SECURITIES AND EXCHANGE COMMISSION
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
10-K/AAmendment No. 1
(Mark One)
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Fiscal Year Ended fiscal year ended August 31, 2009
2023or
☐ | 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 0-50092
OCEAN SMART, INC.
(Name of Small Business Issuer in Its Charter)
file number ______________ Nevada | | 20-3113571ASTRA ENERGY INC. |
(State(Exact Name of registrant as specified in its charter) |
Nevada | | 20-3113571 |
(State or other jurisdiction of incorporation or organization) | | ( IRSI.R.S. EmployerIdentification No.) |
| 400 Professional Drive, Suite 310, Gaithersburg, Maryland | 20878 |
| (Address of Principal Executive Offices) | (Zip Code) |
(250) 757-9811
9565 Waples Street, Suite 200, San Diego, CA 92121
(Issuer’s Telephone Number, Including AreaAddress of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (800) 705-2919
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class | | Trading Symbol(s) | | Name of exchange on which registered |
Common | | ASRE | | OTCQB |
Securities registered pursuant to Sectionsection 12(g) of the Act:
Common Stock
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. | | | | | |
Shares Par Value $0.001(Title of class)
Preferred Shares Par Value $0.001
(Title of class)
_________________________
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Check ☐ Yes ☒ NoIndicate by check mark whether the issuer: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 pastpreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirementfi ling requirements for the past 90 days.
Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]
☒ Yes ☐ NoIndicate by check mark whether the Registrantregistrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒ Yes ☐ 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, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and smaller reporting company”"emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer |_| Accelerated Filer |_|
Non-accelerated filer |_| Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated Filer | ☒ | Smaller reporting company | ☒ |
| | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting company | X|
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The issuer's revenues for its most recent fiscal year were: $1,890,536.
The ☐ Yes ☒ NoState the aggregate market value of the voting and non-voting common equity held by non-affiliates ofcomputed by reference to the registrant as of December 9, 2009price at which the common equity was $747,662 (computed by multiplying the closing sales price for our common stock on such date bylast sold. $22,131,991
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, held by personsas of the latest practicable date.
80,263,982 issued and outstanding at January 8, 2024
DOCUMENTS INCORPORATED BY REFERENCE
None other than officers, directors or by record holders of 10% or more of the registrant’s outstanding common stock. This characterization of officers, directors and 10% or more beneficial owners as affiliates is for purposes of computation only and is not an admission for any purposes that such people are affiliates of the registrant).
The number of shares of our common stock outstanding on December 9, 2009 was 25,920,296.
TABLE OF CONTENTS
indicated in Item 15, exhibit list.| |
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| Submission of Matter to a Vote of Security Holders
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EXPLANATORY NOTE
The purpose of this Amendment No. 1 to our Annual Report on Form 10-K for the fiscal year ended August 31, 2023, as filed with the Securities and Exchange Commission on January 16, is to make amendments to Item 12. Security Ownership of Certain Beneficial Owners and Management Related Stockholder Matters.
No other changes have been made to the Form 10-K other than those described above. This Amendment No. 1 does not reflect subsequent events occurring after the original filing date of the Form 10-K or modify or update in any way disclosures made in the Form 10-K.
TABLE OF CONTENTS
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION
From timePart I
Item 1. Business
Astra Energy is an emerging company in the waste management industry and the electricity and power generation sectors with a focus on energy production from solar, waste conversion and clean burning fuels. The Company strives to time, we may make written statements that are "forward-looking," including statements containedadvance clean energy initiatives globally while delivering measurable benefits to communities and value to our investors by investing in this report and other filingsdeveloping renewable and clean energy projects in markets where demand is high and supply is limited.
CLEAN ENERGY PROJECTS:
Astra Energy in concert with the Securitiesgovernment of Tanzania is advancing a 350MW (Megawatt) Combined Cycle Gas Power Plant project. The government of Tanzania provided a positive response to the expression of interest, and Exchange Commission, reportsthey have requested a technical proposal or Project Feasibility Report. Astra is applying for Advocacy support for this project from the US Mission in Tanzania. The Company is currently in discussions to our stockholdersacquire land and news releases. All statements that express expectations, estimates, forecasts or projections are forward-looking statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "projects," "forecasts," "may," "should," variations of such wordsis looking at an existing 350MW Combined Cycle Gas Power Plant (the “Plant”).
Astra is in continuing discussions to secure both a Power Purchase Agreement and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors on which such statements are based are assumptions concerning uncertainties, including but not limited to uncertainties associatedgas supply agreement with the following:
(a) volatility or decline of our stock price;
(b) potential fluctuation in quarterly results;
(c) our failure to earn revenues or profits;
(d) inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement its business plans;
(e) inadequate capital to continue business;
(f) changes in demand for our products and services;
(g) rapid and significant changes in markets;
(h) litigation with or legal claims and allegations by outside parties; or
(i) insufficient revenues to cover operating costs.
There is no assurance that we will be profitable, we may not be able to successfully develop, manage or market our products and services, we may not be able to attract or retain qualified executives and technology personnel, our products and services may become obsolete, government regulation may hinder our business, additional dilution in outstanding stock ownership may be incurred due to the issuance of more shares, warrants and stock options, or the exercise of warrants and stock options, and other risks inherent in the our businesses.
We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the factors described in other documents we file from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q and Annual Report on Form 10-K and any Current Reports on Form 8-K filed by us. All forward-looking statements attributable to us are expressly qualified in their entirety by the cautionary statement above.
PART I.
Item 1. Description of Business
(A) We were incorporated under the laws of the State of Nevada on June 12, 2000, with the name Heritage Management Corporation. In August 2005, we entered into a share exchange agreement with Edgewater Foods, the parent company of Island Scallops Ltd. (or “Island Scallops”) an aquaculture company located in Vancouver Island, British Columbia. As a result of the Share Exchange, Island Scallops Ltd. became our wholly owned subsidiary and Edgewater’s shareholders became the owners of the majority of our voting stock. Pursuant to the terms of the Share Exchange Agreement, Edgewater’s officers and directors were appointed as our officers and directors. Additionally, we changed our name from Heritage Management, Inc. to Edgewater Foods International, Inc. Thereafter in March 2009, pursuant to our shareholder’s approval, we changed our corporate name from Edgewater Foods International Inc. to Ocean Smart, Inc. (or “Ocean Smart’).
Ocean Smart, a NevadaTanzania Petroleum Development Corporation is the parent company of Island Scallops Ltd., a Vancouver Island aquaculture company. Island Scallops was established in 1989 and for over 20 years has successfully operated a scallop farming and marine hatchery business. Island Scallops is dedicated to the farming, processing and marketing of high quality, high value marine species: scallops and sablefish. Scallop farming is relatively new to North America and Island Scallops is the only producer of the “Qualicum Beach Scallop” .and demonstrated ability to produce sablefish ( blackcod) Given Island Scallops’ unique hatchery technology and extensive research and development, we believe that there is currently no significant competition for these marine species. Island Scallops is committed to rapidly expanding production and profits while continuing to finance the aggressive growth of the company and maintaining a healthy respect for the marine environment.
Ocean Smart acquired Island Scallops in June 2005 throughnatural gas required to fuel the Plant. Once these agreements are executed, the Company will seek an equity partner for the project and debt financing to build out the project. Astra Energy is advancing a tax free share exchange. Island Scallops was established in 1989"Clean Energy Park" on the island of Zanzibar which includes a 42.5MW solar farm combined with a waste to commercialize Canadian government research on scallop aquaculture. Island Scallops’ hatchery operations have diversifiedenergy system to produce other speciesconvert 15 tons of shellfish such as mussels, clams, geoducksmunicipal solid waste per hour into 7.5MW/hour of electric power and oysters. Island Scallops has also investigated the culture of halibut, spot prawn, sea urchin and abalone. Island Scallops is the first hatchery to successfully produce sablefish juveniles for commercial grow-out.
Currently, Island Scallops’ primary product is farmed “Qualicum Beach Scallop” for sale throughout North America. Island Scallops offers a variety of other products and services to the industry including aquaculture equipment, consulting, research and development, and custom processing and marketing. Internationally, Island Scallops has collaborated with both Japanese and Moroccan fisheries interests.
On August 30, 2006, we filed a Form 8-A to register our common stock pursuant to Section 12(g) of the Act and we therefore ceased being a voluntary filer.
Key Corporate Objectives
Our key business development objectives over the next 12 months is to finish the line construction of the Nile Creek and Kanish Bay farms and to move forward with possible joint venture shellfish farmers and with First Nations1 groups, investigate strategic acquisitions and/or business opportunities and look for possible partners or additional strategic investors tobattery storage. The project will enable the companyisland to capitalize ondispose of all its existing black cod technology. In general, we plan on leveraging our existing hatchery technology and expertise via joint venture and/or acquisitionsgarbage, thereby avoiding the need for a garbage landfill. Landfills are major generators of methane, a major greenhouse gas that will enable us to reach significantly increased sales over the next three years. Specifically, we plan to expand our business and operations as follows:
● Expand our sales and marketing relationship with Fanny Bay Oyster Co., a division of Taylor Shellfish Farms of Shelton, Washington (an international seafood distributor and the largest shellfish company on the West Coast) to expand overall scallops and reduce selling costs. is responsible for global warming. The initial order of 800,000 lbs. the "Qualicum Beach Scallop",Prefeasibility Report has been completed and future sales agreementsthere are being finalized.
● Continue to move forward with ourcontinuing discussions with various First Nations groupsthe island government regarding the Power Purchase Agreement to feed the power into the grid network. Over 200 acres of land has been secured by Astra on a long-term lease basis. The island of Zanzibar is a semi-autonomous territory of Tanzania in the Indian ocean. Electric power to the island is currently provided using two 100MW submarine cables from mainland Tanzania. These cables are now at capacity. The island wishes to have an independent power supply. Therefore, the immediate need for an additional 50MW of power in less than two years.
POWER GENERATION TECHNOLOGY:
In October 2022, the Company entered into a Joint Venture with Holcomb Scientific Research Ltd. (“HSR”) to manufacture and individuals about possible partnerships or buy sell agreementsdistribute the innovative and patent protected Holcomb Inline Power Generator (ILPG) for homes, commercial applications, solar projects, electric vehicles, large power scale power plants, and many more applications. On September 22, 2023, Astra entered into an Exclusive Worldwide Manufacturing License Agreement with Holcomb Energy Systems, LLC. Holcomb owns a license for certain intellectual property rights licensed to expand scallops cultureit by Holcomb Scientific Research Ltd., relating to power generation, including the Holcomb Energy System (“HES”) In-Line Power Generator and Self-Sustaining Power Plant worldwide.
