ITEM 1: BUSINESS
General Development of Business
Aquentium, Inc. was incorporated in the state of Delaware in April 1987 as Arnex Investment Group, LTD. The corporation name was changed to WaterPur International, Inc. in 1997. On April 2, 2002, WaterPur International entered into an agreement to acquire Aquentium, Inc., a Nevada corporation incorporated on April 30, 2001. The transaction was treated as a reverse acquisition and Aquentium, Inc. became the accounting survivor. On May 7, 2002, WaterPur International changed its name to Aquentium, Inc.
Description of Business
Since 2002, Aquentium, Inc. has been structured as a holding company that seeks to acquire or invest in viable green technologies. Our current operations consist of sales and marketing of our ozone equipment and marketing distributorships for the resale of our ozone equipment to food and beverage processors. The company is also seeking water purification projects that will utilize the ozone technology. We also are manufacturer of structural insulated panels (SIPs) for commercial and residential buildings. In addition, we are seeking waste to energy projects and solar energy projects throughout the United States and internationally. . We are also a holding company for six wholly-owned subsidiaries, which are development stage companies without commercial operations. Our management serves both as a financial and professional business partner for our subsidiaries. Our role is to improve each subsidiary’s access to potential capital, help them benefit from the economics of scale through the consolidation of administrative functions, and to provide universal access to the financial and management expertise of each subsidiary's corporate personnel.
We continue to identify, locate and evaluate additional acquisitions. Our focus for the next twelve months will be to obtain additional funding to develop and expand our marketing and manufacturing operations and new projects. Our success will depend on our ability to obtain funding through equity and/or debt transactions. However, we will encounter substantial competition for the limited financing that will be available in the market place. If we are unable to obtain financing, then we will likely delay further business development of any of our products, marketing and other projects and joint ventures. Potential investors must recognize that we have limited capital available for the development of our business plan and all risks inherent in a new and inexperienced enterprise are inherent in our plan to launch operations.
Products, Equipment and Services
Ozone Equipment
Aquentium is a distributor of ozone sanitation and water purification equipment that is marketed worldwide by the Company and through distributors. Our ozone equipment is designed to improve food safety and improve the work environment for food and beverage processing plants. It also may be used for water purification.
In addition to selling directly, Aquentium plans to rely upon distributor agreements with third parties to sell and market our ozone equipment throughout the world. Generally, our distributor agreements provide that the distributor has an exclusive or non-exclusive marketing right in a specific geographical market and we agree to pay the distributor a discount based on each sale. As of the date of this filing we have not recorded revenues from any distributor agreements.
The Food and Drug Administration approved ozone in bottled water in 1982 and granted a petition for use with fruits, vegetables, meat and poultry in June 2000. The Environmental Protection Agency allows use of ozone with no reporting or record keeping. The United States Department of Agriculture approved ozone as organic under the USDA Organic Rule in 2000.
Ozone is a gas composed of three oxygen atoms in an unstable and highly reactive form. Ozone naturally tends to seek its normal state, exhibiting a short half-life as it reverts to oxygen fairly rapidly. Ozone is dissolved into water at precise concentrations for use as a safe spray disinfectant. The solution kills pathogens and controls a broad spectrum of food borne and waterborne microorganisms. Our ozone technology is an all-natural solution that reduces or eliminates E. Coli 0157:H7 and other bacteria and viruses in processing plants for meat, poultry, seafood, fruit, vegetable and beverages. Ozone does not react with organic matter, thus, it leaves no residue in the water or on the product, does not form any toxic byproducts and the water in which it is delivered can be filtered and reused. This means no change in color or flavor results from the ozone treatment, unlike chlorine treatment. In addition, ozone is unique in that it can be generated onsite from ambient air and on demand with no storage required. It is an effective sanitizing agent that's economically produced and remarkably effective in applications involving food processing and equipment sanitizing. Ozone technology is replacing conventional sanitation techniques such as chlorine, steam or hot water.
Ozone applications include water treatment, plant sanitation, food processing, and air treatment. Our ozone equipment is designed to improve the work environment for food and beverage processing plants as well as in schools, hospitals and hotels. . We are currently seeking global distributors and/or joint venture partners to market this product in the United States and internationally.
Our current line of ozone equipment includes air systems and water systems. Our water systems can be built to process up to 1500 gpm. We also manufacture mobile wash down units that can be used by hospitals, hotels, schools, restaurants, and food or beverage processors.
Structural Insulated Panels Housing System
Aquentium’s SIP’s can be used for both commercial and residential buildings. SIP’s are building panels for floors, walls and roofs, and consist of a thick core of rigid insulation sandwiched between two skins and bonded together with a structural adhesive. The skins range from 0.026 to one inch thick and common materials used for the skins are fiber-cement, aluminum, oriented strand board, plywood, and drywall. This composite construction forms a monolithic pre-stressed element with steel I-Beam properties. An I-Beam has two flanges, where a SIP has the skins and a web. The flange of an I-Beam is a small percentage of the I-Beam, but in a SIP the web (the foam) is up to 100% of the flange (skin). The insulating core and two skins are flimsy and insubstantial by themselves, but when combined properly, the stressed skin principle transforms these elements into a rigid construction panel that requires no wood studs for structural support. When a force is exerted on a SIP or an I-Beam, one surface is under compression while the opposite side is under tension. The I-Beam will eventually give out, twist and bend well before the SIP will do so. In our testing, SIP’s usually do not reach a total structural failure. They do reach failure points, and then the loads can be built back up to a subsequent failure point without a total, non-supportive failure point. Comparing the same tests on steel, lumber or block; when these materials reach a failure point they are destroyed. The steel is bent, the lumber splinters and breaks, and the blocks implode and crumble; all resulting in a total structural failure.
Our SIP building system includes:
1.
Orient strand board laminated to an expanded polystyrene insulation core.
2.
Installation instructions (SIP panel layouts), and installation guide.
3.
Option to receive "site advisory service" to assist in an installation.
We offer a "Ready to Assemble" (RTA) option - The RTA process reduces construction time and improves efficiency. We can manufacture SIP’s to the customer’s exact specifications and then deliver them to the location as a ready-to-assemble building system.
On August 18, 2008, Aquentium signed a business development agreement with Megaros, Inc. Under the terms of the agreement Megaros will receive commissions related to building contracts using our SIP’s. As of the date of this filing we have not paid any commissions related to this agreement and we do not foresee any future business from Megaros, Inc.
Deployable Housing
Our SIP’s are an integral part of the deployable housing structures we offer which are based upon a standard shipping container. Our current focus is on obtaining funding to launch manufacturing and then market deployable housing internationally. Aquentium uses a process in which new or decommissioned standard shipping containers can be used as housing or building structures. Aquentium's design incorporates SIP’s inside the shipping container in order to provide better insulation for those working or living in the container building structure. For emergency applications, Aquentium can offer a solution that includes a 20 or 40 foot shipping unit. One application uses a standard 20 x 8 foot or 40 x 8 foot container for living or office space. A second application allows for three times the normal space of a container, transforming the container into a rapidly deployable, expandable and versatile shelter, home or office. However, the market appears to be much greater for the non-expandable units and because of this, Aquentium intends to focus on building container structures that do not have the expanding feature.
