Item 1. Business
Company Background
We were incorporated on April 5, 2002 under the laws of the State of Nevada as “Aztek Ventures Inc.” Effective November 13, 2007, we filed a Certificate of Amendment to our Articles of Incorporation to change our name from “Aztek Ventures Inc.” to “Genesis Uranium Corp.” Effective April 21, 2008, we amended our Articles of Incorporation to change our name from “Genesis Uranium Corp.” to “Vault Technology Inc.” to reflect the change in our business focus beyond solely that of uranium exploration. Effective July 10, 2009, we filed a Certificate of Amendment to our Articles of Incorporation to change our name from “Vault Technology, Inc.” to “Modern Renewable Technologies, Inc.” (“Modern”). On May 27, 2011, Modern, merged with Eco Ventures Group, Inc., as discussed below. On July 18, 2013, the Company declared a 15-for-1 reverse stock split for all of its common and preferred stock. All references herein to the number of shares outstanding and per-share amounts have been retroactively restated to reflect this reverse stock split. The Board of Directors of Eco Ventures, Inc. (the “Company”) has approved a change of its name to Clear TV Ventures, Inc. effective at the close of business on July 25, 2013.
Merger with Eco Ventures Group, Inc.
On May 27, 2011, Modern, merged with Eco Ventures Group, Inc., (“Eco Ventures- Florida”) a privately held company formed on November 9, 2010 (date of inception) under the laws of the State of Florida (the “Merger Agreement” or the “Merger”). Under the terms of the Merger Agreement, shareholders of Eco Ventures - Florida exchanged an aggregate of seventy percent (70%) of Eco Ventures - Florida’s issued and outstanding capital stock in exchange for 102,500 (including 8,333 shares issued to consultants and 6,333 shares issued to officers) restricted shares of Modern’s authorized but unissued capital stock. As a condition to the Merger Agreement, 28,144 shares of Modern is to be issued to the Holders of the Registrant’s outstanding convertible debentures. The Merger was consummated on June 1, 2011.
In connection with the Merger, Modern changed its name to Eco Ventures Group, Inc. (“Eco Ventures - Nevada” or the “Registrant”). The transaction has been accounted for in substance as a reverse acquisition of the Registrant by Eco Ventures - Florida since the stockholders of Eco Ventures - Florida owned a majority of the Registrant’s voting power immediately following the Merger Transaction and Eco Ventures - Florida’s management has assumed operational, management and governance control. For accounting purposes, Eco Ventures - Florida shall be the accounting acquirer and or the surviving entity. Accordingly, the historical financial statements are those of Eco Ventures - Florida, the accounting acquirer, immediately following the consummation of the reverse merger.
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Upon completion of the Merger Transaction on June 1, 2011, our name was changed to Eco Ventures Group, Inc. As a result, our OTC Bulletin Board symbol became “EVGI” as of June 6, 2011.
Company business:
During the two years ended August 31 2013, we operated as Eco Ventures Group, Inc. (“EVG”). Our focus during these two years and through June 24, 2014 was on the production of advanced biodiesel from recovered cooking oils and oil rich plants. One of divisions specialized in the extraction of precious metals from ore bodies and reclaimed mine tailings. We never generated any revenue during the period we operated as Eco Ventures Group, Inc.
The Company’s business operations and facilities through March 31, 2013 was located in Groveland, FL. In 2011 EVG entered into to an exclusive strategic joint venture with Raptor Technology Group, Inc. of Groveland, FL to commercialize patent pending and proprietary technologies in the fields of efficient precious metals recovery. EVG and Raptor have completed construction of a 5,000 concentrated ton per year mineral recovery facility. However, the extraction process was determined to be not economically viable and the Company decided to suspend operations on its mineral extraction division and began focuses its efforts on the Eco Energy Group division.
EVG also entered into an agreement for Raptor to build a biodiesel facility in Groveland utilizing their technology and knowhow. This technology makes use of a lower cost feedstock than the current industry standard. EVG is in the process of bringing these biodiesel production technologies to market. The Company was not able to bring the technology to market and on March 31, 2013, with the consent of its landlord, abandoned the facilities,
On June 26, 2014, EVG merged with Petlife Pharmaceuticals, Inc. (See Note 13 to the accompanying consolidated financial statements, for a further discussion on the terms and conditions of this merger).
Our principal offices are located at 28562 Oso Parkway, Unit D, Rancho Santa Margarita, CA 92688, and our telephone number is (949) 858-5836. Our common stock is quoted on the OTC Bulletin Board System under the symbol “EVGI.” We currently do not have a corporate website.
OUR BUSINESS GROUPS
During the period from June 2011 through June 2014, our business operations have been internally divided into two working groups, neither of which are independent legal entities. To date, we have not generated any revenues from either business group.
ECO ENERGY GROUP
Eco Energy Group (EEG) was a business group of EVG which was dedicated to the cost-effective production of biodiesel from multiple low-cost feedstocks by using bio refinery technologies. EEG is near completion of its initial 3.6 million gallon facility in Groveland, FL, which processes biofuels from oil-rich plants and recovered cooking oils. EVG’s batch reactor will initially run on recycled cooking oils as a feedstock, termed “yellow grease.” The Company attempted to find a secure reliable and cost-effective supplies of this feedstock. EVG needed to obtain additional financing in order to complete this facility and make it operational. The Company did find the necessary funding and ceased the indicated operations in 2014
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Employees
There is only one person employed by our Company on a full-time basis as of August 31, 2013, Randall Lanham, our Chief Executive Officer, President and CFO. Additional technological experts provide services to the Company as independent contractors on a project basis.
Offices and Manufacturing Facilities
The Company’s operations and facilities were located in Groveland, FL, 25 miles West of Orlando, FL on State Road 50. The Company has ceased all operations located at that address on March 31, 2013.
The Company’s corporate offices are located at 28562 Oso Parkway, Unit D, Rancho Santa Margarita, California.
Item 1A.
Item 1A. Risk Factors
Not required by smaller reporting companies
Item 1B.
Item 1B. Unresolved Staff Comments
None.
Item 2.
Item 2. Properties
Eco Ventures Group’s initial headquarters, operations and manufacturing facilities were located at 7432 State Road 50, Suite 101, Groveland, FL, in a light-industrial complex 25 miles west of Orlando, FL. It was not economically feasible for the Company to continue to lease the office / warehouse complex with a large warehouse facility for its Mineral Recovery Operation and Bio-Diesel Operation and with the consent of its landlord, abandoned the facilities on March 31, 2013.
Our corporate office is located at 28562 Oso Parkway, Unit D, Rancho Santa Margarita, California. The office is leased by our Company’s president who is currently allowing us to use the space free of charge.
Item 3.
Item 3. Legal Proceedings
We are not currently a party in any legal proceeding or governmental regulatory proceeding nor are we currently aware of any pending or potential legal proceeding or governmental regulatory proceeding proposed to be initiated against us.
Item 4.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Eco Ventures Group, Inc. (formerly, Modern Renewable Technologies, Inc.) common stock is quoted on the OTC Bulletin Board (OTC/BB) under the symbol “EVGI.PK”. Our shares originally commenced quotation under the symbol “AZTV” on May 1, 2007. Prior to May 1, 2007, no public trading market existed for our common stock. Our symbol was changed to “AZVN” on July 9, 2007 upon completion of our 2.5 -for-1 stock split. Subsequently, our symbol was changed to “GEUR” on November 16, 2007 after our name change from “Aztek Ventures Inc.” to “Genesis Uranium Corp.” Effective April 21, 2008, we changed our name from Genesis Uranium Corp. to “Vault Technology, Inc.”, effective July 10, 2009, we filed a Certificate of Amendment to our Articles of Incorporation to change our name from “Vault Technology, Inc.” to “Modern Renewable Technologies, Inc.. and also completed a 70 to1 reverse split. As a result, our OTC Bulletin Board symbol was changed to “MRNZ” as of September 17, 2009. Effective on October 4, 2010 we completed a further 100 to 1 reverse split. The name of the Company was changed to Eco Ventures Group, Inc. on June 1, 2011 and has traded under the symbol “EVGI.OB” since June 6, 2011. On July 12, 2012 the Company effected a forty to one (40-1) reverse stock split. On July 18, 2013, the Company declared a 15-for-1 reverse stock split for all of its common and preferred stock.
The table below sets forth the high and low sales prices for our common stock for the periods indicated as reported by the OTCBB. Sales prices represent prices between dealers, do not include retail markups, markdowns or commissions and do not necessarily represent prices at which actual transactions were effected.*
*The above quotations have been adjusted to reflect our 40 to 1 reverse split effective July 12, 2012 and the 15-for-1 reverse stock split effective on July 18, 2013.
As of August 31, 2013, there were 115 reported holders of record of our common stock and a total of 2,363,170 shares of Common Stock issued and 563,170 shares outstanding.
We have never paid a cash dividend. Payment of future dividends, if any, will be at the discretion of our Board of Directors after taking into account various factors, including the terms of any credit arrangements, our financial condition, operating results, current and anticipated cash needs and plans for growth. Our initial earnings, if any, will likely be retained to finance our growth. At the present time, we are not party to any agreement that would limit our ability to pay dividends.
The Securities Enforcement and Penny Stock Reform Act of 1990
The Securities and Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with prices of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current prices and volume information with respect to transactions in such securities is provided by the exchange or system). Our shares are currently subject to the penny stock rules.
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A purchaser is purchasing penny stock which limits the ability to sell the stock. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his/her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the Commission, which:
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contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;
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contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of the Securities Act of 1934, as amended;
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contains a brief, clear, narrative description of a dealer market, including “bid” and “ask” prices for penny stocks and the significance of the spread between the bid and ask prices;
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contains a toll-free telephone number for inquiries on disciplinary actions;
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defines significant terms in the disclosure document or in the conduct of trading penny stocks; and
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contains such other information and is in such form (including language, type, size and format) as the Securities and Exchange Commission shall require by rule or regulation.
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The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer:
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the bid and offer quotations for the penny stock;
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the compensation of the broker-dealer and its salesperson in the transaction;
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the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and
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monthly account statements showing the market value of each penny stock held in the customer’s account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those 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 acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements have the effect of reducing the trading activity in the secondary market for our stock. Thus, stockholders may have difficulty selling their securities.
