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EX-10.3 - EMPLOYMENT AGREEMENT DATED MARCH 1, 2012 - Bollente Companies Inc.rjemployagree.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-54219

BOLLENTE COMPANIES INC.
(Exact name of registrant as specified in its charter)

Nevada
 
26-2137574
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

Gainey Center II, 8501 North Scottsdale Road, Suite 165
Scottsdale, Arizona 85253-2740
(Address of principal executive offices) (Zip Code)

(480) 275-7572
(Registrant's telephone number, including area code)

Copies of Communications to:
Stoecklein Law Group
401 West A Street
Suite 1150
San Diego, CA 92101
(619) 704-1310 • Fax (619) 704-1325

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value

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 registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x    No ¨

Indicate 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 and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x    No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) 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 a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "small reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨
Accelerated filer  ¨
   
Non-accelerated filer  ¨ (Do not check if a smaller reporting company)
Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ¨    No x

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 last sold, or the average bid and asked price of such common equity, as of June 30, 2011 (the last business day of the registrant's most recently completed second fiscal quarter) was $3,813,880 based on a share value of $0.60.

The number of shares of Common Stock, $0.001 par value, outstanding on April 9, 2012 was 6,697,460 shares.

DOCUMENTS INCORPORATED BY REFERENCE: None.


 
 

 

BOLLENTE COMPANIES INC.
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2011

Index to Report on Form 10-K

PART I
 
Page
     
Item 1.
Business
2
Item 1A.
Risk Factors
8
Item 1B.
Unresolved Staff Comments
13
Item 2.
Properties
13
Item 3.
Legal Proceedings
13
     
     
PART II
   
     
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
13
Item 6.
Selected Financial Data
15
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
15
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
19
Item 8.
Financial Statements and Supplementary Data
19
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
19
Item 9A (T)
Controls and Procedures
20
Item 9B.
Other Information
21
     
PART III
   
     
Item 10.
Directors, Executive Officers and Corporate Governance
21
Item 11.
Executive Compensation
24
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
26
Item 13.
Certain Relationships and Related Transactions, and Director Independence
26
Item 14
Principal Accounting Fees and Services
27
     
PART IV
   
     
Item 15.
Exhibits, Financial Statement Schedules
28



 

 

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements and involves risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows, and business prospects.  These statements include, among other things, statements regarding:

·  
our ability to diversify our operations;
·  
inability to raise additional financing for working capital;
·  
the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require our management to make estimates about matters that are inherently uncertain;
·  
our ability to attract key personnel;
·  
our ability to operate profitably;
·  
deterioration in general or regional economic conditions;
·  
adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;
·  
changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;
·  
the inability of management to effectively implement our strategies and business plan;
·  
inability to achieve future sales levels or other operating results;
·  
the unavailability of funds for capital expenditures;
·  
other risks and uncertainties detailed in this report;

as well as other statements regarding our future operations, financial condition and prospects, and business strategies. Forward-looking statements may appear throughout this report, including without limitation, the following sections: Item 1 “Business,” Item 1A “Risk Factors,” and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “will likely result,” and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Annual Report on Form 10-K, and in particular, the risks discussed under the caption “Risk Factors” in Item 1A and those discussed in other documents we file with the Securities and Exchange Commission (SEC). We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 
1

 

As used herein, “Bollente,” “BOLC,” “the Company,” “we,” “our,” and similar terms include Bollente Companies Inc. and its subsidiaries, unless the context indicates otherwise.

PART I

ITEM 1. BUSINESS

Business Development

Bollente Companies Inc. is a development stage company incorporated in the state of Nevada in March of 2008. On September 23, 2010, we changed our name from Alcantara Brands Corporation to Bollente Companies Inc. 

On March 7, 2011, we entered into a reverse triangular merger (“Merger”) by and among Woodmans Lumber and Millworks Peru (“Woodmans”), a Nevada corporation and our wholly-owned subsidiary, and Bollente, Inc., a Nevada corporation, Woodmans and Bollente, Inc. being the constituent entities in the Merger. On May 16, 2011, we completed the acquisition of 100% of the issued and outstanding common stock of Bollente, Inc. in exchange for 4,707,727 shares of our common stock. Pursuant to the terms of the Merger, Woodmans was merged with Bollente, Inc. wherein Woodmans ceased to exist and Bollente, Inc. became our wholly owned subsidiary.

As a result of the closing of the Merger, our main focus has been redirected to the research and development of high quality, whole-house, electric tankless water heater that is more energy efficient than conventional products.

Business of Issuer

On February 24, 2011, Bollente, Inc. accepted an assignment of an engineering services contract from Perigon Companies, LLC, a Delaware limited liability company, which is also a lender for Bollente, Inc. Perigon started to create an electric tankless water heater and the technology is in research and development. Perigon is owned and controlled by an individual who is a family member of one of the stockholders of the Company. Bollente agreed to accept the assignment for a promissory note of $500,000. The promissory note is due on February 24, 2014 and bears interest at 8% per annum. There are quarterly interest payments of $10,000 with a balloon payment of the principal balance and any accrued interest at the maturity date. In the event of default, the interest rate increases to 18% per annum.

Bollente’s first product is a high quality, whole-house, electric tankless water heater. The residential whole-house version and commercial version have been in research and development since late 2009; with early modeling and design work completed the remaining development has begun. Several novel and patentable technologies are currently in testing and initial prototype work has already begun on this primary line of tankless water heating products. We anticipate development work on the whole-house residential and commercial tankless water heaters will be substantially completed by our current engineering consultants. Once the management’s testing and certification criteria have been met, our engineering consultants will transition the product line to a contract manufacturer, who will begin full-scale production at which point we will be able to commence shipments.

 
2

 

We are committed to manufacturing and distributing a new, high-quality, highly efficient electric tankless water heater that will exceed American consumer performance expectations for large quantities of hot water and delivery of hot water at consistent temperatures with an affordable, durable and reliable design. We have several features and design innovations which are new to the electric tankless water heater market that we believe will give our products a sustainable competitive advantage over our rivals in the market.

Our tankless water heaters will be designed to provide an endless hot water supply because they are designed to heat water as it flows through the system. We believe that our products are capable of higher temperature rise than competitive units at given flow rates because of its improved design and greater efficiency. Our tankless water heaters can save energy and reduce operating costs compared to tank systems because unlike tanks, if there is no hot water demand, no energy is being used. In addition, we intend to improve life-cycle costs with an improved design conceived not only to increase efficiency, but also the longevity of our products versus competitive units. Generally, a typical tank water heater lasts about 11 years, whereas gas tankless systems may last longer, but require routine maintenance. Our product line is designed to last longer than tank water heaters without any routine maintenance required under most conditions.

For forty years, the Japanese have been manufacturing and using gas powered tankless water heaters for residential and commercial use. Companies that sell gas tankless brands in the U.S. are usually sourced from Japanese suppliers, such as Noritz, Rinnai, Takagi, and Paloma, none of which manufacture or sell electric tankless products. Gas tankless manufacturers have had an appreciable impact on the U.S. water heater market in recent years, gaining market share and partnering with well known companies in the space to further increase market share. Manufacturers of electric tankless water heaters have not achieved significant sales relative to gas tankless manufacturers despite the increased awareness for tankless water heaters in general. We expect that Bollente’s tankless electric water heaters will fill the electric tankless market segment as the industry and consumers become aware of our improved technology. Bollente’s products are being engineered to provide quality, functionality, and performance at an attractive price point. The company expects to sell primarily through traditional plumbing wholesale distribution channels, as well as directly to national homebuilders and large plumbing wholesalers. Additionally, we believe licensing and co-branding opportunities are available in the industry.

