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EX-31.2 - CERTIFICATION - Evergreen-Agra Global Investments, Inc. | egrn_ex312.htm |
EX-32.1 - CERTIFICATION - Evergreen-Agra Global Investments, Inc. | egrn_ex321.htm |
EX-31.1 - CERTIFICATION - Evergreen-Agra Global Investments, Inc. | egrn_ex311.htm |
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, 2016
¨ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-53902
Evergreen-Agra, Inc. |
(Exact Name of Registrant as Specified in Its Charter) |
Nevada | 98-0460379 | |
(State or Other Jurisdiction | (I.R.S. Employer |
19800 MacArthur Suite 300, Irvine CA, USA 92612
(Address of Principal Executive Offices & Zip Code)
604-764-7646
(Telephone Number)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to section 12(g) of the Act: Common Stock, $0.001 par value
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 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 the definitions of "large accelerated filer," "accelerated filer," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | ¨ |
Non-accelerated filer | ¨ | Smaller reporting company | x |
(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
The registrant had 42,826,491 shares of common stock outstanding as of June 30, 2016.
Evergreen-Agra, Inc. |
Quarterly Report On Form 10-Q |
For The Quarterly Period Ended |
June 30, 2016 |
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Management's Discussion and Analysis of Financial Condition and Results of Operations | 15 | |||
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FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Forward-looking statements in this quarterly report include, among others, statements regarding our capital needs, business plans and expectations. Such forward-looking statements include, but are not limited to, statements with respect to the following:
· | our need for additional financing; | |
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· | the competitive environment in which we operate; | |
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· | our dependence on key personnel; | |
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· | conflicts of interest of our directors and officers; | |
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· | our ability to fully implement our business plan; | |
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· | our ability to effectively manage our growth; and | |
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· | other regulatory, legislative and judicial developments. |
Forward-looking statements are made, without limitation, in relation to operating plans, property exploration and development, availability of funds, environmental reclamation, operating costs and permit acquisition. 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", "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 in our annual report on Form 10-K for the year ended December 31, 2015, this quarterly report on Form 10-Q, and, from time to time, in other reports that 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. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We caution readers not to place undue reliance on any such forward-looking statements, which speak only to a state of affairs as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. We qualify all the forward-looking statements contained in this annual report by the foregoing cautionary statements.
3 |
Table of Contents |
PART I – FINANCIAL INFORMATION
The following unaudited interim financial statements of Evergreen-Agra, Inc. (sometimes referred to as "we", "us" or "our Company") are included in this quarterly report on Form 10-Q:
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Evergreen-Agra, Inc. | ||||||||
Consolidated Balance Sheets | ||||||||
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| June 30, |
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| December 31, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | - |
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| $ | - |
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Prepaid expense |
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| 82 |
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| 82 |
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Total current assets |
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| 82 |
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| 82 |
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Equipment, less accumulated depreciation of $4,250 and $3,850, respectively |
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| 250 |
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| 650 |
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Total Assets |
| $ | 332 |
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| $ | 732 |
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Liabilities and Stockholders' Deficit |
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Current liabilities: |
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Accounts payable |
| $ | 573,213 |
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| $ | 547,838 |
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Accounts payable - related parties |
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| 520,979 |
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| 446,109 |
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Total current liabilities and total liabilities |
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| 1,094,192 |
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| 993,947 |
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Stockholders' Equity (Deficit): |
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Common Stock, $0.001 par value : 100,000,000 Common Shares Authorized; 42,826,491 and 25,486,602 Shares Issued and Outstanding, respectively |
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| 42,827 |
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| 25,487 |
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Additional paid-in capital |
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| 2,304,519 |
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| 1,454,865 |
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Accumulated deficit |
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| (3,441,206 | ) |
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| (2,473,567 | ) |
Total stockholders' deficit |
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| (1,093,860 | ) |
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| (993,215 | ) |
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Total liabilities and stockholders' deficit |
| $ | 332 |
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| $ | 732 |
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The accompanying notes are an integral part of these consolidated financial statements.
