UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

  X .

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

For the quarterly period ended June 30, 2015

      .

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

For the transition period from ____________ to____________

Commission File Number: 000-54758

The Enviromart Companies, Inc.

(Exact name of issuer as specified in its charter)

Delaware		45-5529607
(State or Other Jurisdiction of		(I.R.S. Employer I.D. No.)
incorporation or organization)

4 Wilder Dr., #7

Plaistow, NH 03865

(Address of Principal Executive Offices)

603-378-0809

(Registrant’s Telephone Number, Including Area Code)

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. Yes    X  . No     .

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

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition 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	. (Do not check if a smaller reporting company)	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 .

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APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

The number of shares outstanding of each of the Registrant’s classes of common equity, as of the latest practicable date:

Class		Outstanding as of August 14, 2015
Common Capital Voting Stock, $0.0001 par value per share		37,190,000 shares

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, Financial Statements and Notes to Financial Statements contain forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended.

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PART I - FINANCIAL STATEMENTS
Item 1. Consolidated Financial Statements.
Consolidated Balance Sheets as of June 30, 2015 (Unaudited) and December 31, 2014	4
Consolidated Statements of Operations for the three and six months ended June 30, 2015 (Unaudited) and 2014 (Unaudited)	5
Consolidated Statements of Cash Flows for the six months ended June 30, 2015 (Unaudited ) and 2014 (Unaudited)	6
Notes to Consolidated Financial Statements (Unaudited)	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	19
Item 4. Controls and Procedures.	19
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	20
Item 1A. Risk Factors	20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3. Defaults upon Senior Securities	20
Item 4. Mine Safety Disclosures	20
Item 5. Other Information	20
Item 6. Exhibits	21

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THE ENVIROMART COMPANIES, INC.

Consolidated Balance Sheets

			As of		As of
			June 30,		December 31,
			2015		2014
			(Unaudited)		(Audited)
	ASSETS
Current Assets
	Cash	$	14,390	$	1,915
	Accounts receivable		306,213		268,345
	Accounts receivable - related party		-		44,579
	Inventory		247,949		171,156
	Prepaid Expenses		18,540		-
Total Current Assets			587,092		485,995
Non-Current Assets
	Equipment, net		40,786		53,961
TOTAL ASSETS		$	627,878	$	539,956
	LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
	Bank overdraft	$	10,142	$	8,721
	Accounts payable and accrued expenses		918,876		890,204
	Convertible notes and interest payable		-		152,096
	Line of credit - related party		500,000		200,000
	Note payable		2,332		7,975
	Due to officer		-		153,745
	Due to related party		15,000		15,000
Total Current Liabilities			1,446,350		1,427,741
Long Term Liabilities
	Convertible notes - related party		200,000		-
	Convertible note and interest payable		52,384		-
Total Long Term Liabilities			252,384		-
Total Liabilities			1,698,734		1,427,741
Stockholders' Deficit
	Preferred stock, $0.0001 par value, 5,000,000 shares authorized; none issued and outstanding		-		-
	Common stock, $0.0001 par value, 250,000,000 shares authorized; 37,190,000 and 34,995,429 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively		3,719		3,500
	Common stock to be issued, -0- and 271,000 shares issuable at June 30, 2015 and December 31, 2014, respectively		-		27
	Additional paid-in capital		639,034		635,256
	Accumulated deficit		(1,713,609)		(1,526,568)
Total Stockholders' Deficit			(1,070,856)		(887,785)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	627,878	$	539,956

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

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THE ENVIROMART COMPANIES, INC.

Consolidated Statements of Operations

(Unaudited)

			Three Months Ended				Six Months Ended
			June 30,				June 30,
			2015		2014		2015		2014
Sales
Packaging solutions		$	262,002	$	108,915	$	565,215	$	138,989
Absorbent products			233,001		27,366		514,837		150,751
Related Party Revenue			-		133,502		-		296,858
Total sales			495,003		269,783		1,080,052		586,598
Cost of goods sold
Packaging solutions			176,794		158,726		347,634		272,245
Absorbent products			129,532		22,612		295,278		131,298
Shipping - net			20,802		12,924		22,186		18,272
Total cost of goods sold			327,128		194,262		665,098		421,815
Gross profit			167,875		75,521		414,954		164,783
Operating Expenses
General and Administrative			338,300		204,654		565,805		543,844
Loss from operations			(170,425)		(129,133)		(150,851)		(379,061)
Other expense
Interest Expense			(20,467)		(3,740)		(35,272)		(7,439)
Penalties and Interest			-		(472)		(918)		(16,418)
Total other expense			(20,467)		(4,212)		(36,190)		(23,857)
Net loss		$	(190,892)	$	(133,345)	$	(187,041)	$	(402,918)
Basic and diluted loss per share		$	(0.01)	$	(0.00)	$	(0.01)	$	(0.01)
Weighted average number of shares outstanding - basic and diluted			37,190,000		28,582,679		36,899,061		28,158,929

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

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THE ENVIROMART COMPANIES, INC.

