UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

 

FORM 10-K

 

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

 

For the fiscal year ended June 30, 2014

 

¨ 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: 333-171658 

 

Nano Labs Corp.

(Exact name of registrant as specified in its charter)

  

Colorado		84-1307164
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

  

The Ford Building 

615 Griswold Street 

Seventeenth Floor 

Suite 1715

Detroit, Michigan 48226 

(Address of principal executive offices, including Zip Code)

 

(888) 806-2315

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered under Section 12(b) of the Act:
Title of each class registered:		Name of each exchange on which registered:
None		None
Securities registered under Section 12(g) of the Act:
Title of each class registered:
None

 

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

 

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

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨ Yes   ¨ No

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

 

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

 

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes   x No

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of December 31, 2013: approximately $4,167,423.89.

 

As of October 28, 2014, there were 241,192,385 shares of the issuer’s $.001 par value common stock issued and outstanding.

  

Documents incorporated by reference. There are no annual reports to security holders, proxy information statements, or any prospectus filed pursuant to Rule 424 of the Securities Act of 1933 incorporated herein by reference.

 

 

 

TABLE OF CONTENTS

 

				Page
PART I
Item 1.	Business			3
Item 1A.	Risk Factors			10
Item 1B.	Unresolved Staff Comments			17
Item 2.	Properties			17
Item 3.	Legal Proceedings			17
Item 4.	Mine Safety Disclosures			17
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			18
Item 6.	Selected Financial Data			23
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk			26
Item 8.	Financial Statements and Supplementary Data			27
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			28
Item 9A.	Controls and Procedures			28
Item 9B.	Other Information			29
PART III
Item 10.	Directors, Executive Officers and Corporate Governance			30
Item 11.	Executive Compensation			31
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			33
Item 13.	Certain Relationships and Related Transactions, and Director Independence			34
Item 14.	Principal Accounting Fees and Services			34
PART IV
Item 15.	Exhibits, Financial Statement Schedules			35

 

2

  

PART I

 

Forward-Looking Information

 

This Annual Report of Nano Labs Corp. on Form 10-K contains forward-looking statements, particularly those identified with the words, “anticipates,” “believes,” “expects,” “plans,” “intends,” “objectives,” and similar expressions. These statements reflect management’s best judgment based on factors known at the time of such statements. The reader may find discussions containing such forward-looking statements in the material set forth under “Management’s Discussion and Analysis and Plan of Operations,” generally, and specifically therein under the captions “Liquidity and Capital Resources” as well as elsewhere in this Annual Report on Form 10-K. Actual events or results may differ materially from those discussed herein. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

 

ITEM 1. BUSINESS

 

BACKGROUND

 

We were incorporated as Colorado Ceramic Tile Inc. in the State of Colorado on March 27, 1995 primarily to sell and install stone, tile and marble products used in residential and commercial buildings. During April 2012, we were reorganized by transferring all of our assets to CCT, Inc., our wholly-owned subsidiary ("CCT"). We subsequently sold CCT to Sandy Venezia, our former officer and director, for $500.00.

 

Amendment to Articles of Incorporation

 

On April 11, 2012, we filed an amendment to our articles of incorporation with the Colorado Secretary of State changing our name from "Colorado Ceramic Tile Inc." to "Nano Labs Corp.".

 

CURRENT BUSINESS OPERATIONS

 

We are a development stage company with no manufacturing capacity or agreements and have not generated any revenue. Our plan of operation involves nanotechnology and the development of new products using nano compounds .We are also a nanotechnology research and development company. We are able to access resources that encompass nearly thirty years of research and development in nanotechnology as well as hundreds of peer-reviewed and published research papers and other scholarly material. Our research and development team of scientists, designers, and engineers is focused on creating a portfolio of advanced products that could provide benefits to a variety of industries as further discussed below including: (i) consumer products, (ii) energy, (iii) materials, and (iv) healthcare. Through the use and integration of proprietary nano compounds, our goal is to evolve common products into new, revolutionary products in order to make the world a better place.

 

3

 

Nanotechnology is the manipulation of matter on an atomic and molecular scale. A generalized description of nanotechnology was established by the National Nanotechnology Initiative, which defines nanotechnology as the manipulation of matter with at least one dimension sized from 1 to 100 nanometers. This definition reflects the fact that quantum mechanical effects are important at this quantum-realm scale, and so the definition pertains to a research category inclusive of all types of research and technologies that deal with the special properties of matter that occur below the given size threshold. It is therefore common to see the plural form "nanotechnologies" as well as "nanoscale technologies" to refer to the broad range of research and applications whose common trait is size. Because of the variety of potential applications (including industrial and military), governments have invested billions of dollars in nanotechnology research. Through its National Nanotechnology Initiative, the USA has invested 3.7 billion dollars. The European Union has invested 1.2 billion and Japan 750 million dollars. See "The Daily Star (Bangladesh April 17, 2012."

 

Nanotechnology as defined by size is naturally very broad, including fields of science as diverse as surface science, organic chemistry, molecular biology, semiconductor physics, microfabrication, etc. The associated research and applications are equally diverse ranging from extensions of conventional device physics to completely new approaches based upon molecular self-assembly, from developing new materials with dimensions on the nanoscale to direct control of matter on the atomic scale.

 

Nanotechnology may be able to create many new materials and devices with a vast range of applications, such as in medicine, electronics, biomaterials and energy production. On the other hand, nanotechnology raises many of the same issues as any new technology, including concerns about the toxicity and environmental impact of nanomaterials, and their potential effects on global economics.

 

Polec Joint Venture Agreement

 

On June 27, 2014, our Board of Directors entered into that certain joint venture collaboration agreement dated June 23, 2014 for a term of twenty years (the "Polec Joint Venture Agreement") with Polec SA de CV ("Polec"), for the manufacture, distribution and marketing of Polec´s technology and products. Polec is a technology based company presently located in Mexico with a strong profile of applied chemistry which has developed a novel technology highly effective as a liquid cement that could be used as soil stabilizer. This is a polymeric water base product able to provide new mechanical high value added properties to practically any soil that could be treated with this product (the "Polec Technology").

 

The general purpose of the Polec Joint Venture Agreement is to: (i) address international market opportunities for products based on the Polect Technology and provide fulfillment funding to manufacture and/or license the Polec Technology to third parties and market the resulting products; (ii) establish a joint venture corporation (the "JVC") for operational and funding requirements and commitment of the Polec Technology to be provided by Polec whereby we will be able to adapt and address market opportunities in the particular territories of the United States and Canada as initial commercialization stage; (iii) have the JVC establish a marketing and sales platform for Polec products and technologies from time to time for the purpose of business development; and (iv) create a corporate entity named Polec International Liquid Cement Technology Corp, USA, a joint venture corporation between Polec and Nano Labs.

 

In accordance with the terms and provisions of the Polec Joint Venture Agreement, the parties agreed that certain contracts in acceptable form would be entered into as follows: (i) a distributorship contract between Jorge Luis Rodriguez Gallardo ("Gallardo") as owner of all right, title and interest in and to the Polec Technology, and the JVC relating to the distribution of the above referenced products; (ii) technology or patent rights transfer agreement between Gallardo and the JVC for the provision of the Polec Technology rights; (iii) manufacturing contract between exclusive manufacturers and the JVC for the exclusive manufacturing of each product; and (iv) trademark licence contract between Gallardo as trademark owner and the JVC for licensing of the use of the Polec products trademarks.

 

In further accordance with the terms and provisions of the Polec Joint Venture Agreement, Polec shall be 50% equity owner and we shall be 50% equity owner of the JVC. We shall be entitled to appoint and maintain in office two directors and Polec shall be entited to appoint and maintain in office two directors. Lastly, the JVC shall reinvest at least during the following two years all dividends and subsequent to this period the JVC shall distribute on an equal basis by way of dividend not less than fifty percent of the audited after tax net profit in relation to each fiscal year.

 

4

 

DB METALS JOINT VENTURE AGREEMENT

 

On June 27, 2014, our Board of Directors entered into that certain joint venture agreement dated June 16, 2014 (the "DB Metals Joint Venture Agreement") with DB Metals SA de CV ("DB Metals"), for the manufacture, distribution and marketing of DB Metal's technology and products. DB Metals is a technology based company located in Mexico that has been developing during the last six years a novel technology consisting of a three phase metallurgical process that enables the reduction significantly of time and raw materials required to recycle lead and other non ferrous metals. As a result of 25 years of experience in the metallurgic field, DB Metals has developed this technology with the financial support of the National Council of Science and Technology of Mexico. After obtaining highly satisfactory pilot-test results in the scaling up process financed by the National Council, DB Metals has been able to confirm the benefits of this novel process that enables the reduction of cost, time, fuel consumption, waste and environmental impact of recycling lead scrap, and that could be applied to recuperate, smelt and refine other non ferrous metals (the "DB Metals Technological Process"). We desire to create a joint venture with DB Metals for the purpose of developing, exploiting and marketing the DB Metals Technological Process addressing related market needs.

 

The general purpose of the DB Metals Joint Venture Agreement is to: (i) address market opportunities for metallurgic processes based on the DB Metals Technological Process and provide fulfillment funding to operate and/or to license the DB Metals Technological Process to third parties and to market the metal products addressing business opportunities; (ii) create a joint venture for operational and funding requirements and commitment of the corresponding DB Metals Technological Process whereby we will be able to address market opportunities; and (iii) have us establish a marketing and sales platform for DB Metals´s products and the DB Metals Technological Process from time to time for the purpose of business development.

 

In further accordance with the terms and provisions of the DB Metals Joint Venture Agreement, prior to June 30, 2014, we shall provide financial resources to DB Metals in Mexico in the necessary amount as specified to commence operations (the "Funding"). Such Funding shall be according to the costs described in Attachment A of the DB Metals Joint Venture Agreement. DB Metals shall issue, assign, transfer, and deliver to us and we shall receive and accept at closing fifty percent (50%) of DB Metals shares issued and outstanding (the “Share Transfer”). Closing shall be on June 30, 2014 after the fulfilment of all the conditions precedent. The Company shall issue to DB Metal´s shareholders 100,000,000 shares of its restricted common stock at a $0.001 per share price, which will be issued to the shareholders of DB Metals at closing.

 

The business and affairs shall be managed by our Board of Directors. The Board of Directors shall consist of four (4) persons of which at closing, DB Metals shall be entitled to appoint and maintain in office two (2) directors (the “DB Metals Directors”) and we shall be entitled to appoint and maintain in office two (2) directors (“Nano Labs Directors”). At Closing, our Board of Directors shall approve and ratify the appointment of Eng. Jose Armando Camargo Del Bianco as a director and Chief Technological and Scientific Officer of the Company.

 

ASSET PURCHASE AGREEMENT

 

On October 10, 2012, we entered into that certain asset purchase agreement (the "Asset Purchase Agreement") with Dr. Victor Castano ("Castano"). In accordance with the terms and provisions of the Asset Purchase Agreement, Castano sold, assigned and transferred to us all rights and assets related to Castano's Nano Coatings Technology (the "Nano Coating Technology") including, but not limited to: (i) all plans, specifications, drawings, concepts, designs, engineering studies and reports, test results, models, manufacturing processes and flowcharts; (ii) all raw materials, supplies, work in progress, finished product and lists of suppliers; (iii) all software programs and software codes relating thereto and all copies and tangible embodiments of the software programs and software code (in source and object code form) together with all documentation related to such programs and code; (iv) all intellectual property rights including all intellectual property, patent applications, patents, trademarks, tradenames, copyrights, and the exclusive right for us to hold ourselves out to be the successor to the Nano Coatings Technology;(v) all licenses to the Nano Coatings Technology and properties of third parties (including licenses with respect to intellectual property rights owned by third parties); (vi) claims, royalty rights, deposits, and rights and claims to refunds; (vii) all Internet domain names and registrations held by Castano that relate to the Nano Coatings Technology; (viii) all franchises, permits, licenses, agreements, waivers and authorizations from, issued or granted by any governmental authority; and (ix) copies of marketing and sales information, including pricing and customer lists. In consideration thereof and in further accordance with the terms and provisions of the Asset Purchase Agreement, we issued an aggregate 101,000,000 shares of our restricted common stock to Dr. Castano.

 

5

 

Rescission of Asset Purchase Agreement and Assignment

 

Effective on March 4, 2014, our Board of Directors approved the execution of that certain rescission agreement dated March 4, 2014 (the "Rescission Agreement") with Castano. Our Board of Directors determined that consummation of the Asset Purchase Agreement was not in our best interests or our shareholders in light of certain difficulties pertaining to the testing of the Nano Coating Technology and thus determined that the Asset Purchase Agreement should be rescinded (the “Rescission”) and that all right, title and interest in and to the Nano Coating Technology shall be returned to Castano.

