Urban Ag. (the registrant,
Company, we, us, our, or Urban Ag) is the successor entity
to Aquamer, Inc. (AQUM), a Delaware corporation, which was established in February 2000 to commercialize proprietary
medical devices. In 2005 Aquamer became a wholly owned subsidiary of Bellacasa Productions, Inc. (Bellacasa) a publicly
traded company, which in 2007 distributed 100% of its AQUM shares to its shareholders, thus creating a public entity that traded
as AQUM. The Company is a calendar year corporation.
From 2007 to 2010 AQUM tried unsuccessfully
to commercialize its medical device business and our Board of Directors closed those operations and acquired Urban Agricultural
Corporation, a Delaware corporation (UAC). UAC holds the exclusive rights under a license from TerraSphere, Inc.
(TerraSphere) to use their patented farming technology in Massachusetts, and the right of first refusal to purchase
exclusive licenses for New Jersey, Pennsylvania and California. Under the TerraSphere license the Company receives certain vertical
farming intellectual property and know-how from TerraSphere. The license was purchased by UAC in May, 2010 for $1,000,000 with
$250,000 paid at acquisition and payments totaling $750,000 due by May 1, 2011. Urban Ag was unable to make payments due under
the TerraSphere License . TerraSphere extended the payment terms under the TerraSphere License through December 31, 2011. Please
see Note 17 of the Notes to Consolidated Financial Statements for further discussion regarding the status of UAC.
Currently we are a company focused on a
long-term strategy of pursuing the consolidation of the fragmented industry that provides outsourced services to General Contractors,
Facility Managers/Owners, Architects and Engineers. This industry is focused on providing construction path services including
pre-construction services, site selection and preparation, hazardous material abatement and environment remediation, electrical/data
communication system integration, electrical cabling installation and design, restoration/remediation services and post occupancy
In pursuit of this strategy, on November
7, 2011 Urban Ag. Corp. (the Registrant, Urban Ag, or the Company) entered into a Stock
Purchase Agreement (the "Agreement"), with CCS Environmental World Wide, Inc., a Delaware corporation (CCS World
Wide, CCS, or the Seller) and the shareholders of CCS (Shareholders). Pursuant
to the terms of the Agreement, Urban Ag acquired 100% of the outstanding shares of CCS. In exchange, the Company issued to the
CCS Shareholders an aggregate of 7,900,000 shares of the Company's common stock, $.0001 par value and five million warrants to
purchase one share of common stock of the Company per Warrant. The warrants are exercisable for a period of five years at a price
of $3.00 per share. The Warrants become exercisable once CCS achieves $50,000,000 in revenue in a single year. The shares purchased
represented 78.8% of the outstanding common stock of the Company after the closing.
Pursuant to the Agreement, CCS became the
Company's wholly-owned subsidiary. This transaction was recorded as a reverse merger. The results of operations from CCS Worldwide
are included in the financial statements for all periods included in this annual report.
A copy of the Agreement is included as Exhibit
10.13 to this Annual Report on Form 10-K. A copy of the form of Warrant is included as Exhibit 4.2 to this Annual Report.
CCS Worldwide is a hazardous material abatement
and environmental remediation company based in Brockton, Massachusetts. The Company, based in Danvers, Massachusetts, currently
acts as a Holding Company that has as its one operating subsidiary CCS Worldwide. CCS Worldwide generates revenue within a single
operating segment which provides hazardous material abatement and environment remediation services through its four wholly owned
subsidiaries - Commonwealth Contracting Services LLC; CCS Special Projects LLC; CCS Environmental, Inc.; and CCS Environmental
Services, Inc., all based in Brockton, Massachusetts. For the periods covered in this annual report, our revenues consist of sales
in the single operating segment providing services for hazardous material abatement and environmental remediation.
CCS Worldwide has operated its current business
since 2005 generating annual revenues of between $2 million and $12 million providing services including removal of interior finishes,
surfaces and fixtures; as well as the removal and proper disposition of certain asbestos-containing and lead-painted building materials
and certain other regulated materials. CCS Worldwide is awarded contracts from its customers generally through a bidding process
whereby contracts are typically awarded on a qualified low bidder basis. Its revenue is comprised of both union and non-union contracts.
Basis of Presentation
The audited consolidated
financial statements as of and for the years ended December 31, 2011 and 2010 have been prepared by the Company pursuant to the
rules and regulations of the Securities and Exchange Commission (the SEC) for financial reporting. These consolidated
statements, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary
for a fair statement for the periods presented.
The accompanying consolidated
financial statements include the consolidated accounts of the Company and its wholly-owned subsidiaries, with all significant intercompany
balances and transactions eliminated in consolidation. As a result of the reverse merger accounting treatment, the Companys
financial statements for the year ended December 31, 2010 reflect the operations and financial position of CCS Worldwide. The Companys
financial statements for the year ended December 31, 2011 reflect the consolidation of CCS Worldwide with the Company effective
with the date of the Agreement. See note 6.