Consolidated Statements of Cash Flows

(Unaudited)

		For the Six Months Ended
		June 30,
		2015		2014
Cash Flows from Operating Activities
Net loss	$	(187,041)	$	(402,918)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization expense		13,175		13,153
Stock-based compensation		274		94,500
Changes in operating assets and liabilities:
Accounts receivable		6,711		20,893
Inventory		(76,793)		(65,731)
Prepaid expenses and other current assets		(18,540)		(8,861)
Accounts payable and accrued expenses		28,672		268,273
Interest payable on convertible notes		288		-
Net cash used in operating activities		(233,254)		(80,691)
Cash Flows from Investing Activities
Purchase of equipment		-		(793)
Net cash used in investing activities		-		(793)
Cash Flows from Financing Activities
Proceeds from (repayments of) bank overdraft		1,421		13
Proceeds from (repayments of) related party debt		(53,745)		98,268
Repayment of note payable		(5,644)		-
Proceeds from inventory line of credit		300,000		-
Issuance of common stock for cash		3,697		-
Net cash provided by financing activities		245,729		98,281
Increase in Cash and Cash Equivalents		12,475		16,797
Cash and Cash Equivalents--Beginning of Period		1,915		9,680
Cash and Cash Equivalents--End of Period	$	14,390	$	26,477
Supplemental Disclosures
Cash paid for Interest	$	7,890	$	5,356
Non-Cash Investing and Financing Activities
Issuance of convertible note to an officer for expenses paid	$	100,000	$	-
Common stock issued for consultants	$	150	$	19,500
Note payments via sales of goods	$	(5,644)	$	-
Note for purchase of equipment	$	-	$	8,700
Subscription payable	$	27	$	(38)

The accompanying notes are an integral part of these unaudited consolidated financial statements

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THE ENVIROMART COMPANIES, INC.

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

The Enviromart Companies, Inc. and subsidiary (the “Company”), formerly known as Environmental Science and Technologies, Inc., was incorporated under the laws of the State of Delaware on June 18, 2012. On June 21, 2013, the Company completed an acquisition of intangible assets comprised of intellectual property and trademarks from its former Chief Executive Officer. In conjunction with the acquisition of the intangible assets, the Company commenced operations.

As of January 2, 2015, the Company’s business is operated through its wholly-owned subsidiary, EnviroPack Technologies, Inc. Effective on or about January 15, 2015, the Company changed its name to The Enviromart Companies, and the Company’s wholly-owned subsidiary, EnviroPack Technologies, Inc., changed its name to Enviromart Industries, Inc. The Company’s other wholly owned subsidiaries are currently inactive.

The Company is a provider of United Nations/Department of Transportation (“UN/DOT”) certified environmental waste packaging solutions and environmental spill response and control products (primarily absorbent products).

NOTE 2. BASIS OF PRESENTATION

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

NOTE 3. GOING CONCERN

During the six months ended June, 2015, although the Company has generated revenue, thus far it has been unable to generate cash flows sufficient to support its operations and has been dependent on debt financing. In addition to negative cash flow from operations, the Company has experienced recurring net losses, and has an accumulated deficit of $1,713,609 as of June 30, 2015. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates and Assumptions

The preparation of financial statements in conformity with U.S. GAAP 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 unaudited consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Enviromart Industries, Inc. (f/k/a EnviroPack Technologies, Inc.). All inter-company accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with original maturities of three months or less when acquired to be cash equivalents.

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Accounts Receivable

In the normal course of business, the Company extends credit to customers that satisfy defined credit criteria. Accounts receivable is recorded at carrying value, which approximates fair value, and is presented in the Company's unaudited consolidated balance sheets net of any allowance for doubtful accounts. As of June 30, 2015, an allowance for doubtful accounts had not been deemed necessary, and therefore, not recorded.

Inventory

The Company’s inventory is stated at the lower of cost or estimated realizable value, with cost primarily determined on a weighted-average cost basis on the first-in, first-out (“FIFO”) method. The Company continuously evaluates the composition of its inventory, assessing slow-turning product. Estimated realizable value of inventory is determined based on an analysis of historical sales trends of our individual products, the impact of market trends and economic conditions, and a forecast of future demand, giving consideration to the value of current orders in-house relating to the future sales of inventory. Estimates may differ from actual results due to quantity, quality, and mix of products in inventory, customer demand, and market conditions. The Company’s historical estimates of these costs and any provisions have not differed materially from actual results. Any reserves for inventory shrinkage, representing the risk of physical loss of inventory, are adjusted based upon physical inventory counts. As of June 30, 2015, an inventory reserve of $7,193 has been recorded.

Concentration of Risk

Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash. Our cash balances are maintained in accounts held by major banks and financial institutions located in the United States. The Company occasionally maintains amounts on deposit with a financial institution that are in excess of the federally insured limits. The risk is managed by maintaining all deposits in high quality financial institutions.

For the six months ended June 30, 2015, we had no individually significant customers.

Machinery and Equipment

Equipment is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method based upon the estimated useful life of depreciable assets, which is three years for machinery and equipment.

Long-lived Assets

Machinery and equipment, along with other long-lived assets, are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be recoverable, or are less than their fair value. In evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from the use of the asset and its eventual disposition. To the extent that estimated future undiscounted net cash flows attributable to the asset are less than the carrying value, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value, considering external market participant assumptions. Assets to be disposed of and for which there is a committed plan of disposal are reported at the lower of carrying value or fair value less costs to sell.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. 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. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. As of June 30, 2015, all deferred tax assets continue to be fully reserved.

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Basic Earnings (Loss) Per Share

Basic EPS is based on the weighted average number of common shares outstanding. Diluted EPS is based on the weighted average number of common shares outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net income/loss available to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Weighted average number of shares used to calculate basic and diluted loss per share is considered the same as the effect of dilutive shares is anti-dilutive for prior periods presented. As of June 30, 2015 and December 31, 2014, there were 10,000,000 and 1,800,000 common stock equivalents, respectively.