Once the structure has fulfilled its need in one location, it can be refolded and transported to another location. These container units are designed to accommodate not only housing applications but can also be offered as shelter for services such as deployable hospitals, stores, food commissaries, and a variety of other applications. Since the housing or office units are developed from an industry standard shipping container, they can be quickly transported to any area in time of need. The unit stacks seamlessly with other containers on transport ships and can be easily placed onto trucks or trailers for transportation purposes. Our primary markets for these structures are the low cost, mass-housing market or commercial buildings.
Waste-to-Energy Projects
In January 2009, we announced that the company was pursuing waste-to-energy projects internationally as well as domestically. The waste-to-energy projects will vary in costs based on the amount of MSW to be processed. As of the date of this filing, we have signed to Power Purchase Agreements (PPA) with Municipalities in China. Both of these projects are contingent of Aquentium receiving financing to build the facilities. Our initial projects in China are projected to cost approximately $200 million (US). We would generate revenues based on the sale of electricity to each municipality. Each (PPA) is for 30 years.
Waste-to-energy projects are important because consumption habits of modern consumer lifestyles are causing a huge worldwide waste problem. Having overfilled local landfill capacities, many first world nations are now exporting their refuse to third world countries. We believe this approach to waste management is having a devastating impact on ecosystems and cultures throughout the world. The enormous increase in the quantity and diversity of waste materials generated by human activity and their potentially harmful effects on the general environment and public health, have led to an increasing awareness about an urgent need to adopt scientific methods for safe disposal of wastes.
Aquentium intends to focus on new technologies to recycle waste by generating electricity from landfill waste and pollution. While there is an obvious need to minimize the generation of wastes and to reuse and recycle them, the technologies for recovery of energy from wastes can play a vital role in mitigating the problems.
Aquentium’s Subsidiaries
H.E.R.E. International, Inc.: In November 2004, Aquentium acquired the exclusive worldwide manufacturing and marketing rights for a patent related to a containerized habitable structure that can be transformed into a rudimentary home in the case of disaster. This patent is the basis for our deployable housing. In November 2006, the exclusive license converted to a non-exclusive license under the terms of the agreement. The licensing agreement provides that the worldwide manufacturing and marketing rights granted to Aquentium also include all future developments of products, trademarks, copyrights, patents and other intellectual property pertaining to the original patent. Patents and certain other intellectual property shall be negotiated for a fee and used on a case by case basis. This agreement expires simultaneously with the expiration of the patent or any extension or deviation of the patent.
In April 2006, Aquentium incorporated H.E.R.E International, Inc. in the state of Colorado. “H.E.R.E.” stands for Housing & Emergency Relief Efforts. This subsidiary was incorporated to market and manufacture our deployable housing structures. Although the company receives numerous inquiries on this product, this business will only become operational with orders of 50 units or more to start. As of September 30, 2013, this subsidiary does not have business operations.
Aquentium de Mexico: On October 24, 2007, we incorporated Aquentium de Mexico, in the country of Mexico. This wholly-owned subsidiary was formed to do business in Mexico in the area of low cost housing. We are currently are seeking housing and alternative energy business in Mexico. As of September 30, 2013, this subsidiary does not have any operating business operations.
New American Energy, Inc.: In December 2003, Aquentium acquired Charis Energy Development, Inc. and subsequently changed the name of the company to New American Energy. This business seeks solutions in the alternative energy sector. New American Energy is going to be the Aquentium subsidiary that specializes in the production of algae bio-fuels. This subsidiary is seeking capital in order to be able to validate the production of an algae prototype system at a major university. As of September 30, 2013, this subsidiary does not have business operations.
Canby Group: In September 2002, Aquentium acquired Canby Group Inc. Canby Group is an entertainment development stage company. The business plan for this subsidiary is to acquire operating companies or projects within the entertainment industry or sector which may have products to license or distribute. As of September 30, 2013, this subsidiary does not have business operations.
Environmental Waste Management, Inc.: In January 2004, Aquentium acquired Environmental Waste Management, Inc. This subsidiary has an operational Styrofoam recycling machine that condenses Styrofoam into blocks at a ratio of 20-1. As of September 30, 2013, this subsidiary does not have business operations.
Aquentium Solar Inc.: In August 2002, Aquentium acquired USA Public Auction, Inc. The name of this company was recently changed to Aquentium Solar. This company will focus on developing solar energy projects in the USA and internationally. As of September 30, 2013, this subsidiary does not have business operations.
Aquentium’s Joint Ventures
Aquentium Hong Kong, Ltd.: In March 2004, Aquentium formed Aquentium Hong Kong, Ltd. as a 50% joint venture with Mr. Chak Cheuk Kau, an individual who resides in Hong Kong. The parties agreed that Aquentium-Hong Kong will market and sell Aquentium’s products and/or services in Asia for a period of 10 years. Aquentium Hong Kong is focused on marketing our ozone technology in Asia and finding potential acquisitions for Aquentium in Asia.
Other Business Opportunities
Our business plan is to seek, investigate, and, if warranted, acquire business opportunities which are profitable, or we anticipate will become profitable. The selection of a business opportunity is complex and extremely risky and will be made by management in the exercise of its business judgment; however, our executive officer is not a professional business analyst. (See Part III, Item 10, “Directors and Executive Officers,” below). We cannot assure you that we will be able to identify and acquire a business opportunity which will ultimately prove to be beneficial to us and our stockholders.
Our management has discretion in seeking and participating in a business opportunity, subject to the availability of such opportunities, economic conditions and other factors. We anticipate that business opportunities will come to our attention through prior personal and business relationships. Also, our search for business opportunities will not be limited to any particular geographical area or industry and may include both the United States and international companies.
A decision to participate in a specific business opportunity may be made upon our management’s analysis of the following factors:
·
Quality of the business opportunity’s management and personnel;
·
Potential for growth and profitability;
·
Capital requirements and anticipated availability of required funds to be provided by us or from operations, through the sale of additional securities, through joint ventures or similar arrangements, or from other sources;
·
The anticipated acceptability of the business opportunity’s new products or marketing concept;
·
The merit of its technological offerings or changes;
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The perceived benefit that it will derive from becoming a publicly held entity; and,
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Numerous other factors which are difficult, if not impossible, to analyze through the application of any objective criteria.