Holcomb Scientific Research Ltd. is a Research and Development company that has created the patent-protected Holcomb Energy System, a scientific breakthrough in British Columbia. This willclean energy generation. The HES utilizes the natural energy produced by the electron spin in the iron atom, converting it into usable electricity while requiring no fuel, releasing zero carbon emissions, and having no moving parts - therefore running completely silent.
WASTE TO ENERGY TECHNOLOGY
Regreen Technologies Inc. (“Regreen”), a related, California-based “zero emissions” clean energy company. Regreen is involved in research and development of the science of converting municipal solid waste (MSW) and organic waste into “zero emission” marketable commodities, such as clean electricity, biofuels, animal feeds, fertilizers, organic pesticides, and reclaimed water purification.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the company with additional growing areasinformation required under this item.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our principal executive offices are located at 9565 Waples Street, Suite 200, San Diego, CA where we lease approximately 100 square feet of office space on a month-to-month basis. We believe our present facilities are adequate for scallops and future joint venture revenues.
● Investigate possible acquisitions of other aquaculture companies, equipment vendors and/or seafood distributors.our current needs. We plan to initially focus on companiesdo not own any real property.Item 3. Legal Proceedings
We are currently not involved in any litigation that we believe could significantly benefit fromhave a material adverse effect on our hatchery technologyfinancial condition or results of operations.
Item 4. Mine Safety Disclosures
Not applicable.
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and expertise. As partIssuer Purchases of this initiative we recently established an Acquisition/Business Opportunity Board Committee and are currently beginning initial conversions with both North American and Chinese based companies. Aside from the November 2008 acquisition of Granscal Sea Farms Ltd., a Kanish Bay Company, as of the date of this filing, no new definitive agreements have been signed.
● Look to indentify either new strategic investors and/or possible joint venture partners who could help us capitalize on existing sablefish (or blackcod) hatchery technology and expertise. One possible arrangement would beEquity SecuritiesMarket for us to license our blackcod hatchery technology and expertise to a strategic partner. As of the date of this filing, we have yet to locate either a strategic investor or a joint venture of licensing partner. If we do indentify a suitable arrangement, our goal would be to capitalizeCommon Stock
Our common stock was listed for trading on the high demand for sablefish in foreign markets by entering into the blackcod market in the next 2 to 3 years.
Marketing and Distribution
Our marketing and distribution strategy for Island Scallops will focusOTCQB on developing and maintaining long-term relationships with distribution channel members. Island Scallops also strives to differentiate its products to achieve consistent supply and quality. Island Scallops believes the scallop market effectively functions as a commodity market and therefore, relationships with distributors are important. To develop these relationships, Island Scallops has identified key purchasing criteria for the distributors: price, quality and consistent fresh farmed supply. Over the long term, for the reasons noted below, Island Scallops wants to differentiate its products so that it can command premium prices. Freshness is an important factor for scallops since whole live scallops have a limited shelf life, while fresh scallop meat remain fresh for up to 20 days. Due to this short shelf life, distributors try to offer the freshest products. Island Scallops believes it is in a favorable position to supply fresh products to United States brokers/distributors, especially those located on the west coast where demand for the product is strong. Currently, these brokers/distributors are supplied for the most part with frozen east coast North American scallops.
1 First Nations commonly refers to the indigenous people in what is now Canada. There are currently over 600 recognized First Nations governments or bands in Canada, roughly half of which are in the provinces of Ontario and British Columbia.
Traditionally, as described above, we have sold live scallops within the Pacific Northwest market. We recently completed a $2.0 million order with Fanny Bay Oyster Co., a division of Taylor Shellfish Farms of Shelton, Washington (an international seafood distributor and the largest shellfish company on the West Coast). The order includes live scallops, fresh scallop meat and frozen scallops produced at our Qualicum Beach, B.C. operation. As a result of this order, Fanny Bay has become the effective exclusive distributor of our scallops. We believe this order (and future orders) will reduce cost and will continue to encourage additional wholesalers within the Taylor network to carry our scallops.
Current Products
Island Scallops currently focuses exclusively on aquaculture products and is not involved in wild fisheries. All seafood products are produced in private hatcheries and grown on ocean farm sites. Currently, the “Qualicum Beach Scallop” is the only product that Island Scallops produces, grows, processes and markets. Island Scallops also produces a variety of other shellfish seed species including the Pacific oyster, Eastern blue mussel, Mediterranean mussel, Geoduck clam, which we sell to third party shellfish farmers.
Island Scallops has been a leader in marine hatchery technology for the past 20 years. Island Scallops has developed proprietary hatchery techniques for a number of marine species, most notably the hybridizing of the “Qualicum Beach Scallop” and becoming the first company to produce commercial quantities of sablefish juveniles. Both of these breakthroughs have required many years of research and considerable investment. In the case of sablefish, which is a cold-water fish that spawns at depths of 800 - 2400 ft, a variety of techniques were required to successfully mature, spawn, incubate and rear the larvae. In addition, there were technical difficulties associated with egg and yolk sac incubation (as well as larvae rearing and weaning) that were resolved using proprietary technology developed at Island Scallops. We intend to begin significant further commercialization of sablefish in the next two to three years, provided we are able to finance the expansion of this product which we estimate will require at least $5.0 million of capital.
Scallop Overview
Island Scallops’ main product is the “Qualicum Beach Scallop”, which is a hybrid of the imported Japanese scallop and the local weathervane scallop. Between 1993 and 1999, Island Scallops developed this new scallop using Japanese scallops that were imported under quarantine in the early 1990’s. This unique scallop is marketed as the “Qualicum Beach Scallop” and is the largest scallop in the world, reaching sizes of 15 cm and 500 grams. The scallop species farmed by Island Scallops has a proven record of being disease resistant, with a 95% survival rate during the grow-out phase. We have the necessary farming infrastructure to produce up to 15 million scallops annually with an additional capital investment of approximately $1.0 million, we hope to fund this expansion via either increasing cash flow or additional equity or debt financings. If we are unable to locate financing or develop positive cash flow, we will not be able to continue to expand our production capabilities.
The “Qualicum Beach Scallop” is sold live, fresh shucked and frozen. Pricing for live scallops is typically US$3.00 per pound and fresh shucked meat at US$11.87 FOR U12 (under 12 pieces per pound). In the early days of our business, due to our limited production, our focus was on the sale of live scallops. As our production has increased our focus has shifted to fresh shucked meat, as this product has a longer shelf life and stronger demand.
In August 2009, the average selling price for live scallops was US$1.58 and shucked US$0.95 per scallop. The combined average price per scallops was US$1.05 due to the higher amount of shucked scallops being processed.
The basis for our recent scallop farming production increase stems from a combination of our tenure expansion, our recent financing, improved grow-out techniques and our transition to a combination of “pearl nets and lantern-style” farming methods. Scallops culture utilizes two styles of small cages referred to as “pearl nets and lantern nets.” Pearl nets are shaped like a pyramid with a 50 by 50 cm square base and grow small scallops from 2-3 mm to 10mm. The 10-mm scallops are grown in cylindrical nets called lantern nets and are 60 cm in diameter and 1.2 meters deep containing 12 layers. Our Hindoo Creek and Deep Bay tenures expansion have been completed, and unfortunately our expansion of our Denman tenure has been turned down by the Denman Island Trust and we are considering re-applying.
As the only hatchery/producer of cultured scallops on the west coast of North America, Island Scallops has the ability to supply fresh scallops (of a predictable quality and quantity) throughout the year. An increasing demand for local sustainable fresh seafood has also increased sales of the “Qualicum Beach Scallop”. Significant exposure of our “Qualicum Beach Scallop,” in trade magazines, newspapers, radio and on television praising the fresh sweet flavor of our local scallop has increased the demand for our product. Traditionally slow sales months of July and August showed an unexpected increase in sales surpassing our usual peak demand period of Christmas and Chinese New Year
The shucked product form is the most significant form for North American scallop markets. A whole-live scallop although the most desirable from the farmer’s point of view, has a very limited market due to the short shelf life. Previously, Island Scallops has developed a market for whole live scallops, which exceeds 5,000 lbs. per week into Vancouver. As described above, our scallop sales efforts are currently focused on our Fanny Bay (Taylor Seafood) orders. We believe that these strategic relationships enable us to capitalize on established selling networks and proven distributors to capitalize on demand for quality seafood products.
Sablefish (Blackcod) Overview
Sablefish (Anoplopoma fimbria), often called blackcod although not a member of the cod family, is an elongate fish with two dorsal fins and an anal fin similar to and opposite the second dorsal fin. Adults are black or greenish gray; usually with slightly paler blotches or chainlike pattern on the upper back. At 30-61 cm in size they are often greenish with faint stripes on the back.
Sablefish inhabit shelf and slope waters in depths of greater than 1,500 meters, from Baja California to the Aleutian Islands and the Bering Sea. The larger populations of sablefish are centered in northern British Columbia and the Gulf of Alaska. Adults favor mud bottoms and feed on benthic invertebrates, squid and numerous fish species. In turn, they are prey for halibut, lingcod, hagfishes and marine mammals such as sea lions. In addition, killer whales have been known to take sablefish from long line gear as it is being retrieved.
Sablefish spawn from January to March along the continental shelf at depths of 800 to 2400 feet. Fecundity ranges from 60,000-200,000 eggs up to one million eggs for a 102-cm fish. Larval sablefish are found in surface waters over the shelf and slope in April and May. Juveniles are highly migratory with significant movement from nursery areas in northern B.C. to the Gulf of Alaska and the Bering Sea. Sablefish move to deeper waters as they mature. Growth is rapid with sizes at maturity reaching 52-61 cm for five-year-old males and 58-71 cm for five-to-seven year old females. Sablefish growth appears to be rapid for the first three-to-five years and slow asymptotically thereafter. Annual natural mortality of adults has been estimated to be about 10 percent.
Island Scallops plans to raise sablefish onshore using shallow ponds or above ground tanks. This system has been successful in Texas for the culture of catfish. Tests have shown that sablefish prove to be very hardy when grown in ponds and this has the added advantage of causing sablefish to be parasite free. Wild sablefish carry a parasite that does not allow the fish to be eaten raw.
Over the past nine years, Island Scallops has also developed proprietary hatchery technology for the production of sablefish juveniles. We believe that sablefish will be the next species, after salmon, for successful large-scale commercial farming. Sablefish, which is a premium-quality whitefish with a delicate texture and moderate flavor, is an ideal substitute for Chilean sea bass (currently over-fished in all oceans). To date, Island Scallops has marketed a limited number of live sablefish into the Vancouver market. Initial response was excellent for a small 1-kilogram live sablefish (~$11/kg). If we are able to locate suitable funding and/or partners, Island Scallops will be able to capitalize on our breakthrough sablefish hatchery technology by constructing a new sablefish hatchery consisting of the following:
● An expanded Brood Stock facility with larger capacity to hold the various families of selected strains of sablefish. This new facility will incorporate a new state-of-the-art water treatment system.
