Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: March 31, 2013
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: _____________ to _____________
ENXNET, INC.
(Exact name of registrant as specified in its charter)
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Oklahoma
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000-30675
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73-1561191
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(State or Other Jurisdiction of Incorporation or Organization)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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11333 E. Pine Street, Suite 92 - Tulsa, OK 74116
(Address of principal executive offices & zip code)
(918) 592 – 0015
Registrant’s telephone number, including area code:
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ] Yes [X] No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. [ ] Yes [X] 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 past 90 days. [X] Yes [ ] 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 (§ 229.405 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 [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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 10K or any amendment to this Form 10K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):
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Large accelerated filer
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[ ]
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Accelerated filer
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[ ]
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Non-accelerated filer
(Do not check if a smaller reporting company)
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[ ]
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Smaller reporting company
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[X]
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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 the voting common equity held by non-affiliates of the registrant on September 30, 2012 (the last business day of the registrant’s most recently completed second fiscal quarter), was $6,946,076.
On May 7, 2013, the registrant had 48,281,518 shares of common outstanding.
Documents incorporated by reference: None.
ENXNET, INC.
FORM 10K
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PAGE
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Description of Business.
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3
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Risk Factors.
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5
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Unresolved Staff Comments.
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5
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Description of Property.
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5
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Legal Proceedings.
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5
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Mine Safety Procedures.
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5
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Market for Common Equity and Related Stockholder Matters.
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6
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Selected Financial Data.
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6
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Management’s Discussion and Analysis of Financial Condition and Results of Operation.
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6
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Financial Statements.
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8
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Changes In And Disagreements With Accountants On Accounting and Financial Disclosure.
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19
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Controls and Procedures.
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19
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Other Information.
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20
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Directors, Executive Officers, and Corporate Governance.
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20
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Executive Compensation.
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21
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
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22
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Certain Relationships and Related Transactions.
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23
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Principal Accountant Fees and Services.
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23
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Exhibits.
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24
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25
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26
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FORWARD LOOKING STATEMENTS
This Report on Form 10K (including the Exhibits hereto) contains certain “forward-looking statements” within the meaning of the of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995, such as statements relating to our financial condition, results of operations, plans, objectives, future performance and business operations. Such statements relate to expectations concerning matters that are not historical fact. Accordingly, statements that are based on management’s projections, estimates, assumptions and judgments are forward-looking statements. These forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “approximately,” “intend,” and other similar words and expressions, or future or conditional verbs such as “should,” “would,” “could,” and “may.” In addition, we may from time to time make such written or oral “forward-looking statements” in future filings (including exhibits thereto) with the Securities and Exchange Commission (the “Commission” or “SEC”), in our reports to stockholders, and in other communications made by or with our approval. These forward-looking statements are based largely on our current expectations, assumptions, plans, estimates, judgments and projections about our business and our industry, and they involve inherent risks and uncertainties. Although we believe that these forward-looking statements are based upon reasonable estimates and assumptions, we can give no assurance that our expectations will in fact occur or that our estimates or assumptions will be correct, and we caution that actual results may differ materially and adversely from those in the forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, contingencies and other factors that could cause our or our industry’s actual results, level of activity, performance or achievement to differ materially from those discussed in or implied by any forward-looking statements made by or on behalf of us and could cause our financial condition, results of operations or cash flows to be materially adversely effected. Accordingly, investors and all others are cautioned not to place undue reliance on such forward-looking statements. In evaluating these statements, some of the factors that you should consider include those described below under “Risk Factors” and elsewhere in this Report on Form 10K.
Overview
EnXnet, Inc. (the “Company”) was formed under the laws of the State of Oklahoma on March 30, 1999. It is a business and technology development enterprise engaged in the development, marketing, and licensing of emerging technologies and innovative business strategies and practices. EnXnet is primarily focusing on products, solutions and services that support and enhance environmental products and multimedia management.
Products and Services
Thermal Air Control Unit
The TAC Unit provides air conditioning and heating for semi-truck cabs that are now required to meet State and Federal engine idling rules. The Tac Unit uses a 12 Volt Technology and is operated solely from the truck’s auxiliary batteries. The batteries are recharged by the truck’s alternator while running. With the TAC Unit, a truck can remain parked with the motor off and maintain a comfortable environment for the driver while burning no diesel fuel for up to 10 hours on the auxiliary battery system. The TAC Unit’s technology has the ability to serve numerous other vehicle applications as well. The patent for the TAC Unit was received on January 11, 2011 and the rights, title and patent were acquired by the Company on July 7, 2011.
ThinDisc
The Thin Disc is our Optical Disc Having a Reduced Planar Thickness. Thin Disc’s primary function is to make any size optical disc thinner with reading capability in players that play optical disc media. The Company has filed for a United States and an international patent covering the technology included in the Thin Disc. On March 31, 2010 the Company announced receiving the official Patent for the Optical Disc Having A Reduced Planar Thickness.
Tap ‘n Go II
We received a patent for our Optical Disc Having Remote Reading Capabilities on May 27, 2010.
Disc Security Tag
Disc Security Tag, (DSTag), is an invention which utilizes proprietary Electronic Article Surveillance (EAS) tags embedded or adhered to a DVD or CD during the injection mold phase of the manufacturing process. Products, to which this process is applied, provide unique item identification for its customers and clients. Manufacturers that use this product are given the opportunity to enhance the integrity of their product while providing added value to their customers (retailers). This will help reduce or stop the enormous losses attributed to employee and retail theft. Additionally, it can give content developers,
manufacturers, and distributors the ability to protect their investment by providing an efficient means to authenticate legitimate products over counterfeit products produced by unauthorized manufacturers. On November 2, 2010 the Company received the patent for DSTag. On September 29, 2009 the Company announced receiving the official Patent for the Passive Resonant Reflector.
EnXcase
EnXcase combines two distinct features for the optical disc media market. The outer styling of the case has the unique feature of a semi-rounded top. The second feature is a theft deterrent ring found within the inner structure of the EnXcase. The Company developed this unique case primarily for use with the two-sided disc format. The Company filed for a United States patent on EnXcase on October 10, 2003 and was awarded the patent on September 19, 2006.
Manufacturing
The Company will not manufacture any of its products. We will outsource any manufacturing needs.
Distribution
The Company has not distributed any of the products created with the use of the Company’s technology. The licensees of the Company’s product offerings will be responsible for the distribution. The Company plans to match manufacturers with its licensees to facilitate sale efforts.
Marketing
The Company has licensed Thin Disc technology to another company and is attempting to license Security Tags, EnXcase and Tap ‘n Go to other companies or manufacturers. The Company’s intentions are to market the TAC Unit.
Patents
The patent for the TAC Unit was received on January 11, 2011 and the rights, title and patent were acquired by the Company on July 7, 2011.
The Company has received a patent covering ThinDisc which is our optical disc having a reduced planar thickness. The Company believes that this patent will afford protection under existing patent laws against infringement. There is no assurance, however, that third parties will not attempt to infringe on the ThinDisc patents.
The Company has received a patent covering our Optical Disc Having Remote Reading Capabilities. The Company believes that this Patent will afford protection under existing Patent law against infringement. There is no assurance, however, that third parties will not attempt to infringe on the Optical Disc Having Remote Reading Capabilities patents.