In many instances, we anticipate that the historical operations of a specific business opportunity may not necessarily be indicative of the potential for future operations because of the possible need to substantially shift marketing approaches, significantly expand or change product emphasis, change or substantially augment management, or the necessity to make other changes. We will be dependent upon the owners of any business opportunity to identify problems which may exist and to implement, or be primarily responsible for the implementation of, required changes.
It is possible that the range of business opportunities that might be available for consideration by us could be limited by impact of the SEC regulations regarding the purchase and sale of “penny stock.” Our common stock is thinly traded and we cannot assure you that a market will develop or that a stockholder ever will be able to liquidate his/her/its investment without considerable delay, if at all. If an active market develops, our shares will likely be subject to the rules of the Penny Stock Suitability Reform Act of 1990. The liquidity of penny stock is affected by specific disclosure procedures required by this Act. (See Part II, Item 5, “Market Information,” below, for further details.)
We cannot predict the manner in which we may participate in a business opportunity. Specific business opportunities will be reviewed as well as our needs and desires and those of the specific business opportunity. The legal structure or method deemed by management to be suitable will be selected based upon our review and our relative negotiating strength. Such methods may include, but are not limited to, leases, purchase and sale agreements, licenses, joint ventures and other contractual arrangements. We may act directly or indirectly through an interest in a partnership, corporation or other forms of organization. We likely will acquire our participation in a business opportunity through the issuance of common stock or other securities.
Competition
We expect to encounter substantial competition in our effort to develop our SIP’s housing system and ozone equipment business operations and our projects, joint venture or subsidiaries’ business plans. With the decline in the overall economic vitality in the United States, we anticipate that obtaining funding from any source will be difficult. We will continue to seek funding from business development companies, venture capital partnerships and corporations, venture capital affiliates of large industrial and financial companies, small investment companies, and wealthy individuals; however, if we are unsuccessful in our efforts to obtain funding we will likely delay or postpone the further development of our business operations.
Employees
We currently have no employees.
ITEM 1A:
ITEM 1A: RISK FACTORS
We need additional external capital and may be unable to raise it.
Based on our current plan, we believe we may require at least $1 to $10 million dollars of additional financing within the next twelve months to expand our alternative energy business, SIP and ozone operations, to satisfy our accrued legal settlements and to meet our commitments to any other new projects. Our success will depend upon our ability to access equity capital markets or borrow on terms that are financially advantageous to us. In the current economy, we may not be able to obtain additional funds on acceptable terms. If we are able to borrow funds, we could be forced to use a large portion of our future revenue to repay principal and interest on those funds. If we issue our securities for capital, then the interests of our shareholders will be diluted. If we fail to obtain funds on acceptable terms, then we might be forced to delay or abandon some or all of our business plans.
We currently have interests in several very different business opportunities and management must determine where to spend our limited resources at the risk of losing market opportunities in the remaining businesses.
We currently have two business lines, five subsidiaries and own interests in joint ventures. We have very limited cash and are able to fund only one or two of these business opportunities. Management must determine which business opportunities are the most viable and which will provide immediate revenue, at the risk of not developing our other business opportunities. We cannot assure you that the business opportunities we choose to develop will become viable and result in cash flows.
We may pursue acquisitions of complementary service product lines, technologies or other businesses and these acquisitions may interfere with our operations and negatively affect our financial position.
From time to time, we evaluate potential acquisitions of businesses, services, products, or technologies. These acquisitions may result in a potentially dilutive issuance of equity securities, the incurrence of debt and contingent liabilities, and recognition of expenses related to goodwill and other intangible assets. In addition, acquisitions involve numerous risks, including difficulties in the assimilation of the operations, technologies, services, and products of the acquired companies; the diversion of our management’s attention from other business concerns; risks of entering markets in which we have no or limited direct prior experience; and, the potential loss of key employees of the acquired company. We cannot assure you that we will be successful in developing and implementing a business strategy that provides for continued growth of all of our subsidiaries or business opportunities.
Certain conflicts of interest exist or may develop between Aquentium and our officer and director.
As of the date of this filing, we have one director and officer, Mr. Mark T. Taggatz, and he has other business interests to which he currently devotes attention, which include his primary employment. He may be expected to continue to devote his attention to these other interests although management time should be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through his exercise of judgment in a manner which is consistent with his fiduciary duties to Aquentium.
Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could lead to loss of investor confidence in our reported financial information.
If we fail to achieve and maintain the adequacy of our internal control over financial reporting, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act (“Section 404"). Effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, then our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our stock could drop significantly.
Pursuant to Section 404, in our annual report for the year ended September 30, 2013 we will be required to provide an attestation from our independent registered public accounting firm as to the effectiveness of our internal control over financial reporting. We cannot assure you as to our independent registered public accounting firm’s conclusions at September 30, 2013 with respect to the effectiveness of our internal control over financial reporting and there is a risk that our independent registered public accounting firm will not be able to conclude at that time that our internal controls over financial reporting are effective as required by Section 404.
ITEM 2:
ITEM 2: PROPERTIES
Principal Office Lease
In September 2012 we subleased space from Mark Taggatz the CEO and sole director of the Company. The Company pays $1,600 per month rent and is on a month to month lease. On March 15, 2014 a new sublease was put in place between the Company and Mark Taggatz. The lease is for 12 months with a monthly rate of $1,050.
ITEM 3:
ITEM 3: LEGAL PROCEEDINGS
As of the date of this filing, we are not a party to any ongoing legal proceeding.
ITEM 4:
ITEM 4: MINE SAFETY INFORMATION
None
PART II
ITEM 5:
ITEM 5: MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our shares of common stock trade under the symbol “AQNM” and are listed on the OTC Bulletin Board. Our common stock is thinly traded and we do not have an active trading market at the time of this filing. The following table lists the range of the high and low bid price for our common stock for each quarter of the 2013 and 2012 fiscal years as reported by the OTC Bulletin Board. Over-the-counter market bid quotations reflect inter-dealer prices, without retail mark-up, mark-downs or commissions, and may not necessarily represent actual transactions.
Our shares are subject to Section 15(g) and Rule 15g-9 of the Securities and Exchange Act, commonly referred to as the “penny stock” rule. The rule defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. The rule provides that any equity security is considered to be a penny stock unless that security is registered and traded on a national securities exchange meeting specified criteria set by the SEC; issued by a registered investment company; or excluded from the definition on the basis of share price or the issuer’s net tangible assets.
These rules may restrict the ability of broker-dealers to trade or maintain a market in our common stock and may affect the ability of shareholders to sell their shares. Broker-dealers who sell penny stocks to persons other than established customers and accredited investors must make a special suitability determination for the purchase of the security. Accredited investors, in general, include individuals with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse, and certain institutional investors. The rules require the broker-dealer to receive the purchaser’s written consent to the transaction prior to the purchase and require the broker-dealer to deliver a risk disclosure document relating to the penny stock prior to the first transaction. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security. Finally, monthly statements must be sent to customers disclosing recent price information for the penny stocks.
