SECURITIES AND EXCHANGE COMMISSION
Annual Report Pursuant to Section(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 orOR 15(d) of the Securities Exchange Act of 1934.
OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended fiscal year ended August 31, 2008
2022or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _________________
Commission File Number 0-50092
EDGEWATER FOODS INTERNATIONAL, INC.
(Name of Small Business Issuer in Its Charter)
file number ______________ Nevada | | 20-3113571ASTRA ENERGY INC. |
(Exact Name of registrant as specified in its charter) |
Nevada | | 20-3113571 |
(State or other jurisdiction of incorporation or organization) | | (IRSI.R.S. Employer Identification No.) |
| 400 Professional Drive, Suite 310, Gaithersburg, Maryland | 20878 |
| (Address of Principal Executive Offices) | (Zip Code) |
(250) 757-9811
9565 Waples Street, Suite 200, San Diego, CA 92121
(Issuer’s Telephone Number, Including AreaAddress of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (800) 705-2919
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class | | Trading Symbol(s) | | Name of exchange on which registered |
Common | | ASRE | | OTCQB |
Securities registered pursuant to Sectionsection 12(g) of the Act:
Common Stock
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. | Yes | | No | X | |
Shares Par Value $0.001(Title of class)
Preferred Shares Par Value $0.001
(Title of class)
_________________________
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Check ☐ Yes ☒ NoIndicate by check mark whether the issuer:registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the pastpreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirementfi ling requirements for the past 90 days.
Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]
☒ Yes ☐ NoIndicate by check mark whether the Registrantregistrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ 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, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and smaller reporting company”"emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer |_| Accelerated Filer |_|
Non-accelerated filer |_| Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated Filer | ☒ | Smaller reporting company | ☒ |
| | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting company | X|
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting fi rm that prepared or issued its audit report. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The issuer's revenues for its most recent fiscal year were: $1,584,027.
The ☐ Yes ☒ NoState the aggregate market value of the voting and non-voting common equity held by non-affiliates ofcomputed by reference to the registrant as of November 28, 2008price at which the common equity was $909,052 (computed by multiplying the closing sales price for our common stock on such date bylast sold. $21,437,540
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, held by personsas of the latest practicable date.
66,774,540 issued and outstanding at December 14, 2022
DOCUMENTS INCORPORATED BY REFERENCE
None other than officers, directors or by record holders of 10% or more of the registrant’s outstanding common stock. This characterization of officers, directors and 10% or more beneficial owners as affiliates is for purposes of computation only and is not an admission for any purposes that such people are affiliates of the registrant).
The number of shares of our common stock outstanding on November 28, 2008 was 24,479,150.
TABLE OF CONTENTS
indicated in Item 15, exhibit list.| |
Item 1 | Description of Business | Page 5 |
Item 2 | Description of Property | Page 15 |
Item 3 | Legal Proceedings | Page 17 |
Item 4 | Submission of Matter to a Vote of Security Holders | Page 17 |
| |
TABLE OF CONTENTS
PART I.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION
From timePart I
Item 1. Business
Astra Energy is an emerging company in the waste management industry and the electricity and power generation sectors with a focus on energy production from solar, waste conversion and clean burning fuels. The Company strives to time, we may make written statementsadvance clean energy initiatives globally while delivering measurable benefits to communities and value to our investors by investing in and developing renewable and clean energy projects in markets where demand is high and supply is limited.
WASTE CONVERSION:
In August 2022, the Company entered into an agreement to acquire a majority interest in Regreen Technologies Inc. (“Regreen”), a California based company with innovative and patented waste conversion technology and equipment. The Regreen Total Waste System converts municipal solid waste, food waste and plant waste raw material into biomass pellets which are then converted to various fuels and end products. In contrast to typical incinerator based WTE systems, the Regreen Total Waste System uses pyrolysis to burn and convert waste. Pyrolysis is an oxygen-absent process that converts dehydrated biomass into flammable liquids and gases under high temperature conditions. The Regreen system works by converting MSW into dried pellets with extremely low moisture content, which are "forward-looking," including statements containedthen fed into a pyrolizer. The pyrolizer produces pyro oils (which can be used in this reportgenerators and other filingsengines), carbon black (typically used in rubber manufacturing), and Syngas, which is further processed to yield jet fuel, green diesel, and bitumen (which can be used for asphalt and roofing).
We will specialize in providing sustainable waste and energy solutions and will safely convert millions of tons of waste from municipalities and businesses into valuable clean, renewable biofuels, biodiesel and jet fuel. The Company will provide comprehensive material management services to communities seeking solutions to some of today’s most complex environmental challenges. The systems used in the power facilities will greatly reduce or eliminate methane emissions from landfills, as well as reduce reliance on imported fuels by replacing them with biofuels made from agricultural products. The Company will create a valued intellectual property portfolio by way of securing global licenses for or co-developing technologies that can convert multiple different waste streams into renewable fuel sources more efficiently and at a considerably lower cost.
Recent legislation in California which requires food waste to be composted with the Securities and Exchange Commission, reportsgoal to our stockholders and news releases. All statementsreduce food waste in landfills by 75%. The State is directly in support of this system as a result. SB 1383, establishes methane reduction targets for California. California SB 1383 is a bill that express expectations, estimates, forecasts or projections are forward-looking statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf. Wordssets goals to reduce disposal of organic waste in landfills, including edible food. The bill’s purpose is to reduce greenhouse gas emissions, such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "projects," "forecasts," "may," "should," variationsmethane, and address food insecurity in California. Aspects of such wordsthis law ensure that food scraps are composted and similar expressionscompost is purchased by cities. Composting, industrial uses, and animal feed are intendedgood environmental uses for inedible food or other organic material. Landfilling organic waste is a significant source of local air quality pollutants, which can cause respiratory issues and hospitalizations for community members. Beyond this, we are seeing the effects of climate change in California with more severe and lengthy droughts, warmer temperatures that contribute to identify such forward-looking statements. These statements are not guaranteesthe increasing number of future performancewildfires (also impacting air quality), bigger storms, and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors on which such statements are based are assumptions concerning uncertainties, including but not limited to uncertainties associated with the following:
(a) volatility or decline of our stock price;
(b) potential fluctuation in quarterly results;
(c) our failure to earn revenues or profits;
(d) inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement its business plans;
(e) inadequate capital to continue business;
(f) changes in demand for our products and services;
(g) rapid and significant changes in markets;
(h) litigation with or legal claims and allegations by outside parties; or
(i) insufficient revenues to cover operating costs.
There is no assurance that we will be profitable, we may not be able to successfully develop, manage or market our products and services, we may not be able to attract or retain qualified executives and technology personnel, our products and services may become obsolete, government regulation may hinder our business, additional dilution in outstanding stock ownership may be incurredcoastal erosion due to rising sea levels. To address the issuanceenvironmental and health concerns of more shares, warrants and stock options, or the exercisesurplus edible food, this law requires 20% of warrants and stock options, and other risks inherentedible food that would otherwise be disposed of in the our businesses.
We undertake no obligation to publicly revise these forward-looking statements to reflect eventsgarbage or circumstances that arise after the date hereof. Readers should carefully review the factors describedcompost be recovered for human consumption by 2025. This means surplus edible food will help feed Californians in other documents we file from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-K and Annual Report on Form 10-K and any Current Reports on Form 8-K filed by us. All forward-looking statements attributable to us are expressly qualifiedneed instead of decomposing in their entirety by the cautionary statement above.
ITEM 1. DESCRIPTION OF BUSINESS |
Overview
(A)We were incorporated under the laws of the State of Nevada on June 12, 2000, with the name Heritage Management Corporation. a landfill while emitting harmful greenhouse gases. In August 2005, weMay 2022, Regreen entered into a share exchange agreement with Edgewater Foods International, Inc., the parent companyLetter of Island Scallops Ltd. an aquaculture company locatedIntent to install a One Ton-Per-Hour system at a material recovery facility in Vancouver Island, British Columbia. As a resultCalifornia. Completion of the Share Exchange, Edgewater became our wholly owned subsidiaryinstallation is pending California Local Enforcement Agency approval relating to solid waste disposal.
On November 20, 2022, Regreen entered into a Joint Venture Investment Cooperation Agreement with Viecotech Joint Stock Company, a Vietnamese based company for the manufacture, distribution, and Edgewater’s shareholders became the ownersdeployment of the majority of our voting stock. Pursuant topatented Regreen waste processing system in the terms ofAsia Pacific region. Regreen will hold 50% ownership in the Share Exchange Agreement, Edgewater’s officers and directors were appointed as our officers and directors. Additionally, we changed our name from Heritage Management, Inc. to Edgewater Foods International, Inc.
Our wholly owned subsidiary, Edgewater Foods International Inc., a Nevada Corporation, is the parent company of Island Scallops Ltd., a Vancouver Island aquaculture company. Island Scallops was established in 1989 and for over 19 years has successfully operated a scallop farming and marine hatchery business. Island Scallops is dedicated to the farming, processing and marketing of high quality, high value marine species: scallops and sablefish. Scallop farming is relatively new to North America and Island Scallops is the only producer of both live-farmed Qualicum Beach scallops and live sablefish (or blackcod). Given Island Scallops’ unique hatchery technology and extensive research and development, we believe that thereJoint Venture.Regreen is currently no significant competition for these marine species. Island Scallops is committedin negotiations to rapidly expanding production and profits while continuing to finance the aggressive growth of the company and maintaining a healthy respect for the marine environment.
Edgewater acquired Island Scallops in June 2005 through a tax free share exchange. Island Scallops was established in 1989 to commercialize Canadian government research on scallop aquaculture. Island Scallops’ hatchery operations have diversified to produce other species of shellfish such as mussels, clams, geoducks and oysters. Island Scallops has also investigated the culture of halibut, spot prawn, sea urchin and abalone. Island Scallops is the first hatchery to successfully produce sablefish juveniles for commercial grow-out.
Currently, Island Scallops’ primary product is farmed Qualicum Beach scallops for sale in the west coast of North America. Island Scallops offers a variety of other products and services to the industry including aquaculture equipment, consulting, research and development, and custom processing and marketing. Internationally, Island Scallops has collaborated with both Japanese and Moroccan fisheries interests.
On August 30, 2006, we filed a Form 8-A to register our common stock pursuant to Section 12(g) of the Act and we therefore ceased being a voluntary filer.
Key Corporate Objectives
Our key business development objectives over the next 36 months are to expand scallop production using both existing and new infrastructure at our facilities in Qualicum Beach, move forward possible joint ventures with First Nations1 groups, investigate strategic acquisitions and/or business opportunities and look for possible partners or additional strategic investors to enable the company to capitalize on its existing black cod technology. In general, we plan on leveraging our existing hatchery technology and expertise viasell, joint venture and/or acquisitions that will enable usand deploy the Regreen system in several countries including India, Panama, Dominican Republic, Fiji, Jamaica, and Ecuador.Astra Energy is advancing a waste to reach signicantly increase sales over the next three years. Specifically, we plan to expand our business and operations as follows:
· | Leverage our recently completed $2.0 million order with Fanny Bay Oyster Co., a division of Taylor Shellfish Farms of Shelton, Washington (an international seafood distributor and the largest shellfish company on the West Coast) to expand overall scallops and reduce selling costs. The initial order is for more than 800,000 lbs. of Edgewater’s proprietary Qualicum Beach scallops to be delivered to Fanny Bay over the next 13 months. The order includes live scallops, fresh scallop meat and frozen scallops to be farmed in Edgewater Foods’ Qualicum Beach, British Columbia, operation, and packaged and delivered in various scallop products (including live in-the-shell, frozen half-shell and fresh meat). |
· | Continue to move forward with our discussions with various First Nations groups about possible partnerships or joint ventures on potential farm sites on First Nation owned lands. This will provide the company with additional growing areas for scallops and future joint venture revenues. |
· | Investigate possible acquisitions of other aquaculture companies, equipment vendors and/or seafood distributors. We plan to initially focus on companies that we believe could significantly benefit from our hatchery technology and expertise. As part of this initiative we recently established an Acquisition/Business Opportunity Board Committee and are currently beginning initial conversions with both North American and Chinese based companies. Aside from the November 2008 acquisition of Granscal Sea Farms Ltd., a Kanish Bay Company, as of the date of this filing, no new definitive agreements have been signed. |
________________________
1First Nations commonly refers to the indigenous peoples in what is now Canada. There are currently over 600 recognized First Nations governments or bands in Canada, roughly half of which are in the provinces of Ontario and British Columbia.
· | Look to indentify either new strategic investors and/or possible joint venture partners who could help us capitalize on existing sablefish (or blackcod) hatchery technology and expertise. One possible arrangement would be for us to license our blackcod hatchery technology and expertise to a strategic partner. As of the date of this filing, we have yet to locate either a strategic investor or a joint venture of licensing partner. If we do indentify a suitable arrangement, our goal would be to capitalize on the high demand for sablefish in foreign markets by entering into the blackcod market in the next 2 to 3 years. |
· | We plan to expand current scallop distribution by leveraging our initial 500,000 piece frozen roe on scallop meat order with European Union seafood distributors. While our arrangement with Taylor Shellfish will focus on North America markets, we believe this order could represent an important first step towards establish a large European based demand for our scallops. |
Marketing and Distribution
Our marketing and distribution strategy for Island Scallops is focused on developing and maintaining long-term relationships with distribution channel members. Island Scallops also strives to differentiate its products to achieve consistent supply and quality. Island Scallops believes the scallop market effectively functions as a commodity market and therefore, relationships with distributors are important. To develop these relationships, Island Scallops has identified key purchasing criteria for the distributors: price, quality and consistent farmed supply. In the short term, Island Scallops intends to adopt a pricing policy equal to the market wholesale prices. In other words, we do not intend to set any promotional or premium prices for either the whole or shucked product, but instead intend to sell our products at the market rate. This would mean Island Scallops’ products would compete on other factors, such as supply and consistent quality.
Over the long term, for the reasons noted below, Island Scallops wants to differentiate its products so that it can command premium prices. Freshness is an important factor for scallops since whole scallops only have a shelf life of approximately 7 days while shucked scallops remain fresh for up to 20 days. Due to this short shelf life, distributors try to offer the freshest products. Island Scallops believes it is in a favorable position to supply fresh products to United States brokers/distributors, especially those locatedenergy project on the west coast where demand for the product is strong. Currently, these brokers/distributors are supplied for the most part with east coast North American scallops, which have several transportation-related delivery delays that decrease freshness.
Supply is another key factor where Island Scallops has a distinct advantage. Based on our planned increase in scallop production, we believe that Island Scallops will have a large quantityisland of scallops for sale. Therefore, a distributor would not haveZanzibar to deal with numerous suppliers, which costs additional time and money. This makes Island Scallops an attractive source for scallops, since we believe that we will be able to satisfy the demandconvert 15 tons of distributors, which will save them time and money.
Island Scallops has also developed a unique live holding system for use with our distribution model. This system allows Island Scallops to deliver live product directly to seafood suppliers and individual restaurants.
Traditionally, as described above, we have sold live scallops within the Pacific Northwest market. We recently received a $2.0 million order with Fanny Bay Oyster Co., a divisionmunicipal solid waste per hour into 10MW/hour of Taylor Shellfish Farms of Shelton, Washington (an international seafood distributor and the largest shellfish company on the West Coast).electric power. The order includes live scallops, fresh scallop meat and frozen scallops to be farmed in Edgewater Foods’ Qualicum Beach, British Columbia, operation, and packaged and delivered in various scallop products (including live in-the-shell, frozen half-shell and fresh meat). As a result of this order, Fanny Bay will become the effective exclusive distributor of our scallops outside the European market. We believe this order will reduce cost and encourage additional wholesalers within the Taylor network to carry our scallops. In addition to the Taylor sales agreement, we also recent finalize an order to provide frozen scallop meat with roe to the European market. We believe that this strategic relationships with enable us to capitalize on the large European demand for quality seafood products.
Current Products
Island Scallops currently focuses exclusively on aquaculture products and is not involved in wild fisheries. All seafood products are produced in private hatcheries and grown on ocean farm sites. Currently, the Qualicum Beach Scallop is the only product that Island Scallops produces, grows, processes and markets, with the exception of limited quantities of sablefish grown as part of our planned expansion into this market. In the past however, Island Scallops produced a variety of other shellfish species including the Pacific oyster, European flat oyster, Manila clam, eastern blue mussel, Mediterranean mussel, rock scallop, geoduck clam and sea urchin, which we sold to third party shellfish farmers. Additionally, our hatchery has produced and is capable of producing a variety of shellfish seed (for grow-out and sale by our companies) including mussel, oysters and geoduck as well as scallop seed.
Island Scallops has been a leader in marine hatchery technology for the past 20 years. Island Scallops has developed proprietary hatchery techniques for a number of marine species, most notably the hybridizing of the Qualicum Beach Scallop and becoming the first company to produce commercial quantities of sablefish juveniles. Both of these breakthroughs have required many years of research and considerable investment. In the case of sablefish, which is a cold-water fish that spawns at depths of 800 - 2400 ft, a variety of techniques were required to successfully mature, spawn, incubate and rear the larvae. In addition, there were technical difficulties associated with egg and yolk sac incubation (as well as larvae rearing and weaning) that were resolved using proprietary technology developed at Island Scallops. We intend to begin significant further commercialization of sablefish in the next two to three years, provided we are able to finance the expansion of this product which we estimate will require at least $5.0 million of capital.
Scallop Overview
Island Scallops’ main product is the "Qualicum Beach Scallop", which is a hybrid of the imported Japanese scallop and the local weathervane scallop. Between 1993 and 1999, Island Scallops developed this new scallop using Japanese scallops that were imported under quarantine in the early 1990’s. This unique scallop is marketed as the Qualicum Beach scallop and is the largest scallop in the world, reaching sizes of 15 cm and 500 grams. The scallop species farmed by Island Scallops has a proven record of being disease resistant, with a 95% survival rate during the grow-out phase. We have the necessary farming infrastructure to produce up to 15 million scallops annually and,
with an additional capital investment of approximately $1.0 million we could increase our annual harvest capacity to 30 million scallops in the near future. We hope to fund this expansion via either increasing cash flow or additional equity or debt financings. If we are unable to locate financing or develop positive cash flow, we will not be able to continue to expand our production capabilities.
The Qualicum Beach Scallop is sold live in four sizes: medium, large, extra large and jumbo. Pricing typically ranged from a low of US$3.95 per pound to $4.20 per pound for the larger sized scallops. In the early days of our business, due to the large demand and high value for live scallops, our focus was on the sale of live scallops. However, with the recent sales agreement with Fanny Bay and new European product line, our average selling prices are expected to be between $1.00 and $1.20 per scallop. Although the average selling price per unit will be slightly lower than the per unit cost of live in-the-shell scallops (only), we believe the reduce sales and administrative costsproject will enable the companyisland to significantly increase our future margins.
dispose of all its garbage, thereby avoiding the need for a garbage landfill. Landfills are major generators of methane, a major greenhouse gas that is responsible for global warming. There are continuing discussions with the island government.The basispreliminary plan is for our recently completedAstra to develop, operate, and possible additional scallop farming production increase stems from a combination of our tenure expansion, our recent financing, improved grow-out techniques and our transitionmaintain the waste to energy infrastructure. The power will be fed into the island’s grid network pursuant to a combinationpower purchase agreement.
SOLAR:
We are currently completing a feasibility study for the supply and installation of “pearl nets and lantern-style” farming methods. Scallops culture utilizesa 40 MW solar farm with battery storage on the island of Zanzibar, Tanzania. The plan is to secure a power purchase agreement to feed the power into the grid network. The island of Zanzibar is a semi-autonomous territory of Tanzania in the Indian ocean. Electric power to the island is currently provided using two styles of small cages referred100MW submarine cables from mainland Tanzania. These cables are now at capacity. The island wishes to as “pearl nets and lantern nets.” Pearl nets are shaped like a pyramid with a 50 by 50 cm square base and grow small scallops from 2-3 mm to 10mm. The 10-mm scallops are grown in cylindrical nets called lantern nets and are 60 cm in diameter and 1.2 meters deep containing 12 layers. Our Hindoo Creek and Deep Bay tenures have been approvedan independent power supply. Therefore, the immediate need for expansion and once expansion of our Denman tenure is approved, which we believe will occur by our next fiscal year, we will be able to increase capacity to approximately 30,000,000 animals per annum (with additional funding). Thereafter, we intend to change our management plan to include off bottom culture at our Nile Creek farm in late 2007 or 2008, which would supply us with the capacity to produce an additional 12-24 million scallops at harvest( depending on the size50MW of nets used).
As the only hatchery/producer of cultured scallops on the west coast of North America, Island Scallops has the ability to supply fresh scallops (of a predictable quality and quantity) throughout the year. Although the supply of scallops has fluctuatedpower in the past, consumer demand has always absorbed the available supply. A primary factor for increased consumption is the increasing health consciousness among consumers. Scallops are low in saturated fats and cholesterol and high in protein. All parts of the scallop body are edible; however, different parts tend to be consumed in different regions of the world. In North America, the adductor muscle is traditionally the only part eaten, with the rest of the body discarded. In Europe, Australia and Tasmania, the adductor muscle is usually marketed and eaten with the gonad attached. Japan utilizes the whole animal, where most of the product is cooked in the shell prior to sale. Marketed scallops generally take the following product forms:
· | Whole-live (shelf life of seven days); |
· | Shucked fresh (shelf life of about 15-20 days); |
· | Shucked frozen (shelf life of about a year); |
· | Frozen on the half-shell (shelf life of about a year); and |
· | Value added forms (smoked, breaded, canned). |
The shucked product form is the most significant form for North American markets. A whole-live product form is the most desirable from the aquaculturist’s point of view, as processing costs are minimal. Previously, Island Scallops has developed a market for whole live scallops, which exceeds 5,000 lbs. per week into Vancouver. As described above, our scallop sales efforts are currently focused on our Fanny Bay (Taylor Seafood) order and our European orders. We believe that these strategic relationships with enable us to capitalize on established selling networks and proven distributors to capitalize on demand for quality seafood products.
The most predominant scallop production in North America comes from the offshore fishery located on the Georgia Band on the east coast. Large American and Canadian fishing companies dominate the fishery. The majority of their product is shucked aboard ship then supplied, primarily frozen, to seafood processors onshore. The processors then distribute the product to various restaurants, retail outlets and seafood brokers.
Sablefish (Blackcod) Overview
Sablefish (Anoplopoma fimbria), often called blackcod although not a member of the cod family, is an elongate fish with two dorsal fins and an anal fin similar to and opposite the second dorsal fin. Adults are black or greenish gray; usually with slightly paler blotches or chainlike pattern on the upper back. At 30-61 cm in size they are often greenish with faint stripes on the back.
Sablefish inhabit shelf and slope waters in depths of greater than 1,500 meters, from Baja California to the Aleutian Islands and the Bering Sea. The larger populations of sablefish are centered in northern British Columbia and the Gulf of Alaska. Adults favor mud bottoms and feed on benthic invertebrates, squid and numerous fish species. In turn, they are prey for halibut, lingcod, hagfishes and marine mammals such as sea lions. In addition, killer whales have been known to take sablefish from long line gear as it is being retrieved.
Sablefish spawn from January to March along the continental shelf at depths of 800 to 2400 feet. Fecundity ranges from 60,000-200,000 eggs up to one million eggs for a 102-cm fish. Larval sablefish are found in surface waters over the shelf and slope in April and May. Juveniles are highly migratory with significant movement from nursery areas in northern B.C. to the Gulf of Alaska and the Bering Sea. Sablefish move to deeper waters as they mature. Growth is rapid with sizes at maturity reaching 52-61 cm for five-year-old males and 58-71 cm for five-to-seven year old females. Sablefish growth appears to be rapid for the first three-to-five years and slow asymptotically thereafter. Annual natural mortality of adults has been estimated to be about 10 percent.
Island Scallops plans to raise sablefish onshore using shallow ponds or above ground tanks. This system has been successful in Texas for the culture of catfish. Tests have shown that sablefish prove to be very hardy when grown in ponds and this has the added advantage of causing sablefish to be parasite free. Wild sablefish carry a parasite that does not allow the fish to be eaten raw. If we are able to located financing, a strategic partner or license the
technology, we believe that Island Scallops has already demonstrated the feasibility of onshore sablefish farming and plans to develop a new sablefish facility that could produce at least 500,000 sablefish within 12 months of funding. Furthermore, we believe that production could be increased by at least 500,000 annually in future years.
Over the past nine years, Island Scallops has also developed proprietary hatchery technology for the production of sablefish juveniles. We believe that sablefish will be the next species, after salmon, for successful large-scale commercial farming. Sablefish, which is a premium-quality whitefish with a delicate texture and moderate flavor, is an ideal substitute for Chilean sea bass (currently over-fished in all oceans). To date, Island Scallops has marketed a limited number of live sablefish into the Vancouver market. Initial response was excellent for a small 1-kilogram live sablefish (~$11/kg). If we are able to locate suitable funding and/or partners, Island Scallops will be able to capitalize on our breakthrough sablefish hatchery technology by constructing a new sablefish hatchery consisting of the following:
· | An expanded Brood Stock facility with larger capacity to hold the various families of selected strains of sablefish. This new facility will incorporate a new state-of-the-art water treatment system. |
· | An improved incubation and larval rearing facility incorporating proprietary improvements in tank design and seawater systems. |
· | An upgraded zooplankton culture facility with improved handling and enrichment techniques. |
· | An expanded and improved juvenile rearing facility incorporating proprietary recirculation system designs. |
As part of this expansion, we also intend to construct a new onshore tank farm consisting of large and small ponds and tanks complete with associated recirculation systems. This onshore facility will be used to augment the juvenile rearing area and will house and grow juvenile fish.
At the present time, worldwide “non-farming” sablefish catches are struggling to meet the worldwide demand according to DFOWeb, NPFMCWeb and Pacific Fishery Management Council Website. Currently, there are only two hatchery facilities: Island Scallops Ltd. and Sablefish Hatcheries Inc. that have produced sablefish juveniles. Current production is less than 400,000 juveniles per year. Based on our analysis of present market conditions, increasing worldwide hatchery production tenfold (to roughly 1 million 3 kilo sablefish) would fill less than 10% of the current world demand shortfall. If Island Scallops’ new sablefish facilities are able to reach a production of 3 million sablefish annually, this will only fill less than 30% of the current overall shortfall.two years. The economic potential for sablefish is therefore considerable. Given these market conditions and opportunities, Island Scallops, subject to our ability to secure adequate funding, is determined to enter the market for sablefish in a significant manner within the next two to three years.
Other Products
In the past Island Scallops sold a variety of shellfish larvae and seed to both international and local customers. Sales included two species of mussels, manila clams, geoduck clams, oysters, abalone and sea urchins. Island ScallopsCompany has established suppliers of aquaculture equipment in Japan and China and supplies nets, ropes, floats, and processing equipment into the British Columbia industry. Currently, Island Scallops is focused mainly on expansion of scallop sales. However, the Company is also looking to develop increasing shellfish larvae and seed sales and equipment sales in the near future. In addition, we will continue to investigate funding sources and/or partners for the development of our sablefish operation with a goal of further commercialization of sablefish in two to three years.
General Fisheries Market Overview
The worldwide market for farmed marine species continues to grow. According to personal communications with the National Marine Fisheries Service, Fisheries Statistics Division, Silver Spring, MD, in British Columbia alone, farming production increased from US$44.56 million in 1988 to US$190.24 million in 1998. Although significant growth occurred in salmon farming and little or no growth occurred in shellfish (oyster) farming. Island Scallops can only benefit from this recent trend towards shellfish, as training farmers in correct husbandry would only add another revenue stream.
The majority of the world’s current scallop production comes from three species of scallops: the Japanese scallop, the sea scallop and the king scallop. The Chinese scallop is also selling well, but FDA inspections of China facilities found that the conditions and hygiene were issues as hatcheries were highly polluted. There has also been a fishery boom on the east coast of Canada and the United States with the Digby or sea scallop.
In the United States, consumption of scallops exceeded 64 million pounds in 2002. Various communications between Island Scallops personnel and the National Marine Fisheries Service, Fisheries Statistics Division, Silver Spring, MD and analysis of data from the Fisheries Statistics & Economics Division of the National Marine Fisheries Service (NMFS) website for annual landings of commercial fisheries (http://www.st.nmfs.noaa.gov/st1/commercial/index.html), tell us that this represented a per capita consumption of 0.22 pounds, with a dollar value of US$342 million. After shrimp, scallops represent one of the most popular shellfish products in the United States. In general, per capita consumption of seafood in the United States has remained steady over the last six years ranging from 15.2 to 16.2 pounds per annum. Based upon Robert Saunders’, our chairman and president, communications with the National Marine Fisheries Service, Fisheries Statistics Division of Silver Spring, MD, and personal observations, given consumers' growing preoccupation with healthier foods and the increasing availability of seafood (due to the recent successes in aqua farming and improved distribution channels), we expect per capita consumption to continue to increase.
Shifts in North American shellfish market trends from shucked to live in shell products can be seen in the oyster markets. Within the last 5 years, we have seen a significant trend away from shucked oyster meat to live in the shell product in the Pacific Northwest due to the demand for fresh high quality products. We believe that once a live in the shell product is readily available within the scallop market, a shift from frozen scallop meat to fresh in shell product will also occur.
Regulatory Environment
Effect of Government Regulation
There are a limited number of regulations that restrict the fishing, distributing or purchase of scallops in Canada and the United States. Therefore, the country of origin makes little difference for the pricing or demand of scallops.
A limitation to market supply is paralytic shellfish poisoning (PSP) or "red tide". PSP is a toxin generated by plankton (scallops' food) at particular times of the year. The toxin is passed to the scallop when plankton is digested, but the toxin does not harm the shellfish. However, the shellfish containing the toxin can be harmful to humans who consume it. Although only a limited number of human deaths caused by red-tide poisoning have been reported, the public announcement of red tide has a devastating effect on most shellfish sales. The exception is scallop meat, because the adductor muscle of the scallop does not concentrate the toxin; shucked scallops are safe to eat at any time of the year. Nevertheless, public perception could still influence demand over short periods of time. To monitor for PSP, the federal Fisheries Inspection Branch constantly monitors samples of shellfish production and wild shellfish populations. In the summer of 2008 Island Scallops experience a prolonged PSP out break and was able to continue processing fresh shucked scallop meat throughout this period with little effect on sales.
Tenure Expansion and Compliance with Environmental Laws
Our planned tenure expansions will require that we undergo an environmental screening from Transports Canada pursuant to Canadian Environmental Assessment Act, which includes a review of factors such as the environmental effects of the planned expansions, including the environmental effects of malfunctions or accidents that may occur in connection with the planned expansions and any cumulative environmental effects that are likely to result from such planned expansions; the significance of such environmental effects and any comments from the public that are received in accordance with the CEA Act and applicable regulations; and measures that are technically and economically feasible and that would mitigate any significant adverse environmental effects of the planned expansions.
Our Deep Bay and Hindo Creek tenures have received final CEA Act approval, which lasts for twenty years and which allows us to expand these 2 tenures. We also received approval to convert our Bowser tenure (now called Nile Creek Farm)to off-bottom growing, which should enable us to accommodate approximately 20million scallops. Please see our risk factor, If we are unable to expand our tenures, our projected production may be delayed.
Competition
Fisheries Industry in General
Island Scallops is in the farmed seafood business. The main concentration of marine farming in British Columbia has traditionally been in the salmon sector. The salmon farming business has developed into a mature industry
dominated by Norwegian farmers. The rest of the British Columbia marine farming sector is in the shellfish industry, mainly in oysters and Manila clams and more recently mussels. This sector is rapidly expanding and it accounted for approximately US$16 million in British Columbia in 2002, according to the British Columbia Shellfish Growers Association website. Given Island Scallops’ expertise and significant research and development experience, we believe that there is little or no direct competition in the production of farmed scallops or farmed sablefish.
There are no significant direct competitors in the scallop farming business in British Columbia. The United States will not allow farming this species in their waters, as this species is considered "exotic". Although scallop farming is a very significant industry in Japan and China, only frozen shucked scallops are currently sold into North America from these countries. Recent examination by the United States and Canadian Food Inspection authorities of the growing waters in China resulted in reduced exporting due to high levels of pollution.
Island Scallops is the only hatchery, outside of China, that has successfully produced the Japanese scallop, and the only company that has successfully, hybridized the weathervane and the Japanese scallop. Island Scallops is uniquely positioned as the sole producer of live Pacific Scallops in North America. There currently are no other hatcheries in North America that we are aware of that are capable of producing this unique breed. Although a large commercial scallop fishery exists on the east coast of North America, the majority of the scallops are shucked at sea with only limited quantities sold live. These scallops are sold as "Digby” or “Sea” scallops. A number of companies have attempted to grow the bay scallop and the sea scallop on the east coast, but these companies have only achieved limited success.
The primary British Columbia participants in scallop farming are Island Scallops joint venture farmers or independent scallop farmers, which receive their supply of seed scallops solely from Island Scallops. These farmers are chronically underfinanced and production from these growers usually totals less than 1,000,000 scallops per year. Island Scallops is uniquely positioned to rapidly expand these farms (up to 10 farms) under an exclusive farming and marketing contract.
Due to its large size and small count per pound, the sea scallop is the prime competitor in the United States market. The fishery for this scallop is located primarily on the North American east coast, in particular Georges Bank off New England and the Maritime provinces. This is a limited opportunity fishery, with actual fishing time being dictated by sea and other environmental conditions.
Island Scallops is currently only one of two hatcheries to produce quantities of juvenile sablefish. These fish were sold to five commercial salmon farming facilities and the fish have been marketed successfully. Little demand for a new species has materialized. Although hatcheries have been constructed in British Columbia, neither has successfully produced large quantities of sablefish. The farming of sablefish is still in its infancy and only limited production has occurred.
