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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarter ended  September 30, 2012

 

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

 

For the transition period from _____ to _____

 

Commission file number: 333-148910

 

ADAMA TECHNOLOGIES CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware 98-0552470
(State of incorporation) (I.R.S. Employer Identification No.)

 

c/o Aviram Malik, 76/7 Zalman Shazar Street, Hod Hasharon, Israel 45350

(Address of principal executive offices)

 

972 - (544) 655-341

(Issuer's telephone number)

 

1 LANE TECHNOLOGIES CORP.

 

 

 

(Former name, former address and former fiscal year, if changed since last report)

 

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

 

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

 

Large accelerated filer ¨   Accelerated filer ¨
Non-accelerated filer ¨   Smaller reporting company x

 

(Do not check if a smaller reporting company)

 

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

Yes ¨ No x

 

As of  September 30 ,2012, 268,960,597  shares of common stock, par value $0.0001 per share, were issued and outstanding.

 

 
 

 

TABLE OF CONTENTS

 

    Page
PART I    
Item 1. Financial Statements   F-1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations   3
Item 3 Quantitative and Qualitative Disclosures About Market Risk   5
Item 4 Controls and Procedures   5
     
PART II    
Item 1. Legal Proceedings   6
Item IA. Risk Factors   6
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   6
Item 3. Defaults Upon Senior Securities   6
Item 4. Submission of Matters to a Vote of Security Holders   6
Item 5. Other Information   6
Item 6. Exhibits   7

 

 
 

 

PART I

FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

ADAMA TECHNOLOGIES CORP.

(A DEVELOPMENT STAGE COMPANY)

 

INDEX TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2012

 

Financial Statements-  
   
Balance Sheets as of September 30, 2012 and December 31, 2011 F-2
   
Statements of Operations for the Three Months and Nine Month Ended September 30, 2012, and 2011 and Cumulative from Inception F-3
   
Statement of Changes in Stockholders’ Equity for the Period from Inception Through September 30, 2012 F-4
   
Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011 And Cumulative from Inception F-5
   
Notes to Financial Statements F-6

 

F-1
 

 

ADAMA TECHNOLOGIES CORP.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

AS OF SEPTEMBER 30, 2012 AND DECEMBER 31, 2011

 

   As of   As of 
   September 30,   December 31, 
   2012   2011 
   (Unaudited)   (Audited) 
ASSETS          
Current Assets:          
Cash in bank  $600   $624 
Prepaid expenses   484,688    2,115,938 
           
Total current assets   485,288    2,116,562 
           
Other Assets:          
Investments   8,170,000    8,050,000 
Allowance for impairment loss   (8,050,000)   (8,050,000)
           
Total Assets   605,288    2,116,562 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Current Liabilities:          
Accounts payable and accrued liabilities  $37,754   $44,420 
Loans from related parties - Directors and stockholders   83,194    53,945 
Convertible notes payable, net of discount   66,818    77,355 
Current maturities of long-term debt   150,000    150,000 
           
Total current liabilities   337,766    325,720 
           
Long-term debt   200,000    200,000 
           
Total liabilities   537,766    525,720 
           
Commitments and Contingencies          
           
Stockholders' Equity          
Common stock, par value $.0001 per share, 500,000,000 shares          
authorized; 268,960,597 and 59,757,242 shares          
issued and outstanding, respectively   26,896    5,976 
Additional paid-in capital   16,933,147    16,658,344 
Stock subscriptions receivable   (44,990)   - 
(Deficit) accumulated during the development stage   (16,847,531)   (15,073,478)
           
Total stockholders' equity (deficit)   67,522    1,590,842 
           
Total Liabilities and Stockholders' Equity  $605,288   $2,116,562 

 

The accompanying notes to financial statements are

an integral part of these financial statements

 

F-2
 

 

ADAMA TECHNOLOGIES CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2012

AND 2011 AND CUMULATIVE FROM INCEPTION (SEPTEMBER 17, 2007)

THROUGH SEPTEMBER 30, 2012

(Unaudited)

 

   Three Months Ended   Nine Months Ended   Cumulative 
   September 30,   September 30,   From 
   2012   2011   2012   2011   Inception 
                     
Revenues  $-   $-   $-   $-   $- 
                          
Expenses:                         
General and administrative-                         
Professional fees   12,500    30,505    49,020    55,942    254,469 
Legal - incorporation   -    -    -    -    2,200 
Consulting   547,500    118,000    1,672,750    392,554    4,088,514 
Travel   -    -    5,000    -    22,890 
Amortization   -    -    -    -    305,555 
Rent   -    -    -    -    4,520 
Impairment loss   -    -    -    -    12,804,445 
Franchise tax   -    -         -    3,500 
Other   -    -    135    2,685    29,272 
                          
Total general and administrative expenses   560,000    148,505    1,726,905    451,181    17,515,365 
                          
(Loss) from Operations   (560,000)   (148,505)   (1,726,905)   (451,181)   (17,515,365)
                          
Other Income (Expense)                         
Foreign currency transaction gains   -    -    -    -    2,769 
Forgiveness of debt   -         -    840,000    840,000 
Foreign currency transaction losses   -         -    (789)   (4,520)
Interest expense   (13,608)   (28,697)   (47,147)   (85,555)   (170,415)
                          
Provision for income taxes   -    -    -    -    - 
                          
Net Income (Loss)  $(573,608)  $(177,202)  $(1,774,052)  $302,475   $(16,847,531)
                          
Earnings (Loss) Per Common Share:                         
Earnings (Loss) per common share - Basic  $(0.00)  $(0.15)  $(0.02)  $0.30      
                          
Weighted Average Number of Common Shares Outstanding - Basic   251,681,224    1,144,046    107,489,687    994,605      

 

The accompanying notes to financial statements are

an integral part of these statements.