Holders
As of September 30, 2013, we had approximately 100 shareholders of record of our common stock, which does not include shares held in “street accounts” of securities brokers.
Dividends
We have not paid cash or stock dividends and have no present plan to pay any dividends. Instead, we intend to retain any earnings to finance the operation and expansion of our business and the payment of any cash dividends on our common stock is unlikely. However, our board of directors may revisit this matter from time to time and may determine our earnings, financial condition, capital requirements and other factors allow the payment of dividends.
Recent Sales of Unregistered Security
On May 14, 2012 the Company issued 10,000,000 shares of common stock with a value of $60,000 ($0.006 per share) for accrued salary.
On June 8, 2012 the Company issued 500,000 shares of common stock with a value of $12,500 ($0.025 per share) for cash.
On February 22, 2013 the Company issued 500,000 shares of common stock with a value of $25,000 ($0.05 per share) for service.
On March 27, 2013 the Company issued 5,000,000 shares of common stock with a value of $50,000 ($0.01 per share) for cash.
On August 29, 2013 the Company issued 30,000,000 shares of common stock to a related party with a value of $1,350,000 ($0.045 per share) for accrued compensation.
On August 29, 2013 the Company issued 1,000,000 shares of common stock with a value of $45,000 ($0.045 per share) for service.
ITEM 6:
ITEM 6: SELECTED FINANCIAL DATA
Not required for smaller reporting companies.
ITEM 7:
ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Executive Overview
During the past year, Aquentium has actively expanded our operational focus to providing “green technologies” to businesses throughout the world. We continue to introduce our ozone system for use in food processing, beverage processing, hotels, schools, hospitals, and veterinarian clinics. We intend to market that product directly to businesses as well as sell directly to third party distributors. On a daily operational basis the company plans to sell and market our complete line of ozone sanitation equipment. During the next 12 months, the company plans on designing larger commercial water purification systems for use beyond the food and beverage industry.
We are also expanding our business in the area of alternative energy. Currently, we are pursuing waste-to-energy projects throughout the world. We have focused our efforts on bringing waste-to-energy solutions to Asia, Europe, and North, Central and South America. Management is excited about the worldwide demand for such technology.
We continue to market our SIPs and with this technology we are actively seeking real estate projects in the market of affordable living or commercial office buildings that could utilize our SIP system. This product can be used worldwide.
As part of the company’s original business model, we are actively seeking other businesses to acquire or invest in.
In summary, management continues to position the company in a way to best benefit from worldwide economic conditions, trends, events, and demand for new technologies.
Liquidity and Capital Resources
At September 30, 2013, Aquentium had an accumulated deficit of $3,933,741 and recorded a net loss of $386,581 for the year ended September 30, 2013. We have recorded revenues of $17,160 during the period ending September 30, 2012 and no revenue during the same period 2013. We have minimal cash or assets. Based on these factors there is substantial doubt that we can continue as a going concern unless we obtain external funding. Management plans to continue limited operations until we obtain additional funding to expand our operations.
During the past two fiscal years we have relied primarily on related party advances and loans and the issuance of our common stock to satisfy our cash requirements. During fiscal year 2013 we received net advances of $7,722 from our President, Mark T. Taggatz, compared to advances of $4,460 he provided in 2012. Also, in 2012, Ozone Safe Food, a related party, advanced $2,900 to us. (See Part III, Item 13 “Certain Relationships and Related Transactions,” below.) The advances are used for operational expenses in the normal course of business. We anticipate that Mr. Taggatz or our affiliates may provide advances in the future; however, we have not entered into written agreements with any person and, therefore, no one is obligated to provide advances to us.
Historically, we also issue shares of our common stock to pay for services and loans. During the fiscal year 2013 we issued 5,000,000 shares for $50,000 in cash, 30,000,000 for accrued compensation of $1,350,000 and 1,500,000 shares of common stock for $70,000 in services. In fiscal year 2012 we issued 10,000,000 shares of common stock, value as $60,000 for accrued salary. In addition we issued 500,000 shares of common stock, valued at $12,500 for cash.
Management expects to continue to issue common stock to pay for acquisitions, services and agreements. Any issuance of common stock will likely be pursuant to exemptions to the registration requirements provided by federal and state securities laws. The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions. We do not currently intend to make a public offering of our stock. We also note that if we issue more shares of our common stock our shareholders may experience dilution in the value per share of their common stock.
We intend to rely on debt and equity financing, capital contributions from management and sales of our common stock to pay for costs, services, operating leases, litigation expense and future development of our business opportunities. Accordingly, our focus for the next twelve months will be to obtain additional funding through debt or equity financing, but as of the date of this filing we have not finalized agreements for additional funding. Our success in obtaining funding will depend upon our ability to sell our common stock or borrow on terms that are financially advantageous to us. If we are unable to obtain financing, then expansion of our ozone distribution network and SIP’s manufacturing program may be delayed and our subsidiaries may remain inactive.
Results of Operations
We recorded no revenue in 2013 and $17,160 in 2012. Our general and administrative expenses were $374,541 in 2013 compared to $323,769 in 2012. Interest expense was $12,040 in 2013 and 2012, respectively. Net loss in 2013 was $386,581 compared to $322,449 in 2012. The increase in net loss was due primarily to higher overhead costs in 2013. Management anticipates net losses will continue over the next two to three years as we develop our distribution methods for our products.
Financing Activities
Cash used in operating activities was $58,348 for the period ending September 30, 2013 compared to $16,318 for the same period in 2012. The lower amount in 2012 was due primarily higher losses in 2013 over 2012.
Cash provided by financing activities was $57,722 in 2013 compared to $16,944 in the same period in 2012. Cash advances by related parties $7,722 plus the sale of common stock for $50,000 in 2013 were the source of the cash provided by financing activities in 2013 and advances of $4,460 and stock sold for cash of $12,500 were the sources on financing in 2012.
Off-Balance Sheet Arrangements
None
Commitments and Contingent Liabilities
Prior to the 2007 year, we leased the Tennant Desert property in North Palm Springs, California. We subleased portions of this building and received rental income from the subleases. Due to a dispute with the landlord of the Tennant Desert property in August 2007 we moved to a new office. As a result of the legal action brought by the landlord a judgment was filed against Aquentium and we have recognized an accrued a liability of $249,855, including interest, related to the judgment awarded to the landlord of the Tennant Desert property.
ITEM 7A:
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
ITEM 8:
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements are audited and included herein beginning on Exhibit 1, page 1 and are incorporated herein by this reference.
ITEM 9:
ITEM 9: CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLSOURE
In June 30, 2014 the Company with the approval of its Board of Directors sent a letter to Johnson Mattson & Smail PLLC in which the Company dismissed and terminated the client-auditor relationship between the Company and Johnson Mattson & Smail PLLC.