This limited production is not a matter of biological barriers but rather a lack of interest by the major producers to venture into a new marine species. Alaska sablefish fishermen have expressed interest in farming sablefish and the Sablefish Association of Alaska has voted unanimously to start farming sablefish in southern Alaska. Island Scallops has been in discussion with this association and has been told that due to "anti-aquaculture" policy in Alaska, it is very unlikely that any farming will occur there in the near future.
Washington State contains two parties interested parties in sablefish farming. The first is the Makah Tribe and the second is a private company, which is trying to obtain farming permits in Port Angeles. These parties have made inquiries to Island Scallops for juvenile sablefish. However, to date, no orders have been placed.
Research and Development
Due to changes in Canadian Federal Government’s Research and Development tax credits (SRED) program, which prevents any part of the research to be combined with commercial production, no Research and Development claims were made in fiscal 2007 and 2008. Research did continue on the genetic selection of superior strains of scallops, as did developments in the culture process for both marine algae and developments in re-circulation systems. Island Scallops plans to conduct research and development under a separate company called RKS Laboratories Ltd., which has no commercial production and whose primary goal is the genetic improvement in breeds of the Qualicum Beach Scallops and other marine species. We believe that this will allow the continued support from the SRED program.
Employees
At August 31, 2008, we had 35 full time employees. We anticipate hiring between 10 and 15 temporary workers during the upcoming spring and summer growing seasons.
None of our employees are represented by a labor union and we consider our relationships with our employees to be good.
ITEM 2. DESCRIPTION OF PROPERTY
For the fiscal year ended August 31, 2008, our U.S. corporate office was located at 400 Professional Drive, Suite 310, Gaithersburg, Maryland 20878. This space was provided on a rent free basis by one of our shareholders.
Island Scallops’ main office and hatcheries are located on the east side of Vancouver Island in the town of Qualicum Bay at 5552 West Island Highway, Qualicum Beach, British Columbia, Canada V9K 2C8. The shellfish hatchery is housed in a 930 square meter building. A 300 square meter shellfish processing plant is also located at this site. Corporate scallop farms are situated along the east and west coasts of Vancouver Island. These facilities represent the largest private marine research hatchery and the first fully integrated shellfish producer in Canada.
Island Scallops has a total of five farm sites for scallops. These farm sites are located at Island Scallops held tenures (shellfish tenures are government-granted rights that allow use of offshore waters to cultivate shellfish). Three of those five scallop farms are located in Baynes Sound, 25 minutes north of the main facility. These farms sites total approximately 200 acres and can currently accommodate more than 8 million scallops. Approximately 30% of the farm area is currently being farmed. As part of our expansion plans, we are currently adding additional main lines and plan to increase our capacity at these tenures to more than 24 million scallops in the near future. An additional bottom tenure of 926 acres is located 10 minutes north of the main facility (at Bowser) and is capable of producing at least 30 million scallops annually. The final farm site on the west coast of Vancouver Island near Tofino is capable of producing at least three million scallops, although that site is currently under-developed. Baynes Sound, the marine waterway situated between eastern Vancouver Island and the western shore of Denman Island, is considered the most productive and highly utilized shellfish growing area in coastal British Columbia. The area supports extensive beach culture (manila clams and oysters) as well as deepwater culture that produces oysters, scallops and some mussels.
| Common Site Name | Lands File No. | Acres | Type |
| Denman | 1406063 | 38.64 | Deepwater |
| Hindoo Creek | 1406664 | 123.32 | Deepwater |
| Deep Bay | 1406711 | 43 | Deepwater |
| Tofino | 1406061 | 9.6 | Deepwater |
| Nile Creek | 1407517 | 926 | Deepwater |
The three Baynes Sound tenures (Denman, Hindoo Creek and Deep Bay) and the Tofino tenure offer unique features, which will add additional value to these properties. These include the split of tenures between east and west shores of Baynes Sound as well as the east and west coast of Vancouver Island, allowing continual accessibility to shellfish despite managed closures (harvest restrictions) due to incidental water quality or Paralytic Shellfish Poisoning (PSP or red tide). The seasonal closures caused by short-term bacteriological contamination related to rainfall and upland bacterial sources, are limited to the western shore of the Baynes Sound and thus to only two of the three tenures retained by Island Scallops. The result of having operating tenures on both sides of the Baynes Sound ensures that product can be continually harvested despite closures that may occur within this management area. The expanded tenures should easily accommodate our increasing scallop harvest in 2009 and beyond. At their current size and with the introduction of sufficient main lines, our tenures have the capacity to accommodate approximately 13-15 million scallops without any increase in their footprints.
Expansion of our Deep Bay and Hindo Creek has been approved and such approval does not need to be renewed for twenty years. An amended tenure agreement has been signedinitiated negotiations with the government of
BCZanzibar to
expandprovide the
Denman Island site. required power.POWER GENERATION
In April 2008,October, 2022, the Company entered into a Joint Venture with Holcomb Scientific Research Ltd. (“HSR”) to manufacture and distribute the innovative and patent protected Holcomb Inline Generator for homes, commercial applications, solar projects, electric vehicles, large power scale power plants, and many more applications.
HSR is a Research and Development company that has created the patent-protected Holcomb Energy System, a scientific breakthrough in clean energy generation. The HES utilizes the natural energy produced by the electron spin in the iron atom, converting it into usable electricity while requiring no fuel, releasing zero carbon emissions, and having no moving parts - therefore running completely silent.
CLEAN ENERGY:
Astra Energy in concert with the government of Tanzania is advancing a 350MW Combined Cycle Gas Power Plant project. The government of Tanzania provided a positive response to the expression of interest and they have requested a technical proposal. Astra is applying for Advocacy support for this project from the US Mission in Tanzania.
The Company is currently in negotiations to acquire an existing 350MW Combined Cycle Gas Power Plant (the “Plant”).
Astra is in continuing discussions to secure a gas supply agreement with the Tanzania Petroleum Development Corporation for the natural gas required to fuel the Plant. Once the agreement is executed, we got approvalwill begin the process of relocating the Plant to convertTanzania. As the method of farming atPlant is installed, the Nile Creek tenure from bottom to off-bottom culture in one-thirdCompany will finalize power purchase agreements and distribution agreements.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the tenure area; onceExchange Act and are not required to provide the conversion is complete,information required under this item.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our principal executive offices are located at 9565 Waples Street, Suite 200, San Diego, CA where we lease approximately 100 square feet of office space on a month-to-month basis. We believe our present facilities are adequate for our current needs. We do not own any real property.
Item 3. Legal Proceedings
We are currently not involved in any litigation that we believe we will be able to accommodate approximately 20 million scallops.
The source of our raw material comes from our own hatchery brood stock. In the case of the Qualicum Beach Scallop, we have been selectively breeding this speciesEquity SecuritiesMarket for superior growth and survival for the past 20 plus years. The breeding program has produced a vigorous, rapid growing, disease resistant scallop with exceptional meat yield. In the case of sablefish we have been selecting fast growing fish for the past 5 years, these display a high degree of domestication. The spawning season has been extended for both of these species allowing for juvenile production almost year round. This ability to hold seed stock and select superior strains gives Island Scallops an advantage in the industry. It also allows Island Scallops to tailor its production to varying seasonal and market demands.
ITEM 3. LEGAL PROCEEDINGS
In 1998 our wholly owned subsidiary, Island Scallops, entered into an Agreement with two parties, pursuant to which Island Scallops was to produce and sell geoduck seed to the two parties. Island Scallops received advance payments from each of the two parties in 2002 totaling approximately $64,140. As a result of breaches of the purchase agreements by the purchasers, it is our position that we may retain any unused portion of these advance payments.
As of August 31, 2004, one of the two purchasers had claimed that Island Scallops owed it amounts totaling $88,925. Since it is our position that the purchasers breached their agreements with Island Scallops, we have no intention of seeking a settlement of this matter at this time. We are unaware of any formal proceedings that may have been commenced by either of these two purchasers in regard to any claims that they may have.
Other than as set forth herein, we are not a party to any material legal proceeding and to our knowledge no such proceeding is currently contemplated or pending.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We did not submit any matters to a vote of our security holders during the fiscal year covered by this Report.
PART II
ITEM 5. | MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES |
TheCommon StockOur common stock is currently quotedwas listed for trading on the over–the-counter Bulletin BoardOTCQB on September 30, 2022, under the symbol “EDWT.”
The following table sets forth the quarterly high and low bid prices for the common stock since the quarter ended August 31, 2006. The prices set forth below represent inter-dealer quotations, without retail markup, markdown or commission and may not be reflective"ASRE".Holders of actual transactions.
| | | High | | | Low |
| | | | | | |
| Quarter ended August 31, 2006 | | $ | 1.70 | | | $ | 1.20 |
| Quarter ended November 30, 2006 | | $ | 1.85 | | | $ | 1.01 |
| Quarter ended February 28, 2007 | | $ | 1.70 | | | $ | 1.01 |
| Quarter ended May 31, 2007 | | $ | 1.70 | | | $ | 1.01 |
| Quarter ended August 31, 2007 | | $ | 1.65 | | | $ | 1.05 |
| Quarter ended November 30, 2007 | | $ | 1.45 | | | $ | 0.75 |
| Quarter ended February 28, 2008 | | $ | 1.45 | | | $ | 0.70 |
| Quarter ended May 31, 2008 | | $ | 1.01 | | | $ | 0.70 |
| Quarter ended August 31, 2008 | | $ | 1.00 | | | $ | 0.26 |
At August 31, 2008, the closing bid priceRecord of
the common stock was $.25 andCommon StockAs of December 14, 2022, we had approximately 24,479,150176 stockholders of record holders offor our common stock, 7,773,998 record holders of our Series A Preferred Stock, 207 record holders of our Series B Preferred Stock, 747,870 record holders of our Series C Preferred Stock and 304,558 record holders of our Series D Preferred Stock issued and outstanding. This number excludes any estimate by us of thestock. The foregoing number of beneficial ownersstockholders of shares held in street name, the accuracy of which cannot be guaranteed.
At November 28, 2008, the closing bid price of the common stock was $.06 and we had approximately 54 record holders of our common stock, 13 record holders of our Series A Preferred Stock, 3 record holders of our Series B Preferred Stock, 2 record holders of our Series C Preferred Stock and 13 record holders of our Series D Preferred Stock. This number excludes any estimate by us of thedoes not include an unknown number of beneficial owners of shares heldstockholders who hold their stock in street name, the accuracy of which cannot be guaranteed.
Dividends
"street name".Dividend Policy
We have notnever declared or paid cash dividends on any class ofour common equity since formation and westock. We presently do not anticipate paying anyexpect to declare or pay such dividends on our outstanding common stock in the foreseeable future.
Securities Authorized for Issuance Under Equity Compensation Plans
2005 Equity Incentive Plan
Our 2005 Equity Incentive Plan is intendedfuture and expect to
furtherreinvest all undistributed earnings to expand our
growth and financial success by providing additional incentivesoperations, which the management believes would be of the most benefit to our
directors, executives and selected employees and consultants so that such participants may acquire or increase their proprietary interest in us.stockholders. The
term "Corporation" shall includedeclaration of dividends, if any,
parent corporation or subsidiary corporation of Edgewater as those terms are defined in Section 424(e) and (f) of the Internal Revenue Code of 1986, as amended. Stock options granted under the Plan maywill be
either "Incentive Stock Options", as defined in Code section 422 and any regulations promulgated under that Section, or "Nonstatutory Options" atsubject to the discretion of our Board of Directors,
which may consider such factors as our results of operations, financial condition, capital needs and
as reflectedacquisition strategy, among others.Recent Sales of Unregistered Securities
Unregistered securities sold by the Company during the period covered by this report have been previously reported in the respective written stock option agreements granted pursuant to thisour Registration Statement on Form S-1, on a Quarterly Report on Form 10-Q or Current Report on Form 8-K.
Purchases of Equity Plan. Stock Appreciation Rights, Restricted Stock, Restricted Stock Unit, Performance Awards, Dividend Equivalents, or Other Stock-Based Awards may also be granted under the Securities
None.
Equity Plan. The Board believes that the EquityCompensation Plan will maintain the flexibility that Edgewater needs to keep pace with its competitors and effectively recruit, motivate, and retain the caliber of employees, directors and consultants essential for achievement of our success.
Individuals eligible to receive awards under the Equity Plan include officers, directors, employees of and consultants to Edgewater and its affiliates. The number of shares available under the Equity Plan shall be 5,000,000 shares of our common stock, as well as the following: As of January 1 of each year, commencing with the year 2006 and ending with the year 2008, the aggregate number of Shares available for granting Awards under the Equity Plan shall automatically increase by a number of Shares equal to the lesser of (x) 5% of the total number of Shares then outstanding or (y) 1,000,000. The Board may distribute those shares in whatever form of award they so choose within the Equity Plan’s guidelines. There are no restrictions on the amount of any one type of award that may be granted under the Equity Plan.
InformationAs of August 31, 2008, our Board of Directors had granted 2,992,000 options to employees, directors and consultants under the Equity Plan. As of August 31, 2008, 400,000 of these options had been canceled and 2,592,000 were outstanding. As of August 31, 2008, there are 7 Directors, 1 executive officers, 1 consultant and approximately 26 employees other than executive officers, who are eligible to receive awards under the Equity Plan.
The Board may delegate a Committee to administer the Equity Plan. The Committee shall not consist of fewer than two members, each of whom is a member of the Board and all of whom are disinterested persons, as contemplated by Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended and each of whom is an outside director for purposes of Section 162(m) of the Code, acting in accordance with the provisions of Section 3.
Amending the Plan. The Board may amend, alter, suspend, discontinue, or terminate the Equity Plan, including, without limitation, any amendment, alteration, suspension, discontinuation, or termination that would impair the rights of any Participant, or any other holder or beneficiary of any Award theretofore granted, without the consent of any share owner, Participant, other holder or beneficiary of an Award, or other Person. The Board may also waive any
conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue, or terminate, any Awards theretofore granted, prospectively or retroactively, without the consent of any Participant, other holder or beneficiary of an Award. Except as provided in the following sentence, the Board is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Board determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits to be made available under the Equity Plan. In the case of any Award that is intended to qualify as performance-based compensation for purposes of Section 162(m) of the Code, the Board will not have authority to adjust the Award in any manner that would cause the Award to fail to meet the requirements of Section 162(m).
Options and Rights. Options and Stock Appreciation Rights may be granted under the Equity Plan. The exercise price of options granted shall be determined by the Board or the Committee; provided, however, that such exercise price per Share under any Incentive Stock Option shall not be less than 100% (110% in the case of a "10-percent shareholder as such term is used in Section 422(c)(5) of the Code) of the Fair Market Value of a Share on the date of grant of such Incentive Stock Option. The Board or Committee shall fix the term of each Option, provided that no Incentive Stock Option shall have a term greater than 10 years (5 years in the case of a "10-percent shareholder” as such term is used in Section 422(c)(5) of the Code).
A Stock Appreciation Right granted under the Equity Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of (1) the Fair Market Value of one Share on the date of exercise or, if the Board or Committee shall so determine in the case of any such right other than one related to any Incentive Stock Option, at any time during a specified period before or after the date of exercise over (2) the grant price of the right as specified by the Board or Committee. Subject to the terms of the Plan, the grant price, term, methods of exercise, methods of settlement, and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Board or the Committee. The Board and the Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate.
Federal Income Tax Consequences. The current federal income tax consequences of grants under the Equity Plan are generally described below. This description of tax consequences is not a complete description, and is based on the Internal Revenue Code as presently in effect, which is subject to change, and is not intended to be a complete description of the federal income tax aspects of options and stock awards under the Equity Plan. Accordingly, the discussion does not deal with all federal income tax consequences that may be relevant to a particular recipient, or any foreign, state or local tax considerations. Accordingly, potential recipients are urged to consult their own tax advisors as to the specific federal, foreign, state and local tax consequences to them as a result of receiving an Award under the Equity Plan.
Nonqualified Stock Options. A recipient will not be subject to federal income tax upon the grant of a nonqualified stock option. Upon the exercise of a nonqualified stock option, the recipient will recognize ordinary compensation
income in an amount equal to the excess, if any, of the then fair market value of the shares acquired over the exercise price. We will generally be able to take a deduction with respect to this compensation income for federal income tax purposes. The recipient’s tax basis in the shares acquired will equal the exercise price plus the amount taxable as compensation to the recipient. Upon a sale of the shares acquired upon exercise, any gain or loss is generally long-term or short-term capital gain or loss, depending on how long the shares are held. The required holding period for long-term capital gain is presently more than one year. The recipient’s holding period for shares acquired upon exercise will begin on the date of exercise.
Incentive Stock Options. A recipient who receives incentive stock options generally incurs no federal income tax liability at the time of grant or upon exercise of the options. However, the spread will be an item of tax preference, which may give rise to alternative minimum tax liability at the time of exercise. If the recipient/optionee does not dispose of the shares before the date that is two years from the date of grant and one year from the date of exercise, the difference between the exercise price and the amount realized upon disposition of the shares will constitute long-term capital gain or loss, as the case may be. Assuming both holding periods are satisfied, no deduction will be allowable to us for federal income tax purposes in connection with the option. If, within two years of the date of grant or within one year from the date of exercise, the holder of shares acquired upon exercise of an incentive stock option disposes of the shares, the recipient/optionee will generally realize ordinary compensation income at the time of the disposition equal to the difference between the exercise price and the lesser of the fair market value of the stock on the date of exercise or the amount realized on the disposition. The amount realized upon such a disposition will generally be deductible by us for federal income tax purposes.
Stock Awards. If a recipient receives an unrestricted stock award, he/she will recognize compensation income upon the grant of the stock award. If a recipient receives a restricted stock award, he/she normally will not recognize taxable income upon receipt of the stock award until the stock is transferable by the recipient or no longer subject to a substantial risk of forfeiture, whichever occurs earlier. When the stock is either transferable or no longer subject to a substantial risk of forfeiture, the recipient will recognize compensation income in an amount equal to the fair market value of the shares (less any amount paid for such shares) at that time. A recipient may, however, elect to recognize ordinary compensation income in the year the stock award is granted in an amount equal to the fair market value of the shares (less any amount paid for the shares) at that time, determined without regard to the restrictions. We will generally be entitled to a corresponding deduction at the same time, and in the same amount, as the recipient recognizes compensation income with respect to a stock award. Any gain or loss recognized by the recipient upon subsequent disposition of the shares will be capital gain or loss.
Tax Deductibility under Section 162(m). Section 162(m) of the Internal Revenue Code disallows a public company’s deductions for employee compensation exceeding $1,000,000 per year for the chief executive officer and the four other most highly compensated executive officers. Section 162(m) contains an exception for performance-based compensation that meets specific requirements. The Equity Plan is intended to permit all options to qualify as performance-based compensation at the Board of Directors or Committee’s discretion. If an Award is to qualify as such, it shall clearly state so in the award agreement.
Withholding. We have the right to deduct any taxes required to be withheld with respect to grants under the Equity Plan. We may require that the participant pay to us the amount of any required withholding. The Compensation Committee may permit the participant to elect to have withheld from the shares issuable to him or her with respect to an option or restricted stock the number of shares with a value equal to the required tax withholding amount.
The following table provides information as of August 31, 2008 with respect to compensation plans (including individual compensation arrangements) under which our securities are authorized for issuance:
| | | | |
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
| Equity Compensation plans approved by security holders | 2,592,000 | $1.23 | 5,408,000* |
| Equity compensation plans not approved by security holders | N/A | N/A | N/A |
| Total | 2,592,000 | $1.23 | 5,408,000 |
*As of January 1 of each year, commencing with the year 2006 and ending with the year 2008, the aggregate number of shares available for granting Awards under the Equity Plan shall automatically increase by a number of Shares equal to the lesser of (x) 5% of the total number of Shares then outstanding or (y) 1,000,000.
Recent Sales of Unregistered Securities
On January 31, 2006, we issued 400,000 shares of our restricted common stock to World Wide Mortgage as consideration for agreeing to extend the due date for us to repay our CDN $1,500,000 loan pursuant to the bridge loan agreement dated November 9, 2004 and amended on April 15, 2005 between us and World Wide. The shares have piggy-back registration rights that require us to register the shares in our next registration statement. The shares were valued at $1.30 per share, the closing bid price for shares of our common stock on the date we issued the shares. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering.
Pursuant to the financings we closed on April 12, May 30, June 30 and July 11, 2006, we issued an aggregate of 30,905,619 shares of our preferred stock. The shares were issued to 9 accredited investors pursuant to the exemption from registration provided by Section 4(2) of the Securities Act for issuances not involving any public offering.
On June 30, 2006, we issued 22,860 shares of common stock to the two accredited investors of our April 12 and May 30, 2006 financings as payment of the semi-annual dividend (8% per annum) per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series A Convertible Preferred Stock. The dividend shares were issued to these investors pursuant to the exemption from registration provided by Section 4(2) of the Securities Act for issuances not involving any public offering.
On December 31, 2006, we issued 138,565 shares of common stock to the investors of our April 12, May 30, 2006, June 30, 2006 and July 11, 2006 financings as payment of the semi-annual dividend (8% per annum) per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series A Convertible Preferred Stock. The dividend shares were issued to these investors pursuant to the exemption from registration provided by Section 4(2) of the Securities Act for issuances not involving any public offering.
Pursuant to the financing we closed on January 16, 2007, we issued 207 shares of our Series B Preferred Stock. The shares were issued to two accredited investors pursuant to the exemption from registration provided by Section 4(2) of the Securities Act for issuances not involving any public offering. |
In connection with the January 16, 2007 financing, we issued the placement consultant a placement consultant warrant, exercisable for a period of three years from the date of issue with an exercise price of $1.15 per share. The warrant allows the placement consultant to purchase up to (i) 20 shares of Series B Preferred Stock, and each of the following warrants, which are identical to the warrants issued to the investors of the financing: (i) Series A Warrant, (ii) Series B Warrant, (iii) Series C Warrant, (iv) Series D Warrant, (v) Series J Warrant, (vi) Series E Warrant, and (vii) Series F Warrant, each to purchase 90,004 shares of common stock, except for the Series J Warrants, which shall entitle the consultant to purchase 180,008 shares of common stock. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering.
On February 1, 2007 we issued Kitsilano Capital Corp. four 100,000 options to purchase our common stock, pursuant to our Consulting Agreement with them. The first option vests on May 1, 2007, the second on August 1, 2007, the third on February 1, 2008 and the fourth on June 1, 2008, so long as Kitsilano continues to provide services to us under the Consulting Agreement. Each option is exercisable for a period of three years from the vesting date and has an exercise price of $1.20, $1.40, $1.60 and $1.80 respectively. The shares underlying the options have piggy-back registration rights that required us to register the shares in our last registration statement. The options and the shares underlying were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering.
On April 12, 2007, we issued 88,000 shares of common stock to an investor of our April 12th financing in connection with the exercise of 88,000 Series J warrants received by such investor as part of the financing. We received net proceeds of approximately $45,600 pursuant to the exercise of these warrants. The shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act for issuances not involving any public offering.
On April 12, 2007 we issued 1,266,667 shares of common stock to an investor of our April 12th financing in connection with such investor’s exercise of 1,266,667 Series J warrants he received as part of the April 12th financing. We received net proceeds of approximately $655,500 pursuant to the exercise of these warrants. The shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act for issuances not involving any public offering.
On April 12, 2007, we issued 188,800 shares of our Series A Preferred Stock and the following warrants: (i) Series A Warrant, (ii) Series B Warrant, (iii) Series C Warrant, (iv) Series D Warrant, (v) Series J Warrant, (vi) Series E Warrant, (vii) Series F Warrant, (viii) Series G Warrant, and (ix) Series H Warrant, each to purchase a number of shares of Common Stock equal to 50% of the number of shares of Series A Preferred Stock purchased, except for the Series J Warrants, which entitled the investor to purchase a number of shares of our common stock equal to 100% of the number of shares of Series A Preferred Stock purchased. We issued a total of 944,000 Warrants. Each of the Warrants has a term of 5 years, except for the Series J Warrants, which have a term of 1 year. Each share of the Series A Preferred Stock is convertible into one fully paid and nonassessable share of our common stock. These shares and warrants were issued pursuant to the exercise of 188,800 placement consultant warrants received as a result of our April 12, 2006 financing. We received net proceeds of approximately $106,000 pursuant to the exercise of these warrants. The shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act for issuances not involving any public offering.
On April 12, 2007, we issued 188,800 shares of common stock to the placement consultant of our April 12, 2006 financing in connection with the exercise of 188,800 Series J warrants, which the placement consultant received from his exercise of his placement consultant warrant, as described above. We received net proceeds of approximately $106,000 pursuant to the exercise of these warrants. The shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act for issuances not involving any public offering.
On May 8, 2007 we issued 30,000 shares of our common stock pursuant to a shareholders conversion of 30,000 shares of our Series A Preferred Stock that he owned. We did not receive any proceeds from this conversion. The shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act for issuances not involving any public offering.
On May 10, 2007 we issued 500,000 shares of our common stock pursuant to a shareholders conversion of 500,000 shares of our Series A Preferred Stock that he owned. We did not receive any proceeds from this conversion. The
shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act for issuances not involving any public offering. On August 31, 2007, this shareholder rescinded the conversion of 430,000 of the 500,000 shares. As a result, we issued this shareholder 430,000 shares of our Series A Preferred Stock and cancelled the 430,000 shares of common stock issued on the conversion to treasury. The preferred shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act for issuances not involving any public offering.
On May 12, 2007 we issued 70,800 shares of our common stock pursuant to a shareholders conversion of 70,800 shares of our Series A Preferred Stock that he owned. We did not receive any proceeds from this conversion. The shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act for issuances not involving any public offering.
On June 14, 2007, our board approved issuing a total of 100,000 shares of our common stock to Pacific Crab Seafood Company, Inc. for the consulting and marketing services that they will provide to us. We issued 40,000 shares upon execution of our agreement with Pacific Crab and the remaining 60,000 will be issued in twelve (12) equal installments during the term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering.
On June 30, 2007, we issued 171,274 shares of common stock to the investors of our 2006 and 2007 financings as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series A Convertible Preferred Stock and Certificate of Designation of the Relative Rights and Preferences of the Series B Convertible Preferred Stock. The dividend shares were issued to these investors pursuant to the exemption from registration provided by Section 4(2) of the Securities Act for issuances not involving any public offering.
On August 20, 2007, a holder of our series A preferred stock exercised their right to convert 65,335 shares of our series A preferred stock into 65,335 shares of common stock. As such, we issued 65,335 shares of common stock and canceled 65,335 shares of our series A. The shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act for issuances not involving any public offering.
On October 31, 2007, we issued 25,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 35,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 25,000 shares issued were valued at $1.28 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $32,000. Going forward the cost of these shares will be expense at current market price as they are issued.
On November 30, 2007 we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 30,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $1.25 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $6,250. Going forward the cost of these shares will be expense at current market price as they are issued.
On December 31, 2007, we issued 172,750 shares of common stock to the investors of our April 12, May 30, June 30 and July 11, 2006 financings as payment of the semi-annual dividend (8% per annum) per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series A Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 8% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000 for the April 12 financing, $1,500,000 for the May 30 financing, $1,550,000 for the June 30 financing and $1,450,000 for the July 11 financing) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $233,500 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On December 31, 2007, we issued 45,999 shares of common stock to the investors of our January 16, 2007 financing as payment of the semi-annual dividend (6% per annum) per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series B Convertible Preferred Stock (The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $63,000 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On December 31, 2007, we issued 17,883 shares of common stock to the investors of our November 5, 2007 financing as payment of the semi-annual dividend (6% per annum) per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series C Convertible Preferred Stock The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount (approximately $897,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $24,000 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On January 1, 2008 we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing
services that they will provide to us. The remaining 25,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $1.35 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $6,750. Going forward the cost of these shares will be expense at current market price as they are issued.
On February 1, 2008 we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 20,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $0.98 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $4,900. Going forward the cost of these shares will be expense at current market price as they are issued.
On March 4, 2008 we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 15,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $0.95 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $4,750. Going forward the cost of these shares will be expense at current market price as they are issued.
On April 1, 2008, we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 10,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $0.95 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $4,750. Going forward the cost of these shares will be expense at current market price as they are issued.
On April 1, 2008, we issued 25,000 shares of common stock to Consulting for Strategic Growth, Inc. as part of the 25,000 shares of our common stock that our Board of Directors previously approved for the consulting and investor relations services that they will provide to us. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances
not involving any public offering. The 25,000 shares issued were valued at $0.95 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $23,750. Going forward the cost of these shares will be expense at current market price as they are issued.
On May 19, 2008, we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 5,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $0.80 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $4,000. Going forward the cost of these shares will be expense at current market price as they are issued.
On June 20, 2008, we issued the final 5,000 share installment of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $0.80 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $4,000. Going forward the cost of these shares will be expense at current market price as they are issued.
On June 30, 2008, we issued 325,725 shares of common stock to the investors of our April 12, May 30, June 30 and July 11, 2006 financings as payment of the semi-annual dividend (8% per annum) per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series A Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 8% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000 for the April 12 financing, $1,500,000 for the May 30 financing, $1,550,000 for the June 30 financing and $1,450,000 for the July 11 financing) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $233,500 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On June 30, 2008, we issued 86,691 shares of common stock to the investors of our January 16, 2007 financing as payment of the semi-annual dividend (6% per annum) per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series B Convertible Preferred Stock The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $62,500 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On June 30, 2008, we issued 33,704 shares of common stock to the investors of our November 5, 2007 financing as payment of the semi-annual dividend (6% per annum) per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series C Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount (approximately $897,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $24,000 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
ITEM 6. | MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION |
OperationsThe following discussion and analysis should be read in conjunction with our financial statements, andincluding the notes thereto, which appearappearing elsewhere in this report. Annual Report.
The results shown hereinfollowing information contains certain forward-looking statements of our management. Forward-looking statements are statements that estimate the happening of future events and are not necessarily indicativebased on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as “may,” “could,” “expect,” “estimate,” “anticipate,” “plan,” “predict,” “probable,” “possible,” “should,” “continue,” or similar terms, variations of those terms or the resultsnegative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be expectedreasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.
Critical Accounting Policies
Refer to Note 2 of our financial statements contained elsewhere in any future periods. This discussion contains forward-looking statements based on current expectations, which involve uncertainties. Actual resultsthis Form 10-K for a summary of our critical accounting policies and recently adopting and issued accounting standards.
Results of Operations
Fiscal Year Ended August 31, 2022, Compared to Fiscal Year Ended August 31, 2021
Revenue increased to $25,000 from $0 for the timing of events could differ materiallyyears ended August 31, 2022 and 2021.
General and administrative expenses increased to $179,132 from $91,149 for the forward-looking statementsyears ended August 31, 2022, and 2021, respectively. General and administrative expenses increased primarily in audit and legal expenses, regulatory filing costs, transfer agent fees and general business development costs.
Business development expenses increased to $712,683 from $160,012 for the years ended August 31, 2022, and 2021, respectively. Business development expenses increased primarily in legal costs, travel, engineering studies and consulting fees.
Executive compensation expenses increased to $1,034,450 from $515,579 for the years ended August 31, 2022, and 2021, respectively. Executive compensation expenses increased primarily as a result of a number of factors. Readers should also carefully review factors set forth in other reports or documents that we filestock compensation for executives for services rendered.
Stock compensation-consulting expenses increased to $595,500 from time to time with$169,250 for the Securitiesyears ended August 31, 2022, and Exchange Commission.
Overview
During our 2008 fiscal year, we continued the harvesting, processing and sale of our 2004 and 2005 year classes of scallops, continued sorting our 2006 scallop class and transferring our 2007 year-class scallops (which were still maturing in our tenured growing sites and on-shore ponds) to larger grow-out nets on our farm sites. We also completed the spawning, grow-out in our on-shore nursery ponds and started transferring our 2008 scallop year class to our farm sites. We refer to the year-class of scallops based on when the scallops were spawned. Generally, the harvest occurs approximately 22 to 24 months after spawning of the scallops.
During our 2008 fiscal year, we also continued the new sales and marketing efforts that began in the later part of our 2007 fiscal year. Traditionally, we have sold live scallops within the Pacific Northwest market, but the seafood sale and distribution consultants that we hired in late 2007 began to introduce new product lines of fresh meat and a new unique frozen on the half-shell product that started to generate significant interest. Despite the initial success of these efforts, we recently completed a large purchase order with Fanny Bay Oyster Co., a division of Taylor Shellfish Farms of Shelton, Washington (an international seafood distributor and the largest shellfish company on the West Coast). The order includes live scallops, fresh scallop meat and frozen scallops that will be packaged and delivered in various scallop products (including live in-the-shell, frozen half-shell and fresh meat). As a result of this order, Fanny Bay will effectively become the exclusive distributor of our scallops outside the European market. We believe this order will reduce cost and encourage additional wholesalers within the Taylor network to carry our scallops, which we believe will bring greater value to our shareholders than a continued relationship with the sale and distribution consultants discussed above. In addition to the Taylor sales agreement, we recently finalized an order to provide frozen scallop meat with roe to the European market. We believe that this strategic relationship will enable us to capitalize on the large European demand for quality seafood products.
Management believes that these new sales agreements, coupled with the improved processing plant will yield increased revenues in our 2009 fiscal year and thereafter. Management believes that the combination of the Fanny Bay (Taylor) sales and marketing network and the Island Scallop processing plant and product will result in both improved sales and margins. In addition, recent experience gained from harvesting and sorting scallops on the new longline systems should allow for greater future harvesting rates. Also,2021, respectively, primarily as a result of the operational review that we completed in the springissuance of 2008, we indentified several areas where we can streamline operations while continuing to grow our revenues.
Additionally, we plan on generating additional near term revenues via the sale of scallopstock for services rendered by advisors, consultants and other shellfish seed (including clamsnon-related parties.Liquidity and oysters). Capital Resources
We are also moving forward with our discussions with various First Nations2 groups about possible partnerships or joint ventures on potential farm sites on First Nation owned lands. Management anticipates formalizing our first joint venture with a first nations group as early as the starthave an accumulated deficit at August 31, 2022 of the 2009 calendar year. This will provide us with additional growing areas for scallops and future joint venture revenues.