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Securities Authorized for Issuance under Equity Compensation Plans
Equity Compensation Plan Information
The following sets forth information for the equity compensation plans outstanding as of August 31, 2013 (including individual compensation arrangements) under which shares of our common stock are authorized for issuance:
Equity Compensation Plan Information
Number of securities
2011 Incentive Stock Option Plan
On July 26, 2011, the Board of Directors approved the 2011 Incentive Stock Option Plan (the “2011 Plan”) which provides incentive stock and non-statutory options to be granted to select employees, directors and consultants of the Company. The 2011 Plan provides that awards may be granted for up to 44,444 shares of the Company’s common share (subject to adjustment in case of a subdivision of our outstanding shares of Common Stock, recapitalization, stock dividend, or other change in our corporate structure that affects our Common Stock). The purpose of the 2011 Plan is (i) to further our growth by allowing us to compensate employees and Directors who have provided bona fide services to our company through the award of shares of our Common Stock, and (ii) attract, motivate, retain and reward quality employees and directors to acquire or increase a proprietary interest in our company. The 2011 Plan is administered by a committee consisting of at least two persons to be appointed by the Board of Directors, or in the absence of such a committee, the Plan is to be administered by the Board of Directors. Our Board of Directors appointed Paul Smith, our President and CFO, to the committee. Any of our employees or directors are eligible to receive awards under the Plan. We intend to register with the Securities and Exchange Commission the common shares issuable under the 2011 Incentive Stock Option Plan.
Transfer Agent
Empire Stock Transfer Co. is the transfer agent for our common stock. Their address is at 1859 Whitney Mesa Drive, Henderson, NV 89014.
Issuer purchase of equity securities
There were no issuer purchases of securities during the period covered by this report.
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Item 6.
Item 6. Selected Financial Data.
Not required by smaller reporting companies.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion provides information that management believes is relevant to an assessment and understanding of the financial condition and results of operations of Clear TV Ventures, Inc., formerly Eco Ventures Group, Inc. . (the “Company”).
This discussion addresses matters we consider important for an understanding of our financial condition and results of operations as from September 1, 2011 through August 31, 2013. It consists of the following subsections:
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“Introduction and Plan of Operation” which provides a brief summary of our consolidated results and financial position and the primary factors affecting those results, as well as a summary of our expectations for fiscal 2014;
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“Liquidity and Capital Resources,” which contains a discussion of our cash flows and liquidity, investing activities and financing activities, contractual obligations, and critical obligations;
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“Results of Operations and Comparison”,” which sets forth an analysis of the operating results for the last two fiscal years
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Critical Accounting Policies,” which provides an analysis of the accounting policies we consider critical because of their effect on the reported amounts of assets, liabilities, income and/or expenses in our consolidated financial statements and/or because they require difficult, subjective or complex judgments by our management;
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“Recent Accounting Pronouncements and Developments,” which summarizes recently published authoritative accounting guidance, how it might apply to us and how it might affect our future results.
This item should be read in conjunction with our consolidated financial statements and the notes thereto included in this annual report.
Introduction and Plan of Operation
The following discussion updates our plan of operation for the 2014 Fiscal Year. The discussion also summarizes the results of our operations for the period from September 1, 2011 through August 31, 2013.
Merger Agreements
On May 27, 2011, the Company, formerly known as Modern Renewable Technologies, Inc., (“Modern”), a Nevada Corporation, merged with Eco Ventures Group, Inc. (“Eco Ventures - Florida”), a privately held company formed on November 9, 2010 (date of inception) under the laws of the State of Florida (the “Merger Agreement” or the “Merger”). Under the terms of the Merger Agreement, shareholders of Eco Ventures - Florida exchanged an aggregate of seventy percent (70%) of Eco Ventures - Florida’s issued and outstanding capital stock in exchange for 102,500 (including 8,333 shares issued to consultants and 6,333 shares issued to officers) restricted shares of Modern’s authorized but unissued capital stock. The Merger was consummated on June 1, 2011.
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In connection with the Merger, Modern changed its name to Eco Ventures Group, Inc. (“Eco Ventures - Nevada” or the “Registrant”). The transaction has been accounted for in substance as a reverse acquisition of the Registrant by Eco Ventures- Florida since the stockholders of Eco Ventures - Florida owned a majority of the Registrant’s voting power immediately following the Merger Transaction and Eco Ventures - Florida’s management has assumed operational, management and governance control. For accounting purposes, Eco Ventures - Florida shall be the accounting acquirer and or the surviving entity. Accordingly, the historical financial statements are those of Eco Ventures - Florida, the accounting acquirer, immediately following the consummation of the reverse merger.
On April 18, 2014., Eco Ventures Group, Inc. (“EVGI”) entered into an Agreement and Plan of Merger with Petlife Pharmaceuticals, Inc., a Nevada Corporation (“PPI”). Under the terms of the merger, each 15 shares of EVGI common stock will exchanged for one share of PPI’s common stock. Each share of EVGI preferred stock will be exchanged for one share of PVI preferred stock.
Plan of Operations
From September 1, 2011 through August 31, 2013, we experienced the negative effects of the financial markets upheaval, which made capital acquisition extremely difficult. Due to our lack of funding and resources, we have been dormant Since August 31, 2013. As indicated above, on June 26, 2014, we became Petlife Pharmaceuticals, Inc. It is our intention to acquire Petlife Corporation.
About Petlife, Inc.
Petlife Corporation (“Petlife”) is a registered US Veterinary Pharmaceutical company, incorporated in 2012 as a subsidiary of Medolife International, Inc. If we do acquire of Petlife and obtain the necessary funding, we plan to market Petlife’s primary product under the name of Escozine for Pets, which now accessible through the company’s website (www.USPetlife.com). It is intent that Escozine for Pets will be registered and distributed globally; We also plan to market Escozine for Pets through direct online marketing.
Petlife’s primary goal is to bring its scientifically proven, potentiated bioactive medication and Nutraceuticals to the world of veterinary oncology, with the ultimate goal of extending the life of pets with cancer and improving their quality of life. In the process of achieving these objectives, Petlife will transition into a world renowned, professionally respected veterinary pharmaceutical company that will create new industry standards as well as being profitable and innovative.
Results of Operations
Year ended August 31, 2013 compared to year ended August 31, 2012
Net loss
We incurred a net loss of $1,622,269 for the year ended August 31, 2013 as compared to the net loss we incurred for the year ended August 31, 2012 of $3,260,801.
Operating expenses
For the year ended August 31, 2013 we incurred $221,516 in operating expenses as compared to $267,058 in operating expenses we incurred for the prior year. Operating expenses for the year ended August 31, 2013 decreased by 45,542, due to the fact we had less funds to operate in 2013.
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General and administrative
For the year ended August 31, 2013, general and administrative costs were $692,386 as compared to $2,311,620 that we incurred in the previous year. General and administrative costs were primarily comprised of costs associated with starting operations and related salaries, overhead and travel expenses. As part of our general and administrative expenses, we incurred stock based compensation (non-cash) of $305,557 and $1,282,100, for services rendered during the fiscal year ended August 31, 2013 and 2012, respectively.
Loss from Operations
For the year ended August 31, 2013 we incurred a loss from operations of $1,680,269 as compared to the operating loss we incurred for the year ended August 31, 2012 of $2,578,678.
Other income (expense):
Gain on forgiveness of debt.
During the year ended August 31, 2013, we recognized a net gain on the forgiveness of debt from a vendor totaling $166,142.
Loss on settlement of debt
For the year ended August 31, 2012, we incurred a loss on settlement of debt of $656,000 resulted from the issuance of 106,667 shares of our common stock, valued at $6.75 per share in settlement of the notes payable and accrued interest.
Interest expense
For the year ended August 31, 2013, we incurred $108,142 in interest expense on demand notes issued in settlement of expenses paid on the Company's behalf and working capital provided as compared to $26,123 that we incurred during the previous year.
Net loss attributable to the non-controlling interest
Net loss attributable to non-controlling interest for the year ended August 31, 2013 was $461,505 as compared to $940,725 for the year ended August 31, 2012. Net loss attributable to the non-controlling interest amounted to $1565,882 for the period from November 9, 2010 (date of inception) through August 31, 2013. The net loss attributable to the non-controlling interest represented the 30% third party ownership of Eco Ventures- Florida’s share of its net loss for the year ended August 31, 2013 and 2012 and for the period from November 9, 2010 (date of inception) through August 31, 2013.
Net loss attributable to Eco Ventures Group, Inc. common shareholders
Net loss attributable to Eco Ventures Group, Inc. common shareholders amounted to $1,160,764 for the year ended August 31, 2013 compared to $2,320,076 for the year ended August 31, 2012.
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Liquidity and Capital Resources
Since November 9, 2010 (date of inception), we have been in the development stage and have to date received no revenue from the extraction of gold or other precious metals or other business operations, we have relied on funds received in connection with our equity and debt offerings to finance our ongoing operations. We have experienced net losses since inception, and we expect we will continue to incur losses for the next year. As of the date of this filing, we do not have any available external source of funds. We require additional capital in the near term to maintain our current operations. Although we are actively seeking additional equity and debt financing, such financing may not be available on acceptable terms, if at all.
Our consolidated financial statements have been prepared assuming that we will continue as a going concern. Since our inception on November 9, 2010, we have not generated revenue and have incurred net loss. Accordingly, we have not generated cash flow from operations and have primarily relied upon loans from officers, promissory notes and advances from related parties, and equity financing to fund our operations. The report of our Independent Registered Public Accounting Firm include an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern.
We currently have no cash on hand. Accordingly, we do not have sufficient cash resources or current assets to pay our obligations, and we have been meeting many of our obligations through the issuance of our common stock to our employees, consultants and advisors as payment for goods and services. Considering the foregoing, we are dependent on additional financing to continue our operations. Our significant capital requirements for the foreseeable future include development and operational costs, and our corporate overhead expenses.
We are actively seeking additional equity or debt financing. However, there can be no assurance that funds required during the next twelve months or thereafter will be available from external sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force us to substantially curtail or cease operations and would, therefore, have a material adverse effect on our business. Further, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significantly dilutive effect on our existing shareholders. All of these factors have been exacerbated by the extremely unsettled credit and capital markets presently existing.
Net Cash Used in Operating Activities
Net cash used in operating activities was $137,097 for the year ended August 31, 2013, as compared to net cash used of $400,119 in prior year’s operating activities. The decrease was primarily due to a decrease in overall activity in 2013 as comared to the activity incurred in 2012.
Net Cash Used in Investing Activities
We had no investing activities during the year ended August 31, 2013. During the year ended August 31, 2012, we used net cash in investing activities of $36,971 for the procurement of property and equipment by Eco Ventures - Florida.
Net Cash Provided by Financing Activities
During the year ended August 31, 2013, we received net cash provided by financing activities totaling $137,030 of which $30,000 was from the issuance of 5,714 shares of our common stock, $7,030 in advances from a related party and $100,000 from a unrelated third party evidenced by a promissory note.
During the year ended August 31, 2012, we received net cash provided by financing activities of $381,250 primarily from sale of our Series B preferred stock of $50,000, common stock subscription of $50,000, proceeds from related party advances of $213,650 and proceeds from related party notes payable of $67,600. During the period from November 9, 2010 (date of inception) through August 31, 2011, we received proceeds from sale of our Series A preferred stock of $250,000, proceeds from related party advances of $48,604 and contributed capital by the majority owned subsidiary of $67,750.