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Evergreen-Agra, Inc. | ||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||
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| For the Three Months Ended |
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| June 30, |
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Revenue |
| $ | - |
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| $ | - |
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| $ | - |
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| $ | - |
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Operating Expenses: |
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Stock-based compensation |
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| - |
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| 44,000 |
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| 866,994 |
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| 44,000 |
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General and administrative |
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| 53,579 |
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| 8,168 |
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| 59,648 |
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| 11,253 |
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Depreciation of equipment |
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| 200 |
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| 200 |
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| 400 |
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| 400 |
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Foreign exchange loss (gain) |
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| (956 | ) |
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| 19,753 |
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| 40,597 |
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| (44,683 | ) |
Total Operating Expenses |
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| 52,823 |
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| 72,121 |
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| 967,639 |
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| 10,970 |
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Income (Loss) from Operations |
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| (52,823 | ) |
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| (72,121 | ) |
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| (967,639 | ) |
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| (10,970 | ) |
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Net Income (Loss) |
| $ | (52,823 | ) |
| $ | (72,121 | ) |
| $ | (967,639 | ) |
| $ | (10,970 | ) |
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Net Income (Loss) per Common Share - Basic and Diluted |
| $ | (0.00 | ) |
| $ | (0.00 | ) |
| $ | (0.02 | ) |
| $ | (0.00 | ) |
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Weighted Average Number of Common Shares Outstanding - basic and diluted |
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| 42,826,491 |
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| 44,987,699 |
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| 42,539,090 |
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| 44,987,149 |
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The accompanying notes are an integral part of these consolidated financial statements.
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Evergreen-Agra, Inc. | ||||||||
Consolidated Statements of Cash Flows | ||||||||
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| For the Six Months Ended |
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Cash Flows from Operating Activities |
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Net Income (loss) |
| $ | (967,639 | ) |
| $ | (10,970 | ) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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Stock-based compensation |
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| 866,994 |
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| 44,000 |
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Depreciation |
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| 400 |
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| 400 |
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Increase (decrease) in accounts payable |
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| 25,375 |
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| (10,457 | ) |
Increase (decrease) in accounts payable - related parties |
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| 74,870 |
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| (22,973 | ) |
Net cash used in operating activities |
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| - |
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| - |
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Net cash used in investing activities |
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| - |
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Net cash provided by financing activities |
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| - |
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Net Increase (Decrease) in Cash |
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| - |
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Cash and cash equivalents at beginning of period |
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| - |
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| - |
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Cash and cash equivalents at end of period |
| $ | - |
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| $ | - |
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Supplemental Cash Flow Information: |
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Income taxes paid |
| $ | - |
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| $ | - |
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Interest paid |
| $ | - |
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| $ | - |
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The accompanying notes are an integral part of these consolidated financial statements.
7 |
Evergreen-Agra, Inc. | ||||||||||||||||||||
Consolidated Statements of Stockholders' Equity | ||||||||||||||||||||
For the Year Ended December 31, 2015 and | ||||||||||||||||||||
For the Six Months Ended June 30, 2016 (Unaudited) | ||||||||||||||||||||
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| Common Stock |
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| Additional |
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| Total |
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| Amount |
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| Paid in |
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| Accumulated Deficit |
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| Stockholders' |
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Balance - December 31, 2014 |
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| 44,986,602 |
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| $ | 44,987 |
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| $ | 1,380,040 |
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| $ | (2,530,523 | ) |
| $ | (1,105,496 | ) |
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Shares issued to Bram Solloway for services |
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| 100,000 |
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| 100 |
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| 43,900 |
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| - |
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| 44,000 |
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Shares reduction relating to resignation of Harpreet Sangha |
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| (19,600,000 | ) |
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| (19,600 | ) |
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| 19,600 |
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| - |
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Forgiveness of accounts payable to Rene Hamouth |
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| - |
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| - |
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| 11,325 |
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| - |
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| 11,325 |
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Net income for the year ended December 31, 2015 |
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| 56,956 |
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| 56,956 |
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Balance - December 31, 2015 |
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| 25,486,602 |
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| $ | 25,487 |
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| $ | 1,454,865 |
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| $ | (2,473,567 | ) |
| $ | (993,215 | ) |
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Shares issued to Matthew Rhoden pursuant to Executive Agreement dated January 4, 2016 |
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| 17,339,889 |
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| 17,340 |
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| 849,654 |
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| - |
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| 866,994 |
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Net loss for the six months ended June 30, 2016 (Unaudited) |
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| - |
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| - |
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| - |
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| (967,639 | ) |
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| (967,639 | ) |
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Balance - June 30, 2016 (Unaudited) |
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| 42,826,491 |
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| $ | 42,827 |
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| $ | 2,304,519 |
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| $ | (3,441,206 | ) |
| $ | (1,093,860 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
8 |
EVERGREEN-AGRA, INC.
