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EX-32 - SOX SECTION 906 CERTIFICATION OF THE CEO - Epoxy, Inc.exhibit321.htm
EX-31 - SOX SECTION 302(A) CERTIFICATION OF THE CEO - Epoxy, Inc.exhibit311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

(Mark One)

 

[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 UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

[ ] to [ ]

Commission file number

000-53669

     

 

NEOHYDRO TECHNOLOGIES CORP.

(Exact name of registrant as specified in its charter)

 

Nevada

 

N/A

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

2200 Yarbrough Avenue, Suite B 305, El Paso, TX

 

79925

(Address of principal executive offices)

 

(Zip Code)

Registrant's telephone number, including area code:

 

805.857.1074

 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

 

Name of Each Exchange On Which Registered

N/A

 

N/A

 

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.00001

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 the Securities Act. 

 

Yes ¨  No 

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 

 

 

 

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 last 90 days. 

 

Yes x  No ¨ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 of this chapter)  is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

 

¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  

¨

Accelerated filer

¨

 

Non-accelerated filer

¨

Smaller reporting company

x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  

 

Yes x  No ¨ 

             

The aggregate market value of Common Stock held by non-affiliates of the Registrant on June 30, 2011 was $19,747 based on a $0.0026 average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.

165,358,040 common shares as of April 16, 2012

 

 

 

DOCUMENTS INCORPORATED BY REFERENCE

None.

 

 

2


 

TABLE OF CONTENTS

 

Item 1.     Business  4
Item 1A.  Risk Factors 6
Item 1B.  Unresolved Staff Comments 6
Item 2.     Properties 6
Item 3.      Legal Proceedings 6
Item 4.     Mine Safety Disclosures. 6
Item 5.     Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities  8
Item 6.     Selected Financial Data. 8
Item 7.     Management’s Discussion and Analysis of Financial Condition and Results of Operations 8
Item 7A.  Quantitative and Qualitative Disclosures About Market Risk 11
Item 8.     Financial Statements and Supplementary Data. 11
Item 9.     Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 12
Item 9A.  Controls and Procedures 12
Item 9B.  Other Information. 13
Item 10.   Directors, Executive Officers and Corporate Governance. 13
Item 11.   Executive Compensation. 16
Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 18
Item 13.   Certain Relationships and Related Transactions, and Director Independence. 18
Item 14.   Principal Accounting Fees and Services 19
Item 15.   Exhibits, Financial Statement Schedules. 20

 

 

3


 

PART I

Item 1.       Business

This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States Dollars and all references to “common shares” refer to the common shares in our capital stock.

As used in this current report and unless otherwise indicated, the terms "we", "us" and "our" mean Neohydro Technologies Corp. a Nevada corporation and our wholly-owned subsidiary, Green Interactive Hybrid Technologies Canada Inc., a company incorporated under the laws of the Province of Alberta, unless otherwise indicated.

General Overview

We were incorporated under the laws of the State of Nevada on November 13, 2007.

We have previously been engaged in the business of acquisition and exploration of mining properties and the industrial waste water business. Until March 8, 2011 we were in the business of installing a patented turbo systems that was proven to assist an engine to operate more efficiently, with less effort, less fuel consumption, and enhanced horsepower.   We are no longer in any of these businesses. We maintain our statutory registered agent's office at National Registered Agents, Inc. of NV, 1000 East William Street, Suite 204, Carson City, Nevada 89701 and our business office is located at 2200 Yarbrough Avenue, Suite B 305, El Paso, TX  79925. Our telephone number is 805.857.1074

We have a wholly-owned subsidiary, Green Interactive Hybrid Technologies Canada Inc., a company incorporated under the laws of the Province of Alberta.

Other than as set out in this annual report, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.

Our Current Business

We are a company with no operations. 

We were not successful in the business of installing patented turbo systems that were proven to assist an engine to operate more efficiently, with less effort, less fuel consumption, and enhanced horsepower, focused initially on the light and heavy-duty trucking industry.

 

4


 

Historically, we have been able to raise a limited amount of capital through private placements of our equity stock, but we are uncertain about our continued ability to raise funds privately.

Other than as set out herein, we have not entered into any formal written agreements for a business combination or opportunity. If any such agreement is reached, we intend to disclose such an agreement by filing a current report on Form 8-K with the Securities and Exchange Commission.

Our management has been analyzing the various alternatives available to our company to ensure our survival and to preserve our shareholder's investment in our common shares. This analysis has included sourcing additional forms of financing to continue our business as is, or mergers and/or acquisitions. At this stage in our operations, we believe either course is acceptable, as our operations have not been profitable and our future prospects for our business are not good without further financing.

We are focusing our preliminary merger/acquisition activities on potential business opportunities with established business entities for the merger of a target business with our company. In certain instances, a target business may wish to become a subsidiary of our company or may wish to contribute assets to our company rather than merge. We anticipate that any new acquisition or business opportunities by our company will require additional financing. There can be no assurance, however, that we will be able to acquire the financing necessary to enable us to pursue our plan of operation. If our company requires additional financing and we are unable to acquire such funds, our business may fail.

In implementing a structure for a particular business acquisition or opportunity, we may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. Upon the consummation of a transaction, it is likely that our present management will no longer be in control of our company and our existing business will close down. In addition, it is likely that our officers and directors will, as part of the terms of the acquisition transaction, resign and be replaced by one or more new officers and directors.

We anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success. Management believes that there are numerous firms in various industries seeking the perceived benefits of being a publicly registered corporation. Business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

We may seek a business opportunity with entities whom have recently commenced operations, or entities who wish to utilize the public marketplace in order to raise additional capital in order to expand business development activities, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.

At this stage, we can provide no assurance that we will be able to locate compatible business opportunities, what additional financing we will require to complete a combination or merger with another business opportunity or whether the opportunity's operations will be profitable.

If we are unable to secure adequate capital to continue our business or alternatively, complete a merger or acquisition, our shareholders will lose some or all of their investment and our business will likely fail.

