Attached files
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended February 28, 2015
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to ______________
Commission File No. 333-168337
GroGenesis, Inc.
(Exact Name of Small Business Issuer as specified in its charter)
Nevada 42-1771870
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Highway 79 North, Springville, TN 38256
(Address of principal executive offices)
Registrant's telephone number, including area code: 855-691-4764
Check 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. Yes [X] 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 during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files). Yes [ ] No [X]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
81,565,000 shares of registrant's common stock, $0.001 par value, were
outstanding at April 14, 2015. Registrant has no other class of common equity.
PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
GroGenesis, Inc.
February 28, 2015
Index
-----
Balance Sheets............................................................ 3
Statements of Operations.................................................. 4
Statements of Cash Flows.................................................. 5
Notes to the Financial Statements......................................... 6
2
GroGenesis, Inc.
Balance Sheets
(Expressed in US Dollars)
(Unaudited)
February 28, May 31,
2015 2014
------------ ------------
(Unaudited)
ASSETS
Current Assets
Cash $ 118 $ 12,188
Prepaid expense 12,600 18,900
Amounts receivable 2,875 19,000
Inventory 5,213 5,407
------------ ------------
Total Current Assets 20,806 55,495
Property, plant and equipment 133,044 159,259
Intangible assets 241,260 241,260
------------ ------------
Total Assets $ 395,110 $ 456,014
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 127,491 $ 115,005
Related party payables 194,437 36,103
Advance 21,750 21,750
------------ ------------
Total Liabilities 343,678 172,858
------------ ------------
Stockholders' Equity
Common stock, 200,000,000 shares authorized, $0.001 par value;
81,520,000 shares and 81,430,000 shares issued and outstanding
as of February 28, 2015 and May 31, 2014, respectively 81,520 81,430
Common stock subscribed -- 21,000
Additional paid-in capital 1,637,010 1,605,600
Deficit (1,667,098) (1,424,874)
------------ ------------
Total Stockholders' Equity 51,432 283,156
------------ ------------
Total Liabilities and Stockholders' Equity $ 395,110 $ 456,014
============ ============
(The accompanying notes are an integral part of these financial statements)
3
GroGenesis, Inc.
Statements of Operations
(Expressed in US Dollars)
(Unaudited)
For the For the For the For the
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
February 28, February 28, February 28, February 28,
2015 2014 2015 2014
------------ ------------ ------------ ------------
Revenue $ 2,876 $ -- $ 32,438 $ --
Cost of Sales (746) -- (8,260) --
------------ ------------ ------------ ------------
Gross Profit 2,130 -- 24,178 --
------------ ------------ ------------ ------------
Expenses
Commissions -- -- 3,925 --
Consulting fees 53,500 44,000 128,500 44,000
Depreciation 8,738 1,532 26,215 1,532
General and administrative 22,270 50,202 55,684 53,184
Transfer agent and filing fees 709 -- 15,786 --
Professional fees 7,999 9,306 36,292 15,306
------------ ------------ ------------ ------------
Total Expenses (93,216) (105,040) (266,402) (114,022)
------------ ------------ ------------ ------------
Net Loss $ (91,086) $ (105,040) $ (242,224) $ (114,022)
============ ============ ============ ============
Net Loss Per Share - Basic and Diluted $ (0.00) $ (0.00) $ (0.00) $ (0.00)
============ ============ ============ ============
Weighted Average Shares Outstanding 81,497,000 122,715,000 81,490,000 130,950,000
============ ============ ============ ============
(The accompanying notes are an integral part of these financial statements)
4
GroGenesis, Inc.