 

F-3
 

 

ADAMA TECHNOLOGIES CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF STOCKHOLDERS' EQUITY

FOR THE PERIOD FROM INCEPTION (SEPTEMBER 17, 2007)

THROUGH SEPTEMBER 30, 2012

(Unaudited)

 

                   (Deficit)     
                   Accumulated     
           Additional   Stock   During the     
   Common stock*   Paid-in   Subscriptions   Development     
   Shares   Amount   Capital   Receivable   Stage   Totals 
                         
Balance - September 17, 2007   -   $-   $-   $-   $-   $- 
Common stock issued for cash   116,667    12    688    -    -    700 
Net (loss) for the period   -    -    -    -    (5,118)   (5,118)
Balance - December 31, 2007   116,667    12    688    -    (5,118)   (4,418)
Common stock issued for cash   50,000    5    66,195    -    -    66,200 
Common stock issued for cash   50,000    5    88,795    -    -    88,800 
Common stock issued for acquired technology   29,633    3    3,999,997    -    -    4,000,000 
Net (loss) for the year   -    -    -    -    (160,515)   (160,515)
Balance - December 31, 2008   246,300    25    4,155,675    -    (165,633)   3,990,067 
Common stock issued for cash   10,417    1    203,785    -    -    203,786 
Common stock issued as compensation   417    0    22,001    -    -    22,001 
Common stock issued for cash   5,000    1    120,000    -    -    120,000 
Common stock issued as compensation   4,017    0    84,350    -    -    84,350 
Common stock issued for cash   2,500    0    35,000    -    -    35,000 
Common stock issued as compensation   4,167    0    58,750    -    -    58,750 
Common stock issued as compensation   11,667    1    146,999    -    -    147,000 
Common stock issued as compensation   11,667    1    146,999    -    -    147,000 
Common stock issued as compensation   1,667    0    7,000    -    -    7,000 
Net (loss) for the year   -    -    -    -    (5,780,153)   (5,780,153)
Balance - December 31, 2009   297,817    30    4,980,557    -    (5,945,786)   (965,199)
Common stock issued as compensation   13,333    1    27,999    -    -    28,000 
Common stock issued as compensation   13,333    1    27,999    -    -    28,000 
Common stock issued as compensation   13,333    1    27,999    -    -    28,000 
Common stock issued as compensation   33,333    3    69,997    -    -    70,000 
Common stock issued as compensation   11,333    1    23,799    -    -    23,800 
Common stock issued as compensation   33,333    3    69,997    -    -    70,000 
Common stock issued for cash   26,667    3    12,997    -    -    13,000 
Common stock issued as compensation   23,333    2    62,998    -    -    63,000 
Common stock issued as compensation   10,833    1    13,974    -    -    13,975 
Common stock issued for cash   27,167    3    34,997    (28,000)   -    7,000 
Common stock issued as compensation   8,333    1    22,499    -    -    22,500 
Common stock issued as compensation   37,000    4    110,996    -    -    111,000 
Common stock issued as compensation   16,667    2    49,998    -    -    50,000 
Common stock issued for cash   33,333    3    9,997    -    -    10,000 
Payment of stock subscription receivable   -    -    -    9,000    -    9,000 
Common stock issued as compensation   16,667    2    24,498    -    -    24,500 
Common stock issued as compensation   49,833    5    209,295    -    -    209,300 
Discount of convertible note   -    -    36,207    -    -    36,207 
Common stock issued as compensation   23,701    2    49,418    -    -    49,420 
Discount of convertible note   -    -    20,454    -    -    20,454 
Net (loss) for the year   -    -    -    -    (867,327)   (867,327)
Balance - December 31, 2010   689,351    69    5,886,674    (19,000)   (6,813,113)   (945,370)
Common stock issued as compensation   33,333    3    109,997    -    -    110,000 
Common stock issued as compensation   8,333    1    27,499    -    -    27,500 
Common stock issued as compensation   13,333    1    43,999    -    -    44,000 
Common stock issued as compensation   3,333    0    11,000    -    -    11,000 
Common stock issued as compensation   33,333    3    109,997    -    -    110,000 
Stock subscriptions payments received   -    -    -    19,000    -    19,000 
Common stock issued as compensation   60,000    6    50,394    -    -    50,400 
Common stock issued as compensation   150,000    15    157,485    -    -    157,500 
Common stock issued as compensation   30,000    3    25,197    -    -    25,200 
Discount of convertible note   -    -    63,361    -    -    63,361 
Common stock issued upon conversion of debt   128,491    13    79,058    -    -    79,071 
Discount of convertible note   -    -    24,545    -    -    24,545 
Common stock issued as compensation   5,000,000    500    849,500    -    -    850,000 
Common stock issued as compensation   2,000,000    200    339,800    -    -    340,000 
Common stock issued as compensation   2,000,000    200    339,800    -    -    340,000 
Common stock issued as compensation   1,000,000    100    169,900    -    -    170,000 
Common stock issued as compensation   500,000    50    84,950    -    -    85,000 
Common stock issued as compensation   2,000,000    200    419,800    -    -    420,000 
Common stock issued as compensation   1,000,000    100    209,900    -    -    210,000 
Conversion of convertible note payable   107,733    11    9,989    -    -    10,000 
Common stock issued to purchase asset   25,000,000    2,500    4,247,500    -    -    4,250,000 
Common stock issued to purchase asset   20,000,000    2,000    3,398,000    -    -    3,400,000 
Net income for the year   -    -    -    -    (8,260,365)   (8,260,365)
Balance -  December 31, 2011   59,757,242    5,976    16,658,344    -    (15,073,478)   1,590,842 
Common stock issued for cash   8,500,000    850    7,650    (8,500)   -    - 
Common stock issued for cash   16,760,000    1,676    15,084    (16,760)   -    - 
Conversion of convertible note payable   407,692    41    26,459    -    -    26,500 
Common stock issued for cash   19,730,000    1,973    17,757    (19,730)   -    - 
Conversion of convertible note payable   913,793    91    21,109    -    -    21,200 
Conversion of convertible note payable   529,801    53    7,947    -    -    8,000 
Discount of convertible note   -    -    23,534    -    -    23,534 
Common stock issued as compensation   10,000,000    1,000    9,000    -    -    10,000 
Common stock issued as compensation   1,500,000    150    1,350    -    -    1,500 
Conversion of convertible note payable   862,069    86    9,914    -    -    10,000 
Common stock issued as compensation   30,000,000    3,000    27,000              30,000 
Common stock issued for cash   120,000,000    12,000    108,000              120,000 
Net loss for the period   -    -    -    -    (1,774,053)   (1,774,053)
Balance - September 30, 2012   268,960,597   $26,896   $16,933,148   $(44,990)  $(16,847,531)  $67,523 

 

The accompanying notes to financial statements are

an integral part of these statements.