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Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a development stage entity, has not established any sources of revenue to cover its operating expenses from November 9, 2010 (date of inception) through August 31, 2013. In addition, the Company has incurred deficit accumulated during development stage of $4,277,950 and used $137,097 in cash for operating activities for the year ended August 31, 2013. The Company will engage in very limited activities without incurring any significant liabilities that must be satisfied in cash until a source of funding is secured. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The Company’s ability to continue existence is dependent upon commencing its planned operations, management’s ability to develop and achieve profitable operations and/or upon obtaining additional financing to carry out its planned business. The Company intends to fund its business development, acquisition endeavors and operations through equity and debt financing arrangements.
There can be no assurance that any additional financings will be available to the Company on satisfactory terms and conditions, if at all. In the event the Company is unable to continue as a going concern, it may elect or be required to seek protection from its creditors by filing a voluntary petition in bankruptcy or may be subject to an involuntary petition in bankruptcy. To date, management has not considered this alternative, nor does management view it as a likely occurrence.
The accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Critical Accounting Policies and Estimates
Significant Accounting Policies
Financial Reporting Release No. 60, published by the SEC, recommends that all companies include a discussion of critical accounting policies used in the preparation of their financial statements. While all these significant accounting policies impact our consolidated financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our consolidated financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates.
We believe that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.
General
The Company’s Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles, which require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue, if any, and expenses, and the disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Board of Directors. Management believes that the accounting estimates employed and the resulting balances are reasonable; however, actual results may differ from these estimates under different assumptions or conditions.
An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the consolidated financial statements. Management believes the following critical accounting policies reflect the significant estimates and assumptions used in the preparation of the Consolidated Financial Statements.
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Development Stage Company
The Company is considered to be a development stage entity, as defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 915.
Going Concern
The consolidated financial statements have been prepared on the going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of operations. If we were not to continue as a going concern, we would likely not be able to realize on our assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the consolidated financial statements. There can be no assurances that we will be successful in generating additional cash from equity or other sources to be used for operations. The consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its majority owned subsidiary, Eco Ventures - Florida. All significant intercompany balances and transactions have been eliminated in consolidation.
The remaining 30% ownership of Eco Ventures - Florida as of August 31, 2013 is recorded as non-controlling interest in the consolidated financial statements.
Revenue Recognition
The Company will recognize revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments will be provided for in the same period the related sales will be recorded.
ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arraignments (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. There was no effect on implementing ASC 605-25 on the Company’s financial position and results of operations, since the Company has not started generating revenue.
Stock-Based Compensation
The Company follows Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) which requires that all share-based payments to both employees and non-employees be recognized in the income statement based on their fair values.
As of August 31, 2013, the Company did not have any issued or outstanding stock options.
Impairment of Long-Lived Assets
The Company follows ASC 360, "Property, Plant and Equipment" which requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of the long-lived assets and certain identifiable intangibles will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less disposal costs.
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Income Taxes
The Company utilizes ASC 740 “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.
Recent Accounting Pronouncements
There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.
Inflation
We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could adversely affect our business, financial condition and results of operations.
Off-Balance sheet Arrangements
We do not maintain off-balance sheet arrangements nor do we participate in any non-exchange traded contracts requiring fair value accounting treatment other than the operating leases as disclosed in Item 2, Properties and Notes to Consolidated Financial Statements (Note 10).
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market RISK
This item is not applicable to smaller reporting companies.
Item 8.
Item 8. Financial Statements and Report of Independent Certifying Accountant
Our consolidated financial statements are included beginning immediately following the signature page to this report. See Item 15 for a list of the consolidated financial statements included herein.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
On August 16, 2011 (the “Engagement Date”), the Company engaged RBSM LLP (“RBSM ”) as its independent registered public accounting firm for the Company’s fiscal year ended August 31, 2011. The decision to engage RBSM as the Company’s independent registered public accounting firm was approved by the Company’s Board of Directors. During the two most recent fiscal years and through the Engagement Date, the Company has not consulted with RBSM regarding either:
1. the application of accounting principles to any specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report was provided to the Company nor oral advice was provided that RBSM concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or
2. any matter that was either the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K and the related instructions thereto) or a reportable event (as described in paragraph (a)(1)(v) of Item 304 of Regulation S-K).
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Item 9A.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of August 31, 2013, under the supervision and with the participation of our Chief Executive Officer (Principal Executive Officer), and Chief Financial Officer (Principal Financial Officer), management has evaluated the effectiveness of the design and operations of the Company’s disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of August 31, 2013 as a result of the material weakness in internal control over financial reporting discussed below.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f). Our Chief Executive Officer and President/Chief Financial Officer conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO Framework”).
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of August 31, 2013. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of August 31, 2013. Our Chief Executive Officer and President/Chief Financial Officer concluded we have a material weakness due to lack of segregation of duties and a limited corporate governance structure.
Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal control system. Therefore while there are some compensating controls in place, it is difficult to ensure effective segregation of accounting and financial reporting duties. Management reported a material weakness resulting from the combination of the following significant deficiencies:· Lack of segregation of duties in certain accounting and financial reporting processes including the approval and execution of disbursements;· The Company’s corporate governance responsibilities are performed by the Board of Directors; we do not have independent Board of Directors, we do not have an audit committee or compensation committee. Because our Board of Directors only meets periodically throughout the year, several of our corporate governance functions are not performed concurrent (or timely) with the underlying transaction, evaluation, or recordation of the transaction.
While we strive to segregate duties as much as practicable, there is an insufficient volume of transactions at this point in time to justify additional full time staff. We believe that this is typical in most exploration stage companies. We may not be able to fully remediate the material weakness until we commence mining operations at which time we would expect to hire more staff. We will continue to monitor and assess the costs and benefits of additional staffing.
In light of the above material weakness, we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the period from November 9, 2010 (date of inception) through August 31, 2013 included in this Annual Report on Form 10-K were fairly stated in accordance with US GAAP. Accordingly, management believes that despite our material weaknesses, our consolidated financial statements for the period from November 9, 2010 (date of inception) through August 31, 2013 are fairly stated, in all material respects, in accordance with US GAAP.
This report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report on internal control in this annual report.
Changes in Internal Control over Financial Reporting
There were no changes in internal control over financial reporting that occurred during the last fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance Identify Directors and Executive Officers
The directors named below were elected for one-year terms. Officers hold their positions at the discretion of the Board of Directors in accordance with the terms of their employment agreements.
The names, addresses and ages of each of our directors and executive officers and the positions and offices held by them, which director positions are for a period of one year, are:
OFFICERS AND DIRECTORS
RANDALL LANHAM - DIRECTOR AND CHIEF EXECUTIVE OFFICER
Experience
Randall Lanham is a California-licensed attorney with experience in securities law and corporate finances. Mr. Lanham has experience in both domestic and international corporate legal matters, with demonstrated effectiveness in corporate reorganizations and business operations. Mr. Lanham's business experience coupled with solid legal background in corporate and civil law positions him perfectly for his work at the helm of EVG, where his goals are to control costs, establishing customer and vendor relations, and increase internal productivity directly generating improved bottom-line profitability.
Mr. Lanham has been engaged in the private practice of law in his own firm since 1996. Randall Lanham is a California- licensed attorney with experience in securities law and corporate finances. Mr. Lanham has experience in both domestic and international corporate legal matters, with demonstrated effectiveness in corporate reorganizations and business operations. Mr. Lanham's business experience coupled with solid legal background in corporate and civil law positions him perfectly for his work at the helm of EVG, where his goals are to control costs, establishing customer and vendor relations, and increase internal productivity directly generating improved bottom-line profitability.
Mr. Lanham has been engaged in the private practice of law in his own firm since 1996, served as Vice President and General Counsel of Activate Corporation during 1995-1996, and was an Attorney with Leonard, Ralston, Stanton and Danks from 1992-1993. Mr. Lanham is also on the board of independent directors of Nymox Pharmaceutical Corporation based out of Montreal, Canada. NASDAQ: NYMX
Education and Associations
●
J.D. Whittier College School of Law - 1991
●
B.S. Criminal Justice/Political Sci., U. of Delaware - 1987
●
State Bar of California - 1993
Significant Employees
We have no significant employees other than our executive officer.
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Director Independence
Our common stock is listed on the OTC Bulletin Board inter-dealer quotation system, which does not have director independence requirements. For purposes of determining director independence, we have applied the definition set forth in NASDAQ Rule 4200(a)(15). The following directors are considered “independent” as defined under Rule 4200(a)(15): Randall Lanham and Paul Smith would not be considered “independent” under the NASDAQ rule due to the fact that they are employees of our company.
Board Meetings
During the fiscal year ended August 31, 2013, we had two directors. During the year fiscal year ended August 31, 2013, the Board held one meeting and has taken numerous actions by unanimous written consent.
Audit, Compensation and Nominating Committees
As noted above, our common stock is listed on the OTC Bulletin Board, which does not require companies to maintain audit, compensation or nominating committees. Considering the foregoing and the fact that we are an early stage exploration company, we do not maintain standing audit, compensation or nominating committees. The functions typically associated with these committees are performed by the entire Board of Directors currently consists of two members, neither of which is considered independent.
Although there is no formal process in place regarding the consideration of any director candidates recommended by security holders, our Board of Directors will consider a director candidate proposed by a shareholder. A candidate must be highly qualified in terms of business experience and be both willing and expressly interested in serving on the Board.
The Board evaluates nominees for directors recommended by shareholders in the same manner in which it evaluates other nominees for directors. Minimum qualifications include the factors discussed above.
Shareholder Communications
We do not have a formal shareholder communications process. Shareholders are welcome to communicate with the Company by forwarding correspondence to Eco Ventures Group, Inc., State Hwy. 50, Groveland, FL, Attn.: Shareholder Relations.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act, requires the Company’s officers and directors, and persons who own more than 10% of the Company’s Common Stock, to file reports of ownership and changes in ownership of the Company’s Common Stock with the SEC. To our knowledge, during the fiscal year ended August 31, 2013, based solely on a review of such materials as are required by the SEC, all required reporting is current and accurate.
Code of Business Conduct and Ethics
We have adopted a code of business conduct and ethics that applies to all of our executive officers and employees. The Code addresses conflicts of interest, compliance with all laws and other legal requirements, conduct of business in an honest and ethical manner, integrity and actions in the Company’s best interest. Directors, officers and employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of the Code. The Sarbanes-Oxley Act of 2002 requires companies to have procedures to receive, retain and treat complaints received regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters. The Company currently has such procedures in place. Eco Ventures Group, Inc. Code of Business Ethics and Conduct is available on our web site at www.ecoventuresgroup.com
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Item 11.
Item 11. Executive Compensation
Covered - All Executive Officers
The executive officers for the year ended August 31, 2012 and for the year ended August 31, 2013 are as follows:
Randall Lanham, Chief Executive Officer
Paul Smith, President (July 1, 2011 - September 9, 2012)
Mark Cox, President September 10, 2012 to present.