Despite the increased revenues in 2008, we were not able to achieve positive operational cash flows during the fiscal year. Although Management expects to achieve positive cash flows in 2009, we have started to investigate acquisitions of other aquaculture companies, equipment vendors and/or seafood distributors.$32,523,735. We plan to initially focus on companies that we believe could significantly benefit from our hatchery technology and expertise. Management believes that the combination of our existing hatchery technology and knowledge, coupled with a company’s existing revenues and sales and marketing channels could result in significantly improved cash flows. As part of this initiative, we recently established an Acquisition/Business Opportunity Board Committee and are currently beginning initial conversations with both North American and Chinese based companies. As of the date of this filing, no definitive agreements have been signed.
In May 2008, we started the expansion of our Nile Creek farm (or scallop growing area). We installed 25 new “triple” lines that will have the capacity to handle up to 135,000 scallops per line. In the coming months, as funds are available, we will add an additional 58 lines and continue to outfit these new 300 meter lines with the necessary floats and netting required for scallop farming.
__________________________
2First Nations commly refers to the indigenous peoples in what is now Canada. There are currently over 600 recognized First Nations governments or bands in Canada, roughly half of which are in the provinces on Ontario and British Columbia.
During the continued harvesting of our 2005 class, sorting of our 2006 scallops classes and transfer of our 2007 scallop classes, we were able to review our mortality rates and update our class size projections. Based on this review and recent sales, we expect to bring the remaining 1.9 million ofincur substantial expenses and generate continued operating losses until we generate revenues sufficient to meet our 2005 and 2006 year class scallops to market in the beginning of 2009. Originally, we believed that our 2006 spawning would yield between 5 and 10 million scallops at full maturity/harvest. However, mortality rates were at the higher end of our projections due to the handling and sorting learning curve associated with the roll-out of our new longline and anchor system. Additionally, problems associated with the timing of moving scallops to large nets (also known as “ocean timing”) and the density (i.e. number of scallops per net level) contributed to additional mortality problems. We anticipate that survival rates for the future classes, starting with the 2007 scallop class, will improve due to the addition of more lines and anchors, better spacing and sorting within each lantern net, experience gained from the sorting and farming of both the 2005 and 2006 year classes and lessons learned on ocean timing and scallop density during the handling of our 2006 scallop class. We noticed gains in animal survival rates and individual scallop size in the 2007 class as compared to the 2006 class at a similar point in its development. As of our most recent review of our scallop inventory, we currently believe that our 2007 year class should yield up to 7 million scallops at full maturity/harvest. Although this is lower than initial estimates, it will still represent our largest year class to date.
We are currently transferring the initial portion of our 2008 scallops class from our hatchery ponds and into the ocean farms. We originally expected to produce up to 24 million full-size scallops in this year class, but due to survival problems associated with our hatchery spawns and funding limitations, we now expect to produce as few as 3 million full-size scallops. Based on our initial review of the hatchery spawn, we believe the mortality problem were the result of large blooms of toxic marine algae at the critical stage prior to metamorphosis of approximately 600 million scallop larvae. These blooms corresponded to high levels of Paralytic Shellfish Poisoning in our ocean farms and although it did not harm any of our juvenile or mature scallops, it is believed that pre-metamorphic larvae are particularly susceptible. Procedures are now in place to prevent the introduction of toxic algae into the hatchery system in the coming years.
As a result of a recent review of our business plan and sales and marketing efforts to date, we currently plan to harvest and sell approximately 7 million full-size 2007 scallops over the 12 months ending December 2009. In addition, we estimate that our 2008 year class will produce at least 3 million full-size scallops. The size of our 2009 and 2010 year classes will (in some ways) be determined by our ability to generate positive cash flows and/or our ability to locate additional financing. As a result of our lower than expected sales and yields, we are still evaluating the cash available for farming and infrastructure costs related to expanding our future yields. These classes will be harvested and sold in subsequent 12 month periods following the sales our 2007 year class. Based on our current review of sales and marketing conditions, we believe our scallops will yield at least $1 of revenue per scallop. The yield per scallop could increase significantly if we are able to sell a greater percentage of live scallops. We also plan on generating additional annual revenues via the sale of scallop and other shellfish seed in the upcoming years. We anticipate formalizing a business venture with a first nations group as early as the second quarter of 2009 and believe that such a partnership will begin producing significant new revenue as early as our 2009 fiscal year.
If our mortality rates are better than our current projections, our yield and revenues from the 2005, 2006 and 2007 scallop class could be higher; conversely, if our mortality rates are worse than we anticipate our revenues for this period could be lower than we anticipate. In addition, changes in the anticipated growth rates, projected harvesting cycles and large fluctuations in the price of scallops or the US-Canadian exchange rate could impact our current projections. Furthermore, if we cannot achieve our estimated product mixture (live/fresh/frozen) than our average sales price per scallop will be lower. Alternatively, if we are able to sell a large percentage of high yield products (live or frozen on the half shells) than our average price per scallop will be higher.
In fiscal year 2008, our cost of goods continued to improve relative to our selling price, however, were still operating at a negative margin. . Part of this problem was associated with operational inefficiencies that were identified during our recently completed top-down operation review. As a result, we expect are cost of goods sold to continue to improve for our 2006 and 2007 year classes and in the coming years we expect to see continued improvements in cost of goods.
We recently completed a private placement that resulted in net proceeds of $1.46 million. Based on our current estimates of near-term sales and capital costs of expanding our farms to increase future crop yields, we will require additional financings to continue our current rate of expansion. As we have yet to raise additional capital and our sales have increased at a slower than expected pace, we have already scaled back some of our expansion plans and may have to further scale back the plans outlined herein. We originally anticipated that we would need approximately $1.0 million over the next 14 months in order to continue our originally planned expansion activities, however, we now plan to align our future expansions with our ability to generate positive cash flows from our current scallop crops and/or our ability to locate additional financing.
Liquidity and Cash Resources |
obligations. At August 31,
2008, we2022, the Company had
a cash
balance of
approximately $712,000. Prior$198,899. We will need to rely on private capital investment or loans to fund future operations for the next 12 months.Cash Flows
The following table summarizes, for the periods indicated, selected items in our Statements of Cash Flows:
| | Years Ended August 31, | |
| | 2022 | | | 2021 | |
Net cash (used in) provided by: | | | | | | |
Operating activities | | $ | (1,073,866 | ) | | $ | (461,235 | ) |
Financing activities | | $ | 1,178,000 | | | $ | 556,000 | |
Operating Activities
Cash used in operating activities was $1,073,866 and $461,235 for the years ended August 31, 2022, and 2021, respectively. The increase in cash used for operating activities was primarily for general operating costs, executive compensation, consulting fees and business development costs.
Financing Activities
Cash provided by financing activities was $1,178,000 and $556,000 for the years ended August 31, 2022, and 2021, respectively. The increase in cash provided by financing activities was due to an increase in the issuances of common stock for cash.
Critical Accounting Estimates
The prepaid asset of $27,026,000 relates to the potential acquisition of Regreen Technologies, Inc. The valuation of this asset is subject to the completion of our initial Preferred Stock Financing, our initial expansion had been largely fundedmilestones in the underlying agreement and all parties meeting requirements. The amount may be impacted by a short term note with a maximum limit of approximately $1,451,000. During the year ending August 31, 2007, we completed one private equity financing and had investors exercise various warrants that resulted in net proceeds of approximately $3,075,000. During the year ending August 31, 2006, we relied on four private equity financings that resulted in net proceeds of approximately $5,140,000. These 2006 and 2007 financings formerly contained warrants, which if fully exercised, could have raised approximately an additional $49,350,000. To date, the exercise of these warrants resulted in net proceeds of roughly $1,200,000; however, our recently completed financing also resulted in a warrant exchange that eliminated mostcancellation of the remaining warrants from the 2006 and 2007 financings. We have suffered operating losses since inceptionacquisition and/or inability for parties to meet milestones in our efforts to establish and execute our business strategy. After the completion of the recent Series D preferred financing, management believed that we had adequate funds to maintain our business operations into our 2009 fiscal year and/or until we become cash flow positive, but we continued to suffer operational losses in our 2008 fiscal year. Until our operations are able to demonstrate and maintain positive cash flows, we may require additional working capital to fund our ongoing operations and execute our business strategy of expanding our operations. In fact, based on our current estimates of future sales and capital costs of expanding our farms in order to increase future crop yields, we will require additional financings to continue expand our operations. Based on these factors, there is substantial doubt about our ability to continue as a going concern.
(b)Significant Accounting Policies
(i)Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the acquired entities since their respective dates of acquisition. All significant inter-company amounts have been eliminated.
Cash and equivalents
Cash and equivalents include cash, bank indebtedness, and highly liquid short term market investments with terms to maturity of three months or less. We consider all highly liquid investments with original maturities of 90 days or less to be cash equivalents. We maintain our cash balances primarily in on financial institution, which exceeded federally insured limits by $1,561,136 at August 31, 2008. We have not experienced any losses, in such accounts and we believe that we are not exposed to any significant credit risk on cash and cash equivalents.
Accounts receivable
Accounts receivable is presented net of allowance for doubtful accounts. The allowance for doubtful accounts reflects estimates of probable losses in accounts receivable. The allowance is determined based on balances outstanding for over 90 days at the period end date, historical experience and other current information.
Loans receivable
Loans receivable is presented net of an allowance for loan losses, as necessary. The loans are written off when collectibility becomes uncertain.
Inventory
We maintain inventories of raw materials for our aquaculture products, of biomass (inventory of live aquaculture product being actively cultivated), and of finished goods (aquaculture product ready for sale).
Inventories are reported at the lesser of cost or estimated net realizable value. Biomass and finished goods includes direct and reasonably attributable indirect production costs related to hatchery, cultivation, harvesting, and processing activities. Carrying costs per unit are determined on a weighted average basis.
Long term investments
Long term investments are recorded at cost. We review our investments periodically to assess whether there is an “other than temporary” decline in the carrying value of the investment. We consider whether there is an absence of an ability to recover the carrying value of the investment by reference to projected undiscounted future cash flows for the investment. If the projected undiscounted future cash flow is less than the carrying amount of the asset, the asset is deemed impaired. The amount of the impairment is measured as the difference between the carrying value and the fair value of the asset.
Property, plant, and equipment
Property and equipment are carried at cost, less accumulated depreciation. Depreciation is calculated by using the straight-line method for financial reporting and accelerated methods for income tax purposes. The recovery classifications for these assets are listed as follows:
| Years |
Headend Facility and Fiber Infrastructure | 20 |
Manufacturing Equipment | 3–7 |
Furniture and Fixtures | 2–7 |
Office Equipment | 5 |
Leasehold Improvements | Life of lease |
Property and Equipment | 5 |
Vehicles | 5 |
Expenditures for maintenance and repairs are charged against income as incurred whereas major improvements are capitalized.
Impairment of long-lived assets
We monitor the recoverability of long-lived assets, including property and equipment and intangible assets, based upon estimates using factors such as expected future asset utilization, business climate, and undiscounted cash flows resulting from the use of the related assets or to be realized on sale. Our policy is to write down assetsperiods. There was no impact to the estimated net recoverable amount in the period in which it is determined likely that the carrying amount of the asset will not be recoverable.
Government assistance
Government assistance we receive, such as grants, subsidies, and tax credits, is recorded as a recovery of the appropriate related expenditure in the period that the assistance is received.
We have received government assistance in the form of loans, for which repayment may not be required if we fail to meet sufficient future revenue levels to repay these loans based on a percentage of gross sales for certain products over a defined period of time. If we receive any such assistance, it is initially recorded as a liability, until such time as all conditions for forgiveness are met, and is then recognized as other income in that period.
Farm license costs
We must pay annual license costs in respect to government-granted tenures that we hold, which give us the right to use certain offshore ocean waters for the purpose of aquaculture farming. Such license costs are recognized as an expense when incurred.
Research and development costs
Development costs include costs of materials, wages, and reasonably attributable indirect costs incurred by us which are directly attributable to the development of hatchery techniques for sablefish and shellfish, these costs are expensed when incurred.
Research costs are expensed when incurred.
Income taxes
We calculate our provision for income taxes in accordance with Statement of Financial Accounting Standards No. 109 (Accounting for Income Taxes) (“SPAS 109”), which requires an asset and liability approach to financial accounting for income taxes. This approach recognizes the amount of taxes payable or refundable for the current year, as well as deferred tax assets and liabilities attributable to the future tax consequences of events recognized in the financial statements and tax returns. Deferred income taxes are adjusted to reflect the effects of enacted changes in tax laws or tax rates. Deferred income tax assets are recorded in the financial statements if realization is considered more likely than not.
Revenue recognition
We recognize revenue when it is realized or realizable, and earned. We consider revenue realized or realizable and earned when there is persuasive evidence of a contract, the product has been delivered or the services have been provided to the customer, the sales price is fixed or determinable, and collectibility is reasonably assured.
Our revenue is derived principally from the sale of scallops we produce or purchase from third parties, and from the sale of seed and farm supplies to other aquaculture farms.
Cost of goods
Cost of goods sold consists primarily of farming, harvesting and processing costs associated with the growth, transfer and sales preparation of our products (principally scallops). These costs consist primarily of salaries and benefits and allocated overhead costs for consulting and support personnel engaged in the farming, harvesting and processing of our products. All costs are recognized at time of delivery.
Financial instruments
The carrying amount of our financial instruments, which includes cash, accounts receivable, loans receivable, bank indebtedness, accounts payable and accrued liabilities, short term debt and long term debt approximate fair value. It is management’s opinion that we are not exposed to significant interest, currency or credit risk arising from these financial instruments unless otherwise noted.
Derivative financial instruments
In connection with the sale of debt or equity instruments, we may sell options or warrants to purchase our common stock. In certain circumstances, these options or warrants may be classified as derivative liabilities, rather than as equity. Additionally, the debt or equity instruments may contain embedded derivative instruments, such as embedded derivative features, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.
We account for all derivatives financial instruments in accordance with SFAS No. 133. Derivative financial instruments are recorded as liabilities in the consolidated balance sheet, measured at fair value. When available, quoted market prices are used in determining fair value. However, if quoted market prices are not available, we estimate fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques.
The identification of, and accounting for, derivative instruments is complex. Our derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income, in the period in which the changes occur. For options, warrants and bifurcated embedded derivative features that are accounted for as derivative instrument liabilities, we estimate fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. The valuation techniques require assumptions related to the remaining term of the instruments and risk-free rates of return, our current common stock price and expected dividend yield, and the expected volatility of our common stock price over the life of the option. The identification of, and accounting for, derivative instruments and the assumptions used to value them can significantly affect our financial statements.
Derivative financial instruments that are not designated as hedges or that do not meet the criteria for hedge accounting under SFAS No. 133 are recorded at fair value, with gains or losses reported currently in earnings. All derivative financial instruments held by us at August 31, 2008 were not designated as hedges.
Foreign exchange
The functional currency of our foreign subsidiaries is the local foreign currency. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate prevailing on the balance sheet date. Revenues, costs and expenses are translated at average rates of exchange prevailing during the period. Translation adjustments resulting from translation of the subsidiaries' accounts are accumulated as a separate component of shareholders' equity. Gains and losses resulting from foreign currency transactions are included in the consolidated statements of operations and have not been significant.
Use of estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities. Such estimates include providing for amortization of property, plant, and equipment, and valuation of inventory. Actual results could differ from these estimates.
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 our investors.
Investments in Tenures as Compared to Estimated Market Value of Tenures
We currently carry our investment in Island Scallops’ tenures at $3,578. This amount represents the initial carrying costs of certain tenures acquired by Island Scallops’ subsidiary. These tenures do not expire until various dates ranging from 2021 – 2024, however, we believe that they have an indefinite useful life because renewal on expiration is anticipated. The area available for shellfish aquaculture within Baynes Sound is fully subscribed, and as a result new tenures for new companies are not available through the Canadian Provincial application and review process. The shellfish companies within the Sound are also well established and sales of tenures are quite rare, making the assessment of the market value for the Island Scallops tenures difficult. Historical sales and government auction of tenures have received as much as $300,000 (CDN) for a small beach tenure (less than 4 acres) and $65,000 CDN) for a small deepwater tenure without infrastructure. The few tenures on the market over the previous 24 months suggest that the current market value is approximately $10,000 to $25,000 (CDN) per acre. Based on listings of tenures on the coast of British Columbia, discussions with local shellfish growers and individuals from the BC Assets and Land Corporation, and an independent appraisal (commissioned by Island Scallops) that recently estimated the value of our roughly 1018 acres of tenures, the value is estimated to be approximately $8,600,000. As a result of the recently approved tenure expansions, the estimated market value of our overall tenures has increased to roughly $10,600,000. The estimated market value is based on the size, location and whether they are beach or deepwater in nature. However, given the variable nature of the shellfish tenures market, the actual value that we receive from the sale of a tenure or a partial tenure could vary significantly from these estimated values.
Although we cannot determine the exact amount we would ultimately receive from the sale of our tenure(s), based upon the information stated above we expect to receive more than the carrying cost ($3,578) from such sale. Accordingly, the carrying cost of our tenures is not indicative of their actual value. This analysis indicates our cash generating capabilities after considering investments in capital assets necessary to maintain and enhance existing operations.
Comparison of results for the fiscal year ended August 31, 2008, to the fiscal year ended August 31, 2007.
Revenues. Revenues for the fiscal year ended August 31, 2008, were approximately $1,584,000. We had revenues of approximately $657,000 for the fiscal year ended August 31, 2007. This is an increase of approximately $927,000 or 141%. The increase in our revenue was mainly the result of an increase in the sales of our own scallops. In fact, sales of our own scallops increased by more than 93% or roughly $509,000. If not for the loss of live scallop sales due to the temporary closing of our harvest areas due to Red Tide issues, our overall sales may have increased by at least an additional $100,000. Prior to 2008, our increase in sales was the result of an increase in oyster and scallop seed sales and increased joint venture sales. As was the case in 2007 and 2006, management continued its emphasis on the development and production of larger scallop crops. Management believes that our emphasis on expansion of future crops coupled with our new sales agreements will yield increased revenues starting in 2009 and beyond.
Gross profit (loss). Gross loss for the year ended August 31, 2008, was approximately $479,000, a increase of approximately $100,0002022, as comparedthe company has only issued common stock (currently held in escrow) to gross loss of roughly $379,000,Regreen for the year ended August 31, 2007. The increaseacquisition. If, upon completion of the acquisition, there has been a material change to the financial condition of Regreen, it may impact the final valuation for the assets acquired and liabilities assumed in the amount of gross loss for 2008 (as compared to 2007) was mainly attributable to management’s continued focus onacquisition. Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements including arrangements that would affect the expansionliquidity, capital resources, market risk support and development of larger scallop cropscredit risk support or other benefits.
Item 7A. Quantitative and larger scallop yields for future years and increased marketing efforts. Part of this increase was attributable to increased costs due to higher processing plant and trucking costs as we began to establish a larger sales effort. In the future, as we capitalize on our new sales agreements, we expect our sales to increase more rapidly that these costs and margins to quickly improve. We continued to focus resources on maintaining, developing and tending to our scallop crops and believe that we have already seen the initial benefits in increased sales of our own scallops and that we will continue to see additional benefits from our efforts in developing larger crops in the first quarter of 2008 and beyond.
General and administrative. General and administrative expenses for the fiscal year ended August 31, 2008, were approximately $3,185,000. Our general and administrative expenses were approximately $1,541,000 for the fiscal year ended August 31, 2007. This is an increase of approximately 1,644,000 or 107%. The majority of this increase was directly attributable to stock option expense of roughly $1,780,000 as compared to $486,000 for the same period in 2007. To date, we have already expensed the majority of the stock option expenses related to the 2,592,000 options that were outstanding as of August 31, 2008. As such, management believes general and administrative expenses will drop significantly in the upcoming fiscal year. Our increase in general and administrative expenses for the year ended August 31, 2008, was attributable to costs associated with establishing, building, and supporting our infrastructure and included various consulting costs, legal and accounting fees, compensation paid as result of our recent financing, overhead, realized stock compensation, stock option expenses and salaries. We anticipate that these costs may continue to slightly rise as we continue to expand our operations. However, we believe that we now have the necessary general and administrative staff in place to handle an expansion of up 30 million scallop crops and beyond.
Common stock issued for services. During the year ended August 31, 2008, we had stock compensation expense of approximately $91,000. The expense was for outside seafood sale and distribution consultants who we hired to help
develop new sales and marketing programs. During the year ended August 31, 2007, we had stock compensation expense of approximately $62,000. The expense was also for outside seafood sale and distribution consultants who we hired to help develop new sales and marketing programs. As such, we incurred a stock compensation expense of approximately $62,000 for year ended August 31, 2007.
Other income (expense), net. Interest expense for the year ended August 31, 2008 was approximately $11,000. Interest expense for the year ending August 31, 2007 was approximately $16,000. Other expense for the year ended August 31, 2008 was approximately $6,000 as opposed to other income of approximately $167,000 for the year ending August 31, 2007. The other income for the year ended August 31, 2007 was mainly the result of a one time gain of approximately $122,000 related to the forgiveness of a third-party debt in 2007. For the year ended August 31, 2007, we recognized a one-time gain of approximately $5,827,000 which was related to the change in fair value of warrants issued to 10 institutional and accredited investors in conjunction with preferred stock on April 12, May 30, June 30, July 11 and January 16, 2007. Qualitative Disclosure about Market Risk.As a result of"smaller reporting company", we are not required to provide the reclassifying these warrant liabilities on February 21, 2007, no such gain or loss was recorded for the year ended August 31, 2008.
As a result, other expense for the year ended August 31, 2008, was approximately $17,000 as compared to other income of approximately $5,978,000 for the year ended August 31, 2007. As described above, the other income for the year ended August 31, 2007, was mainly a result of one-time gains associated with the forgiveness of third-party debt and change in fair-value of warrants. Without these one-time items, other expense would have been relatively unchanged at $17,000 (for 2008) as compared to $16,000 (for 2007).
Net profit (loss). As a result of the above, the net loss for the year ended August 31, 2008, was approximately $4,575,000 as compared to a net income of approximately $3,538,000 for the year ended August 31, 2007.
Risk Factors
You should carefully consider the risks described below before making an investment in us. All of these risks may impair our business operations. If any of the following risks actually occurs our business, financial condition or results of operations could be materially adversely affected. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment.
Risks Relating to Aquaculture |
We are subject to a number of biological and environmental risks.
Our business would be adversely affected if our scallop crop is infectedinformation required by Perkinsus Quagwadi. Perkinsus affects a variety of scallops. In 1992, mortality due to Perkinsus infection was large and mortality was high, but Island Scallops was able to overcome this disease by breeding the remaining stock. Eight years of successfully breeding hardy individuals resulted in the remaining populations of scallops being Perkinsus-free. Although there is a chance that other diseases may occur, the Island Scallops hybrid scallop has proven resistant to Perkinsus disease for the last ten years.
Paralytic Shellfish Poisoning (PSP or red tide) is another concern when farming scallops. The adductor muscle can be processed for sale to the traditional scallop meat market even when there is a PSP closure. On the other hand, the live animal market is stopped by PSP toxicity. Sewage Contamination (faecal coliform) is also monitored by the Canadian Food Inspection Agency (CFIA) to avoid this problem. These types of contaminants do not threaten the crop, it only causes a temporary displacement to the marketing of the product. Island Scallops’ aquaculture is not without total risk; however, the development program over the last decade has reduced the risk of disease and increased the historical grow-out survival rate to 95% over the past six years. Despite these advances, however, an outbreak of PSP, even if it did not affect Island Scallops’ stock, could have a depressive effect on the shellfish market in general, which could then adversely affect our business. |
As recent as this past year, we believe that the mortality rates of our scallops were affected by high levels of PSP in our ocean farms. Although it did not harm any of our juvenile or mature scallops, it is believed that pre-metamorphic larvaeItem 8. Financial Statements and Supplementary Data
The following consolidated financial statements are particularly susceptible. Procedures are now in place to prevent the introduction of toxic algae into the hatchery system in the coming years, however there can be no assurance that such procedures will forever prevent future PSP contamination.
Aquaculture and scallop farming is subject to a variety of general disease risks.
Bacteria are almost always associated with mortalities in the larval stages of growth. Control of disease outbreaks in the hatchery consists of regular inspection, growth rates, color and larvae is checked for proper shape. Proper hygiene practices within the hatchery minimize problems with Bacteria. In general, scallops are harder to handle and transport and care needs to be taken when moving them. Scallops can develop a stress related disease that can be avoided by proper handling conditions such as temperature, moisture rates and time before getting back in the water (maximum time being 24 hours).
Boring sponges and worms can adversely impact our scallop yield.
Boring sponges and worms are organisms that make holes in the scallop’s shell, weakening it and requiring the scallop to make repairs. Secreting additional layers of shell material to mend these holes directs energy away from growth and maintenance of the scallop. In cases of severe infestation, the adductor muscle may be reduced in weight by up to 50%, and the meat may be discolored.
Our business would be adversely affected if our scallop crop is infected by flatworm.
Flatworms can be devastating, destroying all seed within 2 weeks. Island Scallops has managed to minimize this problem and keep mortalities down by keeping the seeds in the pond a little longer so it becomes larger, making the time spent in the first net culture less. We then move the seeds to a larger mesh net culture, which causes the flatworms to fall off and no longer pose a problem. This husbandry technique alleviates the problem to a large degree.
Scallops raised in the open ocean are subject to a variety of predators that could adversely impact crop yield.
Starfish are a major predator of scallops, particularly in bottom culture. If the hanging techniques are far enough from the bottom, even during extreme low tides, this is not problematic. Since starfish and crabs have a free-swimming larval stagefiled as part of their life cycle, it is possible that these larvae can settle within the “grow-out” nets and settle there and prey on these scallops. However, with proper husbandry techniques these effects can be minimized.
Our business would be adversely affected if a majority of our scallop crop experiences fouling.
Fouling is caused by settlement and growth of several organisms such as macroalgae, bryozoans, barnacles and mussels on the nets. Heavy fouling of culture nets and scallops impedes growth of the scallops. Since most fouling occurs in shallower waters, hanging scallops at deeper depths can reduce fouling. If culture systems are managed properly, fouling is not a problem.
Aquaculture can be subject to a variety of growing conditions that can adversely affect product growth and development.
Certain growing conditions and sea conditions can affect the quality and quantity of scallops produced, decreasing the supply of our products and negatively impacting profitability. Extreme wave actions tend to make scallops seasick. In cases of extreme seasickness, scallops stop feeding and growth is reduced. This may create mortality by weakening the scallops and making them susceptible to other problems and diseases. Currently, the water leases owned by Island Scallops are located in areas where this will prove to be less problematic. Additionally, if other environmental conditions are unfavorable, growing conditions in the ocean can greatly inhibit scallop growth. Generally this risk is mitigated by year-to-year variations in growing conditions. However, we cannot guarantee that we will not be negatively affected, at least in the short term, if we experience poor growing conditions.
Increased mortality rates would adversely impact our business.
In general, increased mortality rates in juveniles are due to improper feeding and hatchery husbandry. Once scallops are introduced to the ocean, increased mortality rates are caused by the above factors as well as fluctuations in salinity and currents. Given the location of Island Scallops’ current farming areas, the salinity and currents should not be problematic. Mortality rates can also increase due to overcrowding problems. In cases of extreme overcrowding scallops actually bite each other and their shells become damaged.
If we are unable to expand our tenures, our projected production may be delayed.
To increase our production capacity, we must expand our tenures. However, expanding tenures requires government approval, which can be a timely and costly process. Two of our tenures, Hindoo Creek and Deep Bay, have been approved for expansion. We received approval to convert another one of our tenures, our Nile Creek tenure to off-bottom growing, but we need to complete that construction before we can take full advantage of the conversion. Finally, our Denman tenure must be re-zoned before expansion thereof will be approved. Although we are confident that such approval will be granted after issues raised by local residents and fisherman, such as the use of surface floats for our longlines have been addressed, there is no guarantee that it will be granted. In the future, we will seek expansion of our other tenures, which also may not be granted. If we do not receive expansion approval for our Denman tenure, it will delay our proposed expansion.
Business Risks
We will require additional capital to fund our current business plan.
Our success is dependent on future financings. The aquaculture or marine farming industry is a capital-intensive business, which requires substantial capital expenditures to develop and acquire farms and to improve or expand current production. Further, the farming of marine life and acquisition of additional farms may require substantial amounts of working capital. We project the need for significant capital spending and increased working capital requirements over the next several years. There can be no assurance that we will be able to secure such financing on terms, which are acceptable, if at all. The failure to secure future financing with favorable terms could have a material adverse effect on our business and operations.
We are dependent on certain key existing and future personnel.
Our success will depend, to a large degree, upon the efforts and abilities of our officers and key management employees such as Mr. Saunders, Mr. Bruce Evans and Mr. Brendan Fralick. The loss of the services of one or more of these or other key employees could have a material adverse effect on our operations. We currently maintain key man life insurance on Mr. Saunders for a value of $1,000,000. We also had an employment agreement with Mr. Saunders that expired in June 2008, but are currently operating as if this employment agreement is still in effect as we discuss the terms of a new agreement with him. We do not maintain key man insurance for, nor do we currently have employment agreements with, any of our other key employees. In addition, as our business plan is implemented, we will need to recruit and retain additional management and key employees in virtually all phases of our operations. Key employees will require a strong background in the marine aquaculture industry. We cannot assure that we will be able to successfully attract and retain key personnel.
The fact that our directors and officers own approximately 28% of our capital stock and 56% of our voting capital stock may decrease your influence on shareholder decisions.
Our executive officers and directors, in the aggregate, beneficially own approximately 28% of our capital stock and 56% of our voting capital stock. As a result, our officers and directors, will have the ability to influence our management and affairs and the outcome of matters submitted to shareholders for approval, including the election and removal of directors, amendments to our bylaws and any merger, consolidation or sale of all or substantially all of our assets.
Our acquisitions and potential future acquisitions involve a number of risks.
Our potential future acquisitions involve risks associated with assimilating these operations into our company; integrating, retaining and motivating key personnel; integrating and managing geographically-dispersed operations integrating the technology and infrastructures of disparate entities; and risks inherent in the husbandry and farming of marine species.
We may have difficulty competing with larger and better-financed companies in our sector.
In general, the aquaculture industry is intensely competitive and highly fragmented. Many of our competitors have greater financial, technical, marketing and public relations resources than we presently have. Our sales may be harmed to the extent we are not able to compete successfully against such seafood producers.
Contamination of our seafood would harm our business.
Because our products are designed for human consumption, our business is subject to certain hazards and liabilities related to food products, such as contamination. A discovery of contamination in any of our products, through tampering or otherwise, could result in a recall of our products. Any such recall would significantly damage our reputation for product quality, which we believe is one of our principal competitive assets, and could seriously harm our business and sales. Although we maintain insurance to protect against such risks, we may not be able to maintain such insurance on acceptable terms and such insurance may not be adequate to cover any resulting liability.
We may experience barriers to conducting business due to potential government regulations.
There are no hatchery/producer competitors in the scallop farming business in British Columbia. The United States will not allow the farming of the species farmed in their waters, without undergoing an extensive environmental review which may prove costly and difficult. If these reviews are successful and US approval obtained, then this species could be cultured in US waters, which may provide increased competition for our products in the US.
Our business may be adversely affected by price volatility.
If market prices for Island Scallops’ products decrease, we will incur a loss of profits. However, our operational costs will increase because we will have to produce the same quantity to meet the current demand, which will decrease profit margin. This form of price volatility would be detrimental for our business.
Foreign exchange rates risks, political stability risk, and/or the imposition of adverse trade regulations could harm our business.
We conduct some of our business in foreign currencies. Our profitability depends in part on revenues received in United States dollars as a result of sales into the United States. A decline in the value of the United States dollar against the Canadian dollar would adversely affect earnings from sales in the United States. As part of our plans to acquire other businesses we may expand our operations to other countries, operate those businesses in foreign currencies, and export goods from those countries. Thus far, we have not engaged in any financial hedging activities to offset the risk of exchange rate fluctuations. We may in the future, on an as-needed basis, engage in limited financial hedging activities to offset the risk of exchange rate fluctuations. There is a risk that a shift in certain foreign exchange rates or the imposition of unforeseen and adverse political instability and/or trade regulations could adversely impact the costs of these items and the liquidity of our assets, and have an adverse impact on our operating results. In addition, the imposition of unforeseen and adverse trade regulations could have an adverse effect on our exported seafood operations. We expect the volume of international transactions to increase, which may increase our exposure to future exchange rate fluctuations.
We have one major customer and any disagreement with that customer could have a material adverse affect on our business.
As a result of our recent sales agreement with Fanny Bay, Fanny Bay has effectively become the sole distributor of our scallops outside of the European market. Such a large customer will account for a significant portion of our sales and, as a result, any disagreements or problems with Fanny Bay could have a material adverse effect on our business and operations.
Our common stock may be considered a “penny stock” and may be difficult to sell.
The SEC has adopted regulations which generally define a “penny stock” to be an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock is less than $5.00 per share and, therefore, it may be designated as a “penny stock” according to SEC rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of investors to sell their shares.
Our Auditors have given the Company a “Going Concern” opinion, raising substantial doubt about our ability to continuing to fund our operations.
We have suffered operating losses since inception in our efforts to establish and execute our business strategy. As of August 31, 2008, we had a cash balance of approximately $712,000. Although management believes that we have adequate funds to maintain our business operations into the next fiscal year and/or until we become cash flow positive, we continued to suffer operational losses in our 2008 fiscal year. Until our operations are able to demonstrate and maintain positive cash flows, we may require additional working capital to fund our ongoing operations and execute our business strategy of expanding our operations. Based on these factors, there is substantial doubt about our ability to continue as a going concern.
