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EX-32.1 - SECTION 906 CERTIFICATION - Her Importsex321sec906.htm
EX-31.2 - SECTION 302 CERTIFICATION - Her Importsex312sec302.htm
EX-32.2 - SECTION 906 CERTIFICATION - Her Importsex322sec906.htm
EX-31.1 - SECTION 302 CERTIFICATION - Her Importsex311sec302.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

 

 

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

For the Fiscal Period Ended December 31, 2013

OR

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

For the transition period from _________________to

   
Commission File Number:  000-53810  
   
     

EZJR, INC.

(Exact name of registrant as specified in its charter)

_________________

Nevada   20-0667864  
(State or Other Jurisdiction   (I.R.S. Employer  
  of Incorporation or Organization)   Identification No.)
             

 

          2001 Lawrenceville Suwanee Road, Ste. 203, Suwanee, GA      30024  
            (Address of principal executive offices)   (Zip Code)
             

 

678-866-3414
(Registrant’s telephone number, including area code)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o  No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes þ   No o

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No þ

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 “larger accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o  
  Non-accelerated filer o Smaller Reporting Company þ
(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 Act). 

Yes o  No þ

The aggregate market value of the voting stock held by non-affiliates amounted to $4,364,291 on December 31, 2013

 

APPLICABLE ONLY TO CORPORATE ISSUERS

As of April 15, 2014, the registrant’s outstanding common stock consisted of 18,139,576 shares, $0.001 par value. Authorized – 70,000,000 common shares. 

 

DOCUMENTS INCORPORATED BY REFERENCE

None.

 

 

 

 

 
 

 

INDEX

 Table of Contents

EZJR, Inc.

Index to Form 10-K

For the Year Ended December 31, 2013

 

PART I

 

 
 

Page

Number

TITLE  
   
ITEM 1.  BUSINESS  2
ITEM1A. RISK FACTORS 9

 

ITEM 2. PROPERTIES

 

 14

 

ITEM 3. LEGAL PROCEEDINGS

 

14

 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

14

   
PART II  

 

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

15

 

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

 

 

17

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 19

 

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

 

 19

 

ITEM 9A. CONTROLS AND PROCEDURES

 

 22

   
PART III  

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

24

 

ITEM 11. EXECUTIVE COMPENSATION

 

28

 

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

 

29

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

30

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

31

   
PART IV  

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

33
   
SIGNATURES 34
 
 

 

PART I

 

FORWARD-LOOKING STATEMENTS

 

This Annual Report on Form 10-K contains forward-looking statements. When used in this Annual Report on Form 10-K, the words "may," "could," "estimate," "intend," "continue," "believe," "expect" or "anticipate" and similar expressions identify forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in any forward-looking statements are reasonable, these plans, intentions, or expectations may not be achieved. Our actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied, by the forward-looking statements contained in this Annual Report on Form 10-K. Important factors that could cause actual results to differ materially from our forward-looking statements are set forth in this Annual Report on Form 10-K. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth in this Annual Report on Form 10-K. Except as required by federal securities laws, we are under no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

 

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

 

·         inability to raise additional financing for working capital and product development;

·         inability to identify internet marketing approaches;

·         deterioration in general or regional economic, market and political conditions;

·         the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;

·         adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

·         changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;

·         inability to efficiently manage our operations;

·         inability to achieve future operating results;

·         our ability to recruit and hire key employees;

·         the inability of management to effectively implement our strategies and business plans; and

·         the other risks and uncertainties detailed in this report.

 

In this form 10-K references to "EZJR", "the Company", "we", "us", and "our" refer to EZJR, Inc.

 

 

ITEM 1. BUSINESS

 

History and Organization

 

EZJR, Inc., ("we", "us", "our", “the Company" or the "Registrant") was incorporated August 14, 2006 under the laws of the State of Nevada, as IVPSA Corporation ("IVP"). The Company was incorporated as a subsidiary of Eaton Laboratories, Inc., a Nevada corporation. The Company is a developmental stage company.

 

On July 25, 2008, EZJR, Inc., a Nevada corporation and IVPSA Corporation, entered into an Acquisition Agreement and Plan of Merger. Immediately upon the effectiveness of the merger, the original EZJR ceased to exist.

 

In January 2012, EZJR, Inc. ("Company") ("EZJR") entered into a two-step transaction with OwnerWiz Realty Inc. (“OWR”), a privately-held Georgia corporation. The first step of the transaction occurred in January 2012, when an entity owned by the shareholders of OWR and parent company of OW Marketing, Inc. (“OWM”) acquired seven million five hundred thousand (7,500,000) shares of EZJR, approximately 95.25% of the then outstanding shares of EZJR totaling 7,873,750 shares from then two major shareholders in a private transaction. The second step of the transaction occurred on March 1, 2012, when EZJR, Inc., EZJR Acquisition Corporation ("Sub"), a Nevada corporation and subsidiary of EZJR and OWR, entered into a Share Exchange Agreement and Plan of Merger "Share Exchange" pursuant to which the Sub was merged with and into OWR, with OWR surviving as a wholly-owned subsidiary of the Company. The Company acquired all of the outstanding capital stock of OWR in exchange for issuing 390,000 shares of EZJR common stock which were issued to two shareholders of OWR. Since the former shareholders of OWR owned over 95% of the outstanding common stock of EZJR upon consummation of the Share Exchange, the transaction has been recorded as a reverse merger and resulted in a recapitalization with OWR being the acquirer for accounting purposes. Accordingly, the historical financial statements are those of OWR and have been prepared to give retroactive effect to the reverse acquisition. The transaction contemplated by the Agreement was intended to be a "tax-free" reorganization pursuant to the provisions of Section 351 and 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended. 

 

Corporate Structure

 

EZJR, Inc. ("Company") ("EZJR") is an Internet marketing company and real estate company located in Georgia.  OwnerWiz Realty, Inc. (“OWR”) is the Company’s wholly-owned subsidiary. OWR was incorporated April 12, 2011. OW Marketing, Inc. (“OWM”) is a wholly-owned subsidiary of OWR and was incorporated on October 23, 2011. On January 28, 2014, the Company acquired Leading Edge Financial (“LEF”), a private Florida corporation engaged in the business of personal credit management

 

OWM’s Business

 

OW Marketing, Inc., operates several websites which offer users several services. These services include credit monitoring, credit management, credit reports, and real estate listings. The Company receives fees from its users for its credit related products and records those fees as revenue as they are received. During the years ended December 31, 2013 and 2012, the Company did not provided the credit related services, but rather referred the customer's information to third party companies. The Company received referral fees from these third party credit service providers. During 2014, it, it is management’s intention to provide these services directly through our customers, by licensing the information necessary. Also, the Company has identified a number of additional businesses for which it could expand its product offerings and generate additional revenues. For the Company to fully execute on its business model for OWM, it will require substantial cash resources which are currently unavailable.

 

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OWR’s Business

 

OwnerWiz Realty Inc. is a Georgia licensed real estate company that represents both buyers and sellers of homes.

OWR earns commission revenues when the sales transactions are complete from the buyer or seller. OWR generates revenues by selling realtor services to prospective homebuyers interested in residential properties. They focus on identifying rental properties that a prospective buyer can rent with an option to purchase the property at a later date. In some instances, these services will be provided by realtors employed or retained by our company. In other instances, OWR will refer these services to outside realtors. OWR will collect a fixed portion of the realtor commissions. In order to promote its realtor services, OWR will provide prospective homebuyers with comprehensive information on residential properties.

 

OWR’s principle business activities include: promoting, marketing, and selling realtor services to prospective homebuyers interested in residential properties. During the year ended December 31, 2012, and the three and nine months ended September 30, 2013, OWR did a minimal amount of business due to fiscal constraints. For the Company to fully execute on its business model for OWR it will require substantial cash resources which are currently unavailable. During 2014, the Company intends to reduce its real estate activities and concentrate on OWM’s business.

Overview of Business

We assist those who have lost hope of ever owning a home or owning a home again by providing a clear, step-by-step path on the road to home ownership.  We focus on sub-prime home buyers who are either currently renting or want to own a home and have been turned down at banks or finance companies and provide them tools to allow them to obtain traditional financing and ultimately achieve their goal of home ownership. We provide our customers various tools, products and services that allow them to monitor and repair their credit profiles and in doing so guide them through a step-by-step process from renting to achieving their goal of home ownership. As part of this program we assist sub-prime home buyers in achieving their goal of home ownership. We assist our clients in revitalizing and improving their credit. Our business is positioned at the intersection of sub-prime home buyers, credit management and monitoring, and online marketing and lead generation.

 

 

Customers

 

The Company’s clients are primarily subprime borrowers who are unable to purchase a home in regardless of their current financial situation. They become frustrated with the home buying process because they are unable to qualify for a loan and, as such, are trapped renting with no clear path to home ownership. As a result they feel lost, they don’t know who to trust and believe they are on their own in their quest for home ownership since no one takes a vested interest in their goals.

 

The primary challenge facing these potential homeowners is bad credit which prevents them from qualifying for a mortgage. This is a result of their inability to manage their credit files and their credit scores. Additionally they do not know how to verify the accuracy of the contents of their credit file and how to revitalize or improve their credit.

Also, many consumers can be overwhelmed by large credit based transactions, such as mortgage closings and consumers who do not have a solid understanding of credit scores, or who do not objectively know their creditworthiness are vulnerable to high-pressure tactics to accept any offer of credit, regardless of terms, and may unnecessarily be charged higher rates.

 

We provide our client with a step-by-step process to become homeowners. This includes access to tools and resources and specific actions to take as part of our proprietary Rent-to-Own Home Resume System.

 

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The EZJR system for achieving home ownership is a step by step process as follows:

 

·         Obtain credit reports and scores.

·         Enhance and manage credit scores.

·         Determine buying power.

·         Expand account details.

·         Review home listings.

·         Determine amount of cash required.

·         Prepare the Home Resume and present the offer.

 

Rent-to-Own

Whether called rent-to-own, lease-option or lease-purchase, all these programs are similar in theory: The renter is buying the right to purchase the house later for a given price. If, at the end of the agreement period, the renter doesn't qualify for a loan or simply doesn't want to buy, the landlord keeps the money.

Typically, renters pay either a large upfront fee, called an option fee, of 1% to 3% of the home's purchase price, or finance the option fee by increasing the monthly rent. Usually some or the entire option fee is credited as a down payment on the house.

During the rental period, the landlord still owns the home and is legally responsible for it, but the renters often maintain the property as their own.

Among the benefits of rent-to-own:

  • The buyer can evaluate a neighborhood and property without making a 30-year commitment.
  • Families can immediately enroll children in a desirable school district.
  • The buyer can move right in despite credit problems, inability to document income or lack of financing.
  • The seller gets a tenant with a vested interest in keeping up the property.
  • The seller receives rental income to cover the mortgage, helpful in a slow real-estate market.
  • The seller taps a broader market of potential buyers, instead of being limited to those with excellent credit and cash for a down payment.
  • If a sale goes through, the seller may save on real-estate agent commissions.

The Company specializes in educating our customers so they are prepared to enter into their own rent-to-own transactions on their own.

 

Customer Acquisition

 

The Company obtains customers through two primary channels; online marketing and through a network of affiliates.

 

 

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Online Marketing. The Company markets its products and services primarily through the purchase of search engine keywords. Keywords are purchased from search engines through a bidding process and payment is based on “click-throughs” to a Website maintained by the Company, which is referred to as “the offer.” When the potential customer is presented the offer via search traffic, it is important to capture basic contact information. The process is such that each customer initially provides a limited amount of information and then as they move through the process provides additional and more detailed information. The Company attempts to monetize this traffic in an automated fashion, however, if need be, a company staff member may contact the potential customer either electronically or by phone. Once a customer is acquired after the initial investment, the Company attempts to continue to monetize the customers. Key to this entire process is determining what keywords to purchase and obtaining the basic information of the customer.

 

Affiliate Network. The Company also acquires customers through an affiliate network. Affiliates vary in their approach to generating customers. Essentially they can either direct the potential customer to the Company’s offer Website or they can create a Website themselves that mirrors the offer presented by the Company. When and only when, the referral becomes a customer, the Company pays the affiliate a one-time referral fee. The fee can vary from approximately $20 to $30 for each referral depending on a number of factors.