Statements of Cash Flows
(Expressed in US Dollars)
(Unaudited)
For the For the
Nine Months Nine Months
Ended Ended
February 28, February 28,
2015 2014
------------ ------------
Cash Flows Used in Operating Activities
Net loss $ (242,224) $ (114,022)
Adjustments to reconcile to net cash
used in operating activities:
Depreciation 26,215 1,532
Changes in operating assets and liabilities:
Prepaid expenses 6,300 4,200
Amounts receivable 16,125 --
Inventory 194 --
Accounts payable and accrued liabilities 12,486 17,709
Related party payables 158,334 15,055
------------ ------------
Net Cash Used In Operating Activities (22,570) (75,526)
------------ ------------
Cash Flows from Investing Activities
Purchase of property, plant and equipment -- (45,000)
------------ ------------
Net Cash Used in Investing Activities -- (45,000)
------------ ------------
Cash Flows from Financing Activities
Proceeds from issuance of common stock 10,500 150,500
Payments of finders' fees -- (6,300)
Repayment of advances to related parties -- (2,150)
------------ ------------
Net Cash Provided by Financing Activities 10,500 142,050
------------ ------------
(Decrease) Increase in Cash (12,070) 21,524
Cash - Beginning of Period 12,188 9,473
------------ ------------
Cash - End of Period $ 118 $ 30,997
============ ============
Supplementary Information:
Interest paid $ -- $ --
============ ============
Income taxes paid $ -- $ --
============ ============
Non-cash Investing and Financing Activities:
Common stock issued for acquisition of assets -- 1,466,630
Common stock issued for prepaid expenses -- 25,200
(The accompanying notes are an integral part of these financial statements)
5
GroGenesis, Inc.
Notes to the Financial Statements
February 28, 2015
(Unaudited)
Note 1: Nature and Continuance of Operations
GroGenesis, Inc. (the "Company") was incorporated in the state of Nevada on May
19, 2010. The Company was formed to become an operator of a beach shack in the
State of Goa, India.
On September 9, 2013, the Company entered into two asset purchase agreements
whereby the Company agreed to purchase certain assets necessary for the
operation of a plant growth surfactant manufacture and sales business. The
agreements closed on February 7, 2014. The assets acquired are used in
conjunction with the production, marketing, and sale of the crop surfactant to
be sold under the name "GroGenesis". Effective November 1, 2013, the Company
changed its name to GroGenesis, Inc. The Company's former president, Maria
Fernandes, resigned on closing. In addition, the Company has entered into an
easement agreement whereby it was granted the right to use a portion of a farm
located in Aylmer, Ontario, Canada for the purposes of using it as a
demonstration farm in order to evaluate and exhibit the effects of GroGenesis.
Note 2: Basis of Presentation
Unaudited interim financial statements
The accompanying unaudited interim financial statements have been prepared in
accordance with United States generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q of
Regulation S-X. They may not include all information and footnotes required by
United States generally accepted accounting principles for complete financial
statements. However, except as disclosed herein, there has been no material
changes in the information disclosed in the notes to the financial statements
for the period ended May 31, 2014 included in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission on October 7, 2014.
These interim unaudited financial statements should be read in conjunction with
those financial statements included in the Annual Report Form 10-K. In the
opinion of management, all adjustments considered necessary for a fair
presentation, consisting solely of normal recurring adjustments, have been made.
Operating results for the nine months ended February 28, 2015 are not
necessarily indicative of the results that may be expected for the year ending
May 31, 2015.
Note 3: Going Concern
These financial statements have been prepared on a going concern basis which
assumes the Company will be able to realize its assets and discharge its
liabilities in the normal course of business for the foreseeable future. The
Company has incurred a loss since inception resulting in an accumulated deficit
of $1,667,098 as at February 28, 2015 and further losses are anticipated in the
development of its business raising substantial doubt about the Company's
ability to continue as a going concern. The ability to continue as a going
concern is dependent upon the Company generating profitable operations in the
future and/or obtaining the necessary financing to meet its obligations and
repay its liabilities arising from normal business operations when they come
due. Management intends to finance operating costs over the next twelve months
with existing cash on hand and loans from directors and/or the private placement
of common stock. There is however no assurance that the Company will be able to
raise any additional capital through any type of offering on terms acceptable to
the Company.
6
GroGenesis, Inc.