There were no disagreements or adverse events or opinions on the reports issued by Johnson Mattson & Smail PLLC for the year ended September 30, 2012 and through the interim periods prior to the dismissal and client-audit cessation (as defined in Item 304 of Regulation S-K) with Johnson Mattson & Smail PLLC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Johnson Mattson & Smail PLLC would have caused it to make reference in connection with its opinion to the subject matter of the disagreement. The report of Johnson Mattson & Smail PLLC on the financial statements for the past two years did not contain any adverse opinion or a disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope, or accounting principles, except that the report was modified to state that there was substantial doubt about the Company’s ability to continue as a going concern.”
We provided Johnson Mattson & Smail PLLC with a copy of the above disclosures and requested that Johnson Mattson & Smail PLLC provide us with a letter addressed to the Securities and Exchange Commission stating whether it agrees with such disclosures.
On June 30, 2014 our Board of Directors engaged DKM Certified Public Accountants, 2451 North McMullan Booth Road Suite 308, Clearwater, FL 33759 as its independent registered public accounting firm.
During the Company’s two most recent fiscal years and through the date preceding the engagement of DKM Certified Public Accountants neither the Company nor anyone acting on our behalf, has consulted with DKM Certified Public Accountants regarding either: (i) the application of accounting principles to a specified transaction, either contemplated or proposed, (ii) the type of audit opinion that might be rendered on the Company’s financial statements, or (iii) any matter that was either the subject of a disagreement between the Company and Johnson Matteson & Smail PLLC as described in Item 304(a)(1)(iv) of Regulation S-K or a reportable event as described in Item 304(a)(1)(v) of Regulation S-K.
ITEM 9A
ITEM 9A (T): CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC. This information is accumulated to allow timely decisions regarding required disclosure. Our Chief Executive Officer, who also acts in the capacity of principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report and based on that evaluation he concluded that our disclosure controls and procedures were ineffective.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our Chief Executive Officer (Principal Officer) is responsible to design or supervise a process that provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The policies and procedures include:
·
maintenance of records in reasonable detail to accurately and fairly reflect the transactions and dispositions of assets,
·
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors, and
·
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.
For the year ended September 30, 2013, our management has relied on the Committee of Sponsoring Organizations of the Treadway Commission (COSO), “Internal Control - Integrated Framework,” issued in 1992, to evaluate the effectiveness of our internal control over financial reporting and based upon that framework management has determined that our internal control over financial reporting is effective.
Our principal officer has also determined that there were no changes made in our internal controls over financial reporting during the fourth quarter of fiscal year 2013 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
This annual report does not include an attestation report of our registered public accounting firm regarding management’s report on internal control over financial reporting. The management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit the company to provide only the management’s report in this annual report.
ITEM 9B:
ITEM 9B: OTHER INFORMATION
None:
PART III
ITEM 10:
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
Our executive officer and director is listed below. Our bylaws require three directors who serve until our next annual meeting or until each is replaced by a qualified director. We have two vacancies on our board of directors which we intend to fill at a later date. Our executive officers are appointed by our board of directors and serve at its discretion.
Mark T. Taggatz was appointed Chairman of the Board on April 2, 2002, and he was appointed as President and Chief Executive Officer on April 15, 2002. He assumed the duties of Secretary/Treasurer in May 2003. He is also the President of Ozone Safe Food, Inc.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and persons who own more than five percent of a registered class of our equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of our common stock. Officers, directors and greater than ten-percent beneficial owners of our common stock are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file and provide written representation that no Form 5 is required.
Code of Ethics
We have only one officer and director and minimal operations and, as a result, have not adopted a code of ethics for our principal executive and financial officers. Our board of directors will revisit this issue in the future to determine if adoption of a code of ethics is appropriate. In the meantime, our management intends to promote honest and ethical conduct, full and fair disclosure in our reports to the SEC and compliance with applicable governmental laws and regulations.
Audit Committee
We are a smaller reporting company with one director and executive officer who has an active role in our operations. As a result, we do not have an audit committee with an audit committee financial expert serving on that committee. Our entire board of directors acts as our nominating and audit committee.
ITEM 11:
ITEM 11: EXECUTIVE COMPENSATION
Executive Officer Compensation
The following table shows the compensation paid to our named executive officer in all capacities during the past three fiscal years. We have not entered into employment contracts with our executive officer and his compensation, if any, will be determined at the discretion of our board of directors. We are unable to pay cash for services rendered by our principal executive officer, Mr. Taggatz, and accordingly, we have accrued his compensation for the past three fiscal years.
SUMMARY COMPENSATION TABLE
(1) Represents accrued salary.
On August 29, 2013 the Company issued 30,000,000 shares of common stock to a related party with a value of $1,350,000 ($0.045 per share) for accrued compensation.
On September 30, 2013 Mark Taggatz converted $545,356 of accrued salaries and $166,594 of advances to the Company to two 5 year convertible notes. The convertible notes are convertible to stock by the holder at par value of the stock, bear no interest and mature on September 29, 2018
We do not offer retirement benefit plans to our executive officer, nor have we entered into any contract, agreement, plan or arrangement, whether written or unwritten, that provides for payments to a named executive officer at, or in connection with, the resignation, retirement or other termination of a named executive officer, or a change in control of the company or a change in the named executive officer’s responsibilities following a change in control.
Outstanding Equity Awards
Our executive officer does not have any outstanding equity awards as of September 30, 2013
Compensation of Directors
We do not have any standard arrangement for compensation of our directors for any services provided as director, including services for committee participation or for special assignments.
ITEM 12:
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Securities Authorized Under Equity Compensation Plans
The following table lists the securities authorized for issuance as of September 30, 2013 under any equity compensation plans approved by our shareholders and any equity compensation plans not approved by our shareholders.
EQUITY COMPENSATION PLAN INFORMATION
2003 Stock Option Plan - On February 21, 2003, our board of directors approved the 2003 Stock Option Plan. This plan has not been approved by our shareholders. The plan provides for the grant of both incentive stock options pursuant to Section 422 of the Internal Revenue Code and non-qualified stock options. The plan is administered by the full board of directors, which determines the terms of the options granted. The board of directors may amend the plan without the approval of the shareholders, except shareholder approval is required for certain amendments described more fully in the plan.
We reserved 10,000,000 shares for issuance under this stock option plan. The exercise price of options under the plan must be equal to the fair market value of the common stock on the date of grant. If the incentive stock option is granted to a person possessing more than 10% of the voting rights of the outstanding common stock, then the exercise price must be no less than 110% of the fair market value of the common stock on the date of grant. The term for each option can be no more than three years. In the event the holder terminates employment with Aquentium, then the option may be exercised during a three-month period after termination and the option terminates after that time period.
As of the date of this filing, we do not have any outstanding options or rights under this plan.