 

Products & Plans for Business Expansion

 

Management is currently exploring various business strategies to help the Company's business. This includes evaluating various options and strategies. The analysis of new business opportunities and evaluating new business strategies will be undertaken by the Company's management. In analyzing prospective businesses opportunities, the Company will consider, to the extent applicable, the available technical, financial and managerial resources of any given business venture. Part of the evaluation will also consider the nature of present and expected competition; potential advances in research and development or exploration; the potential for growth and expansion; the likelihood of sustaining a profit within given time frames; the perceived public recognition or acceptance of products, services, trade or service marks; name identification; and other relevant factors.

 

During the years ended December 31, 2013 and 2012, the Company focused on generating revenue by referring customers to outside credit monitoring and credit repair companies. In addition, the Company sold its home resume product as part of its rent-to-own program. Finally, a limited number of referral commissions were earned from the referral of home purchasers to real estate brokers. Each of these revenue streams generated a one-time payment to the company. Our current plans for expanding our business are focused on providing products with recurring revenues. Each of these product lines work together as part of the Company’s rent-to-own approach for our customers to purchase a home.

 

Credeze™ - Credit Monitoring Service. In March 2014, we launched Credeze. The Credeze product is both a credit monitoring service as well as an identity protection program. Customers subscribe to Credeze Identity Protection Program and are charged on a recurring monthly basis. Credeze monitors each customer’s credit daily through all three of the major credit bureaus, and immediately alerts the customer through our notification reports system in the case of a change in their credit score. Customers also have secure, 24 hour access to their credit reports from the major credit bureaus. Additionally, the Credeze Website has a variety of tools and resources to provide customers with the information for protecting their identity.

 

 

 

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Leading Edge Financial - Credit Management & Resources Service. In January 2014, we acquired, in a stock exchange transaction, Leading Edge Financial, Inc. (“LEF”) a company that provides credit management services. LEF is a credit management company with licensed technology that helps our customers establish or re-establish a good credit history while providing ongoing training and support. LEF also provides our customers with up-to-date credit education material and a credit coach to assist in keeping the customer on the right credit path. Customers receive an analysis of their credit file that show which items are hurting their score the most. This analysis also highlights both the positive and negative items affecting their credit. This analysis is created using Point Deduction Technology software (“PDT”). PDT recognizes the many factors used in credit scoring and assigns a point deduction number per item on the credit report thus allowing the customer to understand which accounts are affecting the credit score the most.

 

The customer is also provided access to a Target Score Simulator (“TSS”) which is an interactive tool that instructs the customer as to the best things to do and not to do to increase their credit score. The customer starts by selecting the credit bureau that they would like to simulate. The customer then enters a target score that they would like to achieve. They are then provided with a list of the most efficient recommendation to reach the target score. In some cases there may be a recommendation to use the credit line in order to gain credit score points or they may be required to have a creditor reporting agency correct high credit amount on their credit report. These recommendations are calculated first before a pay down approach in order to save the customers the most amount of money possible. The simulator alerts the customer of the total points recovered and the cost to acquire those points to reach their target score to attain that score. Conversely, the customer is also able to manually simulate the results from various changes to their credit report. By making changes to their report, they can see what the change to their credit score will be.

 

LEF is not a Credit Repair company. Credit Repair companies focus only on negative credit items on your report. Their main modus operandi is to send letters to the credit bureaus highlighting certain items that either might not belong to you or are reported inaccurately. The idea is that if the lender or employer doesn't see any negative items it's a success. Unfortunately this does not necessarily increase the credit score and it will not stop the consumer from making the same mistakes over and over again.

 

Listingswiz – Rent-to-Own Home Finder. Listingswiz is a Website designed to help the customer complete the process of buying a home. Customers pay a monthly fee for access to various tools to achieve that goal. They start with a personal profile that outlines the type of home they desire including number of bedrooms and bathrooms along with the targeted monthly payment. The site allows visitors to view home listing for free. However, paid subscribers may view detailed data and have access to the Company Home Resume service.

 

Other Future Potential Revenue Streams. We have also identified a number of other monetization opportunities to add in the future such as debt consolidation, bankruptcy, tax lien & real estate leads. Additionally we can add services for Spanish speaking clients. Also, we plan to generate referral fees from services such as tax preparation, secured credit cards and mortgage leads.

 

The Company anticipates that the results of operations of a specific business venture may not necessarily be indicative of the potential for future earnings, which may be impacted by a change in marketing strategies, business expansion, modifying product emphasis, changing or substantially augmenting management, and other factors. Management will analyze all relevant factors and make a determination based on a composite of available information, without reliance on any single factor.

 

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Customer Relationship Management Systems

 

At the heart of the Company sales and marketing activities is the Customer Relations Management (“CRM”) system. The CRM system entails all aspects of interaction that a company has with its customer, whether it is sales or service-related. It also provides a greater understanding of the customer and helps manage customer data and all interaction with the customer. Because the Company focuses on online marketing and sales, having a robust CRM system is critical to our success. To date we have relied on an internally developed CRM system which has certain shortcomings that has inhibited the Company’s ability to grow. As such we are in the process on implementing and testing a new CRM system that we believe will be a substantial improvement over our current system. Advantages and features of the new system over our current system are as following:

 

·         Enhanced customer relationship management including retention tools and fraud prevention.

·         Recurring billing feature that allows for fully automated billing and tools to determine approval and decline rates and automated retries of declines.

·         Profit management tools including affiliate commission tracking, price point testing and indemnification of revenue loss causes.

·         Gateway integration and merchant account load balancing.

·         Improved affiliate management and affiliate fraud detection.

·         Better reporting and performance tracking.

 

Finally, the new CRM system, when fully integrated, will be highly scalable and customizable, allowing us to gain actionable customer insights with a back-end analysis as well as helping streamline our operations and personalize customer service.

 

Competitors

 

Credit Monitoring/Identity Theft. There are many companies in the credit monitoring/identity theft. Additionally, since the Company’s predecessor company began marketing its rent-to-own solution, a myriad of copycat competitors have emerged. Included in our credit monitoring/identity theft competitors are the following:

 

·         Lifelock, Inc.

·         Intersections, Inc. (Identity Guard)

·         Experian Information Solutions, Inc. (including freecreditreport.com)

·         TrustedID

·         Transunion LLC

·         Equifax

 

Credit Repair. While the Company focuses on credit management rather than credit repair, credit repair companies are considered competitors. These companies include the following:

 

·         John C. Heath, Attorney at Law, PLLC doing business as Lexington Law

·         Creditrepair.com, Inc.

·         Sky Blue Financial Services, Inc.

 

 

Real Estate Listing. There are a number of real estate listing services. Few, if any, provide additional services like those available on Listingwiz.com. Competitors include the following:

 

Foreclosure.com

Realtytrac.com

 

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We believe that all of our competitors are larger, have stronger brand recognition and have access to greater financial, technical and marketing resources and have been operating longer than we have. There can be no assurance that we will be able to compete successfully against current and future competitors. If we are unable to compete effectively, or if competition results in a deterioration of market conditions, our business and results of operations could be adversely affected.

 

Seasonality

 

In the opinion of management, the business areas in which the Company operates are subject to seasonal fluctuations. As such, past quarterly results are not indicative of future results and may be subject to seasonal fluctuations.

 

Intellectual Property

 

The Company plans to rely on a combination of trademark, copyright, trade secret and patent laws in the United States as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our brand. EZJR plans also to rely on copyright laws to protect our future computer programs and our proprietary databases.

 

Agreement and Transactions with SCS Private Funding

 

 OWM entered into a marketing agreement with SCS Private Funding (“SCS”) in April 2012. This agreement provided for OWM to generate loan applications for loans to be funded by SCS. The loan applications generated by OWM are generally from consumers that have had challenges with their credit and mortgage history. OWM generally received a loan application fee of $5,000 from the prospective borrower on each transaction. After review of each application, OWM sent the application along with $3,500 to SCS. None of the loans were ever funded.

 

In July 2012, OWM became aware that SCS had been operating in violation of a final Cease and Desist order issued by the State of Georgia. OWM then ceased sending loan applications to SCS.

 

From April 15, 2012 to August 3, 2012 the Company received 56 loan applications totaling $274,710 in loan application fees. Of this amount $91,000 was subsequently paid to SCS on behalf of applicants. Additionally, as of December 31, 2013 a total of $202,495 had been refunded to applicants by the Company. Of that amount, $4,000 was refunded to applicants that were, in fact, paid to SCS and is the responsibility of SCS to refund. Subsequent to December 31, 2013 an additional $2,400 has been refunded to applicants.

 

The Company does not believe that it is legally liable for any amounts forwarded to SCS on behalf of applicants. However, from time-to-time, on a case-by-case basis the Company has refunded amounts to applicants that were paid to SCS. Regardless, it is the Company’s policy to record the total of all loan application fees it has received as a loan application fee liability until such time as a refund is made to the applicant by SCS or the Company. As of December 31, 2013 $66,320 was recorded as a loan application liability.

 

Software Algorithm Program

 

On January 21, 2012, OwnerWiz, Inc. Realty, purchased from two individuals, one of whom was a shareholder of EZJR, software that calculates an actual dollar value for the consumer’s credit score using a proprietary algorithm. Based on a comprehensive analysis of the consumer’s debt, income, expenses, assets, employment and financial goals, the software converts the consumer's credit score into a tangible number that aides the consumer when choosing their most suitable course of action.

 

OwnerWiz Realty, Inc. issued two notes payable, each in the amount of $25,000, to each of the sellers. The notes were without collateral, bore interest at 6% per annum and were due on or before September 30, 2012.

 

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On March 21, 2012 the Company issued 625,000 shares to the note holders in exchange for the notes.

 

As of December 31, 2012, the software was never received and was written off.

 

Intellectual Property

 

The Company plans to rely on a combination of trademark, copyright, trade secret and patent laws in the United States as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our brand. EZJR plans also to rely on copyright laws to protect our future computer programs and our proprietary databases.

 

 

ITEM 1A. RISK FACTORS

 

The following list describes several risk factors related to the Company:

 

General Risk Factors

 

The following risks and uncertainties may have a material adverse effect on our business, financial condition or results of operation. Investors should carefully consider the risks described below before making an investment decision. The risks described below are not the only ones we face. Additional risks not presently known to us or that we currently believe are immaterial may also significantly impair our business operations. Our business could be harmed by any of these risks. If any of the following events occur, the trading price of our common stock could decline and investors may lose all or part of their investment.

 

 

Our auditors have expressed uncertainty as to our ability to continue as a going concern.

Our independent registered public accounting firm expressed an opinion on our consolidated financial statements which include an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern due to our recurring losses and our lack of liquidity. While we seek ways to continue to operate by securing additional financing resources or alliances or other partnership agreements, we do not at this time have any commitments or agreements that provide for additional capital resources. Our financial condition and the going concern may also make it more difficult for us to initiate and secure new customer relationships.

 

We have minimal revenues and have incurred and expect to continue to incur substantial losses.

Since inception through December 31, 2013, we have not generated sufficient revenues to achieve operating profitability. We have generated significant operating losses since our formation and expect to incur substantial losses and negative operating cash flows for the foreseeable future. For the year ended December 31, 2013, our net loss was $15,538,090 and our accumulated deficit was $16,289,375. Accordingly, there can be no assurance that we will ever be able to achieve our sales goals or earn a profit.

 

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It is difficult to evaluate the likelihood that the Company will achieve and/or maintain profitability in the future.

 

The Company’s ability to continue to operate as a going concern is fully dependent upon the Company obtaining sufficient revenues or financing to continue its development and operational activities. The ability to achieve profitable operations is in direct correlation to the Company’s ability to generate revenues or raise sufficient financing. It is important to note that even if the appropriate financing is received, there is no guarantee that the Company will ever be able to operate profitably on a sustained basis.

If we fail to raise additional capital, our ability to implement our business model and strategy could be compromised.

We have limited capital resources and operations. To date, our operations have been funded entirely from the proceeds from equity financing and advances from shareholders. We expect to require substantial additional capital in the near future to develop and market new products, services and technologies. We currently do not have commitments for financing to meet our expected needs and we may not be able to obtain additional financing on terms acceptable to us, or at all. Even if we obtain financing for our near term operations and product development, we expect that we will require additional capital beyond the near term. If we are unable to raise capital when needed, our business, financial condition and results of operations would be materially adversely affected, and we could be forced to reduce or discontinue our operations.