● An improved incubation and larval rearing facility incorporating proprietary improvements in tank design and seawater systems.
● An upgraded zooplankton culture facility with improved handling and enrichment techniques.
● An expanded and improved juvenile rearing facility incorporating proprietary recirculation system designs.
As part of this expansion, we also intend to construct a new onshore tank farm consisting of large and small ponds and tanks complete with associated recirculation systems. This onshore facility will be used to augment the juvenile rearing area and will house and grow juvenile fish.
At the present time, worldwide “non-farming” sablefish catches are struggling to meet the worldwide demand according to DFOWeb, NPFMCWeb and Pacific Fishery Management Council Website. Currently, there are only two hatchery facilities with very limited production. Current production is less than 100,000 juveniles per year. Based on our analysis of present market conditions, increasing worldwide hatchery production tenfold (to roughly 1 million 3 kilo sablefish) would fill less than 10% of the current world demand shortfall. If Island Scallops’ new sablefish facilities are able to reach a production of 3 million sablefish annually, this will only fill less than 30% of the current overall shortfall. The economic potential for sablefish is therefore considerable. Given these market conditions and opportunities, Island Scallops, subject to our ability to secure adequate funding, is determined to enter the market for sablefish in a significant manner within the next two to three years.
Other Products
In the past Island Scallops sold a variety of shellfish larvae and seed to both international and local customers. Sales included two species of mussels, manila clams, geoduck clams, oysters, abalone and sea urchins. Island Scallops has established suppliers of aquaculture equipment in Japan and China and supplies nets, ropes, floats, and processing equipment into the British Columbia industry. Currently, Island Scallops is selling oyster and mussel larvae. The Company is also looking to develop increasing shellfish larvae and seed sales and equipment sales in the near future. In addition, we will continue to investigate funding sources and/or partners for the development of our sablefish operation with a goal of further commercialization of sablefish in two to three years.
General Fisheries Market Overview
The worldwide market for farmed marine species continues to grow. According to personal communications with the National Marine Fisheries Service, Fisheries Statistics Division, Silver Spring, MD, in British Columbia alone, farming production increased from US$44.56 million in 1988 to US$190.24 million in 1998. Although significant growth occurred in salmon farming and little or no growth occurred in shellfish (oyster) farming. Island Scallops can only benefit from this recent trend towards shellfish, as training farmers in correct husbandry would only add another revenue stream.
The majority of the world’s current scallop production comes from three species of scallops: the Japanese scallop, the sea scallop and the king scallop. The Chinese scallop is also selling well, but FDA inspections of China facilities found that the conditions and hygiene were issues as hatcheries were highly polluted. There has also been a fishery boom on the east coast of Canada and the United States with the Digby or sea scallop.
In the United States, consumption of scallops exceeded 64 million pounds in 2002. Various communications between Island Scallops personnel and the National Marine Fisheries Service, Fisheries Statistics Division, Silver Spring, MD and analysis of data from the Fisheries Statistics & Economics Division of the National Marine Fisheries Service (NMFS) website for annual landings of commercial fisheries (http://www.st.nmfs.noaa.gov/st1/commercial/index.html), tell us that this represented a per capita consumption of 0.22 pounds, with a dollar value of US$342 million. After shrimp, scallops represent one of the most popular shellfish products in the United States. In general, per capita consumption of seafood in the United States has remained steady over the last six years ranging from 15.2 to 16.2 pounds per annum. Based upon Robert Saunders’, our chairman and president, communications with the National Marine Fisheries Service, Fisheries Statistics Division of Silver Spring, MD, and personal observations, given consumers' growing preoccupation with healthier foods and the increasing availability of seafood (due to the recent successes in aqua farming and improved distribution channels), we expect per capita consumption to continue to increase.
Regulatory Environment
Effect of Government Regulation
There are a limited number of regulations that restrict the fishing, distributing or purchase of scallops in Canada and the United States. Therefore, the country of origin makes little difference for the pricing or demand of scallops.
A limitation to market supply is paralytic shellfish poisoning (PSP) or "red tide". PSP is a toxin generated by plankton (scallops' food) at particular times of the year. The toxin is passed to the scallop when plankton is digested, but the toxin does not harm the shellfish. However, the shellfish containing the toxin can be harmful to humans who consume it. Although only a limited number of human deaths caused by red-tide poisoning have been reported, the public announcement of red tide has a devastating effect on most shellfish sales. The exception is scallop meat, because the adductor muscle of the scallop does not concentrate the toxin; shucked scallops are safe to eat at any time of the year. Nevertheless, public perception could still influence demand over short periods of time. To monitor for PSP, the federal Fisheries Inspection Branch constantly monitors samples of shellfish production and wild shellfish populations. In the summer of 2008 Island Scallops experience a prolonged PSP out break and was able to continue processing fresh shucked scallop meat throughout this period with little effect on sales.
Tenure Expansion and Compliance with Environmental Laws
Our planned tenure expansions will require that we undergo an environmental screening from Transport Canada pursuant to Canadian Environmental Assessment Act, which includes a review of factors such as the environmental effects of the planned expansions, including the environmental effects of malfunctions or accidents that may occur in connection with the planned expansions and any cumulative environmental effects that are likely to result from such planned expansions; the significance of such environmental effects and any comments from the public that are received in accordance with the CEA Act and applicable regulations; and measures that are technically and economically feasible and that would mitigate any significant adverse environmental effects of the planned expansions.
Island Scallops does not at the present time have any new tenure application underway. A lengthy and time consuming process is now further restrained due to overlapping First Nation land claims. Until the British Columbia government has settled these land claims it is unlikely that any further crown land tenures will be approved. If we are unable to expand our tenures, our projected production may be delayed.
Competition
Fisheries Industry in General
Island Scallops is in the farmed seafood business. The main concentration of marine farming in British Columbia has traditionally been in the salmon sector. The salmon farming business has developed into a mature industry dominated by Norwegian farmers. The rest of the British Columbia marine farming sector is in the shellfish industry, mainly in oysters and Manila clams and more recently mussels. This sector is rapidly expanding and it accounted for approximately US$16 million in British Columbia in 2002, according to the British Columbia Shellfish Growers Association website. Given Island Scallops’ expertise and significant research and development experience, we believe that there is little or no direct competition in the production of farmed scallops.
There are no significant direct competitors in the scallop farming business in British Columbia. The United States will not allow farming this species in their waters, as this species is considered "exotic" without an expensive quarantine facility and lengthy environmental assessment studies, which is both costly and time consuming. Island Scallops completed these requirements almost 20 years ago and has a significant advantage over new competitors. Although scallop farming is a very significant industry in Japan and China, only frozen shucked scallops are currently sold into North America from these countries. Recent examination by the United States and Canadian Food Inspection authorities of the growing waters in China resulted in reduced exports due to high levels of pollution.
Island Scallops is the only hatchery, outside of China, that has successfully produced the Japanese scallop, and the only company that has successfully, hybridized the weathervane and the Japanese scallop. Island Scallops is uniquely positioned as the sole producer of live scallops in North America. There currently are no other hatcheries in North America that we are aware of that are capable of producing this unique breed. Although a large commercial scallop fishery exists on the east coast of North America, the majority of the scallops are shucked at sea with only limited quantities sold alive. These scallops are sold as "Digby” or “Sea” scallops. A number of companies have attempted to grow the bay scallop and the sea scallop on the east coast, but these companies have only achieved limited success.
The primary British Columbia participants in scallop farming are Island Scallops joint venture farmers or independent scallop farmers, which receive their supply of seed scallops solely from Island Scallops. These farmers are chronically underfinanced and production from these growers usually totals less than 1,000,000 scallops per year. Island Scallops is uniquely positioned to rapidly expand these farms (up to 10 farms) under an exclusive farming and marketing contract.
Due to its large size and small count per pound, the sea scallop is the prime competitor in the United States market. The fishery for this scallop is located primarily on the North American east coast, in particular Georges Bank off New England and the Maritime provinces. This is a limited opportunity fishery, with actual fishing time being dictated by sea and other environmental conditions.
Island Scallops is currently only one of three hatcheries to produce quantities of juvenile sablefish. These fish were sold to five commercial salmon farming facilities and the fish have been marketed successfully. Little demand for a new species has materialized. Although two hatcheries have been constructed in British Columbia, neither has successfully produced large quantities of sablefish. The farming of sablefish is still in its infancy and only limited production has occurred.
This limited production is not a matter of biological barriers but rather a lack of interest by the major producers to venture into a new marine species.
Research and Development
Due to changes in Canadian Federal Government’s Research and Development tax credits (SRED) program, which prevents any part of the research to be combined with commercial production, no Research and Development claims were made in fiscal 2007, 2008 and 2009. Research did continue on the genetic selection of superior strains of scallops, as did developments in the culture process for both marine algae and developments in re-circulation systems. Island Scallops contracts research and development with a separate company called RKS Laboratories Ltd., which has limited commercial production and whose goal is the genetic improvement in breeds of the, “Qualicum Beach Scallop” designing and testing of aquaculture equipment and producing seed of other marine species. We believe that this will allow the continued support from the SRED program.
Employees
At August 31, 2009, we had 35 full time employees. None of our employees are represented by a labor union and we consider our relationships with our employees to be good.
ITEM 2. DESCRIPTION OF PROPERTY
For the fiscal year ended August 31, 2009, our U.S. corporate office was located at 400 Professional Drive, Suite 310, Gaithersburg, Maryland 20878. This space was provided on a rent free basis by one of our shareholders.
Island Scallops’ main office and hatcheries are located on the east side of Vancouver Island in the town of Qualicum Bay at 5552 West Island Highway, Qualicum Beach, British Columbia, Canada V9K 2C8. The shellfish hatchery is housed in a 930 square meter building. A 300 square meter shellfish processing plant is also located at this site. Corporate scallop farms are situated along the east and west coasts of Vancouver Island. These facilities represent the largest private marine research hatchery and the first fully integrated shellfish producer in Canada.
Island Scallops now has a total of eight farm sites for scallops (up from 5). These farm sites are located at Island Scallops held tenures (shellfish tenures are government-granted rights that allow use of offshore waters to cultivate shellfish). Three of those five scallop farms are located in Baynes Sound, 25 minutes north of the main facility. Baynes Sound, the marine waterway situated between eastern Vancouver Island and the western shore of Denman Island, is considered the most productive and highly utilized shellfish growing area in coastal British Columbia. The area supports extensive beach culture (manila clams and oysters) as well as deepwater culture that produces oysters, scallops and some mussels.