 

Therefore, in accordance with the terms and provisions of the Rescission Agreement: (i) we agreed with Castano to rescind, cancel and set aside the Asset Purchase Agreement, including the terms and provisions regarding the issuance of the 101,000,000 shares of restricted common stock by us to Castano in exchange for the transfer to Castano of all right, title and interest in and to the Nano Coating Technology; (ii) Castano agreed to return to us the share certificate evidencing the 101,000,000 shares of our restricted common stock issued to Castano; (iii) we agreed that all right, title and interest in and to the Nano Coating Technology shall be transferred to and in the name of Dr. Victor Castano; (iv) Castano agreed to resign as our Chief Scientific and Technological Officer and a member of the Board of Directors effective as of March 4, 2014; (v) both parties agreed to release and discharge each other from any and all claims, manner of actions, whether at law or in equity suits, judgments, debts, liens, liabilities, demands, damages, losses, sums of money, expenses or disputes, known or unknown, fixed or contingent, which they now have or may have hereafter, directly or indirectly, individually or in any capacity against each other by reason of any act, omission, matter, cause, or thing whatsoever, from the beginning of time to, and including the date of the execution of the Rescission Agreement, relating to the aforesaid Asset Purchase Agreement and Rescission; and (vi) from and at all times after the date of the Rescission Agreement, both parties shall, to the fullest extent permitted by law and to the extent provided herein, indemnify and hold harmless each other against any and all actions, claims (whether or not valid), losses, damages, liabilities, costs and expenses of any kind or nature whatsoever (including without limitation reasonable attorney’s fees, costs and expenses) incurred by or asserted against either party from and after the date thereof, whether direct, indirect or consequential, as a result of or arising from or in any way relating to any claim, demand, suit, action, or proceeding (including any inquiry or investigation) by any person relating to the Rescission Agreement, whether threatened or initiated, whether or not any such party is a party to any such action or proceeding, suit or the target of any such inquiry or investigation.

 

UNIVERSAL ASSIGNMENT

 

On December 13, 2012, we entered into that certain universal assignment (the "Assignment") with Castano pertaining to an invention entitled "Nanotechnological Thermal Insulating Coating and Uses Thereof" for which a patent application was filed with the United States Patent, Copyright and Trademark Office on October 31, 2012, Serial Number 61/720,716 (the "Nanotechnology Patent"). In accordance with the terms and provisions of the Assignment, Castano transferred and assigned to us his whole right, title and interest for the United States and Canada and allother countries in and to the said Nanotechnology Patent.

 

Patent

 

On October 31, 2012, Castano filed an application for patent protection entitled "Nanotechnological Thermal Insulating Coating and Uses Thereof" with the United States Patent, Copyright and Trademark Office (the "Nanothermal Insulation Coating Patent"). The Nanothermal Insulation Coating Patent generally relates to dispersion which provides paints, namely films. More specifically, the subject matter relates to ceramic and/or carbon nanoparticle dispersions containing ceramic and/or carbon nanoparticle having chemically functionalized surface dispersed in a polymeric matrix. Polymeric resin dispersions have been widely utilized as a starting material for paints or coating of film-forming agents, i.e. a starting material for a paint or a coating agent for coating an outside and inside of an aircraft, automobile, external wall surface, a floor material, furniture, etc. The paint film obtained based on these resin dispersions has a role of not only providing an agreeable appearance but also protecting the material over which they are laid. For example, such paint compositions should provide with a measure of ultraviolet and infrared radiation resistance, acid rain resistance, resistance to fungi and bacteria, resistance to corrosion and oxidation, waterproofing, non-flammability, thermal insulation.

 

6

 

On November 13, 2012, the United States Patent, Copyright and Trademark Office issued to Castano a provisional patent for the Nanothermal Coating Patent, which was assigned to us pursuant to the Asset Purchase Agreement and the Assignment. We believe that the issuance of the provisional patent creates an opportunity for us to partner with industry to commercialize an innovative nanothermal insulation coating product (the "Nanothermal Insulation Coating Product"). As an important competitive advantage, the Nanothermal Insulation Coating Product will provide fire and heat protection at temperatures of up to 1,500 degrees Celsius. The Nanothermal Insulation Coating Product outlined in the provisional patent may be directly applied to virtually any surface, from wood to metal, often without the need to remove existing coatings. The Nanothermal Insulation Coating Product is also resistant to corrosion, rust, water, and oxidization — making it particularly durable, as does its capability of reflecting up to 82% of ultraviolet rays that, over time, can contribute to deterioration involving structural materials such as PVC. Management asserts that the Nanothermal Insulation Coating Product also protects against acid rain. Further management contends that the Nanothermal Insulation Coating Product: (i) does not emit or retain odors; (ii) is particularly effective as a barrier against toxic materials, (anti-bacterial, and anti-fungal); and (iii) displays auto-wash properties in the rain while maintaining a shimmering clear or white color. By manipulating matter on a very small scale, management believes that it will be able to create a new chemical mixture in which the strengths of this mixture are exponentially greater than the sum of the parts, making it commercially and economically viable for use across all industry applications. The Nanothermal Insulation Coating Product can serve as an insulation agent to reduce energy costs, protecting against overheating, corrosion, and microbial growth, especially in a hot and humid environment. We believe this promises significant savings in air-conditioning costs when applied as an exterior coating. As a radiant barrier, it has the potential to change the rate of heat transfer by reflecting the solar radiation that would otherwise be absorbed by the material underneath the coated surface. As a result, management believes that the Nanothermal Insulation Coating Product has the potential to reduce air-conditioning related costs by as much as 40%. Management believes that the Nanothermal Insulation Coating Product is competitively positioned as a better practical and economic alternative to industrial thermal coatings and paints currently used in the marketplace.

 

Termination of Provisional Patent

 

On October 31, 2012, filed an application for patent protection entitled "Nanotechnological Thermal Insulating Coating and Uses Thereof" with the United States Patent, Copyright and Trademark Office (the "Nanothermal Insulation Coating Patent"). The Nanothermal Insulation Coating Patent related to dispersion which provides paints, namely films. More specifically, the subject matter relates to ceramic and/or carbon nanoparticle dispersions containing ceramic and/or carbon nanoparticle having chemically functionalized surface dispersed in a polymeric matrix. Polymeric resin dispersions have been widely utilized as a starting material for paints or coating of film-forming agents, i.e. a starting material for a paint or a coating agent for coating an outside and inside of an aircraft, automobile, external wall surface, a floor material, furniture, etc. On November 13, 2012, the United States Patent, Copyright and Trademark Office issued to Castano a provisional patent for the Nanothermal Coating Patent, which was assigned to us pursuant to the Asset Purchase Agreement.

 

A provisional patent is for the duration of twelve months from the date of filing with the United States Patent and Copyright Office. A provisional patent would have allowed us twelve months of protection of our intellectual property during testing, discussions on production formulations and improve and present our technology to potential clients. The provisional patent would further allow us to make improvements before filing its patent application prior to the expiration of the provisional patent. After the twelve month provisional patent term, we could have either proceeded to file the patent application or abandon the application if the product was not deemed commercially feasible.

 

7

 

We have made the recent decision to not move forward with filing for further patent application with the United States Patent and Copyright Office. We have been testing the Nano coating produced in a laboratory production over the past seventeen months. This testing has resulted in recent evidence that the Nano coating is inconsistent in production resulting in clumping of the Nano particle during larger scale production and installation. We received a written letter dated February 28, 2014 from the International Searching Authority with regards to their findings (the "Opinion"). We thus have made the recent decision to not proceed with further patent application of Castano's Nano system as it applied to the provisional patent applications. Resolving the issue would result in an increase in production costs from the original estimated cost of $9.00 per gallon to over $36.00 and management has determined that this is cost prohibitive. Management also considered other factors in its analysis regarding termination of the Asset Purchase Agreement including, but not limited to: (i) inconsistency in scaling up production from laboratory production to commercial scale; (ii) inconsistency in performance of the Nano coating product due to clumping of Nano particles; (iii) increase in production costs to compete in the marketplace; and (iii) uncertainty in obtaining patent protection due to the novelty, inventive steps and industrial applicability as outlined in the Opinion of prior patent claims and patents issued on Nano coating technology, which could lead to lawsuits for patent infringement.

 

Cancellation of Purchase Order for 27,000 Liters

 

We previously announced receipt of a purchase order for twenty-seven thousand (27,000) liters of its nano coatings (the "Purchase Order"). The Purchase Order was issued to us and Atencio and Atencio by Urban del Golfo S.A. de CV, a supplier of products to Pemex. Atencio and Atencio is a certified maintenance partner of Pemex since 1991 and carried out the installation of the intumescent fire resistant coatings at Pemex’s Francisco I. Madero Refinery. We further disclosed that management deemed the Purchase Order's value at approximately $630,000, had expected to receive the full amount of $630,000 and delivered the first 1,000 liters to Atencio and Atencio to test the production samples.

 

Subsequently, the buyer deemed the Nano coating to be inconsistent in production resulting in clumping of the nano particle during installation. We attempted to resolve this issue resulting in the increase of production costs from $9.00 per gallon to over $36.00 per gallon. Therefore, as of the date of this Quarterly Report, Urban Del Golfo has not paid for the product delivered and has refused to pay for any additional product until the problem is resolved. We have not been able to resolve this production issue and deliver the order and, therefore, has decided to abandon the Nano coatings market. Hence, the Purchase Order was cancelled.

 

GOVERNMENT REGULATION

 

Most of our current and proposed activities will be subject to numerous federal, state, local and international laws and regulations concerning machine and chemical safety and environmental protection. Such laws include, without limitation, the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, and the Comprehensive Environmental Response Compensation Liability Act. We will also be subject to laws governing the packaging and shipment of some of our products. Such laws require that we take steps to, among other things, maintain air and water quality standards, protect threatened, endangered and other species of wildlife and vegetation, preserve certain cultural resources, reclaim processing sites and package potentially flammable materials in appropriate ways and pass stringent government mandated testing standards before shipping our battery products.

 

Compliance with federal, state, local or international laws or regulations will represent a portion of our budget. If we fail to comply with any such laws or regulations, however, a government entity may levy a fine on us or require us to take costly measures to ensure compliance. Any such fine or expenditure may adversely affect our development.

 

ENIVIRONMENTAL REGULATION AND LIABILITY

 

Any proposed processing and manufacturing operations will be subject to federal, state, local and international environmental laws. Under such laws, we may be jointly and severally liable with prior property owners for the treatment, cleanup, remediation, and/or removal of substances discovered at any other property used by us; to the extent the substances are deemed by the federal and/or state government to be toxic or hazardous. Courts or government agencies may impose liability for, among other things, the improper release, discharge, storage, use, disposal, or transportation of hazardous substances. We may use hazardous substances in our testing and operations and, although we will employ reasonable practicable safeguards to prevent any liability under applicable laws relating to hazardous substances, companies engaged in materials production are inherently subject to substantial risk that environmental remediation will be required.

 

8

 

COMPETITION

 

Although there is substantial competition in the nanotechnology industry, including nano compounds, we do not believe that we currently face significant competition for products we intend to sell. However, many of our competitors who are in the nanotechnology industry could likely develop similar products, which would place us in substantial competition with them. Since many of these nanotechnology companies may have substantially greater financial, technical, managerial, marketing and other resources than we do, they may develop similar competing products that could threaten us and they may compete more effectively than we can and they could also have better access to marketing their products to our potential clients.

 

RESEARCH AND DEVELOPMENT

 

Prior to consummation of the Asset Purchase Agreement, we did not conduct any research or development activities. Subsequent to consummation of the Asset Purchase Agreement, we anticipate incurring approximately $500,000 relating to research and development of our nanotechnology products. Certain of the research and development costs incurred pertained to the commercial viability of Dr. Castano's Nano delivery system relating to application of the nano particles to be used in paint coating, nail polish, LED lighting, dental coatings and semi-conductors. We anticipate conducting further additional research or development activities in the near future. Such costs are not borne directly by any customers.

 

EMPLOYEES

 

Our business is currently managed by Mr. Bernardo Camacho Chavarria, our Chief Executive Officer and Chief Financial Officer/Accounting Officer. We also employ 3 persons on a fully-time basis and 3 persons on a part-time basis. We anticipate hiring additional employees primarily in operations, engineering and sales when we bring our products to market. Such additional hiring, if it occurs, will be dependent upon business volume growth.

 

WEBSITE 

 

We currently have a website for our company and own the web domain www.nanolabs.com

 

INTELLECTUAL PROPERTY

 

We currently own the web domains www.nanolabs.com. Under current domain name registration practices, no one else can obtain an identical domain name, but someone might obtain a similar name, or the identical name with a different suffix, such as “.org,” or with a country designation. The regulation of domain names in the United States and in foreign countries is subject to change, and we could be unable to prevent third parties from acquiring domain names that infringe or otherwise decrease the value of our domain names.

 

INSURANCE

 

We currently do not maintain any insurance.