Iterated Systems, Inc., the developer and licensor of ClearVideo software has twenty-four U.S. Patents and fourteen various international patents covering the methods, apparatus and processes used in compressing digital data, fractal encoding of data streams, fractal transformation of data, fractal compression of data, protecting the technology. The Company believes that these patents afford protection under existing patent laws. There is no assurance, however, that third parties will not infringe on the ClearVideo patents.
The Company has received a patent covering Disc Security Tag (DSTag). The Company believes that this patent will afford protection under existing patent laws against infringement. There is no assurance, however, that third parties will not attempt to infringe on the Disc Security Tag (DSTag) patents.
The Company has received a patent covering EnXcase. The Company believes that this patent will afford protection under existing patent laws against infringement. There is no assurance, however, that third parties will not attempt to infringe on the EnXcase patents.
The Company has received a patent covering an Antenna for a Storage Disc. The Company believes that this Patent will afford protection under existing Patent law against infringement. There is no assurance, however, that third parties will not attempt to infringe on the Antenna for a Storage Disc design Patents.
Competition
There are numerous companies offering various types of services and products similar to the Company’s, some of which have more financial and technical resources than the Company and there can be no assurance that in the future, the Company will be able to compete successfully with our competitors.
There are numerous companies offering various types of security tag technologies and services. The Company can offer no assurance that in the future, the Company will be able to compete successfully with other companies providing similar technology and services.
Governmental Regulation
The Company is not aware of any governmental regulations which affect the manufacture, licensing, development or sale of any of its products other than those imposed applicable to technical data included in Export/Import Regulations imposed by the United States government and those controlling regulations and regulations of countries into which any products may be imported.
Company’s Office
The Company’s offices and technology center are located at 11333 E Pine St, Ste 92, Tulsa, Oklahoma 74116 and its telephone number is (918) 592-0015.
Employees
The Company has one full-time employee and two consultants. The president and CEO of the Company is not receiving or accruing a salary at this time.
We are a smaller reporting issuer as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended and are not required to provide the information under this item.
None.
The Company does not own any real property. The Company owns personal property in the form of patents, licenses and office equipment.
The Company currently leases its office and technology space in Tulsa, OK for $457 per month.
The Company’s offices are currently adequate and suitable for its operations. The Company will relocate its offices as the need arises. However, The Company currently has not entered into any negotiations with anyone to relocate its offices.
We may from time to time be a party to various legal actions in the ordinary course of business. There can be no assurance that the Company will not be a party to litigation in the future that could have an adverse effect on the Company.
None.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
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Market Information
The Company’s stock is traded under the symbol “EXNT” on the OTCQB, and the symbol “AOHMDW” on the Frankfurt, Berlin and Stuttgart Stock Exchanges in Germany. There can be no assurance that an active or regular trading market for the common stock will develop or that, if developed, will be sustained. Various factors, such as operating results, changes in laws, rules or regulations, general market fluctuations, changes in financial estimates by securities analysts and other factors may have a significant impact on the market of the Company securities. The market price for the securities of public companies often experience wide fluctuations that are not necessarily related to the operating performance of such public companies such as high interest rates or impact of overseas markets.
The following table shows the reported high and low closing bid prices per share for our common stock based on information provided by the OTC Bulletin Board. The over-the-counter market quotations set forth for our common stock reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
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High
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Low
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Period from January 1, 2013 to March 31, 2013
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$
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0.20
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$
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0.04
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Period from October 1, 2012 to December 31, 2012
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$
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0.20
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$
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0.04
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Period from July 1, 2012 to September 30, 2012
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$
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0.40
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$
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0.07
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Period from April 1, 2012 to June 30, 2012
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$
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0.12
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$
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0.02
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Period from January 1, 2012 to March 31, 2012
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$
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0.13
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$
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0.02
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Period from October 1, 2011 to December 31, 2011
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$
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0.08
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$
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0.01
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Period from July 1, 2011 to September 30, 2011
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$
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0.08
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$
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0.04
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Period from April 1, 2011 to June 30, 2011
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$
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0.10
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$
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0.03
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Holders
There were approximately 117 stockholders of record of the Common Stock as of May 7, 2013. This does not reflect those shares held beneficially or in “street” name.
Dividend Policy
The Company has never declared or paid any cash dividends on its Common Stock, and the Company currently intends to retain any future earnings to fund the development of its business and therefore does not anticipate paying any cash dividends on its Common Stock in the foreseeable future. Future declaration and payment of dividends on its Common Stock, if any, will be determined in light of the then-current conditions, including the Company’s earnings, operations, capital requirements, financial conditions, restrictions in financing agreements, and other factors deemed relevant by the Board of Directors.
Recent Sales of Unregistered Securities
The Company received $15,000 in the sale of 300,000 restricted shares of common stock in April 2013.
We are a smaller reporting issuer as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended and are not required to provide the information under this item.
The following plan of operation, discussion of the results of operations and financial conditions should be read in conjunction with the financial statements and related notes appearing in this report.
Overview
EnXnet, Inc. (the “Company”) was formed under the laws of the State of Oklahoma on March 30, 1999. It is a business and technology development enterprise engaged in the development, marketing, and licensing of emerging technologies and innovative business strategies and practices. EnXnet is primarily focusing on products, solutions and services that support and enhance environmental products and multimedia management.
The Company currently can satisfy its current cash requirements for approximately 30 days and has a plan to raise additional working capital by the sale of shares of the Company common stock to select perspective individuals and from additional borrowings. This plan should provide the additional necessary funds required to enable the Company to continue marketing and developing its products until the Company can generate enough cash flow from sales to sustain its operations.
The Company does not anticipate any significant cash requirements for the purchase of any facilities.
The Company currently has one full-time employee on the payroll. Currently our employee and other outside consultants are used for the further development of our products.
Results of Operations.
Year Ended March 31, 2013 Compared to Year Ended March 31, 2012.
Revenues.
We had no revenues from operations for the years ending March 31, 2013 and 2012. At the present time we are focusing our efforts on the TAC Unit. The unit provides air conditioning and heating for semi-truck cabs that are now required to meet State and Federal engine idling rules. The Tac Unit uses a 12 Volt Technology and is operated solely from the truck’s auxiliary batteries. The batteries are recharged by the truck’s alternator while running. With the TAC Unit, a truck can remain parked with the motor off and maintain a comfortable environment for the driver while burning no diesel fuel for up to 10 hours on the auxiliary battery system. The TAC Unit’s technology has the ability to serve numerous other vehicle applications as well.
Operating Expenses.
The Company incurred operating expenses for the years ended March 31, 2013 and 2012 of $253,088 and $251,468. The increase in operating expenses of $1,620 (0.6%) is minimal from year to year. Expense categories changed from year to year as follows:
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Consulting expense decreased by $53,240
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Depreciation and amortization decreased by $3,293
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Payroll expenses increased by $58,330
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Travel and entertainment expenses increased by $4,114
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All other expense categories decreased by $304
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Consulting expenses for the year ended March 31, 2013 decreased $53,240 from the year ended March 31, 2012. The decrease in consulting expenses is due to decreased amounts paid for the development of the TAC Unit. In the year ended March 31, 2013 we spent $19,367 for developing the TAC Unit while in the previous year ended March 31, 2012 we spent $41,339 or a decrease of $21,972. In addition, the consulting expenses related to the issuance of common stock and options were $12,000 and $42,793 for the years ended March 31, 2013 and 2012, a decrease of $30,793.