Revenue Recognition

Revenue is recognized across all segments of the business when there is persuasive evidence of an arrangement, delivery has occurred, price has been fixed or is determinable, and collectability is reasonably assured. Revenue is recognized at the time title passes and risk of loss is transferred to customers.

Sales Reserves and Uncollectible Accounts

A significant area of judgment affecting reported revenue and net income is estimating sales reserves, which represent that portion of gross revenues not expected to be realized. In particular, revenue is reduced by estimates of returns, discounts, markdowns, and operational chargebacks. In determining estimates of returns, discounts, markdowns and operational chargebacks, management analyzes current economic and market conditions. We review and refine these estimates on a quarterly basis. As of June 30, 2015, a sales reserve had not been deemed necessary, and therefore, not recorded.

Cost of Goods Sold and Selling Expenses

Cost of goods sold includes the expenses incurred to acquire and produce inventory for sale, including product costs, freight-in, and any import costs, as well as changes in reserves for shrinkage and inventory realizability. Any costs of selling merchandise, including those associated with preparing the merchandise for sale, such as picking, packing, warehousing, and order charges (“handling costs”), are included in general and administrative fees.

Stock-Based Compensation

The Company expenses all stock-based payments to employees and non-employee directors based on the grant date fair value of the awards over the requisite service period, adjusted for estimated forfeitures.

Convertible Notes

The Company records a discount to convertible notes for the intrinsic value of conversion options embedded in debt instruments, as appropriate. Debt discounts under these arrangements are amortized to noncash interest expense using the effective interest rate method over the term of the related debt to their date of maturity.

If a security or instrument becomes convertible only upon the occurrence of a future event outside the control of the Company, or, is convertible from inception, but contains conversion terms that change upon the occurrence of a future event, then any contingent beneficial conversion feature is measured and recognized when the triggering event occurs and contingency has been resolved.

NOTE 5. INVENTORY

Inventory consisted of finished goods and raw materials amounting to $179,349 and $75,793, respectively, as of June 30, 2015, and $143,173 and $35,177, respectively, as of December 31, 2014.  The Company had an inventory reserve of $7,193 as of June 30, 2015 and December 31, 2014.

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NOTE 6. EQUIPMENT

Equipment, net consisted of the following as of June 30, 2015 and December 31, 2014:

		June 30, 2015			December 31, 2014
Machinery and equipment		$	87,749		$	87,749
Less: accumulated depreciation			(46,953)			(33,788)
Equipment, net		$	40,786		$	53,961

The Company recorded depreciation expense of $6,587 and $13,175, respectively for the three and six months ended June 30, 2015.

NOTE 7. CONVERTIBLE NOTES

During August, 2013, the Company issued a convertible promissory note to an accredited investor in the principal amount of $50,000. The note originally bore interest at a rate of 10% per annum and had a one year term. The note was originally convertible into shares of common stock at the rate of $0.125 per share. The convertible note was amended in September 2014 (effective July 31, 2014) to extend its maturity date to September 10, 2015, reduce the conversion rate of the note from $0.125 to $0.05 per share, allow the note holder to elect to receive stock in lieu of cash for his interest and issue the note holder 100,000 shares of common stock in consideration of this agreement upon execution. On January 21, 2015, the Company and the holder of the note agreed to reduce the conversion price of the note to $.025 per share, in consideration for which the holder agreed to extend the maturity date of the note for an additional one year period (until September 16, 2016).

During August, 2013, the Company issued a convertible promissory note to an accredited investor in the principal amount of $100,000. Effective July 14, 2014, this investor became a related party.  Please see Note 10 Related Party Transactions for disclosures concerning amounts owed under this note.

See Note 10 Related Party Transactions for disclosure concerning amounts owed to our former CEO.

At the time of issuance the Company assessed the conversion feature to determine if it contained a beneficial conversion feature (BCF) as per ASC 470. The Company determined it did not have a BCF since the conversion price was greater than the market price of the common stock on the date of issuance.

As of June 30, 2015 the Company owed principal of $50,000 and accrued interest of $2,384 related to the convertible promissory note and owed principal of $200,000 and no accrued interest related to the convertible notes – related parties.

NOTE 8. NOTES PAYABLE

During March 2014, the Company issued a promissory note in the principal amount of $8,700 for the purchase of equipment. This note bears no interest and matured on March 5, 2015.  On May 1, 2015, the note holder extended the maturity date of the note by 6 months, until September 5, 2015.   As of June 30, 2015, the Company owed principal of $2,332 related to this note.

NOTE 9. LEASES

The Company leases its primary facility in Plaistow, New Hampshire for $12,000 per month on a month to month basis for up to two years from an entity owned beneficially by the Company’s former CEO (who is a significant shareholder).  See Note 10 – Related Party Transactions.

NOTE 10. RELATED PARTY TRANSACTIONS

The Company leases its facility, which currently consists of approximately 21,000 square feet of office and warehouse space located in Plaistow, New Hampshire for $12,000 per month from an entity owned beneficially by the Company’s CEO, who is a significant shareholder. The lease is a gross lease under which the landlord pays all taxes, maintenance and repairs, and insurance. The lease commenced on May 1, 2015 and is on a month to month basis for up to two years.  As of June 30, 2015, $6,000 was prepaid to the landlord under this agreement.

