Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MAY 31, 2015
Commission file number 333-180978
ESSENSE WATER, INC.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
3638 N Rancho Drive
Las Vegas, NV 89130
(Address of principal executive offices, including zip code)
(509)995-2433
(Telephone number, including area code)
Mr. Jeffrey Nichols, Esq.
811 6th Avenue
Lewiston, ID 83501
(415)314-9088
(Name and Address of Agent for Service)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the last 90 days.
YES [X] NO [ ]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer, "accelerated
filer," "non-accelerated filer," and "smaller reporting company" in Rule 12b-
2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 12,400,000 shares as of
July 13, 2015.
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ITEM 1. FINANCIAL STATEMENTS.
The financial statements for the quarter ended May 31, 2015 immediately
follow.
Essense Water, Inc.
(A Development-Stage Company)
Unaudited Interim Condensed Balance Sheets
As of May 31, 2015
ASSETS
May 31, August 31,
2015 2014
Current Assets
Cash $ 40 $ 44
--- ---
Total Current Assets 40 44
--- ---
TOTAL ASSETS $ 40 $ 44
=== ===
LIABILITIES
Current Liabilities
Accrued Liabilities 3,500 5,350
Payable to Affiliates 47,087 38,673
------ -----
Total Current Liabilities 50,587 44,023
------ ------
STOCKHOLDERS' EQUITY(DEFICIT)
Common Stock:
Par Value $0.0001 per Share,
75,000,000 Shares Authorized,
12,400,000 and 12,400,000 Shares
Outstanding at May 31, 2015
and August 31, 2014, Respectively 1,240 1,240
Additional Paid In Capital 10,760 10,760
Deficit Accumulated During Development Stage (62,547) (55,978)
------ ------
Total Shareholders' Equity (50,547) (43,979)
------ ------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY(DEFICIT) $ 40 $ 44
=== ===
The accompanying notes are an integral part of these financial statements.
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Essense Water, Inc.
(A Development-Stage Company)
Unaudited Interim Condensed Statements of Operations
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
May May May May
31,2015 31,2014 31,2015 31,2014
------- ------- ------- -------
Income:
Operating Revenues $ 0 $ 0 $ 0 $ 0
- - - -
Total Income 0 0 0 0
- - - -
Expenses:
General & Administrative 1,918 1,918 6,568 6,192
----- ----- ----- -----
Total Expenses 1,918 1,918 6,568 6,192
----- ----- ----- -----
Provision for Income Taxes 0 0 0 0
- - - -
Net Income (Loss) $(1,918) $(1,918) $(6,568) $(6,192)
===== ===== ===== =====
Net Loss per Common Share -
Basic and Diluted $ (0.00) $ (0.00) $ (0.00) $ (0.00)
==== ==== ==== ====
Weighted Average Number of
Shares Outstanding -
Basic and Diluted 12,400,000 12,400,000 12,400,000 12,400,000
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
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Essense Water, Inc.
(A Development-Stage Company)
Unaudited Interim Condensed Statements of Cash Flows
Nine Months Nine Months
Ended Ended
May May
31,2015 31,2014
------- -------
Cash Flows from Operating Activities:
Net Loss $ (6,568) $ (6,192)
Net Change in Accrued Liabilities (1,850) (975)
--- -----
Net Cash Provided By
(Used In) Operating Activities (8,418) (7,167)
----- -----
Cash Flows from Financing Activities:
Advances from Affiliate 8,414 5,360
Proceeds from Sale of Common Stock 0 0
- -
Net Cash Flows Provided by
Financing Activities 8,414 5,360
----- -----
Net Increase (Decrease) in Cash (4) (1,807)
----- -----
Cash - Beginning of Period 44 1,819
Cash - End of Period $ 40 $ 12
Supplemental Disclosure of Cash Flow Information:
Cash Paid For:
Interest $ - $ -
Income Taxes $ - $ -
The accompanying notes are an integral part of these financial statements.
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Essense Water, Inc.