Introduction to our Business Development Strategy

We have determined that as part of our growth strategy, we will seek to partner with or acquire entities operating in various fields, with a bias towards green and "clean-tech" sectors. Our management has experience in marketing, product launches, business development strategies, and certain other areas specific to the success of growth companies. We will operate with a view towards identifying acquisition candidates as we seek the rights to provide the market with products and services geared toward environmental responsibility.

We have identified several agents who are well suited to provide consulting to high-growth technology and consumer products companies. We are currently negotiating with several agents possessing technical expertise related to planning, structuring, and capitalizing growth companies in the green and "clean-tech" sectors who will be tasked with creating additional revenues and assist the Company with our own planning, structure, and capitalization. 

 
3

 

We have identified several entities that fit our criteria. We are focused on adding value to these companies and acquiring either the entity or its business, maintaining and growing that business, and hiring and utilizing existing management where appropriate. We have begun the design of a website which we believe will help us attract relationships with possible acquisition targets.

Intellectual Property & Proprietary Rights

Upon completion of our brand development, we will regard substantial elements of our brands and underlying intellectual property as proprietary and attempt to protect them by relying on trademark, service mark and trade secret laws, restrictions on disclosure and transferring title and other methods.

Our plans are to actively pursue patent and trademark protection for all of newly developed products, both domestically and abroad. We have novel and proprietary technologies related to our product line and the central focus of our patent counsel has been to work with our engineers to build a defensible patent portfolio. To date, we have filed several trademark applications through our outside marketing and branding experts and have acquired several unique domain registrations reflective of our online marketing strategy. We anticipate obtaining patent and trademark protection on all of our newly developed, proprietary products. We also plan to continue protecting our intellectual property through confidentiality agreements with vendors and consultants and trade secret protocols employed by employees, consultants, and contractors.

Product Overview

We are currently in a research and development phase to design a product line of tankless water heaters. We are strategizing a branding and marketing strategy for a tankless water heater product line. The whole-house and commercial series of water heaters will be marketed by the Company when the research and development is substantially completed. Management believes our products will deliver increased functionality and energy efficiency to consumers, and that our products are superior to other competing products in the market, but at a lower cost to the end user. In addition, we are working to identify partners in the contract manufacturing space and believe we will enter production through one of these contract manufacturing firms in the next 12 months. There are currently several prototypes, components, and various assemblies and technologies being examined and tested by our engineering contactors for use in our product lines.
 
Tankless Industry Overview

The U.S. gas tankless, whole-house, water heater market is dominated by five brands; Noritz, Rinnai, Takagi, Aqua Star by Bosch and Paloma by Rheem. The U.S. electric tankless, whole-house, water heater market is dominated by four brands; Seisco by Microtherm, Inc., Stiebel Eltron, Eemax and Power Star by Bosch. Until just a few years ago, there were only a few tankless water heater manufacturers with a presence in the United States, but that is changing. Now, several Japanese and European manufacturers have begun marketing products in the United States, and since 2003, gas tankless products have experienced dramatic growth. Electric tankless systems have not experienced comparable growth due to several factors, primarily product performance, capacity, product quality and electrical power supply and installation issues.

 
4

 

Manufacturers of tank heaters have a competitive advantage due largely to their product category’s long established use, name recognition, established distribution and brand position in the marketplace. Many plumbers and other building industry professionals were opposed to changing brands or to tankless systems because many tankless water heaters have been poorly designed in the past. As a result there is a perception among some contractors that these water heaters are more complicated and generally less dependable than traditional tank heaters. This perception is often passed along to consumers when making buying decisions or inquiring about switching to a tankless water heater. In recent years however, the industry has experienced a contraction in sales of products and services for new building projects. Consequently, higher ticket, higher margin products, such as tankless and solar water heating systems have become a primary growth driver for many plumbers and companies who had traditionally avoided emerging technologies.

While we believe that our products will have superior performance, such as endless hot water, superior longevity, greater efficiency and lower “life-cycle” costs than traditional tank water heaters, the Company’s success will depend to a large degree on the successful conversion of traditional water heater buyers to tankless water heater buyers. The acquisition price of tankless water heaters (both gas and electric) is greater than traditional tank water heaters, but the overall cost of ownership will be less than that of traditional tank technologies under typical circumstances. Although the public’s awareness of tankless systems has not been strong historically, sales growth in the sector is suggestive of increasing awareness.

Our marketing and promotion plans have been developed to increase the awareness of the Company’s brand as the preferred option to traditional tank systems. Bollente intends to position itself and its brand to capitalize on the paradigm shift to green-conscious living and development.

Target Markets

The United States market for residential tank water heaters in 2010 was approximately 7.65 million units according to data released by the Air-Conditioning, Heating, and Refrigeration Institute (AHRI). Almost 50% of those shipments were electric water heaters, and the company has found in comparing those statistics with government data, that over 90% of tank water heaters shipped in 2010 were intended for “replacement” installations.

Bollente will initially market its products to builders, remodelers and distributors in the southern and western U.S. These areas of the country have been selected because of generally higher ground water temperatures, which improves the effects of the performance and capacity of all brands of tankless water heaters. This area of the country also traditionally has the largest share of population growth and new housing starts, accounting for almost two-thirds of all housing starts in 2010, according to government data. Additionally, the southern U.S., and specifically the southeastern U.S., has the highest usage of electric water heaters.

 
5

 

Overview of Potential Markets and Summary of Marketing Plan

Management intends to focus on the United States residential market initially. For decades Americans have used only tank type water heaters. For most homes, the units hold an average of 40 to 80 gallons of water in a storage tank, are gas or electric fueled and consume excessive energy to keep water hot continuously. In fact, water heaters expend up to 25% of the total energy used by a typical household representing the second largest use of energy in most homes. Depending on household usage, approximately 25 – 50% of the heat created is lost through the walls of the tank and connecting pipes.

There are other problems inherent with traditional tank water heaters:

·
Due to the high temperatures and corrosive aspects of water, a typical water heater has a life span of 10.7 years.
·
Unless replaced beforehand, more than two thirds of water heaters eventually corrode and leak or burst, often resulting in extensive and costly water and mold related damage.
·
Due to the large size and other installation requirements often result in the units being installed in garages and utility rooms on the opposite side of the home from the bathroom fixtures. Because of this, an estimated 10,000 gallons of water per household goes down the drain while users wait on the water to get hot at the faucet.
·
Traditional tank water heaters take up to 6 to 9 square feet of floor space, which can be especially valuable in multi-family or commercial applications.
·
To reduce operating costs, many people adjust the temperature on their water heaters down. Unfortunately, lower temperatures increase the possibility of unhealthy, water born bacteria growth.
·
To increase water heating capacity, many people will adjust the temperature of their water heaters up. In addition to using more energy, this practice can be dangerous by posing a greater risk of scalding.

Tankless water heaters are becoming increasingly popular in America because they:

·
Produce a continuous, unlimited supply of hot water
·
Expend only the energy needed to heat the water used with no “standby” energy loss
·
Can last more than twice as long as tank heaters
·
Are small and require very little space.
·
Are not conducive to bacterial growth
·
Are considered very “green” by green conscious builders and consumers.

Electric tankless water heaters have additional benefits over gas powered models because they can be installed almost anywhere in a home (closets, attics, utility rooms, etc.) where hot water is needed which improves flexibility of floor plan design for builders, architects, and remodelers. In addition, gas tankless water heaters may not be suitable for many applications due to challenges with adequate fuel supply, the need for exhaust vents with specific requirements, and other code-related requirements. In spite of these issues, gas tankless water heaters have enjoyed significant growth in North America because of the efficiency and performance they provide.

 
6

 

Distribution Plan

Initially, we will be distributing our first product line throughout the southern and western U.S. using an existing network of plumbing and electrical wholesalers (distributors), manufacturers’ representatives and dealers. We believe that once the product has been launched, we will be able to partner with major companies in the building and plumbing industries to rapidly expand awareness of Bollente and our products in the water heater market in the U.S and Canada.

