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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual Report Under Section 13 Or 15(d) Of The Securities Exchange
Act Of 1934
For the fiscal year ended December 31, 2010
[ ] Transition Report Under Section 13 Or 15(d) Of The Securities Exchange
Act Of 1934
For the transition period from ________ to ________
COMMISSION FILE NUMBER: 333-149857
GLOBAL NUTECH, INC.
(Name of small business issuer in its charter)
NEVADA 26-0338889
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5412 Bolsa Avenue, Suite D
Huntington Beach, CA 92649
(Address of principal executive offices) (Zip Code)
(714) 373-1930
(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act:
NONE.
Securities registered under Section 12(g) of the Exchange Act:
Shares of Common Stock, $0.00001 Par Value Per Share.
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
past 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes [X] No [ ]
Indicate by check mark whether by check mark whether the registrant has
submitted electronically and posted on its corporate Website, if any, every
Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months
or for such shorter period that the registrant was required to submit such
files). Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
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", an "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act."
Large accelerated filer [ ] Accelerated filed [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State issuer's revenues for its most recent fiscal year. $0
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant's most recently completed fiscal quarter.
$1,218,864, based on a price of $0.006 per share, being the closing price at
which the registrant's common stock traded on April 11, 2011.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date. As of April 11, 2011, the
Issuer had 514,287,619 Shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g. Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980). Not applicable.
GLOBAL NUTECH, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2010
INDEX
PAGE
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PART I
ITEM 1. Description of Business. 3
ITEM 1A. Risk Factors. 4
ITEM 1B. Unresolved Staff Comments. 7
ITEM 2. Properties. 7
ITEM 3. Legal Proceedings. 7
ITEM 4. (Removed and Reserved). 7
PART II
ITEM 5. Market for Common Equity and Related Stockholder Matters and
Issuer Purchases of Equity Securities. 7
ITEM 6. Selected Financial Data. 8
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations. 9
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk. 11
ITEM 8. Financial Statements and Supplementary Data. 11
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure. 26
ITEM 9A(T). Controls and Procedures. 26
ITEM 9B. Other Information. 28
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance 28
ITEM 11. Executive Compensation. 29
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters. 29
ITEM 13. Certain Relationships and Related Transactions, and Director
Independence. 31
ITEM 14. Principal and Accountant Fees and Services. 32
PART IV
ITEM 15. Exhibits, Financial Statement Schedules 32
SIGNATURES 34
2
PART I
Certain statements contained in this Annual Report on Form 10-K constitute
"forward-looking statements." These statements, identified by words such as
"plan," "anticipate," "believe," "estimate," "should," "expect," and similar
expressions include our expectations and objectives regarding our future
financial position, operating results and business strategy. These statements
reflect the current views of management with respect to future events and are
subject to risks, uncertainties and other factors that may cause our actual
results, performance or achievements, or industry results, to be materially
different from those described in the forward-looking statements. Such risks and
uncertainties include those set forth under the caption "Management's Discussion
and Analysis or Plan of Operation" and elsewhere in this Annual Report. We
advise you to carefully review the reports and documents we file from time to
time with the Securities and Exchange Commission (the "SEC"), particularly our
Quarterly Reports on Form 10-QSB and our Current Reports on Form 8-K.
As used in this Annual Report, the terms "we," "us," "our," "Global NuTech," and
the "Company" refer to Global NuTech, Inc., also formerly known as Bio-Clean,
Inc. and Nature of Beauty, Inc., unless otherwise indicated. All dollar amounts
in this Annual Report are expressed in U.S. dollars, unless otherwise indicated.
ITEM 1. DESCRIPTION OF BUSINESS.
CORPORATE BACKGROUND
The Company was incorporated as Nature of Beauty, Inc. under the laws of the
State of Nevada on May 22, 2007. The Company is in the development stage as
defined under Accounting Standards Codification (ASC) 915, Development Stage
Enterprises. Initially, the Company was engaged in the business of purchasing
and distributing all-natural and organic everyday skin care products from
Russia. In October 2009, the Company changed the focus of its business to
developing "green" products and technologies, including unique cleaning and
environmental remediation products and changed its name to Bio-Clean, Inc.
Subsequently, on October 8, 2010, the Company changed its name to Global NuTech,
Inc. We are currently operating with two different joint venture partners
whereby we provide the sales and marketing operations for the sale of various
products. One of the joint ventures is with Agrigenic Food Company of Huntington
Beach, California. The name of the Joint Venture is Enzyme Bio-Sciences LLC. The
products include a variety of dietary supplements for humans and animals (the
`BioTec products"). The other joint venture is with HIGA Corporation of Orem,
Utah. The products to be marketed include various custom rubber products for
commercial and consumer use, including specialized tires (the "HIGA Products").
SALES AND MARKETING STRATEGY
BioTec Products: We have currently engaged sales representatives as well as
independent distributors both in the United States and in foreign countries,
including Japan, Indonesia, Taiwan, Norway and South Korea, for the sale and
marketing of the Bio-Tec products. These products have been in the marketplace
for over 25 years, but sales efforts when dormant for a period of time, and we
are now selling them to a wide variety of retailers for resale to the consumer.
We also initiated a website as a direct to the consumer sales tool. The BioTec
products include three different lines.
The BIOTEC FOODS line of supplements includes the best selling antioxidant
enzymes Cell Guard(R), Anti-Stress Enzymes(R), Ageless Beauty(R), Extra-Energy
Enzymes(R), Runner's Edge(TM), Pacific Sea Plasma(R) and Jet Stress(R). Biotec
Foods' supplements are sold to consumers through thousands of independently
owned health food stores.
The BIOMED FOODS products are available through healthcare professionals only,
and include AOX/PLX(R), SOD/CAT(R), GP/CAT(R) MET/CAT(R) and Synovalex(R)
brands. Medical professionals including chiropractors, naturopaths, and other
health practitioners order Biomed Foods' products through our distribution
partner, Emerson Ecologics.
The BIOVET INTERNATIONAL line of animal supplements includes Dismutase(TM),
Feline Support(TM), Canine Support(TM) and the ANTIOXIDANT PETWAFER(TM).
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Our plan of operation for the twelve months following the date of this Annual
Report is to continue to engage sales reps and independent distributers for the
BioTec products and to market directly to consumers on our website,
www.ebs-labs.com.
HIGA Products: We are just initiating our sales and marketing efforts for the
HIGA Products with the first product having been developed and initial
production of the product having commenced in China. We anticipate that shortly
we will engage sales representatives as well as independent distributors both in
the United States and in foreign countries for the sale and marketing of the
HIGA products, using the same marketing model that we have developed for the
Bio-Tec products.
Our plan of operation for the twelve months following the date of this Annual
Report is to continue to engage sales reps and independent distributers for the
HIGA products.
SHARE OF MARKET
Our expected share of the this market is difficult to determine given the vast
number of manufacturers and sales outlets for dietary supplements, as well as
specialized rubber products, many of which are private entities that have no
duty to publicly disclose their revenue, and the market for both dietary
supplements and specialized rubber products is highly competitive. However, we
believe that due to the vast size of these market in North America and overseas,
our market share will likely be less than one percent. Furthermore, we will not
be dependent upon a few major customers for our business.
PATENTS AND TRADEMARKS
We do not own, either legally or beneficially, any patent or trademark nor do we
have pending patent or trademark applications; however, some of the products
that we distribute through our joint venture are subject to patents and/or
trademarks by the respective joint venture partners.
NEED FOR GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES
We do not believe that any government approval will be needed for any of the
products that we distribute through our joint venture agreements. The health
supplement products have not been approved by the FDA and have disclaimers to
that effect on the labeling.
COMPLIANCE WITH GOVERNMENT REGULATIONS
We do not believe that there are any government regulations applicable to our
intended business operations.
RESEARCH AND DEVELOPMENT EXPENSE
We have not incurred any research expenditures since our incorporation.
COSTS AND EFFECTS WITH COMPLIANCE WITH ENVIRONMENTAL LAWS
We do not believe that there will be any costs or effects in connection with the
Company's compliance with environmental laws.
EMPLOYEES
We have no employees other than our executive officers and contract labor.
ITEM 1A. RISK FACTORS.
Our business operations are subject to a number of risks and uncertainties,
including, but not limited to those set forth below:
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OUR INDEPENDENT AUDITOR'S REPORT STATES THAT THERE IS A SUBSTANTIAL DOUBT THAT
WE WILL BE ABLE TO CONTINUE AS A GOING CONCERN.
Our independent auditors, Accounting & Consulting Group LLP, specify in their
audit report that we are a development stage company, have incurred a net loss
and negative cash flows from operations for the current year, have a working
capital deficit, have incurred losses from operations since inception, may incur
further significant losses, have no sales, and are dependent on our ability to
raise capital from shareholders or advances or loans from related parties, and
there is a substantial doubt that we will be able to continue as a going
concern.
This qualification clearly highlights that we will, in all probability, continue
to incur expenses without significant revenues into the foreseeable future until
the products which we market pursuant to our joint venture arrangements gain
significant popularity. Our only source of funds to date has been the sale of
our common stock and loans. As we cannot provide any assurance that we will be
able to generate enough interest in our business or that we will be able to
generate any significant revenues or income, the identification of new sources
equity financing is significantly more difficult, and if we are successful in
closing any new financing, existing investors will experience substantially more
dilution. The ability to obtain debt financing is also severely impacted and
probably not feasible, as we do not have revenues or profits to pay interest or
principal.