 

F-4
 

 

ADAMA TECHNOLOGIES CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011,

AND CUMULATIVE FROM INCEPTION (SEPTEMBER 17, 2007)

THROUGH SEPTEMBER 30, 2012

(Unaudited)

 

   Nine Months Ended   Cumulative 
   September 30,   From 
   2012   2011   Inception 
             
Operating Activities:               
Net Income (loss)  $(1,774,052)  $302,475   $(16,847,531)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:        -      
Common stock issued as compensation and interest   44,200    539,671    4,256,467 
Amortization of beneficial conversion feature   43,497    79,557    157,920 
Impairment loss   -    -    12,804,445 
Amortization   -    -    305,555 
Forgiveness of debt   -    (840,000)   (840,000)
Changes in net assets and liabilities-               
Prepaid expenses   1,631,250    (160,938)   (484,688)
Accrued liabilites   (6,667)   (756)   37,753 
                
Net Cash Used in Operating Activities   (61,772)   (79,991)   (610,079)
                
Investing Activities:               
Acquisition and costs of intangible assets   -    -    (610,000)
                
Net Cash Used in Investing Activities   -    -    (610,000)
                
Financing Activities:               
Deferred offering costs   -    -    (25,000)
Proceeds from issuance of common stock   -    19,000    597,486 
Proceeds from convertible note payable   32,500    87,500    225,000 
Proceeds from loans   -         350,000 
Payment of debt   -    (10,000)   (10,000)
Proceeds from stockholder loans   49,248    44,424    743,188 
Payment of stockholder loans   (20,000)   (62,574)   (659,995)
                
Net Cash Provided by Financing Activities   61,748    78,350    1,220,679 
                
Net (Decrease) Increase in Cash   (24)   (1,641)   600 
                
Cash - Beginning of Period   624    1,921    - 
                
Cash - End of Period  $600   $280   $600 
                
Supplemental Disclosure of Cash Flow Information:               
Cash paid during the period for:               
Interest  $-   $-   $- 
Income taxes  $-   $-   $- 
                
Supplemental schedule of noncash investing and financing activities:          
Issuance of common stock for acquired technology  $-   $-   $4,000,000 
Obligation payable for acquired technology  $-   $-   $850,000 
Stock issued to settle convertible debts  $65,700   $75,000   $150,700 
Issuance of common stock for intangible assets  $120,000   $-   $7,650,000 

 

The accompanying notes to financial statements are

an integral part of these statements.

 

F-5
 

 

ADAMA TECHNOLOGIES CORP.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

 

(1)  Summary of Significant Accounting Policies

 

Basis of Presentation and Organization

 

Adama Technologies Corp. (“Adama Technologies” or the “Company”) is a Delaware corporation in the development stage and has not commenced operations. The Company was incorporated under the laws of the State of Delaware on September 17, 2007.

 

The accompanying financial statements of Adama Technologies were prepared from the accounts of the Company under the accrual basis of accounting.

 

Unaudited Interim Financial Statements

 

The interim financial statements of the Company as of September 30, 2012, and for the periods then ended, and cumulative from inception, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of September 30, 2012, and the results of its operations and its cash flows for the periods ended September 30, 2012, and cumulative from inception. These results are not necessarily indicative of the results expected for the calendar year ending December 31, 2012. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States. Refer to the Company’s audited financial statements as of December 31, 2011, filed with the SEC, for additional information, including significant accounting policies.

  

Cash and Cash Equivalents 

 

For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

 

Revenue Recognition

 

The Company is in the development stage and has yet to realize revenues from operations. Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

 

Earnings per Common Share

 

Basic earnings per share is computed by dividing the net income attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Except for the nine months ended September 30, 2011, common stock equivalents were not included in the computation of diluted earnings per share in the statement of operations due to the fact that the Company reported a net loss and to do so would be anti-dilutive for the periods presented. For the nine months ended September 30, 2011 the weighted average number of shares outstanding on a fully diluted basis was 1,076,152 shares and the fully diluted earnings per share was $0.28.

 

F-6
 

 

Income Taxes

 

Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

 

The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the federal tax laws.

 

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

 

Fair Value of Financial Instruments

 

The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of September 30, 2012, the carrying value of accounts payable, accrued liabilities, and loans approximated fair value due to the short-term nature and maturity of these instruments.

 

Patent and Intellectual Property

 

The Company capitalizes the costs associated with obtaining a Patent or other intellectual property associated with its intended business plan. Such costs are amortized over the estimated useful lives of the related assets.

 

Deferred Offering Costs

 

The Company defers as other assets the direct incremental costs of raising capital until such time as the offering is completed. At the time of the completion of the offering, the costs are charged against the capital raised. Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated.

 

Impairment of Long-Lived Assets

 

The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives when events or circumstances lead management to believe that the carrying value of an asset may not be recoverable. For the period ended September 30, 2012, no events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required.

 

Common Stock Registration Expenses

 

The Company considers incremental costs and expenses related to the registration of equity securities with the SEC, whether by contractual arrangement as of a certain date or by demand, to be unrelated to original issuance transactions. As such, subsequent registration costs and expenses are expensed as incurred.

 

Estimates

 

The financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses. Actual results could differ from those estimates made by management.

 

F-7
 

 

Recent Accounting Pronouncements

 

In May 2011, the FASB issued ASU 2011-04, "Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards ("IFRSs")." Under ASU 2011-04, the guidance amends certain accounting and disclosure requirements related to fair value measurements to ensure that fair value has the same meaning in U.S. GAAP and in IFRS and that their respective fair value measurement and disclosure requirements are the same. ASU 2011-04 is effective for public entities during interim and annual periods beginning after December 15, 2011. Early adoption is not permitted. The Company does not believe that the adoption of ASU 2011-04 will have a material impact on the Company's results of operation and financial condition.

 

In June 2011, the FASB issued ASU No. 2011-05, "Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income," ("ASU 2011-05") which amends current comprehensive income guidance. This accounting update eliminates the option to present the components of other comprehensive income as part of the statement of shareholders' equity. Instead, comprehensive income must be reported in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. ASU 2011-05 will be effective for public companies during the interim and annual periods beginning after Dec. 15, 2011 with early adoption permitted. The Company does not believe that the adoption of ASU 2011-05 will have a material impact on the Company's results of operation and financial condition.

 

There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries.  None of the updates are expected to a have a material impact on the Company's financial position, results of operations or cash flows.

 

(2)  Development Stage Activities and Going Concern

 

The Company is currently in the development stage, and has limited operations.

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of September 30, 2012, the cash resources of the Company were insufficient to meet its current business plan. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

(3)  Patent Pending

 

In November 2007, the Company entered into an Invention Assignment Agreement with Eliezer Sheffer, the inventor, whereby the Company acquired from Eliezer Sheffer all of the right, title and interest in the Invention known as the “Security system for mobile vehicles, trucks and shipping containers” for consideration of $60,000. Under the terms of the Assignment Agreement, the Company was assigned rights to the Invention free of any liens, claims, royalties, licenses, security interests or other encumbrances. The inventor of the Invention is not an officer or director of the Company, nor an investor or promoter of such. The Invention is the subject of United States Patent Application 11/720,518 which was filed with the United States Patent and Trademark Office on May 31, 2007. Currently, the Patent Application is pending. The historical cost of obtaining the Invention and filing for the patent has been capitalized by the Company, and amounted to $60,000. As of December 31, 2009, the Company recorded an impairment loss for the full value of the patent.