(Formerly Sharprock Resources Inc.)
Notes to Consolidated Financial Statements
For the Three Months Ended June 30, 2016 and 2015
(Unaudited)
NOTE 1. NATURE OF OPERATIONS
Description of Business and History
Evergreen-Agra Inc. (hereinafter referred to as the "Company") was incorporated on June 13, 2008 by filing Articles of Incorporation under the Nevada Secretary of State. The Company was incorporated under the name AMF Capital Group, Inc. In June 2009, the Company changed its name to Blackrock Resources, Inc. In January 2010 the Company changed its name to Artepharm Global Corp. Effective July 20, 2011, the Company changed its name to Sharprock Resources Inc. Effective October 23, 2013 the Company changed its name to Evergreen-Agra, Inc. During the Company's quarter ended September 30, 2011, the Company shifted its focus from mineral exploration to organic veterinary medical products. In the quarter ended December 31, 2013, the Company shifted its focus to medical marijuana coincident with its acquisition of Evergreen Systems effective November 19, 2013.
On November 19, 2013, pursuant to a letter of intent dated September 10, 2013, the Company issued 20,000,000 post-split shares of its common stock to Rene Hamouth in exchange for 100% ownership of Evergreen Systems ("ES"). Except for conducting research on the medical marijuana industry, ES had no assets, liabilities, or business operations prior to the acquisition. At closing, the Company also issued 19,600,000 post-split shares of its common stock to Harpreet Sangha (then director and former chief executive officer of the Company from September 19, 2009 to September 1, 2013) for future services to be rendered and 1,000,000 post-split shares of its common stock to Richard Specht (secretary and director of the Company from September 1, 2013 to November 21, 2014) for services rendered. ES became a wholly owned subsidiary of the Company.
The acquisition resulted in a change of control of the Company on November 19, 2013. The accompanying consolidated financial statements reflect the assets, liabilities and operations of Evergreen Systems from its inception on August 15, 2013 to November 19, 2013 and are consolidated with Evergreen-Agra, Inc. thereafter.
Reverse Stock Split
Effective October 23, 2013, the Company completed a 1 for 100 reverse stock split of its common stock resulting in the reduction of the issued and outstanding shares of common stock from 82,280,000 shares to 822,800 shares at October 23, 2013. The accompanying consolidated financial statements retroactively reflect this reverse stock split.
NOTE 2. GOING CONCERN UNCERTAINTY
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. At June 30, 2016, the Company had negative working capital of $1,094,110. Further, the Company has had no revenues from inception on August 15, 2013. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty.
The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations. Management has plans to seek additional capital through a private placement of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
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NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Information
The accompanying unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they may not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, the unaudited financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for a fair presentation. Operating results for the three-month and six-month period ended June 30, 2016 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2016. The notes to the consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements contained in the Company's Form 10-K for the year ended December 31, 2015.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Evergreen-Agra, Inc. (from November 19, 2013 to June 30, 2016) and its wholly owned subsidiary ES (from inception on August 15, 2013 to June 30, 2016). All significant intercompany balances and transactions have been eliminated in consolidation.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and are expressed in U.S. dollars.
Use of Estimates
In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with original maturities of three months or less when acquired, to be cash equivalents. We had no cash equivalents at December 31, 2015 and June 30, 2016.