Report of Independent Registered Public Accounting Firm
Edgewater Foods International, Astra Energy, Inc.
Qualicum Beach, British Columbia, Canada
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Edgewater Foods International, Inc. (the “Company”Astra Energy, Inc (“the Company”) as of August 31, 20082022 and 2007,2021, and the related consolidated statements of operations, stockholders' equity (deficit),stockholders’ deficit, and cash flows for each of the years in the two-year period ended August 31, 20082022, and 2007. the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2022 and 2021 and the results of its operations and its cash flows for each of the years in the two-year period ended August 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has an accumulated deficit and minimal revenue. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on thesethe Company’s financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement.misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. OurAs part of our audits, included considerationwe are required to obtain an understanding 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
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.
In our opinion,Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements referredthat were communicated or required to above present fairly,be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in all material respects,any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation of the Prepaid Acquisition Expenses — Refer to Note 4 to the financial statements
Critical Audit Matter Description
The Company issued stock held in escrow for the future acquisition of Regreen Technologies, Inc. and recorded an asset for the potential merger. The valuation of the asset and stock issued are subject to management estimates and judgment. Audit of the valuation of the asset is judgmental due to reliance on the likelihood of future events.
How the Critical Audit Matter Was Addressed in the Audit
Our principal audit procedures to evaluate valuation of the related asset consisted of the following, among others:
| · | We evaluated management’s assumptions related to the valuation of the asset and stock issued. |
| | |
| · | We considered whether the assumptions related to the merger agreement appear reasonable. |
| | |
| · | We performed an independent analysis of the transaction and valuation and compared to management’s analysis. |
We have served as the Company’s auditor since 2021. Spokane, Washington |
December 14, 2022 | |
ASTRA ENERGY INC. CONSOLIDATED BALANCE SHEETS |
|
|
| | August 31, 2022 | | | August 31, 2021 | |
ASSETS | | | | | | |
Current assets: | | | | | | |
Cash | | $ | 198,899 | | | $ | 94,765 | |
Prepaid stock for acquisition (Note 4) | | | 27,026,000 | | | | — | |
Other receivable – related party (Note 5) | | | 194,520 | | | | — | |
Total current assets | | | 27,419,419 | | | | 94,765 | |
| | | | | | | | |
Total Assets | | $ | 27,419,419 | | | $ | 94,765 | |
| | | | | | | | |
LIABILITIES & STOCKHOLDERS’ DEFICIT | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 49,344 | | | $ | 94,570 | |
Accounts payable- related parties (Note 5) | | | 107,200 | | | | 50,000 | |
Due to a related party (Note 6) | | | 270,185 | | | | — | |
Accrued interest payable | | | 630 | | | | — | |
Debenture payable (Note 8) | | | 20,000 | | | | — | |
Total current liabilities | | | 447,359 | | | | 144,570 | |
| | | | | | | | |
Total Liabilities | | | 447,359 | | | | 144,570 | |
| | | | | | | | |
Commitments and contingencies | | | — | | | | — | |
| | | | | | | | |
Stockholders' Equity (Deficit): | | | | | | | | |
Series A Preferred stock, par $0.001, 8,000,000 shares authorized; 7,774 and 15,774, shares issued and outstanding, respectively | | | 8 | | | | 16 | |
Series B Preferred stock, par $0.00001, 100,000 shares authorized; 207 shares issued and outstanding | | | — | | | | — | |
Series C Preferred stock, par $0.001, 1,000,000 shares authorized; 747,870 shares issued and outstanding | | | 748 | | | | 748 | |
Series D Preferred stock, par $0.001, 380,000 shares authorized; 304,558 shares issued and outstanding | | | 305 | | | | 305 | |
Series A1 Preferred stock, par $0.001, 1 share authorized; no shares and 1 share issued and outstanding, respectively | | | — | | | | — | |
Common stock, $0.001 par value; 100,000,000 shares authorized; 57,855,540 and 42,549,540 shares issued and outstanding, respectively | | | 57,856 | | | | 42,550 | |
Stock subscriptions receivable (Note 11) | | | (5,000 | ) | | | (100,000 | ) |
Common stock to be issued (Note 12) | | | 20,000 | | | | 100,000 | |
Additional paid-in capital | | | 59,421,878 | | | | 29,795,766 | |
Accumulated deficit | | | (32,523,735 | ) | | | (29,889,190 | ) |
Total Stockholders’ Equity (Deficit) | | | 26,972,060 | | | | (49,805 | ) |
| | | | | | | | |
Total Liabilities and Stockholders’ Deficit | | $ | 27,419,419 | | | $ | 94,765 | |
| | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements. |
ASTRA ENERGY INC. CONSOLIDATED STATEMENTS OF OPERATIONS |
| | For the Years Ended August 31, | |
| | 2022 | | | 2021 | |
Revenue | | $ | 25,000 | | | $ | — | |
| | | | | | | | |
Operating Expenses: | | | | | | | | |
General and administrative | | | 179,132 | | | | 91,149 | |
Inventory impairment | | | 75,000 | | | | — | |
Business development | | | 712,683 | | | | 160,012 | |
Consulting - related party | | | 60,000 | | | | 117,000 | |
Executive compensation | | | 1,034,450 | | | | 515,579 | |
Stock compensation-consulting | | | 595,500 | | | | 169,250 | |
Total operating expenses | | | 2,656,765 | | | | 1,052,990 | |
| | | | | | | | |
Loss from operations | | | (2,631,765 | ) | | | (1,052,990 | ) |
| | | | | | | | |
Other Expense: | | | | | | | | |
Foreign exchange | | | (13 | ) | | | (3,659 | ) |
Interest expense | | | (2,767 | ) | | | — | |
Total other expense | | | (2,780 | ) | | | (3,659 | ) |
| | | | | | | | |
Loss before provision for income taxes | | | (2,634,545 | ) | | | (1,056,649 | ) |
Provision for income taxes | | | — | | | | — | |
| | | | | | | | |
Net Loss | | $ | (2,634,545 | ) | | $ | (1,056,649 | ) |
| | | | | | | | |
Net loss per share, basic and diluted | | $ | (0.06 | ) | | $ | (0.03 | ) |
Weighted average shares outstanding, basic and diluted | | | 45,567,354 | | | | 35,198,315 | |
| | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements. |
ASTRA ENERGY INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT FOR THE YEARS ENDED AUGUST 31, 2022 AND 2021 |
|
| | Series A Preferred | | | Series A1 Preferred | | | Series B Preferred | | | Series C Preferred | | | Series D Preferred | | | Common Stock | | | Common Stock to | | | Stock Subscription | | | Additional Paid-In | | | Accumulated | | | | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Be Issued | | | Receivable | | | Capital | | | Deficit | | | Total | |
Balance, August 31, 2020 | | | 15,774 | | | $ | 16 | | | | 1 | | | $ | — | | | | 207 | | | $ | — | | | | 747,870 | | | $ | 748 | | | | 304,558 | | | $ | 305 | | | | 4,674,540 | | | $ | 4,675 | | | $ | — | | | $ | — | | | $ | 28,777,141 | | | $ | (28,832,541 | ) | | $ | (49,656 | ) |
Common stock issued for services - related party | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,300,000 | | | | 6,300 | | | | — | | | | — | | | | 324,950 | | | | — | | | | 331,250 | |
Common stock cancelled – related party | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (3,000,000 | ) | | | (3,000 | ) | | | — | | | | — | | | | 3,000 | | | | — | | | | — | |
Common stock issued for services | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,425,000 | | | | 1,425 | | | | — | | | | — | | | | 167,825 | | | | — | | | | 169,250 | |
Common stock issued for cash -related party | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 7,500,000 | | | | 7,500 | | | | — | | | | — | | | | 55,000 | | | | — | | | | 62,500 | |
Common stock issued for cash | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 25,650,000 | | | | 25,650 | | | | 100,000 | | | | (100,000 | ) | | | 467,850 | | | | — | | | | 493,500 | |
Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (1,056,649 | ) | | | (1,056,649 | ) |
Balance, August 31, 2021 | | | 15,774 | | | $ | 16 | | | | 1 | | | $ | — | | | | 207 | | | $ | — | | | | 747,870 | | | $ | 748 | | | | 304,558 | | | $ | 305 | | | | 42,549,540 | | | $ | 42,550 | | | $ | 100,000 | | | $ | (100,000 | ) | | | 29,795,766 | | | $ | (29,889,190 | ) | | $ | (49,805 | ) |
| | Series A Preferred | | | Series A1 Preferred | | | Series B Preferred | | | Series C Preferred | | | Series D Preferred | | | Common Stock | | | Common Stock to | | | Stock Subscription | | | Additional Paid-In | | | Accumulated | | | | | | | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Be Issued | | | Receivable | | | Capital | | | Deficit | | | | | | Total | |
Balance, August 31, 2021 | | | 15,774 | | | $ | 16 | | | | 1 | | | $ | — | | | | 207 | | | $ | — | | | | 747,870 | | | $ | 748 | | | | 304,558 | | | $ | 305 | | | | 42,549,540 | | | $ | 42,550 | | | $ | 100,000 | | | $ | (100,000 | ) | | $ | 29,795,766 | | | $ | (29,889,190 | ) | | $ | — | | | $ | (49,805 | ) |
Common stock issued for services - related party | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 525,000 | | | | 525 | | | | — | | | | — | | | | 410,475 | | | | — | | | | — | | | | 411,000 | |
Preferred shares cancelled – related party | | | (8,000 | ) | | | (8 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 8 | | | | — | | | | — | | | | — | |
Common stock issued for services | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,045,000 | | | | 1,045 | | | | — | | | | — | | | | 985,365 | | | | — | | | | — | | | | 986,410 | |
Common stock issued for inventory | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 150,000 | | | | 150 | | | | — | | | | — | | | | 74,850 | | | | — | | | | — | | | | 75,000 | |
Prepaid common stock issued for acquisition | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,300,000 | | | | 11,300 | | | | — | | | | — | | | | 27,014,700 | | | | - | | | | — | | | | 27,026,000 | |
Common stock issued for cash | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,286,000 | | | | 2,286 | | | | (80,000 | ) | | | 95,000 | | | | 1,140,714 | | | | — | | | | — | | | | 1,158,000 | |
Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (2,634,545 | ) | | | | | | | (2,634,545 | ) |
Balance, August 31, 2022 | | | 7,774 | | | $ | 8 | | | | 1 | | | $ | — | | | | 207 | | | $ | — | | | | 747,870 | | | $ | 748 | | | | 304,558 | | | $ | 305 | | | | 57,855,540 | | | $ | 57,856 | | | $ | 20,000 | | | $ | (5,000 | ) | | $ | 59,421,878 | | | $ | (32,523,735 | ) | | $ | - | | | $ | 26,972,060 | |
The accompanying notes are an integral part of these consolidated financial position of Edgewater Foods International, Inc. asstatements.
ASTRA ENERGY INC. CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
| | For the Years Ended August 31, | |
| | 2022 | | | 2021 | |
CASH FLOW FROM OPERATING ACTIVITIES: | | | | | | |
Net loss | | $ | (2,634,545 | ) | | $ | (1,056,649 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
Stock based compensation | | | 986,410 | | | | 500,500 | |
Executive stock compensation | | | 411,000 | | | | — | |
Changes in assets and liabilities: | | | | | | | | |
Other receivable – related party | | | (194,520 | ) | | | — | |
Accounts payable | | | 30,404 | | | | 94,203 | |
Accounts payable – related party | | | 57,200 | | | | 44,200 | |
Accrued expenses – related party | | | — | | | | (43,489 | ) |
Due to a related party | | | 270,185 | | | | — | |
Net Cash Used in Operating Activities | | | (1,073,866 | ) | | | (461,235 | ) |
| | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | — | | | | — | |
| | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
Proceeds from sale of shares | | | 1,158,000 | | | | 556,000 | |
Proceeds from debenture | | | 20,000 | | | | — | |
Net Cash Provided by Financing Activities | | | 1,178,000 | | | | 556,000 | |
| | | | | | | | |
Net Change in Cash | | | 104,134 | | | | 94,765 | |
Cash at Beginning of Year | | | 94,765 | | | | — | |
Cash at End of Year | | $ | 198,899 | | | $ | 94,765 | |
| | | | | | | | |
Cash paid during the period for: | | | | | | | | |
Interest | | $ | 2,767 | | | $ | — | |
Income taxes | | $ | — | | | $ | — | |
| | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements. |
ASTRA ENERGY INC.
Notes to the Consolidated Financial Statements
August 31, 2008 and 2007, and2022
NOTE 1 -ORGANIZATION AND DESCRIPTION OF BUSINESS
Astra Energy, Inc. (the “Company”, “Astra”), was incorporated in the resultsState of its operations and its cash flows for eachNevada on June 12, 2000.
A Certificate of Amendment was filed on August 22, 2020 with the Nevada Secretary of State changing the name of the years endedCompany to Astra Energy, Inc.
The Company is an emerging leader in the acquisition and development of technology in the Waste-to-Energy project sector.
On October 17, 2019, there was an order by the Eight Judicial District Court of Clark County Nevada appointing a Custodian to the Company. The custodianship was discharged on June 18, 2020.
On September 15, 2021, the Company affected a forward stock split of 3 for 1 which was approved by the Financial Industry Regulatory Authority (“FINRA”). All shares throughout these statements reflect the forward split.
On September 21, 2021, the Company incorporated a wholly owned subsidiary in Uganda called Astra Energy Africa - SMC Limited.
On October 12, 2021, the Company incorporated a wholly owned subsidiary in Uganda called Astra Energy Services Limited. The Company is owned 80% by Astra Energy Inc. and 20% by Ssingo Oils and Gas - SMC Limited of Mityana, Uganda.
On November 15, 2021, the Company incorporated a wholly owned subsidiary in the State of California called Astra Energy California, Inc.
On December 22, 2021, the Company incorporated a subsidiary in Tanzania called Astra Energy Tanzania Limited. The Company is owned 80% by Astra Energy Inc. and 20% by Kiluwa Group of Companies Limited of Kinondoni, Tanzania.
On August 31, 20085, 2022, the Company entered into an agreement to acquire a 68.2% interest in Regreen Technologies Inc. (“Regreen”), a California corporation, in exchange for 10,000,000 shares of the Company’s common stock and 2007an agreement to pay $250,000 in conformitycash. Regreen is in the business of converting organic and solid waste material into marketable bio-products utilizing its patented series of equipment and processes.
On August 17, 2022, the Company entered into an agreement to acquire an additional 8.7% interest in Regreen Technologies Inc. in exchange for 1,300,000 shares of the Company’s common stock and an agreement to pay $400,000 in cash.
On August 17, 2022, the Company incorporated a wholly owned subsidiary in the State of Florida called Astra Holcomb Energy Systems Inc.
NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
As discussed in Note 18 to the consolidated financial statements, the Company's absence of significant revenues, recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2009 raise substantial doubt about its ability to continue as a going concern. The 2008 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ LBB & Associates Ltd., LLP
LBB & Associates Ltd., LLP
Houston, Texas
November 21, 2008
| EDGEWATER FOODS INTERNATIONAL | | | | |
| CONSOLIDATED BALANCE SHEETS | | | | |
| AUGUST 31, 2008 and 2007 | | | | |
| | | | | | | | |
| | | | 2008 | | | 2007 | |
| ASSETS | | | | | | | |
| | | | | | | | |
| Current assets: | | | | | | |
| | Cash | | $ | 712,298 | | | $ | 1,656,868 | |
| | Accounts receivable, net | | | 195,402 | | | | 73,423 | |
| | Inventory | | | 1,290,702 | | | | 1,827,513 | |
| | Other current assets | | | 80,011 | | | | 61,242 | |
| | | | | | | | | | |
| | Total current assets | | | 2,278,413 | | | | 3,619,046 | |
| | | | | | | | | | |
| Property, plant and equipment, net | | | 3,982,336 | | | | 2,963,234 | |
| | | | | | | | | | |
| Inventory, non-current | | | 986,327 | | | | - | |
| | | | | | | | | | |
| Loans receivable, related party | | | 114,079 | | | | 82,260 | |
| | | | | | | | | | |
| Investments in other assets | | | 3,758 | | | | 3,770 | |
| | | | | | | | | | |
| | Total assets | | $ | 7,364,913 | | | $ | 6,668,310 | |
| | | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| | | | | | | | | | |
| Current liabilities: | | | | | | | | |
| | Short term debt | | $ | 109,648 | | | $ | 110,800 | |
| | Line of credit | | | 124,766 | | | | - | |
| | Current portion of long term debt | | | 396,885 | | | | 462,306 | |
| | Accounts payable and accrued liabilities | | | 991,061 | | | | 721,292 | |
| | | | | | | | | | |
| | Total current liabilities | | | 1,622,360 | | | | 1,294,398 | |
| | | | | | | | | | |
| Long term debt, net of current portion | | | 548,004 | | | | 526,299 | |
| | | | | | | | | | |
| | Total liabilities | | | 2,170,364 | | | | 1,820,697 | |
| | | | | | | | | | |
| Commitments and contingencies | | | | | | | | |
| | | | | | | | | |
| Stockholders' equity | | | | | | | | |
| | Series A Preferred stock, par $0.001, 10,000,000 | | | 7,774 | | | | 7,774 | |
| | authorized, 7,773,998 issued and outstanding at August 31, 2008 and 2007, respectively | | | | | | | | |
| | Series B Preferred stock, par $0.001, 220 | | | - | | | | - | |
| | authorized, 207 and 207 issued and outstanding at August 31, 2008 and 2007, respectively | | | | | | | | |
| | Series C Preferred stock, par $0.001, 1,000,000 | | | 748 | | | | - | |
| | authorized, 747,870 and 0 issued and outstanding at August 31, 2008 and 2007, respectively | | | | | | | | |
| | Series D Preferred stock, par $0.001, 380,000 | | | 305 | | | | - | |
| | authorized, 304,558 and 0 issued and outstanding a August 31, 2008 and 2007, respectively | | | | | | | | |
| | Common stock, par $0.0001, 100,000,000 authorized, | | | 2,448 | | | | 2,371 | |
| | 24,479,150 and 23,712,700 issued and outstanding at August 31, 2008 and 2007, respectively | | | | | | | | |
| | Additional paid in capital | | | 27,497,781 | | | | 22,471,315 | |
| | Accumulated deficit | | | (22,103,314 | ) | | | (17,528,303 | ) |
| | Accumulated other comprehensive income (loss) - | | | | | | | | |
| | foreign exchange adjustment | | | (211,193 | ) | | | (105,544 | ) |
| | | | | | | | | | |
| | Total stockholders' equity | | | 5,194,549 | | | | 4,847,613 | |
| | | | | | | | | | |
| | Total liabilities and stockholders' equity | | $ | 7,364,913 | | | $ | 6,668,310 | |
See accompanying summary of accounting policies and notes to financial statements
| EDGEWATER FOODS INTERNATIONAL | |
| CONSOLIDATED STATEMENTS OF OPERATIONS | |
| YEARS ENDED AUGUST 31, 2008 and 2007 | |
| | | | | | | |
| | | 2008 | | | 2007 | |
| | | | | | | |
| | | | | | | |
| Revenue | | $ | 1,584,027 | | | $ | 657,065 | |
| Cost of goods sold | | | 2,062,758 | | | | 1,036,313 | |
| | | | | | | | | |
| Gross profit (loss) | | | (478,731 | ) | | | (379,248 | ) |
| | | | | | | | | |
| Expenses: | | | | | | | | |
| General and administrative expenses | | | 3,185,460 | | | | 1,541,192 | |
| | | | | | | | | |
| Total operating expenses | | | (3,185,460 | ) | | | (1,541,192 | ) |
| | | | | | | | | |
| Loss from operations | | | (3,664,191 | ) | | | (1,920,440 | ) |
| | | | | | | | | |
| Other income (expense): | | | | | | | | |
| Interest expense, net | | | (10,993 | ) | | | (15,876 | ) |
| Change in fair value of warrants | | | - | | | | 5,826,631 | |
| Other income (expense) | | | (5,938 | ) | | | 167,144 | |
| | | | | | | | | |
| Total other income (expense), net | | | (16,931 | ) | | | 5,977,899 | |
| | | | | | | | | |
| Net income (loss) | | | (3,681,122 | ) | | | 4,057,459 | |
| | | | | | | | | |
| Dividend on preferred stock | | | (630,142 | ) | | | (518,900 | ) |
| | | | | | | | | |
| Deemed dividend for beneficial | | | | | | | | |
| conversion feature | | | (163,386 | ) | | | - | |
| | | | | | | | | |
| Deemed dividend for exchange of | | | | | | | | |
| warrants for series D preferred | | | (100,360 | ) | | | - | |
| | | | | | | | | |
| Net income (loss) applicable to | | | | | | | | |
| common shareholders | | | (4,575,010 | ) | | | 3,538,559 | |
| | | | | | | | | |
| Foreign currency translation | | | (105,649 | ) | | | 150,776 | |
| | | | | | | | | |
| Accumulated other comprehensive | | | | | | | | |
| income (loss) | | $ | (4,680,659 | ) | | $ | 3,689,335 | |
| | | | | | | | | |
| Net income (loss) per Share | | | | | | | | |
| Basic | | $ | (0.19 | ) | | $ | 0.16 | |
| Diluted | | $ | (0.19 | ) | | $ | 0.11 | |
| | | | | | | | | |
| Weighted average shares outstanding | | | | | | | | |
| Basic | | | 23,993,935 | | | | 22,228,633 | |
| Diluted | | | 23,993,935 | | | | 32,273,888 | |
See accompanying summary of accounting policies and notes to financial statements
| | | | | | | | | | | | | | | | | EDGEWATER FOODS INTERNATIONAL | | | | | | | |
| | | | | | | | | | | | | | | | | CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY(Deficit) | | | | | | | |
| | | | | | | | | | | | | | | | | FOR THE YEAR ENDED AUGUST 31, 2008 and 2007 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other Comprehensive | | | | | | | |
| | Preferred Stock | | | | | | | | | | | | | Additional | | | Income - | | | | | | | |
| | Series A | | | Series B | | | Series C | | Series D | | | Common Stock | | | Paid in | | | Foreign Exchange | | | Accumulated | | | | |
| | Number | | | Value | | | Number | | | Value | | | Number | | | Value | | Number | | Value | | | Number | | | Value | | | Capital | | | Adjustment | | | Deficit | | | Total | |
| Balance at August 31, 2006 | | 7,887,999 | | | $ | 7,888 | | | | | | $ | - | | | | | | $ | - | | | | $ | - | | | | 20,983,260 | | | $ | 2,098 | | | | - | | | $ | (256,320 | ) | | $ | (19,049,166 | ) | | $ | (19,295,500 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Comprehensive loss | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,057,458 | | | | 4,057,458 | |
| Foreign currency translation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 150,776 | | | | | | | | 150,776 | |
| Total comprehensive loss | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,208,234 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Conversion of Series A Preferred Stock | | (302,801 | ) | | | (303 | ) | | | | | | | | | | | | | | | | | | | | | | 302,801 | | | | 30 | | | | 273 | | | | | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock issued for dividends | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 309,839 | | | | 31 | | | | 518,869 | | | | | | | | (518,900 | ) | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred Series B Stock issued in connection with financing | | | | | | | | | | 207 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | 1,864,502 | | | | | | | | | | | | 1,864,502 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Value Assigned to Series B Warrants | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (2,099,044 | ) | | | | | | | (2,017,695 | ) | | | (4,116,739 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issue of Common and Series A preferred Stock for warrants, net of expense | | 188,800 | | | | 189 | | | | | | | | | | | | | | | | | | | | | | | | 2,076,800 | | | | 208 | | | | 1,189,042 | | | | | | | | | | | | 1,189,439 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock Option expense | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 486,118 | | | | | | | | - | | | | 486,118 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Series A Warrants reclassification | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 17,364,812 | | | | | | | | - | | | | 17,364,812 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Series B Warrants reclassification | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,084,747 | | | | | | | | - | | | | 3,084,747 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock issues for Services | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 40,000 | | | | 4 | | | | 61,996 | | | | | | | | - | | | | 62,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at August 31, 2007 | | 7,773,998 | | | | 7,774 | | | | 207 | | | | - | | | | - | | | | - | | | | | | | | | 23,712,700 | | | | 2,371 | | | | 22,471,315 | | | | (105,544 | ) | | | (17,528,303 | ) | | | 4,847,613 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Comprehensive loss | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (3,681,122 | ) | | | (3,681,122 | ) |
| Foreign currency translation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (105,649 | ) | | | | | | | (105,649 | ) |
| Total comprehensive loss | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (3,786,771 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock option expense | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,780,882 | | | | | | | | | | | | 1,780,882 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock Issued for services | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 85,000 | | | | 9 | | | | 90,591 | | | | | | | | | | | | 90,600 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock issued for dividends | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 681,450 | | | | 68 | | | | 630,075 | | | | | | | | (630,143 | ) | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred Series C Stock issued in connection with financing | | | | | | | | | | | | | | | | | | 747,870 | | | | 748 | | | | | | | | | | | | | | | | | 799,900 | | | | | | | | | | | | 800,648 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Deemed Dividend | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 163,386 | | | | | | | | (163,386 | ) | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred Series D Stock issued in connection with financing | | | | | | | | | | | | | | | | | | | | | | | | 37,500 | | | 38 | | | | - | | | | | | | | 1,461,539 | | | | | | | | | | | | 1,461,577 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred Series D Stock issued in connection with warrant exchange | | | | | | | | | | | | | | | | | | | | | | | | 267,058 | | | 267 | | | | | | | | | | | | 100,093 | | | | | | | | (100,360 | ) | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at August 31, 2008 | | 7,773,998 | | | $ | 7,774 | | | | 207 | | | $ | - | | | | 747,870 | | | $ | 748 | | 304,558 | | $ | 305 | | | | 24,479,150 | | | $ | 2,448 | | | $ | 27,497,781 | | | $ | (211,193 | ) | | $ | (22,103,314 | ) | | $ | 5,194,549 | |
See accompanying summary of accounting policies and notes to financial statements
| EDGEWATER FOODS INTERNATIONAL, INC. | |
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |
| YEARS ENDED AUGUST 31, 2008 and 2007 | |
| | | | | | | |
| | | 2008 | | | 2007 | |
| Cash flows from operating activities: | | | | | | |
| | | | | | | |
| Net income (loss) | | $ | (3,681,122 | ) | | $ | 4,057,458 | |
| | | | | | | | | |
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | | | | | | | | |
| Depreciation and amortization | | | 563,456 | | | | 351,092 | |
| Bad debt expense | | | | | | | | |
| Changes in fair value of warrants | | | - | | | | (5,826,630 | ) |
| Stock option expense | | | 1,780,882 | | | | 486,118 | |
| Common stock issued for services | | | 90,600 | | | | 62,000 | |
| Gain on retirement of debt | | | - | | | | (158,728 | ) |
| | | | | | | | | |
| Changes in current assets and liabilities: | | | | | | | | |
| Accounts receivable | | | (121,979 | ) | | | (34,573 | ) |
| Other current assets | | | (18,769 | ) | | | (16,661 | ) |
| Loan receivables, related party | | | (31,819 | ) | | | (59,245 | ) |
| Inventory | | | (449,516 | ) | | | (575,462 | ) |
| Accounts payable and accrued liabilities | | | 269,769 | | | | 33,198 | |
| | | | | | | | | |
| Net cash used in operating activities | | | (1,598,498 | ) | | | (1,681,433 | ) |
| | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
| | | | | | | | | |
| Purchase of property, plant and equipment | | | (1,592,581 | ) | | | (1,408,247 | ) |
| | | | | | | | | |
| Net cash used in investing activities | | | (1,592,581 | ) | | | (1,408,247 | ) |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| | | | | | | | | |
| Net proceeds from line of credit | | | 131,917 | | | | - | |
| Proceeds from short term debt | | | - | | | | 4,175 | |
| Payment of short term debt | | | (821 | ) | | | (199,384 | ) |
| Proceeds from long term debt | | | 29,798 | | | | 237,486 | |
| Payment of long term debt | | | (114,224 | ) | | | (259,688 | ) |
| Proceeds from sale of common stock | | | - | | | | 1,083,239 | |
| Proceeds from sale of preferred stock | | | 2,262,225 | | | | 1,970,702 | |
| | | | | | | | | |
| Net cash provided by financing activities | | | 2,308,895 | | | | 2,836,530 | |
| | | | | | | | | |
| Foreign currency translation effect | | | (62,386 | ) | | | 93,276 | |
| | | | | | | | | |
| Net decrease in cash | | | (944,570 | ) | | | (159,874 | ) |
| | | | | | | | | |
| Cash, beginning of period | | | 1,656,868 | | | | 1,816,742 | |
| | | | | | | | | |
| Cash, end of period | | $ | 712,298 | | | $ | 1,656,868 | |
| | | | | | | | | |
| Supplemental disclosure of cash flow information | | | | | | | | |
| | | | | | | | | |
| Net cash paid | | | | | | | | |
| Interest | | $ | 42,059 | | | $ | 31,533 | |
| Income taxes | | $ | - | | | $ | - | |
| | | | | | | | | |
| Supplemental disclosure of non-cash flow information | | | | | | | | |
| | | | | | | | | |
| Issuance of stock for dividends | | $ | 630,142 | | | $ | 518,900 | |
| | | | | | | | | |
| Warrant liability incurred in connection with financing | | $ | - | | | $ | 4,116,739 | |
| | | | | | | | | |
| Reclassification of warrant liability | | $ | - | | | $ | (20,449,559 | ) |
See accompanying summary of accounting policies and notes to financial statements
EDGEWATER FOODS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation, Organization and Nature of Operations
Edgewater Foods International Inc., a Nevada Corporation, is the parent company of Island Scallops Ltd., a Vancouver Island aquaculture company. Island Scallops was established in 1989 and for over 19 years has operated a scallop farming and marine hatchery business. Island Scallops is dedicated to the farming, processing and marketing of high quality, high value marine species (scallops).
Note 2. Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the acquired entities since their respective dates of acquisition. All significant inter-company amounts have been eliminated.
Cash and equivalents
Cash and equivalents include cash, bank indebtedness, and highly liquid short term market investments with terms to maturity of three months or less. We consider all highly liquid investments with original maturities of 90 days or less to be cash equivalents. We maintain our cash balances primarily in a financial institution, which exceeded federally insured limits by $262,298 at August 31, 2008. We have not experienced any losses, in such accounts and believe it is not exposed to any significant credit risk on cash and cash equivalents.
Accounts receivable
Accounts receivable is presented a net of allowance for doubtful accounts. The allowance for doubtful accounts reflects estimates of probable losses in accounts receivable. The allowance is determined based on balances outstanding for over 90 days at the period end date, historical experience and other current information.
Loans receivable
Loans receivable is presented a net of an allowance for loan losses, as necessary. The loans are written off when collectability becomes uncertain.
Inventory
Edgewater maintains inventories of raw materials for its aquaculture products, of biomass (inventory of live aquaculture product being actively cultivated), and of finished goods (aquaculture product ready for sale).
Inventories are reported at the lesser of cost or estimated net realizable value. Biomass and finished goods includes direct and reasonably attributable indirect production costs related to hatchery, cultivation, harvesting, and processing activities. Carrying costs per unit are determined on a weighted average basis.
At August 31, 2008 and 2007, inventory consisted of the Biomass (Scallops).
Reclassifications
Certain amounts in the 2007 financial statements have been reclassified to conform to the 2008 financial statement presentation.
Long term investments
Long term investments are recorded at cost. We review our investments periodically to assess whether there is an “other than temporary” decline in the carrying value of the investment. We consider whether there is an absence of an ability to recover the carrying value of the investment by reference to projected undiscounted future cash flows for the investment. If the projected undiscounted future cash flow is less than the carrying amount of the asset, the asset is deemed impaired. The amount of the impairment is measured as the difference between the carrying value and the fair value of the asset.
Property, plant, and equipment
Property, plant and equipment are carried at cost, less accumulated depreciation. Depreciation is included with general and administrative expenses and in some cases cost of goods sold in the accompanying statement of operations and calculated by using the straight-line method for financial reporting and accelerated methods for income tax purposes. The recovery classifications for these assets are listed as follows:
| Years |
Facility and operating plant | 20 |
Manufacturing equipment | 3–7 |
Furniture and fixtures | 2–7 |
Office equipment | 5 |
Leasehold improvements | Life of lease |
Property and equipment | 5 |
Vehicles | 5 |
Expenditures for maintenance and repairs are charged against income as incurred whereas major improvements are capitalized.
Change in Depreciation Method
Effective September 1, 2006, as a result of management’s evaluation of long-lived depreciable assets, we adopted the straight-line method of depreciation for all property, plant and equipment. Under the new provisions of SFAS No. 154 “Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3,” which becomes effective as of September 1, 2006, a change in depreciation method is treated as a change in estimate. The effect of the change in depreciation method will be reflected on a prospective basis beginning September 1, 2006, and prior period results will not be restated. As the results of management’s evaluation indicated the current estimated useful lives of our assets were appropriate, the depreciable lives of property, plant and equipment will not be changed. We believe that the change from the declining balance depreciation method to the straight-line method will better reflect the pattern of consumption of the future benefits to be derived from those assets being depreciated and will provide a better matching of costs and revenues over the assets’ estimated useful lives.
Impairment of long-lived assets
We monitor the recoverability of long-lived assets, including property, plant and equipment and intangible assets, based upon estimates using factors such as expected future asset utilization, business climate, and undiscounted cash flows resulting from the use of the related assets or to be realized on sale. Our policy is to write down assets to the estimated net recoverable amount, in the period in which it is determined likely that the carrying amount of the asset will not be recoverable. At August 31, 2008 no indication of impairment was present.
Government assistance
Government assistance we receive, such as grants, subsidies, and tax credits, is recorded as a recovery of the appropriate related expenditure in the period that the assistance is received.