 

F-8
 

 

(4)  Investments

 

On October 27, 2008, the Company entered into an Exclusive Brownfield License Agreement with Solucorp Industries Ltd. Pursuant to the terms of the Agreement, Solucorp granted the Company an exclusive worldwide license of its MBS Process, for remediating Brownfield and Redevelopment Sites, with the exception of North America, Central America, South America, Russia and China. The Company was also granted a non-exclusive license for use of the MBS Process for the remediation of contaminated sites and superfunded like sites. The term of the Agreement is 15 years.

 

As of December 31, 2009, the Company recorded an impairment loss for the full value of the acquired technology.

 

In consideration for the rights granted under the Agreement, the Company issued 29,633 shares (post reverse stock split) of its common stock to Solucorp, valued in the amount of $4,000,000. In addition, the sum of $1,000,000 is payable to Solucorp within 12 months of October 27, 2008 according to an amendment to the original agreement.

 

As of June 30, 2011 the Company has paid $160,000 of the agreed sum. The exclusive rights under the agreement have been terminated and the remaining $840,000 obligation was written off.

 

In the event the Company sells or develops the Brownfield or Redevelopment property after remediation, the Company shall pay 1% of the royalty of such sale or redevelopment cost to Solucorp.

 

On November 21, 2011, the Company entered into a stock purchase agreement to purchase 477 shares of YGE Mining PLC.  As payment for the 477 shares of YGE Mining PLC, the Company issued 20,000,000 shares of its unregistered common stock valued at $3,400,000.

 

On December 15, 2011, the Company entered an agreement with Ansalt Multicommertz, a limited liability company organized under the laws of Liechtenstein, pursuant to which the Assignor assigned to the Registrant its 90% interest in the Harrison Lake (Talc) Creek Magnesium property in exchange of the issuance of 25,000,000 restricted common stock of the Company to the Assignor. As part of the transaction the Company assumed an obligation to pay a vendor of Ansalt Multicommertz $400,000 of which $350,000 remained payable at June 30. 2012.

 

Effective July 9, 2012, the Company entered into a Mineral Property Acquisition Agreement with MineSadco S.A., an Ecuadorian company. MineSadco is the owner of an undivided, 100% interest in a certain mineral property located in Canton Portovelo, El Oro Province, in the South of Ecuador. Pursuant to the terms of the agreement, the Company acquired the rights to commercially exploit 100% of the mineral rights to the Property for a period of twenty years. In consideration, the Company issued 120,000,000 restricted shares of its common stock to MineSadco. In addition, if within eighteen months from the closing date certain production millstones will be completed, MineSadco will be entitled to additional shares representing up to 55% of the Companies diluted capital at the closing date.

 

(5)  Convertible Notes Payable

 

On April 4, 2011, the Company signed a $25,000 convertible promissory note with a third party.  The note bears interest at 8% per annum and is due on January 6, 2012.  The note has conversion rights that allow the holder of the note to convert after 180 days all or any part of the remaining principal balance into the Company’s common stock at a price equal to 58% of the average of the lowest three trading prices for the Common Stock during the most recent ten day period. This note was paid by conversion to shares.

 

On May 12, 2011, the Company signed a $30,000 convertible promissory note with a third party.  The note bears interest at 8% per annum and is due on February 12, 2012.  The note has conversion rights that allow the holder of the note to convert after 180 days all or any part of the remaining principal balance into the Company’s common stock at a price equal to 58% of the average of the lowest three trading prices for the Common Stock during the most recent ten day period. This note was paid by conversion to shares.

 

F-9
 

 

On June 7, 2011, the Company signed a $32,500 convertible promissory note with a third party.  The note bears interest at 8% per annum and is due on March 7, 2012.  The note has conversion rights that allow the holder of the note to convert after 180 days all or any part of the remaining principal balance into the Company’s common stock at a price equal to 58% of the average of the lowest three trading prices for the Common Stock during the most recent ten day period. $18,000 of principal on the note was paid by conversion to shares. The maturity date was extended.

 

On November 18, 2011, the Company signed a $30,000 convertible promissory note with a third party.  The note bears interest at 8% per annum and is due on August 18, 2012.  The note has conversion rights that allow the holder of the note to convert after 180 days all or any part of the remaining principal balance into the Company’s common stock at a price equal to 58% of the average of the lowest three trading prices for the Common Stock during the most recent ten day period. The maturity date was extended.

 

On April 27, 2012, the Company signed a $32,500 convertible promissory note with a third party.  The note bears interest at 8% per annum and is due on January 27, 2013.  The note has conversion rights that allow the holder of the note to convert after 180 days all or any part of the remaining principal balance into the Company’s common stock at a price equal to 58% of the average of the lowest three trading prices for the Common Stock during the most recent ten day period.

 

In accordance with ASC 470, the Company has analyzed the beneficial nature of the conversion terms and determined that a beneficial conversion feature (BCF) exists.  The Company calculated the value of the BCF using the intrinsic method as stipulated in ASC 470. The BCF has been recorded as a discount to the notes payable and to Additional Paid-in Capital.

 

As of September 30, 2012, the balance of convertible notes payable is $66,818 net of unamortized discounts of $10,182.

 

For the nine months ended September 30, 2012 the Company has recognized $3,650 in interest expense related to the notes and has amortized $43,497 of the beneficial conversion features which has been recorded as interest expense.

 

(6)  Common Stock

 

On November 13, 2007, the Company issued 116,667 shares (post reverse stock split) of its common stock to seven individuals who are founders of the Company, including the Company's initial Directors and officers, for proceeds of $700.

 

The Company commenced a capital formation activity to submit a Registration Statement on Form SB-2 to the SEC to register and sell 50,000 (post reverse stock split) shares of newly issued common stock in a self-directed offering at an offering price of $0.03 per share for proceeds of up to $90,000. As of May 19, 2008, the Company had incurred $25,000 of deferred offering costs related to this capital formation activity. As of May 19, 2008, the Company issued 50,000 (post reverse stock split) shares of common stock pursuant to the Registration Statement on Form SB-2, and deposited proceeds of $90,000.

 

On July 3, 2008, the Company raised $90,000 and issued 50,000 (post reverse stock split) shares of its common stock, purchase price $0.03 per share, to 22 investors. The Company received net proceeds of $88,800.