In the event the Company requires additional funds, the Company will have to seek loans or equity placements to cover such cash needs. There are no assurances additional capital will be available to the Company on acceptable terms.

 

Future funding could result in potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities and/or amortization expenses related to goodwill and other intangible assets, which could materially adversely affect the Company's business, results of operations and financial condition. Any future acquisitions of other businesses, technologies, services or product(s) might require the Company to obtain additional equity or debt financing, which might not be available on terms favorable to the Company, or at all, and such financing, if available, might be dilutive.

 

If we borrow money to expand our business, the likelihood that investors may lose some or all of their investment may increase.

We anticipate that we may incur debt for financing our growth. Our ability to borrow funds will depend upon a number of factors, including the condition of the financial markets. If we receive debt financing, it will have priority in any liquidation over the claims of holders of our stockholders, which could increase the risk of loss of your investment in our common stock. In addition, our payment obligations with respect to any indebtedness could divert funds away from operations, marketing and product development efforts.

We may face intense competition and expect competition to increase in the future, which could prohibit us from developing a customer base and generating revenue.

There are many companies who will compete directly with our planned products and services. Many of these companies have significantly greater financial and other resources than us and have been developing their products and services longer than we have been developing ours. Additionally, there are not significant barriers to entry in our industry and new companies may be created that will compete with us and other, more established companies who do not now directly compete with us, may choose to enter our markets and compete with us in the future.

 

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Major network failures could have an adverse effect on our business.

Major equipment failures, natural disasters, including severe weather, terrorist acts, acts of war, cyber-attacks or other breaches of network or information technology security that affect third-party networks, transport facilities, communications switches, routers, microwave links, cell sites or other third-party equipment on which we rely, could cause major network failures and/or unusually high network traffic demands that could have a material adverse effect on our operations or our ability to provide service to our customers. These events could disrupt our operations, require significant resources to resolve, result in a loss of customers or impair our ability to attract new customers, which in turn could have a material adverse effect on our business, results of operations and financial condition.

If we experience significant service interruptions, which could require significant resources to resolve, it could result in a loss of customers or impair our ability to attract new customers, which in turn could have a material adverse effect on our business, results of operations and financial condition.

Confidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary information.

Our success depends upon the skills, knowledge and experience of our technical personnel, our consultants and advisors as well as our licensors and contractors. Because we operate in a highly competitive field, we rely almost wholly on trade secrets to protect our proprietary technology and processes. However, trade secrets are difficult to protect. We enter into confidentiality and intellectual property assignment agreements with our corporate partners, employees, consultants, outside scientific collaborators, developers and other advisors. These agreements generally require that the receiving party keep confidential and not disclose to third parties confidential information developed by us during the course of the receiving party’s relationship with us. These agreements also generally provide that inventions conceived by the receiving party in the course of rendering services to us will be our exclusive property. However, these agreements may be breached and may not effectively assign intellectual property rights to us. Our trade secrets also could be independently discovered by competitors, in which case we would not be able to prevent use of such trade secrets by our competitors. The enforcement of a claim alleging that a party illegally obtained and was using our trade secrets could be difficult, expensive and time consuming and the outcome would be unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. The failure to obtain or maintain meaningful trade secret protection could adversely affect our competitive position.

Adverse changes in general economic or political conditions could adversely affect our operating results.

If we grow our business to customers located in the United States we expect to become subject to the risks arising from adverse changes in both domestic and global economic and political conditions. For example, the direction and relative strength of the United States and international economies remains uncertain due to softness in the housing markets, difficulties in the financial services sector and credit markets and continuing geopolitical uncertainties. If economic growth in the United States continues to decline then the demand for our products could decline, which would then decrease demand for our products. Any of these events would likely harm investors view of our business, our results of operations and financial condition.

Our business depends substantially on the continuing efforts of our executive officers and our ability to maintain a skilled labor force and our business may be severely disrupted if we lose their services.

Our future success depends substantially on the continued services of our executive officers. We do not maintain key man life insurance on any of our executive officers and directors. If one or more of our executive officers are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all. Therefore, our business may be severely disrupted, and we may incur additional expenses to recruit and retain new officers. In addition, if any of our executives joins a competitor or forms a competing company, we may lose some of our customers.

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If we are unable to attract, train and retain technical and financial personnel, our business may be materially and adversely affected.

Our future success depends, to a significant extent, on our ability to attract, train and retain technical and financial personnel. Recruiting and retaining capable personnel, particularly those with expertise in our chosen industries, are vital to our success. There is substantial competition for qualified technical and financial personnel, and there can be no assurance that we will be able to attract or retain our technical and financial personnel. If we are unable to attract and retain qualified employees, our business may be materially and adversely affected.

Litigation may adversely affect our business, financial condition and results of operations.

From time to time in the normal course of our business operations, we may become subject to litigation that may result in liability material to our financial statements as a whole or may negatively affect our operating results if changes to our business operation are required. The cost to defend such litigation may be significant and may require a diversion of our resources. There also may be adverse publicity associated with litigation that could negatively affect customer perception of our business, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation may adversely affect our business, financial condition and results of operations.

Our shares of common stock are subject to the “Penny Stock” rules of the Securities and Exchange Commission and the trading market in our securities will be limited, which will make transactions in our stock cumbersome and may reduce the value of and investment in our stock.

 

The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosures relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. SEC regulations generally define a penny stock to be an equity security that has a market or exercise price of less than $5.00 per share, subject to certain exceptions. Such exceptions include any equity security listed on NASDAQ and any equity security issued by an issuer that has net tangible assets of at least $100,000, if that issuer has been in continuous operation for three years. Unless an exception is available, the regulations require delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the associated risks. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, details of the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations and broker-dealer and salesperson compensation information must be given to the customer orally or in writing prior to effecting the transaction and must be given in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for securities that become subject to the penny stock rules. Since our securities are highly likely to be subject to the penny stock rules, should a public market ever develop, any market for our shares of common stock may not be liquid.

 

 

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EZJR may, in the future, issue additional common shares, which would reduce investors’ percent of ownership and may dilute our share value.

 

EZJR’s Articles of Incorporation authorize the issuance of 70,000,000 shares of common stock. The future issuance of common stock may result in substantial dilution in the percentage of common stock held by our then existing shareholders. Management may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.

 

EZJR may issue shares of preferred stock in the future that may adversely impact your rights as holders of common stock.

 

EZJR’s Articles of Incorporation authorize the issuance of up to 5,000,000 shares of preferred stock. Accordingly, the board of directors will have the authority to fix and determine the relative rights and preferences of preferred shares, as well as the authority to issue such shares, without further stockholder approval. As a result, the board of directors could authorize the issuance of a series of preferred stock that would grant to holders preferred rights to our assets upon liquidation, the right to receive dividends before dividends are declared to holders of our common stock, and the right to the redemption of such preferred shares, together with a premium, prior to the redemption of the common stock. To the extent that OWR does issue such additional shares of preferred stock, your rights as holders of common stock could be impaired thereby, including, without limitation, dilution of your ownership interests in us. In addition, shares of preferred stock could be issued with terms calculated to delay or prevent a change in control or make removal of management more difficult, which may not be in your interest as holders of common stock.

  

Because EZJR has never paid dividends on its common stock and has no plans to do so, the only return on investment will come from any increase in the value of our common stock.

 

Since its inception, the Company has not paid cash dividends on the common stock and does not intend to pay cash dividends in the foreseeable future. Rather, the Company currently intends to retain future earnings, if any, to finance operations and expand our business. Therefore, any return on investment would come only from an increase in the value of our common stock. There are no assurances that the common will increase in value.

 

In the future, EZJR will incur incremental costs as a result of operating as a public company and management will be required to devote substantial time to compliance initiatives.

 

EZJR is a fully reporting company with the SEC; it will incur additional legal, accounting and other expenses. Moreover, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), as well as new rules subsequently implemented by the SEC, have imposed various new requirements on public companies, including requiring changes in corporate governance practices. Our management will need to devote a substantial amount of time to these new compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. 

 

 

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ITEM 1B. UNRESOLVED STAFF COMMENTS

 

Not Applicable.

 

 

ITEM 2. PROPERTIES

 

The Company’s corporate headquarters are located at: 2001 Lawrenceville Suwanee Road, Ste. 203, Suwanee, GA 30024. Including the corporate headquarters, the Company has existing leases on the following facilities:

 

 

Location   Square Footage   Use
Suwanee, GA   1,671   Corporate offices and operations
Duluth, GA   8,098   Vacant

 

The Company does not own any real property.

 

 

ITEM 3. LEGAL PROCEDINGS.

 

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

 

We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.

 

 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIY HOLDERS

 

None.

 

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND PURCHASE OF EQUITY SECURITIES

 

Market Information

 

EZJR, Inc. Common Stock, $0.001 par value, can be found on the OTC-Bulletin Board under the symbol: EZJR. There have been less than 1,000 shares of stock traded since it became listed. There are no assurances that a market will ever develop for the Company's stock.

 

There are have limited trades of the Company’s stock, since it was listed on the OTC-BB, there are no assurances that an active market will ever develop for the Company's stock.

 

Year ended December 31, 2013

  High     Low  
First Quarter   $ 4.25     $ 0.75  
Second Quarter   $ 9.00     $ 2.40  
Third Quarter   $ 4.00     $ 1.65  
Fourth Quarter   $ 2.00     $ 1.60  

 

 

Holders of Common Stock

 

As of December 31, 2013, there were approximately 100 holders of record of our Common Stock and 13,164,576 shares outstanding.

 

Dividends

 

In the future we intend to follow a policy of retaining earnings, if any, to finance the growth of the business and do not anticipate paying any cash dividends in the foreseeable future. The declaration and payment of future dividends on the Common Stock will be the sole discretion of the board of directors and will depend on our profitability and financial condition, capital requirements, statutory and contractual restrictions, future prospects and other factors deemed relevant.

 

Issuer Purchases of Equity Security Securities

 

We did not repurchase any of our equity securities during the years ended December 31, 2013 or December 31, 2012.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

There are no outstanding grants or rights or any equity compensation plans in place.

 

Recent Sales of Unregistered Securities

 

EZJR agreed to issue 390,000 shares of its unregistered common stock to the two shareholders of OWR in exchange for a one hundred (100%) percent ownership interest of OWR. The shares will be issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act. We believed that Section 4(2) was available because the offer and sale did not involve a public offering and there was not general solicitation or general advertising involved in the offer or sale.

 

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On March 21, 2012 the Company issued 2,122,813 shares of its common stock in payment of advances made by its majority shareholder of $118,225, in satisfaction of notes payable related to the purchase of software of $50,000 and for consulting services provided to the Company of $1,600, as follows:

 

Shareholder advances 1,477,813
     
Notes payable 625,000
     
Consulting services 20,000
     
  Total shares issued  2,122,813
       

 

The shares were issued at $0.08 per share, the fair market value of the shares on that date.

 

The two shareholders are financially sophisticated individuals. Before they received these unregistered securities each person was known to us and our management, through a pre-existing business relationship, as a long standing business associate. We did not engage in any form of general solicitation or general advertising in connection with this transaction. They were provided access to all material information, which they requested and all information necessary to verify such information and was afforded access to our management in connection with this transaction. The two shareholders acquired these securities for investment purposes and not with a view toward distribution, acknowledging such intent to us. They understood the ramifications of their actions. The shares of common stock issued contained a legend restricting transferability absent registration or applicable exemption.

 

On May 22, 2013, the Company sold 100,000 shares of restricted common stock for $1.00 per share.

 

On June 4, 2013, the Company issued 2,678,013 unregistered restricted shares of common stock to a related party in exchange for principal debt and its unpaid interest on the two outstanding Demand Promissory Notes totaling $54,592 including accrued interest. At the time of the issuance, the fair market value of the common stock issued was $15,398,575, based on the trading price of $5.75 per share on May 30, 2013, the date of the demand for payment. The difference between the amounts of the Demand Promissory Notes and the fair market value of the stock was booked as a non-cash interest expense of $15,343,983.