 

FACTILITES

 

Our executive, administrative and operating offices are located at The Ford Building, 615 Griswold Street, Seventeenth Floor, Suite 1715, Detroit, Michigan 48226. The lease calls for monthly payments of approximately $400. We believe that our facilities are adequate for our needs and that additional suitable space will be available on acceptable terms as required.

 

9

 

LEGAL PROCEEDINGS

 

There are no legal actions pending against us nor are any legal actions contemplated by us at this time.

 

ITEM 1A. RISK FACTORS

 

An investment in our securities involves a high degree of risk. You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to our securities. If any of the following risks actually occurs, our business, financial condition, and/or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. You should only purchase our securities if you can afford to suffer the loss of your entire investment.

 

RISKS RELATED TO OUR BUSINESS

 

We have a limited operating history upon which an evaluation of our prospects can be made.

 

Although we were incorporated March 27, 1995, we only recently began conducting the current business operations in June 2012. Thus, our lack of operating history makes an evaluation of our business and prospects very difficult. Our prospects must be considered speculative, considering the risks, expenses, and difficulties frequently encountered in the establishment of a new business. We cannot be certain that our business will be successful or that we will generate significant revenues. As of the date of this Annual Report, we have not commenced business operations involving the marketing and sale and distribution of any products developed under nanotechnology. We may never be successful in developing a market for any of the products under nanotechnology and thus may never become profitable. Therefore, our ability to operate our business successfully remains untested. If we are successful in marketing the products developed under nanotechnology, we anticipate that we will retain future earnings, if any, and other cash resources for the future operation and development of our business as appropriate. We do not currently anticipate declaring or paying any cash dividends in the foreseeable future. Payment of any future dividends is solely at the discretion of our board of directors, which will take into account many factors including our operating results, financial conditions and anticipated cash needs. For these reasons, we may never achieve profitability or pay dividends.

 

We anticipate that our ability to generate revenues in the foreseeable future will depend on the successful development and commercialization of products developed under nanotechnology. If we are not successful in commercializing our products or are significantly delayed or limited in doing so, our business will be materially adversely affected and we may need to curtail or cease operations.

 

Because we are a development stage company, we have no revenues to sustain our operations.

 

We are a development stage company that is currently developing our business. To date, we have not generated revenues. The success of our business operations will depend upon our ability to obtain successfully develop and market our future nanotechnology products and provide quality products. We are not able to predict whether we will be able to develop our business and generate revenues. If we are not able to complete the successful development of our business plan, generate revenues and attain sustainable operations, then our business will fail.

 

We have incurred a net loss since inception and expect to incur net losses for the foreseeable future.

 

As of June 30, 2014, our accumulated deficit was $58,549,446 . We recognized a net loss for the year ended June 30, 2014 of $47,769,955. We expect to incur operating and capital expenditures for the next year and, as a result, we expect significant net losses in the future. We will need to generate significant revenues to develop our business and expand our operations. We may not be able to generate sufficient revenues to achieve profitable operations.

 

We will need to raise additional capital to engage in research and develop and expand our operations. Our failure to raise additional capital will significantly affect our ability to fund our proposed activities.

 

We are currently not engaged in any sophisticated marketing program because we lack capital and revenues to justify the expenditure. In addition, our available funds will not fund our activities for the next twelve months. If we fail to raise additional funds, investors may lose their entire cash investment.

 

10

 

If the use of any of our products as developed harm people or the environment, we could be subject to costly and damaging product liability claims.

 

We may be exposed to potential product liability risks that are inherent in the testing, manufacturing and marketing of our products. Side and/or environmental effects and other liability risks could give rise to viable product and environmental liability claims against us. We have not yet obtained insurance coverage and, if we do so, we may not be able to maintain this insurance on acceptable terms. Moreover, insurance may not provide adequate coverage against potential liabilities. As a result, product liability claims, even if successfully defended, could have a material adverse effect on our business, financial condition and results of operations.

 

The commercial success of our products developed will depend upon the degree of market acceptance of the respective product by consumers.

 

If our various products developed under our joint venture agreements and nanotechnology do not gain market acceptance by consumers, we may not generate sufficient product revenue and we may not ever become profitable. The degree of market acceptance of our products will depend on a number of factors, including:

 

	●	the prevalence of adverse side effects to use of the nanotechnology product;
	●	any limitations or warnings in the nanotechnology product’s approved labeling;
	●	the efficacy and potential advantages over alternative products;
	●	pricing;
	●	the willingness of the target population to try new products developed under nanotechnology;
	●	the strength of marketing and distribution support and timing of market introduction.

 

Adverse changes or interruptions in our relationships with third parties could affect our business operations and reduce our revenues.

 

Our business is substantially dependent on our relationship with third parties with regards to contractual relations, which terms could affect our access to the basis of certain of our products and inventory and reduce our potential revenues. In the event our relations with these crucial third parties should fail, we do not have a third-party back-up sources which will provide the necessary products to us. The relationship we have with these third parties is generally freely terminable upon notice. The arrangements generally are not exclusive. We cannot assure you that our arrangements with current or future third parties will remain in effect or that any of these third parties will continue to join in developmental efforts and supply us with the same level of support and access to inventory in the future. If support or access to inventory is affected, or our ability to obtain support or inventory on favorable economic terms is diminished, it may reduce our revenues. Our failure to establish and maintain representative relationships for any reason could negatively impact our websites and reduce our revenues.

 

11

 

We may become subject to international economic and political risks over which we have little or no control and may be unable to alter our business practice in time to avoid the possibility of reduced revenues.

 

We conduct a substantial portion of our business outside the United States and plan to significantly increase our presence in other foreign countries. Doing business outside the United States, subjects us to various risks, including changing economic and political and environmental conditions, major work stoppages, exchange controls, currency fluctuations, armed conflicts and unexpected changes in United States and foreign laws relating to tariffs, trade restrictions, transportation regulations, foreign investments and taxation. We have no control over most of these risks and may be unable to anticipate or adapt to changes in international economic and political and environmental conditions. This may lead to sudden and unexpected revenue reductions or expense increases.

 

We may have difficulty establishing adequate management, legal and financial controls internationally.

 

As a result of difference in management, accounting, legal, language and cultural norms in certain foreign countries, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting standard business practices for our international projects as well as in our United States based operations. In addition, our international efforts may divert management attention and consume a significant amount of capital without anticipated results.

 

Certain foreign countries could change its policies toward private enterprise or even nationalize or expropriate private enterprises.

 

Our business is expected to be subject to significant political and economic uncertainties and may be affected by political, economic and social developments in Mexico. The Mexican government may pursue economic reform policies including the encouragement of private economic activity and greater economic decentralization. The Mexican government may not pursue current policies or may significantly alter them to our detriment from time to time with little, if any, prior notice.

 

Changes in policies, laws and regulations or in their interpretation or the imposition of confiscatory taxation, restrictions on currency conversion, restrictions or prohibitions on dividend payments to shareholders, or devaluations of currency could cause a decline in the price of our common stock.

 

The nature and application of many laws of certain foreign countries create an uncertain environment for business operations and they could have a negative effect on us.

 

The legal system in foreign countries generally may be a civil law system. Unlike the common law system, the civil law system is based on written statutes in which decided legal cases have little value as precedents. The promulgation of new laws, changes of existing laws and the abrogation of local regulations by national laws could cause a decline in the price of our common stock. In addition, as these laws, regulations and legal requirements are relatively recent, their interpretation and enforcement involve significant uncertainty. Furthermore, the political, governmental and judicial systems in foreign countries are sometimes impacted by corruption. There is no assurance that we will be able to obtain recourse in any legal disputes with suppliers, customers or other parties with whom we conduct business.

 

If we are unable to establish sales, marketing and distribution capabilities, or to enter into agreements with third parties to do so, we will be unable to successfully market and sell our future nanotechnology products.

 

We have no experience with marketing, sales and distribution of certain of our proposed nanotechnology products and may establish pre-commercial capability in those areas. If we are unable to establish capabilities to sell, market and distribute our products, either by developing our own capabilities or entering into agreements with others, we will not be able to successfully sell our future nanotechnology products. In that event, we will not be able to generate significant revenues. We cannot guarantee that we will be able to hire the qualified sales and marketing personnel we need. We may not be able to enter into any marketing or distribution agreements with third-party providers on acceptable terms, if at all.

 

12

 

Our protective measures may not adequately protect our proprietary intellectual property.

 

We regard our intellectual property as critical to our success. Such patents and agreements and various other measures we take to protect our intellectual property from use by others may not be effective for various reasons, including the following:

 

	●	Pending patent applications may not be granted for various reasons, including the existence of conflicting patents or defects in our applications, if there was in existence relevant prior art or the invention was deemed by the examiner to be obvious to a person skilled in the art whether or not there were other existing patents. Risks associated with patent applications are enhanced because patent applications of others remain confidential for a period of approximately 18 months after filing; as a result, our belief that we are the first creator of an invention or the first to patent it may prove incorrect, as information related to conflicting patents is first published or first brought to our attention;
	●	Any patents we may be granted may be challenged, invalidated, narrowed or circumvented because of the pre-existence of similar patented or unpatented intellectual property rights or for other reasons;
	●	The costs associated with enforcing patents, confidentiality and invention agreements or other intellectual property rights may make aggressive enforcement cost prohibitive;
	●	We have not filed for patent protection in many countries in which we may sell product or seek to sell product; as a result, we may be unable to prevent competitors in such markets from selling infringing products;
	●	Even if we enforce our rights aggressively, injunctions, fines and other penalties may be insufficient to deter violations of our intellectual property rights; and
	●	Other persons may independently develop proprietary information and techniques that, although functionally equivalent or superior to our intellectual proprietary information and techniques, do not breach proprietary rights.

 

Our inability to protect our proprietary intellectual property rights or gain a competitive advantage from such rights could harm our ability to generate revenues and, as a result, our business and operations.

 

We may be involved in lawsuits to protect or enforce our patent, which could be expensive, time consuming and involve adverse publicity and adverse results.

 

Competitors or others may infringe our patent. To counter infringement or unauthorized use, we may be required to file patent infringement claims, which can be expensive and time-consuming. Interference proceedings brought by the United States Patent and Trademark Office may be necessary to determine the priority of inventions with respect to our patent applications. Litigation or interference proceedings may result in substantial costs and be a distraction to our management

 

Because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure. In addition, during the course of this litigation (even if ultimately successful), there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our shares of common stock.

 

In addition, in an infringement proceeding, a court may decide that a patent of ours is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover that technology. An adverse determination of any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.

 

We may not prevail in any litigation or interference proceeding in which we are involved. Even if we do prevail, these proceedings can be expensive, result in adverse publicity and distract our management.

 

Other parties may bring intellectual property infringement claims against us, which would be time-consuming and expensive to defend, and if any of our products or processes is found to be infringing, we may not be able to procure licenses to use patents necessary to our business at reasonable terms, if at all.

 

Our success depends in part on avoiding the infringement of other parties’ patents and proprietary rights. We may inadvertently infringe existing third-party patents or third-party patents issued on existing patent applications. Third party holders of such patents or patent applications could bring claims against us that, even if resolved in our favor, could cause us to incur substantial expenses and, if resolved against us, could cause us to pay substantial damages. Under some circumstances in the United States, these damages could be triple the actual damages the patent holder incurs.

 

13

 

If we have supplied infringing products to third parties for marketing or licensed third parties to manufacture, use or market infringing products, we may be obligated to indemnify these third parties for any damages they may be required to pay to the patent holder and for any losses the third parties may sustain themselves as the result of lost sales or damages paid to the patent holder. In addition, we have, and may be required to, make representations as to our right to supply and/or license intellectual property and to our compliance with laws. Such representations are usually supported by indemnification provisions requiring us to defend our customers and otherwise make them whole if we license or supply products that infringe on third party technologies or violate government regulations. Further, if a patent infringement suit were brought against us, we and our customers, development partners and licensees could be forced to stop or delay research, development, manufacturing or sales of products based on our technologies in the country or countries covered by the patent we infringe, unless we can obtain a license from the patent holder. Such a license may not be available on acceptable terms, or at all, particularly if the third party is developing or marketing a product competitive with products based on our technologies. Even if we were able to obtain a license, the rights may be nonexclusive, which would give our competitors access to the same intellectual property.

 

Any successful infringement action brought against us may also adversely affect marketing of products based on our technologies in other markets not covered by the infringement action. Furthermore, we may suffer adverse consequences from a successful infringement action against us even if the action is subsequently reversed on appeal, nullified through another action or resolved by settlement with the patent holder. As a result, any infringement action against us would likely harm our competitive position, be costly and require significant time and attention of our key management and technical personnel.

 

We may be unable to adequately prevent disclosure of trade secrets and other proprietary information.