Depreciation and amortization expenses were $2,072 and $5,365 for the years ended March 31, 2013 and 2012, a decrease of $3,293. During the year ended March 31, 2012, all of our depreciable assets became fully depreciated. The rights to the TAC Unit are valued at $37,778 and $39,850 at March 31, 2013 and 2012, net of amortization.
Payroll expense increased for the year ended March 31, 2013 by $58,330 from the previous year. In the years ended March 31, 2013 the Company issued stock to an employee with a valuation of $80,000 and $3,000. In addition during the year ended March 31, 2013 and 2012 the value of stock options issued to employees, officers and directors was recorded in the amount of $22,702 and $52,310 for options that had vested.
Travel and entertainment expenses increased by $4,114 for the year ended March 31, 2013 from the previous year. This increase is related to research and development of the TAC Unit.
We incurred net losses for the years ended March 31, 2013 and 2012 of $277,655 and $275,125 or $(0.01) and $(0.01) per share.
Liquidity and Capital Resources.
The Company from inception through May 7, 2013 has issued 48,281,518 shares of its Common Stock to officers, directors and others. The Company has little operating history and no material assets other than the license agreement for ClearVideo and DVDplus, and the patent for the TAC Unit, ThinDisc, the Optical Disc, DSTag, EnXcase, and the Antenna patents. The Company has $8,098 in cash as of March 31, 2013.
The Company has a limited source of revenue and has incurred operating losses since inception. The Company has incurred operating losses each year since its inception and has had a working capital deficit at March 31, 2013 and 2012. The working capital deficit at March 31, 2013 and 2012 was $1,547,449 and $1,520,568, respectively. These factors raise substantial doubt about the Company’s ability to continue as a going concern. As a result of these factors, the Company’s independent certified public accountants have included an explanatory paragraph in their reports on the Company’s March 31, 2013 and 2012 financial statements which expressed substantial doubt about the Company’s ability to continue as a going concern.
Contractual Obligations.
The Company at the present time has no material commitments for capital expenditures. If capital expenditures are required after operations commence, the Company will pay for the same through the sale of common stock; or through loans from third parties. There is no assurance, however, that such financing will be available and in the event such financing is not available, the Company may have to cease operations.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES.
Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements. These statements have been prepared in accordance with generally accepted accounting principles in the United States of America.
Use of estimates in preparation of financial statements
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, based on historical experience, and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The following critical accounting policies rely upon assumptions, judgments and estimates and were used in the preparation of our consolidated financial statements:
Licenses
The costs associated with acquiring exclusive licensing rights to patented technology have been capitalized and are being charged to expense using the straight line method of amortization over ten years, the estimated remaining useful lives of the patents.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheets as of March 31, 2013 and 2012 for cash equivalents and accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments.
Contingent Liability
We may have certain contingent liabilities with respect to material existing or potential claims, lawsuits and other proceedings. We accrue liabilities when it is probable that future cost will be incurred and such cost can be measured.
Off Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
The information for this Item is included beginning on Page F-1 of this Annual Report.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
EnXnet, Inc.
Tulsa, Oklahoma
We have audited the accompanying balance sheets of EnXnet, Inc. (the “Company”) as of March 31, 2013 and 2012 and the related statements of expenses, stockholders’ deficit, and cash flows for the years ended March 31, 2013 and 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2013 and 2012 and the results of its operations and its cash flows for the years then ended and in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company suffered recurring losses since inception, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
MALONEBAILEY, LLP
www.malonebailey.com
Houston, Texas
June 25, 2013
F-1
ENXNET, INC
BALANCE SHEETS
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March 31,
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2013
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2012
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|||||
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ASSETS
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||||||
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CURRENT ASSETS
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||||||
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Cash
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$
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8,098
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$
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11,966
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Prepaid expenses
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1,027
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1,828
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TOTAL CURRENT ASSETS
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9,125
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13,794
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OTHER ASSETS
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||||||
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Patent technology, net of accumulated amortization of $2,072 and $1,554 respectively
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37,778
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39,850
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||||
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Deposits
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1,137
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1,137
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||||
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TOTAL OTHER ASSETS
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38,915
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40,987
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||||
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TOTAL ASSETS
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$
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48,040
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$
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54,781
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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||||||
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CURRENT LIABILITIES
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||||||
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Accounts payable and accrued expenses
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$
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524,556
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$
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510,244
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||
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Advances from officer - related party
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10,500
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39,500
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||||
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Advances from stockholder
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32,400
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32,400
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||||
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Convertible notes payable
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180,000
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180,000
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||||
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Convertible notes payable - related party
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809,118
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772,218
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||||
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TOTAL CURRENT LIABILITIES
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1,556,574
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1,534,362
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||||
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STOCKHOLDERS’ DEFICIT
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||||||
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Common stock, $0.00005 par value; 200,000,000 shares authorized, 47,981,518
and 45,139,018 shares issued and outstanding
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2,399
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2,257
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Additional paid-in capital
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5,468,153
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5,219,593
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||||
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Accumulated deficit
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(6,879,086
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)
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(6,601,431
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)
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||
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Other comprehensive loss
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(100,000
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)
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(100,000
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)
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TOTAL STOCKHOLDERS’ DEFICIT
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(1,508,534
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)
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(1,479,581
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)
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||
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
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$
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48,040
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$
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54,781
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The accompanying notes are an integral part of these audited financial statements.
F-2
ENXNET, INC
STATEMENTS OF EXPENSES
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For the Years Ended
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||||||
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March 31,
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2013
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2012
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|||||
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EXPENSES
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||||||
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Consulting fees
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$
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33,067
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$
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86,307
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||
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Depreciation & amortization
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2,072
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5,365
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||||
|
Payroll
|
160,586
|
102,256
|
||||
|
Professional services
|
30,250
|
31,826
|
||||
|
Occupancy
|
13,517
|
13,774
|
||||
|
Office
|
5,806
|
7,960
|
||||
|
Travel
|
5,306
|
1,192
|
||||
|
Other
|
2,484
|
2,788
|
||||
|
Total Expenses
|
253,088
|
251,468
|
||||
|
LOSS FROM OPERATIONS
|
(253,088
|
)
|
(251,468
|
)
|
||
|
OTHER EXPENSE
|
||||||
|
Interest expense
|
(24,567
|
)
|
(23,657
|
)
|
||
|
NET LOSS
|
$
|
(277,655
|
)
|
$
|
(275,125
|
)
|
|
BASIC AND DILUTED NET LOSS PER SHARE
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING,
BASIC AND DILUTED
|
47,037,867
|
43,882,775
|
||||
The accompanying notes are an integral part of these audited financial statements.