On September 27, 2011, we entered into a binding term sheet, which outlines the general terms and conditions pursuant to which our company has agreed to enter into a definitive agreement to purchase 75% of the issued and outstanding shares of common stock of Performance DNS Inc., a private company domiciled in Nevada, in exchange for 30,000,000 shares of common stock of our company. As a term of the agreement, on September 27, 2011, the president of Performance DNS became the current president of our company. Under the term sheet, our company agreed to complete an equity or debt financing of up to $500,000 within 6 months of closing and agreed to advance $25,000 upon closing. Each party will pay its own expenses in connection with the negotiation of the definitive agreement. The agreement has not yet closed and our company has not yet closed an equity or debt

 

5


 

financing of up to $500,000 within the past 6 month period, therefore, both Companies are still negotiating new terms.

Patents and Trademarks

We do not own any patents or trademarks.

Employees

We currently have no employees other than our officers and directors. We expect to use consultants, attorneys and accountants as necessary, and do not anticipate a need to engage any full-time employees.

Research and Development

We have incurred $Nil in research and development expenditures over the last two fiscal years. 

Purchase of Significant Equipment

We do not intend to purchase any significant equipment over the twelve months.

Item 1A.    Risk Factors

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 1B.    Unresolved Staff Comments

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 2.       Properties

Executive Offices

Our business office is located at 2200 Yarbrough Avenue, Suite B 305, El Paso, TX  79925.   Our office space is provided by our president Claudio Lai.  We do not anticipate that we will require any additional premises in the foreseeable future. 

Item 3.       Legal Proceedings

We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.

Item 4.       Mine Safety Disclosures

Not applicable

PART II

Item 5.       Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is not traded on any exchange. Our common stock is quoted on the OTC Bulletin Board under the trading symbol “NHYT”. Trading in stocks quoted on the OTC Bulletin Board is often thin and is characterized

 

 

6


 

by wide fluctuations in trading prices due to many factors that may have little to do with a company's operations or business prospects. We cannot assure you that there will be a market for our common stock in the future.

OTC Bulletin Board securities are not listed or traded on the floor of an organized national or regional stock exchange. Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTC Bulletin Board issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.

The following table shows the high and low bid quotations for our common stock for each fiscal quarter during our two most recently completed fiscal years. These quotations are based on inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

 

OTC Bulletin Board(1)  

Quarter Ended  

High  

Low  

December 31, 2011

$0.0089

$0.0034

September 30, 2011

$0.006

$0.0028

June 30, 2011

$0.01

$0.0026

March 31, 2011

$0.009

$0.0041

December 31, 2010

$0.015

$0.004

September 30, 2010

$0.02

$0.005

June 30, 2010

$0.03

$0.0102

March 31, 2010

$0.06

$0.018

 

(1)  Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions.

Our common shares are issued in registered form. Empire Stock Transfer Inc., 1859 Whitney Mesa Dr., Henderson, NV 89014, Telephone: (702) 818-5898; Facsimile: (702) 974-1444, is the registrar and transfer agent for our common shares.

On April 11, 2012, the shareholders' list showed 6 registered shareholders.

Dividend Policy

We have not paid any cash dividends on our common stock and have no present intention of paying any dividends on the shares of our common stock. Our current policy is to retain earnings, if any, for use in our operations and in the development of our business. Our future dividend policy will be determined from time to time by our board of directors.

Equity Compensation Plan Information

We do not have any equity compensation plans.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

Other than as set forth below, we did not sell any equity securities which were not registered under the Securities Act during the year ended December 31, 2011 that were not otherwise disclosed in this annual report on Form 10-K, in our quarterly reports on Form 10-Q or in our current reports on Form 8-K filed during the year ended December 31, 2011.

7


 

Purchase of Equity Securities by the Issuer and Affiliated Purchasers  

We did not purchase any of our shares of common stock or other securities during our fourth quarter of our fiscal year ended December 31, 2011.

Item 6.       Selected Financial Data

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 7.       Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this annual report.  The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.

Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Results of Operations for our Years Ended December 31, 2011 and 2010

Our net loss and comprehensive loss for our year ended December 31, 2011, for our year ended December 31, 2010 and the changes between those periods for the respective items are summarized as follows:

 

Year Ended
December 31,
2011

$

Year Ended
December 31,
2010

$

Change Between
Year Ended
December 31, 2011
and Year Ended
December 31, 2010

$

Revenue

Nil

Nil

Nil

General and administrative

37,634

363,924

326,290

Net loss for the period

(37,634)

(413,897)

376,263

General and Administrative

We have no revenues in the years ended December 31, 2011 and 2010.  In the year ended December 31, 2011, we incurred net losses of $37,634.  From November 13, 2007 (inception date) to December 31, 2011 we incurred a net loss of $1,321,749

General and administrative expenses relating to operations increased for the year ended December 31, 2011 to approximately $37,634 from approximately $363,924 for the year ended December 31, 2010. The decrease of $326,290 was primarily due to decreased management fees and marketing and administrative costs related to securing contracts for the patented turbo hybrid system (GIHS) in fiscal 2010 versus having no business operations during fiscal 2011. 

Our company did not purchase and have operational a demonstration GIHS by September 30, 2010, as required under the amended licensing agreement, and is therefore, currently in default under the licensing agreement. On March 8, 2011, our company received notice from the GIHS Licensor that our company was in default under the licensing agreement by failing to purchase and have operational a demonstration GIHS by September 30, 2010 and the agreement was terminated by the licensor. 

8


 

Liquidity and Financial Condition

Working Capital

 



At

December 31,

2011  



At

December 31,

2010

Current assets

$

Nil

$

14,076

Current liabilities

 

80,329

 

56,771

Working capital (deficit)

$

(80,329)

$

(42,695)

Cash Flows

 

 

Year Ended

 

 

December 31,

 

December 31

 

 

2011

    

2010

Cash flows used in operating activities

$   

                                    (45,845)  

$

                                        (235,128)

Cash flows provided by (used in) investing activities

 

Nil

$

Nil

Cash flows provided by financing activities

 

31,769

$

210,086

Net (decrease) in cash during year

$

(14,076)

$

(25,042)

Operating Activities

Net cash used in operating activities was $45,845 for our year ended December 31, 2011 compared with cash used in operating activities of $235,128 in the same period in 2010.  The decrease of $188,283 in operating activities is mainly attributable to lack of an operating business venture. 

Investing Activities

Net cash provided by investing activities was $Nil for our year ended December 31, 2011 compared to net cash used in investing activities of $Nil in the same period in 2010. 

Financing Activities

Net cash from financing activities was $31,769 for our year ended December 31, 2011 compared to $210,086 in the same period in 2010. The decrease was mainly attributable to a decrease of advances from related parties.