Notes to the Financial Statements
February 28, 2015
(Unaudited)
Note 4: Property and Equipment
Trade show Manufacturing
booth facility Total
----- -------- -----
$ $ $
Cost:
Balance, May 31, 2014 45,000 124,529 169,529
Additions -- -- --
------- ------- -------
Balance, February 28, 2015 45,000 124,529 169,529
======= ======= =======
Accumulated amortization:
Balance, May 31, 2014 6,611 3,659 10,270
Additions 16,875 9,340 26,215
------- ------- -------
Balance, February 28, 2015 23,486 12,999 36,485
======= ======= =======
Carrying amounts:
Balance, May 31, 2014 38,389 120,870 159,259
------- ------- -------
Balance, February 28, 2015 21,514 111,530 133,044
======= ======= =======
Note 5: Intangible Assets
On September 30, 2014, the Company entered into an asset purchase agreement
(Note 9) whereby the Company issued 12,500,000 shares of restricted common stock
in exchange for intellectual property and related assets necessary for operating
a Plant Surfactant manufacture and sale business. The fair value of the
12,500,000 shares of common stock of $1,342,101 has been recorded as intangible
assets. On May 31, 2014, the Company performed an impairment test on the
intellectual property. The Company recorded impairment of $1,107,101, leaving a
carrying balance of $235,000 as at February 28, 2015, and May 31, 2014.
The following represents changes in gross carrying amount of intangibles as at
February 28, 2015 and May 31, 2014:
Intellectual
Trademark Patent property Total
--------- --------- --------- ---------
$ $ $ $
Cost:
Balance, May 31, 2014 1,130 5,130 1,342,101 1,348,361
Additions -- -- -- --
--------- --------- --------- ---------
Balance, February 28, 2015 1,130 5,130 1,342,101 1,348,361
========= ========= ========= =========
Accumulated amortization
and impairment:
Balance, May 31, 2014 and
February 28, 2015 -- -- 1,107,101 1,107,101
========= ========= ========= =========
Carrying amounts:
Balance, May 31, 2014 1,130 5,130 235,000 241,260
--------- --------- --------- ---------
Balance, February 28, 2015 1,130 5,130 235,000 241,260
========= ========= ========= =========
7
GroGenesis, Inc.
Notes to the Financial Statements
February 28, 2015
(Unaudited)
Note 6: Advance
As at February 28, 2015, the Company owed $21,750 (May 31, 2014 - $21,750) to an
associate of the Company's management. The advance is unsecured, payable on
demand and non-interest bearing.
Note 7: Related Parties
On March 1, 2014, the Company entered into a Consulting Agreement with the
Company's Chief Operations Officer (the "COO") whereby the Company agreed to pay
the COO $2,500 per month. During the nine months ended February 28, 2015, the
Company recorded $22,500 of consulting fees for services provided by the COO. As
at February 28, 2015, the Company owes the COO of the Company $30,961 (May 31,
2014 - $7,500), which is unsecured, non-interest bearing and due on demand.
On June 1, 2014, the Company entered into a Consulting Agreement with the
Company's Chief Financial Officer (the "CFO") whereby the Company agreed to pay
the CFO $2,500 per month. The CFO started working for the Company on August 1,
2014. During the nine months ended February 28, 2015, the Company recorded
$17,500 of consulting fees for services provided by the CFO. As at February 28,
2015, the Company owes the CFO of the Company $17,500 (May 31, 2014 - $nil),
which is unsecured, non-interest bearing and due on demand.
During the nine months ended February 28, 2015, the Vice President of Sales and
Manufacturing ("VPSM") paid for expenses on behalf of the Company and collected
revenue on sales on behalf of the Company. As at February 28, 2015, the Company
owes the VPSM of the Company $57,396 (May 31, 2014 - $12,605), which is
unsecured, non-interest bearing and due on demand.
As at February 28, 2015, the Company owes the President of the Company $43,666
(May 31, 2014 - $15,998) for general and administration expenses and travel
expenses paid on behalf of the Company and consulting services provided by the
President. The amount is unsecured, non-interest bearing and due on demand.