(A Development-Stage Company)
Unaudited Interim Condensed Statement of Shareholders' Equity
For the Period From Inception (January 29, 2009) Through May 31, 2015
Deficit
Accumulated
---- Paid-In Capital ---- During
Development
Shares Amount Excess of Par Stage Total
----------------------------------------------------------------------------
BALANCE, 1/29/2009 0 $ 0 $ 0 $ 0 $ 0
----------------------------------------------------------------------------
Sale of Common Shares
To Founder for Cash
on May 29, 2009 12,000,000 1,200 800 0 2,000
Deficit - thru
August 31, 2009 (3,911) (3,911)
----------------------------------------------------------------------------
BALANCE, 8/31/2009 12,000,000 $ 1,200 $ 800 $(3,911) $(1,911)
----------------------------------------------------------------------------
Deficit - thru
August 31, 2010 (9,117) (9,117)
----------------------------------------------------------------------------
BALANCE, 8/31/2010 12,000,000 $ 1,200 $ 800 $(13,027)$(11,027)
----------------------------------------------------------------------------
Deficit - thru
August 31, 2011 (11,818) (11,818)
----------------------------------------------------------------------------
BALANCE, 8/31/2011 12,000,000 $ 1,200 $ 800 $(24,845)$(22,845)
----------------------------------------------------------------------------
Deficit - thru
August 31, 2012 (10,682) (10,682)
----------------------------------------------------------------------------
BALANCE, 8/31/2012 12,000,000 $ 1,200 $ 800 $(35,527)$(33,527)
----------------------------------------------------------------------------
Sale of Common Shares
For Cash on
Various Dates 400,000 $ 40 $ 9,960 10,000
Deficit - thru
August 31, 2013 (10,490) (10,490)
----------------------------------------------------------------------------
BALANCE, 8/31/2013 12,400,000 $ 1,240 $10,760 $(46,018)$(34,018)
----------------------------------------------------------------------------
Deficit - thru
August 31, 2014 (9,960) (9,960)
-----------------------------------------------------
BALANCE,
AUGUST 31, 2014 12,400,000 $ 1,240 $10,760 $ (55,979) $(43,979)
-----------------------------------------------------
The accompanying notes are an integral part of these financial statements.
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Deficit - Nine Months
Ended May 31, 2015 (6,568) (6,568)
BALANCE,
MAY 31, 2015 12,400,000 $ 1,240 $10,760 $ (62,547) $(50,547)
====================================================
The accompanying notes are an integral part of these financial statements.
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Essense Water, Inc.
Unaudited Interim Condensed Notes to the Financial Statements
-----------------------------------------------------------------------------
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by Essense Water,
Inc. (the "Company") without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations, and cash flows
at May 31, 2015, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted. It
is suggested that these condensed financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's
August 31, 2014 audited financial statements. The results of operations for
the period ended May 31, 2015 are not necessarily indicative of the operating
results for the full year.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles in the United States of America applicable to a going
concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has not yet
established an ongoing source of revenues sufficient to cover its operating
costs and allow it to continue as a going concern. The ability of the Company
to continue as a going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable. If the Company
is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other
things, additional capital resources. Management's plan is to obtain such
resources for the Company by obtaining capital from management and other
investors sufficient to meet its minimal operating expenses and seeking
equity and/or debt financing. However management cannot provide any
assurances that the Company will be successful in accomplishing any of its
plans.
The ability of the Company to continue as a going concern is dependent upon
its ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain
profitable operations. The accompanying financial statements do not include
any adjustments that might be necessary if the Company is unable to continue
as a going concern.
NOTE 3 - SUBSEQUENT EVENTS
Company has evaluated subsequent events through the date that the financial
statements were issued. There were no significant subsequent events that need
to be disclosed.