Contractual Obligations

As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

Going Concern

These accompanying consolidated financial statements have been prepared on a going concern basis, which implies our company will continue to realize its assets and discharge its liabilities in the normal course of business. Our company has not generated revenues since inception, has never paid dividends and is unlikely to generate earnings in the immediate or foreseeable future. As of December 31, 2011, our company has accumulated losses of $1,321,749 since inception and has a working capital deficit of $80,329. These factors raise substantial doubt about our company’s ability to continue as a going concern.  Our company intends to fund operations through equity financing arrangements, which may be insufficient to fund capital expenditures, working capital and other cash requirements for the year ending December 31, 2011.  The continuation of our company as a going concern is dependent upon the continued financial support from its shareholders, the ability of our company to obtain sufficient equity financing and the attainment of profitable operations. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should our company be unable to continue as a going concern.

 

9

 


 

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is  based upon the accompanying consolidated financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America and are expressed in United States Dollars.  Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses.  These estimates and assumptions are affected by management’s application of accounting policies.  We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements

Foreign Currency Translation

Our company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. Our company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Recent Accounting Pronouncements

Our company’s management does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 8.       Financial Statements and Supplementary Data

 

10


 

 

Neohydro Technologies Corp.

(A Development Stage Company)

December 31, 2011

                                                                                                                                                   Index

CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm.............................................................   F–1

Consolidated Balance Sheets........................................................................................................   F–2

Consolidated Statements of Operations..........................................................................................  F–3

Consolidated Statements of Stockholders’ Deficit..........................................................................   F–4

Consolidated Statements of Cash Flows........................................................................................   F–5

Notes to Consolidated Financial Statements..................................................................................   F–6

 

 

 

 

 

 

 

 

11


 

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Directors

Neohydro Technologies Corp.

(A Development Stage Company)

Piscataway, New Jersey

We have audited the accompanying consolidated balance sheets of  Neohydro Technologies Corp. (a Development Stage Company) (the “Company”) as of December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the years then ended and for the period from November 13, 2007 (Inception) to December 31, 2011. These  consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The consolidated financial statements for the period from November 13, 2007 (Inception) to December 31, 2008 were audited by other auditors whose report expressed an unqualified opinion on those consolidated financial statements. The consolidated financial statements for the period from November 13, 2007 (Inception) to December 31, 2008 include total revenues of $-0- and a net loss of $664,299, respectively. Our opinion on the consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the period from November 13, 2007 (Inception) to December 31, 2011, insofar as it relates to amounts from November 13, 2007 (Inception) to December 31, 2008, is based solely on the report of other auditors.

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 consolidated 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 Neohydro Technologies Corp. as of December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the years then ended and for the period from November 13, 2007 (Inception) to 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 that Neohydro Technologies Corp. will continue as a going concern.  As discussed in Note 1 to the consolidated financial statements, Neohydro Technologies Corp. has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ GBH CPAs, PC

GBH CPAs, PC
www.gbhcpas.com 

Houston, Texas
April 16, 2012

 

 

F-1


 

 

Neohydro Technologies Corp. and Subsidiary

(A Development Stage Company)

Consolidated Balance Sheets

(Expressed in US Dollars)

 

 

 

December 31,

December 31,

 

2011

2010

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$            –

$     14,076

Prepaid expenses

 

 

 

Total Assets

$            –

$     14,076

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts payable and accrued liabilities

$     34,089

$     42,510

Due to related party

471

261

Loans payable

45,769

14,000

 

 

 

Total Current Liabilities

80,329

56,771

 

 

 

Stockholders’ Deficit

 

 

 

 

 

Preferred Stock, $0.00001 par value;

authorized: 100,000,000 shares, none issued and outstanding

Common Stock, $0.00001 par value;

Authorized: 800,000,000 shares,

165,358,040 shares issued and outstanding

1,654

1,654

Additional paid-in capital

1,239,766

1,239,766

Deficit accumulated during the development stage

(1,321,749)

(1,284,115)

 

 

 

Total Stockholders' Deficit

(80,329)

(42,695)

 

 

 

Total Liabilities and Stockholders' Deficit

$             –

$      14,076

 

 

 


See Notes to Consolidated Financial Statements.

F-2

 


 

Neohydro Technologies Corp. and Subsidiary

(A Development Stage Company)

Consolidated Statements of Operations

(Expressed in US Dollars)

 

 

 

 

For the year ended

For the year ended

Period from

November 13, 2007

(Inception) to

 

 

 

December 31,

December 31,

December 31,

 

 

 

2011

2010

2011

 

 

 

 

 

 

Revenue

 

 

$               0

$              0

$                      0

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

37,634

363,924

580,430

 

 

 

 

 

 

Operating Loss

 

 

(37,634)

(363,924)

(580,430)

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

Accretion of discount on convertible debenture

 

 

(11,046)

(15,142)

Loss on extinguishment of debt

 

 

(24,545)

(24,545)

Loss on change in fair value of conversion feature

 

 

(14,382)

 

 

 

 

 

 

Total other income

 

 

(49,973)

(39,687)

 

 

 

 

 

 

Loss from continuing operations

 

 

(37,634)

(413,897)

(620,117)

 

 

 

 

 

 

Discontinued operations

 

 

 

 

 

Gain on disposal of discontinued operations

 

 

18,177

Operations

 

 

(719,809)

 

 

 

 

 

 

Total loss from discontinued operations

 

 

(701,632)

 

 

 

 

 

 

Net loss

 

 

$      (37,634)

$     (413,897)

$        (1,321,749)

 

 

 

 

 

 

Net Loss Per Share – Basic and Diluted:

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations

 

 

$         (0.00)

$        (0.01)

 

Discontinued operations

 

 

 

Net loss

 

 

$         (0.00)

$        (0.01)

 

 

 

 

 

 

 

Weighted Average Shares Outstanding – Basic and Diluted

 

 

165,358,040

61,613,000

 

 

 

 

 

 

 

See Notes to Consolidated Financial Statements.