 

We rely on trade secrets to protect our proprietary technologies, especially where we do not believe patent protection is appropriate or obtainable. Trade secrets are difficult to protect. We rely in part on confidentiality agreements with our employees, contractors, consultants, outside scientific collaborators and other advisors to protect our trade secrets and other proprietary information. Parties to the confidentiality agreements may have such agreements declared unenforceable or, even if the agreements are enforceable, may breach such agreements. Remedies available in connection with the breach of such agreements may not be adequate, or enforcing such agreement may be cost prohibitive. Courts outside the United States may be less willing to protect trade secrets. In addition, others may independently discover our trade secrets or independently develop processes or products that are similar or identical to our trade secrets. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection would harm our competitive business position.

 

If we are sued on a product liability claim, our insurance policies may not be sufficient.

 

Although we intend to maintain general liability insurance and product liability insurance, our insurance when acquired may not cover all potential types of product liability claims to which manufacturers are exposed or may not be adequate to indemnify us for all liability that may be imposed. Any imposition of liability that is not covered by insurance or is in excess of our insurance coverage could harm our business, including our relationships with current customers and our ability to attract and retain new customers. In addition, if the liability were substantial relative to the size of our business, any uncovered liability could harm our liquidity and ability to continue as a going concern.

 

We depend on the efforts and abilities of our officers.

 

We currently have only one officer, Bernardo Camacho Chavarria. Outside demands on our officer's time may prevent him from devoting sufficient time to our operations. In addition, the demands on this individual's time will increase because of our status as a public company. Mr. Chavarria has limited experience in managing a public company, which may impact our ability to meet our financial and business objectives as potential investors may not want to invest in a company whose management has limited public company experience. The interruption of the services of our management could significantly hinder our operations, profits and future development, if suitable replacements are not promptly obtained. We currently do not have any executive compensation agreement. We cannot guaranty that our management will remain with us.

 

Our management ranks are thin, and losing or failing to add key personnel could affect our ability to successfully grow our business.

 

Our future performance depends substantially on the continued service of our management. In particular, our success and depends upon the continued efforts of our management personnel, including Mr. Chavarria. We cannot guarantee that Mr. Chavarria will remain with us.

 

14

 

Investors may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in Mexico based upon U.S. laws, including the federal securities laws or other foreign laws, against us or our management.

 

Certain of our current operations are conducted in Mexico. Moreover, all of our directors and officers are nationals and residents of Mexico. All or substantially all of the assets of these persons are located outside the United States. As a result, it may not be possible to effect service of process within the United States or elsewhere outside Mexico upon these persons. In addition, uncertainty exists as to whether the courts of Mexico would recognize or enforce judgments of U.S. courts obtained against us or such officers and/or directors predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in Mexico against us or such persons predicated upon the securities laws of the United States or any state thereof.

 

The costs to meet our reporting requirements as a public company subject to the Securities Exchange Act of 1934 will be substantial and may result in us having insufficient funds to operate our business.

 

We will incur ongoing expenses associated with professional fees for accounting and legal expenses associated with being a public company. We estimate that these costs will range up to $50,000 per year for the next few years. Those fees will be higher if our business volume and activity increases. Those obligations will reduce and possibly eliminate our ability and resources to fund our operations and may prevent us from meeting our normal business obligations.

 

 Our auditors have questioned our ability to continue operations as a “going concern.” Investors may lose all of their investment if we are unable to continue operations and generate revenues.

 

We hope to obtain significant revenues from future product sales. In the absence of significant sales and profits, we may seek to raise additional funds to meet our working capital needs, principally through the additional sales of our securities. However, we cannot guarantee that we will be able to obtain sufficient additional funds when needed, or that such funds, if available, will be obtainable on terms satisfactory to us. As a result, substantial doubt exists about our ability to continue as a going concern.

 

We are subject to the Section 15(d) reporting requirements under the Securities Exchange Act of 1934 which does not require a company to file all the same reports and information as a fully reporting company pursuant to Section 12.

 

We are subject to the Section 15(d) reporting requirements according to the Securities Exchange Act of 1934, or Exchange Act. As a filer subject to Section 15(d) of the Exchange Act:

 

	●	we are not required to prepare proxy or information statements;
	●	we will be subject to only limited portions of the tender offer rules;
	●	our officers, directors, and more than ten (10%) percent shareholders are not required to file beneficial ownership reports about their holdings in our company;
	●	our officers, directors, and more than ten (10%) percent shareholders are not subject to the short-swing profit recovery provisions of the Exchange Act; and
	●	more than five percent (5%) holders of classes of your equity securities will not be required to report information about their ownership positions in the securities.

 

15

 

RISKS RELATED TO OUR COMMON STOCK.

 

Investors should not look to dividends as a source of income.

 

In the interest of reinvesting initial profits back into our business, we do not intend to pay cash dividends in the foreseeable future. Consequently, any economic return will initially be derived, if at all, from appreciation in the fair market value of our stock, and not as a result of dividend payments.

 

The trading price of our common stock on the OTCQB will fluctuate significantly and stockholders may have difficulty reselling their shares.

 

Our common stock commenced trading on the OTC Bulletin Board approximately June 7, 2012. As of the date of this Annual Report, our common stock trades on the OTCQB. There is a volatility associated with QB securities in general and the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock: (i) disappointing results from our exploration or development efforts; (ii) failure to meet our revenue or profit goals or operating budget; (iii) decline in demand for our common stock; (iv) downward revisions in securities analysts' estimates or changes in general market conditions; (v) technological innovations by competitors or in competing technologies; (vi) lack of funding generated for operations; (vii) investor perception of our industry or our prospects; (viii) general economic trends; and ix) commodity price fluctuation.

 

In addition, stock markets have experienced price and volume fluctuations and the market prices of securities have been highly volatile. These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common stock. As a result, investors may be unable to sell their shares at a fair price and you may lose all or part of your investment.

 

Additional issuance of equity securities may result in dilution to our existing stockholders.

 

Our Articles of Incorporation, as amended, authorize the issuance of 500,000,000 shares of common stock. The Board of Directors has the authority to issue additional shares of our capital stock to provide additional financing in the future, including issuances to Social Geek in accordance with contractual terms, and the issuance of any such shares may result in a reduction of the book value or market price of the then outstanding shares of our common stock. If we do issue any such additional shares, such issuance also will cause a reduction in the proportionate ownership and voting power of all other stockholders. As a result of such dilution, your proportionate ownership interest and voting power will be decreased accordingly. Further, any such issuance could result in a change of control.

 

Because we may be subject to the “penny stock” rules, the level of trading activity in our stock may be reduced - which may make it difficult for investors to sell their shares.

 

Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks, like shares of our common stock, generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on NASDAQ. 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 also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to persons other than established customers and “accredited investors” 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. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules, and investors in our common stock may find it difficult to sell their shares.

 

16

 

All of our directors and officers are outside the United States with the result that it may be difficult for investors to enforce within the United States any judgments obtained against us or any of our directors or officers.

 

All of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons' assets are located outside the United States. As a result, it may be difficult for investors to effect service of process on our directors or officers, or enforce within the United States or Mexico any judgments obtained against us or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently, you may be effectively prevented from pursuing remedies under U.S. federal securities laws against them. In addition, investors may not be able to commence an action in a Canadian court predicated upon the civil liability provisions of the securities laws of the United States.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2. PROPERTIES

 

Our Facilities

 

On November 1, 2013, the Company signed a one year lease to occupy office space in suite 916 of the Ford Building at 615 Griswold, Detroit, Michigan. The lease requires a $400 deposit and monthly payments of $400. We believe that our facilities are adequate for our needs and that additional suitable space will be available on acceptable terms as required.

 

ITEM 3. LEGAL PROCEEDINGS

 

We are not currently a party to any legal proceedings.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

17

 

PART II

 

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELAED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

MARKET INFORMATION

 

Our common stock is listed for quotation on the OTCQB under the symbol “CTLE.” Our shares commenced trading approximately June 7, 2012. The following table sets forth the high and low bid prices relating to our common stock on a quarterly basis for the periods indicated as quoted by the NASDAQ OTC:BB stock market. These quotations reflect inter-dealer prices without retail mark-up, mark-down, or commissions, and may not reflect actual transactions.

 

Quarter Ended		High Bid				Low Bid
June 30,2014		$	0.027			$	0.01
March 31, 2014		$	0.04			$	0.021
December 31, 2013		$	0.041			$	0.021
September 30, 2013		$	0.071			$	0.041
June 30,2013		$	0.55			$	0.09
March 31, 2013		$	0.68			$	0.51
December 31, 2013		$	1.38			$	0.62

  

HOLDERS

 

The approximate number of stockholders of record at June 30, 2014 was seven. The number of stockholders of record does not include beneficial owners of our common stock, whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries.

 

DIVIDEND POLICY

 

We have never declared or paid a cash dividend on our capital stock. We do not expect to pay cash dividends on our common stock in the foreseeable future. We currently intend to retain our earnings, if any, for use in our business. Any dividends declared in the future will be at the discretion of our Board of Directors.

 

18

 

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.

 

Equity Compensation Plan Information

 

Plan Category			Number of securities to be issued upon exercise of outstanding options, warrants and rights				Weighted- average exercise price of outstanding options, warrants and rights				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders				-0-				-				-0-
Equity compensation plans not approved by security holders				2,000,000				-				13,000,000
Total				2,000,000				-				13,000,000

 

The 2013 Equity Incentive Plan (“EIP”) is intended to attract, motivate, and retain employees of the Company, consultants who provide significant services to the Company, and members of our Board of Directors who are not employees. The EIP is designed to further our growth and financial success by aligning the interests of the participants, through the ownership of stock and through other incentives, with the interests of our stockholders.

 

Benefits under the 2013 EIP. As defined under the 2013 EIP, the Board may grant any one or a combination of Incentive Stock Options (within meaning of the Code) or Non-Qualified Stock Options.

 

Shares Available under the 2013 EIP. The aggregate number of shares of Common Stock that may be issued or transferred to grantees under the 2013 EIP shall not exceed 15,000,000 shares. If there is a stock split, stock dividend or other relevant change affecting our shares, appropriate adjustments will be made in the number of shares that may be issued or transferred in the future and in the number of shares and price of all outstanding Awards made before such event. If shares under an Award are not issued or transferred, those shares would again be available for inclusion in future Award grants.

 

Awards Under the 2013 EIP. The Board may grant options qualifying as incentive stock options under the Code and nonqualified stock options. The term of an option shall be fixed by the Board, but shall not exceed ten years. In the case of death of the holder of the option or upon the termination, removal or resignation of the option holder for any reason other than for cause within one year of the occurrence of a Change of Control (as that term is defined in the 2010 EIP), an option may be extended for up to 12 months depending on the circumstances. The option price shall not be less than the fair market value of the Common Stock on the date of grant. In the case of an award of Incentive Options to an employee possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent corporation or subsidiary corporation as those terms are defined in the Code, the option price shall not be less than 110% of the fair market value of the Common Stock on the date of grant and the option term shall not exceed five years from date of grant. Payment of the option price may be by cash or, with the consent of the Board, by tender of shares of Common Stock having an equivalent fair market value or delivery of shares of Common Stock for which the option is being exercised to a broker for sale on behalf of the option holder. With respect to Incentive Options, the aggregate fair market value of shares of Common Stock for which one or more options granted may for the first time become exercisable during any calendar year shall not exceed $100,000.

 

19

 

RECENT SALES OF UNREGISTERED SECURITIES

 

In September of 2013, we issued an aggregate of 101,000,000 shares of unregistered common stock to Dr. Castano pursuant to the Asset Purchase Agreement. These shares were returned to treasury. During fiscal year ended June 30, 2014 and to current date, we issued an aggregate 103,125,000 shares of our common stock as follows:

 

Conversion of Debt

 

On August 1, 2014, our Board of Directors authorized the settlement of debt in the amount of $65,883,59 by the issuance of 10,135,937 shares of common stock to Asus Global Holding Inc. (“Asus”). We had previously issued to Asus a convertible promissory note dated September 17, 2013, as amended, in the principal amount of $275,000.00 (the "Convertible Note"), which was issued to Asus evidencing those sums advanced by Asus to us during quarter ended September 30, 2013 for working capital purposes. The terms and provisions of Section 3.2 of the Convertible Note provide that the number of whole shares of common stock into which the Convertible Note may be voluntarily converted shall be determined by dividing the aggregate principal amount borrowed by that price equal to a 50% discount of the then trading price of our shares on the OTC Markets at the date of conversion and precludes Asus from any conversion resulting in Asus holding in excess of 9.99% equity interest of the total issued and outstanding shares of our common stock (collectively, the "Asus Amendments"). Subsequently, we received that certain conversion notice dated August 1, 2014 from Asus (the “Conversion Notice”), which provided for conversion of $65,883.59 into 10,135,937 shares of our common stock at a per share price of $0.0065. The Board of Directors determined that the average trading price of our shares of common stock for the prior five business days was $0.0130 per share resulting in a 50% discounted conversion rate of $0.0065 per share, which the Board of Directors approved and authorized (the "Conversion Term"). Therefore, effective August 1, 2014, the Board of Directors authorized the issuance of 10,135,937 shares of common stock at a per share price of $0.0065 to Asus.