 

On July 28, 2008, the Company implemented a 5 for 1 forward stock split on its issued and outstanding shares of common stock to the holders of record as of July 25, 2008. As a result of the split, each holder of record on the record date automatically received four additional shares of the Company’s common stock. After the split, the number of shares of common stock issued and outstanding are 65,000,000 shares. The accompanying financial statements and related notes thereto have been adjusted accordingly to reflect this forward stock split.

 

On October 27, 2008, the Company entered into an Exclusive Brownfield License Agreement with Solucorp Industries Ltd. In consideration for the rights granted under the Agreement, the Company issued 29,633 (post reverse stock split) shares of its common stock to Solucorp, valued in the amount of $4,000,000.

 

F-10
 

 

On May 11, 2009, the Company raised $250,000 and issued 10,417 (post reverse stock split) shares of its common stock, purchase price $0.08 per share, to an investor. The Company received net proceeds of $203,786.

 

On June 2, 2009, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 417 (post reverse stock split) shares of its unregistered common stock on said date valued at $22,000. The fair value of the unregistered shares is determined based on the closing price of the Company’s stock on the date of grant less a 30% discount.

 

On September 16, 2009, the Company raised $120,000 and issued 5,000 (post reverse stock split) shares of its common stock, purchase price $0.08 per share, to an investor. The Company received net proceeds of $120,000.

 

On October 5, 2009, the Company entered into an agreement with an unrelated third-party consultants.  As payment for the consultants’ services, the Company issued 4,017 (post reverse stock split) shares of its unregistered common stock valued at $84,350. The fair value of the unregistered shares was determined based on the closing price of the Company’s stock on the date of grant less a 30% discount.

 

On October 5, 2009, the Company raised $35,000 and issued 2,500 (post reverse stock split) shares of its common stock, purchase price $0.047 per share, to an investor.

 

On October 5, 2009, the Company entered into an agreement with a shareholder consultant.  As payment for the consultant’s services, the Company issued 4,167 (post reverse stock split) shares of its unregistered common stock on said date valued at $58,750. The fair value of the unregistered shares was determined based on the closing price of the Company’s stock on the date of grant less a 30% discount.

 

On October 27, 2009, the Company entered into an agreement with a resigning Director to receive as compensation for his services, 11,667 (post reverse stock split) shares of its unregistered common stock valued at $147,000. The fair value of the unregistered shares was determined based on the closing price of the Company’s stock on the date of grant less a 30% discount.

 

On October 27, 2009, the Company entered into an agreement with a resigning Director to receive as compensation for his services, 11,667 (post reverse stock split) shares of its unregistered common stock valued at $147,000. The fair value of the unregistered shares was determined based on the closing price of the Company’s stock on the date of grant less a 30% discount

 

On December 1, 2009, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 1,667 (post reverse stock split) shares of its unregistered common stock on said date valued at $7,000. The fair value of the unregistered shares was determined based on the closing price of the Company’s stock on the date of grant less a 30% discount.

 

On January 12, 2010, the Company issued 26,667 (post reverse stock split) shares of its unregistered common stock valued at $56,000 to two directors of the Company. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount.

 

On January 12, 2010, the Company entered into an agreement with an unrelated third-party consultant.  As payment for past services, the Company issued 13,333 (post reverse stock split) shares of its unregistered common stock on said date valued at $28,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount.

 

On February 3, 2010, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s past services, the Company issued 33,333 (post reverse stock split) shares of its unregistered common stock on said date valued at $70,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount.

 

F-11
 

 

On February 16, 2010, the Company entered into an agreement with unrelated third-party consultants.  As payment for the consultants' past services, the Company issued 11,333 (post reverse stock split) shares of its unregistered common stock on said date valued at $23,800. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount.

 

On February 25, 2010, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s past services, the Company issued 33,333 (post reverse stock split) shares of its unregistered common stock on said date valued at $70,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount.

 

On April 25, 2010, the Company raised $13,000 and issued 26,667 (post reverse stock split) shares of its common stock, with a purchase price $0.0016 per share, to investors.

 

On May 26, 2010, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s past services, the Company issued 23,333 (post reverse stock split) shares of its unregistered common stock on said date valued at $63,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount.

 

On June 16, 2010, the Company entered into agreements with unrelated third-party consultants.  As payment for the consultant’s past services, the Company issued 10,833 (post reverse stock split) shares of its unregistered common stock on said date valued at $13.975. The fair value of the unregistered shares was determined based on comparable sales.

 

On June 16, 2010, the Company raised $35,000 and issued 27,167 (post reverse stock split) shares of its common stock, with a purchase price $0.0043 per share, to investors.

 

On June 21, 2010, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s past services, the Company issued 8,333 (post reverse stock split) shares of its unregistered common stock on said date valued at $22,500. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount.

 

On August 13, 2010, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s past services, the Company issued 37,000 (post reverse stock split) shares of its unregistered common stock on said date valued at $111,000. The fair value of the unregistered shares was determined based on comparable sales.

 

On August 30, 2010, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s past services, the Company issued 16,667 (post reverse stock split) shares of its unregistered common stock on said date valued at $50,000. The fair value of the unregistered shares was determined based on comparable sales.

 

On August 31, 2010, the Company raised $10,000 and issued 33,333 (post reverse stock split) shares of its common stock, with a purchase price $0.001 per share, to investors.

 

On October 1, 2010, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s past services, the Company issued 16,667 (post reverse stock split) shares of its unregistered common stock on said date valued at $24,500. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount.

 

On October 18, 2010, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s past services, the Company issued 49,833 (post reverse stock split) shares of its unregistered common stock on said date valued at $209,300. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount.

 

F-12
 

 

On December 15, 2010, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s past services, the Company issued 23,701 (post reverse stock split) shares of its unregistered common stock on said date valued at $49,420. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount.

 

On January 1, 2011, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 33,333 (post reverse stock split) shares of its unregistered common stock on said date valued at $110,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount for restricted trading.

 

On January 1, 2011, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 8,333 (post reverse stock split) shares of its unregistered common stock on said date valued at $27,500. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount for restricted trading.

 

On January 1, 2011, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 13,333 (post reverse stock split) shares of its unregistered common stock on said date valued at $44,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount for restricted trading.

 

On January 1, 2011, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 3,333 (post reverse stock split) shares of its unregistered common stock on said date valued at $11,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount for restricted trading.

 

On January 1, 2011, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 33,333 (post reverse stock split) shares of its unregistered common stock on said date valued at $110,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount for restricted trading.