These farms sites total approximately 205 acres and can currently accommodate more than 8 million scallops over a 2 year harvest. An additional bottom tenure of 926 acres is located 10 minutes north of the main facility (at Bowser) and is capable of producing at least 20 million scallops. Three new farm sites located on Quadra Island in Kanish Bay have a combined area of 131 acres and are capable of producing 3 million scallops over a 2 year harvest. The final
farm site on the west coast of Vancouver Island near Tofino is capable of producing at least three million scallops, although that site is currently under-developed.
| Common Site Name | Lands File No. | Acres | Type |
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The three Baynes Sound tenures (Denman, Hindoo Creek and Deep Bay), the Nile Creek off shore farm, the Granscal farms and the Tofino tenure offer unique features, which will add additional value to these properties. These features include differences in exposure to storms which ease harvesting restriction due to poor weather conditions . Neither high rainfall or PSP closures affect the scallop meat and harvesting can occur year round. The expanded tenures should easily accommodate our increasing scallop harvest in 2009 and beyond. At their current size and with the introduction of sufficient main lines, our tenures have the capacity to accommodate approximately 15 million (depending on size) million scallops without any increase in their footprints over a 2 year harvest.
Expansion of our Deep Bay and Hindo Creek have been completed and do not need to be renewed for twenty years. An amended tenure agreement has been signed with the government of BC to expand the Denman Island site and we are weighing our options on rezoning of the site. In summer of 2008, we completed construction of 23, 300 meter culture lines, each of which were stocked with scallops in the fall and spring of 2008 and 2009 A further 60 lines will be constructed in the coming year and will accommodate over 12 million scallops.
Island Scallops’ location has a distinct advantage for producing marine species. The waters off British Columbia are pristine and unspoiled by large populations or major industries. The close proximity to major western cities allows us to effectively put our products into the hands of the consumer within 24 hours.
The source of our raw material comes from our own hatchery brood stock. In the case of the “Qualicum Beach Scallop”, we have been selectively breeding this species for superior growth and survival for the past 20 plus years. The breeding program has produced a vigorous, rapid growing, disease resistant scallop with exceptional meat yield. In the case of sablefish we have been selecting fast growing fish for the past 5 years, these display a high degree of domestication. The spawning season has been extended for both of these species allowing for juvenile production almost year round. This ability to hold seed stock and select superior strains gives Island Scallops an advantage in the industry. It also allows Island Scallops to tailor its production to varying seasonal and market demands.
ITEM 3. LEGAL PROCEEDINGS
We are not a party to any material legal proceeding and to our knowledge no such proceeding is currently contemplated or pending.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We did not submit any matters to a vote of our security holders during the fiscal year covered by this Report.
PART II
ITEM 5. | MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES |
The common stock is currently quoted on the over–the-counter Bulletin BoardSeptember 30, 2022, under the symbol “OCSM.”
The following table sets forth the quarterly high and low bid prices for the common stock since the quarter ended August 31, 2006. The prices set forth below represent inter-dealer quotations, without retail markup, markdown or commission and may not be reflective"ASRE".Holders of actual transactions.
| | | High | | | Low |
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Quarter ended August 31, 2006 | | | | | | | |
Quarter ended November 30, 2006 | | | | | | | |
Quarter ended February 28, 2007 | | | | | | | |
Quarter ended May 31, 2007 | | | | | | | |
Quarter ended August 31, 2007 | | | | | | | |
Quarter ended November 30, 2007 | | | | | | | |
Quarter ended February 28, 2008 | | | | | | | |
Quarter ended May 31, 2008 | | | | | | | |
Quarter ended August 31, 2008 | | | | | | | |
Quarter ended November 30, 2008 | | | | | | | |
Quarter ended February 28, 2009 | | | | | | | |
Quarter ended May 31, 2009 | | | | | | | |
Quarter ended August 31, 2009 | | | | | | | |
At August 31, 2009, the closing bid priceRecord of
the common stock was $0.15 andCommon StockAs of January 8, 2024, we had approximately 25,920,296 shares178 stockholders of record for our common stock, 7,773,998 shares of our Series A Preferred Stock, 207 shares of our Series B Preferred Stock, 747,870 shares of our Series C Preferred Stock and 304,558 shares of our Series D Preferred Stock issued and outstanding. This number excludes any estimate by us of thestock. The foregoing number of beneficial ownersstockholders of shares held in street name, the accuracy of which cannot be guaranteed.
At November 10, 2009, the closing bid price of the common stock was $0.05 and we had approximately 54 record holders of our common stock, 13 record holders of our Series A Preferred Stock, 3 record holders of our Series B Preferred Stock, 2 record holders of our Series C Preferred Stock and 13 record holders of our Series D Preferred Stock. This number excludes any estimate by us of thedoes not include an unknown number of beneficial owners of shares heldstockholders who hold their stock in street name, the accuracy of which cannot be guaranteed.
Dividends
"street name".Dividend Policy
We have notnever declared or paid cash dividends on any class ofour common equity since formation and westock. We presently do not anticipate paying anyexpect to declare or pay such dividends on our outstanding common stock in the foreseeable future.
Securities Authorized for Issuance Under Equity Compensation Plans
2005 Equity Incentive Plan
Our 2005 Equity Incentive Plan is intendedfuture and expect to
furtherreinvest all undistributed earnings to expand our
growth and financial success by providing additional incentivesoperations, which the management believes would be of the most benefit to our
directors, executives and selected employees and consultants so that such participants may acquire or increase their proprietary interest in us.stockholders. The
term "Corporation" shall includedeclaration of dividends, if any,
parent corporation or subsidiary corporation of Ocean Smart as those terms are defined in Section 424(e) and (f) of the Internal Revenue Code of 1986, as amended. Stock options granted under the Plan maywill be
either "Incentive Stock Options", as defined in Code section 422 and any regulations promulgated under that Section, or "Nonstatutory Options" atsubject to the discretion of our Board of Directors,
which may consider such factors as our results of operations, financial condition, capital needs and
as reflectedacquisition strategy, among others.Recent Sales of Unregistered Securities
Unregistered securities sold by the Company during the period covered by this report have been previously reported in our Registration Statement on Form S-1, on a Quarterly Report on Form 10-Q or Current Report on Form 8-K.
Purchases of Equity Securities
On October 27, 2022, the respective written stock option agreements granted pursuant to this Equity Plan. Stock Appreciation Rights, Restricted Stock, Restricted Stock Unit, Performance Awards, Dividend Equivalents, or Other Stock-Based Awards may also be granted underCompany acquired 50% of the Equity Plan. The Board believes that the Equity Plan will maintain the flexibility that Ocean Smart needs to keep pace with its competitors and effectively recruit, motivate, and retain the caliber of employees, directors and consultants essential for achievement of our success.
Individuals eligible to receive awards under the Equity Plan include officers, directors, employees of and consultants to Ocean Smart and its affiliates. The number of shares available under the Equity Plan shall be 5,000,000outstanding shares of
our common stock, as well as the following: As of January 1 of each year, commencing with the year 2006 and ending with the year 2008, the aggregate number of Shares availableAstra-Holcomb Energy Systems LLC., a Delaware entity, in exchange for
granting Awards under the Equity Plan shall automatically increase by a number of Shares equal to the lesser of (x) 5%5 million shares of the
total number of Shares then outstanding or (y) 1,000,000. The Board may distribute those shares in whatever form of award they so choose within the Company’s common stock.Equity Plan’s guidelines. There are no restrictions on the amount of any one type of award that may be granted under the Equity Plan.
Compensation Plan InformationAs of August 31, 2009, our Board of Directors had granted 6,292,000 options to employees, directors and consultants under the Equity Plan. As of August 31, 2008, 400,000 of these options had been canceled and 5,892,000 were outstanding. As of August 31, 2009, there are 5 Directors, 1 executive officer, 1 consultant and approximately 26 employees other than executive officers, who are eligible to receive awards under the Equity Plan.
The Board may delegate a Committee to administer the Equity Plan. The Committee shall not consist of fewer than two members, each of whom is a member of the Board and all of whom are disinterested persons, as contemplated by Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended and each of whom is an outside director for purposes of Section 162(m) of the Code, acting in accordance with the provisions of Section 3.
Currently,2023, we do not have any
definitive plans for granting further awards under the Equity Planequity compensation plans.Item 6. [Reserved]
Item 7. Management's Discussion and no determination has been made as to the numberAnalysis of awards to be granted, or the number or identityFinancial Condition and Results of recipients of awards.
Amending the Plan. The Board may amend, alter, suspend, discontinue, or terminate the Equity Plan, including, without limitation, any amendment, alteration, suspension, discontinuation, or termination that would impair the rights of any Participant, or any other holder or beneficiary of any Award theretofore granted, without the consent of any share owner, Participant, other holder or beneficiary of an Award, or other Person. The Board may also waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue, or terminate, any Awards theretofore granted, prospectively or retroactively, without the consent of any Participant, other holder or beneficiary of an Award. Except as provided in the following sentence, the Board is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Board determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits to be made available under the Equity Plan. In the case of any Award that is intended to qualify as performance-based compensation for purposes of Section 162(m) of the Code, the Board will not have authority to adjust the Award in any manner that would cause the Award to fail to meet the requirements of Section 162(m).
Options and Rights. Options and Stock Appreciation Rights may be granted under the Equity Plan. The exercise price of options granted shall be determined by the Board or the Committee; provided, however, that such exercise price per Share under any Incentive Stock Option shall not be less than 100% (110% in the case of a "10-percent shareholder as such term is used in Section 422(c)(5) of the Code) of the Fair Market Value of a Share on the date of grant of such Incentive Stock Option. The Board or Committee shall fix the term of each Option, provided that no Incentive Stock Option shall have a term greater than 10 years (5 years in the case of a "10-percent shareholder” as such term is used in Section 422(c)(5) of the Code).
A Stock Appreciation Right granted under the Equity Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of (1) the Fair Market Value of one Share on the date of exercise or, if the Board or Committee shall so determine in the case of any such right other than one related to any Incentive Stock Option, at any time during a specified period before or after the date of exercise over (2) the grant price of the right as specified by the Board or Committee. Subject to the terms of the Plan, the grant price, term, methods of exercise, methods of settlement, and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Board or the Committee. The Board and the Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate.