Equipment
Equipment is stated at historical cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, generally ranging from three to five years.
Stock-Based Compensation
Stock-based compensation is accounted for at estimated fair value in accordance with Accounting Standards Codification 718, "Compensation – Stock Compensation."
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Income Taxes
The Company accounts for income taxes under the provisions issued by the FASB which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company computes tax assets benefits for net operating losses carried forward. The potential benefit of net operating losses has not been recognized in these consolidated financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
Income (Loss) Per Common Share
The Company reports net income (loss) per share in accordance with provisions of the FASB. The provisions require dual presentation of basic and diluted income (loss) per share. Basic net income (loss) per share excludes the impact of common stock equivalents. Diluted net income (loss) per share utilizes the average market price per share when applying the treasury stock method in determining common stock equivalents. For the periods presented, there were no common stock equivalents outstanding.
Fair Value of Financial Instruments
Pursuant to ASC No. 820, "Fair Value Measurements and Disclosures", the Company is required to estimate the fair value of all financial instruments included on its balance sheet as of December 31, 2015 and June 30, 2016. The Company's financial instruments consist of cash and accounts payable. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments.
Recent Accounting Pronouncements
Certain accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and therefore have not yet been adopted by the Company. The impact on the Company's financial position and results of operations from adoption of these standards is not expected to be material.
NOTE 4. ACQUISITION OF EVERGREEN SYSTEMS
Effective November 19, 2013, the Company acquired 100% ownership of Evergreen Systems ("ES") in exchange for 20,000,000 newly issued shares of the Company's common stock (See Note 1). The transaction has been accounted for as a "reverse acquisition" in the accompanying consolidated financial statements. The financial position and results of operations of the Company prior to November 19, 2013 have been excluded from the accompanying consolidated financial statements.
11 |
The estimated fair values of the identifiable net assets of the Company at November 19, 2013 (effective date of the reverse acquisition) consisted of:
Cash and cash equivalents |
| $ | 4 |
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Prepaid expense |
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| 82 |
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Equipment, net |
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| 2,466 |
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Total Assets |
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| 2,552 |
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Accounts payable |
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| 590,852 |
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Accounts payable - related parties |
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| 587,073 |
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Total liabilities |
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| 1,177,925 |
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Identifiable Net Assets |
| $ | (1,175,373 | ) |
NOTE 5. ACCOUNTS PAYABLE
Accounts payable at June 30, 2016 and December 31, 2015 consists of:
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| June 30, |
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| December 31, |
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Former law firms |
| $ | 482,650 |
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| $ | 475,048 |
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Former audit firms |
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| 7,625 |
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| 7,625 |
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Other service providers |
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| 82,938 |
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| 65,165 |
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Total |
| $ | 573,213 |
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| $ | 547,838 |
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At June 30, 2016, $150,612 of the total $573,213 accounts payable is denominated in Canadian Dollars. These accounts payable were translated to United States Dollars using the June 30, 2016 exchange rate of $0.7722.
At December 31, 2015, $139,315 of the total $547,838 accounts payable is denominated in Canadian Dollars. These accounts payable were translated to United States Dollars using the December 31, 2015 exchange rate of $0.7215.
The above accounts payable represent amounts primarily recorded in the records of Evergreen-Agra, Inc. (formerly Sharprock Resources, Inc.) prior to the reverse acquisition of Evergreen Systems on November 19, 2013. Current management of the Company disputes these recorded liabilities.