F-3

 


 

Neohydro Technologies Corp. and Subsidiary

(A Development Stage Company)

Consolidated Statements of Stockholders’ Deficit

For the Period from November 13, 2007 (Inception) to December 31, 2011

(Expressed in US Dollars)

 

 

Common Stock 
$0.00001 par value

 

Additional

Paid-in

 

Deficit Accumulated During the Development

 

Shares

Amount

Capital

Stage

Total

 

Balance - November 13, 2007 (Inception)

$ 0

$ 0

$ 0

$ 0

$ 0

 

 

 

 

 

 

Common shares sold for cash at $0.000125 per share

40,000,000

400

4,600

5,000

Common shares sold for cash at $0.00125 per share

32,800,000

328

40,672

41,000

Donated services

1,500

1,500

Net loss

    (26,792)

(26,792)

Balance - December 31, 2007

72,800,000

$  728

$  46,772

$   (26,792)

$ 20,708

 

 

 

 

 

 

Common shares sold for cash at $0.40 per unit, less costs of $10,000

250,000

3

89,997

90,000

Donated services

6,000

6,000

Net loss

(637,507)

(637,507)

Balance - December 31, 2008

73,050,000

$ 731

$ 142,769

$ (664,299)

$ (520,799)

 

 

 

 

 

 

Common shares returned and cancelled

(14,560,000)

(146)

146

Common shares issued for cash at $0.20 per unit

500,000

5

99,995

100,000

Donated capital - amount due licensor

500,000

500,000

Net loss

    (205,919)

(205,919)

Balance - December 31, 2009

58,990,000

$ 590

$ 742,910

$ (870,218)

$ (126,718)

 

 

 

 

 

 

Common shares issued for conversion of convertible notes

45,595,156

456

150,009

150,465

Common stock issued for settlement of related party payables

51,681,975

517

292,392

292,909

Common stock issued for settlement of payables

9,090,909

91

54,455

54,546

Net loss

(413,897)

(413,897)

Balance - December 31, 2010

165,358,040

$ 1,654

$ 1,239,766

$ (1,284,115)

$ (42,695)

 

 

 

 

 

 

Net loss

(37,634)

(37,634)

Balance - December 31, 2011

165,358,040

$ 1,654

$ 1,239,766

$ (1,321,749)

$ (80,329)

 
F-4

 

Neohydro Technologies Corp. and Subsidiary

(A Development Stage Company)

Consolidated Statements of Cash Flows

(Expressed in US Dollars)

 

 

For the year ended

For the year ended

Period from

November 13, 2007

(Inception) to

 

December 31,

December 31,

December 31,

 

2011

2010

2011

 

 

 

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

Net loss

$ (37,634)

$ (413,897)

$ (1,321,749)

 

 

 

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Donated services

7,500

Impairment of mineral property acquisition costs

6,500

Amortization of terminated license agreement costs

1,096

Impairment of terminated license agreement costs

498,904

Gain on disposal of discontinued operations

(18,177)

Loss on derivative liability

14,382

Accretion of debt discount

(4,096)

Stock-based compensation

122,359

122,359

Loss on extinguishment of debt

24,545

24,545

Changes in operating assets and liabilities:

 

 

 

Accounts payable and accrued liabilities

(8,421)

21,579

34,089

Due to related party

210

210

 

 

 

 

Net cash used for operating activities

(45,845)

(235,128)

(644,723)

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

Mineral property acquisition costs

(6,500)

 

 

 

 

Net cash used for investing activities

(6,500)

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

Proceeds from sale of common stock – net

236,000

Net advances from related party

145,763

234,131

Proceeds from loans payable and convertible debt

31,769

64,323

181,092

 

 

 

 

Net cash provided by financing activities

31,769

210,086

651,223

 

 

 

 

Decrease in cash

(14,076)

(25,042)

 

 

 

 

Cash – beginning of period

14,076

39,118

 

 

 

 

Cash – end of period

$     –

$ 14,076

$     –

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

Interest paid

$     –

$     –

$     –

Income taxes paid

$     –

$     –

$     –

 

                                                                                                            Non-cash investing and financing activities (Note 9)

F-5


 

 

Neohydro Technologies Corp. and Subsidiary

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

(Expressed in US Dollars)

 

1.     Nature of Operations

Neohydro Technologies Corp. (the “Company”) was incorporated in the State of Nevada on November 13, 2007 as Rioridge Resources Corp. On July 22, 2008, the Company changed its name to Neohydro Technologies Corp. From December 14, 2007 to September 20, 2008, the Company’s principal business was the acquisition and exploration of mineral resources. On September 22, 2008, the Company entered into a licensing agreement and acquired the exclusive worldwide marketing, distribution and licensing rights to water sterilization technology. On March 31, 2009, the water sterilization technology license agreement was terminated by the licensor. On June 8, 2009, the Company entered into a licensing agreement to market and sell in Canada an environmental fuel efficient turbo technology called Green Interactive Hybrid System (“GIHS”). On September 1, 2009, the Company incorporated Green Interactive Hybrid Technologies Canada Inc. “GIH Canada” in the Province of Alberta, Canada as a wholly-owned subsidiary to better attract Canadian investment. On March 8, 2011, the GIHS license agreement was terminated by the licensor.

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated revenues since inception, has never paid dividends and is unlikely to generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As of  December   31, 2011, the Company has a working capital deficit of $80,329 and has accumulated losses of $1,321,749 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2.     Summary of Significant Accounting Policies

a)        Basis of Presentation

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is December 31.

b)        Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

c)         Financial Instruments

Our financial instruments consist principally of cash and cash equivalents, due to related party, accounts payable, and loan payable.

d)       Basic and Diluted Earnings (Loss) Per Share

Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method for options and warrants and the if-converted method for convertible preferred stock. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At December 31, 2011, the Company has 1,000,000 (2010 – 1,250,000) potentially dilutive securities outstanding.