Summary Compensation Table
The following table summarizes all compensation recorded by us for the year ended August 31, 2012 and for the year ended August 31, 2013 for our named executive officers.
(1)
Representing a total of 3,167 as Founder’s Shares valued at $12 per share, we also issued 3,167 shares to be equally vested in next 36 months. During the year ended August 31, 2012, 1,056 shares of common stock were valued at average of the closing market price during the month for which stocks are awarded totaling to $64,926 vested as set forth in their Employment Agreements. During the year ended August 31, 2013, 15,829 shares of the Company’s common stocks were issued and valued at average of the closing market price during the month for which stocks are awarded totaling to $2,274 vested as set forth in their Employment Agreements. These shares were not issued as of the date of this Annual Report. These Shares are all restricted in accordance with the requirements of Rule 144 under the Securities Act of 1933, as amended.
(2)
Representing a total of 3,167 as Founder’s Shares valued at $12 per share, we also issued 3,167 shares to be equally vested in next 36 months. During the year ended August 31, 2012, 1,056 stocks were valued at average of the closing market price during the month for which stocks are awarded totaling to $64,926 vested as set forth in their Employment Agreements. During the year ended August 31, 2013, 31,667 shares of the Company’s common stock were agreed to be issued and valued at average of the closing market price during the month for which stocks are awarded totaling to $17,417 vested as set forth in their Employment Agreements and agreed to issue 300,000 shares of Company’s common stock as per Settlement Agreement valued at $165,000. Paul Smith has resigned as of September 10, 2012. These Shares are all restricted in accordance with the requirements of Rule 144 under the Securities Act of 1933, as amended. These shares were not issued as of the date of this Annual Report.
(3)
Mark Cox was appointed on August 7, 2012 and 8,333 shares eligible on signing of the agreement valued at $14.70. Mark Cox is on a review term for the first 120 days. The amended agreement state the effective date of appointment as September 10, 2012 but the stock award of 8,333 restricted shares shall remain earned as of August 7, 2012. During the year ended August 31, 2013, 28,333 shares of the Company’s common stock were earned and valued at average of the closing market price during the month for which stocks are awarded totaling to $63,366 vested as set forth in his Employment Agreement. These shares were not issued as of the date of this Annual Report.
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Executive Employment Agreements
Randall Lanham. We employed Mr. Lanham on July 1, 2011 as our Chief Executive Officer for a period of 3 years at annual salary of $300,000. Mr. Lanham will however forgo 50% of his salary until the Company receives a significant portion of its financing to expand its operations and execute its business plan. Mr. Lanham is entitled to an annual bonus to equal to 1% of the Company’s EBITA for each fiscal year during the Employment Period not to exceed $500,000. Mr. Lanham received 47,500 shares of the Company’s restricted Common Stock in conjunction with the reverse-merger transaction. The Company shall award an additional 1,319 shares of its "restricted stock" for each month that Mr. Lanham remains in the employ of the Company, up to a maximum of thirty-six (36) months.
Equity Compensation Plans
2011 Incentive Stock Option Plan
On July 26, 2011, our Board of Directors unanimously approved our 2011 Incentive Stock Option Plan (the “2011 Plan”). The purpose of the Plan is to retain current, and attract new, employees, directors, consultants and advisors that have experience and ability, along with encouraging a sense of proprietorship and interest in the Company’s development and financial success. The Board of Directors believes that option grants and other forms of equity participation are an increasingly important means of retaining and compensating employees, directors, advisors and consultants. The 2011 Plan authorizes us to issue up to 44,444 shares of our common stock. The plan allows us to grant tax-qualified incentive stock options, non-qualified stock options and restrictive stock awards to employees, directors and consultants of our company.
In order to be able to grant qualified “incentive stock options” under the 2011 Plan in accordance with Section 422 of the Internal Revenue Code, as amended, we must obtain shareholder approval of the 2011 Plan within 12 months before or after the 2011 Plan was adopted. Accordingly, we submitted the Plan for shareholder approval in June 2011 and the 2011 Plan was approved by shareholder action upon written consent in accordance with the By-Laws of the Company.
Unless terminated earlier by the Board, the 2011 Plan will expire on December 31, 2021. As of August 31, 2012 there are no outstanding options under the 2011 Plan, and no shares of Common Stock has been issued under the 2011 Plan.
Outstanding Equity Awards at Fiscal Year-end
There we no outstanding equity awards for our Executive officers in the period from November 9, 2010 (date of inception) through August 31, 2013.
Stock Option Exercised
There were no stock options exercised on common shares in the period from November 9, 2010 (date of inception) through August 31, 2013, with respect to the named executives listed in the Summary Compensation Table.
Expense Reimbursement
We will reimburse our officers and directors for reasonable expenses incurred during the course of their performance.
Retirement Plans and Benefits.
None.
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Director Compensation
The following table summarizes all director compensation for our Executive officers in the most recent fiscal year ended August 31, 2013 and the previous fiscal year ended August 31, 2012. No compensation was paid in either fiscal year due to lack of operating funds. There are no other standard compensation arrangements in place and all directors are treated equally with respect to any compensation.
Standard Director Compensation Arrangement
We do not have a standard compensation arrangement for directors.
Indemnification and Limitation on Liability of Directors
Our Articles of Incorporation and Bylaws provide that we must indemnify, to the fullest extent permitted by the laws of the State of Nevada, any of our directors, officers, employees or agents made or threatened to be made a party to a proceeding, by reason of the person serving or having served in a capacity as such, against judgments, penalties, fines, settlements and reasonable expenses incurred by the person in connection with the proceeding if certain standards are met.
The Nevada Revised Statutes allows indemnification of directors, officers, employees and agents of a company against liabilities incurred in any proceeding in which an individual is made a party because he or she was a director, officer, employee or agent of the company if such person conducted himself in good faith and reasonably believed his actions were in, or not opposed to, the best interests of the company, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. A person must be found to be entitled to indemnification under this statutory standard by procedures designed to assure that disinterested members of the board of directors have approved indemnification or that, absent the ability to obtain sufficient numbers of disinterested directors, independent counsel or shareholders have approved the indemnification based on a finding that the person has met the standard. Indemnification is limited to reasonable expenses.
At present, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents where indemnification will be required or permitted. Insofar as indemnification for liabilities arising under the 1933 Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable.
Our Articles of Incorporation limit the liability of our directors to the fullest extent permitted by law. Specifically, our directors will not be personally liable for monetary damages for breach of fiduciary duty as directors, except for:
•
any breach of the duty of loyalty to us or our stockholders;
•
acts or omissions not in good faith or that involved intentional misconduct or a knowing violation of law;
•
dividends or other distributions of corporate assets that are in contravention of certain statutory or contractual restrictions;
•
violations of certain laws; or
•
any transaction from which the director derives an improper personal benefit.
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Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information regarding the beneficial ownership of the Company’s Common Stock as of July 10, 2014 , by (i) each person known by the Company to beneficially own more than five percent of the outstanding shares of Common Stock, (ii) each current director and named executive officer of the Company and (iii) all executive officers and directors as a group. Except as indicated, the persons named in the table have sole voting and investment power with respect to all shares beneficially owned. Except as indicated, the address of each of the persons named in the table is that of the Company’s principal executive offices. As of July 10, 2014, there were 50,000,000 shares of our common stock authorized and 2,636,170shares issued.
(1)
All shares are owned directly.
(2)
Officer and director.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence
We have borrowed funds (See Note 5 and 8 to the Consolidated Financial Statements), from related parties. In connection with the borrowings, we have executed unsecured promissory notes (“Notes”) to related parties which are due on demand and carry interest rate of 8% per annum. These Notes are in the amounts of $138,026 payable to Central Florida Resources Group, Inc. The Notes also provide that we pay collection costs and attorney fees if the Notes are not paid when due.
In addition, our Chief Executive Officer, President/Chief Financial Officer and a principal shareholder have advanced funds of $290,506 and $315,240 as of August 31, 2013 and 2012, respectively to the Company for travel and working capital purposes. There are no formal repayment terms or arrangements for these advances and are due on demand. Central Florida Resources Group has advanced a total of $232,718 as of August 31, 2013 already included in $290,506. Also, as per employment agreement, the Company charged to operations salary expenses to CEO and President of $150,000 and $300,000 for the years ended August 31, 2013 and 2012, respectively.
Director Independence
Our common stock is listed on the OTC Bulletin Board inter-dealer quotation system, which does not have director independence requirements. For purposes of determining director independence, we have applied the definition set forth in NASDAQ Rule 4200(a)(15). The following directors are considered “independent” as defined under Rule 4200(a)(15): Randall Lanham and Paul Smith would not be considered “independent” under the NASDAQ rule due to the fact that they are employees of our Company.
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Item 14.
Item 14. Principal Accountant Fees and Services
RBSM LLP (“RBSM”) has served as our independent registered public accounting firm since August 16, 2011. RBSM was also Eco Ventures - Florida’s independent registered public accounting firm prior to the completion date of the Reverse Merger transaction on June 1, 2011. Prior to August 16, 2011, MaloneBailey LLP served as the Company’s then independent registered accounting firm.
The following table sets forth fees billed to us by RBSM during the fiscal years ended August 31, 2013 and 2012 for: (i) services rendered for the audit of our annual consolidated financial statements and the review of our quarterly consolidated financial statements, (ii) services by our auditor that are reasonably related to the performance of the audit or review of our consolidated financial statements and that are not reported as Audit Fees, (iii) services rendered in connection with tax compliance, tax advice and tax planning, and (iv) all other fees for services rendered.
(1) Audit Fees
Audit fees include fees incurred for professional services rendered in connection with the audit of the Company’s annual consolidated financial statements for the period from November 9, 2010 (date of inception) through August 31, 2013, the reviews of the quarterly interim consolidated financial statements included in the Company’s Forms 10-Q for the fiscal year ended August 31, 2013, and services rendered to issue consents required in certain of the Company’s registration statements. RBSM has billed us $32,500 and $36,500 for audit fees incurred during the fiscal year ended August 31, 2013 and 2012, respectively in connection with the audit of our annual consolidated financial statements and review of quarterly interim financial statements included in our Form 10-Q.
(2) Audit-Related Fees
RBSM billed us audit-related fees in the aggregate amount of approximately $0 during the fiscal year ended August 31, 2013 and 2012.
(3) Tax Fees
No fees of this sort were billed by RBSM during the period from November 9, 2010 (date of inception) through August 31, 2013.
(4) All Other Fees
No fees of this sort were billed by RBSM during the period from November 9, 2010 (date of inception) through August 31, 2013.
Policy on Pre-Approval of Audit and Permissible Non-audit Services of Independent Auditors
Consistent with the SEC policies regarding auditor independence, our Board of Directors has responsibility for appointing, setting compensation and overseeing the work of the independent auditor. In recognition of this responsibility, our Board of Directors has established a policy to pre-approve all audit and permissible non-audit services provided by the independent auditor.
Prior to engagement of the independent auditor for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of the following four categories of services to the Board of Directors for approval.
PART IV
Item 15.
Item 15. Exhibits and Financial Statement Schedules
See the Exhibit Index and the Index to Financial Statements immediately following the signature page of this report.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on July 21, 2014.
Signature
Title
/s/ Randall Lanham
Chief Executive Officer and Director
Randall Lanham
(Principal Executive Officer) President, Chief Financial Officer,
Principal Accounting Officer) and Director
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EXHIBIT INDEX
Exhibits
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CLEAR TV VENTURES, INC.
(formerly Eco Ventures Group, Inc.)
(A Development Stage Company)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Clear TV Ventures, Inc.
(formerly Eco Venture Group, Inc.)
We have audited the accompanying consolidated balance sheets of Clear TV Ventures, Inc. (formerly Eco Ventures Group, Inc.) and Subsidiary (the “Company”), a development stage company as of August 31, 2013 and 2012 and the related consolidated statements of operations, deficit and cash flows for the years ended August 31, 2013 and 2012 and for the period from November 9, 2010 (date of inception) through August 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to the above present fairly, in all material respects, the consolidated financial position of Clear TV Ventures, Inc. (formerly Eco Ventures Group, Inc.) as of August 31, 2013 and 2012, and the results of operations, deficit and cash flows for the years ended August 31, 2013 and 2012 and for the period from November 9, 2010 (date of inception) through August 31, 2013 in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the accompanying consolidated financial statements, the Company is a development stage company and has not commenced its planned principal operations, is incapable of generating sufficient cash flow to sustain its operations without securing additional financing, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to this matter are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ RBSM LLP
July 21, 2014
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures Group, Inc. )
(A Development Stage Company)
Consolidated Statement of Equity (Deficit)
FOR THE PERIOD FROM NOVEMBER 9, 2010 (DATE OF INCEPTION) THROUGH AUGUST 31, 2013
(Continued on next page)
The accompanying notes are an integral part of these consolidated financial statements.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures Group, Inc. )
(A Development Stage Company)
Consolidated Statement of Equity (Deficit)
FOR THE PERIOD FROM NOVEMBER 9, 2010 (DATE OF INCEPTION) THROUGH AUGUST 31, 2013
(Continued from previous page)
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the presentation of the accompanying consolidated financial statements follows:
Basis and business presentation
Clear TV Ventures, Inc. (formerly Eco Ventures Group, Inc.), a publicly traded and holding company of our planned expanding lines of business was incorporated under the laws of the State of Nevada in April 2002 under the name of Modern Renewable Technologies, Inc. In connection with the consummation of the reverse merger transaction on June 1, 2011 with Eco Ventures Group, Inc., a Florida corporation (“Eco Ventures - Florida”) formed on November 9, 2010 (date of inception), the accounting acquirer (see below), EVG changed its name to Eco Ventures Group, Inc., a Nevada corporation. The historical financial statements are those of Eco Ventures - Florida, the accounting acquirer, immediately following the consummation of the reverse merger. On July 15, 2013, the Company entered into an Agreement and Plan of Merger with Clear TV Ventures, Inc. (“CTV”). Under the terms of the merger, Clear TV became the surviving corporation.
All references that refer to (the “Company” or “Clear TV Ventures, Inc.” or "CTV" or “we” or “us” or “our”) are Clear TV Ventures, Inc., the Registrant and its wholly and or majority owned subsidiaries unless otherwise differentiated, Eco Ventures Group, Inc., a Florida formed corporation. We are in the development stage, as defined by Accounting Standards Codification subtopic 915-10, Development Stage Entities ("ASC 915-10") and specialize in the planned extraction of precious metals from mineralized waste bodies and reclaimed mine tailings and also will focus on the production of advanced biodiesel from recovered cooking oils and oil rich plants. We have not generated any revenues to date, have incurred expenses and has sustained losses since November 9, 2010 (date of inception). Consequently, our operations are subject to all the risks inherent in the establishment of a new business enterprise. For the period from November 9, 2010 (date of inception) through August 31, 2013, we have accumulated a deficit through its development stage of approximately $4,277,950.
The consolidated financial statements include the accounts of the Company and its majority owned subsidiary, Eco Ventures - Florida. All significant intercompany balances and transactions have been eliminated in consolidation.
The remaining 30% ownership of Eco Ventures - Florida as of August 31, 2013 is recorded as non-controlling interest in the consolidated financial statements.
On July 18, 2013, CTV declared a 15-for-1 reverse stock split for all of its common and preferred stock. All references in the accompanying consolidated financial statements and notes thereto to the number of shares outstanding and per-share amounts have been retroactively restated to reflect this reverse stock split.
Reverse Merger and Corporate Restructure
On May 27, 2011, the Registrant entered into a material definitive agreement for the acquisition of 70% of the capital stock of Eco Ventures Group, Inc., a Florida corporation (“Eco Ventures - Florida”). The acquisition was completed on June 1, 2011 through issuance of 102,500 (including 8,333 shares issued to consultants and 6,333 shares issued to officers) shares of Common Stock of the Company in exchange for 467 Shares of Eco Ventures - Florida in a tax-free share exchange. A total of 28,144 shares of Common Stock of the Registrant shall be issued to Holders of the Registrant’s outstanding Convertible Debentures. Upon the conversion of all such Convertible Debentures, the Registrant had a total of 130,659 Shares of Common Stock issued and outstanding.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
As a condition of the reverse merger transaction, the name of the Registrant was changed to “Eco Ventures Group, Inc.”, a Nevada corporation and the Registrant’s OTC trading symbol has been changed to “EVGI.” The transaction is accounted for in substance as a reverse acquisition of the Registrant by Eco Ventures - Florida since the stockholders of Eco Ventures - Florida owned a majority of the Company’s voting power immediately following the merger transaction and Eco Ventures - Florida’s management has assumed operational, management and governance control in accordance with the terms of the Shareholder Agreement dated May 20, 2011. For accounting purposes, Eco Ventures - Florida is the accounting acquirer and / or the surviving entity. Accordingly, the historical financial statements are those of Eco Ventures - Florida, the accounting acquirer, immediately following the consummation of the reverse merger. The Company did not recognize goodwill or any intangible assets in connection with this transaction.
Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Revenue Recognition
The Company will recognize revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments will be provided for in the same period the related sales will be recorded.
ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arraignments (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. There was no effect on implementing ASC 605-25 on the Company’s financial position and results of operations, since the Company has not started generating revenue.
Cash
The Company considers cash to consist of cash on hand and temporary investments having an original maturity of 90 days or less that are readily convertible into cash.
Property and Equipment
Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. During the year ended August 31, 2013, all acquired property and equipment was determined to be impaired and the total cost of $766,367 was charged to operations.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
Long-Lived Assets
The Company follows FASB ASC 360-10-15-3, “Impairment or Disposal of Long-lived Assets,” which established a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. For the year ended August 31, 2013, the Company recognized an impairment loss of $766,367. The impairment loss represents the excess of the carrying amounts of the Company’s property and equipment over their fair value, which was determined on the basis of their liquidation value of the related assets. CTV was significantly behind in paying its rent on its Florida Facilities. On March 31, 2013, the landlord, a related party, waived all past due rents and released the Company from any further obligation under the lease. The Company credited to equity all accrued past due rent totaling $386,255.
Income Taxes
The Company has adopted Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes consist primarily of timing differences such as deferred officers’ compensation and stock based compensation accounting.
Net Loss per Common Share, basic and diluted
The Company has adopted Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”) specifying the computation, presentation and disclosure requirements of earnings per share information. Basic loss per share has been calculated based upon the weighted average number of common shares outstanding. Shares issuable upon conversion of the Series A and Series B preferred stock have been excluded as common stock equivalents in the diluted loss per share because their effect is anti-dilutive on the computation. Diluted shares outstanding were 493,794 shares as of August 31, 2013.
Stock based compensation
The Company follows Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) which requires that all share-based payments to both employees and non-employees be recognized in the income statement based on their fair values.
As of August 31, 2013, the Company did not have any issued or outstanding stock options.
Concentrations of Credit Risk
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade receivables. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
Research and Development
The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company did not incur any research and development expenses from November 9, 2010 (date of inception) through August 31, 2013.
Reliance on Key Personnel and Consultants
The Company has one full-time employee and no part-time employees. Additionally, the Company has consultants performing various specialized services. The Company is heavily dependent on the continued active participation of these current executive officers, employees and key consultants. The loss of any of the senior management or key consultants could significantly and negatively impact the business until adequate replacements can be identified and put in place.
Fair Value
Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying amount reported in the consolidated balance sheet for accounts payable and accrued expenses, advances and notes payable approximates fair value because of the immediate or short-term maturity of these financial instruments.
Reclassification
Certain reclassifications have been made to prior periods' data to conform to the current period's presentation. These reclassifications had no effect on reported income or losses.
Recent Accounting Pronouncements
The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change.
NOTE 2 - GOING CONCERN MATTERS
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements from November 9, 2010 (date of inception) through August 31, 2013, the Company incurred deficit accumulated during development stage of approximately $4,277,950, used $137,097 in cash for operating activities during the year ended August 31, 2013. In addition, the Company is in a development stage, has yet commercialized its planned business and has not generated any revenues since inception. These factors among others may indicate that the Company will be unable to continue as a going concern for a reasonable period of time.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
The Company’s existence is dependent upon management’s ability to develop profitable operations and or upon obtaining additional financing to carry out its planned business. Management is devoting substantially all of its efforts to the commercialization of its planned product and processes, as well as raising additional debt or equity financing in order to accelerate the development and commercialization of additional products. There can be no assurance that the Company’s commercialization or financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems.
There can be no assurance that any additional financings will be available to the Company on satisfactory terms and conditions, if at all. In the event the Company is unable to continue as a going concern, it may elect or required to seek protection from its creditors by filing a voluntary petition in bankruptcy or may be subject to an involuntary petition in bankruptcy. To date, management has not considered this alternative, nor does management view it as a likely occurrence.
The accompanying consolidated statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of August 31, 2013 and 2012 are comprised of the following:
Since its inception, the Company was in the assembly and testing mode and not in operations. Therefore no depreciation was recorded on the above indicated assets. As indicated in Note 1, the Company recognized an impairment loss for the year ended August 31, 2013 of $766,367.
During the period from November 9, 2010 (date of inception) through August 31, 2013, the Company received property and equipment from three investors at a fair value of $560,000. The transaction was recorded as a capital contribution.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
NOTE 4 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities as of August 31, 2013 and 2012 are comprised of the following:
Upon the completion of the reverse merger transaction, the Company determined certain liabilities have been forgiven by the creditors/shareholders, which is deemed as extinguished as of August 31, 2011. Accordingly, the Company has recorded a gain on forgiveness of debt of $261,793 that related to the write-off of these extinguished liabilities during the year ended August 31, 2011.
During the year ended August 31, 2013, the Company determined certain accrued compensation have been forgiven by the officers / related parties and accordingly, the Company credited to additional paid-in capital as contributed services rendered by the officers / related parties of $560,596 (accrued amount of $410,596 as of August 31, 2012 and the amount incurred during the year ended August 31, 2013 of $150,000).
Also, during the year ended August 31, 2013, the Company determined certain liabilities have been forgiven by the creditors and accordingly, the Company recorded a gain on forgiveness of debt of $166,142 during the year ended August 31, 2013. On March 31, 2103, the Company was relieved of paying past accrued rent due to a related party and credited the accrued balance due of $386,255 to equity as contributed capital.
NOTE 5 - NOTES PAYABLE - UNRELATED THIRD PARTY
On December 13, 2012, the Company issued a promissory note to an unrelated third party in exchange for $100,000 in cash. Under the terms of the loan, the $100,000 and interest totaling $25,000 is due and payable on or before March 12, 2013. The loan is collateralized by 100,000 shares of the Company’s restricted common stock, which are held in escrow. In consideration for the loan, the Company also issued 26,667 shares of its common stock which was valued at the shares’ fair market value at the date of issue of $72,000, which is being amortized as a loan fee over the term of the loan.
The Company incurred interest expense of $25,000 and amortization expense $72,000 for the year ended August 31, 2013. As indicated the loan and accrued interest was not paid and the 100,000 shares were released from escrow in full settlement of the $125,000 balance due. On March 12, 2013, the Company recognized a net gain on the settlement of the debt of $65,000, the difference between the fair value of 100,000 shares which was $60,000 on date of issuance and the total indebtedness owed.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
NOTE 6 - NOTES PAYABLE, RELATED PARTIES
Notes payable as of August 31, 2013 and, 2012 are comprised of the following:
From November 9, 2010 (date of inception) through August 31, 2011, the Company issued two notes in the aggregate of $265,474 in exchange for operating expenses paid on behalf of the Company by two shareholders of its majority owned subsidiary. The notes bear interest at an annual rate of 8%, are unsecured and due on demand.
During the year ended August 31, 2012, the Company issued an aggregate of 118,880 shares of common stock, valued at $6.75 - $24 per share in settlement of $357,124 of the outstanding notes payable and accrued interest and recorded a loss on settlement of notes payable and accrued interest of $656,000.
During the year ended August 31, 2012, the Company issued six notes totaling $138,026 in exchange for operating funds provided by a shareholder of its majority owned subsidiary. The notes bear interest at an annual rate of 8%, are unsecured, and are due on demand.
The Company charged to operations interest expense on the above notes of $10,567 during the year ended August 31, 2013.
NOTE 7 - STOCKHOLDERS' EQUITY
Preferred Stock
The Company is authorized to issue 6,666,667 and 100,000,000 shares of preferred stock with a par value of $0.001 per share as of August 31, 2013 and 2012, respectively. The Company's preferred stock may be divided into such series as may be established by the Board of Directors. The Board of Directors may fix and determine the relative rights and preferences of the shares of any series established. On July 18, 2013, CTV declared a 15-for-1 reverse split for all of its common and preferred stock. All references in the accompanying consolidated financial statements and notes thereto to the number of shares outstanding and per-share amounts have been retroactively restated to reflect this stock split.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
Series A Cumulative Convertible Preferred Stock ("Series A")
In August, 2011, the Company designated 266,427 shares of authorized preferred stock as Series A Redeemable Convertible Preferred stock ("Series A").
Voting rights
a)
The Company shall not, without the affirmative consent of the holders of seventy-five percent of the Series A Preferred Stock, in any manner alter or change the designations, or the powers, preferences, rights, qualifications, limitations, or restrictions or increase the number of authorized shares of the Series A Preferred Stock in any manner.
b)
Except as provided below, the holders of the Series A Preferred Stock shall not have any right to vote their Series A Preferred Stock in any manner.
c)
Notwithstanding the provisions above, on all matters coming before the holders of preferred stock of the Company, as a class, or coming before the holders of the Series A Preferred Stock of the Company, as a class, the holders of the Series A Preferred Stock shall have the right to vote their Series A Preferred Stock with each such share of stock being entitled to one (1) vote on any or all such matters.
Dividends
In each year, beginning six months from issuance, the holders of the Series A Preferred Stock shall be entitled to receive when and as declared by the Board of Directors of the Corporation, out of funds legally available for that purpose, quarterly dividends payable January 1, April 1, July 1 and October 1 in each year, commencing on July 1, 2012 in an amount equal to twenty percent (20%) of "Adjusted Gross Revenue" earned during that quarter. Adjusted Gross Revenue is defined as gross revenue less licensing fees, royalties, third party payments, mineral extraction, mining expenses, crushing and shipping. Said dividends shall continue until such time as the holder had received dividends in the amount that equals one hundred and eight percent (108%) of their original investment, after which time, the investor shall receive five percent (5%) of the Adjusted Gross Income for a period of twelve months.
In the case of the original issuance of shares of the Series A Preferred Stock, dividends shall begin to accrue and be cumulative from October 1, 2011. In the case of share of Series A Preferred Stock issued after October 1, 2011, but prior to any Dividend Payment Date, dividends shall begin to accrue and be cumulative from the date of issue to the next Dividend Payment Date; provided, however, that if dividends are not paid on any such Dividend Payment Date, then dividends shall accrue and be cumulative from the Dividend Payment Date to the date such dividends have been paid. Dividends paid on shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated on a pro-rata on a share-by-share basis among all such Series A Preferred shares outstanding at the time. The Board of Directors may fix a record date for the determination of holders of the Series A Preferred Stock entitled to receive payment of a dividend declared thereon, which record date shall be no more than sixty days prior to the date fixed for the payment thereof.
Whenever dividends payable on the Series A Preferred Stock as provided above are in arrears, thereafter and until dividends, including all accrued dividends, on shares of the Series A Preferred Stock outstanding shall have been paid in full or declared and set apart for payment, the Corporation shall not (i) pay dividends on any common stock of the Corporation, or (ii) purchase or otherwise acquire for consideration any share of Series A Preferred Stock, unless required or as otherwise provided.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
Redemption rights
The Company may, at any time and from time to time, after total dividends paid per share equal at least $2.00, redeem all or a portion of the then outstanding shares of the Series A Preferred Stock at the stated value thereof (namely $2.00 per share) plus accrued and unpaid dividends thereon (cumulatively the “Redemption Amount”) by either (i) a check to the Redemption Amount or (ii) such number of shares of common stock of the Corporation as determined by dividing the “market value” as calculated of such common stock as of the date set by the Company for such redemption, into the Redemption Amount.
Liquidation rights
Upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, then the holders of the Series A Preferred Stock shall not be entitled to receive any amounts with respect to their shares of Series A Preferred Stock until payment in full has been made to the holders of the Corporation’s Series B Preferred Stock and Senior Convertible Preferred Stock of amounts which such holders may be entitled to receive upon liquidation. After such payments have been made in full to the Holders of the Company’s Series B Preferred Stock and Senior Convertible Preferred Stock and prior to any payments upon liquidation being made to the holders of the common stock of the Corporation, the holders of the Series A Preferred Stock shall be entitled to receive an amount per share equal to $1,000.00 (the “Series A Liquidation Amount”). The Series A Liquidation Amount shall be paid pari-passu with any payments upon liquidation to holders of any other class preferred stock of the Corporation. If the assets of the Corporation are insufficient to pay to the holders of the Series A Preferred Stock the full amount of the Series A Liquidation Amount to which they shall be entitled, then any amounts to be distributed to the holders of the Series A Preferred Stock shall be distributed pro rata to such holders.
Conversion rights
Subsequent to July 1, 2012, each share of Series A Preferred Stock shall be convertible at the option of the holder thereof (except as prohibited by law), in full or in part, based on the number of shares of Series A preferred stock to be converted, multiplied by the Series A issue price ($2.00 per share), plus any cumulative and unpaid dividends divided by the Series A conversion price in effect at the time of the conversion.
As per the subscription agreement for 5,000 preferred stock Series A issued, each Series A shares will be converted into one share of the Company’s common stock and one share of Raptor Technology Group, Inc.
As of August 31, 2013 and 2012, there were 5,000 Series A Cumulative Convertible Preferred Stock issued and outstanding.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
Series B Cumulative Convertible Preferred Stock ("Series B")
In September 2011, the Company designated 407,686 shares as Series B Cumulative Convertible Preferred stock.
Voting rights
a)
The Company shall not, without the affirmative consent of the holders of seventy-five percent of the Series B Preferred Stock, in any manner alter or change the designations, or the powers, preferences, rights, qualifications, limitations, or restrictions or increase the number of authorized shares of the Series B Preferred Stock in any manner.
b)
Except as provided below, the holders of the Series B Preferred Stock shall not have any right to vote their Series B Preferred Stock in any manner.
c)
Notwithstanding the provisions above, on all matters coming before the holders of preferred stock of the Company, as a class, or coming before the holders of the Series B Preferred Stock of the Company, as a class, the holders of the Series B Preferred Stock shall have the right to vote their Series B Preferred Stock with each such share of stock being entitled to one (1) vote on any or all such matters.
Dividends
In each year the holders of the Series B Preferred Stock shall be entitled to receive when and as declared by the Board of Directors of the Corporation, out of funds legally available for that purpose, an annual dividend in an amount equal to Eight percent (8%) per annum (that is, $0.20 per share on an annual basis) payable monthly (the “Dividend Payment Date”), plus a pro-rated Bonus Dividend equal to the amount of the Bonus Dividend Pool on each Dividend Payment Date divided by the number of Shares of Series B Preferred Stock issued and outstanding on each Dividend Payment Date. The Bonus Dividend
Pool shall consist of Twenty percent (20%) of the Company’s adjusted gross revenue for each fiscal year preceding the Dividend Payment Date until such time as the Company has paid a total of $2.50 in dividends per share, after which time the Bonus Dividend Pool shall consist of Five percent (20%) of the Company’s adjusted gross revenue for one (1) additional fiscal year. Adjusted gross revenue is defined as gross revenue less license fees, royalties, and mining expenses, and which are attributable to business operations financed by the proceeds of the sales of Series B Preferred Stock.