Sales will be pursued through the following channels:

1.
Regional and national plumbing and electrical wholesalers (also called “distributors”);
2.
Plumbers and electricians on a direct basis, in those areas where wholesalers have not yet been set up; and,
3.
Builders on a direct basis, in those areas where wholesalers & mechanical contractors have not yet been set up.

We will expand sales of the product further by marketing the product directly to consumers over the internet with a series of aggressive and ongoing marketing initiatives. We intend to market to industry professionals and end-users through more traditional marketing efforts as well, including print advertising, attendance of select national trade shows, and attendance of select regional consumer shows. We also expect Bollente will be successful in providing education, training, and support to our sales and installer networks as part of our distribution and marketing efforts.

We believe our products will be a differentiating factor for industry professionals and builders as they market to their customers. Additionally, our electric tankless products are expected to provide these professionals and their companies with a mechanism to increase revenue and improve gross margin as compared to more traditional water heating products.

Employees

As of December 31, 2011, we have one part-time employee, Robertson James Orr, who is also our sole officer and director.

Available Information

Our periodic reports filed with the SEC, which include Form 10-K, Form 10-Q, Form 8-K and amendments thereto, may be accessed by the public free of charge from the SEC. Electronic copies of these reports can be accessed at the SEC’s website (http://www.sec.gov). Copies of these reports may also be obtained, free of charge, upon written request to: Bollente Companies Inc., Gainey Center II, 8501 North Scottsdale Road, Suite 165, Scottsdale, Arizona 85253, Attn: Corporate Secretary. The public may read or obtain copies of these reports from the SEC at the SEC’s Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549 (1-800-SEC-0330).

 
7

 

ITEM 1A. RISK FACTORS

In the normal course of business, our financial position will routinely be subjected to a variety of risks, including market risks associated with marketing, technology developments, competitive forces, and government regulatory actions. You should carefully consider the risks and uncertainties described in the sections below. Our actual results could differ materially from projected results due to some or all of the factors discussed below.

We are a development stage company organized in March 2008 and have recently commenced operations, which makes an evaluation of us extremely difficult. At this stage of our business operations, even with our good faith efforts, we may never become profitable or generate any significant amount of revenues, thus potential investors have a high probability of losing their investment.

We were incorporated in March of 2008 as a Nevada corporation. As a result of our start-up operations we have; (i) generated no revenues, (ii) accumulated deficits of $2,098,907 for the period ended December 31, 2011, and (iii) we have incurred losses of $2,098,907 from our inception through the period ended December 31, 2011.  We have been focused on organizational and start-up activities and business plan development. There is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably. Our future operating results will depend on many factors, including our ability to raise adequate working capital, demand for our products, the level of our competition and our ability to attract and maintain key management and employees.

We are subject to significant competition from large, well-funded companies.

The industry we compete in is characterized by intense competition and rapid and significant technological advancements. Many companies are working in a number of areas similar to our primary field of interest to develop new products; some of which may be similar and/or competitive to our products.

Most of the companies with which we compete have substantially greater financial, technical, manufacturing, marketing, sales and distribution and other resources than us. If a competitor enters the tankless water heater industry and establishes a greater market share in the direct-selling channel, our business and operating results will be adversely affected.

If we fail to secure or protect our intellectual property rights, our products and competitors may be able to use our designs, each of which could harm our reputation, reduce our revenues and increase our costs.

We will rely on intellectual property laws to protect our proprietary rights with respect to our trademarks and pending patent. We are susceptible to injury from patent infringement, which may harm our reputation for producing high-quality products or force us to incur additional expense in enforcing our rights. It is difficult and expensive to detect and prevent patent infringement. Despite our efforts to protect our intellectual property, some may attempt to violate our intellectual property rights by using our trademarks and imitating our products, which could potentially harm our brand, reputation and financial condition.

 
8

 

We may face significant expenses and liability in connection with the protection of our intellectual property rights. Infringement claims and lawsuits likely would be expensive to resolve and would require substantial management time and resources. Any adverse determination in litigation could subject us to the loss of our rights to a particular trademark, which could prevent us from manufacturing, selling or using certain aspects of our products or could subject us to substantial liability, any of which would harm our results of operations. Aside from infringement claims against us, if we fail to secure or protect our intellectual property rights, our competitors may be able to use our designs. If we are unable to successfully protect our intellectual property rights or resolve any conflicts, our results of operations may be harmed.

Our reliance on intellectual property and other proprietary information subjects us to the risk that these key ingredients of our business could be copied by competitors.

Our success depends, in significant part, on the proprietary nature of our technology. If a competitor is able to reproduce or otherwise capitalize on our technology, despite the safeguards we have in place, it may be difficult, expensive or impossible for us to obtain necessary legal protection. In addition to patent protection of intellectual property rights, we consider elements of our product designs and processes to be proprietary and confidential. We rely upon employee, consultant and vendor non-disclosure agreements and contractual provisions and a system of internal safeguards to protect our proprietary information. However, any of our registered or unregistered intellectual property rights may be challenged or exploited by others in the industry, which might harm our operating results.

Our auditor’s have substantial doubt about our ability to continue as a going concern.  Additionally, our auditor’s report reflects that the ability of the Company to continue as a going concern is dependent upon our ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues.

Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Our auditor’s report reflects that the ability of the Company to continue as a going concern is dependent upon our ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. If we are unable to continue as a going concern, stockholders will lose their investment.  We will be required to seek additional capital to fund future growth and expansion. No assurance can be given that such financing will be available or, if available, that it will be on commercially favorable terms. Moreover, favorable financing may be dilutive to investors.

We will require additional financing in order to implement our business plan. In the event we are unable to acquire additional financing, we may not be able to implement our business plan resulting in a loss of revenues and ultimately the loss of your investment.

Due to our very recent start-up nature, we will have to incur the costs of product development, import expenses, advertising, in addition to hiring new employees and commencing additional marketing activities for product sales and distribution. To fully implement our business plan we will require substantial additional funding.

 
9

 

We will need to raise additional funds to expand our operations. We plan to raise additional funds through private placements, registered offerings, debt financing or other sources to maintain and expand our operations. Adequate funds for this purpose on terms favorable to us may not be available, and if available, on terms significantly more adverse to us than are manageable. Without new funding, we may be only partially successful or completely unsuccessful in implementing our business plan, and our stockholders may lose part or all of their investment.

Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, 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 and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Mr. Orr has limited experience in running a public company. The lack of experience in operating a public company could impact our return on investment, if any.

As a result of our reliance on Mr. Orr, and his lack of experience in operating a public company, our investors are at risk in losing their entire investment. Mr. Orr intends to hire personnel in the future, when sufficiently capitalized, who may have the experience required to manage our company; however, such management is not anticipated until the occurrence of future financing. Until such future financing occurs, and until such management is in place, we are reliant upon Mr. Orr to make the appropriate management decisions.

Mr. Orr may become involved with other businesses and there can be no assurance that he will continue to provide services to us. Mr. Orr’s limited time devotion to the Company could have the effect on our operations of preventing us from being a successful business operation, which ultimately could cause a loss of stockholder investment.

As compared to many other public companies, we do not have the depth of managerial or technical personnel. Mr. Orr is currently involved in other businesses, which have not, and are not expected in the future to interfere with Mr. Orr’s ability to work on behalf of our Company. Mr. Orr may in the future be involved with other businesses and there can be no assurance that he will continue to provide services to us. Mr. Orr will devote only a portion of his time to our activities.

 
10

 

We depend on certain key employees, and believe the loss of any of them would have a material adverse effect on our business.

We will be dependent on the continued services of our management team, as well as our outside consultants. While we have no assurance that our current management will produce successful operations, the loss of such personnel could have an adverse effect on meeting our production and financial performance objectives. We have no assurance that we will not lose the services of these or other key personnel and may not be able to timely replace any personnel if we do lose their services.