 

On January 28, 2014, we issued 4,475,000 shares of restricted common stock in exchange for 100% of the stock of Leading Edge Financial, Inc. (“LEF”) a Florida Corporation that provides credit management services. Concurrently, with the close of this transaction, Barry Hall was appointed Executive Chairman of the Board of Directors and Chief Financial Officer and Edward Zimbardi was appointed to the Board of Directors and Chief Executive Officer.

 

On October 1, 2013 the Company issued a one-year promissory note for $100,000. Under the terms of the note interest of 5% will be paid on the monthly anniversary of the note. Collateral for the note was 500,000 shares of the Company’s common stock which is being held in escrow until the note is fully paid. In the event of default on the note such shares will be issued to the note holder. On March 1, 2014 the Company released the 500,000 shares being held in escrow that were used to secure the $100,000 promissory note in exchange for the note and any outstanding interest due at the time of the exchange.

 

ITEM 6. SELECTED FINANCIAL DATA

Not Applicable.

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

RESULTS OF OPERATIONS

 

The following discussion and analysis compares our results of operations for the period ended December 31, 2013 to the current year. This discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto.

 

Overview of Current Operations

 

EZJR, Inc. was organized by the filing of Articles of Incorporation with the Secretary of State of the State of Nevada on August 14, 2006. EZJR is an Internet marketing company and real estate company in Georgia. 

OwnerWiz Realty Inc. (“OWR”) is the Company’s wholly-owned subsidiary and parent company of OW Marketing, Inc. (“OWM”). OWR was incorporated April 12, 2011. OWR is a real estate company that provides service and products for first time home buyers and clients re-entering the path to home ownership representing buyers, sellers, developers and investors in all facets of real estate brokerage with a focus on serving the growing number of renters in the US. OWM, a wholly-owned subsidiary of OWR, was incorporated on October 23, 2011 and commenced operations in April 2012. It operates several websites which offer users a variety of services. These services include credit monitoring, credit repair, credit reports, rent to own real estate and real estate finance applications. OWM does not perform these credit related services, but rather refers the customer's information to third party companies.  Since the launch of OWM in April 2012 the primary business of the Company is sales of products and referral revenues related to credit repair, credit monitoring and real estate referrals.

 

Results of Operations

YEAR ENDED DECEMBER 31, 2013 AS COMPARED TO 2012

Revenues

Revenues for the year ended December 31, 2013 were $2,507,909 compared to $1,495,317 an increase of 68%. The reason for the increase was an increase of $1,097,741 or 104.9% in referral fees. This increase was offset by a decrease in product sales of $75,070 or 17.4%, commission revenue of $6,946 or 46.3% and service fees of $3,133 (there were no service revenues in 2013). The increase in referral fees was a direct result of greater affiliate activity complemented by a small increase of online advertising. Going forward the company anticipates that referral fees will decrease dramatically as we shift to selling products provided by third parties directly to our customers.

Operating Expenses

Operating expenses for the year ended December 31, 2013 were $2,677,484 compared to $2,116,063 an increase of $561,421 or 26.5%. The primary reason for the increase was an increase in commission expenses paid to our affiliate network of $425,186 or 164.0% as the company made a strategic decision to preserve cash as a result of a decrease in the efficacy of its online advertising. Also contributing to the increase was an increase in advertising expense which increased $55,146 or 7.9% and general and administrative expense. General and administrative expense increased primarily due to an increase in professional fees, rent, utilities and travel partially offset by a decrease primarily in software expense and merchant account fees.

 

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Loss from Operations

As a result of the foregoing factors we had a loss from operations of $169,575 for the year ended December 31, 2013, compared to an operating loss of $620,746 for the same period in 2012, a decrease of $451,171 or 72.6%.

Interest Expense

Interest expense for the year ended December 31, 2012 was $15,368,515 compared to $3,060 for the same period in 2012. The primary reason for the increase was a non-cash charge of $15,343,983 related the issuance of 2,678,013 unregistered restricted shares of common stock at the request of the Note Holder exchanged for notes payable and unpaid interest in exchange for principal debt and its unpaid interest on the two outstanding Demand Promissory Notes. The remaining increase in interest expense related to two notes payable.

Net Loss

As a result of the foregoing factors we had a net loss of $15,538,090 for the year ended December 31, 2013, compared to a net loss of $623,806 for the same period in 2012, an increase of $14,914,284.

 

Going Concern

 

Since inception through December 31, 2013, we have not generated sufficient revenues to achieve operating profitability. We have generated significant operating losses since our formation and expect to incur substantial losses and negative operating cash flows for the foreseeable future. For the year ended December 31, 2013, our net loss was $15,538,090 and our accumulated deficit was $16,289,375. Accordingly, there can be no assurance that we will ever be able to achieve our sales goals or earn a profit.

Our ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and our ability to achieve and maintain profitable operations.

 

Therefore, management plans to raise equity capital to finance the operating and capital requirements of the Company. While the Company is devoting its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

 

Summary of any product research and development that we will perform for the term of our plan of operation.

 

Not applicable.

 

Expected purchase or sale of plant and significant equipment

 

We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time.

 

Significant changes in the number of employees

 

As of December 31, 2013, we had 16 employees. We are dependent upon our officers and directors for our future business development. As our operations expand we anticipate the need to hire additional employees, consultants and professionals; however, the exact number is not quantifiable at this time. Additionally, from time-to-time we rely heavily on independent contractors. Additionally, the founders of the Company provide a variety of services to the Company at no cost to the Company. At such time that the Company achieves financial stability and positive cash flow it is anticipated that the founders will become paid employees of the Company.

 

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Liquidity and Capital Resources

 

As of December 31, 2013, EZJR had $64,010 in cash and cash equivalents and receivables of $15,265 and total current assets of $80,856. At the same date, EZJR had total current liabilities of $661,474, this includes: Accounts payable and accrued liabilities of $380,554, loan application fee liability of $66,320, deferred rent (current portion) of $3,938 ,related party advances of $100,662 and notes payable of $100,000.

 

During the year ended December 31, 2013 the Company saw a significant increase in its revenues when compared to the prior year. However, during the second half of the year the Company saw a significant decrease in revenues from the first two quarters and as a result experienced an operating loss. Furthermore, the change in the strategic direction of the Company to sell directly to customers provided by third parties rather than referring customers to outside vendors for a referral fee will result in a reduction in immediate revenue earned. Consequently, the Company will have to raise capital, either through the sale of equity or through loans, to sustain operations. There can be no assurance that such capital will be available and if not, the Company may have to significantly reduce or curtail its operations.

 

Off-Balance Sheet Arrangements

 

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

 

Critical Accounting Policies and Estimates

 

Revenue Recognition: We recognize revenue from product sales and services once all of the following criteria for revenue recognition have been met: pervasive evidence that an agreement exists; the services have been rendered; the fee is fixed and determinable and not subject to refund or adjustment; and collection of the amount due is reasonably assured.

 

Recent Pronouncements

 

The Company's management has evaluated all the recently issued accounting pronouncements through the filing date of these financial statements and does not believe that any of these pronouncements will have a material impact on the Company's financial position and results of operations.

 

ITEM 7A. QUANTITATIVE AND QUUALITTATIVE DISCLOSURE ABOUT MARKET RISK.

 

Not applicable.

 

ITEM 8. FINANCIAL STATEMENTS

The financial statements are included as a separate section following the signature page to the Form 10-K. 

 

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

FINANCIAL DISCLOSURE

 

Dismissal of Seale & Beers, CPAs

 

On February 9, 2012 (the "Dismissal Date"), the Board of Directors of EZJR, Inc. (the "Registrant") voted to dismiss Seale and Beers, CPAs, terminating its relationship as the Registrant's independent registered public accounting firm.

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Seale & Beers, CPAs was the independent registered public accounting firm for the Registrant’s from August 11, 2009 until February 9, 2012. None of Seale & Beers reports on the Registrant’s financial statements from August 6, 2009 through February 9, 2012, (a) contained an adverse opinion or disclaimer of opinion, or (b) was modified as to uncertainty, audit scope, or accounting principles, or (c) contained any disagreements on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Seale & Beers, would have caused it to make reference to the subject matter of the disagreements in connection with its reports. None of the reportable events set forth in Item 304(a)(1)(iv) of Regulation S-K occurred during the period in which Seale & Beers served as the Registrant’s principal independent accountants.

 

However, the report of Seale & Beers, CPAs on the financial statements of the Registrant for the years ended June 30, 2011 and June 30, 2010 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that the reports indicated that there was a substantial doubt as to the Registrant’s ability to continue as a going concern and that the financial statements did not include any adjustments that might result from the outcome of this uncertainty.

 

The Registrant has provided Seale & Beers, CPAs with a copy of this disclosure and has requested that Seale & Beers furnish it with a letter addressed to the U.S. Securities and Exchange Commission stating whether it agrees with the above statements, and if not, stating the respects in which it does not agree. A copy of the letter from Seale & Beers, CPAs addressed to the U. S. Securities and Exchange Commission dated February 10, 2012 is filed as Exhibit 16.1 to this Current Report on Form 8-K.

 

Engagement of Kelly & Company

 

On February 9, 2012 (the "Engagement Date"), the Registrant's Board of Directors approved the appointment of and engaged Kelly & Company, 3151 Airway Avenue, Suite E-1, Costa Mesa, California 92626, as the Registrant's independent registered public accounting firm. During the Registrant's two most recent fiscal years, the subsequent interim periods thereto, and through the Engagement Date, neither the Registrant nor anyone on its behalf consulted the Current Accountants regarding either (1) the application of accounting principles to a specified transaction regarding the Company, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements; or (2) any matter regarding the Company that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions to Item 304 of Regulation S-K) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).

 

Dismissal of Kelly & Company

 

On September 12, 2012 (the "Dismissal Date"), the Board of Directors of EZJR, Inc. (the "Registrant") voted to dismiss Kelly & Company, terminating its relationship as the Registrant's independent registered public accounting firm.

 

Kelly & Company was the independent registered public accounting firm for the Registrant from February 9, 2012 until September 12, 2012. None of Kelly & Company’s reports on the Registrant’s financial statements from February 9, 2012 through September 12, 2012, (a) contained an adverse opinion or disclaimer of opinion, or (b) was modified as to uncertainty, audit scope, or accounting principles, or (c) contained any disagreements on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Kelly & Company, would have caused it to make reference to the subject matter of the disagreements in connection with its reports. None of the reportable events set forth in Item 304(a)(1)(iv) of Regulation S-K occurred during the period in which Kelly & Co served as the Registrant’s principal independent accountants.

 

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The report of Kelly & Company on the financial statements of the Registrant as of December 31, 2011 and for the period from April 12, 2011(inception) to December 31, 2011 did not contain an adverse opinion or disclaimer of opinion and was not qualified or modified as to audit scope or accounting principles. However, Kelly & Company’s report indicated that the Registrant was in the development stage and there was a substantial doubt as to its ability to continue as a going concern and that the financial statements did not include any adjustments that might result from the outcome of this uncertainty.

 

The Registrant has provided Kelly & Company with a copy of this disclosure and has requested that Kelly & Company furnish it with a letter addressed to the U.S. Securities and Exchange Commission stating whether it agrees with the above statements, and if not, stating the respects in which it does not agree. A copy of the letter from Kelly & Company addressed to the U. S. Securities and Exchange Commission dated September 12, 2012 is filed as Exhibit 16.1 to this Current Report on Form 8-K.

 

Engagement of Porter Keadle Moore

 

On September 12, 2012 (the "Engagement Date"), the Registrant's Board of Directors approved the appointment of and engaged Porter Keadle Moore, 235 Peachtree Street, NE Suite 1800, Atlanta, Georgia 30303, as the Registrant's independent registered public accounting firm. During the Registrant's two most recent fiscal years, the subsequent interim periods thereto, and through the Engagement Date, neither the Registrant nor anyone on its behalf consulted the Current Accountants regarding either (1) the application of accounting principles to a specified transaction regarding the Company, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements; or (2) any matter regarding the Company that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions to Item 304 of Regulation S-K) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).

 

Dismissal of Porter Keadle Moore

 

On December 4, 2012 (the "Dismissal Date"), the Board of Directors of EZJR, Inc. (the “Registrant” or the “Company”) approved of the dismissal of Porter Keadle Moore as the Registrant’s independent registered public accounting firm.