As at February 28, 2015, the Company owes the wife of the President of the
Company $3,000 (May 31, 2014 - $nil) for general and administration support
services provided to the Company. The amount is unsecured, non-interest bearing
and due on demand.
During the nine months ended February 28, 2015, the Company received loans of
$41,914 from two shareholders. These amounts are unsecured, non-interest bearing
and have no fixed terms of repayment.
Note 8: Capital Stock
On June 30, 2014, the Company completed a private placement consisting of 60,000
shares of common stock at a price of $0.35 per share for total proceeds of
$21,000, which was received prior to May 31, 2014. On February 6, 2015, the
Company completed a private placement consisting of 30,000 shares of common
stock at a price of $0.35 per share for total proceeds of $10,500.
8
GroGenesis, Inc.
Notes to the Financial Statements
February 28, 2015
(Unaudited)
Note 9: Commitments
On September 9, 2013, the Company entered into an Asset Purchase Agreement
whereby the Company agreed to acquire intellectual property as well as all
related assets necessary for operating a plant growth enhancement product
("Plant Surfactant") manufacture and sale business. The agreement was closed on
February 7, 2014. In consideration, the Company issued 12,500,000 shares of
restricted common stock. In addition, the Company also agreed to incorporate a
wholly-owned subsidiary that will hold these assets and conduct operations, and
execute a consulting agreement with the President of the Company whereby he will
receive $7,000 per month. The consulting agreement will become effective on the
date that the Company raises a minimum of $500,000 to fund operations. As at
February 28, 2015, the Company had not incorporated a wholly-owned subsidiary.
On September 9, 2013, the Company entered into an Asset Purchase Agreement
whereby the Company agreed to acquire certain equipment used in conjunction with
the production, marketing and sale of the Plant Surfactant. The agreement closed
on February 7, 2014. In consideration, the Company issued 5,000,000 shares of
restricted common stock. In addition, the Company also agreed to execute a
consulting agreement with the seller whereby he will receive $5,000 per month.
The consulting agreement will become effective on the date that the Company
raises a minimum of $500,000 to fund operations.
On September 9, 2013, the Company entered into an Easement Agreement whereby the
Company agreed to acquire the exclusive right to 10 acres of farm property
located in Aylmer, Ontario, Canada, to operate as a demonstration farm in order
to evaluate and exhibit the effects of using the plant surfactant for an initial
term of 3 years. In consideration, the Company issued 2,500,000 shares of
restricted common stock with a fair value of $25,200, which was recognized as a
prepaid expense and is being amortized over the 3 year term. During the nine
months ended February 28, 2015, the Company has recognized $6,300 (2014 -
$4,200) as rent expense leaving a balance of $12,600 (May 31, 2014 - $18,900)
remaining in prepaid expense.
On March 1, 2014, the Company entered into a Consulting Agreement with the
Company's Chief Operations Officer (the "COO") whereby the Company agreed to pay
the COO $2,500 per month.
On March 1, 2014, the Company entered into a Consulting Agreement whereby the
Company agreed to pay the consultant $2,500 per month effective January 1, 2014.
On June 1, 2014, the Company entered into a Consulting Agreement with the
Company's Chief Financial Officer (the "CFO") whereby the Company agreed to pay
the CFO $2,500 per month.
Note 10: Subsequent Event
On March 9, 2015, the Company completed a private placement consisting of 45,000
shares of common stock at a price of $0.35 per share for total proceeds of
$15,750.
9
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS
As used in this quarterly report on Form 10-Q and unless otherwise indicated,
the terms "we", "us", "our", or the "Company" refer to GroGenesis, Inc. unless
otherwise specified, all dollar amounts are expressed in United States dollars.
The following discussion of our financial condition, changes in financial
condition, plan of operations and results of operations should be read in
conjunction with our unaudited interim financial statements from the period
ended February 28, 2015, together with the notes thereto included in this Form
10-Q. The discussion contains forward-looking statements that involve risks,
uncertainties and assumptions. Our actual results may differ materially from
those anticipated in these forward-looking statements as a result of many
factors.