 

F-6

 


 

 

Neohydro Technologies Corp. and Subsidiary

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

(Expressed in US Dollars)

2.               Summary of Significant Accounting Policies (continued)

e)       Foreign Currency Translation

The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities  denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

f)        Stock-based Compensation

The Company accounts for share-based payments using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

g)       Income Taxes

The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

h)       Reclassifications 

Certain reclassifications have been made to the prior period’s financial statements to conform to the current period’s presentation.

i)         Subsequent Events

The Company evaluated subsequent events through the date these financial statements were issued. There were no material subsequent events that required recognition or additional disclosure in these financial statements.

j)        Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

F-7


 

 

Neohydro Technologies Corp. and Subsidiary

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

(Expressed in US Dollars)

3.       Related Party Balances/Transactions

Due to related party, which is non-interest bearing, unsecured, and has no specific terms of repayment, consist of:

 

 

December 31,

2011

 

 

December 31,

2010

Due to current president of Company

 

 

 

 

 

Expenses paid on behalf of the Company

$

471

 

$

Due to former chief executive officer

 

 

 

 

 

Expenses paid on behalf of the Company

$

 

$

261

Total

$

471

 

$

261

For the year ended December, 2011, the Company incurred $0 (2010 - $150,000) in management fees expense for services provided by its former chief executive officer (from June 8, 2009). No management fees were accrued subsequent to December 31, 2010, due to the termination of the GIHS licensing agreement the Company formerly held. The prior management fees had been accrued for services performed by its former chief executive officer, Michael Kulcheski, and Harry Gelbard related to the exclusive GIHS license covering the territory of Canada and other such territories to market and sell an environmental fuel efficient turbo technology called Green Interactive Hybrid System. The Company did not fulfill its obligations under the GIHS license agreement and received notice from the licensor that the Company was in default under the GIHS licensing agreement. As a result, from the date the licensing agreement was terminated forward, the Company determined that it is no longer receiving significant management services from Michael Kulcheski and Harry Gelbard related to marketing and selling the GIHS and that any management services currently being provided by them to the Company are not material and do not require recognition in the financial statements.

The Company’s office services and office space are provided without charge by the sole officer and director of the Company.

4.       Loans Payable

a)       On July 30, 2009, the Company entered into a loan agreement with a private company for $35,000. The loan was non-interest bearing and due in full on March 1, 2010. The loan could be cancelled upon the conversion of the loan into shares by the lender. The loan was not repaid by the due date of March 1, 2010 and on April 9, 2010 a new agreement was signed.  (see Note 5(b)).

b)       On March 31, 2010, a private company loaned the Company $28,000.   The loan was non-interest bearing and had no repayment terms.  On May 6, 2010, the private company loaned an additional $17,000 and entered into a convertible note agreement for the gross amount of $45,000 due in full on June 30, 2010.  The loan was not repaid by the due date and a new note was signed on July 31, 2010. (see Note 5(c)).

c)       At December 31, 2011, the Company is indebted to an unrelated third party for $45,769 (December 31, 2010 - $14,000).  The loan is non-interest bearing and is due on demand. 

F-8


 

Neohydro Technologies Corp. and Subsidiary
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2011
(Expressed in US Dollars)

5.       Convertible Notes

a)       On December 17, 2009, the Company entered into a convertible note agreement with a private company.  The Company received $50,000 which bears interest at 15% per annum and was due on March 31, 2010. On April 1, 2010, the due date of the loan was extended to June 1, 2010 and on June 1, 2010 the due date of the loan was extended to June 30, 2011. The Company evaluated the modifications and concluded that the modifications were not troubled debt restructurings or extinguishments of the original debt; as a result no gain or loss was recognized upon modification and no change to the carrying value of the debt was recognized. Interest is payable on the note when the principal amount becomes due. The loan and any unpaid interest are convertible into shares of common stock at a conversion price which is the lesser of (a) $0.15 or (b) a 25% discount to the five day value weighted average stock price of the common stock as of the date of conversion. The Company initially recognized the fair value of the embedded conversion feature of $35,989 as a derivative liability and reduced the carrying value of the convertible loan to $14,011.  The discount on the convertible loan was accreted over the term of the convertible loan, and at March 31, 2010 the unamortized discount was $0, increasing the carrying value to the face value of $50,000. As at December 22, 2010, accrued interest of $7,603 was outstanding and included in the carrying amount of the loan.  The fair value of the derivative liability at December 22, 2010, was $90,297 and a loss of $14,382 was recorded on the change in the fair value of the derivative liability for the year ended December 31, 2010.  The fair value of the derivative liability of $90,297 was determined using the Black-Scholes option pricing model with a quoted market price of $0.006, a conversion price of $0.0033, expected volatility of 365%, no expected dividends, an expected term of six months and a risk-free interest rate of 0.2%.  On December 22, 2010, the loan was converted into 17,455,375 shares at a price of $0.0033 per share based on a 25% discount to the five day value weighted average stock price of the common stock.

b)       On April 9, 2010, the Company entered into a convertible loan agreement which replaced the loan agreement for $35,000 referred to in Note 4(a). According to the terms of the agreement, the loan is due March 1, 2011 and bears interest at 12% per annum. Interest is payable on the note when the principal amount becomes due. The loan and any unpaid interest are convertible into shares of common stock at a conversion price which is the lesser of (a) $0.015 or (b) a 25% discount to the five day value weighted average stock price of the common stock as of the date of conversion. The Company evaluated the modification and concluded that the modification was an extinguishment of the original debt; as a result a loss of $0 for the year ended December 31, 2010, was recognized upon modification and no change to the carrying value of the debt was recognized as the Company determined that the fair value of the new debt was $35,000. As at December 22, 2010 accrued interest of $2,957 was outstanding and included in the carrying amount of the loan.  The fair value of the derivative liability at December 22, 2010, was $41,115 and a loss of $0 was recorded on the change in the fair value of the derivative liability for the year ended December 31, 2010.  The fair value of the derivative liability of $41,115 was determined using the Black- Scholes option pricing model with a quoted market price of $0.006, a conversion price of $0.0033, expected volatility of 262%, no expected dividends, an expected term of two months and a risk-free interest rate of 0.11%.  On December 22, 2010, the loan was converted into 11,502,200 shares at a price of $0.0033 per share based on a 25% discount to the five day value weighted average stock price of the common stock. 