Our ability to attract qualified sales and marketing personnel is critical to our future success, and any inability to attract such personnel could harm our business.

Our future success may also depend on our ability to attract and retain additional qualified design and sales and marketing personnel. We face competition for these individuals and may not be able to attract or retain these employees, which could have a material adverse effect on our results of operations and financial condition.

Because our common stock could remain under $5.00 per share, it could continue to be deemed a low-priced “Penny” stock, an investment in our common stock should be considered high risk and subject to marketability restrictions.

Since our common stock is currently under $5.00 per share, it is considered a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock. If the trading price of the common stock stays below $5.00 per share, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:

·
Deliver to the customer, and obtain a written receipt for, a disclosure document;
·
Disclose certain price information about the stock;
·
Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;
·
Send monthly statements to customers with market and price information about the penny stock; and
·
In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.

Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to accept the common stock for deposit into an account or, if accepted for deposit, to sell the common stock and these restrictions may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future.

 
11

 

FINRA sales practice requirements may also limit a stockholder's ability to buy and sell our stock.

In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (FINRA) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board, which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

Companies trading on the OTC Bulletin Board, such as us, generally must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board.  More specifically, FINRA has enacted Rule 6530, which determines eligibility of issuers quoted on the OTC Bulletin Board by requiring an issuer to be current in its filings with the Commission.  Pursuant to Rule 6530(e), if we file our reports late with the Commission three times in a two-year period or our securities are removed from the OTC Bulletin Board for failure to timely file twice in a two-year period, then we will be ineligible for quotation on the OTC Bulletin Board.  As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.  As of the date of this filing, we have one late filing reported by FINRA.

Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, 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 and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

 
12

 

We have one individual performing the functions of all officers and directors. Mr. Orr, our president, has developed our internal control procedures and is responsible for monitoring and ensuring compliance with those procedures. As a result, our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We currently maintain an executive office 8501 North Scottsdale Road, Suite 165, Scottsdale, Arizona. Our monthly rent for this office is $3,500.

As a result of our method of operations and business plan we do not require personnel other than Mr. Orr to conduct our business. In the future we anticipate requiring additional office space and additional personnel; however, it is unknown at this time how much space or how many individuals will be required.

ITEM 3. LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.
PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASE OF EQUITY SECURITIES

Market Information

Our common stock is quoted on the OTC Markets QB (OTCQB), under the symbol “BOLC.”

The following table sets forth the quarterly high and low bid prices for our common stock during our last two fiscal years, as reported by a Quarterly Trade and Quote Summary Report of the OTC Bulletin Board. The quotations reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.

   
2011
   
2010
 
   
BID PRICES
   
BID PRICES
 
   
High
   
Low
   
High
   
Low
 
1st Quarter
  $ 1.01     $ 0.22     $ 29.50     $ 7.75  
2nd Quarter
  $ 0.90     $ 0.30     $ 12.50     $ 1.25  
3rd Quarter
  $ 1.92     $ 0.69     $ 4.50     $ 1.50  
4th Quarter
  $ 4.00     $ 0.50     $ 3.00     $ 0.01  


 
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Holders of Common Stock

As of April 9, 2012, we had approximately 85 stockholders of record of the 6,697,460 shares outstanding.  The closing bid stock price on April 9, 2012 was $2.00.

Dividends

The payment of dividends is subject to the discretion of our Board of Directors and will depend, among other things, upon our earnings, our capital requirements, our financial condition, and other relevant factors. We have not paid or declared any dividends upon our common stock since our inception and, by reason of our present financial status and our contemplated financial requirements, do not anticipate paying any dividends upon our common stock in the foreseeable future.
 
We have never declared or paid any cash dividends. We currently do not intend to pay cash dividends in the foreseeable future on the shares of common stock. We intend to reinvest any earnings in the development and expansion of our business. Any cash dividends in the future to common stockholders will be payable when, as and if declared by our Board of Directors, based upon the Board’s assessment of:

·  
our financial condition;
 
·  
earnings;
 
·  
need for funds;
 
·  
capital requirements;
 
·  
prior claims of preferred stock to the extent issued and outstanding; and
 
·  
other factors, including any applicable laws.
 

Therefore, there can be no assurance that any dividends on the common stock will ever be paid.

Recent Sales of Unregistered Securities

On November 17, 2011, we issued 100,000 shares of our restricted common stock to a consultant for services rendered valued at $150,000 or $1.50 per share.

On December 13, 2011, we issued 100,000 shares of our restricted common stock to a consultant for services rendered valued at $105,000 or $1.05 per share.
 
    We made each of the aforementioned common stock issuances in reliance upon the exemption from registration under Section 4(2) of the Securities Act for private offerings not involving a public distribution.

In December 2011, we sold 100,000 shares of our restricted common stock to two accredited investors for a total purchase price of $25,000 all of which was paid in cash.

 
14

 

We believe that the issuance and sale of the above shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 502 of the Iowa Code as a Limited Offering Transaction. Not more than thirty-five purchasers were present in this state during any twelve consecutive months. The shares were sold directly by us and did not involve a general solicitation or involve general advertising. There were no commissions paid on the issuance and sale of the shares. Lastly, we believe that all the purchasers were purchasing for investment.

Subsequent Sales & Issuances of Unregistered Securities

In March 2012, we sold 50,000 shares of our restricted common stock to two accredited investors for a total purchase price of $25,000 all of which was paid in cash.
 
We made the aforementioned common stock issuances in reliance upon the exemption from registration under Section 4(2) of the Securities Act for private offerings not involving a public distribution.

Issuance of Registered Stock

On March 19, 2012, we issued 150,000 shares of our common stock to Mr. Orr pursuant to his employment agreement. The shares issued were registered in a Registration Statement on Form S-8 filed on June 28, 2011.

Issuer Purchases of Equity Securities

The Company did not repurchase any of its equity securities during the fourth quarter ended December 31, 2011.

ITEM 6. SELECTED FINANCIAL DATA

This item is not applicable, as we are considered a smaller reporting company.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW AND OUTLOOK

Bollente Companies Inc. was formed as a Nevada corporation in March 2008. On September 23, 2010, the Company changed its name from Alcantara Brands Corporation to Bollente Companies Inc.  Effective May 16, 2011, we completed the acquisition of Bollente, Inc. through the acquisition of 100% of the issued and outstanding common stock of Bollente, Inc.

Our Operations

As a result of completing the acquisition of Bollente, Inc. on May 16, 2011, our entire operations is currently based upon the operations of our wholly-owned subsidiary Bollente, Inc., which is involved in researching and manufacturing a green technology centered on a tankless water heater system for residential and commercial purposes. Our first branded product is a high quality, whole-house, electric tankless water heater that is more energy efficient than conventional products.

 
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Operation Plan

Our plan is to focus on continued research and development to improve the performance of our electric tankless water heater line, finishing the main elements of our branding strategy and launching a website introducing the features and benefits of tankless water heaters to the market. Subject to availability of capital and once we have substantially completed research and development of the tankless line, we will implement a marketing and sales program in order to begin filling the sales pipeline with potential customers, outside sales companies, and identify candidates within the plumbing and construction industries who will be interested in utilizing our electric tankless technology.

In order to increase production and increase returns for our stockholders, we will also be seeking licensing partners and private label opportunities. Depending on availability of capital, and other constraints, our goal is to increase stockholder value by acquiring stakes in companies, product licenses, and/or joint ventures which will yield additional products or services related to our tankless water heater line which we will offer to our customers or which will yield additional customers to whom we can offer out tankless water heater line.