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In the normal course of business, the Company sold materials to Enco Industries, Inc. (“Enco”), a company that is controlled by the Company’s former CEO and significant shareholder. During the three and six months ended June 30, 2015 there are no sales with this related party.  During the three and six months ended June 30, 2014, the Company sold $133,502 and $296,858, respectively, worth of materials in arms-length transactions to this related party.

As of June 30, 2015, $10,000 of the $25,000 cash portion of the consideration paid for the purchase of intellectual property had been paid. The remaining $15,000 is included on the consolidated balance sheet as a due to related party because the seller of the intellectual property was hired as an employee of the Company subsequent to the effectiveness of the transaction.

During August, 2013, the Company issued a convertible promissory note to an accredited investor in the principal amount of $100,000. Effective July 14, 2014, this investor became a related party.  The note originally bore interest at a rate of 10% per annum and had a one year term. The note was originally convertible into shares of common stock at the rate of $0.125 per share. The note was amended in July 2014, to extend its maturity date to July 15, 2015 and to make it non-interest bearing. On January 21, 2015, the Company and the holder of the note agreed to reduce the conversion price of the note to $.025 per share, in consideration for which the holder agreed to extend the maturity date of the note for an additional one year period (until July 15, 2016).

During the six months ended June 30, 2015, the Company's former CEO was repaid $53,745 for expenses of the Company he paid through the use of his personal funds and personal credit cards.  This balance is reflected in the account captioned “Due to Officer.”

On July 14, 2014, the Company and its former CEO, Michael R. Rosa, entered into an agreement with Mark Shefts (who is a significant shareholder), as follows:

(1)

Mr. Shefts: (i) agreed to provide management advisory services to the Company for a period of one year, for $1,000 per month, (ii) made a $125,000 equity investment into the Company,  in exchange for 10 million shares of the Registrant’s common stock, (iii) agreed to extend the maturity date of his convertible promissory note in the principal amount of $100,000 until July 15, 2015 and make the note non-interest bearing, and (iv) will have the option of becoming CEO and a member of the board of the Company;

(2)

Mr. Shefts and the Company’s former CEO agreed to endeavor for a specified of time to appoint a mutually agreeable person to act as a director of the Company. In the event that Mr. Shefts and the Company’s former CEO are unable to agree on a third director, Mr. Shefts would have the right to appoint the third director;

(3)

Michael R Rosa, former CEO of the Company, agreed to surrender approximately 6,692,500 shares of the Registrant’s common stock to the treasury, to be restored to the status of authorized but unissued shares; and

(4)

Mr. Rosa agreed to accept a promissory note in the amount of $98,268 for amounts he has advanced on behalf of the Company through June 30, 2014.  As of December 31, 2014, the amount advanced totaled $153,745 as is included in the consolidated balance sheet as due to officer.  This note was amended and executed on January 21, 2015 for $100,000 and is non-interest bearing, is convertible into common stock at a rate of $0.025 per share and matures on July 15, 2016.  As of June 30, 2015 the balance of $53,745 had been repaid.

The Agreement also provides that if the Board of Directors should at any time determine to discontinue the business operations of the Company, then, subject to compliance with applicable laws, the Company will transfer to Michael R. Rosa its discontinued operating businesses, in exchange for his surrendering to the Company all shares of common stock of the Company owned or controlled by him.

In connection with the foregoing transaction, the Company, on July 14, 2014, sold to Rushcap Group, Inc. (Mark Shefts’ designee) (an accredited investor) 10,000,000 shares of its common stock, for aggregate consideration of $125,000 (a per-share price of $.0125).

Effective April 24, 2015, Mr. Michael R. Rosa, CEO and director of the Company, resigned for personal reasons from all offices of the Company and its wholly-owned subsidiaries held by him, including CEO and Director of the Company and Enviromart Industries, Inc., the sole operating subsidiary of the Company. Effective April 27, 2015, the Company entered into a consulting agreement with Mr. Rosa, a significant shareholder of the Company, under which he will render advisory services with respect to sales and marketing. The consulting agreement provides for a weekly consulting fee of $1,540, payable weekly in arrears, and may be terminated by either party upon written notice.

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On September 26, 2014, the Company entered into an agreement with Rushcap Group, Inc. (controlled by Mark Shefts (a significant shareholder)) to provide a revolving line of credit to purchase inventory to the Company.  The maximum borrowing amount under this agreement was $300,000.  Under the Agreement, interest was payable at a rate of 3.5% per advance for the first 30 day period or portion thereof, then 1.5% per 30 day period or portion thereof until paid with a maximum borrowing term of 120 days per advance. The Agreement also provided that payments are due within 30 days of the Company receiving payment from the customer for invoices which are funded under this agreement. Rushcap had informally allowed the Company to treat the revolving line of credit as a term loan (not requiring payment of the principal as the Company receives payment) and has allowed the Company to pay a flat interest rate of 2% per month.  On May 13, 2015, Rushcap advised us that effective immediately, we must direct our customers to remit A/R payments directly to Rushcap in payment of amounts we owe Rushcap under the line of credit.  Rushcap has also stated that it intends to loan the moneys it receives back to our wholly owned operating subsidiary.  Effective May 29, 2015, this agreement was amended to increase the borrowing amount to $750,000 and amend the interest rate to 2% per month until the principal advanced is paid in full. Through June 30, 2015, $500,000 had been advanced to the company under this agreement.  