12 |
NOTE 6. ACCOUNTS PAYABLE – RELATED PARTIES
Accounts payable – related parties at June 30, 2016 and December 31, 2015 consists of:
June 30, | December 31, | |||||||
Harpreet Sangha, chief executive office of the Company from September 19, 2009 to September 1, 2013 and director of the Company from September 19, 2009 to May 4, 2014 | $ | 53,267 | $ | 50,264 | ||||
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Herminder Rai, chief financial officer of the Company from April 12, 2012 to September 21, 2013 and director of the Company from May 8, 2012 to March 11, 2014 | 59,536 | 55,732 | ||||||
| ||||||||
Sam Sangha, brother of Harpreet Sangha | 120,213 | 112,321 | ||||||
| ||||||||
Rene Hamouth, chief executive officer of the Company from September 1, 2013 to July 17, 2014, director of the Company from September 1, 2013, and Chairman of the board of directors of the Company from July 17, 2014 | 44,731 | 530 | ||||||
| ||||||||
Craig Alford, director of the Company from October 14, 2011 to September 1, 2013 | 243,232 | 227,262 | ||||||
Total | $ | 520,979 | $ | 446,109 |
At June 30, 2016, $467,700 of the total $520,979 accounts payable – related parties is denominated in Canadian Dollars. These accounts payable were translated to United States Dollars using the June 30, 2016 exchange rate of $0.7722.
At December 31, 2015, $436,992 of the total $446,109 accounts payable – related parties is denominated in Canadian Dollars. These accounts payable were translated to United States Dollars using the December 31, 2015 exchange rate of $0.7215.
The above accounts payable represent amounts primarily recorded in the records of Evergreen-Agra, Inc. (formerly Sharprock Resources, Inc.) prior to the reverse acquisition of Evergreen Systems on November 19, 2013. Current management of the Company disputes these recorded liabilities.
13 |
NOTE 7. COMMON STOCK ISSUANCES
Issuances in 2015
On March 2, 2015, the Company issued 500,000 shares of its common stock to David Duroure, chief executive officer and director of the Company from November 13, 2014 to December 5, 2014, in connection with the November 13, 2014 acquisition of Strategic Plans Pharma LLC ("SPP"), an entity which planned to provide educational programs for military veterans. In December 2014, the Company terminated its involvement with SPP. The $220,000 estimated fair value of the 500,000 shares of Company common stock has been charged to "Stock-based costs relating to terminated acquisitions" in the statement of operations for the three months ended December 31, 2014.
On June 30, 2015, the Company issued 100,000 shares of its common stock to Bram Solloway for consulting services. The $44,000 estimated fair value of the 100,000 shares of Company common stock has been charged to "Stock-based compensation" in the statement of operations for the three months ended June 30, 2015.
On July 2, 2015, the 19,600,000 shares of Company common stock issued to Harpreet Sangha on November 19, 2013 were returned to the Company transfer agent and cancelled due to the resignation of Harpreet Sangha as Chairman of the Board and as a director on May 4, 2014.
Issuances in 2016
On February 25, 2016, the Company issued 17,339,889 shares of its common stock to Matthew Rhoden pursuant to an Executive Agreement between the Company, Matt Rhoden (the "Executive") and Rene Hamouth (the "Principal Shareholder") dated January 4, 2016. The agreement provides for the employment of the Executive as Chief Executive Officer of the Company for a period of 5 years, unless sooner terminated by the Board of Directors. The agreement also provides for the Executive and Principal Stockholder to vote together on all matters presented to the shareholders for vote and for each to grant the other a right of first refusal on shares owned by each during the term of the agreement. The $866,994 estimated fair value of the 17,339,889 shares of Company common stock has been charged to "Stock-based compensation" in the statement of operations for the three months ended March 31, 2016.
NOTE 8. INCOME TAXES
The Company has generated taxable losses for the periods presented. Accordingly, no provisions for income taxes have been recorded.
The Company's effective tax rate differs from the United States Federal income tax rate as follows:
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| 2016 |
|
| 2015 |
|
| 2016 |
|
| 2015 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Corporate Federal income tax at 35% |
| $ | (18,488 | ) |
| $ | (25,242 | ) |
| $ | (338,674 | ) |
| $ | (3,840 | ) |
Non-deductible stock-based compensation |
|
| - |
|
|
| 15,400 |
|
|
| 303,448 |
|
|
| 15,400 |
|
Non-deductible (non-taxable) foreign exchange (gain) loss |
|
| (335 | ) |
|
| 6,914 |
|
|
| 14,209 |
|
|
| (15,639 | ) |
Change in valuation allowance |
|
| 18,823 |
|
|
| 2,928 |
|
|
| 21,017 |
|
|
| 4,079 |
|
Provision for Income Taxes |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
At June 30, 2016, the Company has net operating loss carryforwards which expire from 2028 to 2036. The deferred tax asset relating to these net operating loss carryforwards has been fully reserved for at June 30, 2016 and December 31, 2015 since management's assessment has not yet determined it to be more likely than not that the net operating loss carryforwards will be realized.
