UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended November 30, 2008
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 000-52784
WASTE TO ENERGY GROUP INC.
(Exact name of registrant as specified in its charter)
Nevada N/A
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
4801 Alhambra Circle, Coral Gables, Florida 33146
(Address of principal executive offices) (Zip Code)
(305) 529-4888
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the 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 preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] YES [ ] NO
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act [ ] YES [X] NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [ ] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
50,265,000 shares issued and outstanding as of January 14, 2009
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with United States Generally Accepted Accounting
Principles.
2
Waste to Energy Group Inc.
(formerly Your Digital Memories, Inc.)
(A Development Stage Company)
Balance Sheets
(Unaudited)
November 30, May 31,
2008 2008
--------- ---------
(unaudited) (Audited)
ASSETS
Current Assets
Cash $ 20 $ 688
Total current assets 20 688
--------- ---------
Non-current
Computer equipment, net of amortization 6,609 5,497
Website, net of amortization 14,000 17,500
--------- ---------
Total Non-current 20,609 22,997
--------- ---------
Total Assets $ 20,628 $ 23,685
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accruals $ 23,888 $ 3,000
Loans Payable 177,454 --
Loans Payable - Related Party 49,114 --
--------- ---------
Total Liabilities 250,457 3,000
--------- ---------
Stockholders' Equity (Note 4, 5)
Preferred Stock, authorized 50,000,000 shares, par value $0.0001
Common Stock, authorized 2,500,000,000 shares, par value $0.0001
Issued and outstanding:
50,265,000 common shares 5,026 22,557
Additional paid-in capital 73,116 55,585
Contributed capital 5,050 --
Deficit accumulated during the development stage (313,020) (57,457)
--------- ---------
Total Stockholders' Equity (229,828) 20,685
--------- ---------
Total Liabilities and Stockholders' Equity $ 20,628 $ 23,685
========= =========
The accompanying notes are an integral part of these financial statements
3
Waste to Energy Group Inc.
(Formerly Your Digital Memories, Inc.)
(A Development Stage Company)
Statements of Operations
(Unaudited)
Period from
Three Months Three Months Six Months Six Months Inception
Ended Ended Ended Ended (June 27, 2006) to
November 30, November 30, November 30, November 30, November 30,
2008 2007 2008 2007 2008
----------- ----------- ----------- ----------- -----------
REVENUE $ -- $ -- $ 387 $ -- $ 1,548
OPERATING EXPENSES
General and
Administrative 13,089 1,417 14,832 4,052 21,977
Professional Fees 15,064 1,580 19,247 6,580 54,805
Consulting 32,500 -- 32,500 -- 42,672
Depreciation 2,442 -- 4,692 -- 8,692
Filing Fees 810 400 4,677 1,060 7,044
Impairment of Asset 180,000 -- 180,000 -- 180,000
----------- ----------- ----------- ----------- -----------
Total Expenses 243,905 3,397 255,949 11,692 315,190
----------- ----------- ----------- ----------- -----------
Loss from operations $ (243,905) $ (3,397) $ (255,949) $ (11,692) $ (313,642)
=========== =========== =========== =========== ===========
Interest income -- 245 -- 406 622
Loss before income taxes $ (243,905) $ (3,152) $ (255,561) $ (11,286) $ (313,020)
Provision for income taxes -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net loss $ (243,905) $ (3,152) $ (255,561) $ (11,286) $ (313,020)
=========== =========== =========== =========== ===========
Basic and Diluted (Loss)
per Share (0.00) (0.00) (0.01) (0.00) (0.01)
Weighted Average Number
of Shares (Note 4) 50,265,000 6,688,511 50,265,000 6,688,511 50,265,000
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements
4
Waste to Energy Group Inc.
(Formerly Your Digital Memories, Inc.)
(A Development Stage Company)
Statement of Stockholders' Equity
Common Stock
---------------------- Paid in Subscriptions Contributed Accumulated Total
Shares Amount Capital Receivable Capital Deficit Equity
------ ------ ------- ---------- ------- ------- ------
INCEPTION JUNE 27, 2006 -- $ -- $ -- $ -- $ -- $ -- $ --
Common Shares issued to
director for cash
June 27, 2006 2,500,000 250 (150) 100
Common Shares issued to
director for cash
September 12, 2006 62,500,000 6,250 (3,750) 2,500
Common Shares issued to
director for cash
October 31, 2006 125,300,000 12,530 (7,518) 5,012
Private placement closed
April 30, 2007 35,265,000 3,527 67,003 70,530
Net loss for the year (28,079) (28,079)
------------ -------- ------- ------- ------- --------- ---------
BALANCE, MAY 31, 2007 225,565,000 $ 2,557 $55,585 $ -- $ -- $ (28,079) $ 50,062
Net loss for the year (29,378) (29,378)
------------ -------- ------- ------- ------- --------- ---------
BALANCE, MAY 31, 2008 225,565,000 $ 22,557 $55,585 $ -- $ -- $ (57,457) $ 20,684
Net loss for the period (11,657) (11,657)
------------ -------- ------- ------- ------- --------- ---------
BALANCE, AUGUST 31, 2008 225,565,000 $ 22,557 $55,585 $ -- $ -- $ (69,114) $ 9,027
Common Shares cancelled
to directors
September 2, 2008 (175,300,000) (17,530) 17,530
Contributed Capital 5,050 5,050
Net loss for the period (243,905) (243,905)
------------ -------- ------- ------- ------- --------- ---------
BALANCE, NOVEMBER 30, 2008 50,265,000 $ 5,027 $73,115 $ -- $ 5,050 $(313,019) $(229,828)
============ ======== ======= ======= ======= ========= =========
* On September 4, 2008 the Company had a 25 new for 1 old forward stock split
that has been retroactively applied to the above schedule.
The accompanying notes are an integral part of these financial statements
5
Waste to Energy Group Inc.
(Formerly Your Digital Memories, Inc.)