 

 

F-9


 

 

Neohydro Technologies Corp. and Subsidiary
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2011
(Expressed in US Dollars)

5.     Convertible Notes (continued)

c)       On May 6, 2010, the Company entered into a convertible note agreement to secure $45,000 of advances referred to in Note 4(b).  According to the terms of the agreement the loan was due on June 30, 2010 and bore interest at 15% per annum.  Interest was payable on the note when the principal became due.  The loan and any unpaid interest were convertible into shares of common stock at a conversion price which of the lesser of (a) $0.02 or (b) a 25% discount to the five day value weighted average stock price of the common stock as of the date of conversion.  The Company initially recognized the fair value of the embedded conversion feature of $26,543 as a derivative liability and reduced the carrying value of the convertible loan to $18,457. The initial fair value of the derivative liability at May 6, 2010 of $26,543 was determined using the Black Scholes option pricing model with a quoted market price of $0.02, a conversion price of $0.0165, expected volatility of 291%, no expected dividends, an expected term of one year and a risk-free interest rate of 0.32%. The discount on the convertible loan was accreted over the term of the convertible loan, increasing the carrying value to the face value of $45,000 on June 30, 2010. As at June 30, 2010, the discount was fully accreted and the carrying value of the convertible debt was $45,000 and the loan had not been repaid or converted into shares. On July 31, 2010, the loan was extended to June 30, 2011 and an additional $5,323 was loaned to the Company. The Company evaluated the modifications and concluded that the modifications were not troubled debt restructurings or extinguishments of the original debt; as a result no gain or loss was recognized upon modification. As at December 22, 2010, accrued interest of $4,581 was outstanding and included in the carrying amount of the loan.  The fair value of the derivative liability at December 22, 2010, was $84,871 and a loss of $0 was recorded on the change in the fair value of the derivative liability for the year ended December 31, 2010.  The fair value of the derivative liability of $84,871 was determined using the Black-Scholes option pricing model with a quoted market price of $0.006, a conversion price of $0.0033, expected volatility of 360%, no expected dividends, an expected term of six months and a risk-free interest rate of 0.2%.  On December 22, 2010, the loan was converted into 16,637,581 shares at a price of $0.0033 per share based on a 25% discount to the five day value weighted average stock price of the common stock. 

6.       Share Purchase Warrants

A summary of the changes in the Company’s common share purchase warrants is presented below:

 

Number of

Warrants

Weighted Average

Exercise Price

 

 

 

Balance – December 31, 2010

1,250,000

$0.15

Expired

(250,000)

$0.40

 

 

 

Balance – December 31, 2011

1,000,000

$0.09

 

As at December 31, 2011, the following common share purchase warrants were outstanding:

Description

Number of

Warrants

Exercise

Price

Expiry Date

 

 

 

 

Issued October 1, 2009

500,000

$0.10

October 1, 2012

Issued October 1, 2009

500,000

$0.08

October 1, 2013

 

 

 

 

Total

1,000,000

 

 

 

As at December 31, 2011, the aggregate intrinsic value of the common share purchase warrants was $0.

 

 

F-10


 

 

Neohydro Technologies Corp. and Subsidiary
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2011
(Expressed in US Dollars)

7.       Income Taxes

No provisions for income taxes have been recorded in the periods presented since the Company has incurred net losses since inception.

Based on management’s present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset of $268,872 at December 31, 2011 (December 31, 2010 - $256,076) attributable to the future utilization of the net operating loss carry-forward of approximately $790,800 at December 31, 2011 (December 31, 2010 - $756,000) will be realized. Accordingly, the Company has provided a 100% allowance against the deferred tax asset in the financial statements. The Company will continue to review this valuation allowance and make adjustments as appropriate. The $790,800 net operating loss carry-forward expires $25,000 in year 2027, $133,000 in year 2028, $216,000 in year 2029, $379,800 in year 2030, and $37,000 in year 2031.

Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.

The components of the net deferred income tax assets consist of:

 

 

December 31,

2011

 

December 31,

2010

 

 

 

 

 

Net operating loss carry-forward

$

268,872

$

256,076

 

 

 

 

 

Valuation allowance

 

(268,872)

 

(256,076)

 

 

 

 

 

Net deferred income tax assets

$

$


Expected income tax benefit computed by applying the U.S. statutory income tax rate of 34% to pre-tax loss differs from the Company’s benefit from income taxes, as follows:

 

 

For the Years Ended

 

 

December 31,

2011

 

December 31,

2010

 

 

 

 

 

Expected income tax expense (benefit) at 34%

$

(12,796)

$

(140,725)

Non-deductible accretion

 

 

(1,393)

Non-deductible loss on re-valuation of derivative liability and loss on extinguishment of debt

 

 

13,235

 

 

 

 

Change in valuation allowance

 

12,796

 

128,883

 

 

 

 

 

Provision for (benefit from) income taxes

$

$

 
F-11

 


 

Neohydro Technologies Corp. and Subsidiary
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2011
(Expressed in US Dollars)

 

8.       Commitment 

On September 27, 2011, the Company entered into a binding term sheet (the “Term Sheet”), which outlines the general terms and conditions pursuant to which the Company has agreed to enter into a definitive agreement to purchase 75% of the issued and outstanding shares of common stock of Performance DNS Inc. (“Performance DNS”), a private company domiciled in Nevada, in exchange for 30,000,000 shares of common stock of the Company. As a term of the agreement, on September 27, 2011, the President of Performance DNS became the current President of the Company.

Under the Term Sheet, the Company agreed to complete an equity or debt financing of up to $500,000 within 6 months of closing and agreed to advance $25,000 upon closing. The agreement has not yet closed and the Company has not yet closed an equity or debt financing of up to $500,000 within the 6-month period, therefore, both companies are still negotiating new terms.

Each party will pay its own expenses in connection with the negotiation of the definitive agreement. As at December 31, 2011, the agreement has not yet closed.

 

9.       Non-cash Investing and Financing Activities

 

 

For the Year

Ended

December 31,

For the Year

Ended

December 31,

Period from

November 13,

2007 (Date of

Inception) to

December 31,

 

2011

2010

2011

 

 

 

 

Acquisition of license agreement in exchange for liability due Licensor of license agreement

$                          –

$                          –

$               500,000

 

 

 

 

Contribution of amount due Licensor of terminated license agreement

$                          –

$                          –

$              500,000

 

 

 

 

Issuance of common stock for conversion of convertible notes

$                          –

$               150,465

$              150,465

 

 

 

 

Issuance of common stock for settlement of debt

$                          –

$               200,551

$              200,551

 

 

 

 

 
 
 
 
F-12

 

 


 

Item 9.       Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

There were no disagreements related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and interim periods, including the interim period up through the date the relationship ended.

Item 9A.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us 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 rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer (our principal executive officer, principal financial officer and principal accounting officer), as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of December 31, 2011, the end of the period covered by this annual report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer, principal financial officer and principal accounting officer), carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based on the foregoing, our management concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.

This annual report does not include an attestation report of our registered public accounting firm regarding our internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm due to rules of the SEC that permit us to provide only the conclusions to management’s report in this annual report.