Current United States income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.
14 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our most recent audited financial statements which are included in the Form 10-K for the year ended December 31, 2015, and the related notes to such financial statements. This section of this report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of our report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. We have yet to generate revenues to achieve profitability.
Plan of Operations
Evergreen-Agra Inc. (hereinafter referred to as the "Company") was incorporated on June 13, 2008 by filing Articles of Incorporation under the Nevada Secretary of State. The Company was incorporated under the name AMF Capital Group, Inc. In June 2009, the Company changed its name to Blackrock Resources, Inc. In January 2010 the Company changed its name to Artepharm Global Corp. Effective July 20, 2011, the Company changed its name to Sharprock Resources Inc. Effective October 23, 2013 the Company changed its name to Evergreen-Agra, Inc. During the Company's quarter ended September 30, 2011, the Company shifted its focus from mineral exploration to organic veterinary medical products. In the quarter ended December 31, 2013, the Company shifted its focus to medical marijuana coincident with its acquisition of Evergreen Systems effective November 19, 2013.
At June 30, 2016, the Company had negative working capital of $1,094,110. Further, the Company has had no revenues from inception on August 15, 2013. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty.
On September 8, 2014, the Company issued a total of 138,800 shares of its common stock to 31 investors of a private placement completed in July 2014 for net proceeds of $62,400. The proceeds were used for business operations of the Company.
The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our plan of operations going forward. In the absence of such financing, our business plan will fail. Even if we are successful in obtaining equity financing, there is no assurance that we will obtain the funding necessary to pursue our business plan. If we do not continue to obtain additional financing going forward, we will be forced to re-evaluate or abandon our plan of operations.
Results of Operations
Three Months Ended June 30, 2016 Compared to Three Months Ended June 30, 2015
For the three months ended June 30, 2016 and 2015, we had no revenues. Total operating expenses decreased $19,298 from $72,121 in 2015 to $52,823 in 2016. Stock-based compensation decreased $44,000 from $44,000 in 2015 to $0 in 2016. General and administrative expenses increased $45,411 from $8,168 in 2015 to $53,579 in 2016 due to higher professional fees in 2016 as a result of our filing of our 2014 and 2015 periodic reports with the SEC in 2016. Foreign exchange loss (gain) decreased $20,709 from a loss of $19,753 in 2015 (resulting from an increase in the Canadian Dollar exchange rate used to translate our liabilities denominated in Canadian Dollars to United States Dollars) to a gain of $956 in 2016 (resulting from a decrease in the Canadian Dollar exchange rate).
Net loss decreased $19,298 from a net loss of $72,121 in 2015 to a net loss of $52,823 in 2016. The decrease was due to the $44,000 decrease in stock-based compensation and the $20,709 decrease in foreign exchange loss, offset partially by the $45,411 increase in general and administrative expenses.
15 |
Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015
For the six months ended June 30, 2016 and 2015, we had no revenues. Total operating expenses increased $956,669 from $10,970 in 2015 to $967,639 in 2016. Stock-based compensation increased $822,994 from $44,000 in 2015 to $866,994 in 2016 as a result of the issuance of 17,339,889 shares of Company common stock to Matthew Rhoden on February 25, 2016 pursuant to an Executive Agreement dated January 4, 2016. General and administrative expenses increased $48,395 from $11,253 in 2015 to $59,648 in 2016 due to higher professional fees in 2016 as a result of our filing of our 2014 and 2015 periodic reports with the SEC in 2016. Foreign exchange loss (gain) increased $85,280 from a gain of $44,683 in 2015 (resulting from a decrease in the Canadian Dollar exchange rate used to translate our liabilities denominated in Canadian Dollars to United States Dollars) to a loss of $40,597 in 2016 (resulting from an increase in the Canadian Dollar exchange rate).