WE HAVE NO OPERATING HISTORY AND HAVE MAINTAINED LOSSES SINCE INCEPTION, WHICH
WE EXPECT TO CONTINUE INTO THE FUTURE.
We were incorporated on May 22, 2007, and have very limited operations. We have
not realized any revenues to date. Our website, although operational, requires
additional work prior to us being able to generate revenue. We have no operating
history at all upon which an evaluation of our future success or failure can be
made. Our net loss from inception to December 31, 2010 is $1,445,792. Based upon
our proposed plans, we expect to incur operating losses in future periods. This
will happen because there are substantial costs and expenses associated with the
development, testing and marketing of our website. We currently believe we are
at least 6-12 months away from generating our first revenues. We may fail to
generate revenues in the future. If we cannot attract a significant number of
users, we will not be able to generate any significant revenues or income.
Failure to generate revenues will cause us to go out of business because we will
not have the money to pay our ongoing expenses.
In particular, additional capital may be required in the event that:
* the actual expenditures required to be made are at or above the higher
range of our estimated expenditures;
* we incur unexpected costs in completing the development of our product
or encounter any unexpected technical or other difficulties;
* we are unable to create a substantial market for the products that we
distribute directly, through market reps and our website; or
* we incur any significant unanticipated expenses.
The occurrence of any of the aforementioned events could adversely affect our
ability to meet our business plans and achieve a profitable level of operations.
IF OUR ESTIMATES RELATED TO EXPENDITURES ARE ERRONEOUS OUR BUSINESS WILL FAIL
AND YOU WILL LOSE YOUR ENTIRE INVESTMENT.
Our success is dependent in part upon the accuracy of our management's estimates
of expenditures, which are currently budgeted at $200,000 for the next 12
months. If such estimates are erroneous or inaccurate we may not be able to
carry out our business plan, which could, in a worst-case scenario, result in
the failure of our business and you losing your entire investment.
IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
5
Our current operating funds are less than necessary to fund our plan of
operations over the next 12 months, and therefore we will need to obtain
additional financing in order to complete our business plan. We currently do not
have any operations and we have no income. As well, we will not receive any
funds from this registration.
We will require additional financing to sustain our business operations if we
are not successful in earning revenues. We do not currently have any
arrangements for financing and may not be able to find such financing if
required.
ANY ADDITIONAL FUNDING WE DO ARRANGE THROUGH THE SALE OF OUR COMMON STOCK WILL
RESULT IN DILUTION TO EXISTING SHAREHOLDERS.
We must raise additional capital in order for our business plan to succeed. Our
most likely source of additional capital will be through the sale of additional
shares of common stock. Such stock issuances will cause stockholders' interests
in our company to be diluted. Such dilution will negatively affect the value of
an investor's shares.
BECAUSE OUR PRESIDENT HAS OTHER BUSINESS INTERESTS, HE MAY NOT BE ABLE OR
WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS OPERATIONS CAUSING
OUR BUSINESS TO FAIL.
Certain of our officers and directors, including our President, intend to devote
limited time to our operations. It is possible that the demands on our officers
and directors from their other obligations could increase with the result that
they would no longer be able to devote sufficient time to the management of our
business. In addition, they may not possess sufficient time for our business if
the demands of managing our business increase substantially beyond current
levels.
RISKS ASSOCIATED WITH OUR COMMON STOCK
TRADING ON THE OTC BULLETIN BOARD MAY BE VOLATILE AND SPORADIC, WHICH COULD
DEPRESS THE MARKET PRICE OF OUR COMMON STOCK AND MAKE IT DIFFICULT FOR OUR
STOCKHOLDERS TO RESELL THEIR SHARES.
Our common stock is quoted on the OTC Bulletin Board service of the Financial
Industry Regulatory Authority. Trading in stock quoted on the OTC Bulletin Board
is often thin and characterized by wide fluctuations in trading prices, due to
many factors that may have little to do with our operations or business
prospects. This volatility could depress the market price of our common stock
for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board
is not a stock exchange, and trading of securities on the OTC Bulletin Board is
often more sporadic than the trading of securities listed on a quotation system
like NASDAQ or a stock exchange like Amex. Accordingly, shareholders may have
difficulty reselling any of their shares.
OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S
PENNY STOCK REGULATIONS AND FINRA'S SALES PRACTICE REQUIREMENTS, WHICH MAY LIMIT
A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.
Our stock is a penny stock. The Securities and Exchange Commission has adopted
Rule 15g-9 which generally defines "penny stock" to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and "accredited investors". The term "accredited investor" refers
generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
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the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common stock.
In addition to the "penny stock" rules promulgated by the Securities and
Exchange Commission, the Financial Industry Regulatory Authority has adopted
rules that require that in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, the Financial Industry Regulatory Authority believes that there
is a high probability that speculative low-priced securities will not be
suitable for at least some customers. The Financial Industry Regulatory
Authority ' requirements make it more difficult for broker-dealers to recommend
that their customers buy our common stock, which may limit your ability to buy
and sell our stock.
OTHER RISKS
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 of such risk
factors before making an investment decision with respect to our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 2. PROPERTIES.
The Company does not own or lease any property except for a sublease for its
offices from a related party which constitutes 1850 square feet. The lease term
expires July 1, 2011 and the current amount of the sublease, which is
month-to-month, is $3,685 per month.
ITEM 3. LEGAL PROCEEDINGS.
We are not a party to any material legal proceedings and, to our knowledge, no
such proceedings are threatened or contemplated.
ITEM 4. (REMOVED AND RESERVED).
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
GENERAL
Our authorized capital stock consists of 1,500,000,000 shares, of which
1,400,000,000 are shares of common stock, with a par value of $0.00001 per
share, and 100,000,000 are shares of preferred stock, with a par value of
$0.00001 per share. As of April 14, 2011, there were 534,287,619 shares of our
common stock issued and outstanding which were held of record by 45
7
stockholders. As of the same date, there were 20,000 shares of Series C and no
shares of the Series A or Series B preferred stock issued and outstanding.
MARKET INFORMATION
Our shares of common stock commenced trading on the OTC Bulletin Board under the
symbol "BOCL" on May 21, 2008. Active trading in our common stock began on or
about October 16, 2009. The high and low bid price information for our common
stock is as follows:
Quarter ended March 31, 2010: High Bid: $0.167 Low Bid: $0.008
Quarter ended June 30, 2010: High Bid: $0.017 Low Bid: $0.005
Quarter ended September 30, 2010: High Bid: $0.012 Low Bid: $0.003
Quarter ended December 31, 2010: High Bid: $0.034 Low Bid: $0.006
Quotations provided by the OTC Bulletin Board reflect inter-dealer prices,
without retail mark-up, markdown or commission and may not represent actual
transactions.
DIVIDENDS
We have not declared any dividends on our common stock since our inception.
There are no dividend restrictions that limit our ability to pay dividends on
our common stock in our Articles of Incorporation or Bylaws. Our governing
statute, Chapter 78 of the Nevada Revised Statutes (the "NRS"), does provide
limitations on our ability to declare dividends. Section 78.288 of the NRS
prohibits us from declaring dividends where, after giving effect to the
distribution of the dividend:
(a) we would not be able to pay our debts as they become due in the usual
course of business; or
(b) our total assets would be less than the sum of our total liabilities
plus the amount that would be needed, if we were to be dissolved at
the time of distribution, to satisfy the preferential rights upon
dissolution of stockholders who may have preferential rights and whose
preferential rights are superior to those receiving the distribution
(except as otherwise specifically allowed by our Articles of
Incorporation).
RECENT SALES OF UNREGISTERED SECURITIES
On October 8, 2010, the Company issued to Enzyme Bio Sciences LLC 50,000,000
shares of its common stock valued at $325,000 for its 40% share of investment in
a joint venture. On November 30, 2010, the Company issued to HIGA Inc.
36,000,000 shares of its common stock valued at $252,000 for its 20% share of
investment. The shares were issued at a fair value on the date issuance pursuant
to the terms of joint venture agreements.
During November 30, 2010 and December 6, 2010, the Company issued 21,000,000
shares of its common stock valued at $630,000 to certain consultants and
business advisors for services. The common shares issued were valued at their
fair value on the date of issuances.
In all instances, the restricted shares were issued in reliance upon the
exemption under Section 4(1) of the Securities Act of 1933.
PURCHASES OF EQUITY SECURITIES
None.
ITEM 6. SELECTED FINANCIAL DATA.
Not Applicable.
8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with our audited
financial statements and the related notes that appear elsewhere in this Annual
Report. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to
those discussed below and elsewhere in this Annual Report, particularly in the
section entitled "Risk Factors". Our audited financial statements are prepared
in accordance with United States Generally Accepted Accounting Principles.
We are a development stage company and have not generated any revenue to date.
RESULTS OF OPERATIONS
We have incurred recurring losses to date. Our financial statements have been
prepared assuming that we will continue as a going concern and, accordingly, do
not include adjustments relating to the recoverability and realization of assets
and classification of liabilities that might be necessary should we be unable to
continue in operation.
We expect we will require additional capital to meet our long term operating
requirements. We expect to raise additional capital through, among other things,
the sale of equity or debt securities.