On March 24, 2015 the Company awarded its then CFO (now President and CFO) warrants to purchase 750,000 shares of common stock, at an exercise price of $.10 per share, subject to vesting annually over a three year period commencing December 31, 2015.  These warrants include a cashless exercise feature.  See Note 11 – Stockholders’ Equity

NOTE 11. STOCKHOLDERS’ EQUITY

Private Offering

On January 22, 2015, the Company sold an aggregate of 1,848,571 shares of our common stock to two accredited investors for gross proceeds of $3,697 (a per share price of $.002).

Stock-Based Compensation

On February 10, 2015, the Company issued 75,000 shares to a third party in recognition of services.  There shares were valued at $0.002 per share.

On March 24, 2015 the Company granted 750,000 warrants to its then CFO (now President and Chief Financial Officer). The warrants vest over a three year period with 250,000 warrants vesting each year. The warrants are exercisable at $.10 per share and expire on December 31, 2018. The Company recognizes stock-based compensation in the financial statements for all share-based awards to employees, including grants of warrants, based on their fair values.  The Company uses the Black-Scholes valuation model to estimate the fair value of stock option grants.  The Black-Scholes model incorporates calculations for expected volatility and risk-free interest rates and these factors affect the estimate of the fair value of the Company’s stock option grants.  The Company used the following variables in its Black-Scholes calculation. Exercise price of $0.10, stock price of $0.002, risk free rate of .5%, term of 3 years and volatility of 200%. The total fair value of the warrants are $750. Total stock based compensation expense for the three and six months ended June 30, 2015 was $62 and $124, respectively.  

NOTE 12.  LEGAL PROCEEDINGS

Except as disclosed herein, we are not a party to any pending legal proceeding. To the knowledge of our management, except as disclosed herein, no federal, state or local governmental agency is presently contemplating any proceeding against us.  

On or about August 12, 2014, we received a Notice of Debarment from the US Defense Logistics Agency (“DLA”) (the “Notice”). The Notice (i) prevents us from bidding on new government contracts and (ii) precludes the renewal of any existing contract that is otherwise renewable.  The Notice was issued to us because our former CEO (who is a significant shareholder of our company) is affiliated with a company that is alleged to have sold products to the DLA that did not conform to the applicable contract. The DLA has not alleged any wrongdoing with respect to our company or its contracts with the DLA.

 

On November 3, 2014, the Company filed a letter with DLA opposing the proposed notice of debarment. We have received notification from the DLA stating that our appeal was reviewed and denied.  As a result, we are not at this time able to bid on any new US government contracts that might otherwise be of interest to us. Our inability to bid on future US government contracts could have an adverse effect on our revenues and profitability, unless we are able to replace the resulting revenue loss.

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NOTE 13. SUBSEQUENT EVENTS

Since June 30, 2015, the Company has borrowed an additional $50,000 under the inventory line of credit making the total outstanding principal balance $550,000 as of August 10, 2015.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-looking Statements

Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.

Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Overview

On June 21, 2013, the Company completed the acquisition of certain assets from Michael R. Rosa, its former chief executive officer (who was the CEO at the time of the transaction), and commenced business operations. Since completing the acquisition, the Company has raised capital, hired employees, leased space, engaged consultants and advisors, conducted extensive sales and marketing related activities both domestically and internationally, negotiated vendor relationships and engaged seller’s representatives.

As of January 2, 2015, the Company’s business was operated through its wholly-owned subsidiary, EnviroPack Technologies, Inc. Effective on or about January 15, 2015, the Company changed its name to The Enviromart Companies, and the Company’s wholly-owned subsidiary, EnviroPack Technologies, Inc., changed its name to Enviromart Industries, Inc.

The Company is a provider of United Nations/Department of Transportation (“UN/DOT”) certified environmental waste packaging solutions and environmental spill response and control products (primarily absorbent products).

Results of Operations

Sales

For the three months ended June 30, 2015, we had sales of $495,003 as compared to $269,783 for the three months ended June 30, 2014, an increase of 83%.  For the six months ended June 30, 2015, we had sales of $1,080,052 as compared to $586,598 for the six months ended June 30, 2014, an increase of 84%.  The increase in revenue was attributable to the purchase order financing we recently received, which we used to fulfill open purchase orders we would not have been able to fill in the normal course of business. Provided that our lender is willing to provide additional purchase order funding, as is permitted under our current agreement, we expect that our revenues will continue to increase.

Cost of Goods Sold

Cost of goods sold was $327,128 for the three months ended June 30, 2015 as compared to a cost of goods sold of $194,262 for the three months ended June 30, 2014.  Cost of sales as a percentage of sales was 66.1% for the three months ended June 30, 2015 (a gross profit percentage of 33.9%) compared to 72.0% for the three months ended June 30, 2014 (a gross profit of 28 %)  Cost of goods sold was $665,098 for the six months ended June 30, 2015 as compared to a cost of goods sold of $421,815 for the six months ended June 30, 2014.  Cost of sales as a percentage of sales was 61.6% for the six months ended June 30, 2015 (a gross profit percentage of 38.4%) compared to 71.9% for the six months ended June 30, 2014 (a gross profit of 28.1%).  Cost of goods sold as a percentage of sales decreased significantly because the purchase order funding we received enabled us to purchase our proprietary products in bulk and at a lower cost per unit.  Provided that our lender is willing to provide additional purchase order funding, as is permitted (but not required) under our current agreement, we expect future cost of sales as a percentage of sales will be consistent with the results for the six months ended June 30, 2015 as we will be able to continue to purchase our materials in bulk at quantity discounts.