 

Since September 12, 2012 (the date on which Porter Keadle Moore has been engaged as the Registrant’s independent registered public accounting firm) Porter Keadle Moore has neither reviewed nor audited any of the financial statements of the Registrant. Therefore, no reports of Porter Keadle Moore on the Registrant’s financial statements for either of the past two years or subsequent interim period contained an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles as no such reports have been prepared.

 

During the registrant's two most recent fiscal years and the subsequent interim periods thereto, there were no disagreements with Porter Keadle Moore whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to Porter Keadle Moore’s satisfaction, would have caused it to make reference to the subject matter of the disagreement in connection with its report on the registrant's financial statements.

 

The Registrant has provided Porter Keadle Moore with a copy of this disclosure and has requested that Porter Keadle Moore furnish it with a letter addressed to the U.S. Securities and Exchange Commission stating whether it agrees with the above statements, and if not, stating the respects in which it does not agree. The Registrant will file the letter requested from Porter Keadle Moore by amendment to this report when provided.

 

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Engagement of De Joya Griffith, LLC

 

On December 4, 2012 (the "Engagement Date"), the Registrant's Board of Directors approved the appointment of and engaged De Joya Griffith, LLC, 2580 Anthem Village Dr., Henderson, Nevada 89052, as the Registrant's independent registered public accounting firm. During the Registrant's two most recent fiscal years, the subsequent interim periods thereto, and through the Engagement Date, neither the Registrant nor anyone on its behalf consulted the Current Accountants regarding either (1) the application of accounting principles to a specified transaction regarding the Company, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements; or (2) any matter regarding the Company that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions to Item 304 of Regulation S-K) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).

 

 

ITEM 9A (T). CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC, and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

 

Management, with the participation of the Chief Executive Officer and the Chief Financial Officer, who is also the sole member of our Board of Directors, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Form 10-K. Based on such evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of December 31, 2013, our disclosure controls and procedures were not effective. Our disclosure controls and procedures were not effective because of the "material weaknesses" described below under "Management's annual report on internal control over financial reporting," which are in the process of being remediated as described below under "Management Plan to Remediate Material Weaknesses."

 

Management's Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in rules promulgated under the Exchange Act, is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and affected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that:

 

·         pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

 

·         provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our Board of Directors; and

 

·         provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements

 

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Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives of the control system are met and may not prevent or detect misstatements. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process, and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Further, over time control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.

 

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2013. In making its assessment, management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on its assessment, management has concluded that we had certain control deficiencies described below that constituted material weaknesses in our internal controls over financial reporting. As a result, our internal control over financial reporting was not effective as of December 31, 2013.

 

A "material weakness" is defined under SEC rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company's annual or interim financial statements will not be prevented or detected on a timely basis by the company's internal controls. As a result of management's review of the investigation issues and results, and other internal reviews and evaluations that were completed after the end of fiscal year 2013 related to the preparation of management's report on internal controls over financial reporting required for this annual report on Form 10-K, management concluded that we had material weaknesses in our control environment and financial reporting process consisting of the following:

 

·         lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and

 

·         insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

 

We do not believe the material weaknesses described above caused any meaningful or significant misreporting of our financial condition and results of operations for the fiscal year ended December 31, 2013. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

 

Management Plan to Remediate Material Weaknesses

 

Management is pursuing the implementation of corrective measures to address the material weaknesses described below. In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

 

We plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us. Additionally, we will create written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

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We believe the remediation measures described above will remediate the material weaknesses we have identified and strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control processes and will continue to diligently and vigorously review our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may determine to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

This annual report does not include an attestation report of the Corporation's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Corporation's registered public accounting firm pursuant to temporary rules of the SEC that permit the Corporation to provide only the management's report in this quarterly report.

 

 Changes in internal controls over financial reporting

 

There was no change in our internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

 

 

ITEM 9B. OTHER INFORMATION

 

None.

 

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 

Identification of Directors and Executive Officers.

 

The following table sets forth certain information regarding our current directors and executive officers. Our executive officers serve one-year terms.

 

 

Name

 

Age

Position & Offices Held
  Barry Hall 65 Executive Chairman of the Board of Directors and Chief Financial Officer
  Edward Zimbardi 46 Chief Executive Officer and Director
  Adam Alred 32 Chief Technology Officer and Director

 

 

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Biographies of Directors/Officers

 

Mr. Barry Hall, Executive Chairman of the Board of Directors and Chief Financial Officer

 

Mr. Hall was appointed to the Board of Directors as Executive Chairman and Chief Financial Officer on January 28, 2014. Mr. Hall concurrently serves as the President of Carlaris LV Inc. (Carlaris), which provides consulting services to the Company pursuant to a consulting agreement between Carlaris and the Company, dated March 15, 2013. Since July 2007 Hall has served as President of Carlaris and its predecessor company Carlaris, Inc., which provides management and consulting services.

 

Prior to the formation of Carlaris, Hall had various management roles including Chairman and Chief Executive Officer of CalAmp Corp. (symbol:CAMP), Chief Financial Officer of Earthlink, Inc. (symbol:ELNK), Chief Financial Officer of Styleclick, Inc., Chief Financial Officer of L.A. Cellular and Chief Financial Officer of Applied Solar Energy Corporation. Early in his career Hall worked as an Certified Public Accountant and audit manager for Arthur Young & Company where he managed the audits of a variety of companies in the high-tech, financial services and restaurant industries.

 

Hall holds an MBA and a BA in Mathematics, both earned at San Diego State University.

 

Mr. Edward Zimbardi, Chief Executive Officer

 

Ed Zimbardi was appointed Chief Executive Officer and Board member on January 28,. Prior to joining EZJR, Mr. Zimbardi was CEO of Fulfillment Central Publishing, Inc., and Internet marketing company, from 1999 until the company was sold in 2012.

 

Mr. Adam Alred, Chief Technology Officer/Director

 

Adam Alred was appointed as Chief Technology Officer on January 28, 2014. From From April 2011 to February 2014 Mr. Alred served as Chief Technology Officer of the Company. Mr. Alred’s career started in 2001 when he left Southern Poly University with a degree in computer engineering and joined the staff at Health Logic Systems Corporation (HLSC) in Tucker, Georgia where he began as a Web Support technician and advanced to Systems Administrator where he managed the firm's technical team and deployed the IT budget.

 

After leaving HLSC in 2005, Adam joined Fulfillment Central as CTO where he built, deployed, and managed the firm's technical team. In addition, to the CTO job, Adam acted as CMO and was responsible for developing the firm’s marketing initiatives and advertising campaigns.

 

Involvement in Certain Legal Proceedings.

 

Our directors, executive officers and control persons have not been involved in any of the following events during the past ten years and which is material to an evaluation of the ability or the integrity of our directors or executive officers:

 

·         any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

 

·         any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

 

 

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·         being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;

 

·         being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

 

·         any judicial or administrative proceedings resulting from involvement in mail or wire fraud or fraud in connection with any business entity;

 

·         Any judicial or administrative proceedings based on violations of federal or state securities, commodities, banking or insurance laws and regulations, or any settlement to such actions; and

 

·         Any disciplinary sanctions or orders imposed by a stock, commodities or derivatives exchange or other self-regulatory organization.

 

Board of Directors

 

Our board of directors currently consists of three members; Mr. Hall, Mr. Zimbardi and Mr. Alred. Our directors serve one-year terms.

 

Audit Committee

 

The company does not presently have an Audit Committee. No qualified financial expert has been hired because the company is too small to afford such expense.

 

Committees and Procedures

 

·         The registrant has no standing audit, nominating and compensation committees of the Board of Directors, or committees performing similar functions. The Board acts itself in lieu of committees due to its small size.

 

·         The view of the board of directors is that it is appropriate for the registrant not to have such a committee because its directors participate in the consideration of director nominees and the board and the company are so small.

 

·         The members of the Board who acts as nominating committee is not independent, pursuant to the definition of independence of a national securities exchange registered pursuant to section 6(a) of the Act (15 U.S.C. 78f(a).

 

·         The nominating committee has no policy with regard to the consideration of any director candidates recommended by security holders, but the committee will consider director candidates recommended by security holders.

 

·         The basis for the view of the board of directors that it is appropriate for the registrant not to have such a policy is that there is no need to adopt a policy for a small company.

 

 

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·         The nominating committee will consider candidates recommended by security holders, and by security holders in submitting such recommendations.

 

·         There are no specific, minimum qualifications that the nominating committee believes must be met by a nominee recommended by security holders except to find anyone willing to serve with a clean background.

 

·         The nominating committee's process for identifying and evaluation of nominees for director, including nominees recommended by security holders, is to find qualified persons willing to serve with a clean backgrounds. There are no differences in the manner in which the nominating committee evaluates nominees for director based on whether the nominee is recommended by a security holder, or found by the board.

 

Compliance with Section 16(A) of the Exchange Act 

Section 16(a) of the Exchange Act, as amended, requires our executive officers, directors and persons who beneficially own more than 10% of our common stock to file reports of their beneficial ownership and changes in ownership (Forms 3, 4 and 5, and any amendment thereto) with the SEC. Executive officers, directors, and greater-than-ten percent holders are required to furnish us with copies of all Section 16(a) forms they file. Based on our review of the activity of our officers and directors for the fiscal year ended December 31, 2012, we believe Forms 3, 4 or 5 were not timely filed.

 

Code of Ethics

 

We have not adopted a Code of Ethics for the Board and any salaried employees.

 

 Limitation of Liability of Directors

 

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

 

Nevada Anti-Takeover Law and Charter and By-law Provisions

 

The anti-takeover provisions of Sections 78.411 through 78.445 of the Nevada Corporation Law apply to EZJR. Section 78.438 of the Nevada law prohibits the Company from merging with or selling more than 5% of our assets or stock to any shareholder who owns or owned more than 10% of any stock or any entity related to a 10% shareholder for three years after the date on which the shareholder acquired the EZJR shares, unless the transaction is approved by EZJR's Board of Directors. The provisions also prohibit the Company from completing any of the transactions described in the preceding sentence with a 10% shareholder who has held the shares more than three years and its related entities unless the transaction is approved by our Board of Directors or a majority of our shares, other than shares owned by that 10% shareholder or any related entity. These provisions could delay, defer or prevent a change in control of EZJR, Inc.

 

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ITEM 11. EXECUTIVE COMPENSATION

 

 The following table sets forth summary compensation information for the fiscal years ended December 31, 2013 and 2012.

 

Compensation

 

Our officer compensation for the years ended December 31, 2013 and 2012.

 

Summary Compensation Table

 

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officer paid by OWR for the last completed fiscal year in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO).

 

 

 

 

EZJR Summary Compensation Table

 

Name Principal Position Year Salary (1) Bonus Stock Awards All Other Compensation Total  
                     
Adam Alred     Chief Executive Officer 2013  $115,200 -0- -0- -0- $115,200  
        2012 115,200 -0- -0- -0- 115,200  

 

(1) Adam Alred was appointed CEO on April 12, 2011. In accordance with his previous employment contract he is paid a salary of $115,200 per year. At December 31, 2013 and 2012 $59,723 and $33,185, respectively was due and outstanding to Mr. Alred under his agreement related to deferred payments.

 

Outstanding Equity Awards at Fiscal Year End

 

There are no outstanding equity awards at December 31, 2013.

 

Stock Option Grants

 

We did not grant any stock options to the executive officers or directors from inception through December 31, 2013.

 

 Option Exercises for Fiscal Year-Ending December 31, 2013

 

There were no options exercised by our named executive officer in fiscal year ending December 31, 2013.

 

Potential Payments upon Termination or Change in Control

 

We have not entered into any compensatory plans or arrangements with respect to our named executive officer, which would in any way result in payments to such officer because of his resignation, retirement, or other termination of employment with us or our subsidiaries, or any change in control of, or a change in his responsibilities following a change in control.

 

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Director Compensation

 

We did not pay our directors any compensation, for their services as a director, during fiscal years ending December 31, 2013 and 2012.

 

ITEM 12. SERCURITY OWNERSHIP OF CERTAN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table presents information, to the best of our knowledge, about the ownership of our common stock on April 14, 2013 relating to those persons known to beneficially own more than 5% of our capital stock and by our named executive officer and sole director. The percentage of beneficial ownership for the following table is based on 18,139,576 shares of common stock outstanding.