FISCAL YEAR ENDED DECEMBER 31, 2010 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
2009.
Our net loss for fiscal year ended December 31, 2010 was $1,360,257 compared to
a net loss of $47,118 during fiscal year ended December 31, 2009 (an increase of
$1,313,139, or 2,786.9%. During fiscal years ended December 31, 2010 and
December 31, 2009, we did not generate any revenue.
During fiscal year ended December 31, 2010, we incurred expenses of $1,360,257
compared to $47,118 incurred during fiscal year ended December 31, 2009 (an
increase of $1,313,139 or 2,786.9%). These expenses incurred during fiscal year
ended December 31, 2010 included: compensation to officers of $12,000 (2009:
$-0-); consulting fees of $653,904 (2009: $8,303); rent of $18,075 (2009: $438);
Accounting and audit fees of $31,932 (2009: $8,200); and legal and other
professional fees of $52,650 (2009: $10,000).
Expenses incurred during fiscal year ended December 31, 2010 compared to fiscal
year ended December 31, 2009 increased primarily due to the increased scale and
scope of business operations. General and administrative expenses generally
include corporate overhead, financial and administrative contracted services,
marketing, and consulting costs.
LIQUIDITY AND CAPITAL RESOURCES
FISCAL YEAR ENDED DECEMBER 31, 2010
As of the end of the fiscal year ended December 31, 2010, our current and total
assets were $989 and our total liabilities were $173,781. As at fiscal year
ended December 31, 2010, total liabilities were comprised of a $1,266 of accrued
expenses, an aggregate of $122,559 in advances from a related party and $49,956
in notes payable.
As of the end of the fiscal year ended December 31, 2009, our current and total
assets were $-0-. The increase in total assets during fiscal year ended December
31, 2010 from fiscal year ended December 31, 2009 was due to the increase in
cash and cash equivalents.
9
Stockholders' deficit increased from $31,535 for fiscal year ended December 31,
2009 to $172,792 for fiscal year ended December 31, 2009, a difference of
$141,257.
CASH FLOWS FROM OPERATING ACTIVITIES
We have not generated positive cash flows from operating activities. For fiscal
year ended December 31, 2010, net cash used in operating activities was $19,011
consisting primarily due to decrease in accrued expenses of $313 and increase in
advances from related party of $122,559. For fiscal year ended December 31,
2009, net cash used in operating activities was $15,783 due to increase in
accrued expenses of $1,579 and increase in advances from related party of
$29,756.
CASH FLOWS FROM INVESTING ACTIVITIES
We did not have cash flows from investing activities during either of the fiscal
years ended December 31, 2010 or December 31, 2009.
CASH FLOWS FROM FINANCING ACTIVITIES
We have financed our operations primarily from either advancements or the
issuance of equity and debt instruments. For fiscal year ended December 31,
2010, cash flows from financing activities consisted of $20,000 in notes payable
to a third party. In the fiscal year ended December 31, 2009 we had no cash
flows from financing activities
We expect that working capital requirements will continue to be funded through
further issuances of securities. Our working capital requirements are expected
to increase in line with the growth of our business.
PLAN OF OPERATION AND FUNDING
Existing working capital, further advances and debt instruments, and anticipated
cash flow are expected to be adequate to fund our operations over the next six
months. We have no lines of credit or other bank financing arrangements.
Generally, we have financed operations to date through the proceeds of the
private placement of equity. In connection with our business plan, management
anticipates additional increases in operating expenses and capital expenditures
relating to: (i) acquisition of inventory; and (ii) working capital. We intend
to finance these expenses with further issuances of securities, and debt
issuances. Thereafter, we expect we will need to raise additional capital and
generate revenues to meet long-term operating requirements. Additional issuances
of equity or convertible debt securities will result in dilution to our current
shareholders. Further, such securities might have rights, preferences or
privileges senior to our common stock. Additional financing may not be available
upon acceptable terms, or at all. If adequate funds are not available or are not
available on acceptable terms, we may not be able to take advantage of
prospective new business endeavors or opportunities, which could significantly
and materially restrict our business operations.
MATERIAL COMMITMENTS
As of the date of this Annual Report, we do not have any material commitments.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve
months.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Annual Report, we do not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors.
10
GOING CONCERN
The independent auditors' report accompanying our December 31, 2010 and December
31, 2009 financial statements contains an explanatory paragraph expressing
substantial doubt about our ability to continue as a going concern. The
financial statements have been prepared "assuming that we will continue as a
going concern," which contemplates that we will realize our assets and satisfy
our liabilities and commitments in the ordinary course of business.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS: PAGE
----
Audited financial statements as of December 31, 2010, including:
1. Reports of Independent Registered Public Accounting Firms; 12
2. Consolidated Balance Sheets as of December 31, 2010 and 2009; 13
3. Consolidated Statements of Operations for the years ended
December 31, 2010 and 2009 and for the period from inception on
May 22, 2007 to December 31, 2010; 14
4. Consolidated Statements of Cash Flows for the years ended
December 31, 2010 and 2009 and for the period from inception on
May 22, 2007 to December 31, 2010; 15
5. Consolidated Statement of Stockholders' Equity for the period from
inception on May 22, 2007 through December 31, 2010; and 16
6. Notes to the Consolidated Financial Statements. 17
11
SEALE AND BEERS, CPAs
PCAOB & CPAB REGISTERED AUDITORS
www.sealebeers.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Bio-Clean Inc., (fka Nature of Beauty Ltd.)
(A Development Stage Company)
We have audited the accompanying balance sheet of Bio-Clean Inc., (fka Nature of
Beauty Ltd.) (A Development Stage Company) as of December 31, 2009, and the
related statements of operations, stockholders' equity (deficit) and cash flows
for the year ended December 31, 2009 and since inception on May 22, 2007 through
December 31, 2009. 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 audits.
We conduct our audits in accordance with 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. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bio-Clean Inc., (fka Nature of
Beauty Ltd.) (A Development Stage Company) as of December 31, 2009, and the
related statements of operations, stockholders' equity (deficit) and cash flows
for the years ended December 31, 2009 and since inception on May 22, 2007
through December 31, 2009, in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2A to the
financial statements, the Company has had an accumulated deficit of $85,536, and
has earned no revenues since inception, which raises substantial doubt about its
ability to continue as a going concern. Management's plans concerning these
matters are also described in Note 2A. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Seale and Beers, CPAs
--------------------------------
Seale and Beers, CPAs
Las Vegas, Nevada
May 14, 2010
50 S. Jones Blvd. Suite 202 Las Vegas, NV 89107
Phone: (888)727-8251 Fax: (888)782-2351
12
To the Board of Directors and Stockholders of:
Global NuTech, Inc.
We have audited the accompanying consolidated balance sheet of Global NuTech,
Inc. and Subsidiary (the Company) at December 31, 2010, and the related
consolidated statements of operations, changes in stockholders' equity (deficit)
and cash flows for the year ended December 31, 2010 and since inception on May
22, 2007 through December 31, 2010. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Global NuTech, Inc.
and Subsidiary as of December 31, 2010, and the results of its operations and
its cash flows for the year ended December 31, 2010 and since inception on May
22, 2007 through December 31, 2010 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has a net loss and net cash used
in operating activities in 2010 of $1,360,257 and $19,011, respectively, and has
working capital deficit and an accumulated deficit of $152,792 and $1,445,792,
respectively at December 31, 2010. These matters raise substantial doubt about
the Company's ability to continue as a going concern. Management's Plan in
regards to these matters is also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Accounting and Consulting Group
--------------------------------------------
Accounting and Consulting Group
Albuquerque, NM
April 14, 2011
13
Global NuTech, Inc.
(Formerly Known as Bio-Clean, Inc.)
(A Development Stage Company)
BALANCE SHEETS
December 31, December 31,
2010 2009
---------- ----------
ASSETS
Current Assets
Cash and cash equivalents $ 989 $ --
---------- ----------
Total Current Assets 989 --
---------- ----------
Total Assets $ 989 $ --
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accrued expenses $ 1,266 $ 1,579
Advance from related parties 122,559 29,956
Note payable to related party - current portion 29,956 --
---------- ----------
Total Current Liabilities 153,781 31,535
---------- ----------
Note Payable 20,000 --
---------- ----------
Total Liabilities 173,781 31,535
---------- ----------
Stockholders' Deficit
Capital stock:
Preferred Stock, $0.00001 par value, 100,000,000 shares authorized:
Preferred Stock, Series A, $0.00001 par value, 5,000,000 shares
authorized; 0 shares issued and outstanding at December 31, 2010
and December 31, 2009, respectively -- --
Preferred Stock, Series B, $0.00001 par value, 250,000 shares
authorized; 0 shares issued and outstanding at December 31, 2010
and December 31, 2009, respectively -- --
Preferred Stock, Series C, $0.00001 par value, 80,000 shares
authorized; 20,000 shares issued and outstanding at December 31, 2010
and 0 shares at December 31, 2009, respectively -- --
Common Stock, $0.00001 par value, 1,400,000,000 shares authorized;
188,810,000 and 81,810,000 shares issued and Outstanding at
December 31, 2010 and December 31, 2009, respectively 1,889 819
Additional Paid in Capital 1,271,111 53,181
Deficit accumulated during the development stage (1,445,792) (85,535)
---------- ----------
Total Stockholders' Deficit (172,792) (31,535)
---------- ----------
Total Liabilities and Stockholders' Deficit $ 989 $ --
========== ==========
The accompanying notes are an integral part of these audited
financial statements.