We have received government assistance in the form of loans, for which repayment may not be required if we fail to meet sufficient future revenue levels to repay these loans based on a percentage of gross sales for certain products over a defined period of time. Such assistance, if received, is initially recorded as a liability, until such time as all conditions for forgiveness are met, and is then recognized as other income in that period.
Farm license costs
We must pay annual license costs in respect to government-granted tenures that it holds, which gives us the right to use certain offshore ocean waters for the purpose of aquaculture farming. Such license costs are recognized as an expense over the period of the license.
Research and development costs
Development costs include costs of materials, wages, and reasonably attributable indirect costs incurred by us which are directly attributable to the development of hatchery techniques for sablefish and shellfish. These costs are expensed when incurred.
Research costs are expensed when incurred.
Income taxes
We calculate our provision for income taxes in accordance with Statement of Financial Accounting Standards No. 109 (Accounting for Income Taxes)America (“SFAS 109”), which requires an asset and liability approach to financial accounting for income taxes. This approach recognizes the amount of taxes payable or refundable for the current year, as well as deferred tax assets and liabilities attributable to the future tax consequences of events recognized in the financial statements and tax returns. Deferred income taxes are adjusted to reflect the effects of enacted changes in tax laws or tax rates. Deferred income tax assets are recorded in the financial statements if realization is considered more likely than not.
Revenue recognition
We recognize revenue when it is realized or realizable, and earned. We consider revenue realized or realizable and earned when it has persuasive evidence of a contract, the product has been delivered or the services have been provided to the customer, the sales price is fixed or determinable, and collectability is reasonably assured.
Our revenue is derived principally from the sale of scallops we produce or purchase from third parties, and from the sale of seed and farm supplies to other aquaculture farms.
Cost of goods
Cost of goods sold consists primarily of farming, harvesting and processing costs associated with the growth, transfer and sales preparation of our products (principally scallops). These costs consist primarily of salaries and benefits and allocated overhead costs for consulting and support personnel engaged in the farming, harvesting and processing of our products. All costs are recognized at time of delivery.
Financial instruments
The carrying amount of our financial instruments, which includes cash, accounts receivable, loans receivable, accounts payable and accrued liabilities, short term debt, shareholder debt, and long term debt, approximate fair value based on either i) the short-term nature of the instrument or ii) the reasonableness of the interest rate as compared to market rates for the long-term instruments. It is management’s opinion that we are not exposed to significant interest, currency or credit risk arising from these financial instruments unless otherwise noted.
Derivative Financial Instruments
In connection with the sale of debt or equity instruments, we may sell options or warrants to purchase our common stock. In certain circumstances, these options or warrants may be classified as derivative liabilities, rather than as equity. Additionally, the debt or equity instruments may contain embedded derivative instruments, such as embedded derivative features, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.
We account for all derivatives financial instruments in accordance with SFAS No. 133. Derivative financial instruments are recorded as liabilities in the consolidated balance sheet, measured at fair value. When available, quoted market prices are used in determining fair value. However, if quoted market prices are not available, we estimate fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques.
The identification of, and accounting for, derivative instruments is complex. Our derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income, in the period in which the changes occur. For options, warrants and bifurcated embedded derivative features that are accounted for as derivative instrument liabilities, we estimate fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. The valuation techniques require assumptions related to the remaining term of the instruments and risk-free rates of return, our current common stock price and expected dividend yield, and the expected volatility of our common stock price over the life of the option. The identification of, and accounting for, derivative instruments and the assumptions used to value them can significantly affect our financial statements.
Derivative financial instruments that are not designated as hedges or that do not meet the criteria for hedge accounting under SFAS No. 133 are recorded at fair value, with gains or losses reported currently in earnings. All derivative financial instruments we held as of August 31, 2008, were not designated as hedges.
Foreign exchange
The functional currency of our foreign subsidiary is the local foreign currency (Canadian dollars). All assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate prevailing on the balance sheet date. Revenues, costs and expenses are translated at average rates of exchange prevailing during the period. Translation adjustments resulting from translation of the subsidiaries' accounts are accumulated as a separate component of shareholders' equity. Gains and losses resulting from foreign currency transactions are included in the consolidated statements of operations and have not been significant.
Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities revenues, expenses and disclosure of contingent assets and liabilities. Suchliabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include providing for amortizationthe estimated useful lives of property plant, and equipment, and valuation of inventory.equipment. Actual results could differ from those estimates.
Principles of Consolidation
These financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are all entities (including structured entities) which the Company controls. For accounting purposes, control is established by an investor when it is exposed to, or has rights to, variable returns from its involvement with the entity and when it can affect those returns through its power over the entity. All inter-company balances and transactions are eliminated upon consolidation.
Cash and Cash Equivalents
The Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less as cash and cash equivalents. The carrying amount of financial instruments included in cash and cash equivalents approximates fair value because of the short maturities for the instruments held. The Company had no cash equivalents as of August 31, 2022 and 2021.
Stock-based Compensation
We account for equity-based transactions with employees and non-employees under the provisions of FASB ASC Topic 718, “Compensation – Stock Compensation” (Topic 718), which establishes that equity-based payments to employees and non-employees are recorded at the grant date the fair value of the equity instruments the entity is obligated to issue when the employees and non-employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments. Topic 718 also states that observable market prices of identical or similar equity or liability instruments in active markets are the best evidence of fair value and, if available, should be used as the basis for the measurement for equity and liability instruments awarded in these estimates.
Concentrationshare-based payment transactions. However, if observable market prices of risk
We operateidentical or similar equity or liability instruments are not available, the fair value shall be estimated by using a valuation technique or model that complies with the measurement objective, as described in
FASB ASC Topic 718.Revenue Recognition
The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the regulated aquaculture industry. Material changesfollowing steps:
| ● | Identification of a contract with a customer; |
| ● | Identification of the performance obligations in the contract; |
| ● | Determination of the transaction price; |
| ● | Allocation of the transaction price to the performance obligations in the contract; and |
| ● | Recognition of revenue when or as the performance obligations are satisfied. |
Revenue is recognized when control of the promised goods or services is transferred to customers, in this industryan amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. As a practical expedient, the applicable regulations could haveCompany does not adjust the transaction price for the effects of a significant impact on our business.
The qualityfinancing component if, at contract inception, the period between customer payment and quantitythe transfer of the aquaculture products we cultivate, harvest and process couldgoods or services is expected to be impacted by biological and environmental risks such as contamination, parasites, predators, disease and pollution. These factors could severely restrict our ability to successfully market our products.
one year or less.During the year ended August 31, 2008, five2022, we recognized revenue of $25,000 ($nil-August 31, 2021), all of which was from one customer.
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The following is the calculation as of August 31, 2022 and 2021.
| | 2022 | | | 2021 | |
Net Loss | | $ | (2,634,545 | ) | | $ | (1,056,649 | ) |
Weighted average shares outstanding, basic and diluted | | | 45,567,354 | | | | 35,198,315 | |
Net loss per share, basic and diluted | | $ | (0.06 | ) | | $ | (0.03 | ) |
The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented.
For the year ended August 31, 2022, the Company has 10,667 potentially dilutive shares from Series A preferred stock and 380,698 potentially dilutive shares from the Series D preferred stock. Any potentially dilutive shares have not been included due to their anti-dilutive effect, as the Company as a net loss.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 – GOING CONCERN
As reflected in the accompanying financial statements, the Company has an accumulated deficit of $32,523,735 as of August 31, 2022, and minimal revenue. These factors raise substantial doubt about its ability to continue as a going concern. The financial statements have been prepared assuming that the Company will continue as a going concern. 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 be necessary should the Company be unable to continue as a going concern.
In order to continue as a going concern, the Company is planning to secure its financial capital in various ways. It will finance its operations initially through shareholder loans from the principals and through private placement investment offerings. The Company may decide to finance its project development stage by way of an equity offering by issuing shares or by engaging venture capital firms that invest in early-stage companies. Venture capital firms August do more than just supply money to small new opportunities. They can also provide advice on potential products, customers, Sea World Fisheries, Turning Point, Organic Ocean Seafood,and key employees.
The company will also look to develop a relationship with a bank or banks with the intention of demonstrating a track record of progress and building value and securing some form of financing in the future. Once Astra Energy Inc. has a record of at least earning significant revenues, and better still of earning profits, the firm can make a credible promise to pay interest, and so it becomes possible for the firm to borrow money. Firms have two main methods of borrowing: banks and bonds.
If Astra Energy is earning profits (their revenues are greater than costs), TriStar Seafood Supply Ltd. And Port Hardy Seafood Ltd., individually accounted for 12%, 12%, 10%, 9%the Company can choose to reinvest some of these profits in equipment, structures, and 5%research and development. For many established companies, reinvesting their own profits is one primary source of financial capital.
Another source of financial capital that will be considered at the project development stage of a specific project is a bond. A bond is a financial contract: a borrower agrees to repay the amount that was borrowed and also a rate of interest over a period of time in the future. A corporate bond is issued by firms, but bonds are also issued by various levels of government. For example, a municipal bond is issued by cities, a state bond by U.S. states, and a Treasury bond by the federal government through the U.S. Department of the Treasury. A bond specifies an amount that will be borrowed, the interest rate that will be paid, and the time until repayment. Given the nature of the renewable industry regarding long term power purchase agreements or our revenues respectively,offtake agreements bonds are a very cost effective and we therefore are materially dependent upon such customers. reliable method of funding projects.
NOTE 4 – PREPAID STOCK FOR ACQUISITION
During the year ended August 31, 2007, four customers, Sea World Fisheries, TriStar Seafood Supply Ltd.2022, the Company entered into an agreement to purchase a 68.2% interest (the “Interest”) in Regreen Technologies Inc., Port Hardy Seafood Ltd.a California corporation in the business of converting solid waste material into a marketable bio-product with its patented series of equipment and Lobsterman, individually accountedprocesses. Regreen is the owner of all the patents for 17%, 13%, 12%the equipment and 12% or our revenues respectively, and we therefore are materially dependent upon such customers. Our ongoing operations are dependent on continued business from these customers.
Location risk
Most, if not all, of our aquaculture are concentrated in one growing region off the coast of Vancouver Island, British Columbia. As such, if there were a major environmental disaster, our ongoing operations could be materially impacted.
Stock-based compensation
We account for stock-based employee compensation arrangements using the fair value method in accordance with the provisionsprocesses.The purchase price of the FASB issued Statement of Financial Accounting Standards No, 123 (revised 2004) (Share-Based Payment) (“SFAS 123R”). SFAS 123RInterest is a revision of SFAS 123 (Accounting for Stock-Based Compensation),$250,000 cash and supersedes Accounting Principles Beard (“APB”) Opinion No. 25 (Accounting for Stock Issued to Employees). SFAS 123R requires that the fair value of employees awards issued, modified, repurchased or cancelled after implementation, under share-based payment arrangements, be measured as10 million shares of the dateCompany’s common stock (the “Astra Shares”). The Closing Date is anticipated to be December 15, 2022.
The cash and share consideration, which will be paid into escrow, will be subject to the awardfollowing milestone and payment schedules:
On the Closing Date, the Company will release 2,500,000 Astra Shares from escrow and pay $50,000 in cash.
Upon completion of the installation and full operation of a Regreen System at the Hesperia, California site, or such other site as the parties agree to in writing, the Company will pay $50,000 cash and release 2,500,000 from escrow.
Upon completion of three months of the Regreen System operating at a minimum of 50% of expected yields, the Company will pay $50,000 cash.
Upon completion of six months of the Regreen System operating at a minimum of 50% of expected yields, the Company will pay $50,000 cash and release 2,500,000 Astra Shares from escrow.
Upon completion of twelve months of the Regreen System operating at a minimum of 50% of expected yields, the Company will pay $50,000 and release 2,500,000 Astra Shares from escrow.
In exchange for the Seller assigning all patents to Regreen, it is issued, modified, repurchased or cancelled. The resulting costagreed that Regreen will pay to the Seller the total sum of $3,000,000 from the proceeds of the sale of a 15TPH Regreen System if the system is then recognizedsold at a minimum price of $12,500,000. If the selling price is less than $12,500,000 the the Seller will receive 8% of the sale price of the 15 TPH system sold and additional 15 TPH systems sold until the Seller has received a total of $3,000,
During the year ended August 31, 2022, the Company entered into an agreement to purchase a 3.8% interest (the “Interest”) in Regreen Technologies Inc., a California corporation in the statementbusiness of earnings overconverting solid waste material into a marketable bio-product with its patented series of equipment and processes. Regreen is the service period.
We periodically issueowner of all the patents for the equipment and the processes.The purchase price of the Interest is $400,000 cash and 1.3 million shares of the Company’s common stock for acquisitions(the “Astra Shares”). The Closing Date is anticipated to be December 15, 2022.
The cash and services rendered. Common stock issued is valuedshare consideration, which will be paid into escrow, will be subject to the following milestone and payment schedules:
On the Closing Date, the Company will pay $50,000 cash and release the 1.3 Astra Shares.
Upon completion of the installation and full operation of a Regreen System at Advanced Waste Disposal in Hesperia, California the estimated fair market value, as determined by our management and boardCompany will pay $50,000 cash.
On March 15, 2023, the Company will pay $150,000 cash.
On December 15, 2023, the Company will pay $150,000 cash.
The prepaid asset of directors. Management and the board of directors consider market price quotations, recent stock offering prices and other factors in determining fair market value for purposes of valuing the common stock. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the various weighted average assumptions, including dividend yield, expected volatility, average risk-free interest rate and expected lives.
Basic and diluted net loss per share
Basic income or loss per share includes no dilution and is computed by dividing net income or loss by the weighted-average number of common shares outstanding for the period. Diluted income or loss per share includes$27,026,000 relates to the potential dilution that could occur if securities or other contractsacquisition of Regreen Technologies, Inc. The valuation of this asset is subject to issue common stock were exercised or converted into common stock (using the treasury stock method for stock options and using the if-converted method for convertible notes), if dilutive.
The following is a reconciliationcompletion of the numerators and denominators of the basic and diluted net income per share computations:
| | | Year ending August 31, 2008 | | | Year ending August 31, 2007 |
| Numerator: | | | | | |
| Net income (loss) applicable to common shareholders | | $ | (4,575,010 | ) | | $ | 3,538,559 |
| | | | | | | | |
| Denominator: | | | -- | | | | -- |
| Denominator for basic net income per share: | | | 23,993,935 | | | | 22,228,633 |
| | | | | | | | |
| Weighted average dilutive potential common shares | | | | | | | |
| | | | | | | | |
| Series A Preferred Stock | | | - | | | | 7,752,699 |
| Series B Preferred Stock | | | - | | | | 1,114,574 |
| Series C Preferred Stock | | | - | | | | - |
| Series D Preferred Stock | | | - | | | | - |
| Options and warrants | | | - | | | | 1,177,982 |
| | | | | | | | |
| Denominator for diluted net income per share | | | 23,993,935 | | | | 32,273,888 |
| | | | | | | | |
| Basic net income (loss) per share | | $ | (0.19 | ) | | $ | 0.16 |
| | | | | | | | |
| Diluted net income (loss) per share | | $ | (0.19 | ) | | $ | 0.11 |
The treasury stock effect of options and warrants to purchase shares of common stock outstanding at August 31, 2008 has not been includedmilestones in the calculation of the net loss per share as such effect would have been anti-dilutive. As a result of these items, the basicunderlying agreement and diluted loss per share for the year ending August 31, 2008 presented are identical.
Recent accounting pronouncements
In December 2007, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin 110 (“SAB 110”). SAB 110 states that the staff will continue to accept, under certain circumstances, the use of the simplified method for estimating the expected term of “plain vanilla” share options in accordance with SFAS 123(R) beyond December 31, 2007.all parties meeting requirements. The Company believes there willamount may be no material impact on the Company’s financial statements upon adoption of this standard.
In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements, and an amendment of ARB Statement No. 51.” SFAS No. 160 amends Accounting Research Bulletin (ARB) No. 51, “Consolidated Financial Statements,” to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 clarifies that a non-controlling interest in a subsidiary, which is sometimes referred to as a minority interest, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, SFAS No. 160 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and the non-controlling interest. SFAS No. 160 will be effective for the Company on August 31, 2009, and is not expected to have a significant impact on the Company’s financial condition or results of operations.
In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations (Revised)”, to replace SFAS No. 141, “Business Combinations. SFAS No. 141(R) requires the useimpacted by cancellation of the acquisition methodand/or inability for parties to meet milestones in future periods. There was no impact to the results of accounting, defines the acquirer, establishes the acquisition date and broadens the scope to all transactions and other events in which one entity obtains control over one or more other businesses. This statement is effective for business combinations or transactions entered into for fiscal years beginning on or after December 15, 2008. The Company is evaluating the impact of SFAS No. 141 (R).
Management has evaluated other recent accounting pronouncements and does not believe that the adoption of these would have a material impact on our consolidated financial statements.
Note 3. Property, Plant and Equipment
Property, plant and equipment at August 31, 2008, consisted of the following:
| | | Cost | | | Accumulated Amortization | | | Net Book Value |
| | | | | | | | | |
| Land | | $ | 236,731 | | | $ | - | | | $ | 236,731 |
| Buildings | | | 1,161,108 | | | | (294,883 | ) | | | 866,225 |
| Seawater piping and tanks | | | 641,535 | | | | (339,478 | ) | | | 302,057 |
| Boats and barge | | | 620,431 | | | | (187,385 | ) | | | 433,046 |
| Field equipment | | | 3,496,702 | | | | (1,444,566 | ) | | | 2,052,136 |
| Office equipment | | | 24,348 | | | | (14,960 | ) | | | 9,388 |
| Vehicles | | | 100,523 | | | | (49,520 | ) | | | 51,003 |
| Computer equipment | | | 55,924 | | | | (24,174 | ) | | | 31,750 |
| | | | | | | | | | | | |
| | | $ | 6,337,302 | | | $ | (2,354,966 | ) | | $ | 3,982,336 |
Depreciation expense for the years ended August 31, 2008 was approximately $563,000.
Property, plant and equipment at August 31, 2007 consisted of the following:
| | | Cost | | | Accumulated Amortization | | | Net Book Value |
| | | | | | | | | |
| Land | | $ | 237,534 | | | $ | - | | | $ | 237,534 |
| Buildings | | | 953,896 | | | | (256,913 | ) | | | 696,983 |
| Seawater piping and tanks | | | 630,877 | | | | (308,509 | ) | | | 322,368 |
| Boats and barge | | | 398,551 | | | | (151,355 | ) | | | 247,196 |
| Field equipment | | | 2,425,922 | | | | (1,012,682 | ) | | | 1,413,240 |
| Office equipment | | | 19,556 | | | | (14,044 | ) | | | 5,512 |
| Vehicles | | | 66,466 | | | | (39,778 | ) | | | 26,688 |
| Computer equipment | | | 28,021 | | | | (14,308 | ) | | | 13,713 |
| | | | | | | | | | | | |
| | | $ | 4,760,823 | | | $ | (1,797,589 | ) | | $ | 2,963,234 |
Depreciation expenseoperations for the year ended August 31, 2007 was approximately $351,000.
Note 4. Related Party Transactions
At2022, as the company has only issued common stock (currently held in escrow) to Regreen for the acquisition. If, upon completion of the acquisition, there has been a material change to the financial condition of Regreen, it may impact the final valuation for the assets acquired and liabilities assumed in the acquisition.NOTE 5 – OTHER RECEIVABLE – RELATED PARTY
During the year ended August 31, 2008, we have five secured notes receivable from RKS Laboratories,2022, the Company advanced $194,520 to Regreen Technologies Inc., a Vancouver research and development company thatrelated party. The advance is working towards developing superior strains of scallops with beneficial traits such as higher meat yield and rapid growth. Robert Saunders, our President and CEO, owns 100% of RKS. The first non-interest bearing, notesunsecured and there are no terms of repayment. The CEO and Managing Director of Regreen Technologies is the holder of 10 million common shares of the Company.
NOTE 6 – DUE TO A RELATED PARTY
During the year ended August 31, 2022, Regreen Technologies Inc., a related party, advanced $270,185 to the Company. The advance is non-interest bearing, unsecured and there are no terms of repayment. The CEO and Managing Director of Regreen Technologies is the holder of 10 million common shares of the Company.
NOTE 7 – OTHER RELATED PARTY TRANSACTIONS
During the year ended August 31, 2022, the Company entered into a services agreement with a director of a wholly-owned subsidiary, whereby the Company agreed to issue 50,000 common shares upon execution of the Agreement. The shares were valued at $0.75 for total non-cash compensation of $37,500.
During the year ended August 31, 2022, the Company issued 150,000 shares at a value of $7,500 to the Corporate Communications Officer pursuant to a services agreement dated January 1, 2021. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 250,000 shares at a value of $195,000 to the Chief Operating Officer pursuant to a services agreement dated February 1, 2021. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 25,000 shares at a value of $57,000 to a Director of the Company pursuant to a services agreement dated August 1, 2022. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 50,000 shares at a value of $114,000 to a Director of the Company pursuant to a services agreement dated August 1, 2022. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company accrued $60,000 in fees to the combined amountPresident. The Company owed $57,500 to the President at August 31, 2022 ($40,000 – August 31, 2021).
During the year ended August 31, 2022, the Company paid $120,000 in fees to the Chief Operating Officer.
During the year ended August 31, 2022, the Company paid $24,000 in fees to the Chief Financial Officer.
During the year ended August 31, 2022, the Company paid $24,000 in fees to the Corporate Secretary.
During the year ended August 31, 2022, the President loaned $20,000 to the Company for working capital. The loan bears no interest, is unsecured and is repayable on demand. The Company owed $20,000 to the President at August 31, 2022 ($nil -August 31, 2021).
During the year ended August 31, 2022, the Chief Operating Officer loaned $20,000 to the Company for working capital. The loan bears no interest, is unsecured and is repayable on demand. The Company owed $20,000 to the Chief Operating Officer at August 31, 2022 ($nil-August 31, 2021).
NOTE 8 – CONVERTIBLE DEBENTURE
On January 11, 2022, the Company entered into a Convertible Debenture agreement, wherein the Company promised to pay Ron and Monique De Jager $20,000 with interest of $81,982 which are secured by all assets of RKS, were originally due8% per annum on or before various dates between June 15, 2007 and August 31, 2008, but were recently extendedJanuary 11, 2024. The Debenture can be converted into 20,000 common shares any time within 2 years with a conversion price of $1.00 per share subject to August 31, 2009. The second non-interest bearing noteadjustments as set out in the amount of $5,328, which is also secured by all assets of RKS, is due on or before November 30, 2008. The fourth non-interest bearing note in the amount of $19,486, which is also secured by all assets of RKS, is due on or before February 28, 2009. The fourth non-interest bearing note in the amount of $2,257, which is also secured by all assets of RKS, is due on or before May 31, 2009. The fifth non-interest bearing note in the amount of $5,026, which is also secured by all assets of RKS, is due on or before August 31, 2009. These amounts are included in assets as loans receivable.
Note 5. Investments in Tenures
Edgewater carries its Investment in Tenures at $3,758 and $3,770 at August 31, 2008 and 2007, respectively. This amount represents the carrying costs of certain shellfish tenures acquired by Island Scallops’ subsidiary, 377332 B.C. Ltd. Shellfish tenures are government-granted rights allowing limited use of offshore waters for the purposes of cultivation of shellfish. The granting of shellfish tenure rights are the responsibility of the Provincial (British Columbia) Government and not the Canadian Federal Government.Debenture. As such, the government assistance that we receive via loan agreement with various Federal Agencies has no effect on our ability to renew and/or modify these tenure agreements. The tenure held by 377332 B.C. Ltd. has an expiration date of July 10, 2021. Other shellfish tenures held by Edgewater and our subsidiaries have expiration dates ranging from 2021 to 2024.
These tenures are considered to have an indefinite useful life because renewal on expiration is anticipated, and are not subject to amortization.
Note 6. Accounts Payable and Accrued Liabilities
Included in accounts payable and accrued liabilities are balances outstanding related to credit cards held in the name of one of our shareholders totaling $33,292 and $25,578 at August 31, 2008 and 2007, respectively. We used these credit cards as a means of short term financing and incur interest charges on such unpaid balances.
Included in accounts payable and accrued liabilities at August 31, 2008, is an amount of $131,859 in respect to an agreement to purchase geoduck seed from us (for additional information see Note 13 – Contingent Liabilities).
Included in accounts payable and accrued liabilities at August 31, 2008 and 2007, is $95,065 and $87,869 of principal due and interest accrued in respect to the loan from the National Research Council of Canada Industrial Research Assistance Program (see Note 9 – Long Term Debt for additional information).
Note 7. Short Term Debt
Included in short-term debt at August 31, 2008, are estimated royalties of $62,522 payable to a third party from whom the former sole shareholder of Island Scallops originally acquired the shares of Island Scallops. The 1992 share purchase agreement (for Island Scallops) provided that the third party was to receive 3% of revenues from Island Scallops as earned, on a quarterly basis, throughout the period from December 1, 1992 to November 30, 2002. The third party holds a first charge (or first lien) over our inventory (including broodstock) in the amount of $328,793 in support of its royalty entitlement. The third party has not taken further action to enforce payment of the arrears liability. To date, we have accrued the entire balance of $62,522 as a current liability and we plan to pay it with available funds in the near future.
Included in short-term notes payable at August 31, 2008, is an unsecured non-interest bearing demand loan payable to an individual with a face value of $47,126 and no specific terms of repayment. However, the lender had previously informally requested that the loan be repaid in full by October 6, 2008.
Note 8. Line of Credit
Included in line of credit at August 31, 2008 are two bank lines of credit. The first line is a $78,000 bank line of credit for Island Scallops. The interest rate on the line of credit is 7.5% as of August 31,
2008. At August 31, 2008,2022 there was $630 interest owing to the
balance due is $77,795. Holders.NOTE 9 – PREFERRED STOCK
Series A Convertible Preferred
The second line isSeries A Convertible Preferred have a $50,000 bank line of credit for Island Scallops. The interest rate on the line of credit is 6.5% as of August 31, 2008. At August 31, 2008, the balance due is $46,971. This second line of credit is subject to a personal guarantee by our Chairman and CEO, Robert Saunders.
Note 9. Long Term Debt
These consolidated financial statements include a Western Diversification Program non-interest bearing loan to Island Scallops that requires repayment equal to 12% of gross revenues from our scallop sales, payable semi-annually, with no specified due date. The repayment terms have been formally amended several times. Most recently, in June 2008, the Western Diversification Program agreed to allow Island Scallops to suspend repayment of the roughly $402,000 loan until October 2008. Starting in October 2008, Island Scallops began repaying the loan at aconversion rate of $9,394$0.75 per month for five months. Once Island Scallops has completed these five monthsshare and voting rights on an as converted basis. The holders of loan paymentsrecord of shares of Series A Preferred Stock are completed,entitled to receive, out of any assets at the Western Diversification Program has agreed to base quarterly repayments on 3%time legally available therefor and when and as declared by the Board of the gross scallop sales (as opposed to the originally agreed upon 4%) or $23,485 whichever is greater. The company is currently seeking to renegotiate this new agreement to further extend the repayment terms. At August 31, 2008, the balance due is $381,286, of which $117,426 is reflected in the current portion of long term debt and the remaining balance of $284,970 is reflected as long term debt.
These consolidated financial statements include Island Scallops’ unsecured loan from the National Research Council of Canada Industrial Research Assistance Program which requires quarterly payments commencing March 1, 2003 equal to 3% of gross revenues of Island Scallops until the earlier of full repayment or December 1, 2012. IfDirectors, dividends at December 1, 2012, Island Scallops has not earned sufficient revenues to be required to repay the original loan amount, the remaining portion of the loan is to be forgiven. Amounts currently due at August 31, 2008, bear interest at a rate of 1%8% per month. At August 31, 2008, Island Scallops isannum in arrears in respect to the payment of these amounts. The National Council of Canada Industrial Research Assistance Program has requested payment of the $95,065 that they claim is owed under this loan agreement. As such, at August 31, 2008, $95,065 is included in accounts payable and accrued liabilities and the remaining full principal balance of $279,459 is reflected in the current portion of long term debt. We are seeking to renegotiate the repayment terms.
These consolidated financial statements include Island Scallop’s mortgage loan repayable at $2,677 per month (currently interest only calculated at 10.5% per annum). The loan is secured by a second charge on the real property of Island Scallops. At August 31, 2008, the principal due is $263,034.
As a result, at August 31, 2008, we had $944,889 of long-term debt less a current portion of $396,885 for a balance of $548,004. Principal payments due within each of the next five fiscal years and subsequently, in respect to long term debt are approximately as follows:
| 2009 | | $ | 396,885 |
| 2010 | | | 187,882 |
| 2011 | | | 93,941 |
| 2012 | | | 3,147 |
| 2013 | | | - |
| 2014 and beyond | | $ | 263,034 |
| | | | |
| | | $ | 944,889 |
Note 10. Series C Preferred Stock Financing
We completed a private equity financing of $897,444 on November 5, 2007, with one accredited investor. Net proceeds from the offering are approximately $801,000. As part of this financing, the investor returned the Series J Warrant, Series D Warrant, Series E Warrant and Series F Warrant that they received as a result of our Series B financing completed on January 16, 2007. Pursuant to this financing, we issued 747,870 shares of our
common stock. On January 19, 2022, 8,000 shares of Series
CA Preferred Stock were cancelled. The shares were cancelled at the direction of the holder of the Series A Preferred Stock. Subsequent to the cancellation, 7,774 shares of Series A Preferred Stock remain outstanding. The outstanding shares can be converted to 10,365 common shares.Series A1 Preferred
On April 24, 2020, the Company created and filed a Certificate of Designation for one share of Series A1 Preferred Stock, par value $0.001 per share$0.0001. On January 21, 2022, the board of directors of the Company changed the designation of Series A1 by eliminating its conversion and voting rights. On January 13, 2022, the Company and the investor also received one of eachsole shareholder of the following warrants: (i) Series A Warrant, (ii) A1 Preferred share entered into a share cancellation agreement, whereby, the sole shareholder of the Series A1 Preferred Shares agreed to the cancellation of the one share of Series A1 Preferred Shares issued and outstanding.
Series B Warrant, (iii) Series C Warrant, (iv) Series J Warrant, (v) Series D Warrant, (vi) Series E Warrant, and (vii) Series F Warrant, each to purchase a number ofPreferred
The Company has authorized 100,000 shares of common stock equalSeries B Preferred Stock. The conversion rights of Series Preferred B were required to fifty percent (50%)be exercised within 5 years. The conversion rights have expired without any of the number of shares of common stock issuable upon conversion of the purchaser’s preferred stock, except for thebeing converted. Series J Warrants, which shall entitle the investorB shares are not entitled to purchase a number of shares of our dividends or liquidation preferences and have no voting rights.
Series C Preferred Stock equal to one hundred percent (100%) of the number
The Company has authorized 1,000,000 shares of Series C Preferred Stock it received in the financing. Each of the Warrants has a term of 5 years, except for the Series J Warrants, which have a term of 1 year.Stock. Each share of the preferred stockSeries C is convertible into one fully paid and nonassessable share of our common stock at an initial conversion price of $1.20, subject to adjustment. We are obligatedThe conversion rights of Series Preferred C were required to file a registration statement on or before Decemberbe exercised within 5 2007 providing for the resaleyears. The conversion rights have expired without any of the shares of common stock issuable upon conversion of the preferred stock and the shares of common stock underlying the Warrants and underlying the preferred stock issuable upon exercise of the Warrants. In connection with the financing, our management agreed not to sell any of our securities owned by them, their affiliates or anyone they have influence over until the registration statementbeing converted.
Series D Preferred
The Company has been effective for nine months. In connection with the financing, a deemed dividend was recorded for $163,386 based on the relative fair values of the preferred shares and warrants.
In connection with this financing, we paid cash compensation to a placement consultant in the amount of approximately $72,000 and issued him placement consultant warrants, exercisable for a period of three years from the date of issue. The placement consultant's warrants allow him to purchase up to (i) 74,787authorized 380,000 shares of Series C Preferred Stock, and each of the following warrants, which are identical to the warrants issued to the investors of the financing: (i) Series A Warrant, (ii) Series B Warrant, (iii) Series C Warrant, (iv) Series D Warrant, (v) Series J Warrant, (vi) Series E Warrant, and (vii) Series F Warrant, each to purchase 37,393 shares of common stock, except for the Series J Warrants, which shall entitle the Consultant to purchase 74,787 shares of our Series C Preferred Stock.
The net proceeds from the financing are to be used for working capital and general corporate purposes.
Note 11. Series D Preferred Stock Financing
On May 29, 2008, we signed a Series D Convertible Preferred Stock Purchase Agreement with one accredited investor whereby such investor was committed, subject to the satisfaction of certain closing conditions, to purchase $1,500,000 of our Series D Preferred Shares. As part of this financing, we also entered into an Exchange Agreement with the investor and certain other holders of our outstanding warrants, whereby the Series J Warrant that the investor received pursuant to the financing we closed on November 5, 2007, as disclosed in the Form 8-K filed on November 7, 2007, was cancelled, and the investor and certain other holders of our outstanding warrants returned to us warrants to purchase an aggregate of 24,941,605 shares of our common stock, which the investor and such other warrant holders received pursuant to the financings we closed on: (i) April 12, 2006, as disclosed in our Form 8-K filed on April 14, 2007; (ii) May 30, 2006, as disclosed in our Form 8-K filed on May 30, 2006; and (iii) November 5, 2007, as disclosed in our Form 8-K filed on November 7, 2007, in exchange for an aggregate of 267,059 Series D Preferred Shares. The net proceeds from the financing are to be used for supplies, processing plant upgrades, working capital and general corporate purposes. All of the closing conditions were satisfied and accordingly we completed the private equity financing and received net proceeds of approximately $1.46 million on June 11, 2008. In connection with the financing, a deemed dividend was recorded for $100,360 based on the relative fair values of the preferred shares and exchanged warrants.