Federal Income Tax Consequences. The current federal income tax consequences of grants under the Equity Plan are generally described below. This description of tax consequences is not a complete description, and is based on the Internal Revenue Code as presently in effect, which is subject to change, and is not intended to be a complete description of the federal income tax aspects of options and stock awards under the Equity Plan. Accordingly, the discussion does not deal with all federal income tax consequences that may be relevant to a particular recipient, or any foreign, state or local tax considerations. Accordingly, potential recipients are urged to consult their own tax advisors as to the specific federal, foreign, state and local tax consequences to them as a result of receiving an Award under the Equity Plan.
Nonqualified Stock Options. A recipient will not be subject to federal income tax upon the grant of a nonqualified stock option. Upon the exercise of a nonqualified stock option, the recipient will recognize ordinary compensation income in an amount equal to the excess, if any, of the then fair market value of the shares acquired over the exercise price. We will generally be able to take a deduction with respect to this compensation income for federal income tax purposes. The recipient’s tax basis in the shares acquired will equal the exercise price plus the amount taxable as compensation to the recipient. Upon a sale of the shares acquired upon exercise, any gain or loss is generally long-term or short-term capital gain or loss, depending on how long the shares are held. The required holding period for long-term capital gain is presently more than one year. The recipient’s holding period for shares acquired upon exercise will begin on the date of exercise.
Incentive Stock Options. A recipient who receives incentive stock options generally incurs no federal income tax liability at the time of grant or upon exercise of the options. However, the spread will be an item of tax preference, which may give rise to alternative minimum tax liability at the time of exercise. If the recipient/optionee does not dispose of the shares before the date that is two years from the date of grant and one year from the date of exercise, the difference between the exercise price and the amount realized upon disposition of the shares will constitute long-term capital gain or loss, as the case may be. Assuming both holding periods are satisfied, no deduction will be allowable to us for federal income tax purposes in connection with the option. If, within two years of the date of grant or within one year from the date of exercise, the holder of shares acquired upon exercise of an incentive stock option disposes of the shares, the recipient/optionee will generally realize ordinary compensation income at the time of the disposition equal to the difference between the exercise price and the lesser of the fair market value of the stock on the date of exercise or the amount realized on the disposition. The amount realized upon such a disposition will generally be deductible by us for federal income tax purposes.
Stock Awards. If a recipient receives an unrestricted stock award, he/she will recognize compensation income upon the grant of the stock award. If a recipient receives a restricted stock award, he/she normally will not recognize taxable income upon receipt of the stock award until the stock is transferable by the recipient or no longer subject to a substantial risk of forfeiture, whichever occurs earlier. When the stock is either transferable or no longer subject to a substantial risk of forfeiture, the recipient will recognize compensation income in an amount equal to the fair market value of the shares (less any amount paid for such shares) at that time. A recipient may, however, elect to recognize ordinary compensation income in the year the stock award is granted in an amount equal to the fair market value of the shares (less any amount paid for the shares) at that time, determined without regard to the restrictions. We will generally be entitled to a corresponding deduction at the same time, and in the same amount, as the recipient recognizes compensation income with respect to a stock award. Any gain or loss recognized by the recipient upon subsequent disposition of the shares will be capital gain or loss.
Tax Deductibility under Section 162(m). Section 162(m) of the Internal Revenue Code disallows a public company’s deductions for employee compensation exceeding $1,000,000 per year for the chief executive officer and the four other most highly compensated executive officers. Section 162(m) contains an exception for performance-based compensation that meets specific requirements. The Equity Plan is intended to permit all options to qualify as performance-based compensation at the Board of Directors or Committee’s discretion. If an Award is to qualify as such, it shall clearly state so in the award agreement.
Withholding. We have the right to deduct any taxes required to be withheld with respect to grants under the Equity Plan. We may require that the participant pay to us the amount of any required withholding. The Compensation Committee may permit the participant to elect to have withheld from the shares issuable to him or her with respect to an option or restricted stock the number of shares with a value equal to the required tax withholding amount.
The following table provides information as of August 31, 2009 with respect to compensation plans (including individual compensation arrangements) under which our securities are authorized for issuance:
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| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
Equity Compensation plans approved by security holders | | | |
Equity compensation plans not approved by security holders | | | |
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*As of January 1 of each year, commencing with the year 2006 and ending with the year 2009, the aggregate number of shares available for granting Awards under the Equity Plan shall automatically increase by a number of Shares equal to the lesser of (x) 5% of the total number of Shares then outstanding or (y) 1,000,000.
Recent Sales of Unregistered Securities
On October 31, 2007, we issued 25,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 35,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 25,000 shares issued were valued at $1.28 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $32,000. Going forward the cost of these shares will be expense at current market price as they are issued.
On November 30, 2007 we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 30,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $1.25 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $6,250. Going forward the cost of these shares will be expense at current market price as they are issued.
On December 31, 2007, we issued 172,750 shares of common stock to the investors of our April 12, May 30, June 30 and July 11, 2006 financings as payment of the semi-annual dividend (8% per annum) per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series A Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 8% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000 for the April 12 financing, $1,500,000 for the May 30 financing, $1,550,000 for the June 30 financing and $1,450,000 for the July 11 financing) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $223,500 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On December 31, 2007, we issued 45,999 shares of common stock to the investors of our January 16, 2007 financing as payment of the semi-annual dividend (6% per annum) per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series B Convertible Preferred Stock (The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $62,600 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On December 31, 2007, we issued 17,883 shares of common stock to the investors of our November 5, 2007 financing as payment of the semi-annual dividend (6% per annum) per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series C Convertible Preferred Stock The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount (approximately $897,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $24,300 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On January 1, 2008 we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 25,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $1.35 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $6,750. Going forward the cost of these shares will be expense at current market price as they are issued.
On February 1, 2008 we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 20,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $0.98 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $4,900. Going forward the cost of these shares will be expense at current market price as they are issued.
On March 4, 2008 we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 15,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $0.95 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $4,750. Going forward the cost of these shares will be expense at current market price as they are issued.
On April 1, 2008, we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 10,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $0.95 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $4,750. Going forward the cost of these shares will be expense at current market price as they are issued.
On April 1, 2008, we issued 25,000 shares of common stock to Consulting for Strategic Growth, Inc. as part of the 25,000 shares of our common stock that our Board of Directors previously approved for the consulting and investor relations services that they will provide to us. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 25,000 shares issued were valued at $0.95 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $23,750. Going forward the cost of these shares will be expense at current market price as they are issued.
On May 19, 2008, we issued 5,000 shares of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The remaining 5,000 shares will be issued in equal monthly installments of 5,000 shares during the remaining term of the agreement. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $0.80 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $4,000. Going forward the cost of these shares will be expense at current market price as they are issued.
On June 20, 2008, we issued the final 5,000 share installment of common stock to Pacific Crab Seafood Company, Inc. as part of the 100,000 shares of our common stock that our Board of Directors previously approved for the consulting and marketing services that they will provide to us. The shares were issued in accordance with the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of such Act for issuances not involving any public offering. The 5,000 shares issued were valued at $0.80 per share, the closing bid of our common stock on the date of issue. Therefore, total aggregate value of the transaction recognized by the company was $4,000. Going forward the cost of these shares will be expense at current market price as they are issued.
On June 30, 2008, we issued 322,228 shares of common stock to the investors of our April 12, May 30, June 30 and July 11, 2006 financings as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series A Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 8% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000 for the April 12 financing, $1,500,000 for the May 30 financing, $1,550,000 for the June 30 financing and $1,450,000 for the July 11 financing) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $231,100 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On June 30, 2008, we issued 85,515 shares of common stock to the investors of our January 16, 2007 financing as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series B Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $61,800 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On June 30, 2008, we issued 37,075 shares of common stock to the investors of our November 5, 2007 financing as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series C Convertible Preferred Stock. (See Note10 – Series C Preferred Shares Financing for additional information on the Series C Convertible Preferred Stock). The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount (approximately $897,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $26,800 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On December 31, 2008, we issued 324,691 shares of common stock to the investors of our April 12, May 30, June 30 and July 11, 2006 financings as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series A Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 8% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000 for the April 12 financing, $1,500,000 for the May 30 financing, $1,550,000 for the June 30 financing and $1,450,000 for the July 11 financing) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $232,900 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On December 31, 2008, we issued 86,454 shares of common stock to the investors of our January 16, 2007 financing as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series B Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $62,500 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On December 31, 2008, we issued 37,482 shares of common stock to the investors of our November 5, 2007 financing as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series C Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount (approximately $897,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $27,000 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On June 30, 2009, we issued 320,269 shares of common stock to the investors of our April 12, May 30, June 30 and July 11, 2006 financings as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series A Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 8% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000 for the April 12 financing, $1,500,000 for the May 30 financing, $1,550,000 for the June 30 financing and $1,450,000 for the July 11 financing) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $229,700 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On June 30, 2009, we issued 85,278 shares of common stock to the investors of our January 16, 2007 financing as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series B Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount ($1,416,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $61,600 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
On June 30, 2009, we issued 36,972 shares of common stock to the investors of our November 5, 2007 financing as payment of the semi-annual dividend per the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series C Convertible Preferred Stock. The number of shares issued was based on the dividend payment at a rate of 6% per annum (subject to a pro rata adjustment) of the Liquidation Preference Amount (approximately $897,000) payable in shares equal to 90% of the quotient of (i) the dividend payment divided by (ii) the average of the VWAP for the 20 trading days immediately preceding the date the dividend payment is due, but in no event less than $0.65. As such, the shares were valued at approximately $26,700 and the total aggregate value of the transaction was recorded as a preferred stock dividend.
ITEM 6. | SELECTED FINANICAL DATA |
| Not required for smaller reporting companies.
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ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION |
OperationsThe following discussion and analysis should be read in conjunction with our financial statements, andincluding the notes thereto, which appearappearing elsewhere in this report. Annual Report.
The results shown hereinfollowing information contains certain forward-looking statements of our management. Forward-looking statements are statements that estimate the happening of future events and are not necessarily indicativebased on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as “may,” “could,” “expect,” “estimate,” “anticipate,” “plan,” “predict,” “probable,” “possible,” “should,” “continue,” or similar terms, variations of those terms or the resultsnegative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be expectedreasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.
Critical Accounting Policies
Refer to Note 2 of our financial statements contained elsewhere in any future periods. This discussion contains forward-looking statements based on current expectations, which involve uncertainties. Actual resultsthis Form 10-K for a summary of our critical accounting policies and recently adopting and issued accounting standards.
Results of Operations
Fiscal Year Ended August 31, 2023, Compared to Fiscal Year Ended August 31, 2022
Revenue decreased to $0 from $25,000 for the timingyears ended August 31, 2023 and 2022.
General and administrative expenses decreased to $127,037 from $179,132 for the years ended August 31, 2023, and 2022, respectively. General and administrative expenses decreased primarily in consulting fees and legal costs.