F-3
ENXNET, INC
STATEMENT OF STOCKHOLDERS’ DEFICIT
For the years ended March 31, 2012 and March 31, 2013
|
Additional
|
Other
|
Total
|
||||||||||
|
Common Stock
|
Paid-in
|
Accumulated
|
Comprehensive
|
Stockholders’
|
||||||||
|
Shares
|
Amount
|
Capital
|
Deficit
|
Loss
|
Deficit
|
|||||||
|
Balance, March 31, 2011
|
43,030,018
|
$
|
2,151
|
5,054,588
|
$
|
(6,326,306)
|
$
|
(100,000)
|
$
|
(1,369,567)
|
||
|
Common stock issued for:
|
||||||||||||
|
Cash
|
1,175,000
|
59
|
74,941
|
-
|
-
|
75,000
|
||||||
|
Services
|
134,000
|
7
|
7,794
|
-
|
-
|
7,801
|
||||||
|
Acquisition of assets
|
800,000
|
40
|
29,960
|
-
|
-
|
30,000
|
||||||
|
Stock options issued
|
||||||||||||
|
Acquisition of assets
|
-
|
-
|
6,404
|
-
|
-
|
6,404
|
||||||
|
Services
|
45,906
|
45,906
|
||||||||||
|
Net loss
|
-
|
|
-
|
|
-
|
|
(275,125)
|
|
-
|
|
(275,125)
|
|
|
Balance, March 31, 2012
|
45,139,018
|
$
|
2,257
|
$
|
5,219,593
|
$
|
(6,601,431)
|
$
|
(100,000)
|
$
|
(1,479,581)
|
|
|
Common stock issued for:
|
||||||||||||
|
Cash
|
2,062,500
|
103
|
124,897
|
-
|
-
|
125,000
|
||||||
|
Services
|
780,000
|
39
|
100,961
|
-
|
-
|
101,000
|
||||||
|
Stock options issued
|
-
|
-
|
22,702
|
-
|
-
|
22,702
|
||||||
|
Net loss
|
-
|
-
|
-
|
(277,655)
|
-
|
(277,655)
|
||||||
|
Balance, March 31, 2013
|
47,981,518
|
$
|
2,399
|
$
|
5,468,153
|
$
|
(6,879,085)
|
$
|
(100,000)
|
$
|
(1,508,534)
|
|
The accompanying notes are an integral part of these audited financial statements.
F-4
ENXNET, INC
STATEMENTS OF CASH FLOWS
|
For the Years Ended
|
||||||
|
March 31,
|
||||||
|
2013
|
2012
|
|||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||
|
Net loss
|
$
|
(277,655
|
)
|
$
|
(275,125
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||
|
Depreciation and amortization
|
2,072
|
5,365
|
||||
|
Common stock issued for services
|
101,000
|
7,801
|
||||
|
Stock options issued
|
22,702
|
45,906
|
||||
|
Changes in operating assets and liabilities:
|
||||||
|
Prepaid expenses
|
801
|
40,996
|
||||
|
Accounts payable & accrued expenses
|
14,312
|
10,730
|
||||
|
Net cash used in operating activities
|
(136,768
|
)
|
(164,327
|
)
|
||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||
|
Purchase of technology
|
-
|
(5,000
|
)
|
|||
|
Net cash used in investing activities
|
-
|
(5,000
|
)
|
|||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||
|
Proceeds from stock sales
|
125,000
|
75,000
|
||||
|
Proceeds from note payable
|
-
|
15,450
|
||||
|
Proceeds from advances from officer and stockholder
|
23,200
|
84,400
|
||||
|
Repayment of advances
|
(15,300
|
)
|
(2,000
|
)
|
||
|
Net cash provided by financing activities
|
132,900
|
172,850
|
||||
|
NET INCREASE (DECREASE) IN CASH
|
(3,868
|
)
|
3,523
|
|
||
|
CASH - Beginning of period
|
11,966
|
8,443
|
||||
|
CASH - End of period
|
$
|
8,098
|
$
|
11,966
|
||
|
SUPPLEMENTAL CASH FLOW DISCLOSURES:
|
||||||
|
Interest expense
|
$
|
-
|
$
|
-
|
||
|
Income taxes
|
$
|
-
|
$
|
-
|
||
|
NON-CASH FINANCING AND INVESTING TRANSACTIONS:
|
||||||
|
Conversion of accounts payable- related party to note payable- related party
|
$
|
36,900
|
||||
|
Common stock issued for acquisition of assets
|
$
|
-
|
$
|
30,000
|
||
|
Issuance of stock options for acquisition of assets
|
$
|
-
|
$
|
6,404
|
||
The accompanying notes are an integral part of these audited financial statements.
F-5
ENXNET, INC.
NOTES TO FINANCIAL STATEMENTS
THE YEARS ENDED March 31, 2013 and 2012
NOTE 1 – DESCRIPTION OF BUSINESS AND GOING CONCERN
EnXnet, Inc. (the “Company”) was formed in Oklahoma on March 30, 1999. It is a business and technology development enterprise engaged in the development, marketing, and licensing of emerging technologies and innovative business strategies and practices. EnXnet is primarily focusing on products, solutions and services that support and enhance environmental products and multimedia management.
The Company has a working capital deficit and has incurred losses since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.
Management of the Company has undertaken certain actions to address these conditions. The Company received $15,000 in the sale of common stock in April 2013. Funds required to carry out management’s plans are expected to be derived from future stock sales and borrowings from outside parties. There can be no assurances that the Company will be successful in executing its plans.
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
Cash and cash equivalents
Cash equivalents are highly liquid investments with an original maturity of three months or less.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States necessarily requires management to make estimates and assumptions that affect the amounts reported in the financial statements. We regularly evaluate estimates and judgments based on historical experience and other relevant facts and circumstances. Actual results could differ from those estimates.
Fixed Assets
Fixed assets are recorded at cost. Depreciation and amortization are provided using the straight-line method over the useful lives of the respective assets, typically 3-10 years. Major additions and betterments are capitalized. Upon retirement or disposal, the cost and related accumulated depreciation or amortization is removed from the accounts and any gain or loss is reflected in operations.
Depreciation expenses included in operating expenses for the years ended March 31, 2013 and 2012 were $2,072 and $3,811, respectively.
Impairment of long-lived assets – The Company reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical-cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. Fair value is estimated based upon either discounted cash flow analysis or estimated salvage value. As of March 31, 2013, the company recognized $0 impairment expense.
Goodwill and other intangibles – Goodwill and other intangibles with indefinite lives are not amortized but are reviewed for impairment at least annually, or more frequently if an event or circumstance indicates that an impairment may have occurred. To test for impairment, the fair value of each reporting unit is compared to the related net book value, including goodwill. If the net book value of the reporting unit exceeds the fair value, an impairment loss is measured and recognized. An income approach is utilized to estimate the fair value of each reporting unit. The income approach is based on the projected debt-free cash flow, which is discounted to the present value using discount factors that consider the timing and risk of cash flows.
Licenses
The costs associated with acquiring exclusive licensing rights to patented technology have been capitalized and are being charged to expense using the straight line method of amortization over ten years, the estimated remaining useful lives of the patents.