OVERVIEW
We are an operating company in the agricultural and environmental sectors
through our ownership, manufacture, and sale of a natural blend of plant
extracts that is used as a liquid plant growth enhancer, known as Agraburst crop
surfactant formula SURF0107 ("Agraburst"). A plant surfactant is a compound that
lowers the surface tension between a liquid and a solid in order to allow for
more efficient nutrient uptake in the plant. We commenced business in this
sector in February 2014.
Agraburst is designed to work as a cation exchange stimulant that penetrates
plant foliage and roots in order to enhance photosynthesis and higher brix
levels. The brix level is the percentage of solids, particularly sugar and
minerals, present in the plant. A high brix level is an indication that the
plant has been grown with sufficient nutrients and water. Minute particles in
Agraburst increase the speed of nutrient transport within a plant and can carry
other blended products into plant leaves.
The small particles within Agraburst have very close to a neutral electrical
charge, which allows them to form light bonds with the hydrogen atoms in water,
which results in a reduction in water's natural surface tension. As a result,
Agraburst acts akin to a lubricant that keeps water flowing and transporting
nutrients within a plant with little resistance. This promotes higher efficiency
of water and nutrient uptake in a plant. The resulting higher brix level in the
plant better enables it to resist disease, insects, drought, and cold weather.
It is also linked to better tasting food crops.
To date, Agraburst and predecessor product formulations have been sold to a
small group of farming clients and tested in a variety of case studies that has
resulted, amongst other benefits, in increased yield for corn, soybean, tobacco,
canola, alfalfa, wheat, cabbage, cotton, corn silage, hay, tomatoes, and beans.
CORPORATE ACCOMPLISHMENTS
In early January 2015, GroGenesis introduced a new organic product, AgraBlast.
AgraBlast is a liquid broad-spectrum algaecide, fungicide, bactericide, and
general sanitation product for use in agricultural industries. This new product
causes no harm to the environment with no residual or harmful components
persisting after spraying. All the degradation products are beneficial to both
soil and plant.
In February, we were invited to Guatemala to investigate the persistent Coffee
Roya (coffee "rust") disease prevalent in the growing regions of Central
America. The Company undertook the opportunity to fast track its development
studies in Guatemala using its new product, AgraBlast. The GroGenesis field team
was led by our Senior Scientific Consultant, Dr. Helen Keenan and based on
discussions with Mr. Marcelo Bosch, a regional Senior Field Consultant for a
major forest products operation, it was determined to visit several large
plantations with characteristic outbreaks of Roya disease. The primary field
test was undertaken at a large farm located in the department of Santa Rosa,
just southeast of Guatemala City. A single application of the GroGenesis
10
product, AgraBlast, was manually sprayed across a predefined area, and the field
team documented visible degradation of the fungal infestation within 24 hours
post- application. Similar tests with exactly the same outcome were completed at
another large privately owned plantation.
GOING FORWARD
We anticipate extensive field testing is scheduled for this season in Australia
and Tasmania on a variety of crops utilizing regional agronomists. GroGenesis
will be working with them to test and compile data regarding the efficacy of
both AgraBurst and AgraBlast.
We have also scheduled continued product trials for this season with Texas A&M
university on various crops in various regions. They will work in conjunction
with us to compile the data for future reference. GroGenesis also plans to work
with various citrus growers in Florida to address the citrus greening issue. The
team will also work with growers of other crops such as sugar cane, vegetables
and fruit.
PLAN OF OPERATION
Our plan of operation for the twelve month period following the date of this
report is to establish facilities for the commercial manufacture of Agraburst
and AgraBlast, enter into distribution arrangements for the sale of both
products, and retain a sales force necessary for the direct marketing of
Agraburst and AgraBlast to commercial farmers.
We expect to incur the following costs in the next 12 months in connection with
our goals:
Manufacturing facilities and equipment costs: $ 500,000
Sales and Marketing: $ 350,000
Product manufacturing costs: $ 250,000
Consulting and distribution costs: $ 200,000
Wages for sales force: $ 150,000
General and administrative costs: $ 50,000
----------
Total: $1,500,000
==========
Total expenditures over the next 12 months are therefore expected to be
approximately $1,500,000. Our ability to meet these objectives will be dependent
on our ability to generate revenue from operations and to raise sufficient
additional capital to expand operations. If we are unable to generate sufficient
revenue or raise financing as required, we will delay our establishment and
expansion of operations as necessary.
RESULTS OF OPERATIONS
THREE-MONTH PERIOD ENDED FEBRUARY 28, 2015
We earned $2,876 in revenue during the three months ended February 28, 2015. Our
cost of sales for the period was $746 resulting in a gross profit from
operations of $2,130.
For the three months ended February 28, 2015, we incurred total operating
expenses in the amount of $93,216, which consisted of consulting fees of
$53,500, professional fees of $7,999, depreciation expense of $8,738, general
and administration fees of $22,270, and transfer agent and filing fees of $709.
This resulted in a net loss of $91,086 for the period.
We have not incurred any expenses for research and development since inception.
As a result of operating losses, there has been no provision for the payment of
income taxes from the date of inception.
11
NINE-MONTH PERIOD ENDED FEBRUARY 28, 2015
We earned $32,438 in revenue during the nine months ended February 28, 2015. Our
cost of sales for the period was $8,260 resulting in gross profit from
operations of $24,178.
For the nine months ended February 28, 2015, we incurred total operating
expenses in the amount of $266,402, which consisted of consulting fees of
$128,500, general and administration fees of $55,684, professional fees of
$36,292, depreciation expense of $26,215, transfer agent and filing fees of
$15,786, and commissions of $3,925. This resulted in a net loss of $266,402 for
the period.
We have not incurred any expenses for research and development since inception.
As a result of operating losses, there has been no provision for the payment of
income taxes from the date of inception.
LIQUIDITY AND CAPITAL RESOURCES
As at February 28, 2015, we had a cash balance of $118 and total current assets
of $20,806.
As additional funds become required, we anticipate that this will come from
either advances from director or shareholder loans, or equity financing from the
sale of our common stock. If we are successful in completing an equity
financing, existing shareholders will experience dilution of their interest in
our company.
Our future financial results are also uncertain due to a number of factors, some
of which are outside our control. These factors include, but are not limited to:
* our ability to raise additional funding;
* our ability to commercially develop the Agraburst and AgraBlast
intellectual property; and
* being able to generate sufficient sales of Agraburst and AgraBlast in
order to realize a profit.
Due to our lack of operating history and present inability to generate revenues,
our auditors have stated their opinion that there currently exists a substantial
doubt about our ability to continue as a going concern.
GOING CONCERN CONSIDERATION
The report of our independent registered public accounting firm for the period
ended May 31, 2014 raises substantial doubt about our ability to continue as a
going concern based on the absence of an established source of revenue,
recurring losses from operations, and our need for additional financing in order
to fund our operations in fiscal 2015. Our operations and financial results are
subject to various risks and uncertainties that could adversely affect our
business, financial condition and results of operations.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements including arrangements that would
affect our liquidity, capital resources, market risk support and credit risk
support or other benefits.
FORWARD LOOKING STATEMENTS
The information in this quarterly report contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). These forward-looking statements involve risks and uncertainties,
including statements regarding the Company's capital needs, business strategy
and expectations. Any statements contained herein that are not statements of
historical facts may be deemed to be forward-looking statements. In some cases,
you can identify forward-looking statements by terminology such as "may,"
"will," "should," "expect," "plan," "intend," "anticipate," "believe,"
12
"estimate," "predict," "potential" or "continue," the negative of such terms or
other comparable terminology. Actual events or results may differ materially. In
evaluating these statements, you should consider various factors, including the
risks outlined from time to time, in other reports we file with the Securities
and Exchange Commission (the "SEC"). These factors may cause our actual results
to differ materially from any forward-looking statement. We disclaim any
obligation to publicly update these statements, or disclose any difference
between its actual results and those reflected in these statements. The
information constitutes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.