Changes in Internal Control

During the fourth quarter of our fiscal year ended December 31, 2011 there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) that materially affected, or are 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

All directors of our company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and

 

12


 

hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:

Name

Position Held
with the Company

Age

Date First Elected or Appointed

Claudio Lai

President, Secretary, Treasurer and Director

42

September 27, 2011

Michael R. Kulcheski

Director

61

June 8, 2009

Business Experience

The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.

Claudio Lai - President, Secretary, Treasurer and Director

Mr. Lai was appointed as our president, secretary, treasurer and as a director of our company on September 27, 2011.

Since 2002, Mr. Lai has served as the president of Performance DNS, a business operating as a sole proprietorship located in El Paso, Texas.  Performance DNS, provides a web and mobile based management tool of website domain names within the Domain Name System (DNS).  Domain administrators using Performance DNS, can dynamically manage the DNS of one or thousands of domains as well as email (MX record) accounts. Mr. Lai manages the day to day operations of Performance DNS including maintaining favorable relationships with existing customers.

Since 2004, he has served as the president of Integration Mind, a business operating as a sole proprietorship, located in El Paso, Texas, that provides online billing, technical, integration, support services and solutions for merchants.  Mr. Lai manages the day to day operations of Integration Mind including but not limited to providing technical support to online merchants who have subscribed to the services of Integration Mind.

In June 2010 Mr. Lai was appointed as president and director of TrustCash Holdings Inc., a company that provides a website to accept online payment options with or without a merchant account As the President Mr. Lai devises strategies, formulates policies and directs operations to ensure that the objectives of TrustCash are met. Mr. Lai is also required to sign major contracts, stock certificates, and other legal documents.

Michael R. Kulcheski - Director

Mr. Kulcheski was appointed a director of our company on June 8, 2009 and served as our president, secretary and treasurer from June 8, 2009 until September 27, 2011.  Mr. Kulcheski remains a director of the company.

From October 2005 until June 2009, Mr. Kulcheski's employer was King Nissan Volvo of Bellingham, WA, where he held the position of Certified Nissan and Master Level Volvo Sales and Leasing Consultant, Internet Sales Manager, Overseas Delivery Specialist and Cross Border Specialist.

From January 2004 to October 2005, Mr. Kulcheski was Co-Founder and Partner of Harbour Pointe Mortgage, Inc. of Bellingham, WA, a Bellingham, WA based mortgage brokerage company that provided residential mortgages in Whatcom and Skagit Counties.

 

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Significant Employees

There are no individuals other than our executive officers who make a significant contribution to our business.

Family Relationships

There are no family relationships between any of our directors, executive officers and proposed directors or executive officers.  
 

Involvement in Certain Legal Proceedings

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

1.                   been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

2.                   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;

3.                   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;

4.                   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;

5.                   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

6.                   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.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who own more than 10% of our common stock to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that they file.

 

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Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended December 31, 2011, all filing requirements applicable to our officers, directors and greater than 10% percent beneficial owners were complied with, with the exception of the following:

Name

Number of Late Reports

Number of Transactions Not Reported on a Timely Basis

Failure to File Required Forms

Claudio Lau

1(1)

1

N/A

Michael R. Kulcheski

Nil

Nil

N/A

(1)           The director or officer was late filing a Form 3, Initial Statement of Beneficial Ownership.

Code of Ethics

We have adopted a Code of Ethics and Business Conduct (the “Code”) that applies to our principal executive officer, principal financial officer and principal accounting officer, or persons performing similar functions (the “Senior Officers”), as well as our directors and employees. As adopted, the Code sets forth written standards that are designed to deter wrongdoing and to promote:

·         honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

·         full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in other public communications made by us;

·         compliance with applicable governmental laws, rules and regulations;

·         the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and

·         accountability for adherence to the Code.

The Code requires that, among other things, our Senior Officers commit to the timely, accurate and consistent disclosure of information; maintain confidential information; and act with honesty and integrity. In addition, it emphasizes that our Senior Officers, directors and employees have a responsibility for maintaining our financial integrity, consistent with generally accepted accounting principles and federal and state securities laws. Any Senior Officer who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to us. Any failure to report such inappropriate or irregular conduct is to be treated as a severe disciplinary matter. It is not our policy to retaliate against any individual who reports in good faith any violation or potential violation of the Code.

The Code was included as an exhibit to our annual report on Form 10-K filed with the SEC on May 8, 2009. We undertake to provide a copy of the Code to any person without charge, upon request sent to either of our executive offices.

Board and Committee Meetings

Our board of directors held no formal meetings during the year ended December 31, 2011. All proceedings of the board of directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote

 

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on that resolution at a meeting of the directors are, according to the Nevada General Corporate Law and our Bylaws, as valid and effective as if they had been passed at a meeting of the directors duly called and held.

For the year ended December 31, 2011 our only standing committee of the board of directors was our audit committee which is comprised of our entire board of directors.

Nomination Process

As of December 31, 2011, we did not effect any material changes to the procedures by which our shareholders may recommend nominees to our board of directors. Our board of directors does not have a policy with regards to the consideration of any director candidates recommended by our shareholders. Our board of directors has determined that it is in the best position to evaluate our company’s requirements as well as the qualifications of each candidate when the board considers a nominee for a position on our board of directors. If shareholders wish to recommend candidates directly to our board, they may do so by sending communications to the president of our company at the address on the cover of this annual report.

Audit Committee

Currently our audit committee consists of our entire board of directors.  We currently do not have nominating, compensation committees or committees performing similar functions. There has not been any defined policy or procedure requirements for shareholders to submit recommendations or nomination for directors.  

During fiscal 2011, aside from quarterly review teleconferences, there were no meetings held by this committee. The business of the audit committee was conducted though these teleconferences and by resolutions consented to in writing by all the members and filed with the minutes of the proceedings of the audit committee.

Audit Committee Financial Expert

Our board of directors has determined that it does have a member of its audit committee that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K.