 

 

Name and Address of
Beneficial Owner(1)

 

Shares Beneficially Owned Percentage Beneficially Owned

Directors and Executive Officers

 

   

Barry Hall, Chairman and Chief Financial Officer

2001 Lawrenceville Suwanee Road, Ste. 203

Suwanee, GA 30024

750,000 4.1%

Edward Zimbardi, Chief Executive Officer

2001 Lawrenceville Suwanee Road, Ste. 203

Suwanee, GA 30024

9,036,500 49.8%

Adam Alred, Director and Chief Technology Officer

2001 Lawrenceville Suwanee Road, Ste. 203

Suwanee, GA 30024

1,500,000 8.3%
All Directors and Officers as a Group 11,286,500 62.2%
5% Stockholders    

Financial Pacific (FIPA)

Balboa Avenue, BBVA Tower, 16th Floor

Panama City, Panama

1,440,000 7.9%

(1)     Beneficial ownership has not been determined in accordance with Rule 13d-3 under the Exchange Act. Pursuant to the rules of the SEC, shares of common stock which an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be beneficially owned and outstanding for the purpose of computing the percentage ownership of any other person shown in the table.

(2)     Brenda Zimbardi, P. O. Box 33, Hoschton, GA 30548, Mr. Zimbardi’s wife is the beneficial owner who has the ultimate voting control over 7,636,500 shares held in the name of AdMaxOffers.com. We are not aware of any arrangements that may result in "changes in control" as that term is defined by the provisions of Item 403(c) of Regulation S-B.

 

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We believe that all persons named have full voting and investment power with respect to the shares indicated, unless otherwise noted in the table. Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION, AND DIRECTOR INDEPENDENCE

 

Sales Lead Contract

 

The Company purchases its qualified client leads from an entity which was owned by a beneficial owner of the majority stockholder. Beginning May 1, 2011, the Company entered into a one-year agreement whereby the Company would receive a monthly minimum of 100 real estate sales leads for a fixed fee of $1,000 per month. All amounts payable per the agreement are unpaid, and separately identified on the face of our financial statements. Either party can terminate the contract by providing a 30 day notice. The agreement was extended to December 2012 upon which it expired. During the course of the agreement the Company incurred $20,000 in expenses all of which was still outstanding at December 31, 2012. The entity was sold by the stockholder to another party in July 2012 and is no longer considered a related party.

 

Advances from Stockholders and Issuance of Common Stock

 

During the year ended December 31, 2013, the net increase in the amount of related party advances was $34,800 from the balance of $75,862 related party advances outstanding as of December 31, 2012. As of December 31, 2013, there was $110,662 in related party advances outstanding.


During the year ended December 31, 2012 stockholders, including the majority stockholder advanced the company $92,842, net of repayments. During the period from inception to December 31, 2011, the majority shareholder advanced funds to the Company for working capital needs totaling $73,050, net of repayments. On March 21, 2012 The Company issued 1,477,813 shares of its common stock in payment of advances made by its majority shareholder of $118,225.

 

At December 31, 2012, we had a related party liability of $55,121. The liability consisted of two Demand Promissory Notes Payable for $20,000 and $33,740 plus accrued interest. The Company had pledged 1,000,000 and 1,687,013, respectively of unregistered restricted shares as collateral for the timely performance on this note. However, on June 4, 2013, the Company only issued 2,678,013 unregistered restricted shares of common stock at the request of the Note Holder in exchange for principal debt and its unpaid interest on the two outstanding Demand Promissory Notes. At the time of the payment, the fair market value of the common stock issued was $15,398,575, based on the trading price of $5.75 per share on May 30, 2013, the date of the demand for payment. The difference between the amounts of the Demand Promissory Notes and the fair market value of the stock was booked as a non-cash interest expense of $15,343,983 in the second quarter of 2013.

 

 

 

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Purchase of Software from a Related Party

 

On January 21, 2012, the Company purchased from two individuals, one of which is a greater than 5% shareholder of the Company, software which quantifies an actual dollar value for the consumer’s credit score using a proprietary algorithm that converts the consumer's credit score into a real dollar amount based on a comprehensive analysis of the consumer's debt, expenses, assets, employment and financial goals. The consumer can use this information to consider the most suitable course of action using the software’s analytical tools. The software also enables the administrator to track and manage leads and consumer clients utilizing advanced customer relationship management software.

 

The Company issued two notes payable, each in the amount of $25,000, to each of the sellers. On March 21, 2012 the Company issued 625,000 shares to the note holders in exchange for the notes. As of December 31, 2012, the software was never received and has been written off.

 

Except as otherwise indicated herein, there have been no related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 and Item 407(a) of Regulation S-K.

 

Board of Directors Independence

The OTC Bulletin Board, on which the Company's common stock is currently traded, does not have a requirement that a majority of the Board of Directors be independent or separate independence determination requirements. The Company has one director who is not deemed to be independent.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 On December 4, 2012 (the "Engagement Date"), the Registrant's Board of Directors approved the appointment of and engaged De Joya Griffith, LLC, 2580 Anthem Village Dr., Henderson, Nevada 89052, as the Registrant's independent registered public accounting firm. The aggregate fees billed to us or incurred by us by De Joya Grifiths, LLC for the year ended December 31, 2013 were as follows:

 

 

  For Year Ended December 31, 2013 For Year Ended December 31, 2012
(1)   Audit Fees (1)  $54,750 $41,000
(2)   Audit-Related Fees  -$0- -$0-
(3)   Tax Fees  -$0- -$0-

 

(1) Audit Fees include fees billed and expected to be billed for services performed as of December 31, 2013 to comply with Generally Accepted Auditing Standards (GAAS), including the recurring audit of the Company's financial statements for such period included in this Annual Report on Form 10-K and for the reviews of the quarterly financial statements included in the Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission.

 

 

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Audit Committee Policies and Procedures

 

We do not have an audit committee; therefore our sole director pre-approves all services to be provided to us by our independent auditor. This process involves obtaining (i) a written description of the proposed services, (ii) the confirmation of our Principal Accounting Officer that the services are compatible with maintaining specific principles relating to independence, and (iii) confirmation from our securities counsel that the services are not among those that our independent auditors have been prohibited from performing under SEC rules. In fiscal period ending December, 2011, all fees paid to Kelly & Company were unanimously pre-approved in accordance with this policy.

 

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

 

For the years ended December 31, 2013 and 2012, there were no fees billed for professional services rendered by the Company’s independent auditors for audit-related fees, which include assistance with responding to SEC comment letters, consents, and procedures performed relating to potential acquisitions.

 

Tax Fees

 

For the years ended December 31, 2013 and 2012, there were no fees billed for the preparation of corporate tax returns.

 

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PART IV

 

ITEM 15. EXHIBITS

 

Exhibit No. Exhibit Description Filed herewith Form Period Ending Exhibit Filing Date
2.1 Share Exchange Agreement and Plan of Merger, dated March 1, 2012   8-K 12/31/2011 2.1 03/05/12
3.1 Articles of Incorporation   10 6/30/09 3.1 10/29/09
3.2 By-laws   10 6/30/09 3.2 10/29/09
10.1 Exclusive Option Agreement between IVPSA Corporation and the Cleveland Clinic, dated March 15, 2007   10 6/30/09 10.1 10/29/09
10.2 Extension of Exclusive Option Agreement between IVPSA Corporation and the Cleveland Clinic, dated April 14, 2008   10 6/30/09 10.1 10/29/09
10.3 Lead Generation Agreement between OwnerWiz Realty and Fulfillment Central Publishing, dated April 25, 2011   8-K/A 12/31/2011 10.3 04/20/12
10.4 Employment Agreement with Adam Alred, dated October 9, 2011   8-K/A 12/31/2011 10.4 04/20/12
10.5 Employment Agreement with Guy Arnone, dated February 29, 2012   8-K/A 12/31/2011 10.5 04/20/12
10.6 Share Exchange Agreement between EZJR and Leading Edge Financial dated January 28, 2014   8-K 12/31/13 10.6 01/28/14
10.7 Contract for services between EZJR and The Law Offices of Thomas C. Cook, Ltd. dated January 28, 2014   8-K 12/31/13 10.7 01/28/14
31.1 Certification of Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act X        
31.2 Certification of Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act X        
32.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X        
32.2 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X        

 

101 * The following materials from this Annual Report on Form 10-K for the year ended December 31, 2012, formatted in XBRL (eXtesible Business Reporting Language)
    (1)     Consolidated Balance Sheets at December 31, 2013 and December 31, 2012.
    (2)     Consolidated Statements of Operations for the year ended December 31, 2013 and December 31, 2012.
    (3)     Consolidated Statements of Cash Flows for the year ended December 31, 2013 and December 31, 2012.
    (4)     Notes to the financial statements

 

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EZJR, INC.

 

Date: April 15, 2014   /s/ Barry Hall  
    Name: Barry Hall  
    Title: Executive Chairman and Chief Financial Officer  
    (Principal Financial Officer and Principal Accounting Officer)  
       
       
Date: April 15, 2014   /s/ Edward Zimbardi  
    Name: Edward Zimbardi  
    Title:  Chief Executive Officer and Director  
    (Principal Executive Officer)  
       
       
Date: April 15, 2014   /s/ Adam Alred  
    Name: Adam Alred  
    Title:  Director and Chief Technology Officer  

 

 

 

 

 

 

 

 

 

 

 

34

 

 

 
 

EZJR, Inc.

Index to the Consolidated Financial Statements

 

 

Report of Independent Registered Public Accounting Firm F-1
   
Consolidated Balance Sheets as of December 31, 2013 and 2012  F-2
   
Consolidated Statements of Operations For the Years Ended December 31, 2013 and 2012 F-3
   
Consolidated Statement of Stockholders’ Deficit For the Years Ended December 31, 2013 and 2012 F-4
   
Consolidated Statements of Cash Flows For the Years Ended December 31, 2013 and 2012 F-5
   
   
Notes to the Consolidated Financial Statements  
   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

 

DE JOYA GRIFFITH

Certified Public Accountants and Consultants

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders

EZJR, Inc.

 

We have audited the accompanying consolidated balance sheets of EZJR, Inc. and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of operations, stockholders' deficit, and cash flows for each of the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the 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 audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of EZJR, Inc. and subsidiaries as of December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the years then ended in conformity with U.S. generally accepted accounting principles.

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

/s/ De Joya Griffith, LLC

Henderson, Nevada

April 14, 2014

 

Corporate Headquarters:

De Joya Griffith, LLC

2580 Anthem Village Drive, Henderson, NV 89052 Phone: (702) 563-1600 Fax: (702) 920-8049

 

F-1

 
 

 

 

EZJR, INC. 
Consolidated Balance Sheets
(Audited)
             
      December 31,     December 31,
      2013     2012
ASSETS            
             
Current assets            
Cash    $                         64,010    $                      24,205
Receivables                            15,265                         15,164
Other assets                               1,581                           1,581
Total current assets                            80,856                         40,950
             
Furniture and equipment, net                             19,419                         19,514
Other assets                              7,574                           4,724
Total assets    $                       107,849    $                      65,188
             
LIABILITIES AND STOCKHOLDERS' DEFICIT            
             
Current liabilities            
Accounts payable and accrued liabilities    $                       380,554    $                    264,964
Loan application fee liability                            66,320                       178,315
Related party notes payable                                    -                           54,021
Related party advances                           110,662                         75,862
Notes payable                          100,000                                 -  
Deferred rent-current                               3,938                           2,199
Total current liabilities                          661,474                       575,361
             
Deferred rent- non current                               2,413                           6,350
Total liabilities                          663,887                       581,711
             
Stockholders' deficit            
Preferred stock, $0.001 par value,  5,000,000 shares            
authorized, no shares issued or outstanding                                    -                                   -  
Common stock, $0.001 par value,             
70,000,000 shares authorized,  13,164,576            
 and 10,386,563 shares issued and outstanding            
 as of December 31, 2013 and December 31, 2012,            
 Respectively                            13,165                         10,387
Additional paid-in capital                     15,720,172                       224,375
Accumulated deficit                   (16,289,375)                     (751,285)
Total stockholders' deficit                        (556,038)                     (516,523)
Total liabilities and stockholders' deficit    $                       107,849    $                      65,188
                                     -        
The accompanying notes are an integral part of these consolidated financial statements