Business development expenses increased to $819,715 from $712,683 for the years ended August 31, 2023, and 2022, respectively. Business development expenses increased primarily in costs associated with the development of events could differ materiallyRegreen Technologies business.
Executive compensation expenses increased to $1,693,250 from $1,034,450 for the forward-looking statementsyears ended August 31, 2023, and 2022, respectively. Executive compensation expenses increased primarily as a result of a number of factors. Readers should also carefully review factors set forth in other reports or documents that we filestock compensation for executives for services rendered.
Stock compensation-consulting expenses increased to $701,612 from time to time with$595,500 for the Securitiesyears ended August 31, 2023, and Exchange Commission.
Overview
During the our 2009 fiscal year, we continued the harvesting, processing and sale of our 2005 and 2006 year classes of scallops and transferring our 2007 and 2008 year-class scallops to larger grow-out nets on our farm sites. We also completed the spawning and started transferring our 2009 scallop class to our farm sites (from onshore nursery ponds). We refer to the year-class of scallops based on when the scallops were spawned.
During the first quarter of our 2009 fiscal year, we completed a sales agreement with Fanny Bay Oyster Co., a division of Taylor Shellfish Farms of Shelton, Washington (an international seafood distributor and the largest shellfish company on the West Coast). The order includes live scallops, fresh scallop meat and frozen scallops that will be packaged and delivered in various scallop products (including live in-the-shell, frozen half-shell and fresh meat). As2022, respectively, primarily as a result of this order, Fanny Bay has effectively become the exclusive distributor of our scallops outside the European market. This order has reduced costs and encouraged additional wholesalers within the Taylor network to carry our scallops.
In addition to scallop sales, we plan on generating additional revenues via the sale of scallopan increase in shares issued for services rendered by advisors, consultants and other shellfish seed (including mussels and oysters). In the future, management may place emphasis on generating additional revenues via equipment sales to other aquaculture businesses. Additionally, we arenon-related parties.Impairment loss expenses were incurred in the process of investigating strategic acquisitions and/or business opportunities with seafood industry partners or additional strategic investors to enable the company to capitalize on our existing hatchery technologyamount $7,049,213 and expertise. As part of this initiative, we are currently beginning initial, informal, conversations with both seafood and aquaculture companies. Part of this process may involve locating opportunities to increase near-term revenues via the sale of shellfish seed or shellfish larvae produced in our hatchery. We are initially focusing on companies that we believe could significantly benefit from our hatchery technology and expertise and that would add additional revenue and/or have a geographically desirable location. We are evaluating both potential acquisitions and partnerships with such companies in order to reach our goal of capitalizing on our hatchery technology in order to increase cash flows. As a result of initial conversions and a review of certain opportunities, we are currently focusing our efforts on Chinese companies. Aside from the November 2008 acquisition of Granscal Sea Farms Ltd., as of the date of this filing, no new definitive agreements have been signed. Additionally, we have not yet located and/or finalized financing sources for any possible acquisition. Management currently plans to fund any future acquisition via either debt financing or additional equity financings. Alternatively, Management believes that opportunities exist where we could provide our technology and knowledge to a joint venture that is funded by the other party.
We are continuing our discussions with various individuals and First Nations groups about possible partnerships or joint ventures. Originally, management believed that we would be able to formalize our first joint venture with a First Nations group as early as the start of the 2009 calendar year. To date, we have yet to finalize a revenue producing First Nations joint venture.
Despite the increased revenues for our 2009 fiscal year (as compared to 2008), we were not able to achieve positive operational cash flows during this year. In fact, since we were unable to meet certain performance targets as set forth in the Series D Convertible Preferred Stock Purchase Agreement, Series D Preferred Stockholders invoked their right to demand that our Board of Directors be reduced from seven members to five members and their right to appoint a majority of such directors. We held a special board meeting on May 21, 2009, during which the Board approved reducing our board to five members and appointing the two Series D nominees, Christopher Wall and Michael Ross to our Board; the Board also resolved that Mr. Robert Saunders, our CEO, Mr. Michael Boswell, our Acting Chief Accounting Officer(CAO) and Javier Idrovo will remain on the Board.
As a result of our new sales agreements, improved processing plant and increasing shellfish seed sales; management expects our sales and margins to improve and hopes to achieve positive cash flows in the near future. Management initially expected to achieve positive cash flows in the second half of 2009, but now hopes to achieve them at some point in our 2010 fiscal year. Given our recent operational history, it is likely that we will continue to struggle to achieve positive cash flows in the near future. Additionally, management is still in the process of evaluating the impact of the recent global economic downturn and is unsure of the direct impact it will have on our sales and projects. It is possible that the North American recession could materially impact future revenues and growth.
During the year ended August 31, 2009, we conduct our principal research and development activities via RKS Laboratories, Inc., a Vancouver research and development company that is working towards developing superior strains of scallops with beneficial traits such as higher meat yield and rapid growth. Robert Saunders, our President and CEO, owns 100% of RKS. As part of this relationship, we loaned RKS approximately an additional $119,000 that is secured by all assets of RKS and a total of $199,000. Originally, we carried this amount as loan related party loan receivable, but given that lack of any repayments to date, we expensed the entire amount in 2009.
During the continued harvesting of our 2005 class and 2006 scallops classes and transfer and handling of our 2007 and 2008 scallop classes, we were able to continue to review our mortality rates and update our class size projections. Based on this review and recent sales, we expect to bring the remaining 160,000 of our 2005 and 2006 year class scallops to market in the 2009 calendar year. Originally, we believed that our 2006 spawning would yield between 5 and 10 million scallops at full maturity/harvest. However, mortality rates were at the higher end of our projections due to the handling and sorting learning curve associated with the roll-out of our new longline and anchor system. Additionally, problems associated with the timing of moving scallops to large nets (also known as “ocean timing”) and the density (i.e. number of scallops per net level) contributed to additional mortality problems. As of our most recent review of our scallop inventory, we currently believe that our 2007 year class should yield up to 3.2 million scallops at full maturity/harvest. Although this is significantly lower than initial estimates, it will still represent our largest year class to date.
During 2009, we continued to grow the 2008 scallop class in pearl nets. We originally expected to produce up to 24 million full-size scallops in this year class, but due to survival problems associated with our hatchery spawns and funding limitations, we now expect to produce as few as 2.0 million full-size scallops. Based on our initial review of the hatchery spawn, we believe the mortality problems were the result of large blooms of toxic marine algae at the critical stage prior to metamorphosis of approximately 600 million scallop larvae. These blooms corresponded to high levels of Paralytic Shellfish Poisoning in our ocean farms and although it did not harm any of our juvenile or mature scallops, it is believed that pre-metamorphic larvae are particularly susceptible. Procedures are now in place to prevent the introduction of toxic algae into the hatchery system in the coming years.
The spawning season started in February 2009 with a total of 400 million pre metamorphic larvae produced. New larval husbandry methods increase overall larval survival and corresponding larval competency or the ability of the larvae to successfully undergo metamorphosis. During March 2009, an additional 380 million larvae was produced using the above new techniques and were transferred to our onshore nursery. As a result of a colder than normal seawater temperatures, onshore nursery growth was delayed in April and May. We transferred more than 7 million 3-5 mm scallop seed into our ocean farms during the summer of 2009. As of August 31, 2009, an additional 1.2 million of our 2009 scallop class was being housed in our on-shore nursery ponds.
As a result of a review of our business plan and sales and marketing efforts to date, we currently plan to harvest and sell approximately 3.2 million full-size 2007 scallops over the 16months ending December 2010. In addition, we estimate that our 2008 year class will produce roughly 1.2 million full-size scallops. Given our lower than expected revenues and negative cash flows during 2009, the size of our 2009 and 2010 year classes will (in many ways) be determined by our ability to generate positive cash flows and/or our ability to locate additional financing. As a result of our lower than expected sales and yields, we are still evaluating the cash available for farming and infrastructure costs related to transferring the remaining portion of the 2009 scallop class and to expanding our future yields. Based on our current review of sales and marketing conditions, we believe that in the best case scenarios our scallops will yield as much $1.00 of revenue per scallop. In 2009 our yield was approximately US$1.05 per scallop. The yield per scallop may increase if we are able to sell a greater percentage of live scallops. Additionally, we are beginning to place a greater emphasis on scallop seed sales and it is possible, although we cannot make any assurances, that we will produce and/or sell a significantly larger amount of scallop seed in the near future. As described above, our current estimated inventory size and projected sales cycle is summarized in the following table as of August 31, 2009.
| | | Estimated Inventory (value) to be Sold |
| Year-class | Accumulated Cost to Date | next 12 months | next 24 months | beyond 24 months |
| 2005 | 69,902 | $ 69,902 | $ - | $ - |
| 2006 | 127,237 | 127,237 | - | - |
| 2007 | 783,664 | 274,281 | 509,383 | - |
| 2008 | 343,452 | - | - | 343,452 |
| 2009 | 304,519 | - | - | 304,519 |
| | | | | |
| Totals | $ 1,628,774 | $ 471,420 | $ 509,383 | $ 647,971 |
Please note that the above table represents estimates of inventory to be sold over the next 12 months, 24 months and beyond. It is possible that actual results could differ significantly from our estimates.
We periodically evaluate the carrying value of our inventory for impairment whenever events or changes in circumstances indicate that such carrying values may not be recoverable. Management uses its best judgment based on the current facts and circumstances relating to its business when determining whether any significant impairment factors exist. As of February 28, 2009, management performed an undiscounted cash flow analysis to determine that impairment of $75,000 existed in carrying value our 2006 scallop year class inventory. As such, the impairment of $75,000 was charged against operations during the year ended August 31, 2009. There can be no assurance, however, that market conditions will not change or demand for the Company’s products will continue or allow the Company to realize the value of its long-lived assets and prevent future impairment.
If our mortality rates are better than our current projections, our yield and revenues from the 2007 and 2008 scallop class could be higher; conversely, if our mortality rates are worse than we anticipate our revenues for this period could be lower than we anticipate. In addition, changes in the anticipated growth rates, projected harvesting cycles and large fluctuations in the price of scallops or the US-Canadian exchange rate could impact our current projections. Furthermore, if we cannot achieve our estimated product mixture (live/fresh/frozen) than our average sales price per scallop will be lower. Alternatively, if we are able to sell a large percentage of high yield products (live or frozen on the half shells) than our average price per scallop will be higher. Given our failure to achieve positive cash flows in 2009, the size of our future crops could be smaller than originally projected. If so, our future revenues and yields could be adversely impacted.