14
Global NuTech, Inc.
(Formerly Known as Bio-Clean, Inc.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cummulative From
For The Year For The Year May 22, 2007
Ended Ended (Inception) to
December 31, December 31, December 31,
2010 2009 2010
------------ ------------ ------------
Revenues $ -- $ -- $ --
------------ ------------ ------------
Operating Expenses
General and administrative 769,990 47,118 855,525
Compensation to officer for services 12,000 -- 12,000
------------ ------------ ------------
Total Operating Expenses 781,990 47,118 867,525
Other (Income) Expenses:
Interest expense 467 -- 467
Impairment of investment in joint ventures 577,000 -- 577,000
------------ ------------ ------------
577,467 -- 577,467
------------ ------------ ------------
Loss from operations before income taxes (1,359,457) (47,118) (1,444,992)
Provision for income taxes 800 -- 800
------------ ------------ ------------
Net Loss $ (1,360,257) $ (47,118) $ (1,445,792)
============ ============ ============
Net loss per share - basic and diluted $ (0.01) $ (0.00)
============ ============
Weighted average number of common
shares outstanding 98,103,151 81,810,000
============ ============
The accompanying notes are an integral part of these audited
financial statements.
15
Global NuTech, Inc.
(Formerly Known as Bio-Clean, Inc.)
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
For the periods from May 22, 2007 (Inception) to December 31, 2010
Series C Accumulated
Common Stock Preferred Shares Deficit
------------------ ---------------- Additional During
Number of Par Number of Par Paid in Development
Shares Value Shares Value Capital Stage Total
------ ----- ------ ----- ------- ----- -----
Balance, May 22, 2007 -- $ -- -- $ -- $ -- $ -- $ --
Shares issued for cash - July 2007 45,000,000 450 -- -- 4,550 -- 5,000
Shares issued for cash - August 2007 36,000,000 360 -- -- 39,640 -- 40,000
Shares issued for cash - December 2007 810,000 9 -- -- 8,991 -- 9,000
Net loss -- -- -- -- -- (10,568) (10,568)
----------- ------ ------ ---- ---------- ----------- -----------
Balance - December 31, 2007 81,810,000 819 -- -- 53,181 (10,568) 43,432
Net Loss -- -- -- -- -- (27,849) (27,849)
----------- ------ ------ ---- ---------- ----------- -----------
Balance - December 31, 2008 81,810,000 819 -- -- 53,181 (38,417) 15,583
Net loss for the year -- -- -- -- -- (47,118) (47,118)
----------- ------ ------ ---- ---------- ----------- -----------
Balance - December 31, 2009 81,810,000 819 -- -- 53,181 (85,535) (31,535)
Shares issued to officer for services -- -- 20,000 -- 12,000 -- 12,000
Shares issued for investment in joint ventures 86,000,000 860 -- -- 576,140 -- 577,000
Shares issued to consultants for services 21,000,000 210 -- -- 629,790 -- 630,000
Net loss for the year -- -- -- -- -- (1,360,257) (1,360,257)
----------- ------ ------ ---- ---------- ----------- -----------
Balance - December 31, 2010 188,810,000 $1,889 20,000 $ -- $1,271,111 $(1,445,792) $ (172,792)
=========== ====== ====== ==== ========== =========== ===========
----------
* In September 2009, the Company had a 9:1 forward stock split which is
retroactively stated.
The accompanying notes are an integral part of these audited
financial statements.
16
Global NuTech, Inc.
(Formerly Known as Bio-Clean, Inc.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cummulative From
May 22, 2007
(Inception) to
For The Years Ended December 31, December 31,
2010 2009 2010
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Reconciliation of net loss to net cash
used in operating activities:
Net loss $(1,360,257) $ (47,118) $(1,445,792)
Issuance of stock to officer for services 12,000 -- 12,000
Impairment of stock issued for joint ventures 577,000 -- 577,000
Issuance of stock to consultants for services 630,000 -- 630,000
(Increase) decrease in current assets and liabilities:
Increase (decrease) in accrued expenses (313) 1,579 1,267
Increase in advances from related party 122,559 29,756 152,514
----------- ----------- -----------
Net cash used in operating activities (19,011) (15,783) (73,011)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES -- -- --
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from notes payable 20,000 -- 20,000
Cash proceeds from sale of common stock -- -- 54,000
----------- ----------- -----------
Net cash provided by financing activities 20,000 -- 74,000
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents 989 (15,783) 990
Cash and cash equivalents - beginning of the period -- 15,783 --
----------- ----------- -----------
Cash and cash equivalents - end of the period $ 989 $ -- $ 990
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest $ -- $ -- $ --
=========== =========== ===========
Income taxes $ -- $ -- $ --
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE ON NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Conversion of debt to Note Payable $ 29,756 $ -- $ 29,756
=========== =========== ===========
The accompanying notes are an integral part of these audited
financial statements.
17
GLOBAL NUTECH, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2010
1. ORGANIZATION AND BUSINESS OPERATIONS
Global NuTech, Inc., formerly Bio-Clean, Inc., ("the Company") was incorporated
under the laws of the State of Nevada, U.S. on May 22, 2007. In September 2010,
the Company changed its name to Global NuTech, Inc. In September 2009, the
Company effectuated a nine for one forward stock split of its common stock. The
Company is in the development stage as defined under Development Stage
Enterprises (ASC 915) and its efforts are primarily devoted in marketing and
distributing beauty products to North American market. The Company has not
generated any revenue to date and consequently its operations are subject to all
risks inherent in the establishment of a new business enterprise. For the period
from inception, May 22, 2007 through December 31, 2010, the Company has
accumulated losses of $1,445,792.
On September 15, 2010, the Company acquired 100% ownership interest in E-Clean
Acquisitions Corporation ("EAC"), a Nevada corporation for an investment of
$100. The purpose of acquisition of EAC was for this wholly-owned entity to
acquire other entities or enter into joint venture business partnerships.
The Company's consolidated financial statements are prepared using the accrual
method of accounting and have been prepared in accordance with generally
accepted accounting principles in the United States of America. The financial
statements have been prepared on a going concern basis which assumes the Company
will be able to realize its assets and discharge its liabilities in the normal
course of business for the foreseeable future. The Company has incurred losses
since inception resulting in an accumulated deficit of $1,445,792 as of December
31, 2010 and further losses are anticipated in the development of its business
raising substantial doubt about the Company's ability to continue as a going
concern. The ability to continue as a going concern is dependent upon the
Company generating profitable operations in the future and/or to obtain the
necessary financing to meet its obligations and repay its liabilities arising
from normal business operations when they come due. Management intends to
finance operating costs over the next twelve months with loans from related
parties and or private placement of common stock.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Global NuTech,
Inc. and its wholly-owned subsidiary E-Clean Acquisitions Corporation. All
material intercompany transactions have been eliminated in the consolidation.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America 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 reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three
months or less at the time of issuance to be cash equivalents.
Foreign Currency Translation
The Company's functional currency and its reporting currency is the United
States dollar.
18
Fair Value of Financial Instruments and fair Value Measurements
ASC 820, FAIR VALUE MEASUREMENTS AND DISCLOSURES, requires an entity to maximize
the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. ASC 820 establishes a fair value hierarchy based on the
level of independent, objective evidence surrounding the inputs used to measure
fair value. A financial instrument's categorization within the fair value
hierarchy is based upon the lowest level of input that is significant to the
fair value measurement. ASC 820 prioritizes the inputs into three levels that
may be used to measure fair value:
LEVEL 1
Level 1 applies to assets or liabilities for which there are quoted prices in
active markets for identical assets or liabilities.
LEVEL 2
Level 2 applies to assets or liabilities for which there are inputs other than
quoted prices that are observable for the asset or liability such as quoted
prices for similar assets or liabilities in active markets; quoted prices for
identical assets or liabilities in markets with insufficient volume or
infrequent transactions (less active markets); or model-derived valuations in
which significant inputs are observable or can be derived principally from, or
corroborated by, observable market data.
LEVEL 3
Level 3 applies to assets or liabilities for which there are unobservable inputs
to the valuation methodology that are significant to the measurement of the fair
value of the assets or liabilities.
The Company's financial instruments consist principally of cash, accounts
receivable, accounts payable and amounts due to related parties. Pursuant to ASC
820, FAIR VALUE MEASUREMENTS AND DISCLOSURES and ASC 825, FINANCIAL INSTRUMENTS,
the fair value of our cash equivalents is determined based on "Level 1" inputs,
which consist of quoted prices in active markets for identical assets. The
Company believes that the recorded values of all of the other financial
instruments approximate their current fair values because of their nature and
respective maturity dates or durations.
Stock-based Compensation
In accordance with ASC 718, COMPENSATION - STOCK COMPENSATION, the Company
accounts for share-based payments using the fair value method. All transactions
in which goods or services are the consideration received for the issuance of
equity instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instrument issued,
whichever is more reliably measurable. To date, the Company has not adopted a
stock option plan and has not granted any stock options.
Income Taxes
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109 (ASC 740), Accounting for Income Taxes. A deferred
tax asset or liability is recorded for all temporary differences between
financial and tax reporting and net operating loss carry-forwards. Deferred tax
expense (benefit) results from the net change during the year of deferred tax
assets and liabilities. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion
of all of the deferred tax assets will be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.
Basic and Diluted Net Loss per Share
In February 1997, the FASB issued ASC 260, "Earnings Per Share", which specifies
the computation, presentation and disclosure requirements for earnings (loss)
per share for entities with publicly held common stock. ASC 260 supersedes the
provisions of APB No. 15, and requires the presentation of basic earnings (loss)
per share and diluted earnings (loss) per share. The Company has adopted the
provisions of ASC 260 effective May 22, 2007 (inception date).
19
Basic net loss per share amount is computed by dividing the net loss by the
weighted average number of common shares outstanding. Diluted earnings per share
are the same as basic earnings per share because diluted earnings per share
gives effect to all potentially dilutive common shares outstanding during the
period. Diluted earnings per share excludes all potentially dilutive shares
since their effect is anti-dilutive.
Fiscal Periods
The Company's fiscal year end is December 31.
Comprehensive Loss
ASC 220, COMPREHENSIVE INCOME, establishes standards for the reporting and
display of comprehensive income (loss) and its components in the consolidated
financial statements. As at December 31, 2010 and 2009, the Company has no items
that represent a comprehensive income (loss) and, therefore, has not included a
schedule of comprehensive income (loss) in the consolidated financial
statements.
Recent Accounting Pronouncements
We have reviewed all the recent accounting pronouncements through ASU 2010-19
and do not believe any of these pronouncements will have a material impact on
the Company.
3. INVESTMENT IN SUBSIDIARY
On September 15, 2010, the Company acquired 100% ownership interest in EClean
Acquisition Corporation (EAC) from an officer of the Company for a consideration
of $100. EAC had no assets, no liabilities and accumulated loss of $100.
4. INVESTMENT IN JOINT VENTURES AND IMPAIRMENT
On September 29, 2010, the Company's wholly-owned subsidiary EAC entered into an
agreement to invest in a Joint Venture ("JV") with Robert Kavanaugh d/b/a Biotec
Foods, a/k/a Agrigenic Food Company ("Agrigenic"). Both the parties mutually
agreed to amend the closing date of the JV to October 8, 2010. Under the terms
of the JV, EAC will provide marketing, distribution and sales for Agrigenic,
including its lines of dietary supplements for humans and animals for a period
of ten years. Pursuant to the terms of the JV, net profits will be divided 60%
to Agrigenic and 40% to EAC. On October 8, 2010, the Company issued 50,000,000
shares of its restricted common stock valued at $325,000 pursuant to Rule 144
restrictions of the Security Exchange Act of 1933, for EAC's 40% share of
investment in the JV. At December 31, 2010, the Company recorded an impairment
of $325,000 in the accompanying financial statements for its investment in the
JV as the business activities in the JV have not started and both parties do not
know when the JV is expected to start their business operations.
On October 31, 2010, the Company's wholly owned subsidiary EAC entered into a
Joint Venture Agreement with HIGA Corporation ("HIGA") for a ten year term.
Under the Joint Venture Agreement, the Company will provide marketing,
distribution and sales for HIGA, including various rubber products, both generic
in design and custom designed for specific product specifications. Net profits
of the Joint Venture will be divided 80% to HIGA and 20% to the Company. On
November 30, 2010, the Company issued 36,000,000 shares of its restricted common
stock valued at $252,000 for EAC's 20% investment in the Joint Venture as
provided for in the Joint Venture Agreement. At December 31, 2010, the Company
has recorded an impairment of $252,000 in the accompanying financial statements
since the business activities of the joint venture have not started.
20
5. INCOME TAXES
Income tax expense for the years ended December 31, 2010 and 2009 is summarized
as follows:
December 31, December 31,
2010 2009
-------- --------
Current:
Federal $ -- $ --
State 800 800
Deferred taxes -- --
-------- --------
Income tax expense (benefit) $ 800 $ 800
======== ========
The following is a reconciliation of the provision for income taxes at the U.S.
federal income tax rate to the income taxes reflected in the Statements of
Operations:
December 31, December 31,
2010 2009
-------- --------
Tax expense (credit) at statutory rate - federal (34%) (34%)
State tax expense net of federal tax (6%) (6%)
Valuation allowance 40% 40%
-------- --------
Tax expense at actual rate -- --
======== ========
The tax effects of temporary differences that gave rise to significant portions
of deferred tax assets and liabilities at December 31, 2010 and 2009 are as
follows:
December 31, December 31,
2010 2009
-------- --------
Deferred tax assets:
Net operating loss carry forward $ 491,297 $ 29,082
--------- ---------
Total gross deferred tax assets 491,297 29,082
Less - valuation allowance (491,297) (29,082)
--------- ---------
Net deferred tax assets $ -- $ --
========= =========
Deferred income taxes are provided for the tax effects of transactions reported
in the consolidated financial statements and consist of deferred taxes related
primarily to differences between the bases of certain assets and liabilities for
financial and tax reporting. The deferred taxes represent the future tax return
consequences of those differences, which will either be deductible or taxable
when the assets and liabilities are recovered or settled.
The Company's provision for income taxes differs from applying the statutory
U.S. Federal income tax rate to income before income taxes. The primary
differences result from deducting certain expenses for financial statement
purposes but not for federal income tax purposes.
At December 31, 2010, the Company had net operating loss carryforwards of
$546,503 for U.S. federal income tax purposes available to offset future taxable
income expiring on various dates through 2030. The Company has recorded a 100%
valuation allowance on the deferred tax assets due to the uncertainty of its
realization. The net change in the valuation allowance during the years ended
December 31, 2010 and 2009 was an increase of $462,215 and $16,020,
respectively.
21
In the normal course of business, the Company's income tax returns are subject
to examination by various taxing authorities. Such examinations may result in
future tax and interest assessment by these taxing authorities. Accordingly, the
Company believes that it is more likely than not that it will realize the
benefits of tax positions it has taken in its tax returns or for the amount of
any tax benefit that exceeds the cumulative probability threshold in accordance
with FASB ASC 740-10-15. Differences between the estimated and actual amounts
determined upon ultimate resolution, individually or in the aggregate, are not
expected to have a material adverse effect on the company's financial position.
The Company is not under examination for any open tax years.
The Company has not filed Federal or State income tax returns for the years
ended December 31, 2007 through December 31, 2010. The Company is subject to
examination by taxing authorities for the years 2007 through 2010.
6. RELATED PARTY TRANSACTONS
A related party paid Company's obligations to vendors amounting to $152,515 to
fund its operations as of December 31, 2010. Advances from related parties of
$122,559 and $29,956, are due on demand, non-interest bearing and unsecured, and
are recorded as a current liability in the accompanying financial statements as
of December 31, 2010 and 2009, respectively.
On September 15, 2010, the Company acquired 100% of ownership interest in EAC
from an officer of the Company for $100. The Company has recorded $100 as
payable to related party in the accompanying financial statements as of December
31, 2010.
On September 15, 2010, the Company issued 20,000 shares of preferred stock
Series C, $0.00001 par value, valued at $12,000, to an officer of the Company
for services performed. The shares were valued at the fair value on the date of
issuance. These preferred shares shall be entitled to convert into 2,000,000
shares of common stock fully-paid and non-assessable shares at any time. The
officer shall have super voting rights and for voting purposes, each Series C
preferred share issued shall be counted as 10,000 shares of common stock per one
(1) share of Series C preferred stock.
On November 22, 2010, the Company issued a promissory note in exchange of loans
made by a related party amounting to $29,756 as of December 31, 2009. The terms
and provisions of the promissory note allowed for the related party to demand
payment of this note, in its sole discretion, in the form of cash or shares of
common stock of the Company to cancel all or part of the principal amount of the
note. Upon the related party's election to receive payments on the note in the
form of shares of Company's common stock, the number of shares called for to be
issued at any one time is to be determined by dividing the unpaid principal
balance and accrued interest thereon, of the outstanding indebtedness, by a
factor of $0.0003, subject to a limitation that at no time will this provision
result in any holder of this note being issued or holding more than 4.99% of the
total number of shares of the Company's common stock which shall be issued and
outstanding at the time of such conversion and exchanges. The principal balance
of the promissory note payable at December 31, 2010 was $29,956. The Company
recorded an accrued interest payable on the promissory note amounting to $318 as
of December 31, 2010.
22
The Company sub-leases its office facilities under a non-cancellable lease from
a related party starting January 1, 2010. The sub-lease term expires on July 1,
2011. Monthly rent of the sub-lease was $780 per month for the nine months ended
September 30, 2010. Monthly rent of the increased to $3,685 per month starting
October 1, 2010 due to the Company sub-leasing additional office space from the
related party. Rent expense recorded in the accompanying financial statements
for the year ended December 31, 2010 and 2009 amounted to $18,075 and $438,
respectively. Future minimum sub-lease of rent payment commitment for the year
ended December 31, 2011 amounted to $22,110.