 

On April 1, 2011, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 60,000 (post reverse stock split) shares of its unregistered common stock on said date valued at $50,400. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount for restricted trading.

 

On April 5, 2011, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 150,000 (post reverse stock split) shares of its unregistered common stock on said date valued at $157,500. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount for restricted trading.

 

On April 13, 2011, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 30,000 (post reverse stock split) shares of its unregistered common stock on said date valued at $25,200. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount for restricted trading.

 

F-13
 

 

On October 28, 2011, the Company implemented a 1 for 300 reverse stock split on its issued and outstanding shares of common stock to the holders of record as of October 28, 2011. After the reverse split, the number of shares of common stock issued and outstanding were 1,149,341 shares. The accompanying financial statements and related notes thereto have been adjusted accordingly to reflect this reverse stock split.

 

On November 21, 2011, the Company entered into an agreement with a director.  As payment for services, the Company issued 5,000,000 shares of its unregistered common stock on said date valued at $850,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 15% discount for restricted trading.

 

On November 21, 2011, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 2,000,000 shares of its unregistered common stock on said date valued at $340,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 15% discount for restricted trading.

 

On November 21, 2011, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 2,000,000 shares of its unregistered common stock on said date valued at $340,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 15% discount for restricted trading.

 

On November 21, 2011, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 1,000,000 shares of its unregistered common stock on said date valued at $170,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 15% discount for restricted trading.

 

On November 21, 2011, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 500,000 shares of its unregistered common stock on said date valued at $85,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 30% discount for restricted trading.

 

On November 21, 2011, the Company entered into an agreement with an unrelated third-party to purchase 477 shares of YGE Mining PLC.  As payment for the 477 shares of YGE Mining PLC, the Company issued 20,000,000 shares of its unregistered common stock on said date valued at $3,400,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 15% discount for restricted trading.

 

On December 1, 2011, the Company entered into an agreement with a director.  As payment for services, the Company issued 2,000,000 shares of its common stock on said date valued at $420,000. The fair value of the shares was determined based on the recent closing price of the Company’s stock on the date of grant.

 

On December 1, 2011, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 1,000,000 shares of its common stock on said date valued at $210,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant.

 

On December 8, 2011, the Company entered into an agreement with an unrelated third-party to purchase a magnesium property.  As payment for the property, the Company issued 25,000,000 shares of its unregistered common stock on said date valued at $4,250,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 15% discount for restricted trading.

 

From January 1, 2011 to December 31, 2011, the Company issued 236,224 shares of its common stock upon conversion of convertible debt of $85,000 and $4,071 of interest.

 

F-14
 

 

On January 4, 2012, the Company raised $8,500 and issued 8,500,000 shares of its common stock, with a purchase price $0.001 per share, to investors. As of September 30, 2012 the investment was receivable.

 

On January 13, 2012, the Company raised $16,760 and issued 16,760,000 shares of its common stock, with a purchase price $0.001 per share, to investors. As of September 30, 2012 the investment was receivable.

 

On February 21, 2012, the Company raised $19,730 and issued 19,730,000 shares of its common stock, with a purchase price $0.001 per share, to investors. As of September 30, 2012 the investment was receivable.

 

On May 22, 2012, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 10,000,000 shares of its common stock on said date valued at $10,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant.

 

On May 31, 2012, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 1,500,000 shares of its common stock on said date valued at $1,500. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant.

 

On July 15, 2012, the Company entered into an agreement with unrelated third-party consultants.  As payment for the consultant’s services, the Company issued 30,000,000 shares of its common stock on said date valued at $30,000. The fair value of the unregistered shares was determined based on trading restrictions on the date of grant.

 

On July 15, 2012, the Company issued 120,000,000 shares of its unregistered common stock valued at $120,000 to MineSadco S.A., an Ecuadorian company, to purchase a 100% interest to exploit and commercialize a mining property located in Ecuador for 20 years.

 

From January 1, 2012 to September 30, 2012, the Company issued 2,713,355 shares of its common stock upon conversion of convertible debt of $63,000 and $2,700 of interest.

 

(7)  Income Taxes

 

The provision (benefit) for income taxes for the periods ended September 30, 2012 and 2011, was as follows (assuming a 23% effective tax rate):

 

   2012   2011 
         
Current Tax Provision:          
Federal-          
Net income  $-   $302,475 
Non-deductible expenses   -    79,557 
Taxable income   -    382,032 
           
Net operating loss carryforward   -    (382,032)
           
Total current tax provision  $-   $- 
           
Deferred Tax Provision:          
Federal-          
Deferred tax benefit on current loss  $408,032   $- 
Non-deductible expenses   (10,004)   - 
Change in valuation allowance   (398,028)   - 
           
Total deferred tax provision  $-   $- 

 

 

F-15
 

 

The Company had deferred income tax assets as of September 30, 2012 and December 31, 2011, as follows:

 

   2012   2011 
         
Loss carryforwards  $893,588   $495,560 
Less - Valuation allowance   (893,588)   (495,560)
           
Total net deferred tax assets  $-   $- 

 

The Company provided a valuation allowance equal to the deferred income tax assets for the period ended September 30, 2012 and 2011, because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.

 

As of September 30, 2012, the Company had approximately $3,900,000 in tax loss carryforwards that can be utilized in future periods to reduce taxable income, and expire by the year 2032.

 

The Company did not identify any material uncertain tax positions.  The Company did not recognize any interest or penalties for unrecognized tax benefits.

 

The Company has filed income tax returns in the United States. All tax years are closed by expiration of the statute of limitations.

 

(8)  Related Party Transactions

 

On November 20, 2007, the Company subscribed 25,083 (post reverse stock split) shares of common stock to Mr. Aviram Malik, President and Director, for a cash payment of $150.

 

On November 20, 2007, the Company subscribed 8,333 (post reverse stock split) shares of common stock to Mr. Gal Ilivitzki, Secretary and Director, for a cash payment of $50.

 

On November 21, 2011, the Company entered into an agreement with a director.  As payment for services, the Company issued 5,000,000 shares of its unregistered common stock on said date valued at $850,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant less an approximate 15% discount for restricted trading.

 

On December 1, 2011, the Company entered into an agreement with a director.  As payment for services, the Company issued 2,000,000 shares of its common stock on said date valued at $420,000. The fair value of the shares was determined based on the recent closing price of the Company’s stock on the date of grant.

 

As of September 30, 2012 the Company owed $83,194 to Directors, officers, and principal stockholders of the Company for working capital loans. The loans are unsecured, non-interest bearing, and have no terms for repayment.

 

For the nine months ended September 30, 2012, the Company expensed share based consulting fees of $816,429 to Directors and officers of the Company.