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General and Administrative Expenses

General and administrative expenses were $338,300 for the three months ended June 30, 2015, as compared to $204,654 for the three months ended June 30, 2014 (about a 65% increase).  The increase in general and administrative expenses for the three months ended June 30, 2015 was due primarily to a $115,000 increase in professional fees, a $5,000 increase in insurance, a $5,000 increase in bank and merchant account fees, a $9,000 increase in rent and a $12,000 increase in office related expenses partially offset by a $10,000 decrease in non-cash stock based compensation expense and $3,000 in payroll and related taxes.  General and administrative expenses were $565,805 for the six months ended June 30, 2015, as compared $543,844 for the six months ended June 30, 2014 (about a 4% increase).  The increase in general and administrative expense for the six months ended June 30, 2015 was due primarily to a $86,000 increase in professional fees, a $10,000 increase in insurance, a $10,000 increase in bank and merchant account fees, a $8,000 increase in rent and a $14,000 increase in office related expenses partially offset by a $94,000 decrease in non-cash stock based compensation expense and $17,000 in payroll and related taxes. We expect future general and administrative expenses will be consistent with the results for the six months ended June 30, 2015.

Income (Loss) from Operations

Loss from operations was $170,425 during the three months ended June 30, 2015, as compared to a loss from operations of $129,133 during the three months ended June 30, 2014.  The increase in the loss from operations was primarily due to an increase in our general and administrative expenses of approximately $134,000 offset by an increase in our gross profit of approximately $92,000.  Loss from operations was $150,851 during the six months ended June 30, 2015, as compared to a loss from operations of $379,061 during the six months ended June 30, 2014.  The difference was a result of our increase in sales and improvement in our gross profit percentage due to the increase in purchase order financing.

Recent Developments

Effective April 24, 2015, Mr. Michael R. Rosa, our CEO and director, resigned for personal reasons from all offices of the Company and its wholly-owned subsidiaries held by him, including CEO and Director of the Company and Enviromart Industries, Inc., the sole operating subsidiary of the Company. Effective April 27, 2015, the Company entered into a consulting agreement with Mr. Rosa, a significant shareholder of the Company, under which he will render advisory services with respect to sales and marketing. The consulting agreement provides for a weekly consulting fee of $1,540, payable weekly in arrears, and may be terminated by either party upon written notice.

Also, effective April 24, 2015, George Adyns, the Company’s CFO, was appointed President and sole director of the Company and Enviromart Industries, Inc., the sole operating subsidiary of the Company.

Critical Accounting Policies and Significant Judgments and Estimates

The Securities and Exchange Commission (“SEC”) issued disclosure guidance for “critical accounting policies.” The SEC defines “critical accounting policies” as those that require the application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

Our significant accounting policies are described below. We anticipate that the following accounting policies will require the application of our most difficult, subjective or complex judgments:

Accounts Receivable

In the normal course of business, the Company extends credit to customers that satisfy defined credit criteria. Accounts receivable is recorded at carrying value, which approximates fair value, and is presented in the Company's unaudited consolidated balance sheets net of any allowance for doubtful accounts. As of June 30, 2015, an allowance for doubtful accounts had not been deemed necessary, and therefore, not recorded.

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Inventory

The Company’s inventory is stated at the lower of cost or estimated realizable value, with cost primarily determined on a weighted-average cost basis on the first-in, first-out (“FIFO”) method. The Company continuously evaluates the composition of its inventory, assessing slow-turning product. Estimated realizable value of inventory is determined based on an analysis of historical sales trends of our individual products, the impact of market trends and economic conditions, and a forecast of future demand, giving consideration to the value of current orders in-house relating to the future sales of inventory. Estimates may differ from actual results due to quantity, quality, and mix of products in inventory, customer demand, and market conditions. The Company’s historical estimates of these costs and any provisions have not differed materially from actual results. Any reserves for inventory shrinkage, representing the risk of physical loss of inventory, are adjusted based upon physical inventory counts. As of June 30, 2015, an inventory reserve of $7,193 has been recorded.

Concentration of Risk

Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash. Our cash balances are maintained in accounts held by major banks and financial institutions located in the United States. The Company occasionally maintains amounts on deposit with a financial institution that are in excess of the federally insured limits. The risk is managed by maintaining all deposits in high quality financial institutions.

For the six months ended June 30, 2015, we had no individually significant customers.

Machinery and Equipment

Equipment is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method based upon the estimated useful life of depreciable assets, which is three years for machinery and equipment.

Long-lived Assets

Machinery and equipment, along with other long-lived assets, are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be recoverable, or are less than their fair value. In evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from the use of the asset and its eventual disposition. To the extent that estimated future undiscounted net cash flows attributable to the asset are less than the carrying value, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value, considering external market participant assumptions. Assets to be disposed of and for which there is a committed plan of disposal are reported at the lower of carrying value or fair value less costs to sell.

Income Taxes

Income taxes are provided in accordance with FASB ASC 740 “Accounting for Income Taxes”. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.  As of June 30, 2015, all deferred tax assets continue to be fully reserved.

Revenue Recognition

Revenue is recognized across all segments of the business when there is persuasive evidence of an arrangement, delivery has occurred, price has been fixed or is determinable, and collectability is reasonably assured. Revenue is recognized at the time title passes and risk of loss is transferred to customers.