Item 11.     Executive Compensation

The particulars of the compensation paid to the following persons:

(a)                 our principal executive officer;

(b)                 each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended December 31, 201 and 2010; and

(c)                 up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended December 31, 201 and 2010

who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:

 

 

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SUMMARY COMPENSATION TABLE

Name
and Principal Position

Year

Salary
($)

Bonus
($)

Stock Awards
($)

Option Awards
($)

Non-Equity Incentive Plan Compensa-tion
($)

Change in Pension
Value and Nonqualified Deferred Compensation Earnings
($)

All
Other Compensa-tion
($)

Total
($)

Claudio Lai(1)
President, Secretary, Treasurer and Director

2011
2010

Nil
N/A

Nil
N/A

Nil
N/A

Nil
N/A

Nil
N/A

Nil
N/A

Nil
N/A

Nil
N/A

Michael R. Kulcheski(2)
former President, Secretary, Treasurer

2011
2010

Nil
37,500

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
112,500(3)

Nil
150,000

(1)           Mr. Lai was appointed president, secretary, treasurer and as a director on September 27, 2011.

(2)           Mr. Kulcheski resigned as president, secretary and treasurer on September 27, 2011.

(3)           Mr. Kulcheski received 34,090,909 common shares in settlement of debt in the amount of $112,500.

Option Exercises

During our Fiscal year ended December 31, 2011, there were no options exercised by our named officers.

Compensation of Directors

We do not have any agreements for compensating our directors for their services in their capacity as directors, although such directors are expected in the future to receive stock options to purchase shares of our common stock as awarded by our board of directors.

Pension, Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.  

Indebtedness of Directors, Senior Officers, Executive Officers and Other Management

None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.

Item 12.     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth, as of April 11, 2012, certain information with respect to the beneficial ownership of our common shares by each shareholder known by us to be the beneficial owner of more than 5% of our common shares, as well as by each of our current directors and executive officers as a group. Each person has sole voting and

 

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investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.

 

Name and Address of Beneficial Owner

Amount and Nature of
Beneficial Ownership

Percentage
of Class(1)

Claudio Lai
2200 Yarbrough Avenue, Suite B 305

El Paso, TX

Nil

Nil

Michael R. Kulcheski
84 Hawkhill Road
Calgary AB T3G 3H8

34,090,909 Common Shares

20.62%

Directors and Executive Officers as a Group(1)

34,090,909 Common Shares

20.62%

Venugopal Rao Balla
312-2645 Kipling Avenue
Toronto, ON M9V 3S6

31,803,794 Common Shares

19.23%

 

(1)     Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares.  Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares).  In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided.  In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights.  As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on April 16, 2012.  As of April 16, 2012, there were 165,358,040 shares of our company’s common stock issued and outstanding.

Changes in Control

We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change in control of our company.

Item 13.     Certain Relationships and Related Transactions, and Director Independence

Except as disclosed herein, no director, executive officer, shareholder holding at least 5% of shares of our common stock, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the year ended December 31, 2011, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last three completed fiscal years.

Director Independence

We currently act with two (2) directors, Claudio Lai and Michael R. Kulcheski.  We have determined that our directors are not an “independent director” as defined in NASDAQ Marketplace Rule 4200(a)(15).

Currently our audit committee consists of our entire board of directors. We currently do not have nominating, compensation committees or committees performing similar functions. There has not been any defined policy or procedure requirements for shareholders to submit recommendations or nomination for directors.

 

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Our board of directors has determined that it does have a member of its audit committee who qualifies as an “audit committee financial expert” as defined in as defined in Item 407(d)(5)(ii) of Regulation S-K.

From inception to present date, we believe that the members of our audit committee and the board of directors have been and are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.

Item 14.     Principal Accounting Fees and Services

The aggregate fees billed for the most recently completed fiscal year ended December 31, 2011 and for fiscal year ended December 31, 2010 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:

 

Year Ended  

 

December 31, 2011
$

December 31, 2010
$

Audit Fees

17,300

24,000

Audit Related Fees

Nil

Nil

Tax Fees

Nil

Nil

All Other Fees

Nil

Nil

Total

17,300

24,000

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our independent auditors are engaged by us to render any auditing or permitted non-audit related service, the engagement be:

  • approved by our audit committee (which consists of our entire board of directors); or
  • entered into pursuant to pre-approval policies and procedures established by the board of directors, provided the policies and procedures are detailed as to the particular service, the board of directors is informed of each service, and such policies and procedures do not include delegation of the board of directors' responsibilities to management.

Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.

Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.

PART IV

Item 15.     Exhibits, Financial Statement Schedules

(a)      Financial Statements

(1)     Financial statements for our company are listed in the index under Item 8 of this document

 

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(2)     All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the financial statements or notes thereto.

(b)      Exhibits 

 

Exhibit Number

Description

(3)

Articles of Incorporation and Bylaws

3.1

Articles of Incorporation (incorporated by reference from our Registration Statement on Form S-1 filed on March 13, 2008).

3.2

By-laws (incorporated by reference from our Registration Statement on Form S-1 filed on March 13, 2008).

(10)

Material Contracts

10.1

Lease Agreement (incorporated by reference from our Registration Statement on Form S-1 filed on March 13, 2008).

 

Amendment to License Agreement between our company and Gene Peckover and Gene Vettes dated November 23, 2009 (incorporated by reference from our Quarterly Report on Form 10-Q filed on September 23, 2010).

(14)

Code of Ethics

14.1

Code of Ethics (incorporated by reference from our Annual Report on Form 10-K filed on May 8, 2009).

(21)

Subsidiaries of the Registrant

21.1

Green Interactive Hybrid Technologies Canada Inc.

(31)

Section 302 Certifications

31.1*

Section 302 Certification

(32)

Section 906 Certification

32.1*

Section 906 Certification

(101)**

Interactive Data File (Form 10-K for the year ended December 31, 2011 furnished in XBRL).

101.INS
101.SCH 
101.CAL 
101.DEF 
101.LAB 
101.PRE 

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

*              Filed herewith.

**           Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections.

 

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SIGNATURES

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

 

 

 

NEOHYDRO TECHNOLOGIES CORP.

 

 

(Registrant)

Dated: April 16, 2012

 

/s/CLAUDIO LAI

 

 

Claudio Lai

 

 

President, Secretary, Treasurer and Director

 

 

(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

 

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.

 

Dated: April 16, 2012

 

/s/CLAUDIO LAI

 

 

Claudio Lai

 

 

President, Secretary, Treasurer and Director

 

 

(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

Dated: April 16, 2012

 

/s/ MICHAEL R. KULCHESKI

 

 

Michael R. Kulcheski

 

 

Director