 

F-2

 

 
 

 

EZJR, INC.   
Consolidated Statements of Operations  
(Audited)  
             
    For the year     For the year  
    ended      ended   
    December 31, 2013     December 31, 2012  
             
REVENUES            
Product sales  $                        356,007   $                     431,077  
Referral fees                        2,143,857                      1,046,116  
Commission revenue                               8,045                           14,991  
Services fees                                     -                               3,133  
Total revenues                       2,507,909                      1,495,317  
             
Operating Expenses:            
Commission expenses                          684,500                         259,314  
Advertising                           756,262                         701,116  
Loan application fee costs                                    -                             91,000  
Selling costs                          722,082                         601,778  
General and administrative                          514,640                         462,855  
Total operating expenses                       2,677,484                      2,116,063  
             
Other expenses            
Interest expense                     (15,368,515)                            (3,060)  
Total other expenses                    (15,368,515)                            (3,060)  
             
Net loss  $                   (15,538,090)    $                     (623,806)  
             
Net loss per share - basic   $                              (1.30)    $                           (0.07)  
             
Weighted average number of common             
shares outstanding – basic                     11,996,662                      8,604,468  
             
The accompanying notes are an integral part of these consolidated financial statements

 

F-3

 

 
 

 

EZJR, Inc
Statement of Stockholders' Deficit
Years Ended December 31, 2013 and 2012
(Audited)
                  Additional        
   Preferred Stock   Common Stock   Paid in   Accumulated   Shareholders'
  Shares   Amount   Shares   Amount   Capital   Deficit   Deficit
BALANCE, DECEMBER 31, 2011                         -                          -                  390,000    $               390    $             64,547    $          (127,479)                (62,542)
                           
   Recapitalization of OWR resulting from reverse merger with EZJR                         -                          -               7,873,750                  7,874                   (7,874)                              -                            -
   Issuance of common shares to satisfy related party payables                         -                          -               1,477,813                  1,479                 116,746                              -                118,225
   Issuance of common shares to satisfy note payable - related party                         -                          -                  625,000                     624                   49,376                              -                  50,000
   Issuance of common shares for consulting fees                         -                          -                    20,000                       20                     1,580                              -                    1,600
   Net loss                         -                          -                             -                          -                            -                (623,806)              (623,806)
BALANCE, DECEMBER 31, 2012                         -                          -             10,386,563                10,387                 224,375                (751,285)              (516,523)
                           
  Sale of common stock $1.00 per share                         -                          -                  100,000                     100                   99,900                              -                100,000
  Issuance of common stock in exchange for $54,592 demand note                     2,678,013                  2,678            15,395,897                              -           15,398,575
  Net loss                         -                          -                             -                          -                            -           (15,538,090)         (15,538,090)
BALANCE, DECEMBER 31, 2013                         -                          -             13,164,576    $          13,165    $      15,720,172    $     (16,289,375)    $        (556,038)
                           
The accompanying notes are an integral part of these consolidated  financial statements

 

F-4

 

 
 

 

EZJR, Inc.
Consolidated Statements of Cash Flows 
(Audited)
             
      Year     Year
      Ended December 31,     Ended December 31,
      2013     2012
             
OPERATING ACTIVITIES            
Net loss    $              (15,538,090)    $                      (623,806)
Adjustments to reconcile net loss             
to net cash used by operating activities:            
Depreciation                           6,613                               4,128
Consulting expense-stock-based                                  -                                 1,600
Software write-off-stock-based                                 -                               50,000
Non-cash interest expense related to issuance of common stock in exchange for cancellation of demand notes                  15,343,983                                     -  
Changes in operating assets and liabilities:            
Prepaid expense                                 -                                      50
Receivables                             (101)                           (15,164)
Other assets                          (2,850)                             (2,105)
Accounts payable and accrued liabilities                        116,161                           264,647
Loan application fee liability                      (111,995)                           178,315
Deferred rent                          (2,198)                               8,549
Net cash used by operating activities                      (188,477)                         (133,786)
             
INVESTING ACTIVITIES            
Purchases of fixed assets                           (6,518)                           (12,413)
Net Cash used by Investing Activities                          (6,518)                           (12,413)
             
FINANCING ACTIVITIES            
Proceeds from sale of common stock                       100,000                                     -  
Proceeds from notes payable                       100,000                                     -  
Proceeds from related party notes                                 -                               55,121
Proceeds from related party advances                         113,173                           104,842
Repayment of related party  advances                        (78,373)                           (12,000)
Net cash provided by financing activities                       234,800                           147,963
             
NET CHANGE IN CASH                         39,805                               1,764
             
CASH AND CASH EQUIVALENTS -             
BEGINNING OF PERIOD                         24,205                             22,441
END OF PERIOD    $                      64,010    $                          24,205
             
SUPPLEMENTAL DISCLOSURES:            
Interest paid    $                      17,361    $                            2,000
Income taxes paid    $                             10    $                                    -
             
Non-cash investing and financing activities:            
Notes payable satisfied with issuance of common stock   $                     54,592   $                         50,000
Stock issued to settle related party advances   $                               -   $                       118,225
             
The accompanying notes are an integral part of these consolidated  financial statements

 

F-5

 

 

 
 

 

EZJR, Inc.

Notes to the Consolidated Financial Statements

 

1. Description of the Company

 

EZJR, Inc., ("we", "us", "our", “the Company" or the "Registrant") was incorporated August 14, 2006 under the laws of the State of Nevada, as IVPSA Corporation ("IVP"). The Company was incorporated as a subsidiary of Eaton Laboratories, Inc., a Nevada corporation. The Company is a developmental stage company.

 

On July 25, 2008, EZJR, Inc., a Nevada corporation and IVPSA Corporation, entered into an Acquisition Agreement and Plan of Merger. Immediately upon the effectiveness of the merger, the original EZJR ceased to exist.

 

In January 2012, EZJR, Inc. ("Company") ("EZJR") entered into a two-step transaction with OwnerWiz Realty Inc. (“OWR”), a privately-held Georgia corporation. The first step of the transaction occurred in January 2012, when an entity owned by the shareholders of OWR and parent company of OW Marketing, Inc. (“OWM”) acquired seven million five hundred thousand (7,500,000) shares of EZJR, approximately 95.25% of the then outstanding shares of EZJR totaling 7,873,750 shares from then two major shareholders in a private transaction. The second step of the transaction occurred on March 1, 2012, when EZJR, Inc., EZJR Acquisition Corporation ("Sub"), a Nevada corporation and subsidiary of EZJR and OWR, entered into a Share Exchange Agreement and Plan of Merger "Share Exchange" pursuant to which the Sub was merged with and into OWR, with OWR surviving as a wholly-owned subsidiary of the Company. The Company acquired all of the outstanding capital stock of OWR in exchange for issuing 390,000 shares of EZJR common stock which were issued to two shareholders of OWR. Since the former shareholders of OWR owned over 95% of the outstanding common stock of EZJR upon consummation of the Share Exchange, the transaction has been recorded as a reverse merger and resulted in a recapitalization with OWR being the acquirer for accounting purposes. Accordingly, the historical financial statements are those of OWR and have been prepared to give retroactive effect to the reverse acquisition. The transaction contemplated by the Agreement was intended to be a "tax-free" reorganization pursuant to the provisions of Section 351 and 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended. 

 

Corporate Structure

 

EZJR, Inc. ("Company") ("EZJR") is an Internet marketing company and real estate company located in Georgia.  OwnerWiz Realty, Inc. (“OWR”) is the Company’s wholly-owned subsidiary. OWR was incorporated April 12, 2011. OW Marketing, Inc. (“OWM”) is a wholly-owned subsidiary of OWR and was incorporated on October 23, 2011. On January 28, 2014, the Company acquired Leading Edge Financial (“LEF”), a private Florida corporation engaged in the business of personal credit management

 

OWM’s Business

 

OW Marketing, Inc., operates several websites which offer users several services. These services include credit monitoring, credit management, credit reports, and real estate listings. The Company receives fees from its users for its credit related products and records those fees as revenue as they are received. During the years ended December 31, 2013 and 2012, the Company did not provide the credit related services, but rather referred the customer's information to third party companies. The Company received referral fees from these third party credit service providers. During 2014, it is management’s intention to provide these services directly through our customers, by licensing the information necessary. Also, the Company has identified a number of additional businesses for which it could expand its product offerings and generate additional revenues. For the Company to fully execute on its business model for OWM, it will require substantial cash resources which are currently unavailable.

 

F-6

 

 
 

 

 OWR’s Business

 

OwnerWiz Realty Inc. is a Georgia licensed real estate company that represents both buyers and sellers of homes.

OWR earns commission revenues when the sales transactions are complete from the buyer or seller. OWR generates revenues by selling realtor services to prospective homebuyers interested in residential properties. They focus on identifying rental properties that a prospective buyer can rent with an option to purchase the property at a later date. In some instances, these services will be provided by realtors employed or retained by our company. In other instances, OWR will refer these services to outside realtors. OWR will collect a fixed portion of the realtor commissions. In order to promote its realtor services, OWR will provide prospective homebuyers with comprehensive information on residential properties.

 

OWR’s principal business activities include: promoting, marketing, and selling realtor services to prospective homebuyers interested in residential properties. During the years ended December 31, 2013, and 2012, OWR did a minimal amount of business due to fiscal constraints. For the Company to fully execute on its business model for OWR it will require substantial cash resources which are currently unavailable. During 2014, the Company intends to reduce its real estate activities and concentrate on OWM’s business.

 

Going Concern and Management's Plan

 

From inception (April 12, 2011) through December 31, 2013, we had an accumulated deficit of $16,289,375 and as such our independent accountants have substantial doubts about the Company’s ability to continue as a going concern. Since inception through December 31, 2013, we have not generated sufficient revenues to achieve operating profitability. We have generated significant operating losses since our formation and expect to incur substantial losses and negative operating cash flows for the foreseeable future. For the year ended December 31, 2013, our net loss was $15,538,090. Accordingly, there can be no assurance that we will ever be able to achieve our sales goals or earn a profit.

These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is seeking additional sources of financing and is continuing to implement the business plan. Management believes these factors will contribute toward achieving profitability. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

 

Reclassifications

Certain reclassifications have been made to the prior year's financial statements to conform to the current year's presentation.  These reclassifications had no effect on previously reported results of operations.  The Company reclassified liabilities due to a shareholder from accounts payable to related party advances.

 

2. Summary of Significant Accounting Policies

 

 Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company (a Nevada Corporation) and its subsidiaries, Ownerwiz Realty and OW Marketing, all of which are wholly-owned. All significant intercompany transactions have been eliminated in consolidation.

 

F-7

 
 

 

 

Revenue Recognition

 

Service and Referral Fees

 

The Company, through its wholly owned subsidiary, OWM, operates several websites which offer users several services. These services include credit monitoring, credit repair, credit reports, rent to own real estate and real estate finance applications. The Company receives fees from its users for its credit related products and records those fees as revenue as they are received. As of December 31, 2013 the Company did not perform these credit related services, but rather referred the customer's information to third party companies. The Company receives referral fees from these third party credit service providers. Both of these fees are recorded as revenue when received. During the year ended December 31, 2014 it is the Company’s intention to provide these services by reselling services of third parties.

 

Loan Application Fees

 

OWM entered into a marketing agreement with SCS Private Funding (“SCS”) in April 2012. This agreement provided for OWM to generate loan applications for loans to be funded by SCS. The loan applications generated by OWM are generally from consumers that have had challenges with their credit and mortgage history. OWM generally received a loan application fee of $5,000 from the prospective borrower on each transaction. After review of each application, OWM sent the application along with $3,500 to SCS. None of the loans were ever funded.

 

In July 2012, OWM became aware that SCS had been operating in violation of a final Cease and Desist order issued by the State of Georgia. OWM then ceased sending loan applications and payments to SCS.

 

From April 15, 2012 to August 3, 2012 the Company received 56 loan applications totaling $274,710 in loan application fees. Of this amount $91,000 was subsequently paid to SCS on behalf of applicants. Additionally, as of December 31, 2012 a total of $96,395 had been refunded to applicants by the Company. Of that amount, $4,000 was refunded to applicants that were, in fact, paid to SCS and the responsibility of SCS. Subsequent to December 31, 2013 an additional $2,400 has been refunded to applicants.