Beneficial Ownership
The following table sets forth the beneficial ownership of our outstanding common stock by our management and each person or group known to us to own beneficially more than 5% of our outstanding common stock. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Due to these rules, two or more persons may be deemed to be the beneficial owners of the same securities. The percentage of beneficial ownership is based on 93,457,403 shares of common stock outstanding as of December 21, 2013.
CERTAIN BENEFICIAL OWNERS
________________
(1) Mr. Taggatz has sole power to vote and invest for Ozone Safe Food, Inc
ITEM 13:
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Transactions with Related Persons
The following information summarizes transactions or proposed transactions in which we were a participant since the beginning of our 2013 fiscal year. The following transactions between Aquentium and our present director and officer and his affiliates have been negotiated between related parties without “arms length” bargaining and, as a result, the terms of these transactions may be different than transactions negotiated between unrelated persons.
In October 2009, we entered into a lease agreement with Sani-Dri, Inc. to sublease for a period of three years office space in the building Sani-Dri leases. Aquentium paid Sani-Dri rent of $4,000 for the year ending September 30, 2010; $4,800 for year two ending September 30, 2011 and $6,000 for year three ending September 30, 2012. The lease was terminated on August 31, 2012 by mutual agreement.
On September 1, 2012 the Company leased on a month to month basis space from its CEO and sole director mark Taggatz. The lease includes a deposit for the first and last month of $3,200 plus monthly rent of $1,600.
On August 29, 2013 the Company issued 30,000,000 shares of common stock to a related party with a value of $1,350,000 ($0.045 per share) for accrued compensation.
On September 30, 2013 the company issued a five year, non-interest bearing convertible note to the Mark Taggatz for $545,356 for the outstanding balance of accrued salary. The holder has the right at any time prior to maturity to convert the note to common stock at par value ($0.005) up to five percent of the outstanding shares of common stock of the Company at the date of conversion. This note is deemed to have a beneficial conversion feature with the fair value exceeding the value of the note. A discount was recorded for the full amount of the note that will be amortized in a straight line over five years
On September 30, 2013 the company issued a five year, non-interest bearing convertible note to the Mark Taggatz for $180,994 for the outstanding balance of advances to the Company. The holder has the right at any time prior to maturity to convert the note to common stock at par value ($0.005) up to five percent of the outstanding shares of common stock of the Company at the date of conversion. This note is deemed to have a beneficial conversion feature with the fair value exceeding the value of the note. A discount was recorded for the full amount of the note that will be amortized in a straight line over five years.
On September 30, 2013 the company issued a five year, non-interest bearing convertible note to the Sani Dri, Inc for $168,000 for the outstanding balance of accrued rent. The holder has the right at any time prior to maturity to convert the note to common stock at par value ($0.005) up to five percent of the outstanding shares of common stock of the Company at the date of conversion. This note is deemed to have a beneficial conversion feature with the fair value exceeding the value of the note. A discount was recorded for the full amount of the note that will be amortized in a straight line over five years. Mark Taggatz is the President and shareholder of Sani Dri, Inc.
On September 30, 2013 the company issued a five year, non-interest bearing convertible note to Ozone Safe Foods, Inc. for $19,963 for the outstanding balance of advances to the Company. The holder has the right at any time prior to maturity to convert the note to common stock at par value ($0.005) up to five percent of the outstanding shares of common stock of the Company at the date of conversion. This note is deemed to have a beneficial conversion feature with the fair value exceeding the value of the note. A discount was recorded for the full amount of the note that will be amortized in a straight line over five years. Mark Taggatz is the President and shareholder of Sani Dri, Inc.
Director Independence
Our director is not an independent director as defined by Nasdaq Stock Market Rule 4200(a) (15).
ITEM 14:
ITEM 14: PRINCIPAL ACCOUNTING FEES AND SERVICES
Accountant Fees
The following table presents for each of the last two fiscal years the aggregate fees billed in connection with the audits of our financial statements and other professional services rendered by our independent registered public accounting firm, Johnson Mattson and Smail, PLLC., Certified Public Accountants and Consultants.
Audit fees represent the professional services rendered for the audit of our annual financial statements and the review of our financial statements included in quarterly reports, along with services normally provided by the accounting firm in connection with statutory and regulatory filings or engagements. Audit-related fees represent professional services rendered for assurance and related services by the accounting firm that are reasonably related to the performance of the audit or review of our financial statements that are not reported under audit fees.
Tax fees represent professional services rendered by the accounting firm for tax compliance, tax advice, and tax planning. All other fees represent fees billed for products and services provided by the accounting firm, other than the services reported for in the other categories.
Audit Committee Pre-approval Policies
We do not have an audit committee currently serving, and as a result, our board of directors performs the duties of an audit committee. Our board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. We do not rely on pre-approval policies and procedures.
PART IV
ITEM 15:
ITEM 15: EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibits
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: October 15, 2014 By /s/ Mark Taggatz
Mark T. Taggatz
Chairman of the Board, President
Chief Executive Officer, Secretary/Treasurer
Principal Financial and Accounting Officer
JOHNSON MATTSON & SMAIL, PLLC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Aquentium, Inc. and subsidiaries (a Delaware Corporation)
(A Development Stage Company)
Perris, California
We have audited the accompanying consolidated balance sheets of Aquentium, Inc. and subsidiaries (A Development Stage Company) as of September 30, 2012, and the related consolidated statements of income, stockholders’ equity and comprehensive income, and cash flows for the years ended September 30, 2012 and 2011, and from inception (April 20, 2001) through September 30, 2012. Aquentium Inc.’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Aquentium, Inc. as of September 30, 2012, and the results of its operations and its cash flows for each of the years ended September 30, 2012 and 2011, and from inception (April 30, 2001) through September 30, 2012 in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Johnson Mattson & Smail, PLLC.
Johnson Mattson & Smail, PLLC
Buffalo, MN
December 21, 2012
2451 N. McMullen Booth Road
Suite.308
Clearwater, FL 33759
Toll fee: 855.334.0934
Fax: 800.581.1908
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Aquentium, Inc.
We have audited the accompanying balance sheet of Aquentium, Inc. as of September 30, 2013, and the related statement of operations, stockholders’ deficiency, and cash flows the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Aquentium , Inc., as of September 30, 2012, were audited by other auditors whose report dated December 21, 2012, expressed an unqualified opinion on those statements, except that the report contained an explanatory paragraph stating that there was substantial doubt about the Company’s ability to continue as a going concern.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Aquentium, Inc. as of September 30, 2013, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has significant net losses and cash flow deficiencies. Those conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding those matters are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ DKM Certified Public Accountants
DKM Certified Public Accountants
Clearwater, Florida
October 13, 2014
AQUENTIUM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
The accompanying notes are an integral part of the consolidated financial statements
AQUENTIUM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
The accompanying notes are an integral part of the consolidated financial statements
AQUENTIUM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
YEARS ENDED SEPTEMBER 30, 2014 AND 2013
The accompanying notes are an integral part of the consolidated financial statements
AQUENTIUM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of the consolidated financial statements
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2013
NOTE 1: BUSINESS AND HISTORY
A. Business
Aquentium, Inc. (a Delaware corporation) is a diversified holding company in the development stage. (See Note 2 H "Development Stage Company"). Its holdings include an early-stage entertainment division that will develop and license products and publications (Canby Group, Inc.), a full service integrator (Aquentium Solar, Inc.), the research and development of alternative energy biofuel projects, (North American Energy, Inc.), and the development of waste recycling systems (Environmental Waste Management, Inc.) and the development of portable housing (HERE, Inc.) and (Aquentium De Mexico). All the above companies were inactive during fiscal years ending September 30, 2013 and 2012, however, See Note 1C, "Acquisitions and Dispositions" for additional information.