 

(9)  Concentration of Credit Risk

 

The Company’s cash and cash equivalents are invested in a major bank in Israel and are not insured. Management believes that the financial institution that holds the Company’s investments is financially sound and accordingly, minimal credit risk exists with respect to these investments.

 

F-16
 

 

(10)  Equity Purchase Agreement

 

Effective July 31, 2012, the Company entered into a Binding Letter of Intent with Southridge Partners II LP, an institutional investor, for the equity purchase agreement of an amount of up to $7 million. Pursuant to the agreement, the Company has the right, in its sole discretion, to sell to Southridge up to $7 million of its common stock over a 24-month period.  The Company will have the right, but is not obligated, to sell stock to Southridge depending on certain conditions as set forth in the equity purchase agreement.

 

F-17
 

 

Item 2. Management’s Discussion and Analysis or Plan of Operations.

 

As used in this Form 10-Q, references to the “Adama,” Company,” “we,” “our” or “us” refer to Adama Technologies Corporation.  Unless the context otherwise indicates.

 

Forward-Looking Statements

 

The following discussion should be read in conjunction with our financial statements, which are included elsewhere in this Form 10-Q (the “Report”). This Report contains forward-looking statements which 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 or our industry’s actual results, levels of activity, 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.

 

For a description of such risks and uncertainties refer to our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on January 26, 2009. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. 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.

 

Corporate Background

 

We were incorporated in Delaware on September 17, 2007 and are a development stage company. We have acquired the rights to a patent-pending technology upon which a unique wireless data platform is built. This platform supports minute-by-minute data transmission intended for several key areas. Preliminary tests have already been run in a real-world environment. The patent-pending technology utilizes the ISM (Industrial Scientific Method) non-licensed spectrum to provide short message transmission and data transmission. The unique element of this system is that it can perform this functionality at an order of magnitude delivering more capacity and much higher robustness than any currently available wireless or cellular network, without interfering whatsoever with other network activities.

 

On October 27, 2008, the Company abandoned the business relating to the patent technology and executed an exclusive brownfield license agreement with Solucorp Industries Ltd., pursuant to which it acquired a 15 year license to certain environmental hazard remediation technology (as discussed below).

 

We completed a public offering of our common stock in the first half of 2008, raising aggregate gross proceeds of $90,000 pursuant to Registration Statement on Form SB-2 that was declared effective by the Securities and Exchange Commission on February 19, 2008.  A private placement of common stock was completed on July 3, 2008, raising aggregate gross proceeds of $90,000 from 22 investors.  On July 28, 2008 we implemented a 5 for 1 forward stock split.

 

On February 27, 2009, at special meeting of the shareholders of our Company, the board of directors was given authorization to change the name of the Company from “1 Lane Technologies Corp.” to “Adama Technologies Corporation” to better reflect the proposed business activities.

 

During the third quarter of 2011 the majority shareholders of the Company voted to implement a reverse split on the Company's Common Stock at a ratio of 1-300. The reverse split was effective on October 28 2011.

 

Our Principal executive offices are located at 76/7 Zalman Shazar Street, Hod Hasharon, Israel, in the home of Aviram Malik, our Chief Executive Officer and President. Our registered office in Delaware is located at 113 Barksdale Professional Center, Newark, DE 19711, and our registered agent is Delaware Intercorp. Our fiscal year end is December 31.

 

3
 

 

Our Business

 

On October 27, 2008, the Company entered into an Exclusive Brownfield  License Agreement with Solucorp Industries Ltd. pursuant to which the  Company acquired a 15 year license to certain environmental hazard  remediation technology. The foundation of the license is its $60,000,000  patented MBS (Molecular Bonding System) technology. The Company is to  provide long-term permanent solutions to hazardous heavy metal waste  problems. The MBS technology successfully treats all Resource Conservation &  Recovery Act (RCRA) and Universal Treatment Standards (UTS) metals such as:  arsenic, cadmium, chromium, lead, mercury, etc., and treats multiple metals  concurrently. The ability to treat difficult waste streams along with being  able to treat multiple metals with different solubility points successfully  separates our MBS technology from any other existing technology. The types  of applications include soils, sludge's, ashes, baghouse dusts and barrel  wastes. The MBS technology provides superior efficacy and has significant  cost advantages over both hazardous waste landfill and alternative remedial  technology options. 

The Company has ceased to continue its original business plan in relation to the wireless data platform acquired in 2007

 

In consideration for the rights granted under the Exclusive Brownfield License Agreement, the Company issued 29,633 (post split) shares of its common stock to Solucorp, valued in the amount of $4,000,000. In addition, the sum of $1,000,000 is payable to Solucorp within 12 months of October 27, 2008. As of March 31 2011 , the Company paid only $160,000 of the agreed sum. The remaining $840,000 liability has been alleviated in exchange of the acceptance of  the NON-Exclusivity clause under the agreement  , hence the termination of the Exclusivity rights.

  

On October 28, 2011, the Company initiated a reverse stock split on its common stock of 300-1 which became effective on October 28, 2011. The authorized shares of the Company did not change .

 

On November 18, 2011, Adama Technologies Corporation (the “Registrant”)  entered a Stock Purchase Agreement with ANOE SA, organized under the laws of St. Vincent and the Grenadines (“ANOE”), to acquire 477 shares, representing approximately 19.5% of the outstanding shares of YGE Mining PLC, organized under the laws of the Federal Democratic Republic of Ethiopia (“YGE”). YGE is the owner of an exclusive license to conduct exploration for gold and tantalum in an area of 40 kilometers in Ethiopia. Tantalum is used in the manufacture tantalum capacitors that are widely used in circuit designs because of their volumetric efficiency, basic reliability and process compatibility   for electronic equipment such as mobile phones, DVD players, video game systems and computers. The Stock Purchase Agreement between the Registrant and ANOE, which provides for the issuance of 20,000,000 restricted shares of the Registrant’s common stock in consideration for the acquisition of the YGE Shares, is attached as Exhibit 99.1 hereto.

 

On December 15, 2011, Adama Technologies Corporation (the “Registrant”) entered an agreement with Ansalt Multicommertz, a limited liability company organized under the laws of Liechtenstein (the “Assignor”), pursuant to which the Assignor assigned to the Registrant its 90% interest in the Harrison Lake (Talc) Creek Magnesium property in exchange of the issuance of 25,000,000 restricted common stock of the Registrent to the Assignor.