We expect to achieve these results by:

·  
Testing new, proprietary technologies for integration into our electric tankless water heating products;
·  
Filing for patent for our electric tankless water heater line and obtaining trademark protection for our brand;
·  
Launching our product website to educate retail consumers about our products;
·  
Installing and testing prototype water heaters in the field in a variety of applications;
·  
Designing a secondary website geared towards providing service and technical guidance to industry professionals, trade persons, and wholesale sales companies on the benefits of offering our products to their customers; and,
·  
Identifying additional candidates in the plumbing and building industry in select markets to support our initial marketing and sales efforts.

In addition to raising additional capital we plan to begin discussions with various acquisition targets whose technologies and product offerings may augment our planned product offerings. This economic strategy may allow us to acquire or license green product lines and generally expand our existing operations.

Because of our limited operating history we have yet to generate any revenues. Our activities have been limited to raising capital, closing the recent merger, negotiating with consultants, and finalizing our consumer website design, and conducting research and testing on competitive technologies in the market place.

Our future financial results will depend primarily on: (i) our ability to raise necessary capital; (ii) obtaining required certifications to sell our products in the domestic market place; (iii) our success in obtaining patent protection for our intellectual property; and (iv) our ability to monetize our intellectual property. There can be no assurance that we will be successful in any of these respects, or that we will be able to obtain additional funding to increase our currently limited capital resources.

 
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RESULTS OF OPERATIONS

Revenue.  During the years ended December 31, 2011 and 2010, we did not generate revenues.

General and Administrative. General and administrative expenses decreased $13,663, or 38%, to $22,662 for the fiscal year ended December 31, 2011 from $36,325 for the fiscal year ended December 31, 2010. The decrease was as a result of the change in management and different visions for the Company.

Executive Compensation.  Executive compensation increased $242,123 or 30,152% in the fiscal year ended December 31, 2011 from $803 for the fiscal year ended December 31, 2010. The increase in executive compensation was the result of the employment agreement with Robertson Orr.

Product Development – Related Party. Our product development – related party expenses decreased $39,576 or 100% in the fiscal year ended December 31, 2011 from $0 for the fiscal year ended December 31, 2010. The decrease was the result of change in management and direction for the Company.

Research and Development.  Research and development expenses increased $59,530 or 100% in the fiscal year ended December 31, 2011 from $0 for the fiscal year ended December 31, 2010. The increase in research and development was due primarily to development of new products and will continue to be the Company’s primary focus.

Professional Fees.  Professional fees decreased $680,478, or 72%, to $263,167 in the fiscal year ended December 31, 2011 from $943,645 for the fiscal year ended December 31, 2010. The decrease in professional fees was the result of a decline in stock based compensation.

Interest Expense – Related Party. Interest expense – related party increased $35,924 or 4,115% in the fiscal year ended December 31, 2011 from $873 for the fiscal year ended December 31, 2010. The increase was the result of the additional borrowings during the year.  The most significant increase is due to the loan for $500,000.

Interest Expense. Interest expense increased $28,502 or 100% in the fiscal year ended December 31, 2011 from $0 for the fiscal year ended December 31, 2010. The increase was the result of additional borrowings during the year and expenses related to the conversion of accounts payable.

Net Loss. In the fiscal year ended December 31, 2011, we generated a net loss of $653,584, a decrease of $367,638, or 36%, from $1,021,222 for the period ended December 31, 2010. The decrease was the result of change in management and change in the business operations of the Company.

 
17

 

Going Concern

The financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of the Company as a going concern.  The Company may not have a sufficient amount of cash required to pay all of the costs associated with operating and marketing of its products. Management intends to use borrowings and security sales to mitigate the effects of cash flow deficits, however no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue existence.

Liquidity and Capital Resources

As of December 31, 2011, we had $864 in cash, $163 in prepaid expenses and $369,375 in prepaid stock compensation. The following table provides detailed information about our net cash flow for all financial statement periods presented in this Annual Report. To date, we have financed our operations through the issuance of stock and borrowings.

The following table sets forth a summary of our cash flows for the periods indicated:

     
Fiscal Year Ended
December 31,
     
2011
 
(Restated)
2010
Net cash used in operating activities
  $
(185,364)
 
$(91,846)
Net cash used in investing activities
  $
(550)
 
$(4,372)
Net cash provided by financing activities
  $
186,730
 
$95,028
Net increase/(decrease) in Cash
  $
816
 
$(1,190)
Cash, beginning of year
  $
48
 
1,238
Cash, end of year
  $
864
 
$48

Operating activities

Net cash used in operating activities was $185,364 for the year ended December 31, 2011, as compared to $91,846 used in operating activities for the same period in 2010. The increase in net cash used in operating activities was primarily due to the decrease in stock based compensation.

Investing activities

Net cash used in investing activities was $550 for the period ended December 31, 2011, as compared to $4,372 used in investing activities for the same period in 2010. The net cash used in investing activities for the current period was primarily due to filings related to trademarks.

Financing activities

Net cash provided by financing activities for the year ended December 31, 2011 was $186,730, as compared to $95,028 for the same period of 2010. The increase of net cash provided by financing activities was mainly attributable to proceeds from borrowing and the sale of unregistered securities through private placements.

 
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As of December 31, 2011, we continue to use traditional and/or debt financing to provide the capital we need to run the business.

Since inception, we have financed our cash flow requirements through issuance of common stock and debt financing. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations, pending receipt of product sales. Additionally, we anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital. In the future we need to generate sufficient revenues from product sales in order to eliminate or reduce the need to sell additional stock or obtain additional loans. There can be no assurance we will be successful in raising the necessary funds to execute our business plan.

We anticipate that we will incur operating losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development. Such risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks, we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, continually develop our line of products, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This item in not applicable as we are currently considered a smaller reporting company.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to Financial Statements and Financial Statement Schedules appearing on page F-1 through  of this Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

We have had no disagreements with our independent auditors on accounting or financial disclosures.

 
19

 

ITEM 9A (T). CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Principal Executive Officer and Principal Financial Officer, Robertson James Orr, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on his evaluation, Mr. Orr concluded that our disclosure controls and procedures are designed at a reasonable assurance level and are not effective to provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

           Our management is responsible for establishing and maintaining adequate internal control, as is defined in the Securities Exchange Act of 1934.  These internal controls are not designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable.  There are inherent limitations in the effectiveness of any system of internal controls, including the possibility of human error and overriding of controls.  Consequently, an effective internal control system can only provide reasonable, not absolute, assurance with respect to reporting financial information.

Our internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles and the receipts and expenditures of company assets are made and in accordance with our management and directors authorization; and (iii) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

Management has undertaken an assessment of the effectiveness of our internal control over financial reporting based on the framework and criteria established in the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).  Based upon this evaluation, management concluded that our internal control over financial reporting was not effective as of December 31, 2011.

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 the temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.

 
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Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The members of our board of directors serve for one year terms and are elected at the next annual meeting of stockholders, or until their successors have been elected. The officers serve at the pleasure of the board of directors.

Information as to our current directors and executive officers is as follows:

Name
Age
Title
Since
       
Robertson James Orr
37
President, Secretary, Treasurer, Director
May 12, 2010

Duties, Responsibilities and Experience

Robertson James Orr, has been our President, Treasurer and Secretary since May 12, 2010. Mr. Orr attended Arizona State University and graduated with a BA in Business Management.  In 1998, Mr. Orr assisted in the founding of bluemedia, Inc., a successful large format digital printing company based in Tempe, Arizona.  Mr. Orr lead bluemedia to profitability 9 years ago while overseeing the company's sales department and business development, and since then the company has continued to grow by more than 28% annually. In 2005, Mr. Orr and his Partners in bluemedia started a non-traditional ad agency called Blind Society, which is responsible for the direct to consumer marketing efforts of companies like AT&T, K-Swiss, and Activision. In addition to his entrepreneurial successes, Mr. Orr has been involved with supporting numerous local charitable causes through his work with the Boys & Girls Clubs of Phoenix, St. Joseph the Worker, the MDA and the ADA. He is also on the Board of Directors for the Tempe Chamber of Commerce and is active in the Phoenix 40.