Net loss increased $956,669 from a net loss of $10,970 in 2015 to a net loss of $967,639 in 2016. The increase was due to the $822,994 increase in stock-based compensation, the $48,395 increase in general and administrative expenses, and the $85,280 increase in foreign exchange loss explained above.
Liquidity and Capital Resources
We had a working capital deficit of $1,094,110 at June 30, 2016. At both June 30, 2016 and December 31, 2015, we had no cash or cash equivalents. General and administrative expenses paid in 2016 and 2015 were paid directly by or on behalf of our Chairman of the Board of Directors.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable because we are a smaller reporting company.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Mr. Rene Hamouth, our Company's Chairman and President and Mr. Matthew Rhoden, our Chief Executive Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a15(e) of the exchange Act) as of June 30, 2016. Based on this evaluation, our chairman and chief executive officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2016, due to the deficiencies in our internal control over financial reporting, as reported in our Annual Report on Form 10K for our year ended December 31, 2015, which deficiencies have not been remedied.
No Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
16 |
We currently are not a party to any material legal proceedings and, to our knowledge, no such proceedings are threatened or contemplated.
Not applicable because we are a smaller reporting company.
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.
On February 25, 2016, the Company issued 17,339,889 shares of its common stock to Matthew Rhoden pursuant to an Executive Agreement between the Company, Matthew Rhoden (the "Executive") and Rene Hamouth (the "Principal Shareholder") dated January 4, 2016. The agreement provides for the employment of the Executive as Chief Executive Officer of the Company for a period of 5 years, unless sooner terminated by the Board of Directors. The agreement also provides for the Executive and Principal Stockholder to vote together on all matters presented to the shareholders for vote and for each to grant the other a right of first refusal on shares owned by each during the term of the agreement.
17 |
Exhibit No. | Description | |
3.1 | Articles of Incorporation (1) | |
3.2 | Bylaws (1) |
3.3 | Certificate of Amendment as filed with the Nevada Secretary of State, effective as of November 13, 2009 (2) | |
3.4 | Certificate of Change as filed with the Nevada Secretary of State, filed December 1, 2010 (3) | |
3.5 | Certificate of Correction as filed with the Nevada Secretary of State, filed December 2, 2010 (3) | |
3.6 | Certificate of Amendment as filed with the Nevada Secretary of State, effective as of February 24, 2011 (4) | |
3.7 | Articles of Merger as filed with the Nevada Secretary of State, effective as of July 20, 2011 (5) | |
10.1 | Share Purchase Agreement, dated February 3, 2012, among Sharprock Resources Inc., Credence Holdings Limited, Union Mining Holding Limited, and two individuals who are the beneficial owners of the entire share capital of Union.(6) | |
10.2 | Consulting Contract between the Company and Craig Alford, dated July 1, 2011 (7) | |
10.3 | Letter Agreement between the Company and Resource Energy Development, Inc., dated October 11, 2011 (7) | |
101 |
| XBRL Interactive Data Files |
Notes
(1) | Incorporated by reference from our Registration Statement on Form S-1, filed with the SEC on September 5, 2008. |
(2) | Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on March 3, 2010. |
(3) | Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on December 17, 2010. |
(4) | Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on March 2, 2011. |
(5) | Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on July 20, 2011. |
(6) | Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on February 9, 2012. |
(7) | Incorporated by reference from our Annual Report on Form 10-K, filed with the SEC on April 16, 2012. |
(8) | Filed herewith. |
18 |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Evergreen-Agra, Inc. | |||
Date: August 15, 2016 | By: | /s/ Matthew Rhoden | |
| Name: | Matthew Rhoden | |
Title: | Chief Executive Officer | ||
Date: August 15, 2016 | By: | /s/ Rene Hamouth |
|
| Name: | Rene Hamouth |
|
| Title: | Chairman of the Board and a Director |
|
19 |