 

Effective July 9, 2012, the Company entered into a Mineral Property Acquisition Agreement with MineSadco S.A., an Ecuadorian company. MineSadco is the owner of an undivided, 100% interest in a certain mineral property located in Canton Portovelo, El Oro Province, in the South of Ecuador. Pursuant to the terms of the agreement, the Company acquired the rights to commercially exploit 100% of the mineral rights to the Property for a period of twenty years. In consideration, the Company issued 120,000,000 restricted shares of its common stock to MineSadco. In addition, if within eighteen months from the closing date certain production millstones will be completed, MineSadco will be entitled to additional shares representing up to 55% of the Companies diluted capital at the closing date.

 

Employees

 

Other than our current directors and officers,  we have three part-time employees .

 

Transfer Agent

 

We have engaged Nevada Agency and Trust as our stock transfer agent. Nevada Agency and Trust is located at 50 West Liberty Street, Reno, Nevada 89501. Their telephone number is (775) 322-0626 and their fax number is (775) 322-5623. The transfer agent is responsible for all record-keeping and administrative functions in connection with our issued and outstanding common stock.

 

Results of Operations

 

Results of Operations For the nine months ended September 30 2012   and nine months ended September 30 2011

 

Revenues

 

The Company did not generate any revenues for the   nine months ended  September 30 2012, or September 30 2011

 

During the nine months ended September June 30 2012 and September 30 2011, total operating expenses were $1,726,905 and $451,181, respectively. The general and administrative expenses were primarily the result of fees for bookkeeping expenses and professional fees associated with fulfilling the Company’s SEC reporting requirements and equity compensation expense  for consulting expenses in relation to the  business operations and  development .

 

Net loss

 

During the nine months ended September 30 2012 and 2011, the net (loss) income was ($1,774,052) and $302,475  respectively.

 

We expect to continue to incur significant operating expenses. As a result, we will need to generate significant revenues to achieve profitability, which may not occur. We expect our operating expenses to increase as a result of our planned expansion . Even if we do achieve profitability, we may be unable to sustain or increase profitability on a quarterly or annual basis in the future. We expect to have quarter-to-quarter fluctuations in revenues, expenses, losses and cash flow, some of which could be significant. Results of operations will depend upon numerous factors, some beyond our control, including regulatory actions, market acceptance of our products and services, new products and service introductions, and competition.

 

4
 

 

Liquidity and Capital Resources

 

Our cash balance as of  September 30 2012 was $600. Cash and cash equivalents from inception to date have been sufficient to provide the operating capital necessary to operate to date.

 

There is not enough cash on hand to fund our administrative and other operating expenses or our proposed research and development program for the next twelve months, and we do not anticipate that we will generate any revenues from operations for the next twelve months.

 

Going Concern Consideration

 

Our auditors have issued an opinion on our financial statements which includes a statement describing our going concern status. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated until we begin marketing the product. Accordingly, we must raise capital from sources other than the actual sale of the product. We must raise capital to implement our project and stay in business.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

 

Item 4. Controls and Procedures.

 

Disclosure Controls and Procedures

 

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission. Our principal executive officer and principal financial and accounting officers have reviewed the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13(a)-15(e) and 15(d)-15(e)) within the end of the period covered by this Quarterly Report on Form 10-Q and have concluded that the disclosure controls and procedures are effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported in a timely manner. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the last day they were evaluated by our principal executive officer and principal financial and accounting officers.

 

5
 

 

Changes in Internal Controls over Financial Reporting

 

There have been no changes in the Company's internal control over financial reporting during the last quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

 

PART II

OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

 

Item 1A. Risk Factors

 

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

On January 4, 2012, the Company raised $8,500 and issued 8,500,000 (post reverse stock split) shares of its common stock, with a purchase price $0.001 per share, to investors. As of June 30, 2012 the investment was receivable.

 

On January 13, 2012, the Company raised $16,760 and issued 16,760,000 (post reverse stock split) shares of its common stock, with a purchase price $0.001 per share, to investors. As of June 30, 2012 the investment was receivable.

 

On February 21, 2012, the Company raised $19,730 and issued 19,730,000 (post reverse stock split) shares of its common stock, with a purchase price $0.001 per share, to investors. As of June 30, 2012 the investment was receivable.

 

On May 22, 2012, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 10,000,000 shares of its common stock on said date valued at $10,000. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant.

 

On May 31, 2012, the Company entered into an agreement with an unrelated third-party consultant.  As payment for the consultant’s services, the Company issued 1,500,000 shares of its common stock on said date valued at $1,500. The fair value of the unregistered shares was determined based on the recent closing price of the Company’s stock on the date of grant.

 

On July 15, 2012, the Company entered into an agreement with unrelated third-party consultants.  As payment for the consultant’s services, the Company issued 30,000,000 shares of its common stock on said date valued at $30,000. The fair value of the unregistered shares was determined based on trading restrictions on the date of grant.

 

On July 15, 2012, the Company issued 120,000,000 shares of its unregistered common stock valued at $120,000 to MineSadco S.A., an Ecuadorian company, to purchase a 100% interest to exploit and commercialize a mining property located in Ecuador for 20 years.

 

From January 1, 2012 to September 30, 2012, the Company issued 2,713,355 shares of its common stock upon conversion of convertible debt of $63,000 and $2,700 of interest.

 

Use of Proceeds

 

None

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Submission of Matters to a Vote of Security Holders.

 

None

 

Item 5. Other Information.

 

None

 

6
 

 

Item 6. Exhibits

 

31.1   Certification of Principal Executive Officer pursuant to Section 302 of  the Sarbanes-Oxley Act (filed herewith)
     
31.2   Certification Principal Financial and Accounting Officer pursuant to  Section 302 of the Sarbanes-Oxley Act (filed herewith)
     
32.1   Certification of Principal Executive Officer pursuant to Section 906 of  the Sarbanes-Oxley (filed herewith)
     
32.2   Certification of Principal Financial and Accounting Officer pursuant to  Section 906 of the Sarbanes-Oxley (filed herewith)
     
101.INS   XBRL Instance Document
     
101.SCH   XBRL Taxonomy Extension Schema
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase
     
101.LAB   XBRL Taxonomy Extension Label Linkbase
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase

 

7
 

 

SIGNATURES

 

Pursuant to the requirements 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.

 

  ADAMA TECHNOLOGIES CORPORATION
     
Date: November 9 2012 By: /s/ Aviram Malik
    Name: Aviram Malik
    Title: Chief Executive Officer, President and
    Director (Principal Executive Officer)

 

Date: November 9 2012 By: /s/ Asher Zwebner
    Name: Asher Zwebner
    Title:  Chief Financial Officer
    (Principal Financial and Accounting Officer)

 

8