Indemnification of Directors and Officers

Our Articles of Incorporation and Bylaws both provide for the indemnification of our officers and directors to the fullest extent permitted by Nevada law.

 
21

 

Limitation of Liability of Directors

Pursuant to the Nevada General Corporation Law, our Articles of Incorporation exclude personal liability for our Directors for monetary damages based upon any violation of their fiduciary duties as Directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or any transaction from which a Director receives an improper personal benefit. This exclusion of liability does not limit any right which a Director may have to be indemnified and does not affect any Director’s liability under federal or applicable state securities laws. We have agreed to indemnify our directors against expenses, judgments, and amounts paid in settlement in connection with any claim against a Director if he acted in good faith and in a manner he believed to be in our best interests.

Election of Directors and Officers

Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the Board of Directors following the next annual meeting of stockholders and until their successors have been elected and qualified.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our executive officers and directors, and persons who beneficially own more than ten percent of our common stock, to file initial reports of ownership and reports of changes in ownership with the SEC.  Executive officers, directors and greater-than-ten-percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.  Based upon a review of the copies of such forms furnished to us and written representations from our executive officers and directors, we believe that as of the date of this filing they were current in their filings.

Code of Ethics

A code of ethics relates to written standards that are reasonably designed to deter wrongdoing and to promote:

(1)  
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
(2)  
Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the Commission and in other public communications made by an issuer;
(3)  
Compliance with applicable governmental laws, rules and regulations;
(4)  
The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
(5)  
Accountability for adherence to the code.

We have not adopted a corporate code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.

 
22

 

Our decision to not adopt such a code of ethics results from our having a small management for the Company.  We believe that the limited interaction which occurs having such a small management structure for the Company eliminates the current need for such a code, in that violations of such a code would be reported to the party generating the violation.

Corporate Governance

We currently do not have standing audit, nominating and compensation committees of the board of directors, or committees performing similar functions. Until formal committees are established, our entire board of directors, perform the same functions as an audit, nominating and compensation committee.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers has, during the past five years:

·  
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
 
·  
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
 
·  
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
 
·  
been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
 
·  
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
 
·  
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 
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ITEM 11. EXECUTIVE COMPENSATION

Overview of Compensation Program

We currently have not appointed members to serve on the Compensation Committee of the Board of Directors. Until a formal committee is established, our entire Board of Directors has responsibility for establishing, implementing and continually monitoring adherence with the Company’s compensation philosophy. The Board of Directors ensures that the total compensation paid to the executives is fair, reasonable and competitive.

Compensation Philosophy and Objectives

The Board of Directors believes that the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals by the Company and that aligns executives’ interests with those of the stockholders by rewarding performance above established goals, with the ultimate objective of improving stockholder value. As a result of the size of the Company and only having one officer, the Board evaluates both performance and compensation on an informal basis. Upon hiring additional executives, the Board intends to establish a Compensation Committee to evaluate both performance and compensation to ensure that the Company maintains its ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly-situated executives of peer companies. To that end, the Board believes executive compensation packages provided by the Company to its executives, including the named executive officers, should include both cash and stock-based compensation that reward performance as measured against established goals.

Role of Executive Officers in Compensation Decisions

The Board of Directors makes all compensation decisions for, and approves recommendations regarding equity awards to, the executive officers and Directors of the Company. Decisions regarding the non-equity compensation of other employees of the Company are made by management.

Summary Compensation

During the year ended December 31, 2010, our former President and Chief Executive Officer Mr. Carlos Alcantara and our former Treasurer and Secretary Ms. Shanda Alcantara received no compensation for their roles associated as the Company’s officers. Mr. and Ms. Alcantara resigned from their positions with the Company effective on May 12, 2010.

Prior to the resignations of Mr. Carlos Alcantara and Ms. Shanda Alcantara on May 12, 2010, the board of directors appointed Mr. Robertson James Orr to serve as the Company’s President, Secretary and Treasurer.

During the period May 12, 2010 through the year ended December 31, 2010, Mr. Orr, our sole executive officer, did not receive any compensation, including plan or non-plan compensation, nor did Mr. Orr earn any compensation as of December 31, 2010.

 
24

 

On March 1, 2011, we entered into a one year employment agreement with Mr. Orr.  Mr. Orr will receive annual compensation of $42,000, due monthly.  For the fiscal year ended December 31, 2011, Mr. Orr earned $35,000, of which $26,521 was accrued. Additionally, Mr. Orr received 50,000 shares of common stock valued at $40,000 during the year ended December 31, 2011. As of December 31, 2011, Mr. Orr was owed a total of 100,000 shares of common stock valued at $164,000. The 100,000 shares were subsequently issued in March 2012.

On March 1, 2012, we renegotiated Mr. Orr’s employment agreement and the annual compensation is $12,000. Mr. Orr has the option to convert the unpaid compensation to shares of common stock at a $1.00 per share. Additionally, he will receive 15,000 shares of common stock per quarter which will be valued based on the fair value of the common stock on the date the shares are earned.

Summary Compensation Table

The table below summarizes the total compensation paid to or earned by our current Executive Officers for the fiscal year ended December 31, 2011.

SUMMARY COMPENSATION TABLE
 
 
 
 
 
Name and Principal Positions
 
 
 
 
 
 
Year
 
 
 
 
 
Salary
($)
 
 
 
 
 
Bonus
($)
 
 
 
 
Stock Awards
($)
 
 
 
 
Option Awards
($)
Non-Equity Incentive Plan Compen-sation
($)
 
 
Non-qualified Deferred Compensation Earnings
($)
 
 
 
All Other Compen-sation
($)
 
 
 
 
 
Total
($)
Robertson James Orr(1),
                 
President, Secretary,
2011
35,000(2)
-0-
204,000(3)
-0-
-0-
-0-
-0-
239,000
Treasurer & Director
2010
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
                   
(1)  
Mr. Orr was appointed President, Secretary, Treasurer, and Director of the Company on May 12, 2010.
(2)  
During the year ended December 31, 2011, our sole Officer and Director earned compensation totaling $35,000 for his role associated as the Company’s officers, of which $26,521 was accrued.
(3)  
Amount represents the fair market value of 150,000 shares of common stock issued for services as an employee.

Termination of Employment

There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any person which would in any way result in payments to any such person because of his resignation, retirement, or other termination of such person’s employment with the Company or its subsidiaries, or any change in control of the Company, or a change in the person’s responsibilities following a change in control of the Company, except with respect to a breach of contract on the part of the Company.

Option Grants in Last Fiscal Year

During the years ended December 31, 2011 and 2010, we did not grant any options to our officers and directors.

 
25

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information, to the best of our knowledge, about the beneficial ownership of our common stock on April 9, 2012 relating to the beneficial ownership of our common stock by those persons known to beneficially own more than 5% of our capital stock and by our directors and executive officers.  The percentage of beneficial ownership for the following table is based on 6,697,460 shares of common stock outstanding.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and does not necessarily indicate beneficial ownership for any other purpose. Under these rules, beneficial ownership includes those shares of common stock over which the stockholder has sole or shared voting or investment power. It also includes shares of common stock that the stockholder has a right to acquire within 60 days after April 9, 2012 pursuant to options, warrants, conversion privileges or other right. The percentage ownership of the outstanding common stock, however, is based on the assumption, expressly required by the rules of the Securities and Exchange Commission, that only the person or entity whose ownership is being reported has converted options or warrants into shares of our common stock.