Despite our efforts to improve our cost of goods relative to our selling price, we are still operating at a negative margin. Although we conducted a top-down operations review and originally believed that we had indentified certain operational inefficiencies that contributed to this negative operating margin, we have yet to successfully reduce our cost of goods and achieve positive cash flow. Management is hopeful that we could achieve positive cash flow at some point in our 2010 fiscal year. However, given our recent operational history, it is likely that we will continue to struggle to achieve positive cash flows in the near future.
Based on our current estimates of near-term sales, capital costs of expanding our farms to increase future crop yields and capital requirement for near-term operations, we will require additional financings to continue our expansion. As we have yet to raise additional capital and our sales have increased at a slower than expected pace, we have scaled back some of our expansion plans and will likely have to further scale back the plans outlined herein. We originally anticipated that we would need approximately $1.0 million over the next 12 months to continue our originally planned expansion activities, however, we now plan to align our future expansions with our ability to generate positive cash flows from our current scallop crops and/or our ability to locate additional financing. As a result of our failure to achieve positive cash flows in 2009, we will require additional capital to complete our expansion plans. Additionally, management intends to place a greater emphasis on increasing scallop and other shellfish seed sales in 2009 and 2010 in order to generate additional cash that could be used in operations. If we are unable to generate more cash from sales and/or financings, we may need to further modify our business plans.
Significant Accounting Policies
FASB Establishes Accounting Standards Codification ™
In June 2009, the FASB issued Accounting Standards Update No. 2009-01, “Generally Accepted Accounting Principles” (ASC Topic 105) which establishes the FASB Accounting Standards Codification (“the Codification” or “ASC”) as the official single source of authoritative U.S. generally accepted accounting principles (“GAAP”). All existing accounting standards are superseded. All other accounting guidance not included in the Codification will be considered non-authoritative. The Codification also includes all relevant Securities and Exchange Commission (“SEC”) guidance organized using the same topical structure in separate sections within the Codification.
Following the Codification, the Financial Accounting Standards Board will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASU”) which will serve to update the Codification, provide background information about the guidance and provide the basis for conclusions on the changes to the Codification.
The Codification is not intended to change GAAP, but it will change the way GAAP is organized and presented. The Codification is effective for our first-quarter 2010 financial statements and the principal impact on our financial statements is limited to disclosures as all future references to authoritative accounting literature will be referenced in accordance with the Codification. In order to ease the transition to the Codification, we are providing the Codification cross-reference alongside the references to the standards issued and adopted prior to the adoption of the Codification.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the acquired entities since their respective dates of acquisition. All significant inter-company amounts have been eliminated.
Cash and equivalents
Cash and equivalents include cash and highly liquid short term market investments with original maturity terms of three months or less. We have not experienced any losses, in such accounts and believe it is not exposed to any significant credit risk on cash and cash equivalents.
Accounts receivable
Accounts receivable is presented net of allowance for doubtful accounts. The allowance for doubtful accounts reflects estimates of probable losses in accounts receivable. The allowance is determined based on balances outstanding for over 90 days at the period end date, historical experience and other current information.
Loans receivable
Loans receivable is presented net of an allowance for loan losses, as necessary. The loans are written off when collectability becomes uncertain.
Inventory
Ocean Smart maintains inventories of raw materials for its aquaculture products, of biomass (inventory of live aquaculture product being actively cultivated), and of finished goods (aquaculture product ready for sale). Inventories are reported at the lesser of cost or estimated net realizable value. Biomass and finished goods includes direct and reasonably attributable indirect production costs related to hatchery, cultivation, harvesting, and processing activities. Carrying costs per unit are determined on a weighted average basis.
In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company evaluates the carrying value of its inventory for impairment whenever events or changes in circumstances indicate that such carrying values may not be recoverable. The Company uses its best judgment based on the current facts and circumstances relating to its business when determining whether any significant impairment factors exist. The Company’s management performs an undiscounted cash flow analysis to determine if impairment exists. If impairment exists, the Company measures the impairment based on the difference between the inventory’s carrying amount and its fair value, and the impairment is charged to operations in the period in which the inventory impairment is determined by management. Based on its analysis, the Company believes that impairment of $75,000 of the carrying value of its current inventory assets existed at August 31, 2009. There can be no assurance, however, that market conditions will not change or demand for the Company’s products will continue or allow the Company to realize the value of its long-lived assets and prevent future impairment.
Management has classified the costs of crops expected to be sold beyond a 12-month cycle from the date of the financial statements as noncurrent.
Reclassifications
Certain amounts in the 2008 financial statements have been reclassified to conform to the 2009 financial statement presentation.
Long term investments
Long term investments are recorded at cost. We review our investments periodically to assess whether there is an “other than temporary” decline in the carrying value of the investment. We consider whether there is an absence of an ability to recover the carrying value of the investment by reference to projected undiscounted future cash flows for the investment. If the projected undiscounted future cash flow is less than the carrying amount of the asset, the asset is deemed impaired. The amount of the impairment is measured as the difference between the carrying value and the fair value of the asset.
Property, plant, and equipment
Property, plant and equipment are carried at cost, less accumulated depreciation. Depreciation is included with general and administrative expenses and in some cases cost of goods sold in the accompanying statement of operations and calculated by using the straight-line method for financial reporting and accelerated methods for income tax purposes. The recovery classifications for these assets are listed as follows:
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Facility and operating plant
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Expenditures for maintenance and repairs are charged against income as incurred whereas major improvements are capitalized.
Impairment of long-lived assets
We monitor the recoverability of long-lived assets, including property, plant and equipment, inventory and intangible assets, based upon estimates using factors such as expected future asset utilization, business climate, and undiscounted cash flows resulting from the use of the related assets or to be realized on sale. Our policy is to write down assets to the estimated net recoverable amount, in the period in which it is determined likely that the carrying amount of the asset will not be recoverable. At August 31, 2009, management performed an undiscounted cash flow analysis of our long-lived assets ando determined that an impairment of $75,000 existed in carrying value our 2006 scallop year class inventory. As such, the impairment of $75,000 was charged against operations during the year ended August 31, 2009.
Government assistance
Government assistance we receive, such as grants, subsidies, and tax credits, is recorded as a recovery of the appropriate related expenditure in the period that the assistance is received.
We have received government assistance in the form of loans, for which repayment may not be required if we fail to meet sufficient future revenue levels to repay these loans based on a percentage of gross sales for certain products over a defined period of time. Such assistance, if received, is initially recorded as a liability, until such time as all conditions for forgiveness are met, and is then recognized as other income in that period.
Farm license costs
We must pay annual license costs in respect to government-granted tenures that it holds, which gives us the right to use certain offshore ocean waters for the purpose of aquaculture farming. Such license costs are recognized as an expense over the period of the license.
Research and development costs
Development costs include costs of materials, wages, and reasonably attributable indirect costs incurred by us which are directly attributable to the development of hatchery techniques for sablefish and shellfish. These costs are expensed when incurred.
Research costs are expensed when incurred.
Income taxes
We calculate our provision for income taxes in accordance with Statement of Financial Accounting Standards No. 109 (Accounting for Income Taxes) (“SFAS 109”), which requires an asset and liability approach to financial accounting for income taxes. This approach recognizes the amount of taxes payable or refundable for the current year, as well as deferred tax assets and liabilities attributable to the future tax consequences of events recognized in the financial statements and tax returns. Deferred income taxes are adjusted to reflect the effects of enacted changes in tax laws or tax rates. Deferred income tax assets are recorded in the financial statements if realization is considered more likely than not.
Revenue recognition
We recognize revenue when it is realized or realizable, and earned. We consider revenue realized or realizable and earned when there is persuasive evidence of a contract, the product has been delivered or the services have been provided to the customer, the sales price is fixed or determinable, and collectability is reasonably assured.
Our revenue is derived principally from the sale of scallops we produce or purchase from third parties, and from the sale of seed and farm supplies to other aquaculture farms.
Cost of goods
Cost of goods sold consists primarily of farming, harvesting and processing costs associated with the growth, transfer and sales preparation of our products (principally scallops). These costs consist primarily of salaries and benefits and allocated overhead costs for consulting and support personnel engaged in the farming, harvesting and processing of our products. All costs are recognized at time of delivery.
Financial instruments
The carrying amount of our financial instruments, which includes cash, accounts receivable, loans receivable, accounts payable and accrued liabilities, short term debt, shareholder debt, and long term debt, approximate fair value based on either i) the short-term nature of the instrument or ii) the reasonableness of the interest rate as compared to market rates for the long-term instruments. It is management’s opinion that we are not exposed to significant interest, currency or credit risk arising from these financial instruments unless otherwise noted.
Derivative Financial Instruments
In connection with the sale of debt or equity instruments, we may sell options or warrants to purchase our common stock. In certain circumstances, these options or warrants may be classified as derivative liabilities, rather than as equity. Additionally, the debt or equity instruments may contain embedded derivative instruments, such as embedded derivative features, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.
We account for all derivatives financial instruments in accordance with SFAS No. 133. Derivative financial instruments are recorded as liabilities in the consolidated balance sheet, measured at fair value. When available, quoted market prices are used in determining fair value. However, if quoted market prices are not available, we estimate fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques.
The identification of, and accounting for, derivative instruments is complex. Our derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income, in the period in which the changes occur. For options, warrants and bifurcated embedded derivative features that are accounted for as derivative instrument liabilities, we estimate fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. The valuation techniques require assumptions related to the remaining term of the instruments and risk-free rates of return, our current common stock price and expected dividend yield, and the expected volatility of our common stock price over the life of the option. The identification of, and accounting for, derivative instruments and the assumptions used to value them can significantly affect our financial statements.
Derivative financial instruments that are not designated as hedges or that do not meet the criteria for hedge accounting under SFAS No. 133 are recorded at fair value, with gains or losses reported currently in earnings. All derivative financial instruments we held as of August 31, 2009, were not designated as hedges.
Foreign exchange
The functional currency of our foreign subsidiary is the local foreign currency (Canadian dollars). All assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate prevailing on the balance sheet date. Revenues, costs and expenses are translated at average rates of exchange prevailing during the period. Translation adjustments resulting from translation of the subsidiaries' accounts are accumulated as a separate component of shareholders' equity. Gains and losses resulting from foreign currency transactions are included in the consolidated statements of operations and have not been significant.
Use of estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities. Such estimates include providing for amortization of property, plant, and equipment, and valuation of inventory. Actual results could differ from these estimates.
Concentration of risk
We operate in the regulated aquaculture industry. Material changes in this industry or the applicable regulations could have a significant impact on our business.
The quality and quantity of the aquaculture products we cultivate, harvest and process could be impacted by biological and environmental risks such as contamination, parasites, predators, disease and pollution. These factors could severely restrict our ability to successfully market our products.