7. CONVERTIBLE NOTES PAYABLE
On November 2, 2010, the Company executed a convertible promissory note for
$10,000 with 8% interest per annum, payable quarterly after the first year, such
principal and interest all due and payable at the end of three (3) years from
date hereof. The Company granted the Holder full recourse. The option granted by
the Company to Holder, as additional consideration for said value received, is
that the repayment for funds provided by Holder shall, at the sole election of
Holder, be made in whole or in part at any time at Holder's discretion, in the
form of shares of common stock of the Company in lieu of cash payments due;
restricted under SEC Rule 144, but granting the Holder piggy back registration
rights to have the Company include such shares for resale on any future
registration of common stock of the Company, including but not limited to
Regulation A. Upon election and notification by Holder, the Company shall cancel
principal and interest payments due and convert such amounts to common
restricted shares of Holder at a set conversion price; such conversion price for
cancellation of amounts of payment for principal and interest due as described
hereunder is set at a price per share reflecting a 20% discount from the average
closing bid price for trading of such common shares for the previous ten
business day period; however, at no time will this provision result in Holder
being issued or holding more than a limit of 5% of the Company's issued and
outstanding total common shares at the time of such conversions. The Company
recorded an interest expense of $130 for the year ended December 31, 2010. The
principal balance outstanding on the convertible note payable at December 31,
2010 was $10,000.
On December 22, 2010, the Company executed a convertible promissory note for
$10,000 with 8% interest per annum, payable quarterly after the first year, such
principal and interest all due and payable at the end of three (3) years from
date hereof. The Company granted the Holder full recourse. This option granted
by the Company to Holder, as additional consideration for said value received,
is that the repayment for funds provided by Holder shall, at the sole election
of Holder, be made in whole or in part at any time at Holder's discretion, in
the form of shares of common stock of the Company in lieu of cash payments due;
restricted under SEC Rule 144, but granting the Holder piggy back registration
rights to have the Company include such shares for resale on any future
registration of common stock of the Company, including but not limited to
Regulation A. Upon election and notification by Holder, the Company shall cancel
principal and interest payments due and convert such amounts to common
restricted shares of Holder at a set conversion price; such conversion price for
cancellation of amounts of payment for principal and interest due as described
hereunder is set at a price per share reflecting a 20% discount from the average
closing bid price for trading of such common shares for the previous ten
business day period; however, at no time will this provision result in Holder
being issued or holding more than a limit of 5% of the Company's issued and
outstanding total common shares at the time of such conversions. The Company
recorded an interest expense of $18 for the year ended December 31, 2010. The
principal balance outstanding on the convertible note payable at December 31,
2010 was $10,000.
8. COMMITMENTS AND CONTINGENCIES
A securities lawyer claims that the prior control group of the Company
contracted with him on behalf of the Company to perform securities legal work
during the year ended December 31, 2009. The attorney claims he was paid $15,000
and is still owed $3,000. However, the attorney has not provided the new control
group with a contract obligating the Company to pay. Accordingly, neither the
$18,000 of expense, nor the $3,000 in liability, has been reflected in the
Company's financial statements as of December 31, 2010 and 2009, respectively.
22
9. STOCKHOLDERS' EQUITY
At December 31, 2010, the authorized capital of the Company consists of (a)
100,000,000 preferred shares with a par value of $0.00001 per share, of which
5,000,000 shares are designated as Series A preferred shares with a par value of
$0.00001; 250,000 shares are designated as Series B preferred shares with a par
value of $0.00001; and 80,000 shares are designated as Series C preferred shares
with a par value of $0.00001, and (b) 1,400,000,000 common shares with a par
value of $0.00001 per share.
On October 8, 2010, the Company amended its Articles of Incorporation to
increase its authorized capital for a total of One Billion Five Hundred Million
(1,500,000,000) shares, One Billion Four Hundred Million (1,400,000,000) shares
of which are of common stock, $0.00001 par value per share, and One Hundred
Million (100,000,000) shares of preferred stock, $0.00001 par value, with Five
Million (5,000,000) shares of preferred stock having previously been designated
as Series A, Two Hundred Fifty Thousand (250,000) shares of preferred stock
having previously been designated as Series B and Eighty Thousand (80,000)
shares of preferred stock previously designated as Series C.
Common Stock
In July 2007, the Company issued 45,000,000 shares of common stock at a price of
$0.0001 per share for total cash proceeds of $5,000. In August 2007, the Company
issued 36,000,000 shares of common stock at a price of $0.001 per share for
total cash proceeds of $40,000. In December 2007, the Company also issued
810,000 shares of common stock at a price of $0.010 per share for total cash
proceeds of $9,000. During the period May 22, 2007 (inception) to December 31,
2007, the Company sold a total of 81,810,000 shares of common stock for total
cash proceeds of $54,000.
On March 29, 2010, the Company filed with the Nevada Secretary of State a
Certificate of Designations designating 5,000,000 shares of Series A Preferred
Stock, $0.00001 par value per share. Each share is convertible at any time into
$1.00 of Common Stock of the Company, has a liquidation value of $1.00 per
share, is not entitled to any dividends and has no voting rights other than
those prescribed the laws of the State of Nevada.
On March 29, 2010, the Company filed with the Nevada Secretary of State a
Certificate of Designations designating 250,000 shares of Series B Preferred
Stock, $0.00001 par value per share. Each share is convertible at any time into
$1.00 of Common Stock of the Company, has a liquidation value of $1.00 per
share, is not entitled to any dividends and has no voting rights other than
those prescribed the laws of the State of Nevada.
On March 29, 2010, the Company filed with the Nevada Secretary of State a
Certificate of Designations designating 80,000 shares of Series C Preferred
Stock, $0.00001 par value per share. Each share is convertible into 100 shares
of Common Stock of the Company, has liquidation rights equal to those of the
Company's common shares on an "as converted" basis, is not entitled to any
dividends and has voting rights which shall be counted on an "as converted"
basis times 100.
On October 8, 2010, the Company issued to Enzyme Bio Sciences LLC 50,000,000
shares of its common stock valued at $325,000 for its 40% share of investment in
a joint venture. On November 30, 2010, the Company issued to HIGA Inc.
36,000,000 shares of its common stock valued at $252,000 for its 20% share of
investment. The shares were issued at a fair value on the date issuance pursuant
to the terms of joint venture agreements.
During November 30, 2010 and December 6, 2010, the Company issued 21,000,000
shares of its common stock valued at $630,000 to certain consultants and
business advisors for services. The common shares issued were valued at their
fair value on the date of issuances.
In September 2009, the Company forward-split its common shares 9 for 1. As of
December 31, 2010 and 2009, the Company had 188,810,000 and 81,810,000 shares of
common stock outstanding taking into effect of the forward-split of its common
shares 9 for 1.
Preferred Stock Series C
The Company's Articles of Incorporation authorize the issuance of 80,000 shares
of $0.00001 par value Class C Preferred Stock. Under the Company's Articles, the
Board of Directors has the power, without further action by the holders of the
23
Common Stock, to designate the relative rights and preferences of the preferred
stock, and issue the preferred stock in such one or more series as designated by
the Board of Directors. The designation of rights and preferences could include
preferences as to liquidation, redemption and conversion rights, voting rights,
dividends or other preferences, any of which may be dilutive of the interest of
the holders of the Common Stock or the Preferred Stock of any other series. The
issuance of Preferred Stock may have the effect of delaying or preventing a
change in control of the Company without further shareholder action and may
adversely affect the rights and powers, including voting rights, of the holders
of Common Stock. In certain circumstances, the issuance of preferred stock could
depress the market price of the Common Stock.
The Series C preferred shares shall not be entitled to receipt of any dividend
and the Company's board of directors shall not declare any dividends in respect
of the Series C preferred shares. The holders of Series C preferred shares shall
be entitled to convert each whole number of Series C preferred share into 100
shares of common stock issuable upon conversion. The holders of Series C
preferred shares and the holders of common stock shall vote together and not as
separate classes. For voting purposes, each Series C preferred share shall be
counted as 10,000 shares of common stock per one (1) share of Series C preferred
stock. For the purposes of calculating the number of shares to be voted and only
for such purpose, the Series C preferred shares shall be deemed not to be
subject to any reverse split of the common stock of the Company. In the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Company, the holders of Series C preferred shares shall have liquidation
preference equal to that of the holders of common stock of the Company, and each
Series C preferred share shall be counted as 10,000 shares of common stock per
one (1) share of Series C preferred share. All shares of Series C preferred
stock shall be junior rank to all shares of Series A and Series B preferred
shares in respect to all preferences as to distributions and payments upon the
liquidation, dissolution and winding up of the Company.
The Company shall not effectuate any conversion of any Series C preferred share
and no holder of any Series C preferred share shall have the right to convert
and Series C preferred share to the extent that after giving effect to such
conversion such person (together with such person's affiliates) (a) would
beneficially own in excess of 4.9% of the outstanding shares of the common stock
following such conversion and (B) would have acquired, through conversion of any
Series C preferred share or otherwise (including without limitation, exercise of
any warrant), in excess of 4.9% of the outstanding shares of the common stock
following such conversion.
On September 15, 2010, the Company issued 20,000 shares of preferred stock
Series C, $0.00001 par value, valued at $12,000, to an officer of the Company
for services performed. These preferred shares shall be entitled to convert into
2,000,000 shares of common stock fully-paid and non-assessable shares at any
time. The officer shall have super voting rights and for voting purposes, each
Series C preferred share issued shall be counted as 10,000 shares of common
stock per one (1) share of Series C preferred stock.
10. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through April 14, 2011, the date
which the financial statements were available to be issued.