In the case of the original issuance of shares of the Series B Preferred Stock, dividends shall begin to accrue and be cumulative from October 1, 2011. In the case of share of Series B Preferred Stock issued after October 1, 2011, but prior to any Dividend Payment Date, dividends shall begin to accrue and be cumulative from the date of issue to the next Dividend Payment Date; provided, however, that if dividends are not paid on any such Dividend Payment Date, then dividends shall accrue and be cumulative from the Dividend Payment Date to the date such dividends have been paid. Dividends paid on shares of Series B Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated on a pro-rata on a share-by-share basis among all such Series B Preferred shares outstanding at the time. The Board of Directors may fix a record date for the determination of holders of the Series B Preferred Stock entitled to receive payment of a dividend declared thereon, which record date shall be no more than sixty days prior to the date fixed for the payment thereof.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
Whenever dividends payable on the Series B Preferred Stock as provided above are in arrears, thereafter and until dividends, including all accrued dividends, on shares of the Series B Preferred Stock outstanding shall have been paid in full or declared and set apart for payment, the Corporation shall not (i) pay dividends on any common stock of the Corporation, or (ii) purchase or otherwise acquire for consideration any share of Series B Preferred Stock, unless required or as otherwise provided.
Redemption rights
The Company may, at any time and from time to time, after total dividends paid per share equal at least $2.50, redeem all or a portion of the then outstanding shares of the Series B Preferred Stock at the stated value thereof (namely $2.50 per share) plus accrued and unpaid dividends thereon (cumulatively the “Redemption Amount”) by either (i) a check to the Redemption Amount or (ii) such number of shares of common stock of the Corporation as determined by dividing the “market value” as calculated of such common stock as of the date set by the Company for such redemption, into the Redemption Amount.
Liquidation rights
Upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, then the holders of the Series A Preferred Stock shall not be entitled to receive any amounts with respect to their shares of Series A Preferred Stock until payment in full has been made to the holders of the Corporation’s Series B Preferred Stock of amounts which such holders may be entitled to receive upon liquidation. After such payments have been made in full to the Holders of the Company’s Series B Preferred Stock and prior to any payments upon liquidation being made to the holders of the common stock of the Corporation, the holders of the Series B Preferred Stock shall be entitled to receive an amount per share equal to $2.50 (the “Series B Liquidation Amount”). The Series B Liquidation Amount shall be paid pari-passu with any payments upon liquidation to holders of any other class preferred stock of the Corporation. If the assets of the Corporation are insufficient to pay to the holders of the Series B Preferred Stock the full amount of the Series B Liquidation Amount to which they shall be entitled, then any amounts to be distributed to the holders of the Series B Preferred Stock shall be distributed pro rata to such holders.
Conversion rights
Subsequent to one (1) year from the date of issuance, each share of Series B Preferred Stock shall be convertible at the option of the holder thereof (except as prohibited by law), in full or in part, into one point nine two (1.92) shares of fully paid and non-assessable shares of common stock of the Company provided.
During the year ended August 31, 2012, the Company issued 1,333 shares of its Series B Redeemable Convertible Preferred stock in exchange for proceeds of $50,000, valued at $37.51 per share.
As of August 31, 2013 and 2012, there were 1,333 Series B Cumulative Preferred Stock issued and outstanding.
Common stock
The Company is authorized to issue 50,000,000 and 750,000,000 shares of $0.001 par value common stock as of August 31, 2013 and 2012, respectively. As of August 31, 2013 and 2012, 2,636,170 and 2,373,789 shares of the Company's common stock were issued and 563,170 and 300,789 shares of the Company's common stock were outstanding, respectively.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
On May 25, 2012 the shareholders and the board of directors of the Company approved a one (1) share for every forty (40) share reverse stock split. The reverse stock split had a record date of May 29, 2012 and an effective date of July 11, 2012. On July 18, 2013, EVG declared a 15-for-1 reverse split for all of its common and preferred stock. All per share amounts in these consolidated financial statements and accompanying notes have been retroactively adjusted to the earliest period presented for the effect of this reverse stock split.
In May 2011, in connection with entering a joint venture, the Company issued an aggregate of 8,333 shares of its common stock in exchange for services rendered with a fair value of $100,000.
In May 2011, in connection with the reverse merger transaction, the Company issued an aggregate of 3,753 shares of its common stock in exchange for old notes payable of $349,726.
In May, 2011, in connection with the reverse merger transaction, the Company issued an aggregate of 6,333 shares of its common stock in exchange for two officers’ compensation with a fair value of $76,000.
In May, 2011, in connection with the reverse merger transaction, the Company issued an aggregate of 87,833 shares of its common stock in exchange for 467 shares or 70% interest of Eco Ventures - Florida (See Note 1 above).
On November 23, 2011, the Company issued, but held in escrow, 6,333 shares of its common stock pursuant to officer's employment agreements at par value.
On November 23, 2011, the Company issued 83 shares of its common stock in exchange for officer's compensation with a fair value of $4,500, valued at $54 per share.
On January 27, 2012, the Company issued 1,333 shares of its common stock in exchange for notes payable in the amount of $32,000, valued at $24 per share.
On February 21, 2012, the Company issued 2,846 shares of its common stock in exchange for a note payable in the amount of $68,737 valued at $24 per share (post-split).
On February 26, 2012, the Company issued 1,333 shares of its common stock in exchange for notes payable in the amount of $32,000, valued at $24 per share.
On March 23, 2012, the Company issued 6,683 shares of its common stock in exchange for a note payable in the amount of $160,387, valued at $24 per share.
On April 18, 2012, the Company issued 750 shares of its common stock as employee compensation in the amount of $9,000 valued at the closing stock price of $12.
On July 23, 2012, the Company issued, but held in escrow 2,066,667 shares of its common stock.
On August 1, 2012, the Company issued 106,667 shares of its common stock in exchange for a note payable and accrued interest in the amount of $64,000, valued at $6.75 per share. The Company recorded a loss on settlement of debt of $656,000 during the year ended August 31, 2012.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
On August 8, 2012, the Company issued 417 shares of its common stock in exchange services rendered in the amount of $6,250 valued at $15 per share.
On August 22, 2012, Company received subscription money of $50,000 for 6,667 shares of restricted common stock, valued at $7.50 per share. On November 1, 2012 the Company issued the 6,667 shares of its authorized but unissued capital in restricted common stock.
On August 22, 2012, the Company issued 50,000 shares of its common stock in exchange for services rendered in the amount of $530,000 valued at $10.50 - $12 per share.
On October 4, 2012, the Company issued 106,667 shares of its authorized but unissued capital in restricted common stock. This was in consideration for services rendered during the fourth quarter ended August 31, 2012. The Company charged to operation as stock based compensation during the year ended August 31, 2012, fair value of 106,667 common stock of $480,000 valued at $4.50 per share.
In addition, in consideration for services rendered in August 2012 by Mark Cox, the Company will subsequently issue 8,333 shares of its common stock and charged to operation as stock based compensation of $122,500 valued at $14.70 per share during the year ended August 31, 2012. As of the date of filing of this report, the shares are not issued.
On November 1, 2012 and November 21, 2012 the Company issued a total of 2,857 shares of its authorized but unissued capital in restricted common stock. This was in consideration for Mr. Schneider purchasing the shares at a price of $5.25 per share through a subscription agreement.
On November 1, 2012 and November 21, 2012 the Company issued a total of 2,857 shares of its authorized but unissued capital in restricted common stock. This was in consideration for Mr. Bhatia purchasing the shares at a price of $5.25 per share through a subscription agreement.
On November 21, 2012, the Company issued 16,667 shares of its authorized but unissued capital in restricted common stock. This was in consideration for services rendered and was valued at $3.45, closing market price on November 21, 2012.
As discussed in Note 5, the Company issued 26,666 shares of its common stock to an unrelated third party as additional consideration for a $100,000 loan. The shares were valued at $2.40, the closing market price on December 12, 2012. Furthermore, under the terms of the loan, the Company issued 100,000 shares of its common stock in escrow as collateral against the loan. The loan was not repaid by its March 12, 2013 due date, and the 100,000 common shares were released from escrow and valued at $60,000 ($0.60 per share) in full settlement of the $100,000 loan and related $25,000 accrued interest (See Note 5). Accordingly, the Company recorded a gain on settlement of debt of $65,000 during the year ended August 31, 2013.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
In addition, as per employment agreement with Mark Cox, upon completion of 60 days review period, the Company will subsequently issue 8,333 shares of its common stock and charged to operation as stock based compensation of $37,500 valued at $4.50 per share during the year ended August 31, 2013. As of the date of filing of this report, the shares are not issued.
Under Mr. Cox’ employment agreement, the Company is required to issue him 3,333 shares per month commencing in December 2012. The Company charged $25,862 to operations as compensation for during the year ended August 31, 2013.. Compensation is valued based upon the average monthly closing price of the underlying shares earned. The Company will issue 20,000 shares and offset the compensation expense against additional paid-in capital. As of the date of filing of this report, the shares are not issued.
As a condition to Mutual Release Agreement with Paul Smith, ex-President and Chief Financial Officer of the Company, dated September 10, 2012 the Company will subsequently issue 20,000 restricted shares and charged to operation as stock based compensation of $165,000 valued at $8.25 per share during the quarter ended November 30, 2012. Also, the remaining 2,111 restricted stock were vested immediately on the date of agreement which will be issued subsequently and charged to operation as stock based compensation of $17,422 valued at $8.25 per share during the year ended August 31, 2013. As of the date of filing of this report, the shares are not issued.
As per employment agreement, the Company charged to operation as a stock based compensation of $2,274 fair value of 1,055 of shares of its restricted stock to Randall Lanham, the Chief Executive Officer of the Company, for the year ended August 31, 2013. As of the date of filing of this report, the shares are not issued.
NOTE 8 - STOCK OPTIONS
On July 26, 2011, the 2011 Incentive Stock Option Plan (the “2011 Plan”) which provides incentive stock and non-statutory options to be granted to select employees, directors and consultants of the Company was approved by the Board of Directors and reserved 44,444 shares of the Company’s common stock for the 2011 Plan.
As of August 31, 2013, the Company has not granted any stock options under the 2011 Plan.
NOTE 9 - RELATED PARTY TRANSACTIONS
The Company’s current officers and shareholders have advanced funds to the Company for travel related and working capital purposes. No formal repayment terms or arrangements existed. There were $290,506 and $315,240 advances due at August 31, 2013 and 2012, respectively.
As described in Note 6 above, from November 9, 2010 (date of inception) through August 31, 2011, the Company issued two notes in the aggregate amount of $265,474 and during the year ended August 31, 2012, the Company issued six notes in the aggregate of $138,026 to the non-controlling interest shareholders of Eco Ventures - Florida. The notes bear an 8% per annum interest rate, unsecured and are due on demand. The Company charged interest expense of $10,567 during the year ended August 31, 2013, respectively.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
On September 10, 2012, the Board of Directors (the “Board”) of Eco Ventures Group, Inc. (the “Company”) accepted the resignation of Paul Smith as President. In accordance with agreement, Mr. Smith’s shall receive all stock earned prior to resignation totaling 6,417 shares. Smith shall receive an additional 20,000 shares of stock valued at $165,000 as compensation for remaining on the “Advisory Board” of Eco Ventures. Also, Smith waived his right to any back salary or cash compensation for services rendered. During the year ended August 31, 2013, the Company credited to additional paid-in capital as contributed services of $180,297 resulted from Smith’s waiving of his right to any back salary or cash compensation for services.
On March 31, 2013, the Company’s landlord, a related party, waived all past due rents and released the Company from any further obligation under the lease. The Company credited to equity all accrued past due rent totaling $386,255.
Also, during the year ended August 31, 2013, Randall Lanham, the Chief Executive Officer of the Company waived rights towards any back salary or cash compensation and accordingly, the Company credited to additional paid-in capital as contributed services of $150,000.
During the year ended August 31, 2013, the Company charged to operations as stock based compensation of $37,500 valued at $4.50 per share for 8,333 shares vested upon completion of 60 days review period per employment agreement with Mark Cox, President and Chief Financial Officer of the Company. As of the date of filing of this report, the shares are not issued.
During the year ended August 31, 2013, a shareholder forgave $67,712 of debt due to him by the Company, which was reclassed to equity. Also during the year ended August 31, 2013, the same shareholder assumed a credit card obligation totaling $12,715.
Also, upon successful completion of the Mark Cox's one hundred and twenty (120) day review, the Company shall also award an additional 3,333 shares of its "restricted stock" for each month that Employee remains in the employ of the Company, up to a maximum of twenty-four (24) months. Accordingly, the Company charged to operations as stock based compensation $25,862 valued at average monthly closing price for 20,000 shares during the year ended August 31, 2013.. As of the date of filing of this report, the shares are not issued.
During the year ended August 31, 2013, the Company accrued $35,000 to the Chief Executive Officer ("CEO") of the Company as per Financial and Marketing Consulting Services agreement and $20,000 as consulting expenses to the CEO of the Company.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
NOTE 10 -COMMITMENTS AND CONTINGENCIES
Reorganization Agreement and Deal Flow Agreement
On July 30, 2012, the Board of Directors of Eco Ventures Group, Inc. (OTCBB: EVGI) (the "Company") ratified a definitive "Reorganization Agreement" ("the Agreement") between the Company and Energiepark Supitz GmbH ("Energiepark") whereby the Company will acquire 75% of the Shares of Energiepark in exchange for Shares of the Company which, upon issuance, will constitute 30% of the issued and outstanding Shares of Common Stock of the Company ("the Acquisition Shares"), and cash consideration of $3,000,000. The Company has the option to acquire the remaining 25% of the Shares of Energiepark at a price which will be equal to 25% of the net value of the combined companies, as defined in the Agreement. The Agreement was signed and notarized by Energiepark, in accordance with German law, on August 1, 2012. The terms of the agreement were never met and the agreement was terminated.
Employment Agreements
Mark Cox. In August, 2012, the Board of Directors (the “Board”) of Eco Ventures Group, Inc. (the “Company”) elected Mark Cox as the Company’s President. The Company entered into an Executive Employment Agreement (the “Agreement”) with Mr. Cox. Pursuant to this Agreement, the Company shall pay Mr. Cox an annual salary at the rate of $150,000 a year during the Employment Period, however Mr. Cox will forgo 100% of his salary until the Company receives a significant portion of its financing to expand its operations and execute its business plan. In addition, the Company issued to Mr. Cox one hundred and twenty thousand (8,333) shares of its “restricted stock” valued at $14.70 per share and charged to operations as a stock based compensation of $122,500 during the year ended August 31, 2012. Mr. Cox shall receive an additional one hundred and twenty thousand (8,333) shares upon successful completion of his sixty (60) day review. Upon successful completion of a one and twenty (120) day review period, the Company shall also award an additional 3.333 shares of its "restricted stock" for each month that Mr. Cox remains in the employ of the Company, up to a maximum of twenty-four (24) months. The amended agreement dated September 10, 2012 state the effective date of appointment as September 10, 2012 but the stock award of 8,333 restricted shares shall remain earned as of August 7, 2012 and other term to be remain as same. Effective June 30, 2013, Mark Cox has resigned his position as an officer of the Company.
Randall Lanham. The Company entered into an employment contract on July 1, 2011 with Mr. Lanham as Chief Executive Officer for a period of 3 years at an annual salary of $300,000. Mr. Lanham will however forgo 50% of his salary until the Company receives a significant portion of its financing to expand its operations and execute its business plan. Mr. Lanham is entitled to an annual bonus to equal to 1% of the Company’s EBITA for each fiscal year during the Employment Period but not to exceed $500,000. Mr. Lanham received 47,500 shares of the Company’s common stock in conjunction with the reverse merger transaction. The Company shall award an additional 1,319 shares of its "restricted stock" for each month that Mr. Lanham remains in the employ of the Company, up to a maximum of thirty-six (36) months.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
Paul Smith. The Company entered into an employment contract on July 1, 2011 with Mr. Smith as our President and Chief Financial Officer for a period of 3 years at an annual salary of $300,000. Mr. Smith will however forgo 50% of his salary until the Company receives a significant portion of its financing to expand its operations and execute its business plan. Mr. Smith is entitled to an annual bonus to equal to 1% of the Company’s EBITA for each fiscal year during the Employment Period but not to exceed $500,000. Mr. Smith received 3,167 shares of the Company’s common stock in conjunction with the reverse merger transaction. The Company shall award an additional 88 shares of its "restricted stock" for each month that Mr. Smith remains in the employ of the Company, up to a maximum of thirty-six (36) months. On September 10, 2012, the Board of Directors (the “Board”) of Eco Ventures Group, Inc. (the “Company”) accepted the resignation of Paul Smith as President.
Joint Venture Agreements
On April 28, 2011, the Company entered into a joint venture agreement for the purpose of acquiring fifty percent (50%) ownership of certain intellectual property. In exchange for the fifty percent ownership, the Company is obligated to provide funding to build a facility to process mineral tailing with production of 2,000 tons per year. Each party of the joint venture shall share in the gross proceeds on a fifty/fifty basis; gross proceeds is total sales less amounts due tailing/mineralized waste provider and operating costs estimated at $2,000 per ton.
In conjunction with the Joint Venture Agreement, the Company issued an aggregate of 125,000 shares of its common stock to consultants for services rendered as compensation with a fair value of $100,000, which were recorded in the operations during the year ended August 31, 2011. In addition, each member of the joint venture shall be entitled to one board seat on the other's board of directors.
The joint venture was terminated as of August 31, 2013.
Operating Lease Commitments
The Company's initial headquarters, operations and manufacturing facilities are located at 7432 State Road 50, Suite 101, Groveland, FL, in a light-industrial complex 25 miles west of Orlando, FL . The Company has leased an office / warehouse complex with a large warehouse facility for its planned Mineral Recovery Operation and Bio-Diesel Operation. The Company has since moved out of the facilities and is no longer leasing the facilities. The properties were sold and all debts and rents due were forgiven.
.
Litigation
The Company is subject at times to other legal proceedings and claims, which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should not have a material adverse effect on its financial position, results of operations or liquidity. There was no outstanding litigation as of August 31, 2013.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
NOTE 11 - NON CONTROLLING INTEREST
The remaining 30% ownership of Eco Ventures - Florida is recorded as Non-Controlling interest in the consolidated financial statements.
A reconciliation of the non-controlling loss attributable to the Company:
Net loss Attributable to the Company and transfers (to) from non-controlling interest for the year ended August 31, 2013:
The following table summarizes the changes in Non-Controlling Interest from November 9, 2010 (date of inception) through August 31, 2013.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
NOTE 12 - INCOME TAXES
The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes include, but not limited to, accounting for intangibles, debt discounts associated with convertible debt, equity based compensation and depreciation and amortization.
At August 31, 2013, the Company has available for federal income tax purposes a net operating loss carryforward of approximately $3,704,000 which expiring through the fiscal tax year 2031, that may be used to offset future taxable income. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, since in the opinion of management based upon the earnings history of the Company; it is more likely than not that the benefits will not be realized. Based upon the change in ownership rules under section 382 of the Internal Revenue Code of 1986, if in the future the Company issues common stock or additional equity instruments convertible in common shares which result in an ownership change exceeding the 50% limitation threshold imposed by that section, all of the Company’s net operating losses carryforwards may be significantly limited as to the amount of use in a particular years. Components of deferred tax assets as of August 31, 2013 are as follows. All or portion of the remaining valuation allowance may be reduced in future years based on an assessment of earnings sufficient to fully utilize these potential tax benefits.
At August 31, 2013 and 2012, the significant components of the deferred tax assets (liabilities) are summarized below:
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
The difference between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense for August 31, 2013 and 2012 is as follows:
Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes. The tax effect of these temporary differences representing deferred tax asset and liabilities result principally from the following:
The Company has not yet filed its tax returns for the period from November 9, 2010 (date of inception) through August 31, 2013.
The provisions of ASC 740 require companies to recognize in their financial statements the impact of a tax position if that position is more likely than not to be sustained upon audit, based upon the technical merits of the position. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure.
Management does not believe that the Company has any material uncertain tax positions requiring recognition or measurement in accordance with the provisions of ASC 740. Accordingly, the adoption of these provisions of ASC 740 did not have a material effect on the Company’s consolidated financial statements. The Company’s policy is to record interest and penalties on uncertain tax positions, if any, as income tax expense.
CLEAR TV VENTURES, INC.
(formerly Eco Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2013
The Company recognizes interest and penalties related to uncertain tax positions in general and administrative expenses. As of August 31, 2013, the Company has no unrecognized tax benefit from uncertain tax positions, including interest and penalties.
All tax years for the Company remain subject to future examinations by the applicable taxing authorities.
NOTE 13 - SUBSEQUENT EVENTS
On or about April 18, 2014, the Company entered into a Share Exchange Agreement (the “Share Exchange”) with Petlife Corporation, a Delaware corporation (“Petlife”) and the shareholders of Petlife Corporation (the “Shareholders”) for the exchange of all of the issued and outstanding shares of Petlife. These shares of Petlife are being exchanged for 40,000,000 fully paid non-assessable shares of the Company or 80% of the issued and outstanding shares of the Company.
The closing of the Share Exchange Agreement is conditioned upon certain, limited customary representations and warranties as well as conditions to close such as the total issued and outstanding shares of the Company being limited to 50,000,000 issued and outstanding post-closing. Following the closing of the Share Exchange Agreement the Company intends to continue the Company’s and Petlife’s historical businesses and proposed businesses. The Company’s historical business and operations will continue independently through a newly formed wholly owned subsidiary.
Both our CUSIP number and our trading symbol for common stock which trades on the OTCQB Tier of the OTC Markets, Inc. will change as a result of the name change. The Company is in the process of submitting the notification and certain other information to the Financial Information Regulatory Association, Inc. (“FINRA”) to process the name change.