 

On August 12, 2014, the Board of Directors authorized the further settlement of debt in the amount of $86,662.26 by the issuance of 10,135,937 shares of common stock to Najo International Corp. ("Najo") . We had previously issued to Globe Financial Corp. ("Globe") a convertible promissory note dated December 30, 2012 in the principal amount of $201,000. Globe entered into that certain assignmentof the convertible note dated August 11, 2014 with Najo. We received that certain conversion notice dated August 11, 2014 from Najo (the “Conversion Notice”), which provided for conversion of $86,662.26 into 10,135,937 shares of our common stock at a per share price of $0.00855. The Board of Directors determined that the average trading price of our shares of common stock for the prior five business days was $0.0171 per share resulting in a 50% discounted conversion rate of $0.00855 per share, which the Board of Directors approved and authorized (the "Conversion Term"). Therefore, effective August `12, 2014, the Board of Directors authorized the issuance of a further 10,135,937 shares of common stock at a per share price of $0.00855 to Najo.

 

On September 1, 2014, the Board of Directors authorized the further settlement of debt in the amount of $90,000.00 by the issuance of 7,659,574 shares of common stock to Setzy Group Inc. ("Setzy") . We had previously issued to Globe a convertible promissory note dated December 30, 2012 in the principal amount of $201,000. Globe entered into that certain assignmentof the convertible note dated August 11, 2014 with Setzy. We received that certain conversion notice dated August 19, 2014 from Setzy (the “Conversion Notice”), which provided for conversion of $90,000.00 into 7,659,574 shares of our common stock at a per share price of $0.01175. The Board of Directors determined that the average trading price of our shares of common stock for the prior five business days was $0.0235 per share resulting in a 50% discounted conversion rate of $0.01175 per share, which the Board of Directors approved and authorized (the "Conversion Term"). Therefore, effective September 1, 2014, the Board of Directors authorized the issuance of a further 7,659,574 shares of common stock at a per share price of $0.01175 to Setzy.

 

20

 

On September 1, 2014, the Board of Directors authorized the further settlement of debt in the amount of $65,883.59 by the issuance of 10,135,937 shares of common stock to Mex Investments Corporation ("Mex") . We had previously issued to Mex a convertible promissory note dated October 1, 2013 in the principal amount of $70,000.00. We received that certain conversion notice dated August 5, 2014 from Mex (the “Conversion Notice”), which provided for conversion of $65,883.59 into 10,135,937 shares of our common stock at a per share price of $0.0065. The Board of Directors determined that the average trading price of our shares of common stock for the prior five business days was $0.0130 per share resulting in a 50% discounted conversion rate of $0.0065 per share, which the Board of Directors approved and authorized (the "Conversion Term"). Therefore, effective September 1, 2014, the Board of Directors authorized the issuance of a further 10,135,937 shares of common stock at a per share price of $0.0065 to Mex.

 

The shares of common stock were issued to the above creditors in reliance on Regulation S promulgated under the United States Securities Act of 1933, as amended (the “Securities Act”). The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. The creditors acknowledged that the securities to be issued have not been registered under the Securities Act, that they understood the economic risk of an investment in the securities, and that they t had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities.

 

21

 

DB Metals Joint Venture Agreement

 

On June 27, 2014, our Board of Directors authorized the execution of the DB Metals Joint Venture Agreement with DB Metals for the manufacture, distribution and marketing of DB Metal's technology and products. Effective on July 30, 2014, the Board of Directors authorized the issuance of 100,000,000 shares of restricted common stock at a per share price of $0.001 to DM Metal's shareholders as follows: (i) 20,000,000 shares to Bernardo Camacho Chararria (who is our President/Chief Executive Officer, Treasurer/Chief Financial Officer and sole member of the Board of Directors); and (ii) 80,000,000 shares to Jose Armando Camargo Del Bianco. The shares of common stock were issued to the two non-United States residents in reliance on Regulation S promulgated under the United States Securities Act of 1933, as amended (the “Securities Act”). The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. Each individual acknowledged that the securities to be issued have not been registered under the Securities Act, that they understood the economic risk of an investment in the securities, and that they had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities.

 

PENNY STOCK REGULATION

 

Shares of our common stock will probably be subject to rules adopted the SEC that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in those securities is provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the SEC, which contains the following:

 

	●	a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;
	●	a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to violation to such duties or other requirements of securities’ laws;
	●	a brief, clear, narrative description of a dealer market, including “bid” and “ask” prices for penny stocks and the significance of the spread between the “bid” and “ask” price;
	●	a toll-free telephone number for inquiries on disciplinary actions;
	●	definitions of significant terms in the disclosure document or in the conduct of trading in penny stocks; and
	●	such other information and is in such form (including language, type, size and format), as the SEC shall require by rule or regulation.

 

Prior to effecting any transaction in penny stock, the broker-dealer also must provide the customer the following:

 

	●	the bid and offer quotations for the penny stock;
	●	the compensation of the broker-dealer and its salesperson in the transaction;
	●	the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and
	●	monthly account statements showing the market value of each penny stock held in the customer’s account.

 

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those 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 acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for a stock that becomes subject to the penny stock rules. Holders of shares of our common stock may have difficulty selling those shares because our common stock will probably be subject to the penny stock rules.

 

22

 

ITEM 6. SELECTED FINANCIAL DATA

 

Not applicable.

 

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

 

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements for the years ended June 30, 2014 and June 30, 2013, together with notes thereto as included in this Annual Report on Form 10-K. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Annual Report, particularly in the section entitled "Risk Factors." Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

 

We are a developmental stage company and have not generated any revenue to date. We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

 

RESULTS OF OPERATION

 

Fiscal Year Ended June 30, 2014 Compared to Fiscal Year Ended June 30, 2013

 

Our net loss for fiscal year ended June 30, 2014 was $47,769,955 compared to a net loss of $10,194,010 during fiscal year ended June 30, 2013, a substantial increase of $37,575,945. The majority of the loss is attributable to non-cash expenses of derivative interest expense which totals $47,226,014. These non-cash expenses are described in detail below. During fiscal years ended June 30, 2014 and June 30, 2013, we did not generate any revenue.

 

During fiscal year ended June 30, 2014, we incurred operating expenses of $545,421 compared to $713,308 incurred during fiscal year ended June 30, 2013, a decrease of $167,887. During fiscal year ended June 30, 2014, our operating expenses consisted of: (i) $166,277 (2013: $264,116) in consulting; (ii) $202,603 (2013: $222,010) in general and administrative; (iii) $140,496 in professional fees (2013: $46,833); (iv) $36,045 in travel (2013: $93,831); and (v) $-0- in wages (2013: $86,518). The decrease in operating expenses was primarily attributable to the decreases in consulting fees, travel and wages. General and administrative expenses also generally include corporate overhead, financial and administrative contracted services, marketing, and consulting costs.

 

We did not incurred any management fees to our officers and directors during fiscal year ended June 30, 2014 as compared to management fees of $204,092 incurred during fiscal year ended June 12, 2012. See "Item 11. Executive Compensation.”

 

During fiscal year ended June 30, 2014, we incurred other income (expense) in the form of: (i) interest expense associated with the derivative liability on our outstanding convertible notes payable of $47,226,014 (2013: $9,448,441) and (ii) $1,480 in interest income (2013: ($32,261) in loss on sale of subsidiary).

 

Therefore, our net loss and loss per share during fiscal year ended June 30, 2014 was $47,769,955 or $0.18 per share compared to a net loss and loss per share of $10,194,010 or $0.08 per share during fiscal year ended June 30, 2013. Net loss increased substantially during fiscal year ended June 30, 2014 as compared to June 30, 2013 as a result of the derivative interest expense attributable to the outstanding convertible notes payable. The weighted average number of shares outstanding was 267,251,667 and 124,103,386 for fiscal years ended June 30, 2014 and June 30, 2013.

 

23

 

LIQUIDITY AND CAPITAL RESOURCES

 

Fiscal Year Ended June 30, 2014

 

As of June 30, 2014, our current assets were $101,480 and our current liabilities were $58,065,445, which resulted in a working capital deficit of $57,963,965. As of June 30, 2014, current assets were comprised of $101,480 in cash. As of June 30, 2014, current liabilities were comprised of: (i) $160,204 in accounts payable; (ii) $1,230,950 in convertible note payable; (iii) $56,674,290 in derivative liability; and (iv) $1in cash overdraft.

 

As of June 30, 2014, our total assets were $101,480 comprised entirely of current assets. The increase in total assets during fiscal year ended June 30, 2014 from fiscal year ended June 30, 2013 was due to the increase in a loan receivable of $101,480.

 

As of June 30, 2014, our total liabilities were $58,065,445 comprised entirely of current liabilities. The increase in liabilities during fiscal year ended June 30, 2014 from fiscal year ended June 30, 2013 was primarily due to the recording of $56,674,290 (2013: $9,448,441) in derivative liability and $1,230,950 (2013: $766,000) in convertible note payable. The derivative liability was related to the outstanding convertible notes payable issued in the fiscal year end June 30, 2014.

 

Stockholders’ deficit increased from $10,194,010 for fiscal year ended June 30, 2013 to $57,963,965 for fiscal year ended June 30, 2014

 

Cash Flows from Operating Activities

 

We have not generated positive cash flows from operating activities. For fiscal year ended June 30, 2014, net cash flows used in operating activities was ($493,147) compared to ($690,781) for fiscal year ended June 30, 2013. Net cash flows used in operating activities consisted primarily of a net loss of $47,769,955 (2013: $10,194,010), which was adjusted by $47,225,849 (2012: $9,448,441) of derivative interest calculated from the outstanding convertible notes. Net cash flows used in operating activities was further changed by: (i) an increase of $101,480 (2013: $-0-); a decrease of $152,439 (2013: $154,027) in accounts payable and accrued expenses; and (iii) an increase of $-0- (2013: $200) in related party payables.

 

Cash Flows from Investing Activities

 

For fiscal years ended June 30, 2014 and June 30, 2013, net cash flows used in investing activities was $-0-.

 

Cash Flows from Financing Activities

 

We have financed our operations primarily from debt or the issuance of equity instruments. For the fiscal year ended June 30, 2014, net cash flows provided from financing activities was $464,951 compared to $718,977 for fiscal year ended June 30, 2013. Cash flows from financing activities for fiscal year ended June 30, 2014 consisted of $464,950 in proceeds from convertible notes payable and $1 from cash overdraft compared to $766,000 in proceeds from convertible notes payable, which was offset by $47,023 from repayment of notes payable for fiscal year ended June 30, 2013. .

 

PLAN OF OPERATION AND FUNDING

 

We expect that future working capital requirements will to be funded through a combination of our existing funds, debt and equity, and potential generation of revenues. Our working capital requirements are expected to increase in line with the growth of our business.

 

Our principal demands for liquidity are to increase research and development, capacity for developing products, inventory purchase, potential sales distribution, and general corporate purposes. We intend to meet our liquidity requirements, including capital expenditures related to the purchase of equipment and/or inventory, and the expansion of our business, through cash flow provided by funds raised through proceeds from the issuance of debt or equity.

 

24

 

Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements. We may finance expenses with further issuances of securities and debt issuances. Any additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all.

 

MATERIAL COMMITMENTS

 

Convertible Notes

 

On December 30, 2012, we entered into a convertible promissory note with Globe Financial Corp. for $201,000 bearing no interest and convertible at a 50% discount to market. The note is payable on demand. Since the conversion rate is discounted to market, we calculated a derivative liability of $14,641,464 at June 30, 2014 using the Black Scholes Model.

 

On December 31, 2012, we entered into a convertible promissory note with Globe Financial Corp. for $90,000 bearing no interest and convertible at a 50% discount to market. The note is payable on demand. Since the conversion rate is discounted to market, we calculated a derivative liability of $7,012,439 at June 30, 2014 using the Black Scholes Model.

 

On January 31, 2013 and March 31, 2013, we entered into a convertible promissory note with Asus Global Holdings, Inc for $100,000 and $375,000 respectively bearing no interest and convertible at a 50% discount to market. The note is payable on demand. We calculated a derivative liability of $31,948,986 at June 30, 2014 using the Black Scholes Model.

 

From July to September 2013, we entered into similar note agreements for $150,000 and we recorded a derivative liability of $1,558,887.

 

From October to December 31, 2013, we entered into similar agreements for $130,000 and we recorded a derivative liability of $751,514.

 

From January to March 31, 2014, we entered into similar agreements as above for $32,000 and $125,000. At June 30, 2014, we recorded a derivative liability of $136,469 for the former and $531,414 for the latter.

 

From April 2014 to June 2014, we executed two additional convertible notes with the same terms as conditions, 50% discount due in 1 year for a total of $27,950. We recorded a derivative expense of $93,117.