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Note 4 - RECENT ACCOUNTING PRONOUNCEMENTS
FASB issues various Accounting Standards Updates relating to the treatment
and recording of certain accounting transactions. On June 10, 2014, the
Financial Accounting Standards Board issued Accounting Standards Update (ASU)
No. 2014-10, DEVELOPMENT STAGE ENTITIES (TOPIC 915) - ELIMINATION OF CERTAIN
FINANCIAL REPORTING REQUIREMENTS, INCLUDING AN AMENDMENT TO VARIABLE INTEREST
ENTITIES GUIDANCE IN TOPIC 810, CONSOLIDATION, which eliminates the concept
of a development stage entity (DSE) entirely from current accounting
guidance. The Company has elected adoption of this standard, which eliminates
the designation of DSEs and the requirement to disclose results of operations
and cash flows since inception.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements that involve risk and
uncertainties. We use words such as "anticipate", "believe", "plan",
"expect", "future", "intend", and similar expressions to identify such
forward-looking statements. Investors should be aware that all forward-
looking statements contained within this filing are good faith estimates of
management as of the date of this report and actual results may differ
materially from historical results or our predictions of future results.
RESULTS OF OPERATIONS
We are still in our development stage and have generated no revenue to date.
We incurred operating expenses of $1,918 for the three months ended May 31,
2015. Our expenses during the period consisted of $1,750 in accounting
services and $168 for miscellaneous expenses. For the same period in the
prior year, expenses also totaled $1,918, consisting of $1,750 in accounting
services and $168 in miscellaneous expenses.
Operating expenses for the nine months ended May 31, 2015 totaled $6,568.
These consisted of $5,500 for accounting services and $1,068 in miscellaneous
expenses. For the same nine month period in the prior year, total operating
expenses were $6,192 consisting of $5,250 in accounting services and $942 in
miscellaneous expenses.
Since our most recent fiscal year end of August 31, 2014, our cash balance
has remained steady, from a balance of $40 to $44. We continue to be
dependent on advances from our founder and, as a result, these balances tend
to fluctuate based on advances, and the timing of our various expenses.
Accrued liabilities are down from $5,350 at year end to $3,500 at present due
to the more expensive year-end "audit" reflected at the August 31 yearend
date versus the less expensive accounting "review" done on the Company's
quarterly operations. This balance has subsequently been reduced and paid
down by way of further advances from the Company's founder. The balance of
Payable to Affiliates has increased from $38,673 at year end to a present
balance of $47,087 as the founder continues to provide cash advances to cover
the cost of our operating shortfalls. We expect that he will continue to fund
such amounts, as necessary, to cover continuing shortfalls. Due to continuing
losses, Shareholders' Equity decreased from $(43,979) at year end to
$(50,547) as of May 31, 2015.
In May 2009, a total of 12,000,000 shares of common stock were issued in
exchange for $2,000, or $.0017 per share. These securities were issued to
Kevin Nichols, the sole officer and director of the Company.
During the year ended August 31, 2013, the Company sold a total of 400,000
shares of common stock at $0.025 per share for total proceeds of $10,000.
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The following table provides selected financial data about our Company for
the period ended May 31, 2015.
Balance Sheet Data: 5/31/15
------------------- --------
Cash $ 40
Total Assets $ 40
Total Liabilities $ 50,587
Shareholders' Equity $ (50,547)
LIQUIDITY AND CAPITAL RESOURCES
Our cash balance at May 31, 2015 was $40. In order to achieve and meet the
objectives of our business plan, we will require additional funding. The
Company raised only $10,000 in additional funding from the sale of shares
pursuant to its Form S-1 Offering during fiscal year 2013.
Until such time as the Company is successful in raising additional funds, it
will continue to survive on and utilize the limited funds received under the
S-1` Offering and funds as may be provided by its sole officer/director, who
has agreed to advance funds for operations until such time as the Company
receives sufficient funding from other source(s). However, we have no formal
commitment, arrangement(s), or legal obligation with our founder to advance
or loan funds to us. As of May 31, 2015 our officer/director has loaned and
paid expenses directly on the Company's behalf totaling $47,087. These funds
are payable upon demand and bear no interest.