 

The Company does not believe that it is legally liable for any amounts forwarded to SCS on behalf of applicants. However, from time-to-time, on a case-by-case basis the Company has refunded amounts to applicants that were paid to SCS. Regardless, it is the Company’s policy to record the total of all loan application fees it has received as a loan application fee liability until such time as a refund is made to the applicant either by SCS or the Company. As of December 31, 2013 and 2012, $66,320 and $178,315, respectively, was recorded as a loan application liability.

 

 

Service and Product Revenues in OWM

 

The Company sells a variety of products on its Websites that are delivered in digital form directly to their customers. Without exception the customer pays the Company with a credit card. The revenues from the sale of these products are recorded upon receipt of the credit card payment.

 

 

F-8

 
 

 

 

 Commission Revenue

 

The Company's wholly-owned subsidiary, OWR, is a licensed corporate real estate broker in the state of Georgia and contracts with real estate agents to provide customer leads and broker services in return for a participatory share of commissions earned on completed real estate sales and rental transactions. The Company reports the entire commission earned from a sales or rental transaction as revenue on a gross basis. Commission expenses as presented in the statement of operations represent the variable portion of the gross commission earned that is paid to the Company’s in-State sub-contracted agents who conduct the transactions. The Company recognizes revenue only when the real estate transaction has closed and all of the following criteria have been met: i) persuasive evidence of an arrangement exists; ii) delivery has occurred or services have been rendered; iii) the fee for the arrangement is fixed or determinable; and iv) collectability is reasonably assured. 

 

Cash Equivalents

 

The Company considers deposits that can be redeemed on demand and investments that have original maturities of less than three months, when purchased, to be cash equivalents. As of December 31, 2013 and 2012, the Company’s cash and cash equivalents were on deposit in federally-insured financial institutions.

 

Concentration of Credit Risk for Cash Deposits at Banks

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Deposits at the Company's financial institutions are fully insured by the Federal Deposit Insurance Corporation (FDIC).

 

 Basis of Presentation and Use of Estimates in the Financial Statements

 

The Company has prepared the accompanying consolidated financial statements pursuant to U.S. Generally Accepted Accounting Principles.

 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Management uses its historical records and knowledge of its business in making estimates.  Accordingly, actual results could differ from those estimates.

 

Accounts Receivable

 

Accounts receivable are reported at the customers' outstanding balances less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. The Company evaluates receivables on a regular basis for potential reserves.

 

 

F-9

 

 
 

 

Fair Value of Financial Instruments

 

The Company measures fair value based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three tier hierarchy that prioritizes the inputs used to measure fair value, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3).

  

Accounts payable are reported at their historical carrying values, which approximate their fair values based on their short-term nature.

 

The fair value measurements of the Company’s financial instruments at December 31, 2013 and December 31, 2012 were as follows:

 

      Level 1   Level 2   Level 3   Total  
                     
  December 31, 2013                  
  Cash and cash equivalents    $        64,010    $                  -    $              -    $    64,010  
                     
  December 31, 2012                  
  Cash and cash equivalents    $        24,205    $                  -    $              -    $    24,205  

 

 

Basis for Recording Fixed Assets, Lives, and Depreciation Methods

 

Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows:

 

 

  Furniture and fixtures 7 years  
  Equipment 3 to 7 years  
  Leasehold improvements Lesser of useful life or lease term  
  Software 5 years  

 

Recent Accounting Pronouncements

 

The Company has evaluated recent pronouncements and believes that none of them will have a material impact on the Company’s financial position, results of operations or cash flows.

 

 Income Taxes

 

The Company accounts for income taxes under the liability method in accordance with FASB ASC 740-10.  Under this standard, deferred income tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using the enacted tax rates expected to be in effect for the year in which the differences are expected to reverse.  Deferred income tax assets are reduced by a valuation allowance when the Company is unable to make the determination that it is more likely than not that some portion or all of the deferred income tax asset will be realized.

F-10

 
 

 

Earnings (Loss) per Share

 

The Company utilizes FASB ASC 260.  Basic earnings per share is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding. 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. Common equivalent shares are excluded from the computation if their effect is anti-dilutive.

 

Stock-based compensation

 

The Company records stock-based compensation issued to non-employees or other external entities for goods and services at either the fair market value of the shares issued or the value of the services received, whichever is more readily determinable, using the measurement date guidelines enumerated in FASB ASC 505-50-30.

 

3. Property and Equipment

 

Property and equipment consists of the following:

      December 31,   December 31,  
      2013   2012  
   Furniture and fixtures     $        14,033    $        14,033  
   Equipment                 8,284                1,767  
   Leasehold Improvements                 9,447                9,447  
   Total               31,764              25,247  
   Accumulated depreciation              (12,345)               (5,733)  
   Property and equipment, net     $        19,419    $        19,514  

 

 

Depreciation expense for the years ended December 31, 2013 and 2012 was $6,613 and $4,128, respectively.

 

 

4. Related Party Transactions

 

Sales Lead Contract

 

The Company purchases its qualified client leads from an entity which was owned by a beneficial owner of the majority stockholder. Beginning May 1, 2011, the Company entered into a one-year agreement whereby the Company would receive a monthly minimum of 100 real estate sales leads for a fixed fee of $1,000 per month. All amounts payable per the agreement are unpaid, and separately identified on the face of our financial statements. Either party can terminate the contract by providing a 30 day notice. The agreement was extended to December 2012 upon which it expired. During the course of the agreement the Company incurred $20,000 in expenses all of which were was outstanding at December 31, 2013 and December 31, 2012, respectively. The entity was sold by the stockholder to another party in July 2012 and is no longer considered a related party.

 

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Shareholder Advances

 

During the year ended December 31, 2013, the net increase in the amount of related party advances was $35,800 from the balance of $75,862 related party advances outstanding as of December 31, 2012. As of December 31, 2013, there was $110,662 in related party advances outstanding.

 

 Notes Payable - Related Party 

 

At December 31, 2012, we had a related party liability of $54,021. The liability consisted of two Demand Promissory Notes Payable for $20,000 and $33,740 plus accrued interest due to a company controlled by the CEO. The Company had pledged 1,000,000 and 1,687,013, respectively of unregistered restricted shares as collateral for the timely performance on this note. However, on June 4, 2013, the Company issued 2,678,013 unregistered restricted shares of common stock at the request of the Note Holder in exchange for principal debt and its unpaid interest on the two outstanding Demand Promissory Notes. At the time of the payment, the fair market value of the common stock issued was $15,398,575, based on the trading price of $5.75 per share on May 30, 2013, the date of the demand for payment. The difference between the amounts of the Demand Promissory Notes and the fair market value of the stock was booked as a non-cash interest expense of $15,343,983 in the second quarter of 2013.

 

For years ended December 31, 2013 interest expense was $15,368,515 and $3,060, respectively, including the non-cash interest described above.

 

 

5. Commitments, Contingencies and Management's Plan

 

Facility Lease

 

In April 2012, the Company entered into a lease for a new office facility. The lease began May 1, 2012 and expires June 30, 2015. The first two months of rent are free, year one calls for monthly base rent of $4,724, year two has monthly base rent of $4,866 and year three has monthly base rent of $5,014. Rent expense is recorded on the straight-line method over the term of the lease. A security deposit of $4,724 was paid upon execution of the lease. In December 2013, the company vacated this facility over a dispute with the landlord on maintenance of the heating system. The Company is currently negotiating a termination of the lease however, for reporting purposes payments due under the lease are reported in the schedule below.

 

In January 2014, the Company entered into a lease for a new office facility. The lease began January 1, 2014 and expires December 31, 2016. Rent on a monthly basis is $1,100 for 2014, $1,133 for 2015 and $1,167 for 2016.

 

Future lease payments related to the Company’s office leases as of December 31, 2013 are as follows:

 

  2014    $               72,480  
  2015                     43,680  
  2016                     14,004  
  Total    $             130,164  

 

 

 

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Employment Contracts

 

On October 9, 2011, the Company entered into one-year employment agreements with two individuals. One was hired as Chief Compliance Officer (CCO) and the other was with the Company's CEO to continue serving in that role. The agreement with the CCO was subsequently terminated while the CEO agreement calls for the officer to receive compensation of $9,600 per month. At December 31, 2013 and 2012 $59,723 and $33,185, respectively was due and outstanding under his agreement.

 

 Concentrations

 

For the years ended December 31, 2013 and 2012 approximately 79% and 88%, respectively of the Company's referral fee was generated from three customers. It is anticipated that in the future the company will rely less on these customers as it transitions from a recurring revenue model to selling service provided by third parties. No single customer provided 10% or more of product sales service fees and commission revenue is non-recurring.

 

Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.

 

6. Promissory Note

 

On October 1, 2013 the Company issued a one-year promissory note for $100,000. Under the terms of the note interest of 5% will be paid on the monthly anniversary of the note. Beginning May 1, 2014 the Company is obligated to pay down the note at an amount of $16,666.67 each month until the note is fully paid. Collateral for the note is 500,000 shares of the Company’s common stock which is being held in escrow until the note is fully paid. In the event of default on the note such shares will be issued to the note holder. On March 1, 2014 the Company released the 500,000 shares being held in escrow that were used to secure the $100,000 promissory note.

 

7. Income Taxes

 

FASB ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The total deferred tax asset is $49,877 ($244,890 in 2012) which is calculated by multiplying a 35% estimated tax rate by the taxable cumulative NOL of $142,507. The total valuation allowance is $49,877 ($244,890 in 2012). Details for the last two years follow:

 

      December 31,   December 31,  
      2013   2012  
  Deferred tax asset    $           49,877    $         244,890  
  Valuation allowance               (49,877)             (244,890)  
  Net deferred asset    $                     -    $                     -  

 

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8. Stockholders’ Equity 

Issuance of Common Stock

 

During year ended December 31, 2013 the Company sold 100,000 shares of restricted common stock for $1.00 per share. Additionally, as discussed in Note 4 to these financial statements, the Company issued 2,678,013 unregistered restricted shares of common stock to a related party in exchange for principal debt and its unpaid interest on the two outstanding Demand Promissory Notes totaling $54,592 including accrued interest. At the time of the issuance, the fair market value of the common stock issued was $15,398,575, based on the trading price of $5.75 per share on May 30, 2013, the date of the demand for payment. The difference between the amounts of the Demand Promissory Notes and the fair market value of the stock was booked as a non-cash interest expense of $15,343,983.

 

Proxy Statement

 

In May 2012, the Board of Directors approved a 3 for 1 forward stock split of the Company’s common stock, an increase in the number of authorized common shares from 70 million to 200 million, and to change the Company’s name from EZJR, Inc. to Realty Ramp, Inc. These matters, among others, will require approval of the majority of the Company’s common shareholders. A shareholders’ meeting to approve these changes has not as yet been set.

 

9. Subsequent Events

Payments related to SCS Agreement

 

As discussed in Note 2 to these financial statements, subsequent to December 31, 2013, the Company has refunded an additional $2,400 to applicants for amounts received by the Company related to the SCS agreement.

 

Acquisition of Leading Edge Financial, Inc.

 

On January 28, 2014, we issued 4,475,000 shares of restricted common stock in exchange for 100% of the stock of Leading Edge Financial, Inc. (“LEF”) a Florida Corporation that provides credit management services. Concurrently, with the close of this transaction, Barry Hall was appointed Executive Chairman of the Board of Directors and Chief Financial Officer and Edward Zimbardi was appointed to the Board of Directors and Chief Executive Officer. Adam Alred, the Company’s Chief Executive Officer, resigned from that position and was appointed Chief Technology Officer.

 

Exchange of Stock for Promissory Note

 

On March 1, 2014 the Company released the 500,000 shares being held in escrow that were used to secure the $100,000 promissory note described in Note 6 to these financial statements in exchange for the note and any outstanding interest due at the time of the exchange.

 

Corporate Status with Nevada Secretary of State

 

On April 15, 2014, the Company paid $1,425 in delinquent filing fees to the Secretary of State of Nevada in order to bring current the filings of its Annual List of Officers and Directors and state business license fee for the years 2012 and 2013.

 

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