F-6
ENXNET, INC.
NOTES TO FINANCIAL STATEMENTS
THE YEARS ENDED March 31, 2013 and 2012
Stock Based Compensation
FASB ASC 718 requires that measurement of the cost of employee services received in exchange for an award of equity instruments be based on the grant-date fair value of the award. Such costs are recorded over the periods employees are required to render services in exchange for the awards.
Income taxes
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse.
We have net operating loss carryforwards available to reduce future taxable income. Future tax benefits for these net operating loss carryforwards are recognized to the extent that realization of these benefits is considered more likely than not. To the extent that we will not realize a future tax benefit, a valuation allowance is established.
Basic and diluted net loss per share
Basic loss per share is computed using the weighted average number of shares of common stock outstanding during each period. Diluted loss per share includes the dilutive effects of common stock equivalents on an “as if converted” basis. For the years ended March 31, 2013 and 2012, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operation, financial position or cash flows.
Reclassifications
Certain amounts have been reclassified from the prior financial statements for comparative purposes.
NOTE 3 – INCOME TAXES
At March 31, 2013 and 2012, the Company had net deferred tax assets of approximately $858,966 and $806,622 principally arising from net operating loss carryforwards for income tax purposes. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset has been established at March 31, 2013 and 2012. At March 31, 2013, the Company has net operating loss carry forwards totaling approximately $6,880,000 which will begin to expire in the year 2015.
F-7
ENXNET, INC.
NOTES TO FINANCIAL STATEMENTS
THE YEARS ENDED March 31, 2013 and 2012
NOTE 4 – CONVERTIBLE NOTES PAYABLE
|
Convertible notes payable-related party consists of the following:
|
March 31,
|
||||
|
2013
|
2012
|
||||
|
3% convertible note payable to Ryan Corley, President of the Company, due on demand, convertible into a
maximum of 271,311 common shares
|
21,705
|
21,705
|
|||
|
2% convertible notes payable to Ryan Corley, due on demand, convertible into a maximum of 13,825,480 and
12,595,503 common shares, respectively
|
620,750
|
583,850
|
|||
|
2% convertible note payable to an entity controlled by Ryan Corley, due on demand, convertible into a maximum
of 978,000 common shares
|
48,900
|
48,900
|
|||
|
3% convertible notes payable to an entity controlled by Ryan Corley, due on demand, convertible into a maximum
of 1,619,500 common shares
|
111,350
|
111,350
|
|||
|
2% convertible notes payable to Douglas Goodsell, due on demand, convertible into a maximum of 194,926
common shares
|
6,413
|
6,413
|
|||
|
Total notes payable-related party
|
$
|
809,118
|
$
|
772,218
|
|
|
Convertible notes payable consist of the following:
|
March 31,
|
||||
|
2013
|
2012
|
||||
|
4% convertible notes payable to a stockholder, due on demand, convertible into a maximum of 350,000 common shares
|
175,000
|
175,000
|
|||
|
2% convertible notes payable to a stockholder, due on demand, convertible into a maximum of 100,000 common shares
|
5,000
|
5,000
|
|||
|
Total notes payable
|
$
|
180,000
|
$
|
180,000
|
|
NOTE 5 – ADVANCES FROM OFFICER AND STOCKHOLDER
Advances from Stockholder:
Advances from two stockholders at March 31, 2013 and 2012 were $32,400 and $32,400, respectively.
Advances from Officer:
Our CEO, Ryan Corley, has made advances to the Company in prior years. During the years ended March 31, 2013 and 2012, the CEO made additional unsecured advances totaling $23,200 and $84,400. During the years ended March 31, 2013 and 2012, the Company made payments on these advances of $15,300 and $2,000. Also during the years ended March 31, 2013 and 2012, the Company converted $36,900 and $55,043 of the advances into notes payable. At March 31, 2013 and 2012, advances from the CEO were $-0- and $29,000 respectively.
The Company has notes payable to the CEO in the aggregate amount of $642,455 and $605,555 as of March 31, 2013 and 2012.During the year ended March 31, 2013, the Company converted $36,900 advances from the CEO to notes payable. Accrued interest owed on these notes at March 31, 2013 and 2012 is $135,569 and $122,670. These notes and accrued interest are convertible into 14,880,388 and 13,372,992 shares of restricted common stock of the company.
At March 31, 2013 and 2012, advances from the entity controlled by the CEO were $10,500 and $10,500 and notes payable totaled $160,250 and $160,250. Accrued interest owed on these notes at March 31, 2013 and 2012 is $16,575 and $12,136. These notes and accrued interest are convertible into 2,851,340 and 2,780,783 shares of restricted common stock of the company.
NOTE 6 - COMMON STOCK TRANSACTIONS
The Company issued 780,000 and 134,000 common shares during the years ended March 31, 2013 and 2012 for services valued at $101,000 and $7,801.
The Company sold 2,062,500 and 1,175,000 common shares during the years ended March 31, 2013 and 2012 cash of $125,000 and $75,000.
The Company issued 800,000 shares of restricted common stock during the year ended March 31, 2012 in exchange for the rights, title and patent to the TAC unit. This stock was valued at $30,000.
F-8
ENXNET, INC.
NOTES TO FINANCIAL STATEMENTS
THE YEARS ENDED March 31, 2013 and 2012
NOTE 7 – STOCK OPTIONS
On July 24, 2001, the Company filed with the SEC Form S-8, for its 2002 Stock Option Plan, (the Plan). An aggregate amount of common stock that may be awarded and purchased under the Plan is 3,000,000 shares of the Company’s common stock. Under the Plan during the years ended March 31, 2013 and 2012, the Company granted stock options to employees and members of the Board of Directors in the amount of -0- and 2,190,000. At March 31, 2013 there were 1,990,000 options issued under the Plan and there were no available options to be issued under the Plan.
The Company also issues stock options to purchase common stock outside of the Plan. During the years ended March 31, 2013 and 2012, the Company granted 500,000 and 800,000 such options for 24 months at exercise prices from $0.15 to $0.50 per share to unrelated entities. At March 31, 2013 and 2012, there were 1,300,000 and 1,100,000 such options outstanding.
During the year ended March 31, 2012 and 2012, the Company estimated the fair value of each stock option for employees and consultants at the grant date by using the Black-Scholes option-pricing model with the following assumptions:
|
Dividends yield
|
0
|
%
|
|
|
Computed volatility
|
108% -158
|
%
|
|
|
Risk-free interest rate
|
.11% - .63
|
%
|
|
|
Expected life
|
1 to 4 years
|
During the year ended March 31, 2013, the Company recognized $22,702 in stock option expense.
A summary of the status of the Company’s stock options as of March 31, 2013 and 2012 is presented below:
|
2013
|
2012
|
|||||
|
Options outstanding at beginning of year
|
3,090,000
|
1,285,800
|
||||
|
Options granted
|
500,000
|
2,990,000
|
||||
|
Options exercised
|
-
|
-
|
||||
|
Options canceled/expired
|
(300,000
|
)
|
(1,185,000
|
)
|
||
|
Options outstanding at end of year
|
3,290,000
|
3,090,000
|
||||
The following table summarizes the information about the stock options as of March 31, 2013:
|
Range of
Exercise Price
|
Number
Outstanding
|
Weighted Average
Remaining Contractual
Life Years
|
Number
Exercisable
|
||||
|
$
|
.10
|
500,000
|
0.80
|
500,000
|
|||
|
.12
|
1,990,000
|
4.30
|
1,990,000
|
||||
|
. 15
|
300.000
|
0.26
|
300,000
|
||||
|
.25
|
200,000
|
2.25
|
|
||||
|
.50
|
300,000
|
3.25
|
-
|
||||
|
$
|
.10 – .50
|
3,290,000
|
3.18
|
2,790,000
|
|||
The following table summarizes the information about the stock options as of March 31, 2012:
|
Range of
Exercise Price
|
Number
Outstanding
|
Weighted Average
Remaining Contractual
Life Years
|
Weighted Average
Exercise Price
(Total shares)
|
Number
Exercisable
|
Weighted Average
Exercise Price
(Exercisable shares)
|
||||||||
|
$
|
.12
|
1,990,000
|
5.30
|
$
|
.12
|
1,120,000
|
$
|
.12
|
|||||
|
.10-.15
|
800.000
|
1.60
|
.12
|
800,000
|
.12
|
||||||||
|
.05
|
300,000
|
.19
|
$
|
.05
|
300,000
|
.05
|
|||||||
|
$
|
.05 – .15
|
3,090,000
|
3.85
|
$
|
.11
|
2,220,000
|
$
|
.11
|
|||||
F-9
ENXNET, INC.
NOTES TO FINANCIAL STATEMENTS
THE YEARS ENDED March 31, 2013 and 2012
NOTE 8 – ACQUISITION - THERMAL AIR CONTROL SYSTEM
The Company announced on July 11, 2011 an agreement to acquire the rights, title and patents to the Thermal Air Control Systems (TAC Unit) from Tac Unit LLC. The agreement calls for Tac Unit LLC to be paid a royalty of eight percent (8%) on the net sales of the products based on the Technology. In addition, Tac Unit LLC was paid 300,000 shares of EnXnet Common Stock, with an additional stock option to purchase 300,000 shares of EnXnet Stock at a price of $0.15 per share for a period of 2 years. The Company agreed to provide $50,000 in funding to introduce the Technology to the market. On January 17, 2012 the Company negotiated the royalty to be paid to four percent (4%) for the issuance of an additional 500,000 shares of EnXnet Common Stock, with an additional stock option to purchase 500,000 shares of EnXnet Stock at a price of $0.10 per share for a period of 2 years.
The TAC Unit provides air conditioning and heating for semi-truck cabs that are now required to meet State and Federal engine idling rules. The Tac Unit uses a 12 Volt Technology and is operated solely from the truck’s auxiliary batteries. The batteries are recharged by the truck’s alternator while running. With the TAC Unit, a truck can remain parked with the motor off and maintain a comfortable environment for the driver while burning no diesel fuel for up to 10 hours on the auxiliary battery system. The TAC Unit’s technology has the ability to serve numerous other vehicle applications as well.
In acquiring the rights, title and patent to the TAC Unit, the CEO of the Company advanced on behalf of the Company $10,450 and another individual advanced $5,000 on behalf of the Company. The Company issued notes payable for $10,450 and $5,000 to the CEO and individual bearing interest at 2% and convertible into common stock of the Company at $0.03 per share.
In acquiring the TAC Unit, the Company also issued 150,000 shares of the Company’s common stock to an individual for his assistance and work on the TAC Unit. These shares were valued at $0.05 per share for total compensation of $7,500.
NOTE 9 – SUBSEQUENT EVENTS
In April 2013, the Company sold 300,000 common shares for $15,000 cash.
F-10
None.
(a) Evaluation of disclosure controls and procedures.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act), as of the end of the period covered by this Annual Report.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, errors, and instances of fraud, if any, have been or will be detected. The inherent limitations include, among other things, the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls and procedures also can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or employee override of the controls and procedures. The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls and procedures may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. If and when management learns that any control or procedure is not being properly implemented, (a) it immediately reviews our controls and procedures to determine whether they are appropriate to accomplish the control objective and, if necessary, modifies and improves our controls and procedures to assure compliance with our control objectives, (b) it takes immediate action to cause our controls and procedures to be strictly adhered to, (c) it immediately informs all relevant managers of the requirement to adhere to such controls, as well as all relevant personnel throughout our organization, and (d) it implements in our training program specific emphasis on such controls and procedures to assure compliance with such controls and procedures. The development, modification, improvement, implementation and evaluation of our systems of controls and procedures is a continuous project that requires changes and modifications to them to remedy deficiencies, to improve training, and to improve implementation in order to assure the achievement of our overall control objectives.
Based upon the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer have concluded that, subject to the limitations noted above, our disclosure controls and procedures as of the end of the period covered by this Annual Report were effective to ensure that material information relating to us and our consolidated subsidiaries is made known to them by others within those entities to allow timely decisions regarding required disclosures.
(b) Management’s Report on Internal Control Over Financial Reporting.
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements and the reliability of financial reporting.
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.
Our management team as of March 31, 2013 conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria provided in the Securities and Exchange Commission’s Interpretive Guidance regarding management’s report on internal control over financial reporting (Release No. 34-55929). Based on such assessment, we believe that, as of March 31, 2013, the Company’s internal control over financial reporting is effective.
This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the year ended March 31, 2013 that have affected, or are reasonably likely to affect, our internal control over financial reporting.
Not applicable.
Directors and Executive Officers
Set forth below are the names, ages, and positions of each of our executive officers and directors, together with such person’s business experience during the past five (5) years.
|
Name
|
Age
|
Position(s)
|
||
|
Ryan Corley
|
69
|
President, Chief Executive Officer, Chairman of the Board of Directors
|
||
|
Stephen Hoelscher
|
54
|
Chief Financial Officer, Chief Accounting Officer, Treasurer
|
||
|
Richard W Martel, Jr.
|
55
|
Director
|
||
|
Linda Howard
|
66
|
Secretary
|
||
| Michael Jackson | 56 | Executive Vice President |
Ryan Corley - President, CEO, and a member of the Board of Directors.
Mr. Corley has served as president and a member of the Board of Directors of the Company since February 5, 2000. Mr. Corley is the managing member of Treasure Finders LLC since it was founded on September 9, 2009. Mr. Corley became the Managing member of San Juan Minerals, LLC in April 2006. Mr. Corley received a Bachelor of Science in Business Administration and a Masters in Business Administration from the University of Tulsa.
Stephen Hoelscher - Chief Financial Officer and Treasurer
Mr. Hoelscher has been Chief Financial Officer of the Company since May 21, 2004 and has been providing accounting consulting services to the Company since January 2001. Mr. Hoelscher is a Certified Public Accountant and has 33 years of accounting and auditing experience. Prior to joining the Company, Mr. Hoelscher was and continues to be the CFO for Mastodon Ventures, Inc., a financial consulting business in Austin, Texas since June 2000. Mr. Hoelscher will continue his work with EnXnet and Mastadon and does not anticipate that this will interfere with his work for the Company. Mr. Hoelscher received a Bachelor of Business Administration from West Texas A&M University (formerly West Texas State University) in Canyon, Texas in 1981.
Richard W. Martel, Jr. - Member of the Board of Directors
Mr. Martel was elected to the Board of Directors and began serving on October 1, 2006. Mr. Martel had been the President of Gem Depot, Inc which was an ecommerce company that sold and distributed gemstones, gold and jewelry over the internet. Mr. Martel is also the co-founder and President of Detekt Corporation, a company that provides nondestructive infrared services to diagnose electrical and roofing problems for facilities. Detekt was founded in April 1986. Mr. Martel received his B.S. in Chemistry from Oklahoma State University in Stillwater, Oklahoma in 1981 and a MBA in Telecommunications Management from St. Edwards University in Austin, Texas in 1998.
Linda Howard – Corporate Secretary
Ms. Howard has been employed by the Company since July 2001 and has served in the capacity of executive assistant. Prior to coming to the Company she managed Sooner Beauty Supply in Tulsa, OK from May 1998 to June 2001. Ms. Howard has worked with management for Doctor’s Hospital; OTASCO; Yellow Freight System; Blue Cross and Blue Shield; and Skelly Oil Company. Ms. Howard attended Tulsa Community College.
Michael Jackson – Executive Vice President
Mr. Jackson joined the Company in June 2012 serving in the position of Executive Vice President. Mr. Jackson was President of US Operations for Duplium Limited Partnership from January 2000 through April 2012. As President of Duplium, Mr. Jackson oversaw manufacturing, assembly, finance and human resources. He was President of Computer Media and Services, a diskette replicating company that he started in 1985. In December 1999 he merged that company with a Canadian company and created Duplium LP. Mr. Jackson has extensive manufacturing and assembly experience, as well as working with start-up companies. Mr. Jackson served in the U.S. Navy from 1974 to 1980.
Election of Officers and Directors
All directors hold office until the next annual meeting of shareholders and until their successors have been elected and qualified. The Company’s officers are elected by the Board of Directors after each annual meeting of the Company’s shareholders and hold office until their death, or until they resign or have been removed from office.
Compensation of Directors
It is intended that each member of our board of directors who is not also an employee (a “non-employee director”) will receive an annual retainer in shares of our common stock as determined by our board of directors and all directors will be reimbursed for costs and expenses related to attending meetings of the board of directors or committees of the board of directors on which they serve.
Our employee directors will not receive any additional compensation for serving on our board of directors or any committee of our board of directors, and our non-employee directors will not receive any compensation from us for their roles as directors other than the stock and stock option grants.
Committees of the Board of Directors
The Board of Directors currently consists of two members and the entire Board acts as the Company’s audit committee. There are no other committees of the Board. The board meets as needed.
Audit Committee and Code of Ethics.
The entire Board serves as the audit committee of the Company. We have not adopted an audit committee charter or made a determination as to whether any of our directors would qualify as an audit committee financial expert. The Company has not yet adopted a code of ethics applicable to its chief executive officer and chief accounting officer, or persons performing those functions, because of the small number of persons involved in management of the Company.
Family Relationships
There are no family relationships among our officers or directors.
Legal Proceedings
Based on our inquiries of all of our officers and directors, we are not aware of any pending or threatened legal proceedings involving any of our officers or directors that would be material to an evaluation of our management.
The following table sets forth certain information concerning all cash and non-cash compensation awarded to, earned by or paid to our Chief Executive Officer and other executive officers whose total compensation exceeded $100,000 for the fiscal years ended March 31, 2013 and 2012.
Summary Compensation Table
|
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Total
($)
|
||||||
|
Ryan Corley
|
2013
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
||||||
|
President and Chief Executive Officer
|
2012
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
(1) There is a stock option plan for the benefit of the Company’s officers and directors. There is no pension, or profit sharing plan for the benefit of the Company’s officers and directors.
Employment Agreements
We do not have an employment agreement with our CEO, Mr. Corley.
Other Compensation
We may issue to our independent directors stock options and common stock as compensation as determined by the Board of directors.
Stock option Plan
2001 Stock Option Plan
We adopted our 2001 Stock Option Plan on July 24, 2001. The plan provides for the grant of options intended to qualify as “incentive stock options” and options that are not intended to so qualify or “non-statutory stock options”. The total number of shares of common stock reserved for issuance under the plan is 3,000,000 shares. We have issued 1,990,000 stock options that are outstanding at March 31, 2013.
The plan is administered by our board of directors, which selects the eligible persons to whom options or stock awards shall be granted, determines the number of shares subject to each option or stock award, the exercise price therefore and the periods during which options are exercisable, interprets the provisions of the plan and, subject to certain limitations, may amend the plan. Each option or stock award granted under the plan shall be evidenced by a written agreement between us and the optionee.
Grants may be made to our employees that includes officers and directors and to certain consultants and advisors.
The exercise price for incentive stock options granted under the plan may not be less than the fair market value of the common stock on the date the option is granted. The exercise price for non-statutory options is determined by the board of directors. Incentive stock options granted under the plan have a maximum term of ten years. Options granted under the plan are not transferable, except by will and the laws of descent and distribution.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
OPTION AWARDS
|
Number of Securities
Underlying Unexercised
Options (#)
|
Equity Incentive Plan Awards:
Number of Securities
Underlying Unexercised
Unearned Options (#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
||||||||
|
Name
|
Exercisable
|
Unexercisable
|
|||||||||
|
Ryan Corley
|
200,000
|
-
|
200,000
|
$
|
0.12
|
2017
|
|||||
|
Richard Martel, Jr.
|
200,000
|
-
|
200,000
|
$
|
0.12
|
2017
|
|||||
|
Stephen Hoelscher
|
500,000
|
-
|
500,000
|
$
|
0.12
|
2017
|
|||||
|
Linda Howard
|
400,000
|
-
|
400,000
|
$
|
0.12
|
2017
|
|||||
|
Michael Jackson
|
-
|
200,000
|
-
|
$
|
0.25
|
2015
|
|||||
|
Michael Jackson
|
-
|
300,000
|
-
|
$
|
0.50
|
2016
|
|||||
Compensation of Directors
DIRECTOR COMPENSATION
|
Name
|
Fees
Earned
or Paid
in Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Non-Qualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||
|
Ryan Corley
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||
|
Richard Martel, Jr.