Pursuant to the financing, we filed a Certificate of Designation of the Relative Rights and Preferences of our Series D Convertible Preferred Stock on May 29, 2008. The Certificate of Designation designates 380,000 shares of our authorized preferred stock as Series D Convertible Preferred Stock, which ranks junior to our Series A, Series B and Series C Convertible Preferred Stock, but senior to our common stock. Except with respect to specified transactions that
mayAugust affect the rights, preferences, privileges or voting power of the Series D Preferred Shares and except as otherwise required by Nevada law, the Series D Preferred Shares have no voting rights. At any time on or after the issuance date, the holder of any Series D Preferred Shares
may,August, at the
holder'sholder’s option, elect to convert all or any portion of the Series D Preferred Shares held by such person into a number of fully paid and nonassessable shares of common stock equal to the quotient of (i) the stated value ($40.00 per share) of the Series D Preferred Shares being converted divided by (ii) the conversion price, which initially is $0.80 per share, subject to certain adjustments.
In the event of our liquidation, dissolution or winding up, the holders shall be entitled to receive, a liquidation preferenceout of the assets of the Company available for distribution, an amount equal to 120%the Liquidation Preference Amount which is the product of the stated valuestocks Stated Value of $40.00 per Series D Preferred Share.
Note 12. Preferredshare plus 120% before any payment or distribution of assets to the holders of Common Stock Dividends
On Decemberor any other Junior Stock. NOTE 10 – COMMON STOCK
The Company affected a forward stock split of 3 for 1 on September 15, 2021, which was approved by the Financial Industry Regulatory Authority (“FINRA”). All shares throughout these financial statements have been retroactively adjusted to reflect the forward split.
During the year ended August 31, 2006, we2022, the Company issued 138,565200,000 common shares at a price of $0.90 per share in exchange for services for total non-cash compensation of $180,000. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 500,000 common shares at a price of $0.78 per share in exchange for services for total non-cash compensation of $390,000. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 70,000 common shares at a price of $1.06 per share in exchange for services for total non-cash compensation of $74,200. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 50,000 common shares at a price of $0.51 per share in exchange for services for total non-cash compensation of $25,500. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 25,000 common shares at a price of $0.53 per share in exchange for services for total non-cash compensation of $13,250. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 50,000 common shares at a price of $1.00 per share in exchange for services for total non-cash compensation of $50,000. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 100,000 common shares at a price of $2.28 per share in exchange for services for total non-cash compensation of $228,000. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 50,000 common shares at a price of $0.51 per share in exchange for services for total non-cash compensation of $25,500. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 150,000 common shares at a price of $0.50 per share in exchange for inventory. The shares were valued based on the price at which the Company was completing private placements and upon mutual agreement by the Company and the creditor.
During the year ended August 31, 2022, the Company sold 2,286,000 Units of its common stock at $0.50, for total cash proceeds of $1,143,000.
Refer to Note 7 for related party transactions.
NOTE 11 – STOCK SUBSCRIPTIONS RECEIVABLE
During the Series A Convertible Preferred Stock holders.year ended August 31, 2022, the Company issued 10,000 common shares pursuant to a Share Subscription Agreement in exchange for $5,000. The shares are included in the total number of shares issued wasand outstanding at August 31, 2022.
NOTE 12 – COMMON STOCK TO BE ISSUED
During the year ended August 31, 2022, the Company accepted a Share Subscription Agreement for $20,000. The funds were received in August 2022 but the shares were not issued until September 2022.
NOTE 13 – WARRANTS
During the year ended August 31, 2022, the Company sold 2,286,000 Units of its common stock. Each Unit consists of one common share and one warrant to purchase one additional share of common stock.
The aggregate fair value of the 2,286,000 warrants, totaled $992,775 based on the Dividend Payment at aBlack Scholes Merton pricing model using the following estimates: exercise price of $1.00, 0.52% risk free rate, of 8% per annum (subject to a pro rata adjustment)761% volatility and expected life of the Liquidation Preference Amount ($1,416,000 for the April 12 financing, $1,500,000 for the May 30 financing, $1,550,000 for the June 30 financing and $1,450,000 for the July 11 financing) payable in shares equal to 90%warrants of the quotient of (i) the Dividend Payment divided by (ii) the average of the VWAP for the twenty (20) trading days immediately preceding the date the Dividend Payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $234,000 and the total aggregate2 years. The value of the transaction was recorded as a preferred stock dividend.
On June 30, 2007, we issued 137,685 shareswarrants has been netted against the proceeds of
common stockthe offering proceeds and accounted for in additional paid in capital up to the
investorsamount of
our April 12, Mayproceeds received. The Warrant must be exercised at the earlier of Two (2) years from the date of issuance, or within 30
June 30 and July 11, 2006 financings as paymentdays after the Company stock closes at or above $1.00 for five (5) consecutive trading days. | | Number of Warrants | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contract Term | | | Weighted Average Fair Value | |
Outstanding, August 31, 2021 | | | - | | | $ | - | | | | - | | | | |
Granted | | | 2,326,000 | | | $ | 1.00 | | | | 2.00 | | | $ | 1.40 | |
Outstanding, August 31, 2022 | | | 2,326,000 | | | $ | 1.00 | | | | 1.54 | | | $ | 1.40 | |
NOTE 14 – INCOME TAXES
At August 31, 2022, the Company had net operating loss carry forwards of approximately $6,830,000 that August be offset against future taxable income. No tax benefit has been reported in the August 31, 2022 or 2021 financial statements since the potential tax benefit is offset by a valuation allowance of the semi-annual dividend (8% per annum) persame amount.
On December 22, 2017, the termsU.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cut and Jobs Act (the “Tax Act”). The Tax Act establishes new tax laws that affects 2018 and future years, including a reduction in the U.S. federal corporate income tax rate to 21% effective January 1, 2018.
The provision for Federal income tax consists of the Certificate of Designation offollowing for the Relative Rights and Preferences ofyears ended August 31, 2022 or 2021:
| | 2022 | | | 2021 | |
Federal income tax benefit attributable to: | | | | | | |
Current operations | | $ | 553,000 | | | $ | 222,000 | |
Less: valuation allowance | | | (553,000 | ) | | | (222,000 | ) |
Net provision for Federal income taxes | | $ | — | | | $ | — | |
The cumulative tax effect at the Series A Convertible Preferred Stock. The number of shares issued was based on the dividend payment at aexpected rate of 8% per annum (subject to a pro rata adjustment)21% (the U.S. federal income tax rate of the Liquidation Preference Amount ($1,416,000 for the April 12 financing, $1,500,000 for the May 30 financing, $1,550,000 for the June 30 financing and $1,450,000 for the July 11 financing) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment21% is being used due but in no event less than $0.65. As such, the shares were valued at approximately $228,000 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On June 30, 2007, we issued 33,589 shares of common stock to the investorsnew tax law recently enacted) of significant items comprising our January 16, 2007 financingnet deferred tax amount is as payment of the semi-annual dividend (6% per annum) per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series B Convertible Preferred Stock (see Note 9 – Series B Preferred Shares Financing for additional information on the Series B Convertible Preferred Stock). The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $56,000 and the total aggregate value of the transaction was recordedfollows as a preferred stock dividend.
On December 31, 2007, we issued 172,750 shares of common stock to the investors of our April 12, May 30, June 30 and July 11, 2006 financings as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series A Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 8% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000 for the April 12 financing, $1,500,000 for the May 30 financing, $1,550,000 for the June 30 financing and $1,450,000 for the July 11 financing) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $233,500 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On December 31, 2007, we issued 45,999 shares of common stock to the investors of our January 16, 2007 financing as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series B Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $63,000 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On December 31, 2007, we issued 17,883 shares of common stock to the investors of our November 5, 2007 financing as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series C Convertible Preferred Stock The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount (approximately $897,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $24,000 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On June 30, 2008, we issued 325,575 shares of common stock to the investors of our April 12, May 30, June 30 and July 11, 2006 financings as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series A Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 8% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000 for the April 12 financing, $1,500,000 for the May 30 financing, $1,550,000 for the June 30 financing and $1,450,000 for the July 11 financing) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $233,500 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On June 30, 2008, we issued 86,691 shares of common stock to the investors of our January 16, 2007 financing as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series B Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $62,500 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On June 30, 2008, we issued 33,704 shares of common stock to the investors of our November 5, 2007 financing as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series C Convertible Preferred Stock. (See Note10 – Series C Preferred Shares Financing for additional information on the Series C Convertible Preferred Stock). The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount (approximately $897,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $24,000 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
Note 13. Contingent Liabilities
Our wholly owned subsidiary, Island Scallops, entered into an agreement in 1998 with two parties, under which Island Scallops was to produce and sell geoduck seed to the two parties. Island Scallops received advance payments from each of the two parties in 2002 of approximately $64,140 and recognized related revenue of $43,705 in respect to seed delivered in 2002. The balance of the deposits received (advance payments), net of sales, totaling $131,859, is included in accounts payable and accrued liabilities.
Management’s position is that the two parties violated the terms of the agreement and we are therefore entitled to retain the balance of the deposits. Per the terms of the original agreement, Island Scallops was entitled to make up any shortfall in the product produced in the following year. Although product was available and offered by Island Scallops in the following year, the two parties refused to honor the terms of the agreement and would not accept the product (to make up the shortfall) in the following year.
As of August 31, 2004, one2022 or 2021: | | 2022 | | | 2021 | |
Deferred Tax Assets: | | | | | | |
NOL Carryover | | $ | 6,830,000 | | | $ | 6,278,000 | |
Less valuation allowance | | | (6,830,000 | ) | | | (6,278,000 | ) |
Net deferred tax assets | | $ | — | | | $ | — | |
Due to the change in ownership provisions of the two parties made claims that Island Scallops owed it an amount totaling $88,925. This particular party believed that the agreement required Island Scallops to deliver the product in year one and did not allow Island Scallops to make up any shortfall with product produced in the following year. The balance included in accounts payable and accrued liabilities related to this party is $35,228.
Any additional liability to us, or any reductionTax Reform Act of the currently recognized liability, in respect to these deposits will be recorded at the time a conclusion to this matter can be determined.
Neither we nor our wholly owned subsidiary maintain insurance covering the replacement of our inventory. Consequently, we are exposed to financial losses or failure as a result of this risk.
Note 14. Income Taxes
We did not provide any current or deferred United States federal, state or foreign1986, net operating loss carry forwards for Federal income tax
provision or benefit forreporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards August be limited as to use in future years. The Company is evaluating the
period presented because we have experienced operation losses since inception. We have provided a full valuation allowanceeffects of its recent change in ownership on its NOL.ASC Topic 740 provides guidance on the deferred tax asset, consisting primarily of unclaimed research and development expenditures, because ofaccounting for uncertainty regarding our ability to realize the benefit.
Deferredin income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities forrecognized in a company’s financial reporting purposes and the amounts used for income tax purposes. Significant components of the net deferred taxes at August 31, 2008 and 2007 are as follows:
| | | August 31, | | | August 31, | |
| | | 2008 | | | 2007 | |
| Deferred tax asset attributable to: | | | | | | |
| Net operating loss carryover | | $ | 4,386,000 | | | $ | 3,541,000 | |
| Less, valuation allowance | | | (4,386,000 | ) | | | (3,541,000 | ) |
| Total net deferred tax asset | | $ | - | | | $ | - | |
We follow Statement of Financial Accounting Standards Number 109 (SFAS 109), “Accounting for Income Taxes.” SFAS No. 109statements. Topic 740 requires a
valuation allowance, if any,company to
reduce the deferred tax assets reported if, based on the weight of the evidence,determine whether it is more likely than not that
some portion or alla tax position will be sustained upon examination based upon the technical merits of the
deferredposition. If the more-likely-than-not threshold is met, a company must measure the tax
assets will not be realized. Management has determined that a valuation allowanceposition to determine the amount to recognize in the financial statements.The Company includes interest and penalties arising from the underpayment of approximately $4,386,000 and $3,541,000 atincome taxes in the statements of operations in the provision for income taxes. As of August 31, 2008 and 2007 is necessary2022, the Company had no accrued interest or penalties related to reduceuncertain tax positions.
NOTE 15 –SUBSEQUENT EVENTS
During the deferred tax assets toquarter ended November 30, 2022, the amount that will more than likely than not be realized. The changeCompany acquired 3.1% interest in valuation allowanceRegreen Technologies Inc. in exchange for 2008 and 2007 was approximately $845,000 and $1,117,000 respectively.
At August 31, 2008, and 2007 we had net operating loss carryforwards amounting to approximately $2,336,000 and $6,960,000 for U.S. and Canadian tax purposes, respectively, that expires in various amounts beginning in 2009 and 2009 in the U.S. and Canada, respectively.
The federal statutory tax rate reconciled to the effective tax rate for 2008 and 2007 are as follows:
| | | 2008 | | | 2007 | |
| Tax at U.S. statutory rate | | | 34.0 | % | | | 34 | % |
| State tax rate, net of federal benefits | | | 0.0 | | | | 0.0 | |
| Foreign tax rate in excess of U.S. statutory rate | | | 17.6 | % | | | 17.6 | % |
| Change in valuation allowance | | | (51.6 | %) | | | (51.6 | %) |
| Effective tax rate | | | 0.0 | % | | | 0.0 | % |
Note 15. Stock-Compensation and Option Expense
Stock Compensation
In June 2007, our wholly owned subsidiary, Island Scallops, Ltd. entered into a Consulting Agreement with Pacific Crab Co., pursuant to which ISL will issue a total of 100,0002,750,000 shares of
ourthe Company’s common stock.During the quarter ended November 30, 2022, the Company issued 599,000 shares of the Company's common stock for cash proceeds of $299,500.
During the quarter ended November 30, 2022, the Company issued 550,000 shares of the Company's common stock in exchange for consulting and marketing services Pacific will provide to ISL. Pursuant toservices.
On October 27, 2022, the agreement, ISL issued 40,000 of such shares to Pacific when the Agreement was signed; the remaining 60,000 shares will vest ratably (5,000 shares per month) at the beginning of each month for each month during the termCompany acquired 50% of the agreement, which initially is twelve months. ISL also agreed that if certain goals are met within the agreed upon timeframe, it will issue 15,000outstanding shares to Pacific at such time as the goals are reached,of Astra-Holcomb Energy Systems LLC., a Delaware entity, in which case the remaining 45,000exchange for 5 million shares will continue to vest as described above. The 40,000 shares issued were valued at $1.55 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized byCompany’s common stock. Astra-Holcomb Energy Systems LLC holds the companyexclusive rights to manufacture and distribute the patented Holcomb Energy System In-Line Power Generator. There are no other assets and no liabilities in 2007 was $62,000. Going forward the cost of these shares will be expense at current market price as they are issued.
On October 31, 2007, we issued 25,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 35,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 25,000 shares issued were valued at $1.28 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $32,000. Going forward the cost of these shares will be expense at current market price as they are issued.
Astra-Holcomb Energy Systems LLC.On November 30, 2007 we issued 5,000 shares of common stock to Pacific Crab Seafood20, 2022, the Company and its subsidiary, Regreen Technologies Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 30,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $1.25 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $6,250. Going forward the cost of these shares will be expense at current market price as they are issued.
On January 1, 2008 we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 25,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $1.35 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $6,750. Going forward the cost of these shares will be expense at current market price as they are issued.
On February 1, 2008 we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 20,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $0.98 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $4,900. Going forward the cost of these shares will be expense at current market price as they are issued.
On March 4, 2008 we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 15,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $0.95 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $4,750. Going forward the cost of these shares will be expense at current market price as they are issued.
On April 1, 2008, we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 10,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $0.95 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $4,750. Going forward the cost of these shares will be expense at current market price as they are issued.
On April 1, 2008, we issued 25,000 shares of common stock to Consulting for Strategic Growth, Inc. as part of the 25,000 shares of our common stock that our Board of Directors previously approved for the consulting and investor relations services that they will provide to us. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 25,000 shares issued were valued at $0.95 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $23,750. Going forward the cost of these shares will be expense at current market price as they are issued.
On May 19, 2008, we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 5,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $0.80 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $4,000. Going forward the cost of these shares will be expense at current market price as they are issued.
On June 20, 2008, we issued the final 5,000 share installment of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $0.80 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $4,000. Going forward the cost of these shares will be expense at current market price as they are issued.
Stock Options
In August 2005, our Board of Directors approved the “Edgewater Foods International 2005 Equity Incentive Plan.” The Board of Directors reserved 5,000,000 shares of our common stock to be issued in the form of incentive and/or non-qualified stock options for employees, directors and consultants to Edgewater. As of August 31, 2008, our Board of Directors had authorized the issuance of 2,962,000 options to employees.
During the years ended August 31, 2008 and 2007, $1,780,882 and $486,118 in stock option expenses were recognized respectively. An additional, $6,789 will be recognized in the three month period ending November 30, 2009.
Stock option activity during the period ending August 31, 2008 and 2007, was as follows:
| | | Number of Shares | | | Weighted Average Exercise Price |
| Outstanding, August 31, 2006 | | | 282,000 | | | $ | 1.50 |
| Granted | | | 2,680,000 | | | | 1.25 |
| Exercised | | | -- | | | | -- |
| Forfeited | | | -- | | | | -- |
| Expired | | | -- | | | | -- |
| Outstanding, August 31, 2007 | | | 2,962,000 | | | | 1.26 |
| Granted | | | 30,000 | | | | 1.21 |
| Exercised | | | -- | | | | -- |
| Forfeited | | | (400,000 | ) | | | 1.50 |
| Expired | | | -- | | | | -- |
| Outstanding, August 31, 2008 | | | 2,592,000 | | | $ | 1.23 |
| Exercisable, August 31, 2008 | | | 2,592,000 | | | $ | 1.23 |
At August 31, 2008, 62,000 of the exercisable options expire in August 2010, 190,000 of exercisable options expire in April of 2012, 2,120,000 of the exercisable options expire in August 2012 with the remaining balance of 220,000 having an expiration date of August 2015.
Warrant activity during the period ending August 31, 2008 and 2007, was as follows:
| | | Number of Warrants | | | Weighted Average Exercise Price |
| Outstanding, August 31, 2006 | | | 22,207,487 | | | $ | 1.52 |
| Granted | | | 8,144,365 | | | | 1.87 |
| Exercised | | | 2,265,600 | | | | 0.56 |
| Forfeited | | | -- | | | | -- |
| Expired | | | -- | | | | -- |
| Outstanding, August 31, 2007 | | | 28,086,252 | | | | 1.75 |
| Granted | | | 3,028,873 | | | | 2.00 |
| Exercised | | | -- | | | | -- |
| Forfeited | | | -- | | | | -- |
| Returned and exchanged | | | (29,428,826 | ) | | | 1.75 |
| Expired | | | (304,347 | ) | | | 1.30 |
| Outstanding, August 31, 2008 | | | 1,381,952 | | | $ | 1.33 |
| Exercisable, August 31, 2008 | | | 1,381,952 | | | $ | 1.33 |
At August 31, 2008, if all options and warrants were exercised and all shares of preferred stock were converted, the company would have 65,526,278 shares of common stock outstanding.
Note 16. Commitments and Contingencies
Corporate Offices
For the fiscal year ended August 31, 2008, our U.S. corporate office was located at 400 Professional Drive, Suite 310, Gaithersburg, Maryland 20878. This space was provided on a rent free basis by one of our shareholders. As a result, we did not recognize rental expense in the fiscal year.
Employment Agreements
We entered into an employment agreement with Mr. Robert Saunders as our Chairman and President effective on June 29, 2005. Subsequently in August 2005, Mr. Saunders was appointed CEO by our Board of Directors. Mr. Saunders will serve at the pleasure of the Board of Directors. For serving as President, Mr. Saunders’ compensation will be US $60,000 per annum. Additionally, we agreed to grant Mr. Saunders a signing bonus of US $150,000 to be paid on closing of at least US $3,500,000 in third party financing and increase his compensation to $120,000 per annum if we receive at least US $5,000,000 in outside funding. After the completion of our Series A Preferred Stock Financing, Mr. Saunders was due the signing bonus of $150,000 and a monthly salary of $10,000 per month beginning in August 2006. However, Mr. Saunders agreed to reduce his monthly salary to $5,000 per month until such time that we become significantly cash flow positive for its operations. As of August 31, 2008 we had paid Mr. Saunders $100,000 of the $150,000 bonus that was due under the terms of the agreement. Additionally, we are currently discussing possible restructuring/payment terms of the accrued salary of $190,000 as of August 31, 2008 until such time that we become significantly cash flow positive for its operations. As of August 31, 2008, the term of the initial employment agreement had expired and we are currently discussing finalizing a new employment agreement. Until a new agreement is completed, we will continue to operate under the terms of this agreement.
Marketing Consulting Agreements
In June 2007, our wholly owned subsidiary, Island Scallops, Ltd. (“
ISL”Regreen”) entered into a
ConsultingJoint Venture Investment Cooperation Agreement with
Viecotech Joint Stock Company, a Vietnamese based company. The Joint Venture will manufacture, distribute, and deploy the patented Regreen waste processing system in the Asia Pacific
Crab Co. (the “consultant’)region. Regreen will hold 50% ownership in the Joint Venture. The agreement will be completed upon receipt by Regreen of certain payments from Viecotech.Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There were no disagreements related to develop new marketsaccounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and facilitateinterim periods.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the salesupervision and distribution of ISL’s products. As compensation forwith the consultant’s marketing services, ISL shall pay the consultant $12,500 per month for the next twelve months. In addition and pursuant to the terms of the agreement, the Company will issue a total of 100,000 sharesparticipation of our common stock (under an agreed upon schedule) in exchange for consultingmanagement, including our principal executive officer and marketing services Pacific will provide to ISL. (for additional information on the distribution schedule see Note 15 – Stock Compensation Expense). This agreement expired in June 2008 and we are currently operating without a new marketing consulting agreement.
Note 17. Subsequent Events
On September 8, 2008, our board of directors authorized the issuance of an aggregate of 100,000 options to purchase our common stock to one of our directors pursuant to the “Edgewater Foods International 2005 Equity Incentive Plan.” The options vest in two equal installments over the next two years (on September 8, 2009 and 2010). Each option is exercisable for a period of five years from the issuance date and has an exercise price of $0.45 respectively. Pursuant to this option, we will incur approximately an additional $43,000 through August 31, 2010. We used the Black Scholes option-pricing model with the following assumptions: an expected life equal to the contractual term of the options (five), underlying stock price of $0.45 per share, no dividends; a risk free rate of 2.96%, which equals the one, three and six-year yield on Treasury bonds at constant (or fixed) maturity and volatility of 175%. However, at the date of this Report, we have not yet issued this option.
In November 2008, our wholly owned subsidiary – Island Scallops, Ltd., entered into a Share Exchange Agreement with Granscal Sea Farms Ltd., a Kanish Bay Company and Granscal’s sole shareholder. Pursuant to the Agreement, Granscal’s sole shareholder shall assign and transfer all of his Granscal shares to Island Scallop in exchange for: (i) 400,000 restricted shares of our common stock; (ii) a sum equal to 50% of the gross revenue Island Scallops earns on account of the sale of Granscal’s 2004, 2005 and 2006 brood year inventory currently in the water – to be paid outprincipal financial officer, as and when Island Scallops receives it; and (iii) an aggregate cash fee of $30,000. Pursuant to the Agreement; Island Scallops also agreed to pay the $35,000 that Granscal owes to the Bank of Montreal.
The $30,000 cash fee shall be paid in $5,000 monthly installments beginning on September 30, 2008 and continuing until the cash fee is fully paid. The cash fee is secured by a Promissory Note between Island Scallop and Granscal’s sole shareholder, who is also Granscal’s Chief Executive Officer. The Promissory Note does not contain any interest, but is immediately due and payable if Island Scallop remains in default of the Promissory Note after a10 day cure period. Pursuant to the Promissory Note, Granscal shall have a security interest in one of Island Scallops commercial vessels until the Promissory Note is fully repaid.
Note 18. Going Concern
Prior to the completion of our initial Preferred Stock Financing, working capital had been primarily financed with various forms of debt. We have suffered operating losses since inception in our efforts to establish and execute our business strategy. As of August 31, 2008, we had a cash balance of approximately $712,000. After the completion of the recent Series D preferred financing (see Note 11 – Series D Preferred Stock Financing for additional information), management believed that we had adequate funds to maintain our business operations into our 2009 fiscal year and/or until we become cash flow positive, but we continued to suffer operational losses in our 2008 fiscal year. Until our operations are able to demonstrate and maintain positive cash flows, we may require additional working capital to fund our ongoing operations and execute our business strategy of expanding our operations. In fact, based on our current estimates of future sales and capital costs of expanding our farms in order to increase future crop yields, we will require additional financings to continue expand our operations. Based on these factors, there is substantial doubt about our ability to continue as a going concern.
The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should we be unable to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate sufficient cash flows to meet our obligations on a timely basis and ultimately to attain profitability. Our management intends to obtain working capital through operations and to seek additional funding through debt and equity offerings to help fund our operations as we expand. There is no assurance that we will be successful in our efforts to raise additional working capital or achieve profitable operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 19. Foreign Operations
Our share of net assets held outside the United States totaled approximately $6,653,000 and $5,007,000 at August 31, 2008 and 2007, respectively.
ITEM 8. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
We have had no disagreements with our certified public accountants with respect to accounting practices or procedures or financial disclosure.
ITEM 8A. | CONTROLS AND PROCEDURES |
Quarterly Evaluation of Controls
As of the end of the period covered by this annual report, on Form 10-K, the Company evaluatedwe conducted an evaluation of the effectiveness of the design and operation of (i) theirour disclosure controls and procedures, as defined in Rules 13a-15(e) and (ii) their internal control over financial reporting. The evaluators who performed this evaluation were our Chief Executive Officer, Robert Saunders and Acting Chief Accounting Officer, Michael Boswell; their conclusions, based on and as of the date of the Evaluation (i) with respect to the effectiveness of our Disclosure Controls and (ii) with respect to any change in our Internal Controls that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect our Internal Controls are presented below.
CEO and CFO Certifications
Attached to this annual report, as Exhibits 31.1 and 31.2, are certain certifications of the CEO and Acting CAO, which are required in accordance with the Exchange Act and the Commission’s rules implementing such section (the "Rule 13a-14(a)/15d-14(a) Certifications"). This section of the annual report contains the information concerning the Evaluation referred to in the Rule 13a-14(a)/15d-14(a) Certifications. This information should be read in conjunction with the Rule 13a-14(a)/15d-14(a) Certifications for a more complete understanding of the topic presented.
Disclosure Controls and Internal Controls
Disclosure Controls are procedures designed with the objective of ensuring that information required to be disclosed in the Company's reports filed with the Securities and Exchange Commission15d-15(e) under the Securities Exchange Act such as this annual report, is recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms. Disclosure Controls are also designed with the objective of ensuring that material information relating to the Company is made known to the CEO and the Acting CAO by others, particularly during the period in which the applicable report is being prepared. Internal Controls, on the other hand, are procedures which are designed with the objective of providing reasonable assurance that (i) the Company's transactions are properly authorized, (ii) the Company’s assets are safeguarded against unauthorized or improper use, and (iii) the Company's transactions are properly recorded and reported, all to permit the preparation of complete and accurate financial statements in conformity with accounting principals generally accepted in the United States.
Limitations on the Effectiveness of Controls
The Company's management does not expect that their Disclosure Controls or their Internal Controls will prevent all error and all fraud. A control system, no matter how well developed and operated, can provide only reasonable, but not absolute assurance that the objectives of the control system are met. Further, the design of the control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of a system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or because the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Scope of the Evaluation
The CEO and Acting CAO’s evaluation of the our Disclosure Controls and Internal Controls included a review of the controls’ (i) objectives, (ii) design, (iii) implementation, and (iv) the effect of the controls on the information generated for use in this annual report. In the course of the Evaluation, the CEO and Acting CAO sought to identify data errors, control problems, acts of fraud, and they sought to confirm that appropriate corrective action, including process improvements, was being undertaken. This type of evaluation is done on a quarterly basis so that the conclusions concerning the effectiveness of our controls can be reported in our quarterly reports on Form 10-K and annual reports on Form 10-K. The overall goals of these various evaluation activities are to monitor our Disclosure Controls and Internal Controls, and to make modifications if and as necessary.1934. Our external auditors also review Internal Controls in connection with their audit and review activities. Our intent in this regard is that the Disclosure Controls and the Internal Controls will be maintained as dynamic systems that change (including improvements and corrections) as conditions warrant.
Among other matters, the Evaluation was to determine whether there were any significant deficiencies or material weaknesses in our Internal Controls, which are reasonably likely to adversely affect our ability to record, process, summarize and report financial information, or whether the Evaluators identified any acts of fraud, whether or not material, involving management or other employees who have a significant role in our Internal Controls. This information was important for both the Evaluation, generally, and because the Rule 13a-14(a)/15d-14(a) Certifications, Item 5, require that the CEO and Acting CAO disclose that information to our Board (audit committee), and our independent auditors, and to report on related matters in this section of the annual report. In the professional auditing literature, "significant deficiencies" are referred to as "reportable conditions". These are control issues that could have significant adverse affect on the ability to record, process, summarize and report financial data in the financial statements. A "material weakness" is defined in the auditing literature as a particularly serious reportable condition where the internal control does not reduce, to a relatively low level, the risk that misstatement cause by error or fraud may occur in amounts that would be material in relation to the financial statements and not be detected within a timely period by employee in the normal course of performing their assigned functions. The Evaluators also sought to deal with other controls matters in the Evaluation, and in each case, if a problem was identified, they considered what revisions, improvements and/or corrections to make in accordance with our ongoing procedures.
Conclusions
Based upon the Evaluation, our disclosure controls and procedures are designed to provide reasonable assurance of achievingthat the information required to be included in our objectives. Our CEOSEC reports is recorded, processed, summarized and Acting CAOreported within the time periods specified in SEC rules and forms, relating to the Company, including our consolidated subsidiaries, and was made known to them by others within those entities, particularly during the period when this report was being prepared. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures arewere not effective at that reasonable assurance level to ensure thatas of August 31, 2022 because of the material information relating to us is made known to management, including the CEO and Acting CFO, particularly during the period when our periodic reports are being prepared, and that our Internal Controls are effective at that assurance level to provide reasonable assurance that our financial statements are fairly presented inconformity with accounting principles generally accepted in the United States. Additionally, there has been no changeweaknesses identified in our Internal Controls that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to affect, our Internal Controls.
internal controls over financial reporting.Management’s Report on Internal Controls OverControl over Financial Reporting
Board of Directors and Edgewater Foods International, Inc:
The Management of Edgewater Foods International, Incthe Company is responsible for establishing and maintaining adequate internal control over financial reporting, foras such term is defined in Rules 13a-15(f) and 15d-15(f) under the Company. TheExchange Act. As of August 31, 2022, management assessed the effectiveness of the Company’s internal control over financial reporting is a process designed to provide reasonable assurance regardingbased on the reliability of financial reporting and the preparation of financial statementscriteria for external purposes in accordance with U. S. generally accepted accounting principles. The Company’seffective internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that,established in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U. S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; (iii) provide reasonable assurance regarding prevention of timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements, and (iv) provide reasonable assurance that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company.
Although currentlyreporting was not effective. Management has identified the following material weakness: | · | inadequate segregation of duties consistent with control objectives |
| | |
| · | insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements |
Planned Remediation
With the oversight of senior management and our audit committee, we do not identify anyare taking the steps below and plan to take additional measures to remediate the underlying causes of the material weaknesses:
| · | The Company will take steps to remediate the control activities material weakness through the documentation of processes and controls for transactions that occur in the course of business, and in the financial statement close, reporting and disclosure processes. |
| | |
| · | The Company will formalize our process and documentation for monitoring internal control over financial reporting. The documentation will serve as the evidence to ascertain whether the control activities are present and functioning, and provide a foundation for the Company to communicate internal control deficiencies in a timely manner to those parties responsible for taking corrective action. |
In addition, under the direction of the audit committee of the Board of Directors, management will continue to review and make necessary changes to the overall design of the Company’s internal control environment, as well as to refine policies and procedures to improve the overall effectiveness of internal control over financial reporting of the Company.
We cannot be assured that the measures we have taken to date, or plan to implement, will be sufficient to remediate the material weaknesses in the process of self assessment, we have recognized significant weaknesses in internal controls. Currently we do not have sufficient in-house expertise in US GAAP reporting. Instead, we rely very muchidentified or avoid potential future material weaknesses.
This Annual Report on the expertise and knowledge of external financial advisors in US GAAP conversion. External financial advisors have helped prepare and review the consolidated financial statements. Although we have not identified any material errors with our financial reporting or any material weaknesses with our internal controls, no assurances can be given that there are no such material errors or weaknesses existing. We are seeking to recruit experienced professionals to augment and upgrade our financial staff to address issues of timeliness and completeness in US GAAP financial reporting. In addition, we do not believe we have sufficient documentation with our existing financial processes, risk assessment and internal controls. We plan to work closely with external financial advisors to document the existing financial processes, risk assessment and internal controls systematically.
EDGEWATER FOODS INTERNATIONAL, INC
/s/ Robert Saunders
Robert Saunders
ChiefCorporate GovernanceDirectors, Executive Officer
PART III.
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Officers and Significant EmployeesThe following table and text set forth the names and ages of allour current directors, and executive officers and significant employees as of November 28, 2008. The Board of Directors is comprised of only one class.30, 2022. All of the directors will serve until the next annual meeting of shareholders, which is anticipated to be held in January 12, 2009, andstockholders or until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. Dr. Kristina Miller, our Chief Scientific Advisor is the wife of Robert Saunders, our Chairman, CEO and President; otherwise, thereThere are no family relationships among ourany of the directors and executive officers. Also provided herein are brief descriptionsFrom time to time, our directors have received compensation in the form of cash and equity grants for their services on the Board.