Security Ownership of Management, Directors and Certain Beneficial Owners
 
 
Title of Class
 
 
Name of Beneficial Owner(1)
 
Number
Of Shares
Percent
Beneficially
Owned
Common
Robertson James Orr – Sole Officer and Director(2)
341,327
5.01%
Common
Craig Gutchow and Cynthia Kenner(3)
350,000
5.2%
Common
Envision Growth Partners, LLC(4)
500,000
7.5%
Common
All Directors, Officers and Principal Stockholders as a Group
1,191,327
17.71%
 
(1)  
As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to Common Stock (i.e., the power to dispose of, or to direct the disposition of, a security).
(2)  
Robertson James Orr is a natural person directly holding 100% voting power over the shares. Mr. Orr’s address is located at 312 West Macaw Drive, Chandler, AZ 85255.
(3)  
Craig Gutchow and Cynthia Kenner are natural persons directly holding 100% voting power over the shares. Mr. Gutchow and Ms. Kenner address is located at 7150 East Bronco Drive, Paradise Valley, AZ 85253
(4)  
Envision Growth Partners, LLC is owned 100% by Joshua Allred. The address is located at PO Box 722, Mesa, AZ 85211.
 
Changes in Control

There are no arrangements, known to the Company, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPNDENCE

Transactions with Related Persons

As of December 31, 2011 and December 31, 2010 the Company had accounts payable totaling $0 and $343, respectively, due to an entity that is owned and controlled by a former officer, director and stockholder of the Company.

 
26

 

As of December 31, 2011, the Company had a note payable totaling $500,000 due to a stockholder of the Company. The note payable is unsecured and due February 2014.

Promoters and Certain Control Persons

We did not have any promoters at any time since our inception in March 2008.

Director Independence

We currently do not have any independent directors, as the term “independent” is defined in Section 803A of the NYSE Amex LLC Company Guide. Since the OTCQB does not have rules regarding director independence, the Board makes its determination as to director independence based on the definition of “independence” as defined under the rules of the New York Stock Exchange (“NYSE”) and American Stock Exchange (“Amex”).

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

(1)  
AUDIT FEES

Audit and Non-Audit Fees

The following table sets forth the fees paid or accrued by us for the audit and other services provided by De Joya Griffith & Company, LLC for the audit of our annual financial statements for the years ended December 31, 2011 and December 31, 2010:

     
Fiscal Year Ended
December 30, 2011
   
Fiscal Year Ended
December 30, 2010
             
Audit Fees(1)
 
$
$19,000
   
$9,500
Audit-Related Fees
 
$
-
   
-
Tax Fees
 
$
-
   
-
All Other Fees
 
$
-
   
-
Total
 
$
$19,000
   
$9,500
             
(1)  
Audit Fees: This category represents fees for professional services provided in connection with the audit of our financial statements and review of our quarterly financial statements.

(2) AUDIT-RELATED FEES

None.

(3) TAX FEES

See table above.

(4) ALL OTHER FEES

None.

 
27

 

(5) AUDIT COMMITTEE POLICIES AND PROCEDURES

We do not have an audit committee.

(6) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.

Not applicable.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)  
We have filed the following documents as part of this Annual Report on Form 10-K:

1.  
The financial statements listed in the "Index to Consolidated Financial Statements" on page 31 are filed as part of this report.
2.  
Financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
3.  
Exhibits included or incorporated herein: See index to Exhibits.
Exhibit Index
     
Incorporated by reference
Exhibit
Number
Exhibit Description
Filed
herewith
Form
Period
ending
Exhibit
Filing date
2.1
Acquisition Agreement and Plan of Merger – dated March 3, 2011
 
8-K
 
2.1
3/10/11
2.2
Addendum No. 1 to Acquisition Agreement and Plan of Merger – Dated April 27, 2011
 
8-K
 
2.2
5/6/11
3(i)(a)
Articles of Incorporation of Bollente Companies, Inc. (Formerly Alcantara Brands Corporation)
 
SB-2
 
3(i)(a)
3/19/08
3(ii)(a)
Bylaws of Bollente Companies, Inc. (Formerly Alcantara Brands Corporation)
 
SB-2
 
3(ii)(a)
3/19/08
3(i)(b)
Certificate of Amendment – Name Change – Dated March 2, 2011
 
10-Q
9/30/11
3(i)(b)
11/24/10
3(i)(c)
Certificate of Change – 50:1 Reverse Split – Dated September 23, 2010
     
3(i)(c)
11/24/10
10.1
Debt Conversion Agreement – Dated March 3, 2011
 
8-K
 
10.1
3/10/11
10.2
Employment Agreement – Dated February 18, 2011
 
10-Q
6/30/11
10.2
5/23/11
10.3
Employment Agreement – Dated March 1, 2012
X
       
31
Certification pursuant to Section 302 of the Sarbanes-Oxley Act
X
       
32
Certification pursuant to Section 906 of the Sarbanes-Oxley Act
X
       
101.INS**
XBRL Instance Document
X
       
101.SCG**
XBRL Taxonomy Extension Schema
X
       
101.CAL**
XBRL Taxonomy Extension Calculation Linkbase
X
       
101.DEF
XBRL Taxonomy Extension Definition Linkbase
X
       
101.LAB**
XBRL Taxonomy Extension Label Linkbase
X
       
101.PRE**
XBRL Taxonomy Extension Presentation Linkbase
X
       
 
**
XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 

 
28

 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BOLLENTE COMPANIES INC.


By: /S/ Robertson James Orr                                                                  
Robertson James Orr, President

Date: April 13, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature
Title
Date
     
/S/ Roberton James Orr 
Chairman of the Board of Directors,
April 13, 2012
Robertson James Orr
Chief Executive Officer (Principal Executive Officer)
 
 
and Principal Financial Officer
 
     
     



 
29

 

BOLLENTE COMPANIES, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010


 
PAGES
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
F-1
   
CONSOLIDATED BALANCE SHEETS
F-2
   
CONSOLIDATED STATEMENTS OF OPERATIONS
F-3
   
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
F-4
   
CONSOLIDATED STATEMENTS OF CASH FLOWS
F-5
   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-5 – F-29


 
 

 

De Joya Griffith & Company, LLC

CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Bollente Companies, Inc. and Subsidiary
(Formerly Alcantara Brands Corporation)

We have audited the accompanying consolidated balance sheets of Bollente Companies, Inc. and Subsidiary (Formerly Alcantara Brands Corporation (A Development Stage Company)) as of December 31, 2011 and 2010 and the related consolidated statements of operations, stockholders’ deficit and cash flows for the years then ended and from inception (March 7, 2008) through December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Bollente Companies, Inc. and Subsidiary (Formerly Alcantara Brands Corporation (A Development Stage Company)) as of December 31, 2011 and 2010 and the results of its operations and cash flows for the years then ended and from inception (March 7, 2008) through December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ De Joya Griffith & Company, LLC
Henderson, Nevada
April 10, 2012
 
Member Firm with
Russell Bedford International
2580 Anthem Village Dr., Henderson, NV  89052
Telephone (702) 563-1600 ●  Facsimile (702) 920-8049


F-1

 
 

 


BOLLENTE COMPANIES, INC. (FORMERLY ALCANTARA BRANDS CORPORATION)
 
(A DEVELOPMENT STAGE COMPANY)
 
CONSOLIDATED BALANCE SHEETS
 
(AUDITED)
 
             
             
   
December 31,
   
December 31,
 
   
2011
   
2010
 
         
(restated)
 
ASSETS
           
             
Current assets:
           
Cash
  $ 864     $ 48  
Prepaid expenses
    163       -  
Prepaid stock compensation
    369,375       -  
Total current assets
    370,402       48  
                 
Other assets:
               
Deferred financing cost, net
    1,980       -  
Security deposits
    1,500       -  
Trademarks
    550       -  
Total other assets
    4,030       -  
                 
Total assets
  $ 374,432     $ 48  
                 
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
                 
Current liabilities:
               