PLAN OF OPERATION
Our plan of operation for the next 12 to 24 months consists of the following
steps/stages:
1. Seek additional funding of capital. The Company expects to finalize
testing and formulation of its product once it achieves some minimum level of
funding - see Page 12 for projected development costs. The Company intends to
continue with its focus of resources towards raising capital over the next
few months.
2. Formulation of its drink product is of foremost importance at present in
this stage of the Company's business cycle. As stated earlier, the drink will
be formulated with added ingredients with the idea of making it better for
you plain water. The Company is endeavoring at present to develop about three
basic formulas rather than several formulas, and then offer those few basic
flavors for its product roll-out. At present, the Company is actively
pursuing its product development, testing/working with various fruit, citrus,
and berry flavors to come up with its initial drink formulations.
The Company's drink formulation effort has been started and we expect our
drink formulas to be completely developed over the next three to six months.
-10-
3. Once the Company's drink formula(s) have been developed and decided upon,
we expect to begin working simultaneously on several other key operating
areas in furtherance of our business plan. In no particular order, these
areas of development include the following:
- develop contacts with third-party bottlers with the goal of selecting one
to utilize in the manufacturing and bottling of the Company's product,
- develop a name for the Company's product,
- design labeling for the product,
- research and select the form of packaging (i.e. bottle type),
- research and decide upon the pricing model for the product;
- design and develop the Company's web-site with a third-party web designer
- meet with local area retailers and wholesalers regarding sale and
distribution of the product,
- plan other marketing and promotional means for getting knowledge and brand
recognition of the product into the marketplace.
The above-referenced third stage of the business plan will most likely begin
once the Company has neared completion of the development and formulation of
the drink product and continue on for six to twelve months after product
completion. It is late during this stage when the Company expects to begin
producing any operating cash flows from the sale of its product.
The Company has budgeted the following amounts, by related expense category,
to be used in executing its business plan. The figures were based on the
Company's "minimum" and "maximum" level of projected proceeds from its
previous capital funding effort per its Form S-1 filing. The Company still
feels that these are accurate representation of the use and required levels
of funding.
See table on following page.
-11-
The following table sets forth uses of various levels of proceeds that the
Company is seeking to raise as additional capital, with the maximum level
expected to be $200,000. Assuming the Company raises 10%, 25%, 50%, 75%, and
100% of this total level of capital, the following shows the various levels
of uses of that capital.
If 25% If 50% If 75% If 100%
Rec'd Rec'd Rec'd Rec'd
Gross Proceeds $ 50,000 $100,000 $150,000 $200,000
Less: Repay Founder for
Cash Advances (1) 20,000 20,000 20,000 20,000
Less: Offering Expenses
Preparation , Filing, Copies 500 500 500 500
Transfer Agent 1,500 1,500 1,500 1,500
Legal & Accounting 2,000 2,000 2,000 2,000
----- ----- ------ -----
TOTAL 4,000 4,000 4,000 4,000
Less: Administrative
Office Supplies and Services 1,000 4,000 6,000 8,000
Accounting & Legal 10,000 10,000 10,000 10,000
----- ----- ------ -----
TOTAL 11,000 14,000 16,000 18,000
Less: Product Development
Drink Testing/Formulations 3,000 6,000 10,000 12,000
Name/Label/Packaging Design 5,000 10,000 15,000 18,000
Trademark Research/Filing 1,000 2,000 3,000 3,000
----- ------ ------ ------
TOTAL 9,000 18,000 28,000 33,000
Less: Marketing & Advertising
Product Promotion 3,000 8,000 12,000 15,000
Targeted Advertising 2,000 4,000 6,000 8,000
Web Design/E-Commerce 2,000 8,000 12,000 15,000
------ ------ ------- -------
TOTAL 7,000 20,000 30,000 38,000
Working Capital 2,000 24,000 52,000 87,000
------ ------ ------- -------
TOTALS $50,000 $100,000 $150,000 $200,000
====== ======= ======= =======
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OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes
in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures, or capital resources that is material to
investors.