B. History
Aquentium Inc., formerly WaterPur International, Inc. (the Company) was incorporated in the state of Delaware on April 3, 1987 as Arnex Investment Group, Ltd. (“Aquentium - Delaware”) Then the corporation name was changed to Vector Environmental Technologies, Inc. in 1993 and then to WaterPur International, Inc. in 1997. Up through September 30, 1997, WaterPur operated principally in one business segment, the development and sale of environmental technologies, primarily water purification. WaterPur became an inactive shell as of September 30, 1998.
On April 2, 2002, Aries Ventures, Inc., formerly Casmyn Corp. and holder of 100% of the 5% cumulative convertible preferred stock of WaterPur received 1,000,000 post-split shares and 250,000 warrants in consideration for the release of any and all outstanding debts or claims that Aries had or may have had against WaterPur.
On April 2, 2002 Aquentium - Delaware acquired 100% of Aquentium, Inc., a Nevada corporation incorporated on April 30, 2001 (“Aquentium-Nevada”), in exchange for 4,000,000 shares of its common stock. With this transaction the common stock of Aquentium -Delaware outstanding was: 5,076,014 shares with 4,000,000 shares held by the Aquentium shareholders, 1,000,000 shares held by Aries and the remaining shares of 76,014 (post reverse split 200 to 1) held by the former stockholders of WaterPur.
Aquentium - Delaware, formerly WaterPur, entered into an asset purchase agreement with Duck Marine Systems, Inc. (a British Columbia Corporation) on May 7, 1999. The agreement was rescinded April 2, 2002.
In connection with the above transactions the officers and principal stockholders of Aquentium - Delaware, on one hand and Aquentium - Delaware and its subsidiary, Aquentium - Nevada, on the other hand, affected a mutual release of any and all debts and claims that either party may have against each other.
In substance, the Aquentium - Delaware transaction is considered to be a capital transaction rather than a business combination. Consequently, the transaction is considered a reverse takeover and the accounting treatment will be as if Aquentium - Nevada acquired Aquentium - Delaware. Accordingly, these financial statements are the historical financial statements of Aquentium - Nevada
On October 24, 2007, Aquentium formed Aquentium De Mexico, a Mexican subsidiary, to manufacture and market our low-cost housing model units in the Mexican Republic.
C. Acquisitions and Dispositions
Subsequent to Aquentium - Delaware acquiring Aquentium - Nevada, the following acquisitions were made:
On June 29, 2002, 100% of Fiber Application Systems Technology (FAST) was acquired for 500,000 common shares at $0.02 per share or $10,000. The Company acquired cash of $4,363, organization costs of $10,817 (written off) and accounts payable of $15,080 for a net asset value of $100 resulting in goodwill of $9,900.
On March 12, 2003, FAST was disposed of for 500,000 preferred shares of Alpha Solarco, Inc., a publicly traded company. The preferred shares can be converted into 5,000,000 common shares. Because Alpha Solarco stock is thinly traded no value has been assigned to this transaction. An $817 gain, measured by the accounts payable, cash reduction and $9,900 cost basis, has been recognized. In March 2004, the Company agreed to rescind the acquisition and sale of FAST by canceling the 500,000 shares of Aquentium common stock issued for the acquisition and FAST agreed to cancel the 500,000 ten-dollar convertible preferred shares.
On August 9, 2002, 100% of USA Public Auction, Inc. (now Aquentium Solar, Inc.) was acquired for 250,000 common shares at $0.02 per share or $5,000. The Company acquired cash of $82 and organization costs of $4,280 (written off) resulting in goodwill of $638.
On September 9, 2002, 100% of Canby Group, Inc. was acquired for 150,000 common shares at $0.02 per share or $3,000 with no net assets.
On October 28, 2002, 100% of Food Safe, Inc., a Texas corporation, was acquired for 250,000 common shares valued at $5,000 in exchange for 100% of its shares. Food Safe was sold on October 29, 2003 to a publicly traded corporation (eFoodSafety.com Inc.). Aquentium received 500,000 (split 3 to 1 on December 8, 2003) restricted shares valued at $650,000 resulting in a gain of $645,000.
On December 8, 2003, Charis Energy Development, Inc., (now New American Energy, Inc.) a privately held company, was acquired for 1,000,000 restricted shares. As there were no assets or liabilities, the acquisition is treated as a capital transaction instead of a business combination and no goodwill or other intangibles are recognized.
On January 27, 2004, Environmental Waste Management, Inc., a privately held company, was acquired for 1,080,000 restricted shares. As there were no assets or liabilities, the acquisition is treated as a capital transaction instead of a business combination and no goodwill or other intangibles are recognized.
On October 24, 2007, Aquentium formed Aquentium De Mexico, a Mexican subsidiary, to manufacture and market our low-cost housing model units in the Mexican Republic.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles. The Company has elected a fiscal year ending on September 30.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Aquentium, Inc. and its wholly-owned subsidiaries Canby Group, Inc., Aquentium Solar, Inc., Aquentium De Mexico and Joint Venture with 50% Hong Kong JV All intercompany accounts and transactions have been eliminated. There was no activity in the Company’s subsidiaries.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Basic and diluted net loss per share
Basic and diluted net loss per share calculations are calculated on the basis of the weighted average number of common shares outstanding during the year. Diluted loss per share calculations includes the dilutive effect of common stock. Basic and diluted net loss per share is the same due to the absence of common stock equivalents.
Policy in Regards to Issuance of Common Stock in a Non-Cash Transaction
The Company’s accounting policy for issuing shares in a non-cash transaction is to issue the equivalent amount of stock equal to the fair market value of the assets or services received.
Revenue Recognition
Revenue is recognized when it is received in accordance with the basic FASB ASC 605-10 “Revenue Recognition”. The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.
Recent Accounting Pronouncements
On June 10, 2014, FASB issued Accounting Standards Update No. 2014-10, Development Stage Entities. The update removes the definition of a development stage entity from FASB ASC 915 and eliminates the requirement for development stage entities to present inception-to-date information on the statements of operations, cash flows and stockholders’ deficit. The Company early adopted this standard for the period covered by the report herein.