 

At June 30, 2014, the balance due against these convertible notes was $1,230,950 In connection with the issuance of these convertible notes, we recorded derivative liability of $56,674,290 at June 30, 2014.

 

Certain of these notes have been converted into shares of common stock subsequent to fiscal year ended June 30, 2014. See "Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities."

 

PURCHASE OF SIGNIFICANT EQUIPMENT

 

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

 

OFF-BALANCE SHEET ARRANGEMENTS

 

As of the date of this Annual Report, 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 of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

25

 

GOING CONCERN

 

The independent auditors' report accompanying our June 30, 2014 and June 30, 2013 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared assuming that we will continue as a going concern, which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business. We have suffered recurring losses from operations, have a working capital deficit and are currently in default of the payment terms of certain note agreements. These factors raise substantial doubt about our ability to continue as a going concern.

 

RECENTLY ISSUED ACCOUNTING STANDARDS

 

The following describes the recently issued accounting standards used in reporting our financial condition and results of operations. In some cases, accounting standards allow more than one alternative accounting method for reporting. Such is the case with accounting for oil and gas activities described below. In those cases, our reported results of operations would be different should we employ an alternative accounting method.

 

In July 2012, FASB issued ASU No. 2012-02, Intangibles – Goodwill and Other. This update presents an entity with the option to first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles – Goodwill and Other – General Intangibles Other than Goodwill. The more-likely-than-not threshold is defined as having a likelihood of more than fifty percent. ASU No. 2012-02 will be effective for annual and impairment tests performed for fiscal years beginning after 15 September 2012, with early adoption permitted. The Company does not expect the adoption of this update will have a material effect on its financial statements.

 

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

 

OFF-BALANCE SHEET ARRANGMENTS.

 

We have no off-balance sheet arrangements.

 

IITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

26

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

The financial statements required by Item 8 are presented in the following order:

 

TABLE OF CONTENTS

 

Report of Independent Registered Public Accounting Firm	F-1
Balance Sheets as June 30, 2014 and 2013	F-2
Statements of Operations for years ended June 30, 2014 and 2013	F-3
Statements of Stockholders Deficit as of June 30, 2014	F-4
Statements of Cash Flows for years ended June 30, 2014 and 2013	F-5
Notes to Financial Statements	F-6

 

27

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To The Board of Directors and shareholders of 

Nano Labs Corp

 

We have audited the accompanying  balance sheets of  Nano Labs Corp. (the “Company”) as of June 30, 2014 and 2013  and the related statements of operations, stockholders’ deficit and cash flows for the years then ended.

 

Management’s Responsibility for the Financial Statements

 

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United State of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

 

Auditor’s Responsibility

 

Our responsibility is to express an opinion on these consolidated financial statements based on my 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 audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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.

 

Opinion

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2014 and 2013  and the  results of its operations and its cash flows for the years ended June 30, 2014 and 2013, in conformity with accounting principles generally accepted in the United States of America.

 

Emphasis of Matter

 

The accompanying  financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 3 of the accompanying financial statements, the Company has a significant accumulated deficit and no cash to for payment of ongoing operating expenses, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to this matter are described in Note 3.The  financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Terry L. Johnson, CPA

Casselberry, Florida

October 27, 2014

 

F-1

 

NANO LABS CORP.

BALANCE SHEETS

 

		June 30, 2014				June 30, 2013
						(Restated)
ASSETS
CURRENT ASSETS
Cash		$	-			$	28,196
Loan Receivable			101,480				-
Total current assets			101,480				28,196
Total Assets		$	101,480			$	28,196
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable		$	160,204			$	7,765
Cash overdraft			1				-
Notes payable			-				-
Convertible notes payable			1,230,950				766,000
Derivative Liability			56,674,290				9,448,441
Accrued interest payable			-				-
			58,065,445				10,222,206
Total current liabilities			58,065,445				10,222,206
STOCKHOLDERS' DEFICIT
Preferred stock: $0.001 par value; 10,000,000 shares authorized;
none issued or outstanding at June 30, 2014 and 2013, respectively.			-				-
Common stock: $0.001 par value; 500,000,000 shares authorized;
103,125,000 shares issued respectively
at June 30, 2014 and June 30, 2013 respectively			103,125				103,125
Common stock issuable			-				101,000
Additional paid-in capital			482,356				381,356
Accumulated deficit			(58,549,446	)			(10,779,491	)
Total stockholders' deficit			(57,963,965	)			(10,194,010	)
Total liabilities and stockholders' deficit		$	101,480			$	28,196

 

The accompanying notes are an integral part of these financial statements.

 

F-2

 

NANO LABS CORP.

STATEMENTS OF OPERATIONS

		For the Years Ended June 30,
		2014				2013
						(Restated)
Sales		$	-			$	-
Cost of goods sold			-				-
Gross Margin			-				-
Operating Expenses
Consulting			166,277				264,116
General and administrative			202,603				222,010
Professional Fees			140,496				46,833
Travel			36,045				93,831
Wages			-				86,518
Total operating expenses			545,421				713,308
Loss from Operations			(545,421	)			(713,308	)
Other income (Expense)
Interest expense- derivative			(47,226,014	)			(9,448,441	)
Interest Income/Loss on Subsidiary			1,480				(32,261	)
Other (income) expenses			(47,224,534	)			(9,480,702	)
Loss before Income Taxes			(47,769,955	)			(10,194,010	)
Provision for income tax			-				-
Net Loss			(47,769,955	)			(10,194,010	)
Net loss per common share-basic		$	(0.46	)		$	(0.10	)
Weighted average common shares outstanding			103,125,000				107,081,164
Net loss per commoin share basic and diluted		$	(0.18	)		$	(0.08	)
Weighted average common shares outstanding-basic and diluted			267,251,667				124,103,386

  

The accompanying notes are an integral part of these financial statements.

 

F-3

 

NANO LABS CORP.

STATEMENTS OF STOCKHOLDERS' DEFICIT

 

																		Common				Additional				(restated)				Total
		Preferred Stock								Common Stock								Stock				Paid-In				Accumulated				Stockholders'
		Shares				Amount				Shares				Amount				Issuable				Capital				Deficit				Deficit
Balance June 30, 2012			-			$	-				179,125,000			$	179,125			$	-			$	197,341			$	(585,481	)		$	(209,015	)
Debt Frogiveness			-				-				-				-				-				209,015				-				209,015
Shares issuable asset purchase agreement			-				-				-				-				101,000				(101,000	)			-				-
Share repurchases from related party			-				-				(76,000,000	)			(76,000	)			-				76,000				-				-
Net loss			-				-				-				-				-				-				(10,194,010	)			(10,194,010	)
Balance June 30, 2013			-				-				103,125,000				103,125				101,000				381,356				(10,779,491	)			(10,194,010	)
Shares issed for purchase agreement			-				-				101,000,000				101,000				(101,000	)			-				-				-
Shares recinded			-				-				(101,000,000	)			(101,000	)			-				101,000				-				-
Net loss			-				-				-				-				-				-				(47,769,955	)			(47,769,955	)
Balance June 30, 2014			-			$	-				103,125,000			$	103,125			$	-			$	482,356			$	(58,549,446	)		$	(57,963,965	)

 

The accompanying notes are an integral part of these financial statements.

 

F-4

 

NANO LABS CORP.

STATEMENTS OF CASH FLOWS

		Years Ended June 30,
		2014				2013
						(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(47,769,955	)		$	(10,194,010	)
Adjustments to reconcile net loss to net cash
used by operating activities:
Derivative interest			47,225,849				9,448,441
Debt forgiveness			-				209,015
Changes in operating assets and liabilities:
(Increase) in Notes Receivable			(101,480	)			-
Related party payables			-				(200	)
Accounts payable and accrued expenses			152,439				(154,027	)
NET CASH USED IN OPERATING ACTIVITIES			(493,147	)			(690,781	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable/Cash overdraft			1				(47,023	)
Proceed from convertible notes payable			464,950				766,000
NET CASH PROVIDED BY FINANCING ACTIVITIES			464,951				718,977
NET CHANGE IN CASH			(28,196	)			28,196
Cash at beginning of the period			28,196				-
Cash at end of the period		$	-			$	28,196
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Interest paid		$	165			$	-
Income tax paid		$	-			$	-

 

The accompanying notes are an integral part of these financial statements. 

 

F-5

 

NANO LABS CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2014

 

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Nano Labs Corp. (the “Company”), formerly Colorado Ceramic Tile, Inc., was incorporated in the State of Colorado on March 27, 1995. The Company through the end of March 2012 sold and installed stone and tile. On March 28, 2012, the Company disposed of its tile business by forming a subsidiary corporation called CCT, Inc., moving the related assets and transferrable liabilities into CCT, Inc., then selling CCT, Inc. to a former officer for a nominal sum.

 

Respect American Glass (“RAG”) was incorporated on June 1, 2012 under the laws of the state of Florida. On October 4, 2012, the Company acquired all the outstanding shares of RAG for $100 through a mutual stock purchase agreement. In the rescission agreement with Respect Innovations, Inc., the Company agreed to sell Respect American Glass (“RAG), a wholly owned subsidiary of the Company, to an officer of Respect Innovations, Inc.

 

The Company currently intends to acquire for its own use or licensing to others coatings and laminates made from microscopic particles known as “nanotechnology.”

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

Use of estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Such estimates include management’s assessments of the carrying value of certain assets, useful lives of assets, and related depreciation and amortization methods applied.

 

Cash equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. At June 30, 2014 and 2013 the Company had no cash equivalents.

 

Fair value of financial instruments

 

The Company adopted the provisions of FASB ASC 820 (the “Fair Value Topic”) which defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements.

 

The Fair Value Topic defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. It also establishes a fair value hierarchy, which prioritizes the valuation inputs into three broad levels.

 

F-6

 

The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

 

A) Market approach—Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources;

 

B) Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and

 

C) Income approach—Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques, and option-pricing models). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate.

 

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. An active market for an asset or liability is a market in which transactions for the asset or liability occur with significant frequency and volume to provide pricing information on an ongoing basis.

 

Level 2: Observable inputs other than Level 1 inputs. Example of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

 

Level 3: Unobservable inputs based on the Company’s assessment of the assumptions that are market participants would use in pricing the asset or liability.

 

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses, accounts payable, accrued expenses, and deferred revenue approximate their fair value because of the short maturity of those instruments. The Company’s note payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at June 30, 2014 and 2013.

 

The Company had no assets but had liabilities measured at fair value on a recurring basis for the period ended June 30, 2014 and June 30, 2013, respectively, using the black schools module in measuring convertible debt. This calculation resulted in a derivative liability of $56,674,290 which is based on a discount ot market of 50%, interest rate of 20% and a volativity of 652.32%.

 

Property and Equipment

 

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method over the assets estimated useful life of three (3) years for equipment, (5) years for automobile, and (7) years for furniture and fixtures. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.

 

Impairment of long-lived assets

 

The Company follows paragraph 360-10-05-4 of the FASB Accounting Standards Codification for its long-lived assets. The Company’s long-lived assets, such as intellectual property, are required to be reviewed for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

 

F-7

 

The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.

 

The Company determined that there were no impairments of long-lived assets as of June 30, 2014 and June 30, 2013.

 

Commitments and contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

 

Revenue recognition

 

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. In addition, the Company records allowances for accounts receivable that are estimated to not be collected.

 

Income taxes

 

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty in income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its assets and/or liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

 

F-8

 

Stock-Based Compensation

 

In December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation – Stock Compensation. Under FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. The Company applies this statement prospectively.

 

Equity instruments (“instruments”) issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB Accounting Standards Codification No. 718. FASB Accounting Standards Codification No. 505, Equity Based Payments to Non-Employees defines the measurement date and recognition period for such instruments. In general, the measurement date is when either a (a) performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the FASB Accounting Standards Codification.

 

Net income (loss) per share

 

The Company computes basic and diluted earnings per share amounts pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first day of the year for any potentially diluted debt or equity.

 

There were 164,126,667 potentially dilutive shares outstanding as of June 30, 2014 which were derived from the outstanding convertible promissory notes. There were 17,022,222 potentially dilutive shares outstanding as of June 30, 2013.

 

Subsequent events

 

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued.

 

Recently issued accounting pronouncements

 

In July 2012, FASB issued ASU No. 2012-02, Intangibles – Goodwill and Other. This update presents an entity with the option to first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles – Goodwill and Other – General Intangibles Other than Goodwill. The more-likely-than-not threshold is defined as having a likelihood of more than fifty percent. ASU No. 2012-02 will be effective for annual and impairment tests performed for fiscal years beginning after 15 September 2012, with early adoption permitted. The Company does not expect the adoption of this update will have a material effect on its financial statements.

 

Company management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

 

F-9

 

NOTE 3 – GOING CONCERN

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

 

As of June 30, 2014, the Company had an accumulated deficit of $57,963,965, which included a net loss of $47,769,955 reported for the year ended June 30, 2014. Also, during the year the Company used net cash of $493,147 for operating activities. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

While the Company is attempting to commence operations and generate revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.

 

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

NOTE 4 – ASSET PURCHASE AGREEMENT

 

On October 10, 2012, the Company executed an asset purchase agreement with Dr. Victor Castano, a related party, whereby the Compan issued on September 18, 2013 101,000,000 common shares for the assignment and all rights to Dr. Castano’s patent pending nanotechnology.

 

The Company valued the 101,000,000 shares at par value ($0.001), which resulted in $101,000 of consideration paid for the asset. This deal was recinded in March 2014 the shares returned and the resulting transaction cancelled.

 

NOTE 5 – NOTE RECEIVABLE

 

The Company has loaned an entity $100,000 with interest at 5% in March 2014. Repayment is due within one year.

 

NOTE 6 – COMMITMENTS & CONTIGENCIES

 

Office Lease

 

On November 1, 2013, the Company signed a one year lease to occupy office space in suite 916 of the Ford Building at 615 Griswold, Detroit, Michigan. The lease requires a $400 deposit and monthly payments of $400.

 

Minimum future rental payments under the agreement are as follows:

 

2014- $1,600

 

Consulting Agreement

 

There are no consulting or employment agreements in force.

 

F-10

 

NOTE 7 – CONVERTIBLE NOTES PAYABLE

 

On December 30, 2012, the Company entered into a convertible promissory note with Globe Financial Corp. for $201,000 bearing no interest and convertible at a 50% discount to market. The note is payable on demand. Since the conversion rate is discounted to market, the Company calculated a derivative liability of $14,641,464 at June 30, 2014 using the Black Scholes Model.

 

On December 31, 2012, the Company entered into a convertible promissory note with Globe Financial Corp. for $90,000 bearing no interest and convertible at a 50% discount to market. The note is payable on demand. Since the conversion rate is discounted to market, the Company calculated a derivative liability of $7,012,439 at June 30, 2014 using the Black Scholes Model.

 

On January 31, 2013 and March 31, 2013 the Company entered into a convertible promissory note with Asus Global Holdings, Inc for $100,000 and $375,000 respectively bearing no interest and convertible at a 50% discount to market. The note is payable on demand. The Company calculated a derivative liability of $31,948,986 at June 30, 2014 using the Black Scholes Model.

 

From July to September 2013 the Company entered into similar note agreements for $150,000 and the company has recorded a derivative liability of $1,558,887.

 

From October to December 31, 2013 the Company entered into similar agreements for $130,000 and the company has recorded a derivative liability of $751,514.

 

From January to March 31, 2014 the Company entered into similar agreements as above for $32,000 and $125,000. The Company at June 30, 2014 recorded a derivative liability of $136,469 for the former and $531,414 for the latter.

 

From April 2014 to June 2014 the Company executed two additional convertible notes with the same terms as conditions, 50% discount due in 1 year for a total of $27,950. The Company recorded a derivative expense of $93,117.

 

At June 30, 2014, the balance due against these convertible notes was $1,230,950 In connection with the issuance of these convertible notes the Company recorded derivative liability of $56,674,290 at June 30, 2014.

 

NOTE 8 – STOCKHOLDERS’ EQUITY

 

Common and preferred shares authorized

 

The Company is authorized 500,000,000 shares of common stock with $0.001 par value and 10,000,000 shares of preferred stock with $0.001 par value.

 

Common shares issued

 

Pursuant to the asset purchase agreement with Dr. Castano, a related party, the Company issued him 101,000,000 common shares at par value ($0.001) during the quarter ended September 30, 2013. This transaction was cancelled and the shares cancelled in March of 2014.

 

F-11

 

NOTE 9 – STOCK OPTIONS

 

1.

On October 1, 2013 the Company board of directors approved a board resolution authorizing the Company to issue a total of 15,000,000 stock options; 2,000,000 of these options were issued to four consultants for services to the Company. The options begin vesting on October 1, 2013 and terminate October 1, 2015. The stock options have an option price of .40

 

NOTE 10 – INCOME TAX

 

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Net deferred tax assets consist of the following components as of June 30, 2014 and 2013:

 

		June 30,
		2014				2013
Deferred tax asset - non-current
NOL carryover		$	399,748			$	231,126
Less valuation allowance			(399,748	)			(231,126	)
Deferred tax assets, net of valuation allowance		$	-			$	-

 

F-12

 

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the period ended June 30, 2014 and 2013 due to the following:

 

		June 30,
		2014				2013
Book income		$	(47,769,955	)		$	(10,194,010	)
Other nondeductible expenses			47,226,014				9,448,441
Valuation allowance			543,941				745,569

 

At June 30, 2014, the Company had net operating loss carry forwards of approximately $1,289,500 that may be offset against future taxable income from the year 2014 to 2034. No tax benefit has been reported in the June 30, 2014 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

 

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal Income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.

 

NOTE 11 – RESTATEMENT OF FINANCIAL STATEMENTS

 

The Company has restated its Balance Sheet as of June 30, 2013, its Statement of Operations for the year ended June 30, 2013, its Statement of Cash Flows for the year ended June 30, 2013, and it’s Statements of Stockholders’ Equity to account for an additional $100,000 of convertible debt from Asus Global Holdings Inc. The funds were wired directly to an officer of the Company and did not pass through the Company’s bank account. The Company recalculated the derivative liability related to the additional convertible debt outstanding. The terms of the additional convertible debt are the same as other convertible debt from Asus Global Holdings.

 

The following are previously recorded and restated balances as of June 30, 2013 and for the year ended June 30, 2013.

 

F-13

 

NANO LABS CORP.

BALANCE SHEETS

 

		June 30, 2013
		Originally
		Reported				Restated				Difference
ASSETS
CURRENT ASSETS
Cash		$	28,196			$	28,196				-
Total current assets			28,196			$	28,196				-
Total Assets		$	28,196			$	28,196				-
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable		$	7,765			$	7,765				-
Related party payables			-				-				-
Notes payable			-				-				-
Convertible notes payable			666,000				766,000				(100,000	)
Derivative Liability			8,223,786				9,448,441				(1,224,655	)
Accrued interest payable			-				-				-
			8,897,551				10,222,206				(1,324,655	)
Total current liabilities			8,897,551				10,222,206				(1,324,655	)
STOCKHOLDERS' DEFICIT
Preferred stock: $0.001 par value; 10,000,000 shares authorized;
none issued or outstanding at June 30, 2013 and 2012, respectively.			-				-				-
Common stock: $0.001 par value; 500,000,000 shares authorized;
103,125,000 and 179,125,000 shares issued and outstanding
at June 30, 2013 and 2012, respectively.			103,125				103,125				-
Common stock issuable			101,000				101,000				-
Additional paid-in capital			381,356				381,356				-
Accumulated deficit			(9,454,836	)			(10,779,491	)			1,324,655
Total stockholders' deficit			(8,869,355	)			(10,194,010	)			1,324,655
Total liabilities and stockholders' deficit		$	28,196			$	28,196				-

 

The accompanying notes are an integral part of these financial statements.

 

F-14

 

NANO LABS CORP.

STATEMENTS OF OPERATIONS

 

		For the year ended June 30, 2013
		Originally
		Reported				Restated				Difference
Sales		$	-			$	-				-
Cost of goods sold			-				-				-
Gross Margin			-				-				-
Operating Expenses
Consulting			264,116				264,116				-
General and administrative			122,010				222,010				100,000
Professional Fees			46,833				46,833				-
Travel			93,831				93,831				-
Wages			86,518				86,518				-
Total operating expenses			613,308				713,308				100,000
Loss from Operations			(613,308	)			(713,308	)			(100,000	)
Other (Income) Expenses
Interest expense- derivative			(8,223,786	)			(9,448,441	)			1,224,655
Loss on sale to subsidiary			(32,261	)			(32,261	)			-
Other (income) expenses			(8,256,047	)			(9,480,702	)			1,224,655
Loss before Income Taxes			(8,869,355	)			(10,194,010	)			(1,324,655	)
Provision for income tax			-				-				-
Net Loss from continuing operations		$	(8,869,355	)		$	(10,194,010	)			(1,324,655	)
Discontinued Operations:
Income from discontinued operations			-				-				-
Net Loss		$	(8,869,355	)		$	(10,194,010	)			(1,324,655	)
Net income (loss) per common share- basic and diluted		$	(0.08	)		$	(0.10	)			0.02
Weighted average common shares outstanding- basic and diluted			107,081,164				107,081,164				-

 

 The accompanying notes are an integral part of these financial statements.

 

F-15

 

NANO LABS CORP.

STATEMENTS OF CASH FLOWS

 

		For the Year Ended June 30, 2013
		Originally
		Reported				Restated				Difference
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(8,869,355	)		$	(10,194,010	)			1,324,655
Adjustments to reconcile net loss to net cash
used by operating activities:
Derivative interest			8,223,786				9,448,441				(1,224,655	)
Debt forgiveness			209,015				209,015				-
Changes in operating assets and liabilities:
Discontinued operations			-				-				-
Related party payables			(200	)			(200	)			-
Accounts payable and accrued expenses			(154,027	)			(154,027	)			-
NET CASH USED IN OPERATING ACTIVITIES			(590,781	)			(690,781	)			100,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable			(47,023	)			(47,023	)			-
Proceed from convertible notes payable			666,000				766,000				(100,000	)
NET CASH PROVIDED BY FINANCING ACTIVITIES			618,977				718,977				(100,000	)
NET CHANGE IN CASH			28,196				28,196				-
Cash at beginning of the period			-				-				-
Cash at end of the period		$	28,196			$	28,196				-
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Interest paid		$	-			$	-				-
Income tax paid		$	-			$	-				-

 

The accompanying notes are an integral part of these financial statements.

 

F-16

 

NOTE 12 – SUBSEQUENT EVENTS

 

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that other than listed below, no other material subsequent events exist.

 

1. From July 1, 2014 to September 30, 2014 the Company issued 138,067,385 shares of stock, 100,000,000 of which was for a joint venture related to metal development. The joint venture agreement was effective I August of 2014.

 

F-17

  

ITEM 9. CHANGES AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

No report necessary.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of disclosure controls and procedures.

 

We maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Based upon their evaluation of those controls and procedures performed as of the end of the period covered by this report, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective.

 

Management’s annual report on internal control over financial reporting.

 

Our chief executive officer and our chief financial officer are responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected 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 generally accepted accounting principles and 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 generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and our 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 the financial statements.

 

Because of its inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Our chief executive officer and our chief financial officer assessed the effectiveness of our internal control over financial reporting as of June 30, 2014. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control — Integrated Framework.

 

28

 

Based on our assessment, our chief executive officer and our chief financial officer believe that, as of June 30, 2014, our internal control over financial reporting is not effective based on those criteria, due to the following:

 

	●	Deficiencies in segregation of duties. Lack of proper segregation of functions, duties and responsibilities with respect to our cash and control over the disbursements related thereto due to our very limited staff, including our accounting personnel.
	●	Deficiencies in the staffing of our financial accounting department. The number of qualified accounting personnel with experience in public company SEC reporting and GAAP is limited. This weakness does not enable us to maintain adequate controls over our financial accounting and reporting processes regarding the accounting for non-routine and non-systematic transactions. There is a risk that a material misstatement of the financial statements could be caused, or at least not be detected in a timely manner, by this shortage of qualified resources.

 

In light of this conclusion and as part of the preparation of this report, we have applied compensating procedures and processes as necessary to ensure the reliability of our financial reporting. Accordingly, management believes, based on its knowledge, that (1) this report does not contain any untrue statement of a material fact or omit to state a material face necessary to make the statements made not misleading with respect to the period covered by this report, and (2) the financial statements, and other financial information included in this report, fairly present in all material respects our financial condition, results of operations and cash flows for the years and periods then ended.

 

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

 

Changes in internal control over financial reporting.

 

There were no significant changes in our internal control over financial reporting during the fourth quarter of the year ended June 30, 2014, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

 

None.