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Securities Authorized for Issuance under Equity Compensation Plans
The following table shows information about securities authorized for issuance under our equity compensation plans as of March 31, 2013:
|
Plan Category
|
Number of Securities
to be issued upon
exercise of
outstanding options
(a)
|
Weighted- average
exercise price of
outstanding
(b)
|
Number of Securities
remaining for future
issuance under equity
compensation plans
(excluding securities
reflected in column (a))
(c)
|
||||
|
Equity compensation plans approved by security holders
|
1,990,000
|
$
|
0.12
|
-0-
|
|||
|
Equity compensation plans not approved by security holders
|
-0-
|
$
|
-0-
|
-0-
|
|||
|
Total
|
1,990,000
|
$
|
0.12
|
-0-
|
|||
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|
The following table sets forth certain information as of March 31, 2013 regarding the beneficial ownership of our common stock by (i) each person who, to our knowledge, beneficially owns more than 5% of our Common Stock; (ii) each of our directors and named executive officers; and (iii) all of our named executive officers and directors as a group:
|
Name and address of Beneficial Owner (2)
|
Amount (1)
|
Percent of Class
|
|||
|
Directors and Named Executive Officers:
|
|||||
|
Ryan Corley (3)
|
8,293,948
|
17.29
|
%
|
||
|
Steve Hoelscher (4)
|
840,760
|
1.75
|
%
|
||
|
Richard W Martel, Jr. (5)
|
320,000
|
*
|
|||
|
Linda Howard (6)
|
725,000
|
1.51
|
%
|
||
|
Michael Jackson (7)
|
698,800
|
1.45
|
%
|
||
|
All directors and named executive officers as a group (5 persons)
|
10,878,508
|
22.67
|
%
|
||
|
Other 5% or Greater Beneficial Owners
|
-0-
|
N/A
|
* Less than 1%.
|
(1)
|
Beneficial ownership is calculated based on 47,981,518 shares of our common stock issued and outstanding. Beneficial ownership is determined in accordance with Rule 13d-3 of the Securities and Exchange Commission. The number of shares beneficially owned by a person includes shares of common stock subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days following the date hereof. The shares issuable pursuant to those options or warrants are deemed outstanding for computing the percentage ownership of the person holding these options and warrants but are not deemed outstanding for the purposes of computing the percentage ownership of any other person. The persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite the stockholder’s name, subject to community property laws, where applicable.
|
(2) The address for the directors and named executive officers is c/o EnXnet, Inc 11333 E Pine St, Suite 92 Tulsa, OK 74116.
(3) Includes 200,000 shares of common stock issuable upon the exercise of options at an average price of $.12 per share.
(4) Includes 500,000 shares of common stock issuable upon the exercise of options at an average price of $.12 per share.
(5) Includes 200,000 shares of common stock issuable upon the exercise of options at an average price of $.12 per share.
(6) Includes 400,000 shares of common stock issuable upon the exercise of options at an average price of $.12 per share.
(7) Includes 100,000 shares of common stock issuable upon the exercise of options at an average price of $.50 per share.
Our CEO, Ryan Corley, has made advances to the Company in prior years. During the years ended March 31, 2013 and 2012, the CEO made additional unsecured advances totaling $23,200 and $84,400. During the years ended March 31, 2013 and 2012, the Company made payments on these advances of $15,300 and $2,000. Also during the years ended March 31, 2013 and 2012, the Company converted $36,900 and $55,043 of the advances into notes payable. At March 31, 2013 and 2012, advances from the CEO were $-0- and $29,000 respectively.
The Company has notes payable to the CEO in the aggregate amount of $642,455 and $605,555 as of March 31, 2013 and 2012. During the year ended March 31, 2013, the Company converted $36,900 advances from the CEO to notes payable. Accrued interest owed on these notes at March 31, 2013 and 2012 is $135,569 and $122,670. These notes and accrued interest are convertible into 14,880,388 and 13,372,992 shares of restricted common stock of the company.
At March 31, 2013 and 2012, advances from the entity controlled by the CEO were $10,500 and $10,500 and notes payable totaled $160,250 and $160,250. Accrued interest owed on these notes at March 31, 2013 and 2012 is $16,575 and $12,136. These notes and accrued interest are convertible into 2,851,340 and 2,780,783 shares of restricted common stock of the company.
Audit Fees
The aggregate fees charged by Pattillo, Brown and Hill, L.L.P. (2012 interim) for professional services rendered for the audits of our annual financial statements included in the Annual report on Form 10K for the fiscal year ended March 31, 2012 were $5,275.
Our board of directors appointed MaloneBailey, LLP as independent auditors to audit our financial statements for the year ended March 31, 2013 and 2012. The aggregate fees billed by MaloneBailey LLP for professional services rendered for the audit of our annual financial statements included in this Annual report on Form 10K for the fiscal years ended March 31, 2013 and 2012 were $20,000 and $11,000.
Audit Related Fees
For the Company’s fiscal year ended March 31, 2013 and 2012, we were not billed for professional services rendered for any audit related fees.
Tax Related Fees
For the Company’s fiscal year ended March 31, 2013 and 2012, we were not billed for professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees
The Company did not incur any other fees related to services rendered by our principal accountants for the fiscal years ended March 31, 2013 and 2012.
|
(a)
|
Exhibits
|
|
|
Exhibit
Number
|
Exhibit Description
|
|
|
3.1
|
Articles of Incorporation (1)
|
|
|
3.2
|
First Amendment to Articles of Incorporation (1)
|
|
|
3.3
|
Second Amendment to Articles of Incorporation (1)
|
|
|
3.4
|
Bylaws (1)
|
|
|
10.1
|
Sub-License Agreement with Ryan Corley as Nominee (1)
|
|
|
10.2
|
License agreement for Clear Video (1)
|
|
|
10.3
|
License agreement for Clear Video - addendum (1)
|
|
|
31.1
|
Chief Executive Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (2)
|
|
|
31.2
|
Chief Financial Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (2)
|
|
|
32.1
|
Chief Executive Officer’s Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (2)
|
|
|
32.2
|
Chief Financial Officer’s Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (2)
|
|
(1) Filed as an exhibit to Registrant’s Form 10-SB filed on May 22, 2000 and incorporated herein by reference.
(2) Filed herewith.
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
June 28, 2013
|
EnXnet, Inc.
|
|
By:/s/ Ryan Corley
|
|
|
Name: Ryan Corley
|
|
|
Title: President, Chief Executive Officer and Director
(principal executive officer)
|
In accordance with the Securities Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
|
June 28, 2013
|
/s/ Ryan Corley
|
|
Ryan Corley, President, Chief Executive Officer and Director
(principal executive officer)
|
|
|
June 28, 2013
|
/s/ Stephen Hoelscher
|
|
Stephen Hoelscher, Chief Financial Officer
(principal financial and accounting officer)
|
|
|
June 28, 2013
|
/s/ Richard W. Martel
|
|
Richard W. Martel, Director
|
|
Exhibit
Number
|
Exhibit Description
|
|
|
3.1
|
Articles of Incorporation (1)
|
|
|
3.2
|
First Amendment to Articles of Incorporation (1)
|
|
|
3.3
|
Second Amendment to Articles of Incorporation (1)
|
|
|
3.4
|
Bylaws (1)
|
|
|
10.1
|
Sub-License Agreement with Ryan Corley as Nominee (1)
|
|
|
10.2
|
License agreement for Clear Video (1)
|
|
|
10.3
|
License agreement for Clear Video - addendum (1)
|
|
|
31.1
|
Chief Executive Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (2)
|
|
|
31.2
|
Chief Financial Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (2)
|
|
|
32.1
|
Chief Executive Officer’s Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (2)
|
|
|
32.2
|
Chief Financial Officer’s Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (2)
|
(1) Filed as an exhibit to Registrant’s Form 10-SB filed on May 22, 2000 and incorporated herein by reference.
(2) Filed herewith.
26