On January 19, 2011, the Company formed a new wholly-owned subsidiary, NuTec
Energy Corporation. The subsidiary will invest in operating and exploratory oil
and gas properties. On February 8, 2011, NuTech Energy, Inc., has reached an
agreement, in principle, with Gungadin Energy LLC ("Gungadin"), whereby Gungadin
will sell to NuTech Energy and NuTech Energy will purchase from Gungadin, all of
the interests of Gungadin in five existing oil wells located in the Austin Chalk
formation in the State of Texas. On February 10, 2011, NuTech Energy, Inc.
signed a non-binding letter of intent to acquire majority interests in five
producing Texas oil wells. NuTech Energy intends this proposed transaction to be
the start of a program to acquire existing and marginal production oil wells and
to use proprietary technology to improve the production of these wells.
On February 1, 2011, the Company reached an agreement, in principle, with
Trillacorpe/BK LLC, a Michigan limited liability company ("Trillacorpe"),
whereby Trillacorpe will provide the Company with certain management consulting
services, including those relating to federal and military contract
solicitation, procurement and fulfillment. Trillacorpe is a leading Service
Disabled Veteran Owned Small Business with considerable experience in procuring
24
government and military contracts. The agreement contemplates that the Company
and Trillacorpe will engage as joint venturers in the solicitation, procurement
and contract fulfillment of specific federal and military contract involving the
Company's line of products and services.
Subsequent to December 31, 2010, the Company issued (i) 89,477,619 shares of
common stock to satisfy indebtedness of $26,843 towards a related party
promissory note of $29,956 dated November 22, 2010, (ii) 4,500,000 shares of
common stock valued at $29,150 to third parties for consulting services, (iii)
21,000,000 shares of common stock to officers and employees valued at $144,900
for compensation for services, (iv) 5,000,000 shares of common stock valued at
$25,000 to a third party consultant for contract services, and (v) 225,500,000
shares of common stock to its wholly-owned subsidiary EAC for acquisition of
business entities.
25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Effective on April 12, 2010, the Company dismissed its independent account,
Ronald R. Chadwick, P.C. Certified Public Accountant. The report of Ronald R.
Chadwick, P.C., Certified Public Accountant for the fiscal year ended December
31, 2008 contained no adverse opinion, disclaimers of opinion nor were they
modified as to uncertainty, audit scope or accounting principles, other than an
explanatory paragraph regarding the substantial doubt about the Company's
ability to continue as a going concern. The decision to dismiss Ronald R.
Chadwick, P.C. Certified Public Accountant was made by the Board of Directors on
April 12, 2010. At no time during the fiscal year ended December 31, 2008, nor
during the interim period from January 1, 2009 through April 12, 2010, were
there any disagreements with Ronald R. Chadwick, P.C., Certified Public
Accountant, whether or not resolved, on any matter of accounting principles or
practices, financials statement disclosures or auditing scope or procedure.
The Company disclosed the dismissal of Ronald R. Chadwick, P. C., Certified
Public Account and the subsequent appointment of Seale & Beers, Certified Public
Accountants in a Current Report on Form 8-K which was filed with the Securities
and Exchange Commission on April 20, 2010.
On February 23, 2011, the Company engaged Accounting & Consulting Group, LLP,
Certified Public Accountants ("ACG") as the Company's new independent registered
public accounting firm to audit the Company's financial statements for the year
ended December 31, 2010 and dismissed Seale & Beers, Certified Public
Accountants ("Seale & Beers") as the Company's independent registered public
accounting firm. The decision to dismiss Seale & Beers and engage ACG was
approved by the Company's Board of Directors.
The report of Seale & Beers on the financial statements of the Company for the
year ended December 31, 2009 contained no adverse opinion, disclaimers of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principles, other than an explanatory paragraph regarding the
substantial doubt about the Company's ability to continue as a going concern.
During the period from January 1, 2009 through the date of the Seale & Beers
dismissal there have been no disagreements (as defined in Item 304(a)(1)(iv) of
Regulation S-K and the related instructions) with Seale & Beers on any matter of
accounting principles or practices, financial statement disclosures, or auditing
scope or procedure, which disagreements if not resolved to the satisfaction of
Seale & Beers would have caused it to make reference to the subject of such
disagreements in their reports on the financial statements of such years.
Further, there have been no reportable events (as described in Item 304(a)(1)(v)
of Regulation S-K).
Neither the Company, nor anyone on its behalf consulted with ACG during the
period from January 1, 2009 though the date of Seale & Beers' dismissal
regarding either (i) the application of the accounting principles to a specified
transaction, either completed or proposed, or (ii) any matter that was either
the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation
S-K and the related instructions) or a reportable event (as described in Item
304(a)(1)(v) of Regulation S-K).
The Company disclosed the dismissal of Seale & Beers and the subsequent
appointment of ACG in a Current Report on Form 8-K which was filed with the
Securities and Exchange Commission on March 1, 2011.
ITEM 9A(T). CONTROLS AND PROCEDURES.
DISCLOSURE CONTROLS AND PROCEDURES.
Our management, with the participation of our Principal Executive Officer and
Principal Financial Officer, has evaluated the effectiveness of our disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as of December 31, 2010. Based on this evaluation, our Principal
Executive Officer and our Principal Financial Officer concluded that our
disclosure controls and procedures were effective, at the reasonable assurance
level, during the period and as of the end of the period covered by this Annual
26
Report to ensure that information required to be disclosed by us in reports that
we file or submit under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in the Securities and Exchange
Commission rules and forms and that such information is accumulated and
communicated to our management as appropriate to allow timely decisions
regarding required disclosures.
Our management, including our Principal Executive Officer and Principal
Financial Officer, does not expect that our disclosure controls or procedures
will prevent all error and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute assurance that
the objectives of the control system are met. Our disclosure controls and
procedures are designed to provide reasonable assurance of achieving their
objectives. Further, the benefits of controls must be considered relative to
their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within us have been detected. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.
Our internal controls over financial reporting are designed by, or under the
supervision of our Principal Executive Officer and Principal Financial Officer
or persons performing similar functions, and effected by our board of directors
and management, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. Management
has the responsibility to establish and maintain adequate internal controls over
financial reporting. Our internal control over financial reporting includes
those policies and procedures that:
* Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of our
assets;
* Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with accounting principles generally accepted in the United States and
that our receipts and expenditures are being made only in accordance
with authorizations of our management and directors; and
* Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition or disposition of our assets that could
have a material effect on the financial statements.
Our management has evaluated the effectiveness of our internal control over
financial reporting as of December 31, 2010, based on the control criteria
established in a report entitled INTERNAL CONTROL -- INTEGRATED FRAMEWORK,
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this evaluation, our management concluded that our internal control
over financial reporting was effective as of December 31, 2010.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING.
There has been no change in our internal control over financial reporting (as
such term is defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act
during the fiscal year ended December 31, 2010 that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.
This Annual Report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management's report in this Annual
Report.
27
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Our executive officers and directors and their ages and titles as of April 11,
2011 are as follows:
Name of Director Age Position
---------------- --- --------
E. G. Marchi 82 President, Chief Financial Officer and a
Director
Sean Stanowski 31 Secretary and a Director
E. G. MARCHI. President, Chief Financial Officer and a Director. Mr. Marchi was
appointed a Director and Secretary on January 28, 2010 and President on May10,
2010. Mr. Marchi was appointed Chief Financial Officer on April 11, 2011
following the resignation of Rene Ponce. Since 2003, Mr. Marchi has been a
consultant for a number of small, medium and start-up companies, assisting in
developing business plans, market stratifying/planning., restructuring
organizationally, and structuring reverse mergers into public entities. Two of
those companies, Fuel Technologies Plus, Inc. and H2XOP, Inc. were involved in
the business of hydrogen generator enrichment systems for use in internal
combustion engines. Early in his business career, Mr. Marchi spent 11 years in
management with IBM Corporation which was followed by management positions with
Greyhound Corporation, Control Information, Inc. and South Pacific Industries,
Inc.
SEAN STANOWSKI. Director and Secretary. Mr. Stanowski was elected Secretary and
a director on October 18, 2010 Following graduation from the United States Naval
Academy in 2001, Mr. Stanowski served on active duty in the United States Navy
in various capacities. From June 2001 through December 2001, he served as a
coach in the Physical Education Department at the Naval Academy. From January
2002 through June 2004, he was a Student Naval Aviator and earned his Wings in
the E-2C Hawkeye. Beginning in July 2004, he began his duty aboard the U.S.S.
Harry Truman (CVN-75), serving in the Operations Department from July 2004 until
April 2005 and, thereafter, was assigned to the Administration Department until
he left active duty as a Lieutenant in September 2006. He remains a Lieutenant
in the U.S. Naval Reserve. Mr. Stanowski trained and then served as a Police
Officer with the Fresno (CA) Police Department from April 2007 until January
2009. From October 2008 through December 2009, he was Vice President - Sales and
Marketing for American Bio-Clean Corp. He joined the Company in January 2010 as
a Business Development Consultant.
TERM OF OFFICE
Members of our board of directors are appointed to hold office until the next
annual meeting of our stockholders or until his or her successor is elected and
qualified, or until he or she resigns or is removed in accordance with the
provisions of the Nevada Revised Statutes. Our officers are appointed by our
board of directors and hold office until removed by the board.
SIGNIFICANT EMPLOYEES
We have no employees other than our executive officers and contact labor.