NOTE 3: GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has an accumulated deficit of $3,933,741 and has minimal revenues to cover its operating costs. This uncertainty raises substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company's plan. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty
NOTE 4: EQUITY
On May 14, 2012 the Company issued 10,000,000 shares of common stock with a value of $60,000 ($0.006 per share) for accrued salary.
On June 8, 2012 the Company issued 500,000 shares of common stock with a value of $12,500 ($0.025 per share) for cash.
On February 22, 2013 the Company issued 500,000 shares of common stock with a value of $25,000 ($0.05 per share) for service.
On March 27, 2013 the Company issued 5,000,000 shares of common stock with a value of $50,000 ($0.01 per share) for cash.
On August 29, 2013 the Company issued 30,000,000 shares of common stock to a related party with a value of $1,350,000 ($0.045 per share) for accrued compensation.
On August 29, 2013 the Company issued 1,000,000 shares of common stock with a value of $45,000 ($0.045 per share) for service.
NOTE 5: INCOME TAX
At September 30, 2013 and 2012, the Company had a federal operating loss carry forward of approximately $3,326,366 and $3,009,785, respectively, which expires in varying amounts between 2031and 2030.
Components of net deferred tax assets, including a valuation allowance, are as follows at September 30:
The valuation allowance for deferred tax assets as of September 30, 2013 and 2012 was $1,752,339 and $1,496,451, respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of September 30, 2013 and 2012 and, accordingly, recorded a full valuation allowance.
Prior tax years from 2010 forward are open for review by the Internal Revenue Service and may be subject to changes should a review take place.
Reconciliation between the statutory rate and the effective tax rate is as follows at September 30:
NOTE 6: RELATED PARTY TRANSACTIONS
In October 2009, we entered into a lease agreement with Sani-Dri, Inc. to sublease for a period of three years office space in the building Sani-Dri leases. Aquentium paid Sani-Dri rent of $4,000 for the year ending September 30, 2010; $4,800 for year two ending September 30, 2011 and $6,000 for year three ending September 30, 2012. The lease was terminated on August 31, 2012 by mutual agreement.
On September 1, 2012 the Company leased on a month to month basis space from its CEO and sole director mark Taggatz. The lease includes a deposit for the first and last month of $3,200 plus monthly rent of $1,600.
During the fiscal year ended September 30, 2012, Mr. Taggatz, advanced $1,560 to Aquentium and its affiliates. As of September 30, 2012, $193,234 was due to Mr. Taggatz for advances to Aquentium.
On August 29, 2013 the Company issued 30,000,000 shares of common stock to a related party with a value of $1,350,000 ($0.045 per share) for accrued compensation.
On September 30, 2013 the company issued a five year, non-interest bearing convertible note to the Mark Taggatz for $545,356 for the outstanding balance of accrued salary. The holder has the right at any time prior to maturity to convert the note to common stock at par value ($0.005) up to five percent of the outstanding shares of common stock of the Company at the date of conversion. This note is deemed to have a beneficial conversion feature with the fair value exceeding the value of the note. A discount was recorded for the full amount of the note that will be amortized in a straight line over five years
On September 30, 2013 the company issued a five year, non-interest bearing convertible note to the Mark Taggatz for $180,994 for the outstanding balance of advances to the Company. The holder has the right at any time prior to maturity to convert the note to common stock at par value ($0.005) up to five percent of the outstanding shares of common stock of the Company at the date of conversion. This note is deemed to have a beneficial conversion feature with the fair value exceeding the value of the note. A discount was recorded for the full amount of the note that will be amortized in a straight line over five years.
On September 30, 2013 the company issued a five year, non-interest bearing convertible note to the Sani Dri, Inc for $168,000 for the outstanding balance of accrued rent. The holder has the right at any time prior to maturity to convert the note to common stock at par value ($0.005) up to five percent of the outstanding shares of common stock of the Company at the date of conversion. This note is deemed to have a beneficial conversion feature with the fair value exceeding the value of the note. A discount was recorded for the full amount of the note that will be amortized in a straight line over five years. Mark Taggatz is the President and shareholder of Sani Dri, Inc.
On September 30, 2013 the company issued a five year, non-interest bearing convertible note to Ozone Safe Foods, Inc. for $19,963 for the outstanding balance of advances to the Company. The holder has the right at any time prior to maturity to convert the note to common stock at par value ($0.005) up to five percent of the outstanding shares of common stock of the Company at the date of conversion. This note is deemed to have a beneficial conversion feature with the fair value exceeding the value of the note. A discount was recorded for the full amount of the note that will be amortized in a straight line over five years. Mark Taggatz is the President and shareholder of Sani Dri, Inc.
The maturity date and aggregate amount of the notes due on that date is as follows:
NOTE 7: INTEREST EXPENSE
As a result of arbitration during the fiscal year 2007, a former landlord was awarded a judgment against the Company totaling $177,247. The Company is accruing interest on the judgment at an annual rate of seven percent on the outstanding balance totaling $72,608 and $60,568 as of September 30, 2013 and 2012 respectively. (See Note 8: Commitments and Contingencies)
NOTE 8: COMMITMENTS AND CONTINGENCIES
Effective September 1, 2004, the Company exercised an option to lease the entire 84,772 square feet of building space on an average monthly basis of $31,897 per month. The Company was assigned the lease rights of the other tenants in the building and collected rents from those tenants. For the years ending September 30, 2010 and 2008, the Company recorded no lease expense in connection with these leases. The Company had an option to purchase the building for $5.1 million. The largest tenant in the building was eFoodsafety.com.
During the year ended 2007 the Company was party to an arbitration hearing with the landlord pertaining to the lease of the building and the sub-lease of portions of the building to its sub-tenants. On April 11, 2007, the arbitrator granted legal fees to the landlord in the amount of $47,000. On April 19, 2007 and June 29, 2007, amended notices of ruling were heard by the Superior Court of California, County of Riverside resulting in a judgment awarded on September 21, 2007 to the landlord of $146,917 including fees and interest. Additionally, on August 17, 2007 the landlord received a judgment against the Company of $29,692 pertaining to termination of the Company’s occupancy of the building.
The Company is a plaintiff in suits against the individual sub-tenants pertaining to rent withheld by the sub-tenants. No determination of these cases has been concluded. As of September 30, 2013, $177,247 for the judgment plus accrued interest of $72,608 has been accrued by the Company for a total liability of $249,855.
NOTE 9: SUBSEQUENT EVENTS
During August 2013 The Company issued a $20,000 non-interest bearing note which matures on August 7, 2016. The note is convertible to common stock of the company at the average trailing 10 day closing price of the Company common stock prior to conversion. At no time may the note holder convert so their conversion amount is not greater than Five percent (5%) of the outstanding shares of the Company.