Bank overdraft
  $ -     $ 81  
Accounts payable
    66,103       145,426  
Accounts payable – related party
    -       343  
Accrued salaries – related party
    26,521       -  
Accrued payroll taxes – related party
    3,060       -  
Notes payable – related party
    250       12,510  
Accrued interest payable – related party
    3,284       598  
Line of credit – related party
    51,881       16,820  
Note payable, net of unamortized debt discount of $900
    41,110       -  
Total current liabilities
    192,209       175,778  
                 
Long-term liabilities:
               
Note payable - related party
    500,000       -  
Total long-term liabilities
    500,000       -  
                 
Total liabilities
    692,209       175,778  
                 
Stockholders' deficit:
               
Preferred stock, $0.001 par value, 10,000,000 shares
               
authorized, no shares issued and outstanding
               
as of December 31, 2011 and December 31, 2010, respectively
    -       -  
Common stock, $0.001 par value, 100,000,000 shares
               
authorized, 6,497,460 and 374,729 shares issued and outstanding
               
as of December 31, 2011 and December 31, 2010, respectively
    6,498       375  
Additional paid-in capital
    1,610,632       1,219,218  
Subscriptions payable
    164,000       50,000  
Deficit accumulated during development stage
    (2,098,907 )     (1,445,323 )
Total stockholders' deficit
    (317,777 )     (175,730 )
                 
Total liabilities and stockholders' deficit
  $ 374,432     $ 48  

See Accompanying Notes to Financial Statements.

F-2

 
 

 


BOLLENTE COMPANIES, INC. (FORMERLY ALCANTARA BRANDS CORPORATION)
 
(A DEVELOPMENT STAGE COMPANY)
 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
(AUDITED)
 
                   
                   
               
Inception
 
               
(March 7, 2008)
 
   
For the years ended
   
to
 
   
December 31,
   
December 31,
 
   
2011
   
2010
   
2011
 
         
(restated)
       
Revenue
  $ -     $ -     $ -  
                         
Operating expenses:
                       
General and administrative
    22,662       36,325       78,970  
Executive compensation
    242,926       803       242,926  
Product development - related party
    -       39,576       336,014  
Research and development
    59,530       -       59,530  
Professional fees
    263,167       943,645       1,315,295  
                         
Total operating expenses
    588,285       1,020,349       2,032,735  
                         
Other expenses:
                       
Interest expense - related party
    (36,797 )     (873 )     (37,670 )
Interest expense
    (28,502 )     -       (28,502 )
                         
Total other expenses
    (65,299 )     (873 )     (66,172 )
                         
Net loss
  $ (653,584 )   $ (1,021,222 )   $ (2,098,907 )
                         
Net loss per common share - basic
  $ (0.17 )   $ (2.98 )        
                         
Weighted average number of common shares
    3,917,125       342,664          
outstanding - basic
                       

See Accompanying Notes to Financial Statements.

F-3

 
 

 


ALCANTARA BRANDS CORPORATION
 
(A DEVELOPMENT STAGE COMPANY)
 
STATEMENT OF STOCKHOLDERS' DEFICIT
 
(AUDITED)
 
                                                     
                                                     
                                             
Deficit
     
                                             
Accumulated
     
                           
Additional
               
During
   
Total
   
Preferred Shares
   
Common Shares
   
Paid-In
   
Subscriptions
   
Subscriptions
   
Development
   
Stockholders'
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Receivable
   
Payable
   
Stage
   
Deficit
March 7, 2008
                                                   
Issuance of common stock for cash on organization of the Company
    -     $ -       150,000       150       7,350       -       -       -       7,500  
                                                                         
March 14, 2008
                                                                       
Issuance of common stock for professional fees
    -       -       20,000       20       9,980       -       -       -       10,000  
                                                                         
September 30, 2008
                                                                       
Issuance of common stock for cash, net offering costs
    -       -       110,000       110       49,890       (500 )     -       -       49,500  
                                                                         
Net loss
    -       -       -       -       -       -       -       (77,464 )     (77,464 )
                                                                         
Balance, December 31, 2008
    -     $ -       280,000       280       67,220       (500 )     -       (77,464 )     (10,464 )
                                                                         
March 4, 2009
                                                                       
Donated capital
    -       -       -       -       1,000       -       -       -       1,000  
                                                                         
October 27, 2009
                                                                       
Issuance of common stock for cash
    -       -       16,762       17       214,515       -       -       -       214,532  
                                                                         
November 2, 2009
                                                                       
Cash received for sale of common stock
    -       -       -       -       -       -       50,000       -       50,000  
                                                                         
December 17, 2009
                                                                       
Cash received for sale of common stock
    -       -       -       -       -       -       30,000       -       30,000  
                                                                         
December 31, 2009
                                                                       
Expenses paid for by an officer of the Company
    -       -       -       -       2,555       -       -       -       2,555  
                                                                         
Net loss
    -       -       -       -       -       -       -       (346,637 )     (346,637 )
                                                                         
Balance, December 31, 2009
    -     $ -       296,762       297       285,290       (500 )     80,000       (424,101 )     (59,014 )
                                                                         
February 9, 2010
                                                                       
Issuance of common stock for services
    -       -       10,000       10       194,990       -       -       -       195,000  
                                                                         
February 28, 2010
                                                                       
Donated capital
    -       -       -       -       3,555       -       -       -       3,555  
                                                                         
March 3, 2010
                                                                       
Issuance of warrants for services
    -       -       -       -       308,176       -       -       -       308,176  
                                                                         
March 22, 2010
                                                                       
Issuance of common stock for services
    -       -       1,000       1       14,999       -       -       -       15,000  
                                                                         
May 5, 2010
                                                                       
Issuance of common stock for cash
    -       -       11,967       12       122,988       500       (80,000 )     -       43,500  
                                                                         
June 9, 2010
                                                                       
Issuance of common stock for services
    -       -       35,000       35       174,965       -       -       -       175,000  
                                                                         
June 17, 2010
                                                                       
Issuance of common stock for services
    -       -       20,000       20       79,980       -       -       -       80,000  
                                                                         
July 1, 2010
                                                                       
Shares issuable for services
    -       -       -       -       -       -       25,000       -       25,000  
                                                                         
October 1, 2010
                                                                       
Shares issuable for services
    -       -       -       -       -       -       25,000       -       25,000  
                                                                         
December 31, 2010
                                                                       
Recapitalization for merger with Bollente, Inc.
    -       -       -       -       34,275       -       -       -       34,275  
                                                                         
Net loss
    -       -       -       -       -       -       -       (1,021,222 )     (1,021,222 )
                                                                         
Balance, December 31, 2010
    -     $ -       374,729       375       1,219,218       -       50,000       (1,445,323 )     (175,730 )
                                                                         
February 24, 2011
                                                                       
Deemed distribution
    -       -       -       -       (516,563 )     -       -       -       (516,563 )
                                                                         
March 7, 2011
                                                                       
Issuance to settle accounts payable
    -       -       250,000       250       137,250       -       -       -       137,500  
                                                                         
May 1, 2011
                                                                       
Issuance for employment agreement
    -       -       50,000       50       39,950       -       -       -       40,000  
                                                                         
May 16, 2011
                                                                       
Recapitalization for merger with Bollente, Inc.
    -       -       4,707,727       4,708       (4,708 )     -       -       -       -  
                                                                         
June 21, 2011
                                                                       
Issuance for consulting services
    -       -       375,000       375       299,625       -       -       -       300,000  
                                                                         
September 30, 2011
                                                                       
Issuance for cash
    -       -       400,000       400       99,600       -       -       -       100,000  
                                                                         
September 30, 2011
                                                                       
Issuance for subscriptions payable
    -       -       10,000       10       49,990       -       (50,000 )     -       -  
                                                                         
September 30, 2011