Sales Reserves and Uncollectible Accounts

A significant area of judgment affecting reported revenue and net income is estimating sales reserves, which represent that portion of gross revenues not expected to be realized. In particular, wholesale revenue is reduced by estimates of returns, discounts, markdowns, and operational chargebacks. In determining estimates of returns, discounts, markdowns and operational chargebacks, management analyzes current economic and market conditions. We review and refine these estimates on a quarterly basis. As of June 30, 2015, a sales reserve had not been deemed necessary, and therefore, not recorded.

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Liquidity and Capital Resources

Currently, we have only minimal operating capital. Accordingly, we have an immediate and urgent need for additional capital to fund our business operations. Although the $550,000 in purchase order financing we received through August 10, 2015, is helping to fund limited sales, the lack of unrestricted operating capital is nevertheless adversely affecting our ability to purchase needed product inventory and develop our Enviromart.com B2B website.  Consequently, the lack of working capital is currently interfering with our ability to implement our business plan and maximize our sales revenue. We are actively seeking to raise additional capital through the sale of equity and/or debt securities. Sales of additional equity securities (or securities convertible into equity securities) will dilute the percentage ownership interest of existing stockholders in the Company.

Although our operating revenues have grown, we are incurring significant costs and expenses in connection with the establishment of our business, implementation of our business plan and ongoing compliance costs associated with being a public company. During the six months ended June 30, 2015, our operating activities used approximately $233,000 in cash, compared to using approximately $81,000 during the comparable prior period.  The approximate $152,000 increase in cash used by operations was due primarily to a $239,000 decline in the increase in accounts payable and accrued expenses caused by better cost control plus the securing of purchase order financing, a $14,000 decrease in the decline in accounts receivable, an $11,000 increase in the amount of inventory growth, a $94,000 decrease in stock based compensation and a $10,000 increase in prepaid expenses, partially offset by a $216,000 decrease in net loss. Although we have decreased our reliance on funding our operating losses through increased accounts payable and accrued expenses, we are still dependent on accounts payable as a means of funding our operations.  Funding our business through increased accounts payable and accrued expenses is not a sustainable way to fund our operating activities. We need to raise additional unrestricted cash immediately in order to fund our business operations and implement our business plan. As a result, we have an immediate and urgent need for additional funds.

At June 30, 2015, we had a working capital deficiency of approximately $859,000, compared to a working capital deficiency of approximately $942,000 at December 31, 2014. The decrease of approximately $83,000 in our working capital deficiency was due primarily to a $54,000 decrease in amounts due our former CEO, a $38,000 increase in accounts receivable, a $76,000 increase in inventory, a $19,000 increase in prepaid expense, a $12,000 increase in cash and the reclassification of approximately $252,000 in convertible notes and due to officer to long term debt, partially offset by an increase in accounts payable and accrued expenses of $29,000, an increase in the inventory line of credit of $300,000 and a $45,000 decrease in accounts receivable – related party.

In order to remedy this liquidity deficiency, we need to raise additional capital immediately, and ultimately we will need to generate substantial positive operating cash flows. Our internal sources of funds will consist of cash flows from operations, but not until we begin to realize additional revenues from the sale of products. As previously stated, as of the date of filing of this report, we have only limited cash, and our operations are generating negative cash flows, and thus adversely affecting our liquidity. We intend to raise additional funds through equity and/or debt financing. In addition, due to the purchase order funding we already have in place and subject to receipt of additional funding in the near term, we expect that our operations will continue to generate increasing revenues during the remainder of 2015, which should improve our liquidity deficiency. However, if we are unable to raise additional unrestricted funds in the near term, we will not be able to implement our business plan, and it is unlikely that we will be able to continue as a going concern.

Subject to the availability of unrestricted funds, which we currently do not have, we expect to incur approximately $250,000 in web development expenditures over the next 12 months. The purpose of these expenditures will be to continue the development of our Environmart.com B2B website.

We expect to fund these capital expenditures and website development costs through a combination of cash flows from operations (but not until we realize further significant revenue growth) and proceeds from equity/debt financing. If we are unable to generate positive cash flows from operations, and/or raise additional funds (either through debt or equity or a combination thereof), we will be unable to fund these expenditures, in which case, there could be an adverse effect on our business and results of operations.

Since March, 2013, we have raised an aggregate of approximately $567,000 from the sale of shares of common stock and convertible promissory notes. We have also received $550,000 in purchase order financing.  We expect to raise additional funds in the near term from the further equity and/or debt offerings. Additional sales of common stock or securities convertible into common stock will reduce the percentage interest of existing stockholders in our Company.

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In addition, on September 26, 2014, the Company entered into an agreement with Rushcap Group, Inc. (controlled by Mark Shefts (a significant shareholder)) to provide a revolving line of credit to purchase inventory to the Company.  The maximum borrowing amount under this agreement was $300,000.  Under the Agreement, interest was payable at a rate of 3.5% per advance for the first 30 day period or portion thereof, then 1.5% per 30 day period or portion thereof until paid with a maximum borrowing term of 120 days per advance.  The Agreement also provided that payments are due within 30 days of the Company receiving payment from the customer for invoices which are funded under this agreement. Rushcap had informally allowed the Company to treat the revolving line of credit as a term loan (not requiring payment of the principal as the Company receives payment) and has allowed the Company to pay a flat interest rate of 2% per month.  On May 13, 2015, Rushcap advised us that effective immediately, we must direct our customers to remit A/R payments directly to Rushcap in payment of amounts we owe Rushcap under the line of credit.  Rushcap has also stated that it intends to loan the moneys it receives back to our wholly owned operating subsidiary.  Effective May 29, 2015, this agreement was amended to increase the borrowing amount to $750,000 and amend the interest rate to 2% per month until the principal advanced is paid in full. Through June 30, 2015, $500,000 had been advanced to the company under this agreement.  