ITEM 4. CONTROLS AND PROCEDURES.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting
is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities
Exchange Act of 1934 as a process designed by, or under the supervision of,
the Company's principal executive and principal financial officers and
effected by the Company's board of directors, management, and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States of America and includes those policies and procedures that:
- Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the
assets of the Company;
- Provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America
and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the
Company; and
- Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company's assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate. All
internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparation and presentation. Because of the inherent limitations of internal
control, there is a risk that material misstatements may not be prevented or
detected on a timely basis by internal control over financial reporting.
However, these inherent limitations are known features of the financial
reporting process. Therefore, it is possible to design into the process
safeguards to reduce, though not eliminate, this risk.
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As of May 31, 2015 management assessed the effectiveness of our internal
control over financial reporting based on the criteria for effective internal
control over financial reporting established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") and SEC guidance on conducting such assessments. Based on
that evaluation, they concluded that, during the period covered by this
report, such internal controls and procedures were not effective to detect
the inappropriate application of US GAAP rules as more fully described below.
This was due to deficiencies that existed in the design or operation of our
internal controls over financial reporting that adversely affected our
internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public
Company Accounting Oversight Board were: (1) lack of a functioning audit
committee due to a lack of a majority of independent members and a lack of a
majority of outside directors on our board of directors, resulting in
ineffective oversight in the establishment and monitoring of required
internal controls and procedures; (2) inadequate segregation of duties
consistent with control objectives; and (3) ineffective controls over period
end financial disclosure and reporting processes. The aforementioned material
weaknesses were identified by our Chief Executive Officer in connection with
the review of our financial statements as of May 31, 2015.
Management believes that the material weaknesses set forth in items (2) and
(3) above did not have an effect on our financial results. However,
management believes that the lack of a functioning audit committee and the
lack of a majority of outside directors on our board of directors results in
ineffective oversight in the establishment and monitoring of required
internal controls and procedures, which could result in a material
misstatement in our financial statements in future periods.
MANAGEMENT'S REMEDIATION INITIATIVES
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated, or plan to
initiate, the following series of measures:
We will create a position to segregate duties consistent with control
objectives and will increase our personnel resources and technical accounting
expertise within the accounting function when funds are available to us. And,
we plan to appoint one or more outside directors to our board of directors
who shall be appointed to an audit committee resulting in a fully functioning
audit committee who will undertake the oversight in the establishment and
monitoring of required internal controls and procedures such as reviewing and
approving estimates and assumptions made by management when funds are
available to us.
Management believes that the appointment of one or more outside directors,
who shall be appointed to a fully functioning audit committee, will remedy
the lack of a functioning audit committee and a lack of a majority of outside
directors on our Board.
-14-
We anticipate that these initiatives will be at least partially, if not
fully, implemented by December 31, 2014. Additionally, we plan to test our
updated controls and remediate our deficiencies by December 31, 2015.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, which has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS.
Incorporated by Reference
Exhibit No. Exhibit or Filed Herewith
---------- ------- -----------------------------
3.1 Articles of Incorporation Incorporated by reference to
the Registration
Statement on Form S-1 filed
with the SEC on May 20, 2010
File No. 333-162824
3.2 Bylaws Incorporated by reference to
the Registration
Statement on Form S-1 filed
with the SEC on May 20, 2010
File No. 333-162824
31.1 Section 302 Certification of Filed herewith
Chief Executive Officer
31.2 Section 302 Certification of Filed herewith
Chief Financial Officer
32 Section 906 Certification of Filed herewith
Chief Executive Officer and
Chief Financial Officer
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
July 13, 2015 Essense Water, Inc.
/s/ Kevin Nichols
-------------
By: Kevin Nichols
(Chief Executive Officer, Chief Financial Officer,
Principal Accounting Officer, President, Secretary,
Treasurer & Sole Director)
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