Name | | Age | | Title |
| | | | |
Kermit Harris | | 48 | | President, Director |
| | | | |
Daniel Claycamp | | 58 | | Chief Executive Officer and Director of Astra-Holcomb Energy Systems Inc., a wholly owned subsidiary. |
| | | | |
David F. Lutz | | 71 | | Director |
| | | | |
Benjamin N. Grier | | 56 | | Director |
| | | | |
Douglas D. Hampton | | 56 | | Chief Executive Officer and Director of Astra Energy California, Inc., a wholly owned subsidiary and President and Director of Regreen Technologies Inc., a majority owned subsidiary. |
| | | | |
Rachel Boulds | | 52 | | Chief Financial Officer |
| | | | |
Lisa Thompson | | 47 | | Corporate Secretary of our Company and Corporate Secretary of Astra-Holcomb Energy Systems Inc., a wholly owned subsidiary |
The background and principal occupations of the business experiencedirectors and officers of each director, executive officer and advisor during the past five years and an indication of directorships held by each director in other companies subject to the reporting requirements under the Federal securities laws.
Name | | Age | | Position | |
Robert Saunders | | 55 | | Chairman,CEO and President | |
Douglas C.MacLellan | | 52 | | Vice Chairman | |
Mark H. Elenowitz | | 38 | | Director | |
Javier Idrovo | | 40 | | Director | |
Michael Boswell | | 39 | | Director, Acting Chief accounting Office | |
Darryl Horton | | 58 | | Director | |
Victor Bolton | | 54 | | Director | |
Robert Saunders, Chairman, CEO and President. Mr. Saunders has directed all research and development efforts at Island Scallops since its establishment. After studying for his B.Sc. at the University of British Columbia in the early 1970's, Mr. Saunders has worked exclusively in the aquaculture research and development field. His efforts have primarily involved designing and implementing innovative culture technology and methods for new aquaculture species in British Columbia. Mr. Saunders has direct experience with managing projects similar to the type proposed, suchCompany are as developing the hatchery technology for producing the Japanese scallop and the development of sablefish aquaculture.
Douglas C. MacLellan,Vice-Chairman. Since May 1992, Mr. MacLellan has beenfollows:Kermit A. Harris, age 48, is a founder, President and Chief Executive Officer of the MacLellan Group, Inc., a privately held business incubator and financial advisory firm. Mr. MacLellan is currently Chief Executive Officer and Executive Chairman of AMDL, Inc. (AMEX: ADL), a publicly held biotechnology firm. He was previously a member of the board of directors and chairman of the audit committee of ADML, Inc. From 2002 until September 2005, Mr. MacLellan was Vice Chairman and a Director of AXM Pharma, Inc. (AMEX; AXJ). From March 1998 through October 2000,our Company. Mr. MacLellan was the co-founderHarris has proven and a significant shareholder of Wireless Electronique, Ltd., a China-based telecommunications company having joint venture operations with China Unicom (NASDAQ: CHU) in Yunnan, Inner Mongolia and Ningxia provinces. He is also a co-founder and, since May 1997, has been a director of Datalex Corporation, a Canadian-based legacy software solution provider. From November 1996 to March 1998, Mr. MacLellan was co-Chairman and an Investment Committee member of the Strategic East European Fund. From November 1995 to March 1998, Mr. MacLellan was President, Chief Executive Officer and a Director of PortaCom Wireless, Inc., a company engaged as a developer and operator of cellular and wireless telecommunications ventures in selected developing world markets. Mr. MacLellan is a former member of the board of directors and co-founder of FirstCom Corporation (NASDAQ: FCLX), an international telecommunications company that operates a competitive access fiber and satellite network in Latin America, which became AT&T Latin America (NASDAQ: ATTL) in August 2000. During 1996, he was also the Vice-Chairman of Asia American Telecommunications (now Metromedia China Corporation), a majority-owned subsidiary of Metromedia International Group, Inc. (AMEX: MMG). Mr. MacLellan was educated at the University of Southern California in economics and finance, with advanced training in classical economic theory.
Mark H. Elenowitz,Director. Mr. Elenowitz is a co-founder and managing director of TriPoint Capital Advisors, LLC. Mr. Elenowitz is responsible for the overall corporate development of the firm and assisting their clients with high-level financial services and general business development. In this role he provides high level advice regarding corporate finance, corporate structure, SOX 404 compliance, employee option programs and capital market navigation including providing advice as a member of the board of directors. Mr. Elenowitz integrates a strong, successful entrepreneurial background with extensive financial services and capital markets experience. Mr. Elenowitz has assisted in numerous companies in a “soup-to-nuts” process of preparing a company for the public markets, bringing them public and advising on an ongoing basis via board seats and executive positions to oversee further rounds of financing, strategic acquisitions and a broader investor market via a listing on “higher” securities exchange or market. Mr. Elenowitz is also currently a director of Global Growth Acquisition Corp. 1, a Cayman Islands corporation. From December 2002 to September 2005, Mr. Elenowitz was a board member of AXM Pharma formerly (AMEX: AXJ) He was also the senior managing director of Investor Communications Company, LLC (ICC), a national investor relations firm he founded in 1996. Through ICC, Mr. Elenowitz has developed ongoing relationships with other investment banking firms, market makers, and analysts. Mr. Elenowitz has workedunique transformational leadership skills with over 50 publicly traded companies providingtwenty years of experience in real estate acquisition/land development, commercial financing, business development, and restaurant industries. He has demonstrated high quality cross-functional management qualifications, business strategy, international/governmental engagement, and dynamic leadership. Mr. Harris developed the above mentioned financial consulting and strategic planning services. Mr. Elenowitz holds the Series 24, 82 and 63 licenses and is also CEO of TriPoint Global Equities, LLC, a FINRA member firm. Mr. Elenowitz is the recipient of several entrepreneurial awards and has been profiled in BusinessWeek and CNBC,Company’s renewable division as well as severalthe global bio-fuel supply chain using Regreen Technology. He has full oversight of the entire organization domestic and abroad, working closely with COO Dan Claycamp. Kermit has been with the Company since 2019. From January 2017 to January 2019, he was the Business Development/Acquisition Manager for the Donato Group, Inc. where his responsibilities included identifying opportunities to enhance and streamline operations within any construction/development project to increase the satisfaction levels of municipalities, development entity, and investors when working with their staff/sub-contractors and partners. None of the companies where Mr. Harris was employed prior to being employed by the registrant was a parent, subsidiary or other publications.affiliate of the registrant. These skills working with private and public companies are used to carry out the strategic initiatives of our Company. He is a graduate of the University of Maryland SchoolEastern Michigan University’s Gary Owen College of Business, with a Finance MajorDaniel L. Claycamp, 58 years of age, CEO and Director of Astra-Holcomb Energy Systems Inc., and a former COO and Director of our Company. Mr. Claycamp has 36 years of management experience in Plant Construction, Manufacturing, Engineering and Production of Food Grade and USP Grade Chemicals, Corn Milling, Flour Milling, Wet Milling, Oat Milling, Extrusion, Oil Extraction, Ethanol, and Mixing and Blending of Food Grade Ingredients. Skills include: Management of operations, construction, engineering, maintenance, distribution, purchasing, human relations, and accounting management. Strengths in plant management, project management, engineering, plant design and construction, plant operations, risk management, budget finance, quality and safety programs, and team based continuous improvement projects. During the years 2017 and 2018 Dan was the General Manager of Elemental Processing, LLC located in Lexington Kentucky. His responsibilities included engineering, design of new facilities and the management of the employees on the projects. During 2018 he was hired as Vice President of GenCanna Global USA, Inc. where he Managed a $120M capital project responsible for developing, designing, engineering, and constructing a Food Grade Hemp Processing Facility, Storage Elevator, Receiving, Grinding, and Screening, Extraction, RPI, Mixing and Blending, Formulations, and Packaging facilities for processed Hemp products in Mayfield, Kentucky. He remained in this position until he joined the Issuer as the COO in February 2021. None of the companies where Mr. Claycamp was employed prior to being employed by the registrant was a parent, subsidiary or other affiliate of the registrant.
His educational background consists of AC/DC Electrical Theory, Allen Bradley PLC Programming, and Electrical Motor Controls and Circuits: Rend Lake College, Whittington, IL 1997 and he holds a B.S. in Milling Science and Management from Kansas State University in 1986. His managerial and technical experience with private and public companies involved in the renewable energy industry qualifies him as a major part of the Company’s mission.
David F. Lutz, CPA/ABV, CVA/ABAR, CBA, 71 years of age, Director has extensive experience in small business management consulting, corporate finance, and business valuation. He has performed and supervised over 200 business valuations. He helped build a valuation department that produced over 500 business valuations a year. In corporate finance he helped structure, underwrite, and syndicate over $100 million in private and public stock offerings. With over 18 years’ experience in the brokerage industry and seven years’ experience with a major Chicago-based management consulting firm, Mr. Lutz has acquired a unique and diverse experience in legal and business matters uncommon among business valuation experts.
Mr. Lutz has worked with businesses in numerous industries and has assisted clients for a variety of purposes, including merger and acquisitions, sale, succession planning, estate and gift tax, divorce, employee stock ownership plans (ESOPS), various litigation and economic damage matters. He has developed reports to assist the emerging company to achieve its goals and has developed strategies to assist the established company to enhance and improve its value in the future.
In addition to a Certified Public Accountant (CPA), Mr. Lutz’s valuation credentials include the Accredited in Business Valuation (ABV) designation issued by the American Institute of Certified Public Accountants (AICPA) and the Certified Valuation Analyst (CVA), Certified Business Appraiser (CBA), and Accredited in Business Appraisal Review (ABAR) designations issued by the National Association of Certified Valuation Analysts (NACVA).
He earned the ‘The Best Certified Business Appraisal’ Award from the Institute of Business Appraisers (IBA) prior to its merger/acquisition by NACVA. This award has been earned by only eight other individuals since the IBA was founded in 1978, see attached award letter.
Mr. Lutz is a member of the American Institute of Certified Public Accountants (AICPA), the National Association of Certified Valuation Analysts (NACVA). He was a Captain in the United States Air Force as a Budget Officer. He earned his Bachelor of Science in Finance.
Javier Idrovo, Director. Accounting at the University of Northern Colorado and graduate work in business administration and accountancy at the University of Oklahoma.Benjamin N. Grier, JD, CPA, CTP, 56 years of age, Director, brings with him 20 plus years of experience in accounting and auditing, finance, treasury, tax and legal matters. Mr. IdrovoGrier’s expertise includes, financial audits, investments and cash management, financial planning & analysis (FP&A), tax, and risk and litigation management, and negotiations.
Mr. Grier has been involvedheld the position of Director of Treasury Services since August 2007 with a large insurance company and served as Assistant General Counsel at the same company from 2004 to 2007. From 2000 to 2003, Mr. Grier was Associate General Counsel at another Michigan based insurance company. Mr. Grier previously worked as an attorney and an accountant in private practice and as a Credit Analyst and Commercial Loan Officer at a Michigan based bank.
Mr. Grier obtained his Juris Doctor (Tax Law), Cum Laude, from Michigan State University – College of Law and a Bachelor of Arts in Financial Administration from Michigan State University. Mr. Grier is a Certified Treasury Professional (CTP) and is a Licensed Attorney and Certified Public Accountant in the food industry since 2001 when he joined Dole Food Company, Inc. as ViceState of Michigan.
Douglas D. Hampton, Esq, 56 years of age, Director and President of Strategy. In 2004,Astra Energy California, Inc., is an accomplished attorney with over 30 years of experience in corporate/business, international law, criminal defense, insurance litigation, personal injury, and real estate law. Mr. IdrovoHampton currently manages a law practice in Michigan, the Law Offices of Douglas D. Hampton PC (1996-present), where he specializes in representing SMEs. He has successfully represented numerous clients in the areas of business law, automobile negligence, simple negligence, wrongful death, insurance litigation, real estate, and landlord/tenant relations.
Mr. Hampton was promotedpreviously an Associate Attorney at Dickinson Wright, formerly Dickinson, Wright, Moon, Van Dusen & Freeman (1994-1996), and Jaffe, Raitt, Huer & Weiss (1991-1994). He is also an adjunct professor at the Western Michigan University Cooley Law School (2008-present).
He obtained a BA in International Relations from Michigan State University and a JD degree from the University of Iowa. Douglas Hampton and Kermit Harris bring the financial, operational, legal, and marketing skills necessary to Senior Vice Presidentgrow the business, develop key partnerships, and ensure the Company’s successful expansion.
Rachel Boulds, CPA, age 52, is the contracted Chief Financial Officer of Strategy. In 2005, he became Vice Presidentour Company with over 20 years of experience in the audit and CFOrelated financial reporting fields. She is responsible for the Company’s financial reporting, audit consulting, bookkeeping, and business operation consulting services. preparation of Dole Packaged Foods, one of the operating divisions of Dole Food Company. In 2006, he was promoted to President of Dole Packaged Foodsperiod-end financial statements, footnotes and held that title until March 2008. Prior to joining Dole, Mr. Idrovo worked as a management consultant for The Boston Consulting Group, Inc. holding positions of increasing responsibility from Associate Consultant to Manager. As a consultant, Mr. Idrovo worked for clients on projects that focused on strategy issuesManagement Discussion and Analysis in conformity with US GAAP and SEC reporting rules as well as organizational effectiveness issues acrossconsultation on complex accounting matters and working closely with client staff, auditors and legal counsel to prepare, review and file periodic public financial information, including Forms 10-Q and 10-K. After graduating from San Jose University with a numberBS in Accounting, she stared her career in the audit department of industries including, but not limitedPrice WaterhouseCooper. Rachel Boulds, CPA has been engaged in her sole accounting practice which she has led since 2009.
Lisa V. Thompson, age 47, is the Company’s Corporate Secretary and the Corporate Secretary of Astra-Holcomb Energy Systems Inc. She has over 20 years-experience as a dependable and resourceful securities paralegal specialist. As the Corporate Secretary, she excels at communication and collaborating with a diverse range of legal and company personnel, executive officers and board of directors. She conducts all legal business professionally with corporate counsel and with minimal supervision. Lisa is experienced in the preparation of regulatory filings for US and Canadian Securities Commissions. She is extremely organized with advanced technical and corporate skills. Her position with our publicly traded Company is very valuable. From 2016 to Telecommunications, Retailing, Manufacturing,January of 2020, Ms. Thompson was the operations manager for PubCo Reporting Services, Inc. which was an EDGAR Filer and FinancialCorporate Secretary Consulting Services. He received a BachelorIn January of Science degree in 1989 and a Master of Engineering degree in 1990 both from Harvey Mudd College. Mr. Idrovo also received a Master of Business Administration degree from Harvard Business School in 1995.
Michael Boswell,Director and Acting Chief Accounting Officer. Mr. Boswell is a co-founder and member in TriPoint Capital Advisors, LLC, a boutique merchant bank focused on small and mid-sized growth companies and a co founder2020 she started Meraki Corporate Services, Inc. where she provides corporate secretary consulting services. She has been under contract as an employee with our company since October 1, 2020. None of the TriPoint familycompanies where Lisa holds Legal Secretary and Paralegal certificates from Capilano University, North Vancouver BC; Legal Secretary Certificate and Business Management Diploma from Kwantlen University College, Richmond BC.The Board and Committees
Our Board has one committee, the Audit Committee.
Audit Committee
Kermit Harris, David F. Lutz and Benjamin N. Grier are the members of companies. Mr. Boswell provides high-level financial servicesour Audit Committee and David F. Lutz serves as the chairperson. David F. Lutz and Benjamin N. Grier Committee meet the independence standards promulgated by the SEC and by NASDAQ as such standards apply specifically to start-up businesses and small to mid-sized companies. Mr. Boswell is currentlymembers of audit committees.
David Lutz, a member of the board of directors and chairman of the audit committee of AMDL, Inc. (AMEX: ADL), a publicly held biotechnology firm. Mr. Boswell is also currently a director of Global Growth Acquisition Corp. 1, a Cayman Islands corporation. Mr. Boswell holds the Series 24, 82 and 63 licenses and is also Managing Director and Chief Compliance Officer of TriPoint Global Equities, LLC, a FINRA member firm. Prior to the founding of TriPoint, Mr. Boswell had a number of executive positions focusing on business development and management consulting. Mr. Boswell also spent eight years as a senior analyst and/or senior engineer for various branches of the United States Government. He earned a MBA from John Hopkins University and a BS degree in Mechanical Engineering from University of Maryland.
Darryl Horton, Director. Mr. Horton has been a businessman successfully involved in numerous construction and development projects for the past 35 years. He is the President, Manager and a Partner of Abbotsford Development Corporation and is currently managing a development project in Abbotsford, British Columbia called Eagle Mountain. Eagle Mountain is an upscale, master planned community of single family homes, town homes and commercial properties covering approximately 60 acres that is expected to be valued, upon completion, in excess of 200 million dollars. Prior to Eagle Mountain, Mr. Horton managed, owned and marketed numerous other residential and commercial projects including the construction of a 30 million dollar multi-function residential Intermediate Care Facility in LaJolla California. For 15 years Mr. Horton was a partner in a general contracting company that did various contracts with an average volume of about 25 million per year. In the 1970’s, Mr. Horton was the Vice president of Community Builders, the largest single family developer in British Columbia. Mr. Horton is also the director of several other building and development companies in British Columbia.
Victor Bolton, Director. Mr. Bolton founded a Mechanical contracting firm after graduating from college and evolved that firm into all aspects of the construction industry including building and raw land developing as well as extensive property management. Retiring from this business in 2000, Mr. Bolton now focuses time and energy towards the food manufacturing field.
Significant Employees
The following are employees who are not executive officers, but who are expected to make significant contributions to our business:
Bruce Evans, Farm Manager. Mr. Bruce Evans has been involved in shellfish production since 1985. He successfully established an oyster business, employing methods of long-line and beach culture production. That business is still in operation today, producing 7,000 gals of shucked oysters annually and employing 3 full time people and 4 part time people. He moved to Island Scallops in 1989. Mr. Evans was responsible for securing the leases from the Provincial government for this scallop grow-out project. He built the established long-line systems that currently produce scallops for Island Scallops. Mr. Evans worked with a Japanese scallop farmer for two years in B.C. and spent a month working on highly acclaimed scallop farms in Japan. Mr. Evans has BS in Marine Biology from the University of Victoria.
Dr. Kristina M. Miller, Chief Scientific Advisor. Dr. Miller is currently Head of the Molecular Genetics Section in the Pacific Region for the Department of Fisheries and Oceans, Canada (DFO). She has been a research scientist at DFO since obtaining her PhD in Biological Sciences from Stanford University in 1992. The Molecular Genetics section she oversees contains a staff of 26, including scientists, biologists, computer analysts and research technicians. Dr. Miller conducts research on the genetic composition, adaptation, immunity and physiology of wild and domesticated fish and shellfish species using both molecular and genomic approaches. She has been a leader in the development of molecular technologies to aid in the conservation and management of aquatic resources. In the past 10 years, she has published over 40 scientific peer-reviewed journal manuscripts, and her group has been the focus of numerous magazine and newspaper articles. Dr. Miller brings a strong scientific component to the management of Edgewater Foods, and she will serve as Chief Scientific Advisor. In addition to her PhD, Dr. Miller received a BSc in Zoology from University of California, Davis in 1983, and a MSc in Biology from University of British Columbia in 1986. Dr. Miller is Robert Saunders, our Chairman, CEO and President’s wife.
We currently have seven committees appointed by our Board of Directors:
· | Acquisition/Business Opportunity Committee, which is comprised of Javier Idrovo, Victor Bolton and Douglas MacLellon.
|
· | Audit Committee, which is comprised of Douglas MacLellan (Chair), Javier Idrovo and Darryl Horton. The Board has determined that all of these members are independent, as that term is defined in Section 121(A) of the American Stock Exchange’s Listing Standards.
|
· | Finance Committee, which is comprised of Mark Elenowitz (Chair), Douglas MacLellan and Robert Saunders.
|
· | Compensation Committee, which is comprised of Victor Bolton, Darryl Horton and Doug MacLellan.
|
●
| Disclosure Committee, which is comprised of Douglas MacLellan (Chair), Robert Saunders and Michael Boswell.
|
● | Nominating Committee, which is comprised of Robert Saunders (Chair) and Douglas MacLellan. The Board has determined that Mr. MacLellan are independent, as that term is defined in Section 121(A) of the American Stock Exchange’s Listing Standards.
|
· | Sarbanes-Oxley Steering Committee, which is comprised of Douglas MacLellan, Robert Saunders, Michael Boswell and Louis Taubman (Louis Taubman is our outside corporate and securities counsel).
|
Audit Committee and Financial Expert
We have an Audit Committee as specified in Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, composed of Douglas MacLellan (Chair), Javier Idrovo and Darryl Horton. The Audit Committee focuses its efforts on assisting our Board of Directors to fulfill its oversight responsibilities with respect to our:
· | Quarterly and annual consolidated financial statements and financial information filed with the Securities and Exchange Commission; |
· | System of internal controls; |
· | Financial accounting principles and policies; |
· | Internal and external audit processes; and |
· | Regulatory compliance programs. |
The“audit committee meets periodically with management to consider the adequacy of our internal controls and financial reporting process. It also discusses these matters with our independent auditors and with appropriate financial personnel that we employ. The committee reviews our financial statements and discusses them with management and our independent auditors before those financial statements are filed with the Securities and Exchange Commission.
The committee has the sole authority to retain and dismiss our independent auditors and periodically reviews their performance and independence from management. The independent auditors have unrestricted access and report directly to the committee.
Audit Committee Financial Expert
Douglas MacLellan is our Audit Committee Financial Expert,expert,” as that term is defined in Item
407407(d)(5)(ii) of Regulation
S-BS-K, and
the Board has determined that Mr. MacLellan is independent,David F. Lutz and Benjamin N. Grier are both “independent” as that term is defined in
Section 121Rule 5605(a) of the
American Stock Exchange’s Listing StandardsNasdaq Marketplace Rules.We adopted and Section 10A(m)(3)approved a charter for the Audit Committee. In accordance with our Audit Committee Charter, our Audit Committee shall perform several functions, including:
| · | evaluate the independence and performance of, and assesses the qualifications of, our independent auditor, and engages such independent auditor; |
| | |
| · | approve the plan and fees for the annual audit, quarterly reviews, tax and other audit-related services, and approves in advance any non-audit service to be provided by the independent auditor; |
| | |
| · | monitor the independence of the independent auditor and the rotation of partners of the independent auditor on our engagement team as required by law; |
| | |
| · | review the financial statements to be included in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and reviews with management and the independent auditors the results of the annual audit and reviews of our quarterly financial statements; |
| · | oversee all aspects our systems of internal accounting control and corporate governance functions on behalf of the board; |
| | |
| · | review and approves in advance any proposed related-party transactions and report to the full Board of Directors on any approved transactions; and |
| | |
| · | provide oversight assistance in connection with legal, ethical and risk management compliance programs established by management and the Board of Directors, including Sarbanes-Oxley Act implementation, and makes recommendations to the Board of Directors regarding corporate governance issues and policy decisions. |
It is determined that David F. Lutz possesses accounting or related financial management experience that qualifies him as an “audit committee financial expert” as defined by the rules and regulations of the Securities Exchange ActSEC.
Independence of 1934. Mr. MacLellan’s qualificationsthe Board
As required under the Nasdaq Stock Market listing standards, a majority of the members of a listed company’s Board of Directors must qualify as “independent,” as affirmatively determined by the Board of Directors. Our Board has undertaken a review of the independence of each director. Based on information provided by each director concerning her or his background, employment, and affiliations, our board has determined that David F. Lutz and Benjamin N. Grier do not have relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the listing requirements and rules of Nasdaq.
In making this determination, the Board found that none of these directors had a material or other disqualifying relationship with the Company.
Conflicts of Interest
Members of our management are associated with other firms involved in a range of business activities. Consequently, there are potential inherent conflicts of interest in their acting as officers and directors of our company. Although the directors are engaged in other business activities, we anticipate they will devote an audit committeeimportant amount of time to our affairs.
Our officers and directors are now and may in the future become shareholders, officers or directors of other companies, which may be formed for the purpose of engaging in business activities similar to ours. Accordingly, additional direct conflicts of interest may arise in the future with respect to such individuals acting on behalf of us or other entities. Moreover, additional conflicts of interest may arise with respect to opportunities which come to the attention of such individuals in the performance of their duties or otherwise. Currently, we do not have a right of first refusal pertaining to opportunities that come to their attention and may relate to our business operations.
Our officers and directors are, so long as they are our officers or directors, subject to the restriction that all opportunities contemplated by our plan of operation which come to their attention, either in the performance of their duties or in any other manner, will be considered opportunities of, and be made available to us and the companies that they are affiliated with on an equal basis. A breach of this requirement will be a breach of the fiduciary duties of the officer or director. If we or the companies with which the officers and directors are affiliated both desires to take advantage of an opportunity, then said officers and directors would abstain from negotiating and voting upon the opportunity. However, all directors may still individually take advantage of opportunities if we should decline to do so. Except as set forth above, we have not adopted any other conflict of interest policy with respect to such transactions.
Involvement in Certain Legal Proceedings
No director, person nominated to become a director, executive officer, promoter or control person of the Company has, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law; (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto; (iv) been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (a) Any Federal or State securities or commodities law or regulation; or (b) any law or regulation respecting financial expert are describedinstitutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) any law or regulation prohibiting mail or wire fraud or fraud in his biography above.
Complianceconnection with any business entity; nor (v) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 16(a)3(a)(26) of the Exchange Act
(15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 16(a)1(a)(29) of the Commodity Exchange Act requires our officers, directors and(7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons who own more than 10% of any class of our securities registered under Section 12(g) of the Exchange Act to file reports of ownership and changes in ownershipassociated with the SEC. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
Based on our review of copies of such reports, we believe that there was compliance with all filing requirements of Section 16(a) applicable to our officers, directors and 10% stockholders during fiscal 2008.
a member (covering stock, commodities or derivatives exchanges, or other SROs).Code of ethics
On August 3, 2005, weConduct and EthicsWe have adopted a written code of ethics that applies to our Chief Executive Officerall directors, officers and Principal Financialemployees in accordance with the rules of the NASDAQ Stock Market and Accounting Officer. You may obtainthe SEC. We have filed a copy of our code of ethics as an exhibit to our Registration Statement filed on Form S-1. You will be able to review these documents by accessing our public filings at the SEC’s web site at sec.report. In addition, a copy of the code of ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our codescode of ethics in a Current Report on Form 8-K.
Item 11. Executive Compensation
The following tables set forth certain information concerning all compensation paid, earned or accrued for service by our President, Chief Operating Officer, Principal Financial Officer and Corporate Secretary in the fiscal years ended August 31, 2022 and 2021. This table consists of all the executive officers of the Company who served in such capacity at no cost, by written request to: Edgewater Foods International, Inc., 5552 West Island Highway, Qualicum Beach, British Columbia, Canada V9K 2C8; or, by oral request at: (250) 757-9811.
ITEM 10. EXECUTIVEthe end of the fiscal year.2022 AND 2021 SUMMARY COMPENSATION
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) |
| (a) | (b) | (c) | (d) | (e) | (f) |
Robert Saunders Chief Executive Officer | 2008 | 60,000 (1) | 0 | 0 | 227,164 (3) |
Robert Saunders Chief Executive Officer | 2007 | 60,000 (1) | 0 | 0 | 20,651 |
Michael Boswell Acting Chief Accounting Officer | 2008 | 0 (2) | 0 | 0 | 295,317 (3) |
Michael Boswell Acting Chief Accounting Officer | 2007 | 0 (2) | 0 | 0 | 26,847 |
| Name and Principal Position | Year | Non-Equity Incentive Plan Compensation ($) | Non-Qualified Deferred Compensation Earnings ($) | All other Compensation | Total ($) |
| (a) | (b) | (g) | (h) | (i) | (j) |
Robert Saunders Chief Executive Officer | 2008 | 0 | 0 | [ ] | 287,164 |
Robert Saunders Chief Executive Officer | 2007 | 0 | 0 | 0 | 80,651 |
Michael Boswell Acting Chief Accounting Officer | 2008 | 0 | 0 | 0 | 295,317 |
Michael Boswell Acting Chief Accounting Officer | 2007 | 0 | 0 | 0 | 26,847 |
TABLEName and Principal position | | Year | | Salary ($) | | | Bonus ($) | | | Stock awards ($) | | | Option awards ($) | | | Non-equity incentive plan compensation ($) | | | Change in pension value and nonqualified deferred compensation earnings ($) | | | All other compensation ($) | | | Total ($) | |
Kermit Harris | | 2022 | | $ | 60,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
President | | 2021 | | $ | 55,000 | | | $ | 0.0 | | | $ | 12,500 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 67,500 | |
Daniel Claycamp(1) | | 2022 | | $ | 120,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
CEO, Astra-Holcomb Energy Systems Inc. | | 2021 | | $ | 75,000 | | | $ | 0.0 | | | $ | 187,500 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 262,500 | |
Rachel Boulds | | 2022 | | $ | 24,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
CFO | | 2021 | | $ | 16,000 | | | $ | 0.0 | | | $ | 37,500 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 53,500 | |
Lisa Thompson(2) | | 2022 | | $ | 24,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
Corporate Secretary | | 2021 | | $ | 22,000 | | | $ | 0.0 | | | $ | 2,500 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 24,500 | |
Douglas Hampton(3) | | 2022 | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | | | $ | - | |
President, Astra Energy California, Inc. | | 2021 | | $ | N/A0.0 | | | $ | N/A | | | $ | N/A | | | $ | N/A | | | $ | N/A | | | $ | N/A | | | $ | N/A | | | $ | N/A | |
(1) | In June 2005, we entered into an employment agreement with Robert Saunders, our Chairman,(1) | Mr. Claycamp was appointed a director of the Company on August 4, 2021 and as COO on February 1, 2021. Mr. Claycamp resigned both positions on November 3, 2022. Mr. Claycamp was appointed as CEO and President. Mr. Saunders will serve at the pleasurea director of the Board of Directors. Pursuant to his employment agreement, Mr. Saunders’ compensation will be $60,000 (USD) per annum for his services as our President. Additionally, we agreed to grant Mr. Saunders a signing bonus of US $150,000 to be paid on closing of at least US $3,500,000 in third party financing and increase his compensation to $120,000 per annum if we receive at least US $5,000,000 in outside funding. After the completion of our Series A Preferred Stock Financing, Mr. Saunders was due the signing bonus of $150,000 and a monthly salary of $10,000 per month beginning in August 2006. However, Mr. Saunders agreed to reduce his monthly salary to $5,000 per month until such time that we become significantly cash flow positive for its operations. This agreement expired in June 2008 and we are currently operating as if this employment agreement is still in effect as we discuss a new agreement with Mr. Saunders. As of August 31, 2008, we had paid Mr. Saunders $100,000 of the $150,000 bonus that was due under the terms of the agreement. Additionally, we are currently discussing possible restructuring/payment terms of the accrued salary of $190,000 as of August 31, 2008, until such time that we become significantly cash flow positive for its operations. |
(2) | Mr. Boswell served as our President from March to June 2005, at which time Mr. Saunders replaced Mr. Boswell as President. Mr. Boswell has served as our Acting Chief Accounting Officer since August 2005. Mr. Boswell indirectly owns a minority interest in TriPoint Capital Advisors, LLC, a significant shareholder and party with which we maintain a consulting agreement. In August 2006, the Board approved the Compensation Committee’s recommendation to pay TriPoint $15,000 per month, which includes fees for Mr. Boswell’s services as our Acting Chief Accounting during 2005, however TriPoint agreed to reduce such fee to $7,000 per month until our cash flow position improves, at which time the Committee will reconvene and recommend a return to $15,000 per month. In addition, TriPoint has agreed not to accept any additional fees, other than expenses, until we are sufficiently funded to carry out our business and operations. According to the above reasons, Mr. Boswell did not receive any compensation in 2006 and only received the options listed in the table above in 2007. |
(3) | On August 17, 2007, Mr. Saunders and Mr. Boswell were granted five-year nonqualified stock options, pursuant to our 2005 Equity Plan, that vested on a 1/12 monthly basis over a twelve month period beginning on the grant date. The exercise price of the options is $1.21, which represents 110% of the closing price of our common stockAstra-Holcomb Energy Systems Inc. on August 17, 2007. Based2022. |
| | |
| (2) | Mrs. Thompson was appointed Corporate Secretary of the Company on the Black-Scholes option pricing model, the total fair valueOctober 1, 2020 and was appointed Corporate Secretary of these options were determined to be $247,815 and $322,159 for Mr. Saunders and Mr. Boswell, respectively. Since these options vested monthly, the company incurred a monthly cost of $20,651 and $26,847 respectively between August 2007 and July 2008. As of August 31, 2008, all of these stock options costs had been realized. |
Outstanding Equity Awards at Fiscal Year-End
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date |
| (a) | (b) | (c) | (d) | (e) | (f) |
| Robert Saunders | 300,000 (1) | 0 | 0 | 1.21 | 8-14-2007 |
| Michael Boswell | 390,000 (1) | 0 | 0 | 1.21 | 8-14-2007 |
| Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares of Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested |
| (a) | (g) | (h) | (i) | (j) |
| Robert Saunders | 0 | 0 | 0 | 0 |
| Michael Boswell | 0 | 0 | 0 | 0 |
(1) | Pursuant to our 2005 Equity Incentive Plan, Mr. Saunders and Mr. Boswell were granted five-year nonqualified stock optionsAstra-Holcomb Energy Systems Inc. on August 17, 2007 that vest2022. |
| | |
| (3) | Mr. Hampton was appointed as President and Director of Astra Energy California, Inc. on a 1/12 monthly basis over a twelve month period beginning on the grant date. The exercise priceJuly 15, 2022. |
Retirement/Resignation Plans
We doCompensation of Executive Officers
Each of the executive officers has a services or consulting agreement with our company.
On October 1, 2020, we entered into a services agreement with Kermit Harris, wherein, Mr. Harris will receive a monthly fee of $5,000. In addition, Mr. Harris received 500,000 pre-split shares of common stock of the Company pursuant to his agreement.
On October 3, 2020, we entered into a services agreement with Lisa Thompson, wherein, Ms. Thompson will receive a monthly fee of $2,000. In addition, Ms. Thompson received 100,000 pre-split shares of common stock of the Company pursuant to her agreement.
On January 16, 2021, we entered into a contract services agreement with Rachel Boulds, wherein, Ms. Boulds will receive a monthly fee of $2,000. In addition, Ms. Boulds received 50,000 pre-split shares of common stock of the Company pursuant to her agreement.
On February 1, 2021, we entered into a consulting agreement with Daniel Claycamp, wherein Mr. Claycamp will receive an hourly fee for services. In addition, Mr. Claycamp received 250,000 pre-split shares of common stock pursuant to his agreement. On February 11, 2022, Mr. Claycamp shall received an additional 250,000 shares of common stock.
The Company does not have any plans ora compensation committee. Given the nature of the Company’s business and the current composition of management, the board of directors does not believe that the Company requires a compensation committee at this time.
Compensation of Directors
We have no arrangements in place regardingfor the payment to anyremuneration of our executive officers following such persons retirement or resignation.
Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity incentive Plan Compensation ($) |
| (a) | (b) | (c) | (d) | (e) |
| Douglas MacLellan | 36,000 | 0 | 165,210 (1) (2) | 0 |
| Mark Elenowitz | 0 | 0 | 429,546 (1) (3) (4) | 0 |
| Darryl Horton | 1,000 | 0 | 8,260 (1) (5) | 0 |
| Victor Bolton | 1,000 | 0 | 8,260 (1) (6) | 0 |
| Javier Idrovo | 0 | 0 | 0 (7) | 0 |
| Name | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All other Compensation ($) | Total ($) |
| (a) | (f) | (g) | (h) |
| Douglas MacLellan | 0 | 0 | 201,210 |
| Mark Elenowitz | 0 | 0 | 429,546 |
| Darryl Horton | 0 | 0 | 9,260 |
| Victor Bolton | 0 | 0 | 9,260 |
| Javier Idrovo | 0 | 0 | 0 |
(1) | At the end of the fiscal year, 2,592,000options are outstanding. |
(2) | These include the five-year incentive stock options granted to such individual on August 17, 2007 pursuant to our 2005 Equity Plan. These options vested on a 1/12 monthly basis over a twelve month period beginning on the grant date and are exercisable at $1.21, which represents 110% of the closing price of our common stock on August 17, 2007. Based on the Black-Scholes option pricing model, the total fair value of these 200,000 options were determined to be $165,210. Since these options vested monthly, we incurred a monthly cost of $13,768. As of August 31, 2008, all of these stock options costs had been realized. |
(3) | These include the five-year incentive stock options granted to such individual on August 17, 2007 pursuant to our 2005 Equity Plan. These options vested on a 1/12 monthly basis over a twelve month period beginning on the grant date and are exercisable at $1.21, which represents 110% of the closing price of our common stock on August 17, 2007. Based on the Black-Scholes option pricing model, the total fair value of these 520,000 options were determined to be $429,546. Since these options vested monthly, we incurred a monthly cost of $35,795. As of August 31, 2008, all of these stock options costs had been realized. |
(4) | Mr. Elenowitz indirectly owns a minority interest in TriPoint Capital Advisors, LLC, a significant shareholder and party with which we maintain a consulting agreement. In August 2006, the Board approved the Compensation Committee’s recommendation to pay TriPoint $15,000 per month, which includes fees for Mr. Elenowitz’s services as a Director; however, TriPoint agreed to reduce such fee to $7,000 per month until our cash flow position improves, at which time the Committee will reconvene and recommend a return to $15,000 per month. In addition, TriPoint has agreed not to accept any additional fees, other than expenses, until we are sufficiently funded to carry out our business and operations. |
(5) | These include the five-year incentive stock options granted to such individual on August 17, 2007 pursuant to our 2005 Equity Plan. These options vested on a 1/12 monthly basis over a twelve month period beginning on the grant date and are exercisable at $1.21, which represents 110% of the closing price of our common stock on August 17, 2007. Based on the Black-Scholes option pricing model, the total fair value of these 10,000 options were determined to be $8,260. Since these options vested monthly, we incurred a monthly cost of $688. As of August 31, 2008, all of these stock options costs had been realized. |
(6) | These include the five-year incentive stock options granted to such individual on August 17, 2007 pursuant to our 2005 Equity Plan. These options vested on a 1/12 monthly basis over a twelve month period beginning on the grant date and are exercisable at $1.21, which represents 110% of the closing price of our common stock on August 17, 2007. Based on the Black-Scholes option pricing model, the total fair value of these 10,000 options were determined to be $8,260. Since these options vested monthly, we incurred a monthly cost of $688. As of August 31, 2008, all of these stock options costs had been realized. |
(7) | On September 8, 2008, our board of directors authorized the issuance of an aggregate of 100,000 options to purchase our common stock pursuant to our 2005 Equity Plan to Mr. Idrovo. The options vest in two equal installments over the next two years (on September 8, 2009 and 2010). Each option is exercisable for a period of five years from the issuance date and has an exercise price of $0.45. Based on the Black-Scholes option pricing model, we will incur approximately $43,000 through August 31, 2010 for these options. However, as of August 31, 2008, Mr. Idrovo had not yet been granted any options and therefore we have not yet incurred any stock option expense. |
Our directors, who are employees do notexcept that they will be entitled to receive reimbursement for actual, demonstrable out-of-pocket expenses, including travel expenses, if any, compensation from us for services rendered as directors. The Board has created three classes of fees for outside directors: (1) outside directors who are “independent,” as definedmade on our behalf in the Exchange Act will be paid $500 per meeting, whether telephonic or in person for director fee – there shall not be any fees for written consents in lieuinvestigation of board meetings; (2) outside directors who are not “independent” will not receive any fees at this time, but once our cash flow position improves, the Compensation Committee will reconvene and make recommendations; (3) the Vice Chairman will receive $3,000 per month, which includes $1,500 per month for his role as Chairman of our Audit Committee. Additionally, although we do not currently have an arrangement or agreement to provide stock based compensation to our outside directors, we may, from time to time, grant outside directors incentive stock options pursuant to our 2005 Equity Incentive Plan.
business opportunities.ITEM 11. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS14 |
|
| Table of Contents |
12. Security Ownership of Certain Beneficial Owners and Management
As used in this section, the term beneficial ownership with respect to a security is defined by Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as consisting of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power (including the power to dispose of or direct the disposition of) with respect to the security through any contract, arrangement, understanding, relationship or otherwise, subject to community property laws where applicable.
As of November 28, 2008, we had a total of 24,479,150 shares of common stock, 7,773,998 shares of Series A Preferred Stock, 207 shares of Series B Preferred Stock, 747,870 shares of our Series C Preferred Stock and 304,558 shares of our Series D Preferred Stock issued and outstanding, which are our only issued and outstanding equity securities. However, our preferred stock does not have any voting rights except with respect to specified transactions that may affect the rights, preferences, privileges or voting power of such class and except as otherwise required by Nevada law. As of the date of this Report, each share of our Series A Preferred Stock and each share of Series C Preferred Stock is convertible into one share of common stock; each share of our Series B Preferred Stock is convertible into a number of fully paid and nonassessable shares of our common stock equal to the quotient of the liquidation preference amount per share ($10,000) divided by the conversion price, which initially is $1.15 per share, subject to certain adjustments, or approximately 8,696 shares of common for each share of converted Series B Preferred Stock; and each share of our Series D Preferred Stock is convertible into a number of fully paid and nonassessable shares of common stock equal to the quotient of (i) the stated value of per share ($40) divided by (ii) the conversion price, which initially is $0.80 per share, subject to certain adjustments.
Related Stockholder MattersThe following table sets forth, as of November 28, 2008: (a)30, 2022, certain information concerning the names and addresses of each beneficial owner of more than five percent (5%)ownership of our common stockCommon Stock by: (i) each stockholder known by us to own beneficially 5% or more of our outstanding Common Stock; (ii) each director; (iii) each named executive officer; and Preferred Stock (taken together(iv) all of our executive officers and directors as one class) known to us,a group, and their percentage ownership:
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percentage | |
Common | Kermit A Harris(1) Southfield, Michigan | 1,500,000 | 2.22 | % |
Common | Rachel Boulds(2) Murray, UT | 150,000 | .022 | % |
Common | Daniel L Claycamp(3) West Frankfort, IL | 980,000 | 1.46 | % |
Common | Lisa Thompson(4) Langley, British Columbia, Canada | 300,000 | .011 | % |
Common | David F. Lutz(5) Golden, CO | 50,000 | .007 | % |
Common | Benjamin N. Grier(6) Southfield, MI | 35,000 | .005 | % |
Common | Douglas Hampton(7) Atlanta, GA | 3,000 | .001 | % |
Common | Albert Mardikian(8) Huntington Beach, CA | 10,000,000 | 14.9 | % |
| Directors and Officers as a Group (8 persons) | 13,018,000 | 19.495 | % |
Common | Alita Capital Inc. (Ron Loudon) Poway, CA | 3,989,714 | 5.97 | % |
Common | Trimark Capital Partners Inc. (Ron Loudon) Grand Cayman, Cayman Islands | 6,000,000 | 8.98 | % |
Common | United Capital Management Inc. (Schaad Brannon) Las Vegas, NV | 3,000,000 | 4.49 | % |
__________
(1) | Mr. Harris was appointed President and Director on October 1, 2020 |
| |
(2) | Ms. Boulds was appointed CFO on January 19, 2021. |
| |
(3) | Mr. Claycamp was appointed a director of the Company on August 4, 2021 and as COO on February 1, 2021. Mr. Claycamp resigned both positions on November 3, 2022. Mr. Claycamp was appointed as CEO and a director of Astra-Holcomb Energy Systems Inc. on August 17, 2022. |
| |
(4) | Ms. Thompson was appointed Corporate Secretary of the Company on October 1, 2020 and as Corporate Secretary of Astra-Holcomb Energy Systems Inc. on August 17, 2022. |
| |
(5) | Mr. Lutz was appointed a director on July 28, 2022. |
| |
(6) | Mr. Grier was appointed a director on July 28, 2022. |
| |
(7) | Mr. Hampton was appointed President and Director of Astra Energy California Inc. on July 15, 2022. |
| |
(8) | Mr. Mardikian is a Director of Regreen Technologies Inc. |
The number of shares of common stock and Preferred Stock beneficially owned by each suchentity, person, director or executive officer is determined in accordance with the rules of the SEC, and the percentinformation is not necessarily indicative of our common stock and Preferred Stock so owned; and (b)beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares over which the names and addresses of each director and executive officer, the number of shares our common stock and Preferred Stock beneficially owned, and the percentage of our common stock and Preferred Stock so owned, by each such person, and by all of our directors and executive officers as a group. Each personindividual has sole or shared voting and investment power with respect toor dispositive power as well as any shares that the shares of our common stock and Preferred Stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock and Preferred Stock, except as otherwise indicated. Individual beneficial ownership also includes shares of common stock that a personindividual has the right to acquire within 60 days from November 28, 2008.
| Name and Address | Amount and Nature of Beneficial Ownership | Percentage Of Voting of Securities (1) |
Robert Saunders Chairman, President and CEO 10. 5552 West Island Highway Qualicum Beach, British Columbia Canada V9K 2C8 | 10,200,000 (2) | 19.82% |
| | | |
Douglas C. MacLellan Vice Chairman 8324 Delgany Avenue Playa del Ray, CA 90293 | 1,240,000 (3) | 2.41% |
| | | |
Mark Elenowitz Director 400 Professional Drive Suite 310 Gaithersburg, MD 20879 | 1,758,000 (4) (5) | 3.42% |
| | | |
Javier Idrovo Director 400 Professional Drive Suite 310 Gaithersburg, MD 20879 | 0 (6) | 0.00% |
| | | |
Michael Boswell Director and Acting Chief Accounting Officer 400 Professional Drive Suite 310 Gaithersburg, MD 20879 | 1,328,000 (7) (8) | 2.58% |
| | | |
Victor Bolton 345-916 W. Broadway Vancouver, BC V5Z 1K7 | 10,000 (9) | 0.02% |
| | | |
Darryl Horton 33568 Eagle Mountain Drive Abbortsford, BC V3G 2X7 | 10,000 (10) | 0.02% |
| | | |
Vision Opportunity Master Fund, Ltd. 20 West 55th St., 5th Floor New York, NY 10019 | 2,033,108 (11) | 4.99% |
| | | |
| All directors and officers as a group (7 persons) | 14,546,000 | 28.27% |
_________________
(1) | All Percentages have been rounded up to the nearest one hundredth of one percent and such percentage is based upon the amount of outstanding our common stock and preferred stock, on an as converted basis. The percentage assumes in the case of each shareholder listed in the above list that all warrants or options held by such shareholder that are exercisable currently or within 60 days were fully exercised by such shareholder, without the exercise of any warrants or options held by any other shareholders. |
(2) | In addition to his stock ownership, Mr. Saunders was granted 300,000 five-year nonqualified stock options on August 17, 2007 that vested on a 1/12 monthly basis over a twelve month period beginning on the grant date. The exercise price of the options is $1.21, which represents 110% of the closing price of our common stock on August 17, 2007. All of these options vested on August 17, 2008. |
(3) | In addition to his stock ownership, Mr. MacLellan was granted 200,000 five-year nonqualified stock options on August 17, 2007 that vested on a 1/12 monthly basis over a twelve month period beginning on the grant date. The exercise price of the options is $1.21, which represents 110% of the closing price of our common stock on August 17, 2007. All of these options vested on August 17, 2008.. Additionally on October 13, 2008 and October 14, 2008 respectively, Mr. MacLellan purchased an additional 5,000 and 15,000of the date through the exercise of any stock option, warrants or other rights. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and dispositive power with respect to all shares of common stock held by that person. The percentage of shares beneficially owned is computed on the basis of 66,774,540 shares of common stock. |
(4) | Mr. Elenowitz is a 100% percent shareholder of MHE, Inc., which owns 18,000 shares of our voting stock. Additionally, MHE, Inc. is a 40% member of TriPoint Capital Advisors, LLC, which owns 3,000,000 shares of our voting stock. Mr. Elenowitz owns 20,000 shares of our voting stock directly. Therefore, Mr. Elenowitz beneficially owns 1,238,000shares of our voting stock. |
(5) | In addition to his stock ownership, Mr. Elenowitz was granted 520,000 five-year nonqualified stock options on August 17, 2007 that vested on a 1/12 monthly basis over a twelve month period beginning on the grant date. The exercise price of the options is $1.21, which represents 110% of the closing price of our common stock on August 17, 2007. All of these options vested on August 17, 2008.. |
(6) | On September 8, 2008, our board of directors authorized the issuance of an aggregate of 100,000 options to purchase our common stock pursuant to our 2005 Equity Plan to Mr. Idrovo. The options shall vest in two equal installments over the next two years (on September 8, 2009 and 2010). Each option is exercisable for a period of five years from the issuance date and has an exercise price of $0.45 respectively. As of August 31, 2008, Mr. Idrovo had not yet been granted any options. As of November 28, 2008, none of these options have vested and none will vest within 60 days from such date. |
(7) | Mr. Boswell and his wife jointly own Invision, LLC, which owns 38,000 shares of our voting stock. Additionally, Invision, LLC is a 30% member of TriPoint Capital Advisors, LLC, which owns 3,000,000 shares of our voting stock. Therefore, Mr. Boswell beneficially owns 938,000 shares of our voting stock. |
(8) | In addition to his stock ownership, Mr. Boswell was granted 390,000 five-year nonqualified stock options on August 17, 2007 that vested on a 1/12 monthly basis over a twelve month period beginning on the grant date. The exercise price of the options is $1.21, which represents 110% of the closing price of our common stock on August 17, 2007. All of these options vested on August 17, 2008.. |
(9) | Mr. Bolton was granted 10,000 five-year nonqualified stock options on August 17, 2007 that vested on a 1/12 monthly basis over a twelve month period beginning on the grant date. The exercise price of the options is $1.21, which represents 110% of the closing price of our common stock on August 17, 2007. All of these options vested on August 17, 2008.. |
(10) | Mr. Horton was granted 10,000 five-year nonqualified stock options on August 17, 2007 that vested on a 1/12 monthly basis over a twelve month period beginning on the grant date. The exercise price of the options is $1.21, which represents 110% of the closing price of our common stock on August 17, 2007. All of these options vested on August 17, 2008.. |
(11) | Vision owns 2,204,296 shares of common stock, 5,238,333 shares of common stock issuable upon conversion of their Series A Convertible Preferred Stock, 1,495,740 shares of common stock issuable upon conversion of their Series B Convertible Preferred Stock, 747,870 shares of common stock issuable upon conversion of their Series C Convertible Preferred Stock, 12,714,650 shares of common stock issuable upon the conversion of their Series D Convertible Preferred Stock and 740,627 shares of common stock received as dividends. However, based upon the terms of the preferred stock, Vision may not convert its preferred stock if on any date, it would be deemed the beneficial owner of more than 4.99% of the then outstanding shares of our common stock. However, Vision can elect to waive the cap upon 61 days notice to us or less if, and only if less than 61 days remain on the term of the warrant and in such case the waiver will not be effective until the warrant’s expiration date. |
Changes in Control
To the best of our
knowledge, there are no arrangements that could causecommon stock outstanding as of the date of this annual report.The following table sets forth, as of November 30, 2022, certain information concerning the beneficial ownership of our Preferred Stock:
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |
Preferred A | Vision Opportunity Master Fund, Ltd. 317 Madison Avenue, Suite 1220, New York, NY | 7,774 | 100 | % |
Item 13. Certain Relationships and Related Transactions, and Director Independence
On October 1, 2020, the Company entered into a change in our control.
ITEM 12. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
Dr. Kristina Miller, our Chief Scientific Advisor is Robert Saunders, our Chairman, CEO and President’s wife.
We are party to a consultingservices agreement with TriPoint Capital Advisors, LLC, a company in which Mark Elenowitz, a director and one of our significant shareholders, indirectly owns a 40% interest. Michael Boswell, our acting Chief Accounting Officer and one of our directors, indirectly owns a 30% interest in TriPoint. Louis Taubman, our outside corporate and securities counsel also indirectly owns an interest (30%) in TriPoint. Our Board recently approved the Compensation Committee’s recommendation of a flat rate $15,000 per month fee, which shall be reduced to $7,500 per month until our cash flow position improves, forPresident, whereby the legal services Louis Taubman provides us. The Board also approved the recommendation of a $15,000 per month fee, which shall be reduced to $7,000 per month until our cash flow position improves, for the Acting CFO type services and financial advisory services Michael Boswell and TriPoint, respectively, provide us. Additionally, our corporate offices in Gaithersburg, Maryland are currently provided by Tripoint Holdings, LLC, the parent company of Tripoint at no cost to us.
Island Scallops, our wholly owned subsidiary, recently transferred 100% ownership of RKS Laboratories, Inc. to Robert Saunders, our Chairman, CEO and President. RKS is a Vancouver research and development that is working towards developing superior strains of scallops (developed by Island Scallops and known as the Qualicum Beach Scallop) with beneficial traits such as higher meat yield and rapid growth. Island ScallopsCompany agreed to
transfer its ownershippay a monthly fee of
RKS in consideration$5,000 until terminated by either party. The company also issued 1,500,000 common shares to the President upon execution of the Agreement. The shares were valued at $0.008 for
total non-cash compensation of $12,500. As of August 31, 2022, the
grantCompany owes $57,500 to
Island Scallops by RKS and Robert Saunders ofthe President for accrued fees.On October 1, 2020, the Company entered into a right of first refusal to commercialize any intellectual property developed by RKS. Island Scallops hasservices agreement with the right to acquire or use any intellectual property from RKS at RKS’ cost, in perpetuity or until such time as RKS shall cease to exist. Between June 2006 and August 2008, Island ScallopsCorporate Secretary, whereby the Company agreed to loan RKSpay a monthly fee of $2,000 until terminated by either party. The company also issued 300,000 common shares to the Corporate Secretary for total non-cash compensation of approximately $114,000 under five non-interest bearing notes that are secured by all$2,500.
On January 1, 2021, the Company entered into a services agreement with the Corporate Communications Officer for cash compensation of RKS’ assets$2,500 per month. The company also issued 150,000 common shares to the officer for total non-cash compensation of $2,500.
On January 16, 2021, the Company entered into a services agreement with the Chief Financial Officer for cash compensation of $2,000 per month. The company also issued 150,000 common shares to the officer for total non-cash compensation of $37,500.
On February 1, 2021, the Company entered into a services agreement with the Chief Operating Officer for cash compensation of $10,000 per month. The Company also issued 250,000 shares of common hares to the officer for total non-cash compensation of $62,500.
Item 14. Principal Accountant Fees and are due at various dates between November 30, 2008 and August 31, 2009.
ITEM 13. EXHIBITS LIST
Exhibit Number
| Description
|
3.1
| Articles of Incorporation of the Company, as amended. (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-QSB for the quarter ending February 28, 2007, which was filed on April 13, 2007.) |
3.2
| Amended and restated Bylaws of the Company (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-QSB for the quarter ending February 28, 2007, which was filed on April 13, 2007.) |
4.1+
| Form of certificate representing shares of the Company’s common stock. |
4.2 | Form of Certificate of Designation of Rights and Preferences of Series A Convertible Preferred Stock. (Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on April 14, 2006). |
4.3+
| Form of certificate representing shares of the Company’s Series A Preferred Stock. |
4.4+ | Form of certificate representing shares of the Company’s Series B Preferred Stock. |
4.5+
| Form of certificate representing shares of the Company’s Series C Preferred Stock. |
10.1 | Form of Series A Convertible Preferred Stock Purchase Agreement, dated April 12, 2006, by and between the Company and each of the Purchasers thereto (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 14, 2006). |
10.2 | Form of Registration Rights Agreement, dated April 12, 2006, by and between the Company and each of the Purchasers thereto. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 14, 2006). |
10.4 | Form of Individual Lock-Up Agreement dated April 12, 2006 by and between the Company and each of the shareholders listed therein. (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on April 14, 2006). |
10.5 | Form of Lock-Up Agreement dated April 12, 2006 by and between the Company and World Wide Mortgage Corporation. (Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on April 14, 2006). |
10.6 | Form of Series A Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on April 14, 2006). |
10.7 | Form of Series B Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on April 14, 2006). |
10.8 | Form of Series C Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed on April 14, 2006). |
10.9 | Form of Series D Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on April 14, 2006). |
10.10 | Form of Series E Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed on April 14, 2006). |
10.11 | Form of Series F Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K filed on April 14, 2006). |
10.12 | Form of Series G Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K filed on April 14, 2006). |
10.13 | Form of Series H Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K filed on April 14, 2006). |
10.14 | Form of Series J Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K filed on April 14, 2006). |
10.15 | Form of Series A Convertible Preferred Stock Purchase Agreement, dated May 30, 2006, by and between the Company and each of the Purchasers thereto (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 30, 2006). |
10.16 | Form of Registration Rights Agreement, dated May 30, 2006, by and between the Company and each of the Purchasers thereto. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 30, 2006). |
10.17 | Form of Series A Warrant dated May 30, 2006. (Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on May 30, 2006). |
10.18 | Form of Series B Warrant dated May 30, 2006. (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on May 30, 2006). |
10.19 | Form of Series C Warrant dated May 30, 2006. (Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on May 30, 2006).16, 2005). |
10.20 | Form of Series D Warrant dated may 30, 2006. (Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on May 30, 2006). |
10.21 | Amendment to Registration Rights Agreement dated May 30, 2006(Incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on August 16, 2005). |
10.22 | Form of Joinder Agreement to the Series A Convertible Preferred Stock Purchase Agreement, dated May 30, 2006, by and between the Company and each of the Purchasers thereto (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 30, 2006). |
10.23 | Form of Joinder Agreement to the Registration Rights Agreement, dated May 30, 2006, by and between the Company and each of the Purchasers thereto. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 30, 2006). |
4.12 | Form of Series C Convertible Preferred Stock Purchase Agreement, dated November 5, 2007, by and between the Company and each of the Purchasers thereto (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 7, 2007). |
4.13 | Form of Registration Rights Agreement by and between the Company and each of the Purchasers thereto (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 7, 2007). |
4.14 | Form of Certificate of Designation of Rights and Preferences of Series C Convertible Preferred Stock (Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 7, 2007). |
4.15 | Form of Lock-Up Agreement by and between the Company and each of the shareholders listed therein (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on November 7, 2007). |
4.16 | Form of Warrants (Incorporated by reference to Exhibits 10.5 through 10.11 to the Company’s Current Report on Form 8-K filed on November 7, 2007). |
31.1+ | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2+ | Certification of Acting Chief Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1+
| Certification of Chief Executive Officer and Acting Chief Accounting Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
+ Filed herewith.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES |
(1) AUDIT FEES
The aggregateServices | | 2022 | | | 2021 | |
Audit Fees | | $ | 25,820 | | | $ | 12,020 | |
Audit-Related Fees | | $ | - | | | $ | - | |
Tax Fees | | $ | - | | | $ | - | |
All Other Fees | | $ | - | | | $ | - | |
Audit fees billedrepresent fees for professional services rendered by LBB & Associates, Ltd., LPP (formerly Lopez, Blevins, Bork & Associates, LLP)our principal accountants for the audit of the registrant'sour annual financial statements and review of the financial statements included in the registrant's Form 10-Kour Forms 10-Q or services that are normally provided by the accountantour principal accountants in connection with statutory and regulatory filings or engagementsengagements.
Audit-related fees represent professional services rendered for fiscal years 2008assurance and 2007 were approximately $99,000 and $102,000 respectively.
(2) AUDIT-RELATED FEES
NONE
(3) TAX FEES
NONE
(4) ALL OTHER FEES
NONE
(5) AUDIT COMMITTEE POLICIES AND PROCEDURES
The policyrelated services by the accounting firm that are reasonably related to the performance of the audit or review of our Audit Committee is to pre-approve allfinancial statements that are not reported under audit and permissible non-auditfees.Tax fees represent professional services to be performedrendered by the Company’s independent auditors during the fiscal year.
Noaccounting firm for tax compliance, tax advice, and tax planning. All other fees represent fees billed for products and services related to Audit-Related Fees, Tax Fees or All Other Fees described above, were approvedprovided by the Audit Committee.
accounting firm, other than the services reported for the other three categories.Part IV
Item 15. Exhibits
The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Securities and Exchange Commission.
| | | | Incorporated by Reference | | Filed | |
Exhibit No. | | Exhibit Description | | Form | | Exhibit | | Filing Date | | Herewith | |
3.1 | | Articles of Incorporation | | 10-KSB | | 3.1 | | 12/14/2005 | | | |
3.2 | | Amended and Restated Bylaws | | 8-K | | 3.1 | | 08/16/2005 | | | |
3.3 | | Amendment to Articles of Incorporation | | 10-KSB | | 3.1 | | 11/28/2006 | | | |
3.4 | | Amendment to the Articles of Incorporation indicating name change and forward stock split | | 8-K | | 3.1 | | 09/15/2021 | | | |
4.1 | | Form of Certificate of Designation of Rights and Preferences of Series A Convertible Preferred Stock | | 8-K | | 10.3 | | 04/14/2006 | | | |
4.2 | | Form of Certificate of Designation of Rights and Preferences of Series B Convertible Preferred Stock | | 8-K | | 10.3 | | 01/18/2007 | | | |
4.3 | | Form of Certificate of Designation of Rights and Preferences of Series C Convertible Preferred Stock | | 8-K | | 10.3 | | 11/07/2007 | | | |
4.4 | | Form of Certificate of Designation of Rights and Preferences of Series D Convertible Preferred Stock | | 8-K | | 10.3 | | 05/30/2008 | | | |
4.5 | | Certificate, Amendment or Withdrawal of Designation filed with the Nevada Secretary of State on January 21, 2022. | | 8-K | | 4.16 | | 02/03/2022 | | | |
10.1 | | Exclusive Technology Licensing and Distribution Agreement for the Island of Jamaica dated February 24, 2021. | | 8-K | | 10.1 | | 03/17/2021 | | | |
10.2 | | Sale and Purchase Agreement for the Country of Jamaica dated March 5, 2021 | | 8-K | | 10.2 | | 03/17/2021 | | | |
10.3 | | Exclusive Technology Licensing and Distribution Agreement for the Province of Alberta dated March 1, 2021 | | 8-K | | 10.3 | | 03/17/2021 | | | |
10.4 | | Sale and Purchase Agreement for the Province of Alberta dated March 5, 2021 | | 8-K | | 10.4 | | 03/17/2021 | | | |
10.5 | | Effective November 1, 2021, the Company entered into an Exclusive Licensing Agreement and Promissory Note with Corporate Guarantee with Albert Mardikian, Regreen Technologies Inc. and Global Sustainable Technologies Inc. | | 8-K | | 10.1 | | 11/15/2021 | | | |
10.6 | | Employment Agreement with Kermit Harris naming him President of the Registrant dated October 1, 2020, | | S-1 | | 10.6 | | 03/03/2022 | | | |
10.7 | | Service Agreement with Lisa Thompson as corporate Secretary dated October 3, 2020 | | S-1 | | 10.7 | | 03/03/2022 | | | |
10.8 | | Consulting Agreement with Heidi Thomasen dated January 1, 2021 | | S-1 | | 10.8 | | 03/03/2022 | | | |
10.9 | | Agreement with Rachel Boulds, CPA as contracted Chief Financial Officer dated January 16, 2021 | | S-1 | | 10.9 | | 03/03/2022 | | | |
10.10 | | Agreement with Dan Claycamp appointing him as Chief Operating Officer dated February 1, 2021 | | S-1 | | 10.10 | | 03/03/2022 | | | |
10.11 | | Stock Cancellation Agreement dated January 13, 2022 | | 8-K | | 10.12 | | 02/03/2022 | | | |
10.12 | | Loan/Convertible Debenture dated January 11, 2022 | | S-1 | | 10.12 | | 06/02/2022 | | | |
10.13 | | Uganda Investment Authority Investment License dated November 5, 2021 | | S-1 | | 10.13 | | 06/02/2022 | | | |
10.14 | | Supply and Installation Contract for Green Hygienics Holdings Inc. dated January 12, 2022 | | S-1 | | 10.14 | | 06/02/2022 | | | |
10.15 | | Common Stock Purchase Agreement between the Company and Albert Mardikian | | 8-K | | 10.1 | | 08/10/2022 | | | |
10.16 | | Addendum to Common Stock Purchase Agreement | | 8-K | | 10.2 | | 08/10/2022 | | | |
10.17 | | Common Stock Purchase Agreement between the Company and Alpha Ventures LLC | | 8-K | | 10.1 | | 08/24/2022 | | | |
10.18 | | Common Stock Purchase Agreement between the Company and Garan SAS Di Serapian Aradavast Carlo & Co. | | 8-K | | 10.1 | | 09/22/2022 | | | |
10.19 | | Common Stock Purchase Agreement between the Company and Hagop Istanboulli | | 8-K | | 10.2 | | 09/22/2022 | | | |
10.20 | | Common Stock Purchase Agreement between the Company and Rafi Istanboulli | | 8-K | | 10.3 | | 09/22/2022 | | | |
10.21 | | Common Stock Purchase Agreement between the Company and Chant Istanboulli | | 8-K | | 10.4 | | 09/22/2022 | | | |
10.22 | | Common Stock Purchase Agreement between the Company and Jack Koumjian | | 8-K | | 10.5 | | 09/22/2022 | | | |
14.1 | | Code of Ethics | | | | | | | | x | |
21.1 | | List of Subsidiaries | | | | | | | | x | |
31.1 | | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer | | | | | | | | x | |
31.2 | | Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer | | | | | | | | x | |
32.1 | | Section 1350 Certification of Principal Executive Officer | | | | | | | | x | |
32.2 | | Section 1350 Certification of Principal Financial Officer | | | | | | | | x | |
99.5 | | Audit Committee Charter | | | | | | | | x | |
101.INS | Inline XBRL Instance Document. | | | | | | | | | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | | | | | | | | | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | | | | | | | | | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | | | | | | | | | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | | | | | | | | | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | | | | | | | | | |
104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | | | | | | | | | |
Item 16. Form 10-K Summary
We have elected to not provide information under this Item.
SIGNATURES
In accordance withPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrantRegistrant has duly caused this report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
ASTRA ENERGY INC.
/s/ Robert SaundersKermit Harris | | Dated: December 1, 200814, 2022 |
Robert Saunders
| | Date |
President | | |
/s/ Rachel Boulds | | December 14, 2022 |
Rachel Boulds | | Date |
Chief Financial Officer | | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
/s/ Kermit Harris | | December 14, 2022 |
Kermit Harris | | Date |
President and Chief Executive OfficerDirector | | |
/s/ Daniel Claycamp | | December 14, 2022 |
Daniel Claycamp | | Date |
Director | | |
/s/ David F. Lutz | | December 14, 2022 |
David F. Lutz | | Date |
Director | | |
/s/ Benjamin N. Grier | | December 14, 2022 |
Benjamin N. Grier | | Date |
Director | | |
| |
| | |
/s/ Michael Boswell | | Dated: December 1, 2008 |
Michael Boswell
Director & Acting Chief Accounting Officer
| | |
| | |
/s/ Douglas C. MacLellan | | |
Douglas C. MacLellan
Vice-chairman of the Board
| | Dated: December 1, 2008 |
| | |
/s/ Mark H. Elenowitz | | |
Mark H. Elenowitz
Director
| | Dated: December 1, 2008 |
| | |
/s/ Javier Idrovo | | Dated: December 1, 2008 |
Javier Idrovo
Director
| | |
| | |
/s/ Victor Bolton | | Dated: December 1, 2008 |
Victor Bolton
Director
| | |
| | |
/s/ Darryl Horton | | Dated: December 1, 2008 |
Darryl Horton
Director
| | 18 |