The purchase order funding provided by Rushcap Group has enabled the Company to significantly grow its revenue since funding began. For the nine month period ended September 30, 2014, the Company had revenues of approximately $1,018,000 (or about $113,000 per month). The Company realized revenue of approximately $1,719,000 in the fourth quarter of 2014 and first six months of 2015 combined (or about $191,000 per month). Accordingly, the Company has experienced nearly a 70% increase in its monthly sales revenue in the fourth quarter of 2014 and first six months of 2015, as compared with the nine months ended September 30, 2014. The Company believes this level of sales can be maintained or surpassed during the remainder of 2015, given that we were able to secure substantial additional purchase order funding.

As of June 30, 2015, the company was delinquent with respect to the payment of IRS Payroll Taxes for the period July 1, 2013 through June 30, 2014 in the amount of $119,079. As of June 30, 2015, the Company owed an aggregate of $146,575, including $34,522 in penalties and interest related to these delinquencies.  The Company believes that it will be able to secure a waiver of penalties in the aggregate approximate amount of $31,000, leaving the Company with a payroll tax liability to the US Treasury (including interest) of approximately $122,000. The company expects to pay this amount out in installments over a three year period (approximately $3,500 per month).

In the event we do not generate sufficient funds from revenues or financing through the issuance of common stock or from debt financing, we will not be able to fully implement our business plan and pay our obligations as they become due, any of which circumstances would have a material adverse effect on our business prospects, financial condition, and results of operations. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to recover the value of its assets or satisfy its liabilities. See Note 3 to the Financial Statements - Going Concern.

We expect to raise additional funds in the near term from sales of shares of common stock. Additional sales of common stock will reduce the percentage interest of existing shareholders in our company. We may also raise additional funds through the sale of debt securities in the near term.

On or about August 12, 2014, we received a Notice of Debarment from the US Defense Logistics Agency (“DLA”) (the “Notice”). The Notice (i) prevents us from bidding on new government contracts and (ii) precludes the renewal of any existing contract that is otherwise renewable.  The Notice was issued to us because our CEO (who is also a significant shareholder of our company) is affiliated with a company that is alleged to have sold products to the DLA that did not conform to the applicable contract. The DLA has not alleged any wrongdoing whatsoever with respect to our company or its contracts with the DLA.

On November 3, 2014, the Company filed a letter with DLA opposing the proposed notice of debarment based on EST’s alleged affiliation with the other company.  

We have received notification from the DLA stating that our appeal was reviewed and denied.  As a result, we are not able to bid on any new US government contracts that might otherwise be of interest to us. Our inability to bid on future US government contracts could have an adverse effect on our revenues and profitability, unless we are able to replace the resulting revenue loss.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements as defined in Item 303(a) (4) (ii) of the SEC’s Regulation S-K.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including the President and CFO, to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of our management, including our former CEO and CFO, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, our former CEO and controller concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were not effective.

Changes in Internal Control over Financial Reporting

Effective April 24, 2015, Mr. Michael R. Rosa, CEO and director of the Registrant, resigned for personal reasons from all offices of the Registrant and its wholly-owned subsidiaries held by him, including CEO and Director of the Registrant and Enviromart Industries, Inc., the sole operating subsidiary of the Registrant. Effective April 27, 2015, the Registrant entered into a consulting agreement with Mr. Rosa, a significant shareholder of the Registrant, under which he will render advisory services with respect to sales and marketing. The consulting agreement provides for a weekly consulting fee of $1,540, payable weekly in arrears, and may be terminated by either party upon written notice.

Also, effective April 24, 2015, George Adyns, the Registrant’s CFO, was appointed President and sole director of the Registrant and Enviromart Industries, Inc., the sole operating subsidiary of the Registrant.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Except as disclosed herein, we are not a party to any pending legal proceeding. To the knowledge of our management, except as disclosed herein, no federal, state or local governmental agency is presently contemplating any proceeding against us.  

On or about August 12, 2014, we received a Notice of Debarment from the US Defense Logistics Agency (“DLA”) (the “Notice”). The Notice (i) prevents us from bidding on new government contracts and (ii) precludes the renewal of any existing contract that is otherwise renewable.  The Notice was issued to us because our CEO (who is also a significant shareholder of our company) is affiliated with a company that is alleged to have sold products to the DLA that did not conform to the applicable contract. The DLA has not alleged any wrongdoing whatsoever with respect to our company or its contracts with the DLA.

 

On November 3, 2014, the Company filed a letter with DLA opposing the proposed notice of debarment based on EST’s alleged affiliation with the other company.  

We have received notification from the DLA stating that our appeal was reviewed and denied.  As a result, we are not able to bid on any new US government contracts that might otherwise be of interest to us. Our inability to bid on future US government contracts could have an adverse effect on our revenues and profitability, unless we are able to replace the resulting revenue loss.

ITEM 1A. RISK FACTORS

Not required.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

N/A

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ITEM 6. EXHIBITS

** Furnished, not filed

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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 hereunto duly authorized.

Environmental Science and Technologies, Inc.

By: /s/ George R. Adyns

Name: George R. Adyns

Title: President and Chief Financial Officer (Principal Executive and Financial Officer)

Dated: August 14, 2015

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