28
COMMITTEES OF THE BOARD OF DIRECTORS
We do not presently have a separately constituted audit committee, compensation
committee, nominating committee, executive committee or any other committees of
our board of directors.
AUDIT COMMITTEE FINANCIAL EXPERT
Not applicable as we do not presently have an audit committee.
CODE OF ETHICS
We adopted a Code of Ethics applicable to our principal executive officer and
principal financial officer and certain other finance executives, which is a
"code of ethics" as defined by applicable rules of the SEC. If we make any
amendments to our Code of Ethics other than technical, administrative, or other
non-substantive amendments, or grant any waivers, including implicit waivers,
from a provision of our Code of Ethics to our principal executive officer and
principal financial officer, or certain other finance executives, we will
disclose the nature of the amendment or waiver, its effective date and to whom
it applies in a Current Report on Form 8-K filed with the SEC.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires our executive officers and directors,
and persons who beneficially own more than 10% of our equity securities
(collectively, the "Reporting Persons"), to file reports of ownership and
changes in ownership with the SEC. Reporting Persons are required by SEC
regulation to furnish us with copies of all forms they file pursuant to Section
16(a). Based on our review of the copies of such forms received by us, other
than as described below, no other reports were required for those persons. We
believe that, during the year ended December 31, 2010, all Reporting Persons
complied with all Section 16(a) filing requirements applicable to them, except
E. G. Marchi and Sean Stanowski.
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
We did not pay any compensation to our executive officers and director during
the fiscal year ended December 31, 2010 other than we issued 20,000 shares of
Series C preferred stock to our President, E. G. Marchi. The stock was valued at
$12,000.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
As at December 31, 2010, we did not have any outstanding equity awards.
EMPLOYMENT CONTRACTS
We have no employment contracts, termination of employment or change-in-control
arrangements with any of our executive officers or other employees.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
EQUITY COMPENSATION PLANS
We have no equity compensation plans (including individual compensation
arrangements) under which our equity securities are authorized for issuance.
29
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the number of
shares of our common stock owned beneficially as of April 11, 2011 by: (i) each
person (including any group) known to us to own more than five percent (5%) of
any class of our voting securities, (ii) each of our directors, (iii) each of
our named executive officers; and (iv) officers and directors as a group. Unless
otherwise indicated, the shareholder listed possesses sole voting and investment
power with respect to the shares shown.
Amount and
Nature of Percentage
Beneficial of Common
Title of Class Name and Address of Beneficial Owner Ownership Stock(1)
-------------- ------------------------------------ --------- --------
DIRECTORS AND EXECUTIVE OFFICERS
Common Stock E. G. Marchi 10,000,000
Chief Executive Officer, President, Direct 1.87%
Chief Financial Officer, and
Director (2)
Common Stock Sean Stanowski 4,890,000
Director (2) Direct .92%
Common Stock All Directors and Executive Officers 14,890,000 2.79%
as a Group (2 persons) Direct
Preferred Stock E. G. Marchi 20,000 100%
Series C Chief Executive Officer, President, Direct
Chief Financial Officer, and
Director (2)
Amount and
Nature of Percentage
Beneficial of
Title of Class Name and Address of Beneficial Owner Ownership Stock(1)
-------------- ------------------------------------ --------- --------
5% STOCKHOLDERS
Common Stock E-Clean Acquisitions, Inc. (3)(4) 225,500,000 42.21%
Direct
Common Stock Enzyme Bio Sciences LLC (5)(6) 50,000,000 9.36%
Direct
Common Stock Higa Corporation (7)(8) 36,000,000 6.74%
Direct
Preferred Stock E. G. Marchi (2) 20,000 100%
Series C Direct
30
NOTES:
----------
(1) Based on 534,287,619 shares of our common stock issued and outstanding and
0,000 of our Series C preferred stock issue and outstanding, both as of
April 4, 2011. Under Rule 13d-3, certain shares may be deemed to be
beneficially 2wned by more than one person (if, for example, persons share
the power to vote 1r the power to dispose of the shares). In addition,
shares are deemed to be oeneficially owned by a person if the person has
the right to acquire the ohares (for example, upon exercise of an option)
within 60 days of the date as bf which the information is provided. In
computing the percentage ownership of sny person, the amount of shares
outstanding is deemed to include the amount of ohares beneficially owned by
such person (and only such person) by reason of ahese acquisition rights.
As a result, the percentage of outstanding shares of sny person as shown in
this table does not necessarily reflect the person's tctual ownership or
voting power with respect to the number of shares of common atock actually
outstanding on April 11, 2011.
(2) The address is 5412 Bolsa Ave., Ste. D, Huntington Beach, CA 92649.
(3) E-Clean Acquisitions, Inc. is a wholly owned subsidiary of the Company.
(4) The address is 5412 Bolsa Ave., Ste. D, Huntington Beach, CA 92649.
(5) Enzyme Bio Sciences Ltd. is a joint venture in which the Company owns 49%
interest.
(6) The address is 5412 Bolsa Ave., Ste. D, Huntington Beach, CA 92649.
(7) Higa Corporation is a joint venture in which the Company owns a 20%
nterest.
(8) The address is 1391 South 740 East, Orem, UT 84097
CHANGE IN CONTROL
There is no intent or plan for a change of control.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
None of the following parties has, since our date of incorporation, had any
material interest, direct or indirect, in any transaction with us or in any
presently proposed transaction that has or will materially affect us, other than
noted in this section:
(i) Any of our directors or officers;
(ii) Any person proposed as a nominee for election as a director;
(iii) Any person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to our
outstanding shares of common stock;
(iv) Any of our promoters; and
(v) Any relative or spouse of any of the foregoing persons who has the
same house as such person.
31
ITEM 14. PRINCIPAL AND ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
The aggregate fees billed for the two most recently completed fiscal years ended
December, 2010 and 2009 for professional services rendered by the principal
accountant for the audit of our annual financial statements and review of the
financial statements included our Quarterly Reports on Form 10-Q and services
that are normally provided by the accountant in connection with statutory and
regulatory filings or engagements for these fiscal periods were as follows:
Year Ended Year Ended
December 31, December 31,
2010 2009
-------- --------
Audit Fees $ 13,145 $ 7,500
Audit Related Fees 0 0
Tax Fees 0 0
All Other Fees 0 0
-------- --------
TOTAL $ 13,145 $ 7,500
======== ========
PART IV
ITEM 15. EXHIBITS.
The following exhibits are filed as part of this Annual Report.
Exhibit No. Description of Exhibit Location
----------- ---------------------- --------
3.1 Articles of Incorporation Incorporated by reference to
Exhibit 3.1 to the Company's
Registration Statement on Form
S-1 as filed with the Securities
& Exchange Commission on March
21, 2008, as subsequently
amended.
3.2 Bylaws Incorporated by reference to
Exhibit 3.2 to the Company's
Registration Statement on Form
S-1 as filed with the Securities
& Exchange Commission on March
21, 2008, as subsequently
amended.
3.3 Certificate of Amendment to Incorporated by reference to the
Certificate of Incorporation Schedule 14C Definitive
filed with the Nevada Secretary Information Statement filed with
of State on October 8, 2009. the Securities & Exchange
Commission on October on October
September 18, 2009. 3.4
Certificate of Amendment to
Certificate Incorporated by
reference to Exhibit 3.1 to the
of Incorporation filed with the
Nevada Company's Current Report
on Form 8-K, filed Secretary of
State on October 8, 2010. with
the Securities and Exchange
Commission on October 8, 2010.
3.5 Certificate of Designation of Incorporated by reference to
Series A Convertible Preferred Exhibit 3.4 to the Company's
Stock filed with the Nevada Annual Report on Form 10-K, as
Secretary of State on filed subsequently amended. with
March 29, 2010. the Securities and Exchange
Commission on May 17, 2010, as
subsequently amended.
32
3.6 Certificate of Designation of Incorporated by reference to
Series B Convertible Preferred Exhibit 3.5 to the Company's
Stock filed with the Nevada Annual Report on Form 10-K, as
Secretary of State on filed with the Securities and
March 29, 2010. Exchange Commission on May 17,
2010, as subsequently amended.
3.7 Certificate of Designation of Incorporated by reference to
Series C Convertible Preferred Exhibit 3.6 to the Company's
Stock filed with the Nevada Annual Report on Form 10-K, as
Secretary of State on filed with the Securities and
March 29, 2010. Exchange Commission on May 17,
2010, as subsequently amended.
21.1 Subsidiaries. Included herein.
23.1 Consent of Seale and Beers, CPAs Included herein.
31.1 Certification of Chief Executive Included herein.
Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Included herein.
Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Included herein.
Officer pursuant to 18 U.S.C.
Section 1350.
32.2 Certification of Chief Executive Included herein.
Officer pursuant to 18 U.S.C.
Section 1350.
33
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GLOBAL NUTECH, INC.
Date: April 15, 2011 By: /s/ E. G. Marchi
----------------------------------
E. G. Marchi
President
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Date: April 15, 2011 By: /s/ E. G. Marchi
----------------------------------
E. G. Marchi
President, Chief Financial Officer
and Director
(Principal Executive Officer)
(Principal Accounting Officer)
Date: April 15, 2011 By: /s/ Sean Stanowski
----------------------------------
Sean Stanowski
Director
34