 

29

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Executive Officers and Directors

 

Our directors and principal executive officers are as specified on the following table:

 

Name and Address		Age		Position(s)
Bernardo Camacho Chavarria		36		Chief Executive and Financial and Accounting Officer and a Director
Calle 4, #37
Fraccionamiento Industrial Alco Blanco
Municipality of Naucalpan
Estado de Mexico, Mexico MCP 53520

  

Bernardo Camacho Chavarria. Mr. Chavarria has been our chief executive officer and chief financial officer and accounting officer and a member of our board of directors since March 28, 2012. During the past ten years, Mr. Chavarria has been involved in financing and providing consulting services to numerous development stage technology companies. From approximately May 2005 to current date, Mr. Chavarria has been a partner in Avanza Capital S de RL de CV, which is an investment banking firm specializing in high tech businesses, real estate developments and mining companies. Mr. Chavarria has also been responsible for merger and acquisition consultations with a strong focus on high tech ventures. From approximately January 2005 through July 2005, Mr. Chavarria was a financial consultant for Valuación de Proyectos Inmobiliarios, which is a company with approximately 126 distress assets titles. Mr. Chavarria was responsible for financial modeling, risk management and effective valuation of business return. From approximately October 2002 through May 2003, Mr. Chavarria was an associate consultant at Sistemas Digitales Zergo SA de CV, which is a business consulting firm for investment projects, project development and capital raisingible. Sistemas Digitales Zergo SA de CV is a certified agent of RAMAR Corp., which is a factoring firm for Mexican companies that export to USA and Canada., and is also a commercial partner with Avantel and BM in business intelligence and business software solutions. From approximately August 2001 through January 2002, Mr. Chavarria was a sales manager for Unión de Crédito de Comercio Automotriz, where he was responsible for the recruiting and training process of new account executives at the company. During March 2002, Mr. Chavarria was a financial consultant for American Traders, which was a financial advisory and investment strategy management firm involved with the spot currency market. During July 2003, Mr. Chavarria was the chief operating officer for Telemobil de México SA de CV, which is a technology integrator business where he was responsible for the commercial and operative strategy and providing communication solutions over IP network, (Internet Telephone Provider), and tracking services for remote assets management (Satellite tracking, M2M solutions, etc). The nature of his responsibilities discussed above, including the underlying requisite managerial, financing, administrative and sales skills, establish Mr. Chavarria's qualification as a member of our Board of Directors

 

Mr. Chavarria is fluent in English and basic French and Italian. He is also a member of the board of directors of three high tech start up companies. Mr. Chavarria has also been a commentator on economic topics invited by “Club de Periodistas,” which is a radio program from Radio Chapultepec.

 

30

 

CORPORATE GOVERNANCE

 

Committees

 

Our board of directors does not currently have a compensation committee or nominating and corporate governance committee because, due to the board of director’s composition and our relatively limited operations, the board of directors believes it is able to effectively manage the issues normally considered by such committees. Our board of directors may undertake a review of the need for these committees in the future.

 

Audit Committee and Financial Expert

 

Presently, the board of directors acts as the audit committee. The board of directors does not have an audit committee financial expert. The board of directors has not yet recruited an audit committee financial expert to join the board of directors because we have only recently commenced a significant level of financial operations.

 

Code of Ethics

 

We do not currently have a Code of Ethics that applies to all employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We plan to adopt a Code of Ethics.

 

Director Independence

 

Our director is not deemed independent. Our director also holds positions as executive officer.

  

ITEM 11. EXECUTIVE COMPENSATION

 

SUMMARY COMPENSATION TABLE

 

The table set forth below summarizes the annual and long-term compensation for services in all capacities to us payable to our principal executive officers during the years ended June 30, 2014 and June 30, 2013.

 

Summary Compensation Table

 

Name and Principal Position		Year			Salary ($)				Bonus ($)				Stock Awards ($)				Option Awards ($)				Non-Equity Incentive Plan Compensation ($)				Nonqualified Deferred Compensation Earnings ($)				All Other Compensation ($)				Total ($)
Bernardo Camacho Chavarria, current Chief Executive Officer and Chief Financial Officer/Accounting		2013				71,518				-				-				-				-				-				-				71,518
Officer and a director		2014				-	(3)			-				-				-				-				-				-				-
Dr. Victor Castano, Chief Technological and		2013				132,574				-				-				-				-				-				-				132,574	(1)
Scientific Officer and a director (2)		2014				-0-				-				-				-				-				-				-				-0-

______________  

(1)	On October 12, 2013, in accordance with the terms and provisions of the Asset Purchase Agreement with Dr. Castano, an aggregate 101,000,000 shares of common stock were issued to Dr. Castano at a per share price of $0.001 for aggregate consideration of $101,000. These shares were cancelled and returned to treasury.
(2)	Victor Castano was appointed Chief Technological and Scientific Officer and a Director in October of 2012 and resigned March 3, 2014.
(3)	On June 27, 2014, in accordance with terms and provisions of the DB Metals Joint Venture Agreement, an aggregate 20,000,000 shares of common stock were issued to Mr. Chavarria at a per share price of $0.001 for aggregate consideration of $20,000.

 

31

  

OUTSTANDING EQUITY AWARDS

 

We do not have an equity compensation plan.

 

Option Awards

Stock Awards

Name

Number of Securities Underlying Unexercised Options # Exercisable

# Un-exercisable

Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Options

Option Exercise Price

Option Expiration Date

Number of Shares or Units of Stock Not Vested

Market Value of Shares or Units Not Vested

Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights Not Vested

Value of Unearned Shares, Units or Other Rights Not Vested

Bernardo Carracho Chavarria, current Chief Executive Officer/Chief Financial Officer/Accounting Officer and Director

-

-

-

-

-

-

-

-

-

Dr. Victor Castano, Prior Chief Technological and Scientific Officer and a director

-

-

-

-

-

-

-

-

-

  

STOCK OPTIONS.

 

No grants of stock options or stock appreciation rights were made during the fiscal year ended June 30, 2014.

 

LONG TERM INCENTIVE PLANS.

 

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers.

 

32

 

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

 

The following table sets forth certain information regarding the beneficial ownership of our common stock as of the date of this Annual Report by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, each of our directors and named executive officers, and all of our directors and executive officers as a group.

Title of Class				Name and Address of Beneficial Owner Officers and Directors	Amount and Nature of Beneficial Owner	Percent of Class (1)
Common Stock				Bernardo Camacho Cavarria   Avenida Jorge Jimenez Cantu lote 4 Business Center, Colonia Rancho Viejo, Atizapan de Zaragoza, Estado de México, Mexico. CP 52930	20,000,000 shares	8.29%
Common Stock				All directors and named executive officers as a group (1 person)	20,000,000 shares	8.29%
5% or Greater Beneficial Holders
Common Stock				Jose Armando Camargo Del Bianco   Avenida Jorge Jimenez Cantu lote 4 Business Center, Colonia Rancho Viejo, Atizapan de Zaragoza, Estado de México, Mexico. CP 52930	80,000,000	33.17%
Common Stock				Brant Investments Limited   155 Wellington Street West Second Floor Securities Cage Toronto,Ontario Canada M5V 3l3	23,593,750	9.78%

____________  

(1)	Percentage of beneficial ownership of our common stock is based on 241,192,385 shares of common stock outstanding as of the date of the filing.

 

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. In accordance with Securities and Exchange Commission rules, shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the table are deemed beneficially owned by the optionees. Subject to community property laws, where applicable, the persons or entities named in the table above have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them.

 

Changes in Control

 

Our management is not aware of any arrangements which may result in “changes in control” as that term is defined by the provisions of Item 403(c) of Regulation S-K.

 

33

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

RELATED PARTY TRANSACTIONS

 

Canceled Shares

 

In June 2013, we canceled 11,400,000 shares to previously issued to Bernardo Chavarria, our chief executive officer. In June 2013, we canceled 64,600,000 shares to Jose Manuel Flores Hernandez, a founding officer of the Company.

 

In March 2014, we canceled 101,000,000 shares previously issued to Dr. Victor Castano.

 

Joint Venture Agreement

 

In June 2014, we issued 20,000,000 shares to Bernardo Chavarria pursuant to the terms and provisions of the Joint Venture Agreement. Mr. Chavarria is our sole executive officer and director.

 

There have been no other related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-K.

 

ITEM 14. PRINCI[PAL ACCOUNTING FEES AND SERVICES

 

Audit Fees

 

The aggregate fees billed for the fiscal years ended June 30, 2014 and 2013 for professional services rendered by the principal accountant for the audit of our annual financial statements and quarterly review of the financial statements included in our Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were $19,000 and $15,000, respectively.

 

Audit-Related Fees

 

For the fiscal years ended June 30, 2014 and 2013, there were $-0- in fees billed for services reasonably related to the performance of the audit or review of the financial statements outside of those fees disclosed above under “Audit Fees.”

 

Tax Fees

 

For the fiscal years ended June 30, 2014 and 2013, there were no fees billed for services for tax compliance, tax advice, and tax planning work by our principal accountants.

 

All Other Fees

 

None.

 

Pre-Approval Policies and Procedures

 

Prior to engaging our accountants to perform a particular service, our Board of Directors obtains an estimate for the service to be performed. All of the services described above were approved by the Board of Directors in accordance with its procedures.

 

34

 

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

(a)	Financial Statements.

 

Included in Item 8

 

(b)	Exhibits required by Item 601.

 

Exhibit No.		Description
3.1		Articles of Incorporation, as amended (1)
3.3		Bylaws (1)
10.1		Convertible Promissory Note dated March 31, 2013 between Nano Labs Corp. and Asus Global Holding Inc. (2)
10.2		Convertible Promissory Note dated September 17, 2013 between Nano Labs Corp. and Asus Global Holding Inc. (2)
10.3		Convertible Promissory Note dated December 30, 2012 between Nano Labs Corp. and Globe Financial Corp. (2)
10.4		Convertible Promissory Note dated December 31, 2012 between Nano Labs Corp. and Globe Financial Corp. (2)
10.5		Collaboration Agreement dated September 25, 2013 between Nano Labs Corp. and Soluciones Nanotechnolgicas S.L. (2)
10.6		Mutual Confidentiality Agreement dated April 7, 2013 between Saint-Gobain Ceramics & Plastics Inc. and Nano Labs Corp. (3)
10.7		Confidential Disclosure Agreement dated May 6, 2013 between Dentsply International Inc. and Nano Labs Corp. (4)
10.8		Asset Purchase Agreement dated October 10, 2012 between Dr. Victor Castano and Nano Labs Corp.
10.9		Non-Disclosure & Confidentiality Agreement datede July 19, 2013 between Centro De Innovacion E Investigacion Se Sistemas Para La Edificacion Y Energias Renovables, S.A.P.J. de C.V. and Nano Labs Corp. (6)
10.10		Services Agreement dated January 1, 2013 between Eng. Felipe Estevan Samario Nino and Nano Labs Corp. (6)
10.11		Services Agreement dated October 10, 2012 between Dr. Victor Castano and Nano Labs Corp. (6)
10.12		Services Agreement dated May 1, 2013 between Dr. Arnulfo Rosas-Juarez and Nano Labs Corp. (6)
10.13		Universal Agreement dated December 13, 2012 between Dr.Victor Castano and Nano Labs Corp. *
16.1		Letter from KBL LLP dated May 24, 2013 incorporated by reference to Exhibit 16.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 28, 2013.
31.1		Certification of Principal Executive Officer Required By Rule 13a-14(A) of the Securities Exchange Act of 1934, As Amended, As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002*
31.2		Certification of Principal Financial Officer Required By Rule 13a-14(A) of the Securities Exchange Act of 1934, As Amended, As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002*
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*
101.INS		XBRL Instance Document**
101.SCH		XBRL Taxonomy Schema**
101.CAL		XBRL Taxonomy Calculation Linkbase**
101.DEF		XBRL Taxonomy Definition Linkbase**
101.LAB		XBRL Taxonomy Label Linkbase**
101.PRE		XBRL Taxonomy Presentation Linkbase**

_________________  

*	Filed herewith.
(1)	Incorporated by reference to the same exhibit filed with the Company’s registration statement on Form S-1 with the Securities and Exchange Commission on January 12, 2011.
(2)	Incorporated by reference to the exhibit filed with the Company's Current Report on Form 8-K with the Securities and Exchange Commission on October 10, 2013.
(3)	Incorporated by reference to the exhibit filed with the Company's Current Report on Form 8-K with the Securities and Exchange Commission on May 23, 2013.
(4)	Incorporated by reference to the exhibit filed with the Company's Current Report on Form 8-K with the Securities and Exchange Commission on May 29, 2013.
(5)	Incorporated by reference to the exhibit filed with the Company's Current Report on Form 8-K with the Securities and Exchange Commission on July 24, 2013 and August 6, 2013.
(6)	Incorporated by reference to the exhibits filed with the Company's Amendment No. 1 to Annual Report on Form 10-K with the Securities and Exchange Commission on April 23, 2014.

 

35

 

SIGNATURES

 

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

  

	Nano Labs Inc. a Colorado corporation
October 31, 2014	By:	/s/ Bernardo Camacho Chavarria
	Name:	Bernardo Camacho Chavarria
	Its:	Chief Executive Officer Director
October 31, 2014	By:	/s/ Bernardo Camacho Chavarria
	Name:	Bernardo Camacho Chavarria
	Its:	Chief Financial Officer/Principal Accounting Officer Director

 

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. 

 

October 31, 2014	By:	/s/ Bernardo Camacho Chavarria
	Name:	Bernardo Camacho Chavarria
	Its:	Director

 

 

36

---