(A Development Stage Company)
Statements of Cash Flows
Period from
Six Months Six Months Inception
Ended Ended (June 27, 2006) to
November 30, November 30, November 30,
2008 2007 2008
--------- --------- ---------
Operating Activities
Net income (loss) $(255,561) $ (11,285) $(150,520)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 2,388 -- 6,388
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities 20,889 -- 41,389
--------- --------- ---------
Net Cash (Used) by Operating Activities (232,284) (11,285) (102,743)
--------- --------- ---------
Financing Activities
Proceeds from sale of Common Stock -- -- 78,142
Loans payable 226,568 -- 226,568
Additional paid in capital (4,124) -- (4,124)
Contributed capital 5,050 -- 5,050
Proceeds from issuance of capital stock 4,124 -- 4,124
--------- --------- ---------
Cash Provided by Financing Activities 231,618 78,142 309,760
--------- --------- ---------
Investing Activities
Purchase of computer equipment and website -- -- (26,997)
--------- --------- ---------
Cash used in investing activities -- -- (26,997)
--------- --------- ---------
(Decrease) Increase in Cash during the period (666) (11,285) 180,020
Cash, Beginning of Period 686 50,062 --
--------- --------- ---------
Cash, End of Period $ 20 $ 38,777 180,020
========= ========= =========
Supplemental disclosure with respect to cash flows:
Cash paid for income taxes $ -- $ -- $ --
Cash paid for interest $ -- $ -- $ --
The accompanying notes are an integral part of these financial statements
6
Waste to Energy Group Inc.
(Formerly Your Digital Memories, Inc.)
(A Development Stage Company)
Notes to the Interim Financial Statements
November 30, 2008
NOTE 1 - GENERAL ORGANIZATION AND BUSINESS
Your Digital Memories, Inc. ("the Company") was incorporated in the state of
Nevada on June 27, 2006.
Waste to Energy Group Inc., a wholly-owned subsidiary of Your Digital Memories
Inc., was incorporated in the state of Nevada on August 13, 2008. Waste to
Energy Group Inc. and Your Digital Memories Inc. entered into an Agreement and
Plan of Merger on August 14, 2008. The board of directors of Waste to Energy
Group Inc. and Your Digital Memories Inc. deemed it advisable and in the best
interest of their respective companies and shareholders that Waste to Energy be
merged with and into Your Digital Memories Inc. with Your Digital Memories Inc.
remaining as the surviving corporation under the name Waste to Energy Group Inc.
On August 27, 2008 Aaron Bard resigned as President, Secretary, Treasurer and
Director of Waste to Energy Group Inc. and Maria C. Maz was appointed President,
Secretary, Treasurer and Director of Waste to Energy Group Inc. prior to Mr.
Bard's resignation.
The company has limited operations and in accordance with SFAS#7 is considered
to be in the development stage.
On September 4, 2008 the Company entered into a memorandum of understanding with
Waste to Energy Group LLC, a Nevada limited liability company, and the
shareholders of Waste to Energy Group LLC. Pursuant to the terms of the
memorandum of understanding, we agreed to acquire all of the issued and
outstanding shares of Waste to Energy Group LLC's common stock in exchange for
the transfer of 15,000,000 shares of the Company's common stock to the
shareholders of Waste to Energy Group LLC from a shareholder of the Company. It
was possible for the shareholders of Waste to Energy Group LLC, by meeting
certain performance criteria listed in the memorandum of understanding, to earn
a further 8,500,000 shares of the Company from treasury.
The Waste to Energy Group LLC is a leading source of waste-to-energy conversion
technology. The Waste to Energy Group LLC acts as system integrators with unique
processes and technology which convert a waste stream into a variety of revenue
producing products and renewable energy. These technologies include biological,
chemical, thermal and mechanical.
7
Waste to Energy Group Inc.
(Formerly Your Digital Memories, Inc.)
(A Development Stage Company)
Notes to the Interim Financial Statements
November 30, 2008
NOTE 1 - GENERAL ORGANIZATION AND BUSINESS - CONT.
They are capable of converting post-recycled residual solid waste into useful
products and chemicals, algae to biofuel, green fuels such as hydrogen, natural
gas, ethanol and biodiesel, as well as, providing a source of clean, renewable
energy. The technology is modular and designed for scalability or to add to
existing systems and processes. This creates flexibility in deployment for
cities and municipalities with environmentally sound solutions. The company's
unique systems are an alternative to the current landfill and incineration
practices with a 90-99% diversion from landfills and attain a 95-99% recycle
rate. They are 100% environmentally safe with no secondary pollutions, well
below the KOTO, IPPC and EPA requirements, providing an excellent source of
clean, renewable energy to meet the world's problems.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING BASIS
These financial statements are prepared on the accrual basis of accounting in
conformity with accounting principles generally accepted in the United States of
America.
CASH AND CASH EQUIVALENTS
For the purposes of the statement of cash flows, cash flows include all highly
liquid investments with a maturity of three months or less.
FINANCIAL INSTRUMENT
The Company's financial instruments consist of Promissory Notes for loans made
to the Company.
Some of the amounts due to the note holders are non interest-bearing. It is
management's opinion that the Company is not exposed to significant interest,
currency or credit risks arising from its other financial instruments and that
their fair values approximate their carrying values except where separately
disclosed.
8
Waste to Energy Group Inc.
(Formerly Your Digital Memories, Inc.)
(A Development Stage Company)
Notes to the Interim Financial Statements
November 30, 2008
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - CONT.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles of the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the year.
The more significant areas requiring the use of estimates include asset
impairment, stock-based compensation, and future income tax amounts. Management
bases its estimates on historical experience and on other assumptions considered
to be reasonable under the circumstances. However, actual results may differ
from the estimates.
LOSS PER SHARE
Net income (loss) per common share is computed based on the weighted average
number of common shares outstanding and common stock equivalents, if not
anti-dilutive. The Company has not issued any potentially dilutive common
shares.
Basic loss per share is calculated using the weighted average number of common
shares outstanding and the treasury stock method is used to calculate diluted
earnings per share. For the years presented, this calculation proved to be
anti-dilutive.
DIVIDENDS
The Company has not adopted any policy regarding payment of dividends. No
dividends have been paid during the period shown.
INCOME TAXES
The Company provides for income taxes under Statement of Financial Accounting
Standards NO. 109, "Accounting for Income Taxes." SFAS No. 109 requires the use
of an asset and liability approach in accounting for income taxes.
SFAS No. 109 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized. No
provision for income taxes is included in the statement due to its immaterial
amount, net of the allowance account, based on the likelihood of the Company to
utilize the loss carry-forward.