During the year ended August 31, 2009, one customer, Fanny Bay Oysters, accounted for 65% of our revenues, and we therefore are materially dependent upon Fanny Bay Oysters. During the year ended August 31, 2008, three customers, Sea World Fisheries, Turning Point and Organic Ocean Seafood, Inc., individually accounted for 12%, 12% and 10% of our revenues, respectively. These remain our customers; however we now sell through a single distributor, Fanny Bay Oysters.
Location risk
Most, if not all, of our aquaculture are concentrated in one growing region off the coast of Vancouver Island, British Columbia. As such, if there were a major environmental disaster, our ongoing operations could be materially impacted.
Stock-based compensation
We account for stock-based employee compensation arrangements using the fair value method in accordance with the provisions of the FASB issued Statement of Financial Accounting Standards No, 123 (revised 2004) (Share-Based Payment) (“SFAS 123R”). SFAS 123R is a revision of SFAS 123 (Accounting for Stock-Based Compensation), and supersedes Accounting Principles Beard (“APB”) Opinion No. 25 (Accounting for Stock Issued to Employees). SFAS 123R requires that the fair value of employees awards issued, modified, repurchased or cancelled after implementation, under share-based payment arrangements, be measured as of the date the award is issued, modified, repurchased or cancelled. The resulting cost is then recognized in the statement of earnings over the service period.
We periodically issue common stock for acquisitions and services rendered. Common stock issued is valued at the estimated fair market value, as determined by our management and board of directors. Management and the board of directors consider market price quotations, recent stock offering prices and other factors in determining fair market value for purposes of valuing the common stock. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the various weighted average assumptions, including dividend yield, expected volatility, average risk-free interest rate and expected lives.
Basic and diluted net loss per share
Basic income or loss per share includes no dilution and is computed by dividing net income or loss by the weighted-average number of common shares outstanding for the period. Diluted income or loss per share includes the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock (using the treasury stock method for stock options and using the if-converted method for convertible notes), if dilutive.
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 our investors.
Investments in Tenures as Compared to Estimated Market Value of Tenures
We currently carry our investment in Island Scallops’ tenures at $3,663. This amount represents the initial carrying costs of certain tenures acquired by Island Scallops’ subsidiary. These tenures do not expire until various dates ranging from 2021 – 2024, however, we believe that they have an indefinite useful life because renewal on expiration is anticipated. The area available for shellfish aquaculture within Baynes Sound is fully subscribed, and as a result new tenures for new companies are not available through the Canadian Provincial application and review process. The shellfish companies within the Sound are also well established and sales of tenures are quite rare, making the assessment of the market value for the Island Scallops tenures difficult. Historical sales and government auction of tenures have received as much as $300,000 (CDN) for a small beach tenure (less than 4 acres) and $65,000 CDN) for a small deepwater tenure without infrastructure. The few tenures on the market over the previous 36 months suggest that the current market value is approximately $10,000 to $25,000 (CDN) per acre. Based on listings of tenures on the coast of British Columbia, discussions with local shellfish growers and individuals from the BC Assets and Land Corporation, and an independent appraisal (commissioned by Island Scallops in 2007) that estimated the value of 1018 acres of scallop tenures was estimated at approximately $8,600,000. As a result of the recently approved tenure expansions from 1018 to 1270 acres the estimated market value of our overall tenures could be roughly as high as $10,600,000. The estimated market value is based on the size, location and whether they are beach or deepwater in nature. To further complicate the issue of value is the requirement for government approval for transfer of ownership of these tenures. Given the variable nature of the shellfish tenure markets, the lack of any recent sales, and ownership transfer issues, the actual value that we receive from the sale of a scallop farming tenure could vary significantly from these estimated values. This non-ownership of ocean-farm land is the single largest impediment to successful ocean farming in British Columbia.
Although we cannot determine the exact amount we would ultimately receive from the sale of our tenure(s), based upon the information stated above we expect to receive more than the carrying cost ($3,663) from such sale. Accordingly, the carrying cost of our tenures is not indicative of their actual value.
Comparison of results for the fiscal year ended August 31, 2009, to the fiscal year ended August 31, 2008.
Revenues. Revenues for the year August 31, 2009, were approximately $1,891,000. We had revenues of approximately $1,584,000$9,701,000 respectively for the year ended August 31, 2008. This is an increase of approximately $307,000 or 19%. If not for the recent improvement of the US dollar relative2023 and 2022. The impairment losses relate to the Canadian dollar for the twelve months ended August 31, 2009 (as compared to the same period in 2008), our overall sales increase would have been greater. Revenue generated by scallops sales (only) increased almost 40% (in terms of Canadian dollars). This increase in scallops sales represented almost 67% of our overall sales increase (in terms of Canadian dollars). Although our overall volume of scallops sales increased over the previous fiscal year, our average price per scallop decreased slightly due to the agreement with Fanny Bay, however our administration and shipping cost decreased. In our 2009 fiscal year, management also continued to place a greater emphasis on equipment sales to other aquaculture companies and continued their efforts to increase revenues generated from both scallop and shellfish seed sales. This resulted in increased seed sales and slightly increased equipment sales as compared to the previous fiscal year. Management continued its emphasis on the development and production of larger scallop crops. Management believes that our emphasis on expansion of future crops coupled with our new sales agreements will yield increased revenues in our 2010 fiscal year and beyond.
Gross loss. Gross loss for the year ended August 31, 2009 was approximately $686,000, an increase of approximately $207,000 as compared to gross loss of roughly $479,000, for the year ended August 31, 2008. The increase in gross loss for the year ended August 31, 2009 (as compared to 2008) was attributable to increased cost of inventory and cost of scallop seed relative to the previous periods. The increase in the cost of inventory (per scallop) was the result of certain inventory downgrades related to mortality and survivability issues that we believe we are correcting in future classes. The increase in the cost of scallop seed inventory was the result of certain older inventory that was deemed too small for processing and was therefore sold as seed. In addition, as of February 28, 2009, management performed an undiscounted cash flow analysis to determine that impairment of $75,000 existed in carrying value our 2006 scallop year class inventory. As such, the impairment of $75,000 was charged against operations for 2009.
Although our gross loss increased for the year ended August 31, 2009, our gross loss actually slightly decreased (as compared to the previous period) for the second and third quarters of our 2009 fiscal year. As such, despite the increase in gross loss for the year, we believe that we are beginning to capitalize on management’s continued focus on both the expansion and development of larger scallop crops and larger scallop yields for future years as well as an increased emphasis on seed sales. Additionally, management is continuing to attempt to address issues that resulted in higher cost of inventory and seed costs. Management believes that in the future our sales may continue to increase while costs of goods sold will only increase slightly. As a result, we are hopeful that our margins will improve in future years. Despite our continuing losses, we are attempting to continue to focus resources on maintaining, developing and tending to our scallop crops and shellfish seed. We believe that we have already seen the initial benefits in increased sales of our own scallops and increased seed sales and if we are able to locate adequate working capital that we can continue to see additional benefits from our efforts in developing larger crops and expanding our seed sales in the 2010 fiscal year and beyond. If we are unable to locate adequate working capital and/or generate positive cash flow that can be used for overall business development, we may not be able to capitalize on recent developments and gross losses could further increase in future periods.
General and administrative. General and administrative expenses for the year August 31, 2009, were approximately $1,641,000. Our general and administrative expenses were approximately $3,185,000 for the year ended August 31, 2008. This is a decrease of approximately $1,544,000 or 48%. This decrease was directly attributable to a reduction in stock option expense of roughly $1,596,000 as compared to 2008. To date, we have already expensed the majority of the stock option costs related to the 5,892,000 outstanding options and are currently scheduled to only incur approximately an additional $21,000 through August 31, 2010. Management expects that general and administrative expenses (excluding stock options expense) may slightly rise as we continue to expand our operations. However, if adequate working capital is available, we believe that we now have the necessary general and administrative staff in place to maintain an expansion into scallop crops to more than 20 million.
Stock compensation and stock option expense. During the year ended August 31, 2009, we had stock compensation expenses of $17,500. During the year ended August 31, 2008, we had stock compensation expense of approximately $91,000.
We issued 3,300,000 new options during the year ended August 31, 2009. As a result, we have stock option expense of roughly $185,000 for the year ended August 31, 2009. We did not issue any new options during 2008. However, due to options issued to employees, consultants and directors during 2007 and based upon the common stock trading price at the times of issuance, vesting schedules and FASB rules, we incurred stock option compensation expenses of approximately $1,781,000 during the year ended August 31, 2008.
Other income (expense), net. Interest expense for the year ended August 31, 2009, was approximately $57,000. Interest expense for the year ended August 31, 2008 was roughly $11,000. Other income for the year ended August 31, 2009, was approximately $120,000 as opposed to other expense of approximately $6,000 for the year ended August 31, 2008.
Net loss. As a result of the above, the net loss for year ended August 31, 2009 was approximately $2,265,000 as compared to a net loss of approximately $3,681,000 for the year ended August 31, 2008.
Risk Factors
You should carefully consider the risks described below before making an investment in us. All of these risks may impair our business operations. If any of the following risks actually occur our business, financial condition or results of operations could be materially adversely affected. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment.
Risks Relating to Aquaculture
We are subject to a number of biological and environmental risks.
Our business would be adversely affected if our scallop crop is infected by Perkinsus Quagwadi. Perkinsus affects a variety of scallops. In 1992, mortality due to Perkinsus infection was large and mortality was high, but Island Scallops was able to overcome this disease by breeding the remaining stock. Eight years of successfully breeding hardy individuals resulted in the remaining populations of scallops being Perkinsus-free. Although there is a chance that other diseases may occur, the Island Scallops hybrid scallop has proven resistant to Perkinsus disease for the last ten years.
Paralytic Shellfish Poisoning (PSP or Red Tide) could limit the amount of scallops available for sale.
Paralytic Shellfish Poisoning (PSP or red tide) is another concern when farming scallops. The adductor muscle can be processed for sale to the traditional scallop meat market even when there is a PSP closure. On the other hand, the live animal market is stopped by PSP toxicity. Sewage Contamination (fecal coliform) is also monitored by the Canadian Food Inspection Agency (CFIA) to avoid this problem. These types of contaminants do not threaten the crop, it only causes a temporary displacement to the marketing of the live product . Island Scallops’ aquaculture is not without total risk; however, the development program over the last decade has reduced the risk of disease and increased the historical grow-out survival rate to 95% over the past six years. Despite these advances, however, an outbreak of PSP, even if it did not affect Island Scallops’ stock, could have a depressive effect on the shellfish market in general, which could then adversely affect our business.
Aquaculture and scallop farming is subject to a variety of general disease risks.
Bacteria are almost always associated with mortalities in the larval stages of growth. