Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ENERGY EDGE TECHNOLOGIES CORPORATION
(Exact Name of Registrant in its Charter)
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NEW JERSEY
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8711
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52-2439239
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(State of Incorporation)
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(Primary Standard Classification Code)
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(IRS Employer ID No.)
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1200 Route 22 East
Suite 2000
Bridgewater, New Jersey 08807
1-888-729-5722 x 100
(Address and Telephone Number of Registrant’s Principal
Executive Offices and Principal Place of Business)
Denise Carek - Corporation Service Company
830 Bear Tavern Road
West Trenton, NJ 08628
1-866-403-5272
(Name, Address and Telephone Number of Agent for Service)
Copies of communications to:
VINCENT & REES, L.C.
Attn: David M. Rees
175 South Main, 15th Floor
Salt Lake City, Utah 84111
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. R
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration Statement number of the earlier effective registration statement for the same offering. £
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering £
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering £
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer £ Accelerated filer £
Non-accelerated filer £ Smaller Reporting Company R
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities to be Registered
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Amount
to be Registered
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Proposed Maximum Offering Price Per Share
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Proposed Maximum Aggregate Offering Price
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Amount of Registration Fee [tbd]
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Common Stock to be registered as part of the Offering (as hereinafter defined)
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10,000,000
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$0.10
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$1,000,000
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$71.30
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Common Stock Issued and Outstanding
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42,825,000
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$0.10
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$4,282,500
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$305.34 |
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Total
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52,825,000
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$0.10
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$5,282,500
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$376.64
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The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded on any national exchange and, in accordance with Rule 457 the offering price was determined by factors such as the lack of liquidity (since there is no present market for EETC stock) and the high level of risk that is inherent in this sort of offering. The selling shareholders may sell shares of our common stock at a fixed price of $0.10 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority (“FINRA”), which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders.
In the event of a stock split, stock dividend or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act of 1933, as amended.
The offering price of the common stock has been arbitrarily determined and bears no relationship to any objective criterion of value. The price does not bear any relationship to our assets, book value, historical earnings or net worth.
The information in this prospectus is not complete and may be changed. The Selling Security Holders may not sell these securities until after the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED June __, 2010
Prospectus
[10,000,000] shares
ENERGY EDGE TECHNOLOGIES CORPORATION
Common Stock
This prospectus relates to the offer for sale of up to [10,000,000] of our common stock by certain existing holders of the securities, referred to as Selling Security Holders throughout this document. The total number of shares registered in this prospectus is 52,825,000.
We anticipate applying for trading of our common stock on the over-the-counter (OTC) Bulletin Board upon the effectiveness of the registration statement of which this prospectus forms a part. We have not yet engaged a market maker to assist us to apply for quotation on the OTC Bulletin Board and we are not able to determine the length of time that such application process will take. Such time frame is dependent on comments we receive, if any, from the NASD regarding our Form 211 application.
There is no present public trading market for the Company’s Common Stock and the price at which the Shares are being offered bears no relationship to conventional criteria such as book value or earnings per share. The Company has determined the offering price based primarily on its projected operating results. There can be no assurance that the offering price bears any relation to the current fair market value of the Common Stock.
Therefore, purchasers of our shares registered hereunder may be unable to sell their securities, because there may not be a public market for our securities. As a result, you may find it more difficult to dispose of, or obtain accurate quotes of our common stock. Any purchasers of our securities should be in a financial position to bear the risks of losing their entire investment.
The Selling Security Holders will sell the shares from time to time through independent brokerage firms in the over-the-counter market at $0.10 per share, until the shares are quoted on the OTC Bulletin Board, in which case the shares will be sold at market prices prevailing at the time of sale.
Investing in our stock involves substantial risks. See “Risk Factors” beginning on page 8.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The Date of This Prospectus is: June 28, 2010
TABLE OF CONTENTS
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PROSPECTUS SUMMARY
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5
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RISK FACTORS
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7
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FORWARD LOOKING STATEMENTS
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16
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USE OF PROCEEDS
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16
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DIVIDEND POLICY
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17
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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
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17
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DILUTION
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17
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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40
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BUSINESS AND RECENT DEVELOPMENTS
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19
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DESCRIPTION OF PROPERTY
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24
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MANAGEMENT
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24
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EXECUTIVE COMPENSATION
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27
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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28
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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28
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SELLING SHAREHOLDERS
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28
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DESCRIPTION OF SECURITIES
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31
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SHARES ELIGIBLE FOR FUTURE SALE
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33
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PLAN OF DISTRIBUTION
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33
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LEGAL PROCEEDINGS
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34
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INTERESTS OF NAMED EXPERTS AND COUNSEL
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34 |
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TRANSFER AGENT
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35
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AVAILABLE INFORMATION
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35
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FINANCIAL STATEMENTS
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F-1 - F-18
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You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. The Selling Security Holders are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.
PROSPECTUS SUMMARY
This summary highlights some information from this prospectus, and it may not contain all of the information that is important to you. You should read the following summary together with the more detailed information regarding our company and the common stock being sold in this offering, including “Risk Factors” and our consolidated financial statements and related notes, included elsewhere in, or incorporated by reference into, this prospectus.
ABOUT OUR COMPANY
Except as otherwise indicated by the context, references in this report to "EETC" "we," "us," or "our," "Successor" and the "Company" are references to the combined business of Energy Edge Technologies Corporation and its wholly-owned subsidiaries.
Overview
Energy Edge Technologies Corporation (“EETC”) was founded in 2004 as a New Jersey corporation by Robert Holdsworth. EETC has grown over the past seven years, through significant energy efficiency and conservation projects for a variety of customers including municipalities, breweries, pharmaceuticals, restaurants, food processing, manufacturing, printing, leisure, hospitals, office buildings, etc. EETC projects are suitable and applicable for any type of customer whose energy bill exceeds $10,000 monthly.
Company Information
Energy Edge Technologies Corporation (“EETC”) is an energy engineering and services company that specializes solely in providing companies, institutions and government entities with turnkey, whole facility solutions that reduce energy costs and increase the efficiency of existing and new buildings. Combined, the management team along with senior engineers have over 140 years of industry experience. The company, a New Jersey corporation, consists of professional, industrial and electrical engineers, LEED Accredited Professionals and business entrepreneurs. EETC offers a truly comprehensive, whole facility solution that covers all aspects of gas and electrical energy consumption. Most competitors offer solutions that are one dimensional and single focused, such as simply lighting, HVAC or refrigeration individually. EETC distinguishes itself in multiple ways such as by delivering a multi-dimensional solution that combines multiple approaches and technologies to increase the efficiency of the diverse and various electrical and gas consuming loads across a facility. Most importantly EETC’s approach provides its customers with bottom line cost reduction and fast project pay back – typically under 36 months. Lastly, EETC removes the financial risk for its customers by backing projects with reimbursement contingency insurance underwritten by Lloyds of London. The Lloyds of London backed policy guarantees that every penny invested by the customer is returned within the prescribed payback period through energy cost reduction. If any shortfall occurs the policy covers the customer for any difference.
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Use of Certain Defined Terms and Treatment of Stock Split
Except as otherwise indicated by the context, references in this report to:
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"EETC" "we," "us," or "our," "Successor" and the "Company" are references to the combined business of Energy Edge Technologies Corporation and its wholly-owned subsidiaries.
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Securities Act” are references to the Securities Act of 1933, as amended and references to “Exchange Act” are references to the Securities Exchange Act of 1934, as amended
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Commission’s Position on Indemnification for Securities Act Liabilities
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions of its Certificate of Incorporation, By-Laws, the General Corporation Law of the State of New Jersey or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer of controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Where You Can Find Us
Our corporate headquarters are located at 1200 Route 22 East, Suite 2000, Bridgewater, New Jersey 08807. Our telephone number is 1-888-729-5722 x 100
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RISK FACTORS
The following risk factors should be considered carefully in addition to the other information contained in this report. This report contains forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. These statements are only predictions. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that may cause our customers’ or our industry’s actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements, to differ. “Risk Factors,” “Management’s Discussion and Analysis” and “Business,” as well as other sections in this report, discuss some of the factors that could contribute to these differences.
The forward-looking statements made in this report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
An investment in our common stock is highly speculative and involves a high degree of risk. Therefore, you should consider all of the risk factors discussed below, as well as the other information contained in this document. You should not invest in our common stock unless you can afford to lose your entire investment and you are not dependent on the funds you are investing.
(1) While we have had sustainable revenues and net profits in the past, there is no assurance our future operations will result in such revenues or net profits. Our revenues depend on continual new business development.
While a number of our customers have written about their satisfaction with our services, because of this success, they may not need us to provide additional services in the near future, unless they expand and have additional facilities for us to provide an energy audit. Accordingly we are continually dependent upon developing new clients for our continued revenue production and growth, and any inability to continue business development growth would materially impact our revenues and adversely impact a shareholder’s investment.
(2) Our existing and anticipated working capital needs, the acceleration or modification of our expansion plans, lower than anticipated revenues, or increased expenses or other events will all affect our ability to continue as a going concern.
We intend to use part of the proceeds of this offering to fund infrastructure, including a physical office location and salaries to key employees. Supporting the increased costs of infrastructure as well as expanding business development to attract new clients will significantly increase our costs of operations. If we cannot generate sufficient revenues to operate profitably, we may suspend or cease operations.
(3) We anticipate incurring operating losses and negative cash flows in the foreseeable future resulting in uncertainty of future profitability and limitation on our operations.
We anticipate that the Company will incur operating losses and negative cash flows in the foreseeable future, and will accumulate increasing deficits as we increase our expenditures for (i) infrastructure, (ii) sales and marketing, (iii) equipment, (iv) personnel, and (v) general operating expenses. Any increases in our operating expenses will require us to achieve significant revenue before we can attain profitability. In the event that we are unable to achieve profitability or raise sufficient funding to cover our losses, we may not be able to meet our obligations as they come due, raising substantial doubts as to our ability to continue as a going concern.
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(4) We are dependent on outside financing for expansion of our operations.
We have successfully operated in the past based upon a model of hiring independent consultants to joint venture on our projects. We are presently changing this model to hire certain of our key consultants as employees and to change our virtual office situation to an anticipated leased physical office space. Accordingly for the near future, we are dependent on the continued availability of outside financing in order to continue the growth our business. There can be no assurance that financing sufficient to enable us to continue our operations will be available to us in the future. Our failure to obtain future financing or to produce levels of revenue to meet our financial needs could result in our inability to continue as a going concern and, as a result, investors in the Company could lose their entire investment.
(5) We will need additional capital beyond that sought in this Offering to pursue our business plan and conduct our operations and our ability to obtain the necessary funding is uncertain.
We will require significant additional capital resources from sources including equity and/or debt financings in order to develop products/services and continue operations. We intend to raise up to $5 million of such additional capital. While we believe the raise of the Maximum Offering of $1,000,000 will allow us to pursue our business plan, the projected time for achieving our goals will be increased, and may not be achieved without raising additional capital. Our current rate of expenditure is expected to increase due to, among other things, our anticipated need to hire additional employees, lease additional office space, increase our research and development investment, and the additional costs associated with applying for a public company status, as noted below. If we raise such additional capital our existing stockholders will experience dilution which may be significant.
(6) We will need additional capital, which may not be available on acceptable terms, if at all, and any additional financing may be on terms adverse to your interests.
We will need additional cash to fund our operations. Our capital needs will depend on numerous factors, including market conditions and our profitability. We cannot be certain that we will be able to obtain additional financing on favorable terms, if at all. If additional financing is not available when required or is not available on acceptable terms, we may be unable to fund expansion, successfully promote our brand name, develop or enhance our services, take advantage of business opportunities, or respond to competitive pressures or unanticipated requirements, any of which could seriously harm our business and reduce the value of your investment.
If we are able to raise additional funds, if and when needed, by issuing additional equity securities, you may experience significant dilution of your ownership interest and holders of these new securities may have rights senior to yours as a holder of our Common Stock. In this case, the value of your investment could be reduced.
(7) Our Growth Plan is based upon Management’s projection of what may happen in the future, and such predictions may not occur. Actual results may differ materially.
Our growth plan is based upon Management's projections of estimated available cash flow, expenses, revenue, revenue over profit, earnings before interest, taxes and depreciation, sales cycle time and other measures of projected economic performance. These projections are made in Management's view of what may happen in the future, and are not based upon historical projections. These statements, facts and the views of Company management which constitute forward looking statements within the meaning of Section 27A of the 1933 Securities Act and Section 21E of the Securities Exchange Act of 1934. The outcome of the events described in such forward-looking statements is subject to risks and uncertainties. Projections or predictions of future events may not occur and actual results may differ materially from those expressed in or implied by such forward-looking statements.
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(8) We rely on strategic vendors to provide strategic contracting services integral to our service package.
We rely on strategic vendors, to provide strategic contracting services integral to our overall client service package. If we experience problems with any of our strategic vendors, the satisfaction of our customers could suffer and our business could be adversely affected. If we experience difficulties in maintaining these relationships or developing new relationships on a timely basis and on terms favorable to us, our business and financial condition could be adversely affected. Malfunctions of third party service providers could adversely affect our business which may impede our ability to attract and retain clients.
(9) Our success is tied to maintaining adequate understanding of and access to developing energy efficiency technology.
Our future revenues and profits, if any, substantially depend on our maintaining an adequate understanding of and access to new and developing energy efficiency technologies. We also must remain current on appropriate implementation methods of such technologies, and in certain instances, obtain licensing and other access agreements to use such technologies. Any loss of personnel or inability to gain access to such technologies could impair our ability to remain a going concern. Also, lack of capital to hire sufficiently experienced personnel could also adversely affect our operations and revenue.
(10) Our Competitors may have more resources and develop proprietary technologies that we do not have access to, and pursue similar business and acquisition strategies.
For the most part, the energy efficiency audit services market has been fragmented, regionally directed, and composed of many different segments of service providers. Part of our business plan and our past success has been our architecture of energy audits for clients that integrate the provision of energy savings service from multiple vendors and consultants, and we intend with sufficient future capital raises to pursue a strategy of acquiring or joint venturing with such vendors and consultants regionally, nationally and internationally. Any such strategy is dependent upon the success of such capital raises, and is not assured. Other competitors may be better funded, have access to more business expansion capital, have strategic business and local relationships longer developed, and may stronger capability to develop or license proprietary technologies, all among other factors, that could adversely affect our ability to compete.
(11) Growth of internal operations and business may strain our financial resources.
We will be significantly expanding the scope of our operating and financial systems in order to build and expand our business. Our growth rate may place a significant strain on our financial resources for a number of reasons, including, but not limited to, the following:
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The need for continued development of the financial and information management systems;
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The need to manage strategic relationships and agreements with subscribers;
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Difficulties in hiring and retaining skilled management, technical and other personnel necessary to support and manage our business; and
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We cannot give you any assurance that we will adequately address these risks and, if we do not, our ability to successfully expand our business could be adversely affected.
(12) Failure to manage growth effectively could prevent us from achieving our goals.
Our strategy envisions a period of rapid growth that may impose a significant burden on our administrative and operational resources. Our ability to effectively manage growth will require us to substantially expand the capabilities of our administrative and operational resources and to attract, train, manage, and retain qualified management and other personnel. Our failure to successfully manage growth could result in our sales not increasing commensurately with capital investments. Our inability to successfully manage growth could materially adversely affect our business.
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(13) Any failure to adequately expand a direct sales force will impede our growth.
We expect to be substantially dependent on a direct sales force to attract new clients and to manage customer relationships. We plan to expand our direct sales force and believe that there is significant competition for qualified, productive direct sales personnel with advanced sales skills and technical knowledge. Our ability to achieve significant growth in revenue in the future will depend, in large part, on our success in recruiting, training and retaining sufficient direct sales personnel and sustaining revenue to support such hires. Recent hires and planned hires may not become as productive as expected, and we may be unable to hire sufficient numbers of qualified individuals in the future in the markets where we do business. We expect to face competition in the recruitment of qualified personnel, and we can provide no assurance that we will attract or retain such personnel. If we are unable to hire and develop sufficient numbers of productive sales personnel our business prospects could suffer.
(14) If our services do not gain expanded market acceptance, we may not be able to fund future operations.
A number of factors may affect the market acceptance of our network, including, among others:
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the perception by users of the effectiveness of our services;
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our ability to fund our sales and marketing efforts; and
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the effectiveness of our sales and marketing efforts.
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If our services do not gain acceptance by new clients, we may not be able to fund future operations, including the development of new products and services, and/or our sales and marketing efforts for our current products and services, which inability would have a material adverse effect on our business, financial condition and operating results.
(15) The departure of Robert Holdsworth, President of the Company and/or other key personnel could compromise our ability to execute our strategic plan and may result in additional severance costs to us.
Our success largely depends on the skills, experience and efforts of our key personnel, in particular, Robert Holdsworth, the President of our Company. The loss of Mr. Holdsworth, or our failure to retain other key personnel, would jeopardize our ability to execute our strategic plan and materially harm our business. In addition, we intend to enter into a written employment agreement with Mr. Holdsworth and with other key executives that can be terminated at any time by us or the executives. We do not maintain a key person life insurance policy on Mr. Holdsworth or any other officer or director.
(16) We will incur increased costs as a result of being a public company.
If we are able to become a public company, we will incur significant legal, accounting and other expenses. We expect the laws, rules and regulations governing public companies to increase our legal and financial compliance costs and to make some activities more time-consuming and costly.
(17) Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations and OTCBB rules, are creating uncertainty for companies such as ours. These new or changed laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. Also, while there is limited regulation of our business at the state and federal level, any change to such regulation could adversely affect our business. Also, our clients are often regulated, and their ability to pay us or our ability to provide services may be impacted by changes in regulation. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, our business may be materially impacted and our reputation may be harmed.
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(18) Unauthorized use of our intellectual property by third parties, and the expenses incurred in protecting our intellectual property rights, may adversely affect our business.
We regard our trade secrets and other intellectual property as critical to our success. Unauthorized use of the intellectual property used in our business may adversely affect our business and reputation.
We have historically relied on trade secret protection and restrictions on disclosure to protect our intellectual property rights. We cannot assure you that our proprietary technology will not otherwise become known to, or be independently developed by, third parties.
In addition, policing unauthorized use of our proprietary technology is difficult and expensive, and litigation may be necessary in the future to enforce our intellectual property rights. Future litigation could result in substantial costs and diversion of our resources, and could disrupt our business, as well as have a material adverse effect on our financial condition and results of operations.
Risks Related to our Common Stock
(19) Because there is no public trading market for our Common Stock, you may not be able to resell your stock.
The Common Stock offered in this Prospectus is restricted common stock, and our Company is a private company. There is currently no public trading market for our Common Stock and there is no assurance that a public trading market will ever develop. As such, you may have to hold your shares for an extended period of time before you are able to sell them, if at all. The Common Stock offered herein will bear a restrictive legend regarding transferability and obtaining an opinion of counsel before transfer.
(20) If our Company is able to register publicly, our shares would be considered “penny stocks” which imposes additional sales practice requirements on broker/dealers; as such many broker/dealers may not want to make a market in our shares which could affect your ability to sell your shares in the future.
If we are able to register our Company publicly with the Securities and Exchange Commission, our shares will be considered “penny stocks” covered by section 15(g) of the Exchange Act, and Rules 15g-1 through 15g-6 promulgated hereunder, which imposes additional sales practice requirements on broker/dealers who sell our securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). Since our shares are covered by section 15(g) of the Securities Exchange Act of 1934, many broker/dealers may not want to make a market in our shares or conduct any transactions in our shares. As such, even if we become a public company, your ability to dispose of your shares may be adversely affected.
(21) We do not expect to pay dividends and investors should not buy our Common Stock expecting to receive dividends.
We do not anticipate that we will declare or pay any dividends on our Common Stock in the foreseeable future. Consequently, you will only realize an economic gain on your investment in our Common Stock if the price appreciates. You should not purchase our Common Stock expecting to receive cash dividends. Since we do not pay dividends, and if we are not successful in establishing an orderly public trading market for our shares, then you may not have any manner to liquidate or receive any payment on your investment. Therefore our failure to pay dividends may cause you to not see any return on your investment even if we are successful in our business operations. In addition, because we do not pay dividends we may have trouble raising additional funds which could affect our ability to expand our business operations.
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(22) We may seek to raise additional funds, finance acquisitions or develop strategic relationships by issuing capital stock.
We have financed our operations, and we expect to continue to finance our operations, acquisitions and develop strategic relationships, by issuing equity or debt securities, which could significantly reduce the percentage ownership of our existing stockholders. Furthermore, any newly issued securities could have rights, preferences and privileges senior to those of our existing stock. Moreover, any issuances by us of equity securities may be at or below the prevailing market price of our stock and in any event may have a dilutive impact on your ownership interest, which could cause the market price of stock to decline.
(23) Our historical results are subject to fluctuations which may be material.
Since the Company was organized in 2004, the likelihood of the success of the Company must be considered in light of the problems, expenses, and difficulties, complications and delays frequently encountered in connection with the competitive environment in which the Company will operate. The statements set forth in the Prospectus are based on significant assumptions about circumstances and events that have not yet taken place. Accordingly, they are subject to variations (which could be substantial) that may arise as future operations actually occur. Because of the early stage of the Company’s efforts, there can be no assurance that the Company will be able to operate profitably.
(24) Trends, risks and uncertainties.
We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all such risk factors before making an investment decision with respect to our Common Stock.
(25) Control by existing management.
Upon completion of the private placement, the existing shareholders and management of the Company will own approximately 60% of the Company’s outstanding Common Stock if the maximum number of shares are sold, with a contemplated reserve of 20% of voting common stock to be issued for an employee stock benefit plan, for board member and advisory committee compensation and for attraction and retention of key employees. As a result, the existing shareholders will remain in a position, if they act together, to control the management and affairs of the Company, including the election of directors, and mergers, sales of assets and other such transactions
(26) Legal actions.
There are presently no legal actions pending against the Company or to which it or any of its property are subject, nor to its knowledge are any such proceedings contemplated. In the event there were any such legal action, there would be costs of defense that would be variable. The Company anticipates a general increase in legal counsel cost going forward due to the increased compliance costs of running a public company and the legal work that may be necessary for implementing the Company’s business plan of expansion.
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(27) Risks related to financial projections.
The financial projections contained in this Prospectus are based on certain assumptions and estimates and, although the Company believes there is a reasonable basis for the assumptions and estimates upon which the projections are based, there can be no assurance that the revenues stated therein will be attained or that expenses will not be higher than estimated. Much of the information contained in the projections is based on assumptions and estimates that are subject to variations that could be beyond the control of the Company and could have a substantially adverse effect on the performance and profitability of the Company. Accordingly, no representation is or can be made as to the future operations or the amount of any future income or loss of the Company. In addition, the projections were prepared by management and have not been reviewed by any independent certified public accountant. Each investor should consult his own attorney, accountant or other advisors concerning an investment in the Company.
(28) Absence of market; restrictions on transfer.
It is unlikely that any market will develop for resale of the Common Stock because the Shares will be offered only to a small number of investors and because the Shares will be subject to certain restrictions on transferability, including restrictions imposed for the purpose of insuring the availability of securities law registration exemptions under the Securities Act of 1933, as amended. Therefore, purchasers of the Shares may not be able to sell their Shares in the event of an emergency or for any other reason, and the Shares may have to be held indefinitely. The certificates representing the Shares will bear a legend referring to restrictions on transferability and sale thereof. Persons having no need for liquidity in the investment should purchase the Shares only as a long-term investment.
(29) Investor life crisis.
If crisis occurs, such as death of investor spouse or family member, at the request of the investor, Board of Directors may meet to discuss the possibility of buying back shares from investor, but is not required to do so.
(30) Arbitrary offering price.
There is no present public trading market for the Company’s Common Stock and the price at which the Shares are being offered bears no relationship to conventional criteria such as book value or earnings per share. The Company based primarily on its projected operating results has determined the offering price. There can be no assurance that the offering price bears any relation to the current fair market value of the Common Stock.
(31) Dilution.
The net tangible book value of the Common Stock offered hereby will be substantially diluted below the offering price paid by investors. The present shareholders acquired founder’s shares at an average cost of par value or $0.0001 per share, whereas Investors will pay a price of $0.10 (ten cents) per share. Therefore, outside Investors participating in this offering will incur immediate substantial dilution of their investment insofar as it refers to the resulting per share net tangible book value of the Company’s Common Stock after completion of this Offering.
(32) There may be deficiencies with our internal controls that require improvements, and we will be exposed to potential risks from legislation requiring companies to evaluate controls under Section 404 of the Sarbanes-Oxley Act of 2002 in the event we become a fully reporting company.
While we believe that we currently have adequate internal control procedures in place, we are still exposed to potential risks from legislation requiring companies to evaluate controls under Section 404a of the Sarbanes-Oxley Act of 2002. Under the supervision and with the participation of our management, we have evaluated our internal controls systems in order to allow management to report on, and our registered independent public accounting firm to attest to, our internal controls, as required by Section 404a of the Sarbanes-Oxley Act. We have performed the system and process evaluation and testing required in an effort to comply with the management certification and auditor attestation requirements of Section 404a. As a result, we have incurred additional expenses and a diversion of management’s time. If we are not able to meet the requirements of Section 404a in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities, such as the SEC.
13
Risks Associated with this Offering
(33) Our shares will be listed for trading on the OTC Bulletin Board, and our shares will likely be classified as a “penny stock” as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price less than $5.00. Our shares will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.
We will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to its customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our stockholders to sell their securities.
Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser’s written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth in excess of $1,000,000, or annual income exceeding $200,000 individually, or $300,000 together with his or her spouse, is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to:
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·
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Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;
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·
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Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;
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Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer’s account, the account’s value and information regarding the limited market in penny stocks; and
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Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction, prior to conducting any penny stock transaction in the customer’s account.
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Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling stockholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities. In addition, the liquidity for our securities may be decreased, with a corresponding decrease in the price of our securities. Our shares in all probability will be subject to such penny stock rules and our stockholders will, in all likelihood, find it difficult to sell their securities.
(34) There has been no independent valuation of the stock, which means that the stock may be worth less than the purchase price.
The per share purchase price has been determined by us without independent valuation of the shares. We established the offering price based on management’s estimate of the value of the shares. This valuation is highly speculative and arbitrary. There is no relation to the market value, book value, or any other established criteria. We did not obtain an independent appraisal opinion on the valuation of the shares. The shares may have a value significantly less than the offering price and the shares may never obtain a value equal to or greater than the offering price.
14
(35) Investors may never receive cash distributions which could result in an investor receiving little or no return on his or her investment.
Distributions are payable at the sole discretion of our board of directors. We do not know the amount of cash that we will generate, if any, once we have more productive operations. Cash distributions are not assured, and we may never be in a position to make distributions.
(36) Even if a market develops for our shares, our shares may be thinly traded with wide share price fluctuations, low share prices and minimal liquidity.
If a market for our shares develops, the share price may be volatile with wide fluctuations in response to several factors, including: potential investors’ anticipated feeling regarding our results of operations; ·increased competition; our ability or inability to generate future revenues; and market perception of the future of development of wood product manufacturing.
In addition, if our shares are quoted on the OTCBB, our share price may be affected by factors that are unrelated or disproportionate to our operating performance. Our share price might be affected by general economic, political, and market conditions, such as recessions, interest rates, or international currency fluctuations. In addition, even if our stock is approved for quotation by a market maker through the OTCBB, stocks traded over this quotation system are usually thinly traded, highly volatile and not followed by analysts. These factors, which are not under our control, may have a material effect on our share price.
(37) We anticipate the need to sell additional authorized shares in the future. This will result in a dilution to our existing shareholders and a corresponding reduction in their percentage ownership in EETC.
We may seek additional funds through the sale of our common stock. This will result in a dilution effect to our shareholders whereby their percentage ownership interest in EETC is reduced. The magnitude of this dilution effect will be determined by the number of shares we will have to issue in the future to obtain the funds required. The sale of additional stock to new shareholders will reduce the ownership position of the current shareholders. The price of each share outstanding common share may decrease in the event we sell additional shares.
(38) Since our securities are subject to penny stock rules, you may have difficulty reselling your shares.
Our shares are "penny stocks" and are covered by Section 15(d) of the Securities Exchange Act of 1934 which imposes additional sales practice requirements on broker/dealers including: disclosure and confirmation of quotation prices; disclosure of compensation the broker/dealer receives; and, furnishing monthly account statements. For sales of our securities, the broker/dealer must make a special suitability determination and receive from its customer a written agreement prior to making a sale. The imposition of the foregoing additional sales practices could adversely affect a shareholder's ability to dispose of his stock.
(39) Arbitrary offering price.
The offering price of $0.10 per share of common stock was arbitrarily determined by EETC and is unrelated to specific investment criteria, such as the assets or past results of EETC’s operations. In determining the offering price, EETC considered such factors as the prospects, if any, of similar companies, the previous experience of management, EETC’s anticipated results of operations, and the likelihood of acceptance of this offering. Please review any financial or other information contained in this offering with qualified persons to determine its suitability as an investment before purchasing any shares in this offering.
15
Information included or incorporated by reference in this prospectus may contain forward-looking statements. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology.
This prospectus contains forward-looking statements, including statements regarding, among other things, (a) our projected sales and profitability, (b) our technology, (c) the regulation to which we are subject, (d) anticipated trends in our industry and (e) our needs for working capital. These statements may be found under “Management’s Discussion and Analysis or Plan of Operations” and “Business,” as well as in this Prospectus generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this Prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this prospectus will in fact occur.
Except as otherwise required by applicable laws, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in the prospectus, whether as a result of new information, future events, changed circumstances or any other reason after the date of this prospectus.
USE OF PROCEEDS
Energy Edge Technologies Corporation anticipates that the net proceeds of the Offering will be used primarily to increase revenues, increase sales force, marketing, advertising and publicity, salaries, consulting fees, initiate promotion to vendors to engage in contracts, and initiating the process of taking the company public via OTCBB and other general administrative expenses. The precise amounts that the Company will devote to its programs will vary depending on numerous factors, including but not limited to, the progress and results of its research and assessments as to the market potential of its proposal to develop the business.
The Company anticipates that the estimated $1,000,000 gross proceeds from the Maximum Offering will enable it to fund its operating entity and other capital needs for the next fiscal year. In the event that the Maximum Offering is not completed, the Company will be required to seek additional financing. There can be no assurance that additional financing will be available when needed and, if available, will be on terms acceptable to the Company. This said, Energy Edge Technologies Corporation has engaged the services of a consulting firm in the form of a strategic alliance that will initiate the OTCBB process when the final closing has occurred and will provide ongoing capital advisory services in the event that the Company is successfully registered with the SEC and listed on the OTCBB.
Use of Initial $500,000 of Proceeds
To implement the Company’s initial plans, an investment of an initial $500,000 would be utilized for the following anticipated purposes:
Table of Use of Proceeds
A breakdown of the use of these proceeds is presented below:
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$ Amount
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Key Employees
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$150,000
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OTCBB Audit, Registration and Listing
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$100,000
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Marketing Sales and Advertising
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$150,000
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Working Capital
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$100,000
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Total
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$500,000
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DIVIDEND POLICY
We do not anticipate that we will declare or pay any dividends on our Common Stock in the foreseeable future. Consequently, you will only realize an economic gain on your investment in our Common Stock if the price appreciates. You should not purchase our Common Stock expecting to receive cash dividends. Since we do not pay dividends, and if we are not successful in establishing an orderly public trading market for our shares, then you may not have any manner to liquidate or receive any payment on your investment. Therefore our failure to pay dividends may cause you to not see any return on your investment even if we are successful in our business operations. In addition, because we do not pay dividends we may have trouble raising additional funds which could affect our ability to expand our business operations.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
There has been no market for our securities. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority, FINRA for our common stock to be eligible for trading on the OTC Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale.
Holders of Our Common Stock
As of the date of this registration statement, we have approximately 20 shareholders of record and 42,825,000 of shares issued and outstanding. As a result of the Offering there may be additional Shareholders subscribing up to 10,000,000 shares.
Securities Authorized for Issuance under Equity Compensation Plans
A contemplated reserve of 20% of voting common stock to be issued for an employee stock benefit plan, for board member and advisory committee compensation and for attraction and retention of key employees. If the maximum amount of Shares is sold, the Company’s capital structure post-offering would be as follows:
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Robert Holdsworth
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30,200,000
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Additional Shareholders
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12,825,000
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Offering Investors
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10,000,000
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Reserved Shares
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10,565,000
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Reserved Shares would consist of shares to be used to fund an Employee Stock Option Plan, to compensate members of the Board of Directors and Advisory Board members, and to attract additional executives, consultants and joint venture partners.
DILUTION
The net tangible book value of the Common Stock offered hereby will be substantially diluted below the offering price paid by investors. The present shareholders acquired founder’s shares at an average cost of par value or $0.0001 per share, whereas Investors will pay a price of $0.10 (ten cents) per share. Therefore, outside Investors participating in this offering will incur immediate substantial dilution of their investment insofar as it refers to the resulting per share net tangible book value of the Company’s Common Stock after completion of this Offering.
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Critical Accounting Policies
Our financial statements are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use if estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Our significant accounting policies are summarized in Note 1 of our financial statements. While all these significant accounting policies impact our 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 financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Recent Accounting Pronouncements
Refer to Note 2 to the financial statements for a complete description of recent accounting standards which we have not yet been required to implement and may be applicable to our operation, as well as those significant accounting standards that have been adopted during 2009 and 2008.
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BUSINESS AND RECENT DEVELOPMENTS
Energy Edge Technologies Corporation
Energy Edge Technologies Corporation (“EETC”) is a firm specializing in energy cost and consumption reduction for mid to large sized companies, institutions and government entities. The company, a New Jersey corporation, consists of professional, industrial and electrical engineers, LEED Accredited Professionals and business entrepreneurs. EETC provides companies, institutions and government entities with turnkey, whole facility solutions that reduce energy consumption and corresponding cost and increase the efficiency of existing equipment and buildings. EETC has experience in implementing and supporting industrial and commercial energy conservation enhancement technologies, approaches and processes across a broad spectrum of industries and facility types. Our typical projects are guaranteed to reduce energy costs by 8% to 30%, provide 33% or better return on investment and decrease greenhouse gas emissions and our customers' carbon footprints.
EETC has experienced growing success over the past 7 years, with projects for a variety of customers including municipalities, breweries, pharmaceuticals, restaurants, food processing, manufacturing, printing, leisure, hospitals, office buildings, etc. EETC projects are suitable and applicable for any type of customer whose energy bill exceeds $10,000 monthly. EETC identifies where and how energy is being used and solves the problems that contribute to inefficient systems and higher energy bills. EETC are experts in the design and implementation of advanced, IEEE, DOE and USGBC recommended passive engineering approaches and technologies that reduce energy losses and increase the efficiency of existing systems while providing fast project payback and significant return on investment for customers. Our unique custom turnkey projects maximize energy savings by treating the entire facility based on its distinctive features and electricity and gas usage.
EETC applies different technologies and engineering approaches to positively affect the various energy consuming loads in a facility, and we work to improve the efficiency of equipment and systems to reduce kilowatt hour and Therm consumption. We combine in-house engineering experience with the expertise of our primary manufacturers. This allows us to develop the most effective turnkey projects with the greatest energy savings, largest reduction in greenhouse gas emissions and strongest return on investment for our customers. All of the approaches and technologies we employ are proven, passive, DOE, USGBC and/or IEEE approved and recommended. Furthermore, many of our technologies are ENERGY STAR qualified and supplied by ENERGY STAR partners such as Phillips, GE, Telkonet and Intellidyne. All of the technologies we utilize are UL Listed and CSA Approved. Many states and local utilities also offer generous incentives and rebates for our work and we help our customers to receive the full incentives available as well as qualify them for all applicable and available federal tax incentives.
Lastly, EETC removes the financial risk for its customers by backing projects with reimbursement contingency insurance underwritten by Lloyds of London. The policy guarantees that every penny invested by the customer is returned within the prescribed payback period through energy cost reduction. If any shortfall occurs the policy covers the customer for any difference.
EETC has developed a one of a kind, robust, proprietary e-tool for developing unique, accurate, facility specific energy savings calculations and project designs.
The proprietary database and underlying formulas and algorithms have been developed and perfected over years of analysis of hundreds of facilities of varying type, size, location, use, etc.
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The Energy Edge Analyzer allows team members to collect specific, pin point information on the various energy consuming loads and systems in a facility and input the data into the tool to produce fast, precise results including:
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Overall project design
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Guaranteed energy savings
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Available utility rebates
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Available federal, state and local incentives
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Client project cost
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Guaranteed client payback and ROI
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Financing options
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Carbon footprint and greenhouse gas reductions
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Electrical and gas consumption breakdowns and profiles across respective loads
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Detailed engineering and design specifications down to the individual treated load
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Corresponding additional benefits of the specific design (i.e. extended equipment life, less downtime, heat load reductions, electrical system capacity, cooling capacity, etc)
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The results from the Energy Edge Analyzer can then be quickly imported to a client ready, professional proposal. The proposal incorporates the relevant information from above and includes everything from the executive summary to the sales agreement to graphs and charts and dozens of customer referral letters.
Competitive Business Conditions within the Industry
There are multiple ways a company can proceed with trying to reduce energy spending. Vendors in the industry typically take one of two approaches. The first approach is from an administrative and supply side point of view. Many companies offer professional services where energy bills are audited for errors and for procurement opportunities. Reports are provided that show what is being spent at various times and seasons. Along with the audit, the company researches possible energy procurement and demand response opportunities in deregulated energy markets that may be accessible to the client. Logical SG (www.logicalsg.com), Kilojolts Consulting Group (www.kilojolts.com) and Energen USA (www.energenusa.com) are such companies that provide an administrative solution.
The second approach is to address the consumption side by attending to the different electrical and gas consuming equipment running in a facility. There are several companies providing a single or a two dimensional technological approach such as small lighting retrofit companies, electrical contractors, HVAC contractors, general contractors, etc. They provide lighting retrofits, or HVAC inspection and upgrades, or new windows, or building management software, or one or two efficiency technologies.
There are merits and benefits to both approaches to energy cost savings noted above and EETC’s competitive advantage is detailed below in the section titled “Competitive Strengths Within The Industry”.
Independent Contractors
EETC utilizes a growing network of independent contractors, channel partners and vendor relationships to develop business opportunities. The members of our network typically operate under the Energy Edge moniker and work from various strategic regions across the United States. Utilizing such a network of independent partners working on a 100% commission basis affords EETC with great advantages such as expanded geographical reach and marketplace exposure, generation of a significantly larger number of sales leads and prospects, and no additional overhead.
Effect of Existing Governmental Regulation on our Business
There is no regulation of this specific type of business other than the normal business restrictions that apply to all businesses.
Number of Total Employees and Part-Time Employees
We currently employ 1full-time employee in the United States.
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Suppliers
Energy Edge provides energy efficiency results including technology solutions from the following manufacturers and suppliers. We engineer the solution, specify the exact design, quantity and type of unit or equipment and the manufacturer or supplier ships them out. They also provide technical support for their product(s) at no cost as needed:
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Intellidyne
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eCube
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Myron Zucker
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Alumalight
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UE Systems
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HySave
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Telkonet
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Powersmiths
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Huper Optiks
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Others
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We have excellent relationships with all of our manufacturers and suppliers and currently have distributor contracts with eCube, Alumalight, Myron Zucker and HySave. For other suppliers, operate on a more informal basis and order what we require at the times we need it.
Business Strategies
Our business includes energy engineering studies and the designing and building of turnkey energy efficiency projects. We have grown the company by offering high quality services and products to customers we initially attracted using very simple techniques such as networking, channel partners, cold calling and mailers. We continue to add to our network of independent contractors and using these methods of prospecting. However, we plan to begin utilizing more sophisticated methods of attaining customers and increasing the visibility of EETC such as online viral marketing, traditional marketing and advertising and extensive publicity and public relations campaigns.
In addition we are looking to expand into underserved regions of the United States and internationally to areas such as China and Europe.
Lastly, management will be looking for additional revenue streams such as energy efficiency consulting for new building design and potential acquisition targets to expand size, revenue and profitability of the company.
Industry Summary
Businesses are continually seeking ways to lower expenses and cut energy costs. Federal and state governments and local utilities have put several regulations and incentives in place (with more to come), encouraging and requiring companies to take active responsibility for lowering their energy consumption. A monsoon of media coverage has also created awareness of high energy consumption and the ultimate effects on the US and the rest of the world. It is to the advantage of any company, with a significant energy bill, to take advantage of the offer presented by EETC, from a fiscal, environmental and social standpoint.
Extensive research has been done showing that the United States is the largest energy consumer in terms of total use, using 100 quadrillion BTUs (105 exajoules, or 29,000 TWh) as of 2005. This number is three times the consumption by the United States in 1950, ranking the U.S. seventh in energy consumption per-capita after Canada and a number of small countries.1 EETC target markets include the industrial, commercial and government sectors, which account for more than half of the energy consumed in the US. The other two sectors are residential and transportation.
Along with its “whole facility approach” the company provides additional advantages to its client with its 100% savings guarantee program which is backed by a surety bond underwritten by Lloyds of London. The guarantee ensures every dollar invested in an EETC project by a customer will be returned via energy savings within the determined payback period. If any shortfall occurs, the difference between the savings and the investment will be refunded by the surety bond. This quells customer anxiety by removing the financial risk from the buying decision and ultimately increases closure rate, allowing EETC a competitive and reputational advantage as an energy engineering company.
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Competitive Strengths within the Industry
There is merit to both the administrative, supply side and the energy efficiency, consumption side solutions detailed in the “Competitive Business Conditions” section above. That is why EETC has developed the ability to address both for customers.
The administrative solution has value for customers and EETC offers these solutions by partnering with companies such as Enernoc (www.enernoc.com) and Glacial Energy (www.glacialenergy.com). In this way EETC can provide administrative, supply side savings to its customers while also generating revenue for the firm. However, these administrative strategies focus only on the supply side cost and not on reducing actual energy usage, or reducing a company’s carbon footprint. To use less energy, the equipment and its supporting systems must be made to run more efficiently. This is where EETC takes it to the next level by employing a holistic, comprehensive approach that is necessary to thoroughly enhance the energy efficiency and profile of all types of facilities.
As noted there are many companies and individuals that focus only on one or two aspects of the dozens of areas that can be made more efficient. In management’s view, no companies were found that offered a similar whole facility approach as offered by Energy Edge that can literally address the multitude of energy consuming loads across the lighting, HVAC, refrigeration, heating and production systems in today’s commercial, industrial and institutional facilities. Competitors typically cannot bring to bear the numerous technologies and approaches that EETC can to ensure a significant, measurable impact and strong ROI for customers. In addition to the narrow scope and limited available energy treatment options and approaches, competitors can not truly guarantee the energy savings and do not offer true, insured guaranteed savings programs.
Management believes that EETC maintains a distinct advantage over its competition by offering a comprehensive energy cost reduction suite of services including whole facility energy consumption reduction, energy procurement and demand response programs. And EETC removes the financial risk from the buying decision for customers with guaranteed savings and ROI backed by Lloyds of London.
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Growth Strategy
Market trends suggest that the demand for energy resources will rise dramatically over the next 25 years (2). Global demand for all energy sources is forecast to grow by 57%. These numbers include all energy types.
EETC currently has over $20 million in potential business in the sales pipeline. The $20 million is comprised of prospects that have already received the initial analysis and project summary (Step 2) and are deciding whether to move forward with a project. EETC continues to add new prospects to the sales pipeline every week.
EETC intends to enter into more strategic, vendor and distributorship relationships with additional industry leading energy efficiency manufacturers and suppliers in 2010.
EETC has grown the current business using very simple techniques such as networking, channel partners, cold calling and mailers. EETC will continue to add to our network of independent contractors and using these methods of prospecting. However, EETC plans to begin utilizing more sophisticated methods of attaining customers and increasing the visibility of EETC such as online viral marketing, traditional marketing and advertising and extensive publicity and public relations campaigns.
EETC is looking to expand into underserved regions of the United States and internationally to areas such as China and Europe.
EETC will be looking for additional revenue streams such as energy efficiency consulting for new building design and potential acquisition targets to expand the size, revenue and profitability of the company.
Recent Developments
EETC has multiple projects committed for the first and second quarters of 2010.
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Principal Executive Offices
Our corporate headquarters are located at 1200 Route 22 East, Suite 2000 Bridgewater, New Jersey 08807. Our telephone number is (888) 729-5722, ext. 100
DESCRIPTION OF PROPERTY
The Company neither owns nor leases any real property. An officer has provided office services without charge. There is no obligation for the officer to continue this arrangement; however it does maintain a Virtual Online (Mailbox) at 1200 Route 22 East, Bridgewater, New Jersey 08807.
MANAGEMENT
The directors and executive officers of the Company are:
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Name
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Age
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Position
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Robert Holdsworth
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40
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President & Chairman
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John Gerace
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64
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Vice President
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Warren Fellus
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39
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Director
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Yin Hu
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47
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Director
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Robert Holdsworth, 40, MBB, President, has a 17 year proven track record of success partnering with Fortune 500 companies, global enterprises and medium businesses. His experience covers a depth of senior level operations management, inside and outside sales, large scale project management and Six Sigma deployment. He has successfully managed large, multi-hundred member departments and key contracts that generated revenues of up to $40M annually. Mr. Holdsworth has had great success in strategically growing organizations, managing highly complex projects, and cutting waste while increasing revenues. Mr. Holdsworth successfully integrated three distinct outsourcing businesses and created ways to decrease cost, correctly apply assets and significantly impact the top and bottom lines. In Management’s view, Mr. Holdsworth possesses the well rounded skill set necessary to lead a company today, as an effective communicator, strategic leader, poised presenter, skilled salesperson, with astute financial capabilities. Mr. Holdsworth has worked in Senior Management positions for such companies as Mellon Financial Corporation, Price Waterhouse Coopers and Merrill Lynch & Co. Mr. Holdsworth received a Bachelor Degree from Rider University, Lawrenceville, NJ. He holds certifications as a Certified Energy Manager, a Six Sigma Master Black Belt, and a Total Quality Management (TQM) Practitioner and formerly held NASD Series 7 and Series 63 licenses.
John Gerace, 64, Ph.D., P.E. Vice President, has been a consultant for EETC for 6 years and engages in the various aspects of EETC sales, project design and installations. He oversees client projects including sales, end to end engineering, project management and financial accountability. Dr. Gerace offers excellent expertise in the field of engineering and business development. His engineering knowledge encompasses environmental, industrial and facilities engineering, power plant engineering, cogeneration and of course energy engineering. Dr. Gerace has overseen projects spanning power plants, boiler plants, chiller plants, pharmaceutical firms, schools, Department of Defense, chemical plants, hospitals, food processing plants, and many other facilities. Dr. Gerace is a published author and a Registered Professional Engineer. He holds a Bachelor of Engineering, an MBA in Finance and a Doctor of Philosophy with Honors in Economics. He holds Full Membership in the National Society of Professional Engineers, the Association for the Advancement of Cost Engineering International and sits on the Philadelphia Council on Business Economics. Dr. Gerace has also fulfilled US Navy Active Duty obligations as a Lt. in the US Naval Reserve.
24
Warren Fellus, 39, started out his career in international banking in 1990 and supervised the lending department to facilitate commercial, corporate and real estate loans to Mitsubishi Trust and Banking international clients for over 5 years. By 1996, he was a registered investment rep. and managed over 10 million dollars for his clients. He successfully advised his clients on investment products from bonds, stocks and mutual funds.
In 1999 he engaged in trading equities for multi-million dollar hedge funds and was always a top ranked trader in his field. He trained and managed a trading desk in 2004 with well over 25 traders under his management. By
2007, he successfully managed and owned his own hedge fund specializing in trading IPOs in the post market until the spring of 2010 where he began consulting to public and pre public companies on globalization strategies, strategic alliance facilitation and market entry solutions.
Yin Hu, 47, is the CEO and Founder of Oceancross Capital, LLC, a FINRA/SIPC member security broker-dealer. With 15 years experience in working for financial firms, managing broker-dealer branches, running trading operations, founding and managing a FINRA member broker-dealer, he is currently putting his main effort to developing capital market service between China and US.
Before Yin Hu founded Oceancross Capital in 2006, he was the manager and partner of 5th Avenue branch of Carlin Financial Group from 2002 to 2005. After Carlin was bought by Royal Bank of Canada, he, together with his partners, formed Spinnacker Partners, LLC as an independent hedge fund. Yin Hu was the president of the company.
Previous to this, Yin Hu was the manager and partner of New York Mercantile Exchange branch for Andover Brokerage, LLC from 2001 to 2002. In a short year, he built the branch from scratch to having around 100 traders.
From 1995 to 2001, Yin Hu worked for Larson Capital Management, Worldco, LLC as security analyst, and senior trader. Also from 1987 to 1989, he was an economist for Policy Research Office at State Economic Information Center of China.
Yin Hu holds a Master of Business Administration degree from Shanghai Jiaotong University as well as a Bachelor of Science degree in ocean engineering. He spent a few years in University of Minnesota economics Ph.D. program. He started to work in financial industry before he finished the study. He intends to finish it in the future.
We believe that the members of our board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date. In addition, we currently do not have nominating, compensation or audit committees or committees performing similar functions nor do we have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes the functions of such committees can be adequately performed by our board of directors. Further, we are not a "listed company" under SEC rules and thus we are not required to have a compensation committee or a nominating committee.
We do not have any defined policy or procedure requirements for shareholders to submit recommendations or nominations for directors. Our board of directors believes that, given the early stages of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. We do not currently have any specific or minimum criteria for the election of nominees to our board of directors and we do not have any specific process or procedure for evaluating such nominees. Our board of directors assesses all candidates, whether submitted by management or shareholders, and makes recommendations for election or appointment.
25
A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our Chief Executive Officer at the address appearing on the face page of this Prospectus.
Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office or until his successor has been elected and qualified in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
All officers and directors listed above will remain in office until the next annual meeting of our stockholders, and until their successors have been duly elected and qualified. There are no agreements with respect to the election of Directors. Officers are appointed annually by our Board of Directors and each Executive Officer serves at the discretion of our Board of Directors. We do not have any standing committees. Our Board of Directors may in the future determine to pay Directors’ fees and reimburse Directors for expenses related to their activities.
None of our Officers and/or Directors have filed any bankruptcy petition, been convicted of or been the subject of any criminal proceedings or the subject of any order, judgment or decree involving the violation of any state or federal securities laws within the past five (5) years.
Audit Committee
We do not have an audit committee of the Board of Directors. Management has determined not to establish an audit committee at present because of our limited resources and limited operating activities do not warrant the formation of an audit committee or the expense of doing so. We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Item 401(e) of Regulation S-B is beyond its limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in our financial statements at this stage of our development.
Certain Legal Proceedings
No director, nominee for director, or executive officer has appeared as a party in any legal proceeding material to an evaluation of his ability or integrity during the past five years.
Compliance with Section 16(A) Of the Exchange Act.
Upon the effectiveness of this Registration Statement, Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file.
Code of Ethics
The Board of Directors has established a written code of ethics that applies to the Company’s Chief Executive Officer and Chief Financial Officer. A copy of the Code of Ethics is filed as Exhibit 14.1.
26
EXECUTIVE COMPENSATION
Summary Table. The following table sets forth information concerning the annual and long-term compensation awarded to, earned by, or paid to the named executive officer for all services rendered in all capacities to our company, or any of its subsidiaries, for the years ended December 31, 2009, 2008, and 2007:
|
Summary Compensation Table
|
||||||||
|
Name &Principal Position
|
Year
|
Salary
($)
|
Total
($)
|
|||||
|
Robert Holdsworth, President
|
2007
|
$0
|
$0
|
|||||
|
2008
|
$0
|
$0
|
||||||
|
2009
|
$0
|
$0
|
||||||
Employment Agreements
The Company has no formal employment agreements.
27
Compensation of Directors
Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors.
|
Fees Earned
or Paid in
Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||
|
Robert Holdsworth
|
$20,000
|
$50,000
|
$70,000
|
||||||||||||
|
John Gerace
|
|
$20,000
|
$50,000
|
$70,000
|
|||||||||||
|
Yin Hu
|
|
$20,000
|
$50,000
|
$70,000
|
|||||||||||
|
Warren Fellus
|
$20,000
|
$50,000
|
$70,000
|
||||||||||||
(1) The stock awards set forth on this table were issued for services rendered to the Company by the directors. This dollar estimate is based on the fair market value at the date of grant at the close of business in accordance with ASC 718-20 (formerly SFAS No. 123R, Share-Based Payment).
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial ownership of our Common Stock as of June 28, 2010 for:
|
l
|
each of our executive officers and directors;
|
|
l
|
all of our executive officers and directors as a group; and
|
|
l
|
any other beneficial owner of more than 5% of our outstanding Common Stock.
|
Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and include ordinary shares issuable upon the exercise of stock options that are immediately exercisable or exercisable within 60 days. Except as otherwise indicated, all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. The information is not necessarily indicative of beneficial ownership for any other purpose.
|
Title of Class
|
Name and Address
of Beneficial Owner
|
Amount and Nature
of Beneficial Owner
|
Percent of
Class
|
|
Common Stock
|
Robert E. Holdsworth
33 Chestnut Trail
Flemington, NJ, 08822
|
30,200,000
|
70.52%
|
|
Common Stock
|
ACS Inc.
500 Office Center Drive
Fort Washington, PA 19034
|
9,000,000
|
21.02%
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SELLING SHAREHOLDERS
The following table sets forth the shares beneficially owned, as of June 28, 2010 by the selling shareholders included in this Prospectus.
Beneficial ownership is determined in accordance with Securities and Exchange Commission rules. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to dispose of, or to direct the disposition of, the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
28
The percentages below are calculated based on 42,825,000 shares of our common stock issued and outstanding.
|
Name of Selling Shareholder and
Position, Office, or Material
Relationship
with the Company
|
Common
Shares
Owned by
the Selling
Shareholder
|
Total Shares
to be
Registered
Pursuant
to this Prospectus
|
Total Shares
After
Completion of the Offering
|
|
Charles Richard Harvin, Jr.
2732 Rush Haven Drive
Mt. Pleasant, SC 29466
|
250,000
|
250,000
|
250,000
|
|
Alejandro Sei
18 Chestnut Trail
Flemington, NJ 08822
|
50,000
|
50,000
|
50,000
|
|
Keith Harvin
2870 Porcher Drive
Sumter, SC 29150
|
250,000
|
250,000
|
250,000
|
|
Charles Barovian
1763 West 9th Street
Brooklyn, NY 11223
|
100,000
|
100,000
|
100,000
|
|
Steve Gianniotis
226 Kings Highway
Brooklyn, NY 11223
|
100,000
|
100,000
|
100,000
|
|
Richard Edelman
216 Walnut Street
Livingston, NJ 07039
|
100,000
|
100,000
|
100,000
|
|
Robert E. Holdsworth
33 Chestnut Trail
Flemington, NJ, 08822
|
30,200,000
|
30,200,000
|
30,200,000
|
|
Terrence Maher
3531 N. Reta Avenue
Chicago, IL 60657
|
75,000
|
75,000
|
75,000
|
|
Alejandro Sei
18 Chestnut Trail
Flemington, NJ 08822
|
30,000
|
30,000
|
30,000
|
|
Michael Napolitano
4024 Quarry Road
Manchester, NJ 08759
|
1,000,000
|
1,000,000
|
1,000,000
|
|
Richard Gigantino
5 White Birch Drive
Millstone Twsp., NJ 08510
|
50,000
|
50,000
|
50,000
|
|
Frank Kukla
176 Brahma Avenue
Bridgewater, NJ 08807
|
20,000
|
20,000
|
20,000
|
|
Randall Bielski
1534 York Road
Lutherville, MD 21093
|
300,000
|
300,000
|
300,000
|
|
ACS Inc.
500 Office Center Drive
Fort Washington, PA 19034
|
9,000,000
|
9,000,000
|
9,000,000
|
|
Frank J. Pena
1590 Horseshoe Drive
Manasquan, NJ 08736
|
100,000
|
100,000
|
100,000
|
29
|
TVT Capital LLC
8 Hunters Lane
Roslyn, NY 11576
|
500,000
|
500,000
|
500,000
|
|
Kenny Fellus
4 Green Drive
Roslyn, NY 11576
|
100,000
|
100,000
|
100,000
|
|
John Gerace, Ph.D.
646 Friar Drive
Yardley, PA 19067
|
200,000
|
200,000
|
200,000
|
|
Yin Hu
58 Rose Avenue
Great Neck, NY 11021
|
200,000
|
200,000
|
200,000
|
|
Warren Fellus
8 Hunters Lane
Roslyn, NY 11576
|
200,000
|
200,000
|
200,000
|
There has been no market for our securities. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with FINRA for our common stock to be eligible for trading on the Over the Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. The selling security holder will be offering the shares of common stock being covered by this prospectus at a fixed price of $0.10 per share until a market develops and thereafter at prevailing market prices or privately negotiated prices. The fixed price of $0.10 has been determined arbitrarily.
Once a market has been developed for our common stock, the shares may be sold or distributed from time to time by the selling security holders directly to one or more purchasers or through brokers or dealers who act solely as agents, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods: (a) ordinary brokerage transactions and transactions in which the broker solicits purchasers; (b) privately negotiated transactions; (c) market sales (both long and short to the extent permitted under the federal securities laws); (d) at the market to or through market makers or into an existing market for the shares; (e) through transactions in options, swaps or other derivatives (whether exchange listed or otherwise); and (f) a combination of any of the aforementioned methods of sale.
In the event of the transfer by any of the selling security holders of its common shares to any pledgee, donee or other transferee, we will amend this prospectus and the registration statement of which this prospectus forms a part by the filing of a post-effective amendment in order to have the pledgee, donee or other transferee in place of the selling security holder who has transferred his, her or its shares.
In effecting sales, brokers and dealers engaged by the selling security holders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions or discounts from a selling security holder or, if any of the broker-dealers act as an agent for the purchaser of such shares, from a purchaser in amounts to be negotiated which are not expected to exceed those customary in the types of transactions involved. Broker-dealers may agree with a selling security holder to sell a specified number of the shares of common stock at a stipulated price per share. Such an agreement may also require the broker-dealer to purchase as principal any unsold shares of common stock at the price required to fulfill the broker-dealer commitment to the selling security holder if such broker-dealer is unable to sell the shares on behalf of the selling security holder. Broker-dealers who acquire shares of common stock as principal may thereafter resell the shares of common stock from time to time in transactions which may involve block transactions and sales to and through other broker-dealers, including transactions of the nature described above.
Such sales by a broker-dealer could be at prices and on terms then prevailing at the time of sale, at prices related to the then-current market price or in negotiated transactions. In connection with such resales, the broker-dealer may pay to or receive from the purchasers of the shares commissions as described above.
30
The selling security holders and any broker-dealers or agents that participate with the selling security holders in the sale of the shares of common stock may be deemed to be "underwriters" within the meaning of the Securities Act in connection with these sales. In that event, any commissions received by the broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
From time to time, any of the selling security holders may pledge shares of common stock pursuant to the margin provisions of customer agreements with brokers. Upon a default by a selling security holder, their broker may offer and sell the pledged shares of common stock from time to time. Upon a sale of the shares of common stock, the selling security holders intend to comply with the prospectus delivery requirements under the Securities Act by delivering a prospectus to each purchaser in the transaction. We intend to file any amendments or other necessary documents in compliance with the Securities Act which may be required in the event any of the selling security holders defaults under any customer agreement with brokers.
To the extent required under the Securities Act, a post effective amendment to this registration statement will be filed disclosing the name of any broker-dealers, the number of shares of common stock involved, the price at which the common stock is to be sold, the commissions paid or discounts or concessions allowed to such broker-dealers, where applicable, that such broker-dealers did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus and other facts material to the transaction.
We and the selling security holders will be subject to applicable provisions of the Exchange Act and the rules and regulations under it, including, without limitation, Rule 10b-5 and, insofar as a selling security holder is a distribution participant and we, under certain circumstances, may be a distribution participant, under Regulation M. All of the foregoing may affect the marketability of the common stock.
All expenses of the registration statement including, but not limited to, legal, accounting, printing and mailing fees are and will be borne by us. Any commissions, discounts or other fees payable to brokers or dealers in connection with any sale of the shares of common stock will be borne by the selling security holders, the purchasers participating in such transaction, or both.
Any shares of common stock covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act, as amended, may be sold under Rule 144 rather than pursuant to this prospectus.
DESCRIPTION OF SECURITIES
General
Our authorized capital stock consists of 100,000,000 Common Shares, $0.00001 par value per share.
31
Common Stock
As of June 28, 2010, we had 42,825,000 shares of Common Stock issued and outstanding. Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote.
Holders of common stock do not have cumulative voting rights. Therefore, holders of a majority of the shares of common stock voting for the election of directors can elect all of the directors. The presence, in person or by proxy, of shareholders holding at least fifty-one (51%) percent of the shares entitled to vote shall be necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our articles of incorporation.
Holders of common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of liquidation, dissolution or corporate wind up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock.
Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.
Preferred Stock
None.
Warrants
None.
Options
None.
OTC Bulletin Board
Our common stock is not currently traded in the over-the-counter market. The Company plans to file a Form 211 and to apply for a symbol on the OTC Bulletin Board.
32
Transfer Agent and Registrar
The transfer agent and registrar for our Common Stock is OTC CORPORATE TRANSFER SERVICE
52 MAPLE RUN DRIVE, JERICHO, NY 11753.
SHARES ELIGIBLE FOR FUTURE SALE
As of June 28, 2010, we had outstanding 42,825,000 shares of common stock.
Shares Covered by this Prospectus
All of the 42,825,000 shares of Common Stock being registered in this offering may be sold without restriction under the Securities Act.
Rule 144
The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
Rule 144 allows for the public resale of restricted and control securities if a number of conditions are met. Meeting the conditions includes holding the shares for a certain period of time, having adequate current information, looking into a trading volume formula, and filing a notice of the proposed sale with the SEC.
PLAN OF DISTRIBUTION
The Selling Security Holders and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of our common stock on any stock exchange, market or trading facility on which the shares are traded or quoted or in private transactions. These sales may be at fixed or negotiated prices. The Selling Security Holders may use any one or more of the following methods when selling shares:
|
·
|
ordinary brokerage transactions and transactions in which the broker-dealer solicits Investors;
|
|
·
|
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
|
|
·
|
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
|
|
·
|
an exchange distribution in accordance with the rules of the applicable exchange;
|
|
·
|
privately negotiated transactions;
|
|
·
|
to cover short sales made after the date that this prospectus is declared effective by the Commission;
|
|
·
|
broker-dealers may agree with the Selling Security Holders to sell a specified number of such shares at a stipulated price per share;
|
|
·
|
a combination of any such methods of sale; and
|
|
·
|
any other method permitted pursuant to applicable law.
|
The Selling Security Holders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Security Holders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Security Holders, or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser, in amounts to be negotiated. The Selling Security Holders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.
The Selling Security Holders may from time to time pledge or grant a security interest in some or all of the shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of our common stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling security holders to include the pledgee, transferee or other successors in interest as selling security holders under this prospectus.
33
Upon our being notified in writing by a Selling Security Holder that any material arrangement has been entered into with a broker-dealer for the sale of our common stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such Selling Security Holder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of our common stock were sold, (iv)the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In addition, upon our being notified in writing by a Selling Security Holder that a donee or pledgee intends to sell more than 500 shares of our common stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.
The Selling Security Holders also may transfer the shares of our common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
The Selling Security Holders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of Securities will be paid by the Selling Security Holder and/or the purchasers. Each Selling Security Holder has represented and warranted to us that it acquired the securities subject to this prospectus in the ordinary course of such Selling Security Holder’s business and, at the time of its purchase of such securities such Selling Security Holder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.
We have advised each Selling Security Holder that it may not use shares registered on this prospectus to cover short sales of our common stock made prior to the date on which this prospectus shall have been declared effective by the Commission. If a Selling Security Holder uses this prospectus for any sale of our common stock, it will be subject to the prospectus delivery requirements of the Securities Act. The Selling Security Holders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations there under promulgated, including, without limitation, Regulation M, as applicable to such Selling Security Holders in connection with resales of their respective shares under this prospectus.
We are required to pay all fees and expenses incident to the registration of the shares, but we will not receive any proceeds from the sale of our common stock. We have agreed to indemnify the Selling Security Holders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
LEGAL PROCEEDINGS
We are not presently a party to any litigation, nor to our knowledge and belief is any litigation threatened or contemplated.
The validity of the common stock being offered by this prospectus will be passed upon for us by Vincent & Rees, L.C., of Salt Lake City, Utah, which has acted as our counsel in connection with this offering.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Except as disclosed herein, no expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
34
Our legal counsel, Vincent & Rees, L.C., receives restricted shares of the common stock of the Company totaling 3% of the then-issued and outstanding shares of the Company upon completion of the reorganization or recapitalization of Energy Edge in exchange for the legal services performed.
The financial statements included in this prospectus and the registration statement have been audited by Silberstein Ungar, PLLC an independent registered public accounting firm, to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
TRANSFER AGENT
The transfer agent and registrar for our Common Stock is OTC CORPORATE TRANSFER SERVICE 52 MAPLE RUN DRIVE, JERICHO, NY 11753.
AVAILABLE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the common stock offered hereby. This prospectus, which constitutes part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits and schedule thereto, certain parts of which are omitted in accordance with the rules and regulations of the SEC. For further information regarding our common stock and our company, please review the registration statement, including exhibits, schedules and reports filed as a part thereof. Statements in this prospectus as to the contents of any contract or other document filed as an exhibit to the registration statement, set forth the material terms of such contract or other document but are not necessarily complete, and in each instance reference is made to the copy of such document filed as an exhibit to the registration statement.
We will also be subject to the informational requirements of the Exchange Act upon the registration statement’s effectiveness, which requires us to file reports, proxy statements and other information with the SEC. Such reports, proxy statements and other information along with the registration statement, including the exhibits and schedules thereto, may be inspected at public reference facilities of the SEC at 100 F Street N.E, Washington D.C. 20549. Copies of such material can be obtained from the Public Reference Section of the SEC at prescribed rates. You may call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. Because we file documents electronically with the SEC, you may also obtain this information by visiting the SEC’s Internet website at http://www.sec.gov.
35
FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying financial statements, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form S-1 filed with the SEC as of and for the period ended December 31, 2009. In the opinion of management, all adjustments necessary in order for the financial statements to be not misleading have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results expected for the full year.
F-1
Silberstein Ungar, PLLC CPAs and Business Advisors
Phone (248) 203-0080
Fax (248) 281-0940
30600 Telegraph Road, Suite 2175
Bingham Farms, MI 48025-4586
www.sucpas.com
Report of Independent Registered Public Accounting Firm
To the Board of Directors of
Energy Edge Technologies Corporation
Bridgewater, New Jersey
We have audited the accompanying balance sheets of Energy Edge Technologies Corporation (the “Company”) as of December 31, 2009 and 2008, and the related statements of operations, stockholder’s deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Energy Edge Technologies Corporation as of December 31, 2009 and 2008 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Silberstein Ungar, PLLC
Bingham Farms, Michigan
June 2, 2010
F-2
ENERGY EDGE TECHNOLOGIES CORPORATION
BALANCE SHEETS
AS OF DECEMBER 31, 2009 AND 2008
|
ASSETS
|
2009
|
2008
|
||||||
|
Current assets
|
||||||||
|
Cash and cash equivalents
|
$ | 4,544 | $ | 15,242 | ||||
|
Contract receivables
|
210,460 | 35,481 | ||||||
|
Costs and estimated earnings in excess of billings on uncompleted contracts
|
9,554 | 400 | ||||||
|
Total Current Assets
|
224,558 | 51,123 | ||||||
|
Property and equipment
|
||||||||
|
Computers and equipment
|
2,690 | 1,410 | ||||||
|
Less: accumulated depreciation
|
(556 | ) | (173 | ) | ||||
|
Total property and equipment (net)
|
2,134 | 1,237 | ||||||
|
Total Assets
|
$ | 226,692 | $ | 52,360 | ||||
|
LIABILITIES AND STOCKHOLDER’S DEFICIT
|
||||||||
|
Liabilities
|
||||||||
|
Current liabilities
|
||||||||
|
Accounts payable
|
$ | 16,485 | $ | 23,123 | ||||
|
Accrued expenses
|
31,526 | 38,654 | ||||||
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
206,871 | - | ||||||
|
Sales tax payable
|
15,082 | - | ||||||
|
Total Liabilities
|
269,964 | 61,777 | ||||||
|
Stockholder’s deficit
|
||||||||
|
Common stock, no par value, 1,500 shares authorized, 1,500 shares issued and outstanding
|
1,500 | 1,500 | ||||||
|
Retained earnings (deficit)
|
(44,772 | ) | (10,917 | ) | ||||
|
Total Stockholder’s Deficit
|
(43,272 | ) | (9,417 | ) | ||||
|
Total Liabilities and Stockholder’s Deficit
|
$ | 226,692 | $ | 52,360 | ||||
The accompanying notes are an integral part of these financial statements.
F-3
ENERGY EDGE TECHNOLOGIES CORPORATION
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
|
2009
|
2008
|
|||||||
|
CONTRACT REVENUES
|
$ | 902,148 | $ | 732,190 | ||||
|
CONTRACT COSTS
|
577,708 | 327,494 | ||||||
|
GROSS PROFIT
|
324,440 | 404,696 | ||||||
|
OPERATING EXPENSES
|
||||||||
|
Telemarketing services
|
31,164 | 43,729 | ||||||
|
Travel
|
20,365 | 30,821 | ||||||
|
General & administrative expenses
|
63,320 | 36,200 | ||||||
|
TOTAL OPERATING EXPENSES
|
114,849 | 110,750 | ||||||
|
INCOME FROM OPERATIONS
|
209,591 | 293,946 | ||||||
|
OTHER INCOME (EXPENSE)
|
||||||||
|
Interest expense
|
(5,325 | ) | (3,790 | ) | ||||
|
INCOME BEFORE PROVISION FOR INCOME TAXES
|
204,266 | 290,156 | ||||||
|
PROVISION FOR INCOME TAXES
|
- | - | ||||||
|
NET INCOME
|
$ | 204,266 | $ | 290,156 | ||||
The accompanying notes are an integral part of these financial statements.
F-4
ENERGY EDGE TECHNOLOGIES CORPORATION
STATEMENT OF STOCKHOLDER’S DEFICIT
AS OF DECEMBER 31, 2009
|
Common Stock
|
|
Total
|
||||||||||||||
|
Shares
|
Amount
|
Retained
Earnings (Deficit) |
Stockholder’s
Deficit
|
|||||||||||||
|
Balance, January 1, 2008
|
1,500 | $ | 1,500 | $ | (87,996 | ) | $ | (86,496 | ) | |||||||
|
Net income for the year ended December 31, 2008
|
290,156 | 290,156 | ||||||||||||||
|
Shareholder distributions
|
- | - | (213,077 | ) | (213,077 | ) | ||||||||||
|
Balance, December 31, 2008
|
1,500 | 1,500 | (10,917 | ) | (9,417 | ) | ||||||||||
|
Net income for the year ended December 31, 2009
|
204,266 | 204,266 | ||||||||||||||
|
Shareholder distributions
|
- | (238,121 | ) | (238,121 | ) | |||||||||||
|
Balance, December 31, 2009
|
1,500 | $ | 1,500 | $ | (44,772 | ) | $ | (43,272 | ) | |||||||
The accompanying notes are an integral part of these financial statements.
F-5
ENERGY EDGE TECHNOLOGIES CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
|
2009
|
2008
|
|||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
|
Net income for the period
|
$ | 204,266 | $ | 290,156 | ||||
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
|
Depreciation
|
383 | 173 | ||||||
|
(Increase) in contracts receivable
|
(174,979 | ) | (35,481 | ) | ||||
|
(Increase) decrease in costs and estimated earnings in excess of billings on uncompleted contracts
|
(9,154 | ) | 29,710 | |||||
|
Increase (decrease) in accounts payable
|
(6,638 | ) | 23,123 | |||||
|
Increase (decrease) in billings in excess of costs and estimated earnings on uncompleted contracts
|
206,871 | (176,242 | ) | |||||
|
Increase in sales tax payable
|
15,082 | - | ||||||
|
(Decrease) in accrued expenses
|
(7,128 | ) | (4,497 | ) | ||||
|
Cash flows from operating activities
|
228,703 | 126,942 | ||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
|
Purchase of property and equipment
|
(1,280 | ) | (1,410 | ) | ||||
|
Cash flows used in investing activities
|
(1,280 | ) | (1,410 | ) | ||||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
|
Distributions to shareholder
|
(238,121 | ) | (213,077 | ) | ||||
|
Cash flows used in financing activities
|
(238,121 | ) | (213,077 | ) | ||||
|
NET DECREASE IN CASH
|
(10,698 | ) | (87,545 | ) | ||||
|
Cash, beginning of the period
|
15,242 | 102,787 | ||||||
|
Cash, end of the period
|
$ | 4,544 | $ | 15,242 | ||||
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
||||||||
|
Interest paid
|
$ | 5,325 | $ | 3,790 | ||||
|
Income taxes paid
|
$ | - | $ | - | ||||
The accompanying notes are an integral part of these financial statements
F-6
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009
NOTE 1 – NATURE OF OPERATIONS
Energy Edge Technologies Corporation (“Energy Edge” and the “Company”) was incorporated in New Jersey in January, 2004 and was in the development stage until January 1, 2008 when the assets, liabilities, and operations of a sole proprietorship controlled by the Company’s sold stockholder were transferred in. The Company provides energy engineering and services specializing in the development and implementation of advanced, turnkey projects to reduce energy losses and increase the efficiency of new and existing buildings. The Company is comprised of professional and industrial engineers, LEED Accredited Professionals, and Green Building Coalition Certifying Agents. Energy Edge is a Clean Energy Pay for Performance Partner and a Smart Start Building Trade Ally. The Company’s custom designed projects are developed using proprietary methods and maximize energy savings by treating an entire facility based on its unique features and electricity and gas usage.
The Company applies a whole facility approach to energy cost reduction by applying different technologies and engineering approaches to treat most of the various electrical and gas consuming loads across facility such as lighting, HVAC, refrigeration and production equipment. The energy projects developed and implemented by the Company are ideal for virtually any type of facility and have successfully resulted in tremendous savings in manufacturing plants, hospitals, entertainment venues, office buildings, restaurants, warehouses, etc.
Revenues come primarily from engineering survey work and turnkey energy projects where the company takes responsibility for equipment procurement, installation labor, utility rebates, tax incentives, pre and post survey work, waste removal, certifications, and ongoing measurement and verification of results.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
Energy Edge uses the accrual basis of accounting for financial statement reporting. Accordingly, revenues are recognized when products are delivered and services are rendered, and expenses are recognized when the obligation is incurred. The Company recognizes revenues from contracts on the percentage-of-completion method, measured by the percentage of cost incurred to date to estimated total cost for each contract.
Financial Instruments
The Company's financial instruments consist of cash and cash equivalents, contract receivables, costs and estimated earnings in excess of billings on uncompleted contracts, property and equipment, accounts payable, billings in excess of costs and estimated earnings on uncompleted contracts, sales tax payable and accrued expenses. The carrying amounts of these financial instruments approximate fair value due either to length of maturity or interest rates that approximate prevailing rates unless otherwise disclosed in these financial statements.
Contract Receivables
Contract receivables are recorded when invoices are issued and are presented in the balance sheet net of the allowance for doubtful accounts. Contract receivables are written off when they are determined to be uncollectible.
F-7
ENERGY EDGE TECHNOLOGIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles of the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.
Concentrations of Credit Risk
The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.
In addition, the Company extends credit to customers in the normal course of business. The Company monitors the account receivable balances and does not expect significant collection problems.
Revenue Recognition
The Company recognizes revenues from contracts on the percentage-of-completion method, measured by the percentage of cost incurred to date to estimated total cost for each contract. That method is used because management considers total cost to be the best available measure of progress on contracts. Because of inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change within the near term.
Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation. Selling, general, and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and income, which are recognized in the period in which the revisions are determined. Changes in estimated job profitability resulting from job performance, job conditions, contract penalty provisions, claims, change orders, and settlements, are accounted for as changes in estimates in the current period.
The asset, “Costs and estimated earnings in excess of billings on uncompleted contracts,” represents revenues recognized in excess of amounts billed. The liability, “Billings in excess of costs and estimated earnings on uncompleted contracts,” represents billings in excess of revenues recognized.
Income Taxes
The Company, with the consent of its shareholder, has elected to be taxed as an S Corporation under the provisions of the Internal Revenue Code. Instead of paying federal corporate income taxes, the shareholders of an S Corporation are taxed individually on their proportionate share of the Company’s taxable income.
F-8
ENERGY EDGE TECHNOLOGIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock-Based Compensation
As of December 31, 2009, the Company has not issued any stock-based payments to its employees. The Company uses the modified prospective method of accounting for stock-based compensation. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the estimated grant-date fair value.
Recent Accounting Pronouncements
In May 2009, the FASB issued SFAS 165 (ASC 855-10) entitled “Subsequent Events”. Companies are now required to disclose the date through which subsequent events have been evaluated by management. Public entities (as defined) must conduct the evaluation as of the date the financial statements are issued, and provide disclosure that such date was used for this evaluation. SFAS 165 (ASC 855-10) provides that financial statements are considered “issued” when they are widely distributed for general use and reliance in a form and format that complies with GAAP. SFAS 165 (ASC 855-10) is effective for interim and annual periods ending after June 15, 2009 and must be applied prospectively. The adoption of SFAS 165 (ASC 855-10) during the year ended December 31, 2009 did not have a significant effect on the Company’s financial statements as of that date. In connection with the preparation of the accompanying financial statements as of December 31, 2009, management evaluated subsequent events through the date that such financial statements were issued (filed with the SEC).
In June 2009, the FASB issued SFAS 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“GAAP”). (“SFAS 168” or ASC 105-10) SFAS 168 (ASC 105-10) establishes the Codification as the sole source of authoritative accounting principles recognized by the FASB to be applied by all nongovernmental entities in the preparation of financial statements in conformity with GAAP. SFAS 168 (ASC 105-10) was prospectively effective for financial statements issued for fiscal years ending on or after September 15, 2009 and interim periods within those fiscal years. The adoption of SFAS 168 (ASC 105-10) on July 1, 2009 did not impact the Company’s results of operations or financial condition. The Codification did not change GAAP, however, it did change the way GAAP is organized and presented.
As a result, these changes impact how companies reference GAAP in their financial statements and in their significant accounting policies. The Company implemented the Codification in this Report by providing references to the Codification topics alongside references to the corresponding standards.
With the exception of the pronouncements noted above, no other accounting standards or interpretations issued or recently adopted are expected to have a material impact on the Company’s financial position, operations or cash flows.
NOTE 3 – PROPERTY AND EQUIPMENT
The Company’s policy is to depreciate the cost of property and equipment over the estimated useful lives of the assets by use of the straight-line method. The Office Equipment presently owned by the Company is being depreciated over an estimated useful life of five years.
Depreciation expense for 2009 and 2008 was $383 and $173, respectively.
F-9
ENERGY EDGE TECHNOLOGIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009
NOTE 4 – STOCKHOLDER’S DEFICIT
The company has 1,500 no par value common shares authorized and issued.
As of December 31, 2009, the company has no warrants or options outstanding.
NOTE 5 – COMMITMENTS AND CONTINGENCIES
The Company neither owns nor leases any real property as of December 31, 2009. An officer has provided office services without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein.
NOTE 6 – SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) the Company has analyzed its operations subsequent to December 31, 2009 to the date these financial statements were issued.
On March 26, 2010, the Company amended its Articles of Incorporation to increase the number of authorized shares to 100,000,000, with a par value of $.00001.
F-10
ENERGY EDGE TECHNOLOGIES CORPORATION
BALANCE SHEET (UNAUDITED)
AS OF MARCH 31, 2010
|
ASSETS
|
March 31, 2010 (Unaudited)
|
|||
|
Current assets
|
||||
|
Cash and cash equivalents
|
$ | 43,002 | ||
|
Contract receivables
|
- | |||
|
Costs and estimated earnings in excess of billings on uncompleted contracts
|
- | |||
|
Total Current Assets
|
43,002 | |||
|
Property and equipment
|
||||
|
Computers and equipment
|
10,640 | |||
|
Less: accumulated depreciation
|
(958 | ) | ||
|
Total property and equipment (net)
|
9,682 | |||
|
Total Assets
|
$ | 52,684 | ||
|
LIABILITIES AND STOCKHOLDER’S DEFICIT
|
||||
|
Liabilities
|
||||
|
Current liabilities
|
||||
|
Accounts payable
|
$ | - | ||
|
Accrued expenses
|
28,431 | |||
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
54,156 | |||
|
Sales tax payable
|
15,082 | |||
|
Total Liabilities
|
97,669 | |||
|
Stockholder’s deficit
|
||||
|
Common stock, .00001 par value, 100,000,000 shares authorized, 1,500 shares issued and outstanding
|
1,500 | |||
|
Retained earnings (deficit)
|
(46,485 | ) | ||
|
Total Stockholder’s Deficit
|
(44,985 | ) | ||
|
Total Liabilities and Stockholder’s Deficit
|
$ | 52,684 | ||
The accompanying notes are an integral part of these financial statements.
F-11
ENERGY EDGE TECHNOLOGIES CORPORATION
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2010
|
Three months ended March 31, 2010 (Unaudited)
|
||||
|
CONTRACT REVENUES
|
$ | 311,459 | ||
|
CONTRACT COSTS
|
165,529 | |||
|
GROSS PROFIT
|
145,930 | |||
|
OPERATING EXPENSES
|
||||
|
Telemarketing services
|
3,737 | |||
|
Travel
|
1,829 | |||
|
General & administrative expenses
|
29,413 | |||
|
TOTAL OPERATING EXPENSES
|
34,979 | |||
|
INCOME FROM OPERATIONS
|
110,951 | |||
|
OTHER INCOME (EXPENSE)
|
||||
|
Interest expense
|
(1,076 | ) | ||
|
INCOME BEFORE PROVISION FOR INCOME TAXES
|
109,875 | |||
|
PROVISION FOR INCOME TAXES
|
- | |||
|
NET INCOME
|
$ | 109,875 | ||
The accompanying notes are an integral part of these financial statements.
F-12
ENERGY EDGE TECHNOLOGIES CORPORATION
STATEMENT OF STOCKHOLDER’S DEFICIT (UNAUDITED)
AS OF MARCH 31, 2010
|
Common Stock
|
Additional Paid in
|
Retained Earnings
|
Total Stockholder’s
|
|||||||||||||||||
|
Shares
|
Amount
|
Capital
|
(Deficit)
|
Deficit
|
||||||||||||||||
|
Balance, January 1, 2008
|
1,500 | $ | 1,500 | $ | 0 | $ | (87,996 | ) | $ | (86,496 | ) | |||||||||
|
Net income for the year ended December 31, 2008
|
- | - | - | 290,156 | 290,156 | |||||||||||||||
|
Shareholder distributions
|
- | - | - | (213,077 | ) | (213,077 | ) | |||||||||||||
|
Balance, December 31, 2008
|
1,500 | 1,500 | 0 | (10,917 | ) | (9,417 | ) | |||||||||||||
|
Net income for the year ended December 31, 2009
|
- | - | - | 204,266 | 204,266 | |||||||||||||||
|
Shareholder distributions
|
- | - | - | (238,121 | ) | (238,121 | ) | |||||||||||||
|
Balance, December 31, 2009
|
1,500 | 1,500 | 0 | (44,772 | ) | (43,272 | ) | |||||||||||||
|
Net income for the three months ended March 31, 2010
|
- | - | - | 109,875 | 109,875 | |||||||||||||||
|
Shareholder distributions
|
- | - | - | (111,588 | ) | (111,588 | ) | |||||||||||||
|
Balance, March 31, 2010
|
1,500 | $ | 1,500 | 0 | $ | (46,485 | ) | $ | (44,985 | ) | ||||||||||
The accompanying notes are an integral part of these financial statements.
F-13
ENERGY EDGE TECHNOLOGIES CORPORATION
STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2010
|
For the three months ended March 31, 2010 (Unaudited)
|
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||
|
Net income for the period
|
$ | 109,875 | ||
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||
|
Depreciation
|
402 | |||
|
Changes in assets and liabilities:
|
||||
|
Decrease in contracts receivable
|
210,460 | |||
|
Decrease in costs and estimated earnings in excess of billings on uncompleted contracts
|
9,554 | |||
|
(Decrease) in accounts payable
|
(16,485 | ) | ||
|
(Decrease) in billings in excess of costs and estimated earnings on uncompleted contracts
|
(152,715 | ) | ||
|
(Decrease) in accrued expenses
|
(3,095 | ) | ||
|
Cash flows provided by operating activities
|
157,996 | |||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||
|
Purchase of property and equipment
|
(7,950 | ) | ||
|
Cash flows used in investing activities
|
(7,950 | ) | ||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||
|
Distributions to shareholder
|
(111,588 | ) | ||
|
Cash flows used in financing activities
|
(111,588 | ) | ||
|
NET DECREASE IN CASH
|
38,458 | |||
|
Cash, beginning of the period
|
4,544 | |||
|
Cash, end of the period
|
$ | 43,002 | ||
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
||||
|
Interest paid
|
$ | 1,076 | ||
|
Income taxes paid
|
$ | 0 | ||
The accompanying notes are an integral part of these financial statements
F-14
ENERGY EDGE TECHNOLOGIES CORPORATION
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2010
NOTE 1 – NATURE OF OPERATIONS
Energy Edge Technologies Corporation (“Energy Edge” and the “Company”) was incorporated in New Jersey in January, 2004 and was in the development stage until January 1, 2008 when the assets, liabilities, and operations of a sole proprietorship controlled by the Company’s sold stockholder were transferred in. The Company provides energy engineering and services specializing in the development and implementation of advanced, turnkey projects to reduce energy losses and increase the efficiency of new and existing buildings. The Company is comprised of professional and industrial engineers, LEED Accredited Professionals, and Green Building Coalition Certifying Agents. Energy Edge is a Clean Energy Pay for Performance Partner and a Smart Start Building Trade Ally. The Company’s custom designed projects are developed using proprietary methods and maximize energy savings by treating an entire facility based on its unique features and electricity and gas usage.
The Company applies a whole facility approach to energy cost reduction by applying different technologies and engineering approaches to treat most of the various electrical and gas consuming loads across facility such as lighting, HVAC, refrigeration and production equipment. The energy projects developed and implemented by the Company are ideal for virtually any type of facility and have successfully resulted in tremendous savings in manufacturing plants, hospitals, entertainment venues, office buildings, restaurants, warehouses, etc.
Revenues come primarily from engineering survey work and turnkey energy projects where the company takes responsibility for equipment procurement, installation labor, utility rebates, tax incentives, pre and post survey work, waste removal, certifications, and ongoing measurement and verification of results.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form S-1 filed with the SEC as of and for the period ended December 31, 2009. In the opinion of management, all adjustments necessary in order for the financial statements to be not misleading have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results expected for the full year.
Basis of Accounting
Energy Edge uses the accrual basis of accounting for financial statement reporting. Accordingly, revenues are recognized when products are delivered and services are rendered, and expenses are recognized when the obligation is incurred. The Company recognizes revenues from contracts on the percentage-of-completion method, measured by the percentage of cost incurred to date to estimated total cost for each contract.
Financial Instruments
The Company's financial instruments consist of cash and cash equivalents, contract receivables, costs and estimated earnings in excess of billings on uncompleted contracts, property and equipment, accounts payable, billings in excess of costs and estimated earnings on uncompleted contracts, sales tax payable and accrued expenses. The carrying amounts of these financial instruments approximate fair value due either to length of maturity or interest rates that approximate prevailing rates unless otherwise disclosed in these financial statements.
F-15
ENERGY EDGE TECHNOLOGIES CORPORATION
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2010
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Contract Receivables
Contract receivables are recorded when invoices are issued and are presented in the balance sheet net of the allowance for doubtful accounts. Contract receivables are written off when they are determined to be uncollectible
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles of the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the year. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.
Concentrations of Credit Risk
The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.
In addition, the Company extends credit to customers in the normal course of business. The Company monitors the account receivable balances and does not expect significant collection problems.
Revenue Recognition
The Company recognizes revenues from contracts on the percentage-of-completion method, measured by the percentage of cost incurred to date to estimated total cost for each contract. That method is used because management considers total cost to be the best available measure of progress on contracts. Because of inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change within the near term.
Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation. Selling, general, and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and income, which are recognized in the period in which the revisions are determined. Changes in estimated job profitability resulting from job performance, job conditions, contract penalty provisions, claims, change orders, and settlements, are accounted for as changes in estimates in the current period.
The asset, “Costs and estimated earnings in excess of billings on uncompleted contracts,” represents revenues recognized in excess of amounts billed. The liability, “Billings in excess of costs and estimated earnings on uncompleted contracts,” represents billings in excess of revenues recognized.
Income Taxes
The Company, with the consent of its shareholder, has elected to be taxed as an S Corporation under the provisions of the Internal Revenue Code. Instead of paying federal corporate income taxes, the shareholders of an S Corporation are taxed individually on their proportionate share of the Company’s taxable income.
F-16
ENERGY EDGE TECHNOLOGIES CORPORATION
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2010
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock-Based Compensation
As of March 31, 2010, the Company has not issued any stock-based payments to its employees. The Company uses the modified prospective method of accounting for stock-based compensation. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the estimated grant-date fair value.
Recent Accounting Pronouncements
In May 2009, the FASB issued SFAS 165 (ASC 855-10) entitled “Subsequent Events”. Companies are now required to disclose the date through which subsequent events have been evaluated by management. Public entities (as defined) must conduct the evaluation as of the date the financial statements are issued, and provide disclosure that such date was used for this evaluation. SFAS 165 (ASC 855-10) provides that financial statements are considered “issued” when they are widely distributed for general use and reliance in a form and format that complies with GAAP. SFAS 165 (ASC 855-10) is effective for interim and annual periods ending after June 15, 2009 and must be applied prospectively. The adoption of SFAS 165 (ASC 855-10) during the year ended December 31, 2009 did not have a significant effect on the Company’s financial statements as of that date. In connection with the preparation of the accompanying financial statements as of December 31, 2009, management evaluated subsequent events through the date that such financial statements were issued (filed with the SEC).
In June 2009, the FASB issued SFAS 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“GAAP”). (“SFAS 168” or ASC 105-10) SFAS 168 (ASC 105-10) establishes the Codification as the sole source of authoritative accounting principles recognized by the FASB to be applied by all nongovernmental entities in the preparation of financial statements in conformity with GAAP. SFAS 168 (ASC 105-10) was prospectively effective for financial statements issued for fiscal years ending on or after September 15, 2009 and interim periods within those fiscal years. The adoption of SFAS 168 (ASC 105-10) on July 1, 2009 did not impact the Company’s results of operations or financial condition. The Codification did not change GAAP, however, it did change the way GAAP is organized and presented.
As a result, these changes impact how companies reference GAAP in their financial statements and in their significant accounting policies. The Company implemented the Codification in this Report by providing references to the Codification topics alongside references to the corresponding standards.
With the exception of the pronouncements noted above, no other accounting standards or interpretations issued or recently adopted are expected to have a material impact on the Company’s financial position, operations or cash flows.
NOTE 3 – PROPERTY AND EQUIPMENT
The Company’s policy is to depreciate the cost of property and equipment over the estimated useful lives of the assets by use of the straight-line method. The Computers and Equipment presently owned by the Company are being depreciated over estimated useful lives of five to seven years.
Depreciation expense for the three months ended March 31, 2010 was $402.
F-17
ENERGY EDGE TECHNOLOGIES CORPORATION
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2010
NOTE 4 – STOCKHOLDER’S DEFICIT
On March 26, 2010, the Company amended its Articles of Incorporation to increase the number of authorized shares to 100,000,000, with a par value of $.00001.
The company has issued 1,500 common shares as of March 31, 2010.
As of March 31, 2010, the company has no warrants or options outstanding.
NOTE 5 – COMMITMENTS AND CONTINGENCIES
The Company leases its office space on a month-to-month basis for approximately $300 per month.
NOTE 6 – SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) the Company has analyzed its operations subsequent to March 31, 2010:
In May, 2010, the Company issued 29,998,500 shares of common stock in exchange for services provided by the founder of the Company. The shares were valued at $300 based on a par value of $.00001 per share.
F-18
[10,000,000] SHARES OF COMMON STOCK
PROSPECTUS
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES WHETHER OR NOT PARTICIPATING IN THIS OFFERING MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
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Securities and Exchange Commission registration fee
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$
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376.74 | ||
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Transfer Agent Fees
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1,500
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|||
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Accounting fees and expenses
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21,468
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|||
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Princeton Corporate Solutions
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55,000
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|||
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Total
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$
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78,344.64
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All amounts are estimates other than the Commission’s registration fee. We are paying all expenses of the offering listed above.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The only statue, charter provision, by-law, contract, or other arrangement under which any controlling person, director or officers of the Registrant is insured or indemnified in any manner against any liability which he may incur in his capacity as such, is as follows:
New Jersey law provides that any corporation shall have the power to indemnify a corporate agent against his expenses and liabilities in connection with any proceeding involving the corporate agent if the agent acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation; and with respect to any criminal proceeding, such corporate agent had no reasonable cause to believe his conduct was unlawful.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
None.
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ITEM 16. EXHIBITS.
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Exhibit No.
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Description
|
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3.1
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Articles of Incorporation of the Company
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3.2
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Bylaws of the Company
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|
3.3
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Articles of Amendment of the Company
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5.1
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Opinion of Vincent & Rees, L.C.
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|
10.1
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Regus HQ Office Agreement
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|
10.2
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Sales Agreement between Precision Medical Products, Inc. and the Company
|
|
10.3
|
Yuengling Brewing Co. of Tampa, Inc. Purchase Order
|
|
10.4
|
Pepperidge Farm, Inc. Purchase Order
|
|
10.5
|
Lloyds of London Policy
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|
10.6
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Independent Reseller Agreement between HY_SAVE and the Company
|
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10.7
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Channel Partner Agreement between EnerNOC, Inc. and the Company
|
|
10.9
|
Glacial Energy Agreement
|
|
10.10
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eCube Independent Sales Rep Agreement
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|
10.11
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Victaulic Engineering PO
|
|
10.12
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Board Member Agreement – Robert Holdsworth
|
|
10.13
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Board Member Agreement – John J. Gerace, Ph.D
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|
10.14
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Board Member Agreement – Yin Hu
|
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10.15
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Board Member Agreement – Warren Fellus
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|
10.16
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Mangar Industries Invoice
|
|
10.17
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Form of Company Independent Contractor Agreement
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14.1
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Code of Ethics
|
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23.1
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Consent from Independent Auditor
|
37
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”).
(ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the change in volume and price represents no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
(iii) to include any additional or changed material information with respect to the plan of distribution.
(2) that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof.
(3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) that, for the purpose of determining liability under the Securities Act to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions of its Certificate of Incorporation, By-Laws, the General Corporation Law of the State of Nevada or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer of controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
38
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in__________, on the 28 day of June, 2010.
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Energy Edge Technologies Corporation
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||
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By:
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/s/ Robert Holdsworth
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|
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Robert Holdsworth
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||
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Chief Executive Officer and Chief Financial Officer
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||
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated
June 28, 2010
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/s/ Robert Holdsworth
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|||
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Robert Holdsworth
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|||
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President & Chief Executive Officer and Chief Financial Officer
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39