ITEM 3 QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISKS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item.
ITEM 4 CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Based on our evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our internal controls over financial reporting were not effective
as of February 28, 2015 and were subject to material weaknesses.
A material weakness is a deficiency, or a combination of deficiencies, in
internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the company's annual or interim
financial statements will not be prevented or detected on a timely basis. We
have identified the following material weaknesses in our internal control over
financial reporting using the criteria established in the COSO:
1. Failing to have an audit committee or other independent committee that
is independent of management to assess internal control over financial
reporting; and
2. Failing to have a director that qualifies as an audit committee
financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. In addition, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions and that the
degree of compliance with the policies or procedures may deteriorate.
This quarterly report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting. Our internal control over financial reporting was not subject to
attestation by our independent registered public accounting firm pursuant to
temporary rules of the SEC that permit us to provide only management's report in
this annual report.
CONTROLS AND PROCEDURES OVER FINANCIAL REPORTING
Additionally, there were no changes in our internal controls over financial
reporting or in other factors that could significantly affect these controls
subsequent to the evaluation date. We have not identified any significant
deficiencies or material weaknesses in our internal controls, and therefore
there were no corrective actions taken.
13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company currently is not a party to any legal proceedings and, to the
Company's knowledge; no such proceedings are threatened or contemplated.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the period ended February 28, 2015, we completed private placements
consisting of the sale of a total of 90,000 shares of our common stock to
private purchasers for total cash proceeds of $31,500 (i.e., $0.35 per share).
On March 9, 2015, we completed private placements consisting of the sale of a
total of 45,000 shares of our common stock to private purchasers for total cash
proceeds of $15,750 (i.e., $0.35 per share). These sales were completed pursuant
to Regulation S of the Securities Act.
REGULATION S COMPLIANCE
For the above offering, we relied upon the following facts to make the
Regulation S exemption available:
Each offer or sale was made in an offshore transaction;
Neither we, a distributor, any respective affiliates, nor any person on behalf
of any of the foregoing, made any directed selling efforts in the United States;
Offering restrictions were, and are, implemented;
No offer or sale was made to a U.S. person or for the account or benefit of a
U.S. person;
Each purchaser of the securities certifies that it was not a U.S. person and was
not acquiring the securities for the account or benefit of any U.S. person;
Each purchaser of the securities agreed to resell such securities only in
accordance with the provisions of Regulation S, pursuant to registration under
the Act, or pursuant to an available exemption from registration; and agreed not
to engage in hedging transactions with regard to such securities unless in
compliance with the Act;
The securities contain a legend to the effect that transfer is prohibited except
in accordance with the provisions of Regulation S, pursuant to registration
under the Act, or pursuant to an available exemption from registration; and that
hedging transactions involving those securities may not be conducted unless in
compliance with the Act; and
We are required, either by contract or a provision in our bylaws, articles,
charter or comparable document, to refuse to register any transfer of the
securities not made in accordance with the provisions of Regulation S pursuant
to registration under the Act, or pursuant to an available exemption from
registration.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
14
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit
Number Description of Exhibit
------ ----------------------
31.1 Certification of Principal Executive Officer pursuant to 18
U.S.C.ss.1350, as adopted pursuant toss.302 of the Sarbanes-Oxley Act
of 2002.
31.2 Certification of Principal Financial Officer pursuant to 18 U.S.C.ss.
1350, as adopted pursuant to ss. 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Principal Executive Officer pursuant to 18
U.S.C.ss.1350, as adopted pursuant toss.906 of the Sarbanes-Oxley Act
of 2002.
32.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. ss.
1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002.
101 Interactive data files pursuant to Rule 405 of Regulation S-T.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
Date: April 15, 2015
GROGENESIS, INC.
By: /s/ Joseph Fewer
---------------------------------
Joseph Fewer
Principal Executive Officer
By: /s/ Ron Evinou
---------------------------------
Ron Evinou
Principal Financial Officer
1