9
Waste to Energy Group Inc.
(Formerly Your Digital Memories, Inc.)
(A Development Stage Company)
Notes to the Interim Financial Statements
November 30, 2008
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
Accumulated 11/30/08 05/31/08
Cost Amortization Net Book Value Net Book Value
---- ------------ -------------- --------------
Computer Equipment $ 8,301 $ 1,692 $ 6,609 $ 5,497
Website 21,000 7,000 14,000 17,500
------- ------- ------- -------
TOTAL $29,301 $ 8,692 $20,609 $22,997
======= ======= ======= =======
Amortization is taken over 3 years on a straight line basis. The Company is
considering selling these assets.
NOTE 4 - STOCKHOLDERS' EQUITY
Common Shares - Authorized
The company has 2,500,000,000 common shares authorized at a par value of $0.0001
per share and 50,000,000 shares of preferred stock, par value $0.0001 per share.
All common stock shares have equal voting rights, are non-assessable and have
one vote per share. Voting rights are not cumulative and, therefore, the holders
of more than 50% of the common stock could, if they choose to do so, elect all
the directors of the Company.
Common Shares - Issued and Outstanding
On June 27, 2006 (inception), the Company issued 2,500,000 shares of its common
stock to a director for cash consideration of $100.
On September 13, 2006, the Company issued 62,500,000 shares of its common stock
to a director for cash consideration of $2,500.
On October 31, 2006, the Company issued 125,300,000 shares of its common stock
to a director for cash consideration of $5,012.
10
Waste to Energy Group Inc.
(Formerly Your Digital Memories, Inc.)
(A Development Stage Company)
Notes to the Interim Financial Statements
November 30, 2008
NOTE 4 - STOCKHOLDERS' EQUITY - CONT.
On April 30, 2007, the Company completed a private placement for 35,265,000
common shares at $0.002 per share for total consideration of $70,530.
As of May 31, 2008, the Company had 225,565,000 common shares issued and
outstanding.
During the six months ending November 30, 2008, 175,300,000 shares were
voluntarily cancelled. Subsequent to the cancellation there were 225,565,000
common shares of the Company issued and outstanding. Subsequent to the share
cancellation the Company authorized to effect a forward split of the Company's
stock on a 25 new for 1 old basis, such that its authorized capital shall
increase from 100,000,000 shares of common stock with a par value of $0.0001 to
2,500,000,000 shares of common stock with a par value of $0.0001 and,
correspondingly, its issued and outstanding shares of common stock shall
decrease from 225,565,000 shares of common stock to 50,265,000 shares of common
stock. The effective date for the forward stock split was September 3, 2008. The
forward split will result in a mandatory exchange of share certificates.
NOTE 5 - RELATED PARTY TRANSACTIONS
On June 27, 2006 (inception) the Company issued 2,500,000 shares of its common
stock to a director for cash.
On September 13, 2006, the Company issued 62,500,000 shares of its common stock
to its director for cash.
On October 31, 2006, the Company issued 125,300,000 shares of its common stock
to a director for cash.
During the six months ending November, 2008 the accounts payable included
expenses of $10,661 and Consulting Fees of $15,000 for a total of $25,661
incurred on behalf of the Company due to the President of the Company through a
company controlled by the President. None of the amounts remains outstanding as
of November 30, 2008.
11
Waste to Energy Group Inc.
(Formerly Your Digital Memories, Inc.)
(A Development Stage Company)
Notes to the Interim Financial Statements
November 30, 2008
NOTE 5 - RELATED PARTY TRANSACTIONS - CONT.
During the six months ending November 30, 2008 the Company entered into a
consulting agreement commencing September 2, 2008 with a company controlled by
the President. The terms of the consulting agreement are $5,000 per month
payable in consulting fees and reimbursement to the consultant for all
reasonable business expenses incurred by it in the performance of its duties.
During the six months ending November 30, 2008, Prosper Financial Inc., a
company controlled by the President of Waste to Energy Group Inc. advanced to
the company $2,500 by way of a direct payment to one of the Company's current
accounts payable. A Promissory Note was issued in the amount of $2,500 by the
Company to Prosper Financial Inc. This was an interest free loan. During the six
months ending November 30, 2008 the Promissory Note of $2,500 was paid by an
unrelated party directly to Prosper Financial Inc. on behalf of Waste to Energy
Group Inc.
On September 22, 2008 Prosper Financial Inc., a company controlled by the
President of Waste to Energy Group Inc., advanced Waste to Energy Group LLC
$50,000 as part of the payments due to Waste to Energy Group LLC in the
Memorandum of Understanding between the two companies. Prosper Financial Inc.
was issued a Promissory Note in the amount of $50.000 from the Company on
September 22, 2008 paying 8% interest per annum. During the quarter ending
November 30, 2008 $1,617 was paid to Prosper Financial, a company controlled by
the President of Waste to Energy Group Inc. by an unrelated party directly to
Prosper Financial Inc. on behalf of Waste to Energy Group Inc.
NOTE 6 - LOANS PAYABLE
As of November 30, 2008, the loans payable balance comprised of:
a) $44,975 total loans on an interest free basis payable on demand. These
loans were provided to the Company by unrelated parties and bear no
interest.
b) $130,000 was advanced to Waste to Energy Group LLC as part of the
payments due to Waste to Energy Group LLC in the Memorandum of
Understanding between the two companies. Three Promissory Notes in the
amounts of $50,000, $70,000 and $10,000 were issued from the Company
on September 4, 2008 paying 8% interest per annum. The total interest
accrued on the three Promissory Notes issued by the Company was
$2,479.
NOTE 7 - LOANS PAYABLE - RELATED PARTY TRANSACTIONS
$50,000 was advanced to Waste to Energy Group LLC as part of the payments due to
Waste to Energy Group LLC in the Memorandum of Understanding between the two
companies by Prosper Financial Inc. a company controlled by the President of
Waste to Energy Group Inc. A Promissory Notes in the amounts of $50,000, was
issued from the Company on September 22, 2008 paying 8% interest per annum. The
total interest accrued on this Promissory Notes issued by the Company was $732.
During the quarter ending November 30, 2008 $1,617 was paid to Prosper
Financial, a company controlled by the President of Waste to Energy Group Inc.
by an unrelated party directly to Prosper Financial Inc. on behalf of Waste to
Energy Group Inc.
12
Waste to Energy Group Inc.
(Formerly Your Digital Memories, Inc.)
(A Development Stage Company)
Notes to the Interim Financial Statements
November 30, 2008
NOTE 8 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has net losses for the
period of inception to the six months ending November 30, 2008 of $313,020. This
condition raises substantial doubt about the Company's ability to continue as a
going concern. The Company's continuation as a going concern is dependent on its
ability to meet its obligations, to obtain additional financing as may be
required an ultimately to attain profitability. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
NOTE 9 - INCOME TAXES
The Company provides for income taxes under Statement of Financial Accounting
Standards No. 109, ACCOUNTING FOR INCOME TAXES. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes. Deferred tax
assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in
effect currently.
SFAS No. 109 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized. In the
Company's opinion, it is uncertain whether they will generate sufficient taxable
income in the future to fully utilize the net deferred tax asset. Accordingly, a
valuation allowance equal to the deferred tax asset has been recorded. The total
deferred tax asset is $6,886,440 which is calculated by multiplying a 22%
estimated tax rate by the cumulative NOL of $313,020.
NOTE 10 - RECENT ACCOUNTING PRONOUNCEMENTS
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
163, "Accounting for Financial Guarantee Insurance Contracts-and interpretation
of FASB Statement No. 60". SFAS No. 163 clarifies how Statement 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 has no effect on the
Company's financial position, statements of operations, or cash flows at this
time.
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS No. 162
sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB's amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on
the Company's financial position, statements of operations, or cash flows at
this time.
13
Waste to Energy Group Inc.
(Formerly Your Digital Memories, Inc.)
(A Development Stage Company)
Notes to the Interim Financial Statements
November 30, 2008
NOTE 10 - RECENT ACCOUNTING PRONOUNCEMENTS - CONT.
In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS
No. 161, Disclosures about Derivative Instruments and Hedging Activities--an
amendment of FASB Statement No. 133. This standard requires companies to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity's financial
position, financial performance, and cash flows. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Company has not yet
adopted the provisions of SFAS No. 161, but does not expect it to have a
material impact on its consolidated financial position, results of operations or
cash flows.
In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110
regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB
107), in developing an estimate of expected term of "plain vanilla" share
options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular,
the staff indicated in SAB 107 that it will accept a company's election to use
the simplified method, regardless of whether the company has sufficient
information to make more refined estimates of expected term. At the time SAB 107
was issued, the staff believed that more detailed external information about
employee exercise behavior (e.g., employee exercise patterns by industry and/or
other categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. The Company currently uses the
simplified method for "plain vanilla" share options and warrants, and will
assess the impact of SAB 110 for fiscal year 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements--an amendment of ARB No. 51. This statement
amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary.
14
Waste to Energy Group Inc.
(Formerly Your Digital Memories, Inc.)
(A Development Stage Company)
Notes to the Interim Financial Statements
November 30, 2008
NOTE 10 - RECENT ACCOUNTING PRONOUNCEMENTS - CONT.
It clarifies that a noncontrolling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
consolidated financial statements.
Before this statement was issued, limited guidance existed for reporting
noncontrolling interests. As a result, considerable diversity in practice
existed. So-called minority interests were reported in the consolidated
statement of financial position as liabilities or in the mezzanine section
between liabilities and equity. This statement improves comparability by
eliminating that diversity. This statement is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier
adoption is prohibited. The effective date of this statement is the same as that
of the related Statement 141 (revised 2007). The Company will adopt this
Statement beginning March 1, 2009. It is not believed that this will have an
impact on the Company's consolidated financial position, results of operations
or cash flows.
In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations.'This Statement replaces FASB Statement No. 141, Business
Combinations, but retains the fundamental requirements in Statement 141. This
Statement establishes principles and requirements for how the acquirer: (a)
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree; (b) recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase; and (c) determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination.
This statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. An entity may not apply it
before that date. The effective date of this statement is the same as that of
the related FASB Statement No. 160, Noncontrolling Interests in Consolidated
Financial Statements. The Company will adopt this statement beginning March 1,
2009. It is not believed that this will have an impact on the Company's
consolidated financial position, results of operations or cash flows.
15
Waste to Energy Group Inc.
(Formerly Your Digital Memories, Inc.)
(A Development Stage Company)
Notes to the Interim Financial Statements
November 30, 2008
NOTE 10 - RECENT ACCOUNTING PRONOUNCEMENTS - CONT.
In February 2007, the FASB, issued SFAS No. 159, The Fair Value Option for
Financial Assets and Liabilities--Including an Amendment of FASB Statement No.
115. This standard permits an entity to choose to measure many financial
instruments and certain other items at fair value. This option is available to
all entities. Most of the provisions in FAS 159 are elective; however, an
amendment to FAS 115 Accounting for Certain Investments in Debt and Equity
Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not report
net income. SFAS No. 159 is effective as of the beginning of an entity's first
fiscal year that begins after November 15, 2007. Early adoption is permitted as
of the beginning of the previous fiscal year provided that the entity makes that
choice in the first 120 days of that fiscal year and also elects to apply the
provisions of SFAS No. 157 Fair Value Measurements. The Company will adopt SFAS
No. 159 beginning March 1, 2008 and is currently evaluating the potential impact
the adoption of this pronouncement will have on its consolidated financial
statements.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements This
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this statement does not require any
new fair value measurements. However, for some entities, the application of this
statement will change current practice. This statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. Earlier application is
encouraged, provided that the reporting entity has not yet issued financial
statements for that fiscal year, including financial statements for an interim
period within that fiscal year. The Company will adopt this statement March 1,
2008, and it is not believed that this will have an impact on the Company's
consolidated financial position, results of operations or cash flows.
NOTE 11 - SUBSEQUENT EVENTS
The Company is in negotiations to secure the licensing rights to a set of
renewable energy technologies.
16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors that may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States Dollars (US$) and
are prepared in accordance with United States Generally Accepted Accounting
Principles. The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in this
quarterly report. The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all dollar amounts are
expressed in United States dollars. All references to "US$" refer to United
States dollars and all references to "common shares" refer to the common shares
in our capital stock.
As used in this quarterly report, the terms "we", "us", "our", "our company" and
"Waste to Energy" mean Waste to Energy Group Inc., unless otherwise indicated.
GENERAL OVERVIEW
We were incorporated on June 27, 2006 under the laws of the state of Nevada
under the name "Your Digital Memories Inc.".
The address of our principal executive office is 4801 Alhambra Circle, Coral
Gables, Florida, 33146. Our telephone number is (305) 529-4888.
Our common stock is quoted on the OTC Bulletin Board under the symbol "WTEG".
CURRENT OPERATIONS
On August 27, 2008, Aaron Bard resigned as President, Secretary, Treasurer and
Director of our company and Maria C. Maz was appointed President, Secretary,
Treasurer and Director of our company prior to Mr. Bard's resignation.
Effective September 3, 2008, we have our name from "Your Digital Memories Inc."
to "Waste to Energy Group Inc." by way of a merger with our wholly owned
subsidiary Waste to Energy Group Inc., which was formed solely for the change of
name.
In addition, effective September 3, 2008, we effected a 25 for 1 forward stock
split of our authorized issued and outstanding common stock. As a result, our
authorized capital increased from 100,000,000 shares of common stock with a par
value of $0.0001 to 2,500,000,000 shares of common stock with a par value of
$0.0001. Our preferred stock has not increased and shall remain at 50,000,000
shares of preferred stock with a par value of $0.0001.
17
We had 9,022,600 common shares issued and outstanding of which 7,012,000 common
shares were cancelled and after the 25 for 1 forward stock split the issued and
outstanding common shares increased from 2,010,600 shares of common stock to
50,265,000 shares of common stock.
On September 4, 2008 we entered into a memorandum of understanding with Waste to
Energy Group LLC, a Nevada limited liability company, and the shareholders of
Waste to Energy Group LLC. Pursuant to the terms of the memorandum of
understanding, we have agreed to acquire all of the issued and outstanding
shares of Waste to Energy Group LLC's common stock in exchange for the transfer
of 15,000,000 shares of our company's common stock to the shareholders of Waste
to Energy Group LLC from a shareholder of our company. The shareholders of Waste
to Energy Group LLC may also earn a further 8,500,000 shares of our company from
treasury by meeting certain performance criteria that are listed in the
memorandum of understanding.
BUSINESS OF WASTE TO ENERGY GROUP LLC
Waste to Energy Group, LLC is a leading source of waste-to-energy conversion
technology. The company acts as system integrators with unique processes and
technology which convert a waste stream into a variety of revenue producing
products and renewable energy. These technologies include biological, chemical,
thermal and mechanical. They are capable of converting post-recycled residual
solid waste into useful products and chemicals, algae to biofuel, green fuels
such as hydrogen, natural gas, ethanol and biodiesel, as well as, providing a
source of clean, renewable energy.
The technology is modular and designed for scalability or to add to existing
systems and processes. This creates flexibility in deployment for cities and
municipalities with environmentally sound solutions. The company's unique
systems are an alternative to the current landfill and incineration practices
with a 90-99% diversion from landfills and attain a 95-99% recycle rate. They
are 100% environmentally safe with no secondary pollutions, well below the KOTO,
IPPC and EPA requirements, providing an excellent source of clean, renewable
energy to meet the world's problems.
Between September 4, 2008 and the date hereof, we conducted supplemental due
diligence and reviewed additional documentation with regard to Waste to Energy
Group LLC, including without limitation,
* certain publicly available financial and other information, including
equity research, and certain other relevant financial and operating
data furnished to the Company's by Waste to Energy Group LLC's
management;
* certain internal financial analyses, reports and other information
concerning Waste to Energy Group LLC;
* certain financial terms of the merger as compared to the financial
terms of certain selected business combinations we deemed relevant;
and
* such other information, financial studies, analyses and investigations
and such other factors that we deemed relevant.
From this due diligence our company determined that it would not complete the
financing of this project with Waste to Energy Group LLC.
RESULTS OF OPERATIONS
From the date of our incorporation on June 27, 2006 to November 30, 2008, we
have been a start up company that has not generated substantial revenues.
18
THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
The following summary of our results of operations should be read in conjunction
with our financial statements for the quarter ended November 30, 2008 which are
included herein.
Our operating results for the three months ended November 30, 2008, for the
three months ended November 30, 2007 and the changes between those periods for
the respective items are summarized as follows:
Change Between
Three Month
Three Months Three Months Period Ended
Ended Ended November 30, 2008
November 30, November 30, and November 30,
2008 2007 2007
-------- -------- --------
Revenue $ Nil $ Nil $ Nil
General and Administrative 13,089 1,417 11,672
Professional Fees 15,064 1,580 13,484
Consulting 32,500 Nil 32,500
Depreciation 2,442 Nil 2,442
Filing Fees 810 400 410
Impairment of Assets 180,000 Nil 180,000
Net Loss (243,905) (3,397) 240,508
Our financial statements report a net loss of $243,905 for the three month
period ended November 30, 2008 compared to a net loss of $3,397 for the three
month period ended November 30, 2007. Our losses have increased primarily as a
result of an increase in all of our operating expenses.
SIX MONTHS ENDED NOVEMBER 30, 2008 AND 2007
Our operating results for the six months ended November 30, 2008, for the six
months ended November 30, 2007 and the changes between those periods for the
respective items are summarized as follows:
Change Between
Six Month
Six Months Six Months Period Ended
Ended Ended November 30, 2008
November 30, November 30, and November 30,
2008 2007 2007
-------- -------- --------
Revenue $ Nil $ Nil $ Nil
General and Administrative 14,832 4,052 10,780
Professional Fees 19,247 6,580 12,667
Consulting 32,500 Nil 32,500
Depreciation 4,692 Nil 4,692
Filing Fees 4,667 1,060 3,607
Impairment of Assets 180,000 Nil 180,000
Net Loss (255,561) (11,286) 244,275
Our financial statements report a net loss of $255,561 for the six month period
ended November 30, 2008 compared to a net loss of $11,286 for the six month
period ended November 30, 2007. Our losses have increased primarily as a result
of an increase in all of our operating expenses.
19
As at November 30, 2008, we had $23,888 in current liabilities. Our net cash
used in operating activities for the six months ended November 30, 2008 was
$232,284 compared to $11,285 used in the six months ended November 30, 2007. Our
accumulated losses increased to $313,020 as of November 30, 2008.
EQUITY COMPENSATION
We currently do not have any stock option or equity compensation plans or
arrangements.
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL
At At
November 30, May 31,
2008 2008
-------- --------
Current assets $ 20 $ 688
Current liabilities 23,888 3,000
-------- --------
Working capital $(23,868) $ (2,312)
======== ========
CASH FLOWS
Six Months Ended
November 30, November 30,
2008 2007
-------- --------
Net cash used in operating activities $232,284 $ 11,285
Net cash provided by financing activities 231,618 78,142
Net cash used in investing activities Nil Nil
-------- --------
Net increase (decrease) in cash during period $ (666) $(11,285)
======== ========
As of November 30, 2008, our company had working capital deficiency of $23,868.
We have historically incurred losses, and through November 30, 2008 have
incurred losses of $313,020 from our inception. Because of these historical
losses, we will require additional working capital to develop our business
operations. We intend to raise additional working capital through private
placements, public offerings, bank financing and/or advances from related
parties or shareholder loans.
The continuation of our business is dependant upon obtaining further financing
and achieving a break even or profitable level of operations. The issuance of
additional equity securities by us could result in a significant dilution in
equity interests of our current and future stockholders. Obtaining commercial
loans, assuming those loans would be available, will increase our liabilities
and future cash commitments.
There are no assurances that we will be able to either (1) achieve a level of
revenue adequate to generate sufficient cash flow from operations; or (2) obtain
additional financing through either private placements, public offerings and/or
bank financing necessary to support our working capital requirements. To the
extent that funds generated from operations and any private placements, public
offerings and/or bank financing are insufficient, we will have to raise
additional working capital. No assurance can be given that additional financing
will be available, or if available, will be on terms acceptable to us. If
adequate working capital is not available we may not increase our operations.
These conditions raise 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 assets carrying amounts or the
amount and classification of liabilities that might be necessary should we be
unable to continue as a going concern.
20
FUTURE FINANCINGS
We will require additional financing in order to enable us to proceed with our
plan of operations and to pay for our ongoing operating expenses. These expenses
include audit, legal and office expenses. These cash requirements are in excess
of our current cash and working capital resources. Accordingly, we will require
additional financing in order to continue operations and to repay our
liabilities. There is no assurance that any party will advance additional funds
to us in order to enable us to sustain our plan of operations or to repay our
liabilities.
We anticipate continuing to rely on equity sales of our common stock in order to
continue to fund our business operations. Issuances of additional shares will
result in dilution to our existing stockholders. There is no assurance that we
will achieve any additional sales of our equity securities or arrange for debt
or other financing to fund our planned business activities.
We presently do not have any arrangements for additional financing for the
expansion of our exploration operations, and no potential lines of credit or
sources of financing are currently available for the purpose of proceeding with
our plan of operations.
CONTRACTUAL OBLIGATIONS
As a "smaller reporting company", we are not required to provide tabular
disclosure obligations.
GOING CONCERN
We have suffered recurring losses from operations. The continuation of our
company as a going concern is dependent upon our company attaining and
maintaining profitable operations and raising additional capital. The financial
statements do not include any adjustment relating to the recovery and
classification of recorded asset amounts or the amount and classification of
liabilities that might be necessary should our company discontinue operations.
Due to the uncertainty of our ability to meet our current operating expenses and
the capital expenses noted above, in their report on the annual financial
statements for the year ended May 31, 2008, our independent auditors included an
explanatory paragraph regarding the substantial doubt about our ability to
continue as a going concern. Our financial statements contain additional note
disclosures describing the circumstances that lead to this disclosure by our
independent auditors.
The continuation of our business is dependent upon us raising additional
financial support. The issuance of additional equity securities by us could
result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.
OFF-BALANCE SHEET ARRANGEMENTS
We have no 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 stockholders.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Our financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles used in the United States. Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue, and expenses. These
estimates and assumptions are affected by management's application of accounting
policies. We believe that understanding the basis and nature of the estimates
and assumptions involved with the following aspects of our consolidated
financial statements is critical to an understanding of our financials.
21
ITEM 3. QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS.
As a "smaller reporting company", we are not required to provide the information
required by this Item.
ITEM 4T. CONTROLS AND PROCEDURES.
An evaluation was performed under the supervision and with the participation of
our sole Officer and Director, of the effectiveness of the design and operation
of our disclosure controls and procedures. Based on management's evaluation as
of the end of the period covered by this quarterly report, our sole Officer and
Director concluded that as of the end of the period covered by this report, our
disclosure controls and procedures (as defined in rules 13a-15e and 15d-15(e)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") were
effective in ensuring that the information required to be disclosed by us in the
reports we file under the Exchange Act is gathered, analyzed and disclosed with
adequate timeliness, accuracy and completeness.
Disclosure controls and procedures and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Securities Act of 1934 is recorded, processed, summarized
and reported, within the time period specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Securities Act of 1934
is accumulated and communicated to management, including our president and chief
executive officer and our chief financial officer as appropriate, to allow
timely decisions regarding required disclosure.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We know of no material, existing or pending legal proceedings against our
company, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered or beneficial shareholder, is an
adverse party or has a material interest adverse to our interest.
ITEM 1A. RISK FACTORS.
Much of the information included in this quarterly report includes or is based
upon estimates, projections or other "forward looking statements". Such forward
looking statements include any projections or estimates made by us and our
management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.
Such estimates, projections or other "forward looking statements" involve
various risks and uncertainties as outlined below. We caution the reader that
important factors in some cases have affected and, in the future, could
materially affect actual results and cause actual results to differ materially
from the results expressed in any such estimates, projections or other "forward
looking statements".
Our common shares are considered speculative during the development of our new
business operations. Prospective investors should consider carefully the risk
factors set out below.
RISKS RELATED TO OUR BUSINESS
BECAUSE OUR AUDITORS HAVE ISSUED A GOING CONCERN OPINION, THERE IS SUBSTANTIAL
UNCERTAINTY WE WILL CONTINUE ACTIVITIES IN WHICH CASE YOU COULD LOSE YOUR
INVESTMENT.
22
Our auditors have issued a going concern opinion. This means that there is
substantial doubt that we can continue as an ongoing business for the next
twelve months. As such we may have to cease activities and you could lose your
investment.
WE HAVE HAD LIMITED CASH FLOWS FROM OPERATIONS SINCE INCEPTION. WE WILL REQUIRE
SIGNIFICANT ADDITIONAL FINANCING, THE AVAILABILITY OF WHICH CANNOT BE ASSURED,
AND IF OUR COMPANY IS UNABLE TO OBTAIN SUCH FINANCING, OUR BUSINESS MAY FAIL.
To date, we have had limited cash flows from operations and have depended on
sales of our equity securities and debt financing to meet our cash requirements.
Our ability to develop and, if warranted, commercialize our technologies, will
be dependent upon our ability to raise significant additional financing. If we
are unable to obtain such financing, we will not be able to fully develop our
business. Specifically, we will need to raise additional funds to:
* support our planned growth and carry out our business plan;
* continue scientific progress in our research and development
programs;
* address costs and timing of conducting clinical trials and seek
regulatory approvals and patent prosecutions;
* address competing technological and market developments; and
* establish additional collaborative relationships.
We may not be able to obtain additional equity or debt financing on acceptable
terms as required. Even if financing is available, it may not be available on
terms that are favourable to us or in sufficient amounts to satisfy our
requirements. If we require, but are unable to obtain, additional financing in
the future, we may be unable to implement our business plan and our growth
strategies, respond to changing business or economic conditions, withstand
adverse operating results and compete effectively. More importantly, if we are
unable to raise further financing when required, we may be forced to scale down
our operations and our ability to generate revenues may be negatively affected.
WE HAVE A HISTORY OF LOSSES AND NOMINAL OPERATING RESULTS, WHICH RAISE
SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
Since inception through November 30, 2008, we have incurred a net loss of
$313,020. We can offer no assurance that we will operate profitably or that we
will generate positive cash flow in the future. In addition, our operating
results in the future may be subject to significant fluctuations due to many
factors not within our control, such as the level of competition and general
economic conditions.
Our company's operations will be subject to all the risks inherent in the
establishment of a developing enterprise and the uncertainties arising from the
absence of a significant operating history. No assurance can be given that we
may be able to operate on a profitable basis.
Due to the nature of our business and the early stage of our development, our
securities must be considered highly speculative. We have not realized a profit
from our operations to date and there is little likelihood that we will realize
any profits in the short or medium term. Any profitability in the future from
our business will be dependent upon the successful commercialization or
licensing of our core technology, which itself is subject to numerous risks.
We expect to continue to incur development costs and operating costs.
Consequently, we expect to incur operating losses and negative cash flows until
our technology gains market acceptance sufficient to generate a sustainable
level of income from the commercialization or licensing of our technology.
23
OUR INABILITY TO COMPLETE OUR PRODUCT DEVELOPMENT ACTIVITIES SUCCESSFULLY MAY
SEVERELY LIMIT OUR ABILITY TO OPERATE AND FINANCE OPERATIONS.
Commercialization of our core technology will require significant additional
research and development as well as substantial clinical trials. We believe that
the United States will be the principal market for our technology, as will any
country in the world where the need for waste-to-energy conversion technology
exists. We may not be able to successfully complete development of our core
technology, or successfully market our technology. We, and any of our potential
collaborators, may encounter problems and delays relating to research and
development, regulatory approval and intellectual property rights of our
technology. Our research and development programs may not be successful. Our
core technology may not prove to be safe and efficacious in clinical trials, and
we may not obtain the intended regulatory approvals for our core technology.
Whether or not any of these events occur, we may not have adequate resources to
continue operations for the period required to resolve the issue delaying
commercialization and we may not be able to raise capital to finance our
continued operation during the period required for resolution of that issue.
WE MAY LOSE OUR COMPETITIVENESS IF WE ARE NOT ABLE TO PROTECT OUR PROPRIETARY
TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS AGAINST INFRINGEMENT, AND ANY
RELATED LITIGATION MAY BE TIME-CONSUMING AND COSTLY.
Our success and ability to compete depends to a significant degree on our
proprietary technology. If any of our competitors copy or otherwise gain access
to our proprietary technology or develop similar technologies independently, we
may not be able to compete as effectively. The measures we have implemented to
protect our proprietary technology and other intellectual property rights are
currently based upon a combination of patents and trade secrets. This, however,
may not be adequate to prevent the unauthorized use of our proprietary
technology and our other intellectual property rights. Further, the laws of
foreign countries may provide inadequate protection of such intellectual
property rights. We may need to bring legal claims to enforce or protect such
intellectual property rights. Any litigation, whether successful or
unsuccessful, may result in substantial costs and a diversion of our company's
resources. In addition, notwithstanding our rights to our intellectual property,
other persons may bring claims against us alleging that we have infringed on
their intellectual property rights or claims that our intellectual property
rights are not valid. Any claims against us, with or without merit, could be
time consuming and costly to defend or litigate, divert our attention and
resources, result in the loss of goodwill associated with our business or
require us to make changes to our technology.
OUR COMPANY MAY BECOME SUBJECT TO INTELLECTUAL PROPERTY LITIGATION WHICH MAY
HARM OUR BUSINESS.
Our success depends in part on our ability to develop commercially viable
products without infringing the proprietary rights of others. Although we have
not been subject to any filed infringement claims, other patents could exist or
could be filed which may prohibit or limit our ability to market our products or
maintain a competitive position. In the event of an intellectual property
dispute, we may be forced to litigate. Intellectual property litigation may
divert management's attention from developing our technology and may force us to
incur substantial costs regardless of whether we are successful. An adverse
outcome could subject us to significant liabilities to third parties, and force
us to curtail or cease the development and commercialization of our technology.
IF OUR COMPANY COMMERCIALIZES OR TESTS OUR TECHNOLOGY, OUR COMPANY WILL BE
SUBJECT TO POTENTIAL PRODUCT LIABILITY CLAIMS WHICH MAY AFFECT OUR EARNINGS AND
FINANCIAL CONDITION.
We face an inherent business risk of exposure to product liability claims in the
event that the use of our core technology during research and development
efforts, including clinical trials, or after commercialization, results in
adverse affects. As a result, we may incur significant product liability
exposure, which may exceed any insurance coverage that we obtain in the future.
Even if we elect to purchase such issuance in the future, we may not be able to
maintain adequate levels of insurance at reasonable cost and/or reasonable
terms. Excessive insurance costs or uninsured claims may increase our operating
loss and affect our financial condition.
24
IF WE FAIL TO EFFECTIVELY MANAGE THE GROWTH OF OUR COMPANY AND THE
COMMERCIALIZATION OR LICENSING OF OUR TECHNOLOGY, OUR FUTURE BUSINESS RESULTS
COULD BE HARMED AND OUR MANAGERIAL AND OPERATIONAL RESOURCES MAY BE STRAINED.
As we proceed with the development of our technology and the expansion of our
marketing and commercialization efforts, we expect to experience significant
growth in the scope and complexity of our business. We will need to add staff to
manage operations, handle business development efforts and perform finance and
accounting functions. We anticipate that we will be required to hire a broad
range of additional personnel in order to successfully advance our operations.
This growth is likely to place a strain on our management and operational
resources. The failure to develop and implement effective systems, or to hire
and retain sufficient personnel for the performance of all of the functions
necessary to effectively service and manage our potential business, or the
failure to manage growth effectively, could have a material adverse effect on
our business and financial condition.
IF WE DO NOT KEEP PACE WITH OUR COMPETITORS, TECHNOLOGICAL ADVANCEMENTS AND
MARKET CHANGES, OUR TECHNOLOGY MAY BECOME OBSOLETE AND OUR BUSINESS MAY SUFFER.
The market for our technology is very competitive, is subject to rapid
technological changes and varies for different individual products. We believe
that there are potentially many competitive approaches being pursued that
compete with our technology, including some by private companies for which
information is difficult to obtain.
Many of our competitors have significantly greater resources and have developed
products and processes that directly compete with our technology. Our
competitors may develop, or may in the future develop, new technologies that
directly compete with our technology or even render our technology obsolete. Our
technology is designed to develop a conversion of waste-to-energy. Even if we
are able to demonstrate improved or equivalent results from our technology, our
technology may suffer a competitive disadvantage. Finally, to the extent that
others develop new technologies that address the targeted application for our
current technology, our business will suffer.
OUR BUSINESS IS SUBJECT TO COMPREHENSIVE GOVERNMENT REGULATION AND ANY CHANGE IN
SUCH REGULATION MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR COMPANY.
There is no assurance that the laws, regulations, policies or current
administrative practices of any government body, organization or regulatory
agency in the United States or any other jurisdiction, will not be changed,
applied or interpreted in a manner which will fundamentally alter the ability of
our company to carry on our business. The actions, policies or regulations, or
changes thereto, of any government body or regulatory agency, or other special
interest groups, may have a detrimental effect on our company. Any or all of
these situations may have a negative impact on our operations.
RISKS RELATED TO OUR COMMON STOCK
TRADING IN OUR COMMON SHARES ON THE OTC BULLETIN BOARD IS LIMITED AND SPORADIC
MAKING IT DIFFICULT FOR OUR SHAREHOLDERS TO SELL THEIR SHARES OR LIQUIDATE THEIR
INVESTMENTS.
Our common shares are currently listed for public trading on the OTC Bulletin
Board. The trading price of our common shares has been subject to wide
fluctuations. Trading prices of our common shares may fluctuate in response to a
number of factors, many of which will be beyond our control. The stock market
has generally experienced extreme price and volume fluctuations that have often
been unrelated or disproportionate to the operating performance of companies
with no current business operation. There can be no assurance that trading
prices and price earnings ratios previously experienced by our common shares
will be matched or maintained. These broad market and industry factors may
adversely affect the market price of our common shares, regardless of our
operating performance.
In the past, following periods of volatility in the market price of a company's
securities, securities class-action litigation has often been instituted. Such
litigation, if instituted, could result in substantial costs for us and a
diversion of management's attention and resources.
25
OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S
PENNY STOCK REGULATIONS WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL
OUR STOCK.
Our stock is a penny stock. The Securities and Exchange Commission has adopted
Rule 15g-9 which generally defines "penny stock" to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and "accredited investors". The term "accredited investor" refers
generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules; the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.
THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, OR FINRA, HAS ADOPTED SALES
PRACTICE REQUIREMENTS WHICH MAY ALSO LIMIT A STOCKHOLDER'S ABILITY TO BUY AND
SELL OUR STOCK.
In addition to the "penny stock" rules described above, FINRA has adopted rules
that require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for
that customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customer's financial status, tax status, investment
objectives and other information. Under interpretations of these rules, FINRA
believes that there is a high probability that speculative low priced securities
will not be suitable for at least some customers. FINRA requirements make it
more difficult for broker-dealers to recommend that their customers buy our
common stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
26
ITEM 6. EXHIBITS.
Exhibits required by Item 601 of Regulation S-K
Exhibit
Number Description
- ------ -----------
(3) (I) ARTICLES OF INCORPORATION; AND (II) BYLAWS
3.1 Articles of Incorporation (Incorporated by reference to the Form
SB-2 filed on June 19, 2007)
3.2 Bylaws (Incorporated by reference to the Form SB-2 filed on June 19,
2007)
3.3 Certificate of Change filed with the Secretary of State of Nevada on
August 19, 2008 (Incorporated by reference to the Form 8-K filed on
September 9, 2008)
(10) MATERIAL CONTRACTS
10.1 Memorandum of Understanding dated September 3, 2008 (Incorporated by
reference to the Form 8-K filed on September 9, 2008)
(31) SECTION 302 CERTIFICATION
31.1* Certification of Principal Executive Officer and Principal Financial
Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
(32) SECTION 906 CERTIFICATION
32.1* Certification of Principal Executive Officer and Principal Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
- ----------
* Filed herewith
27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
WASTE TO ENERGY GROUP INC.
(Registrant)
Dated: January 14, 2009 /s/ Maria C. Maz
-------------------------------------------------
Maria C. Maz
President, Chief Executive Officer and Director
(Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
28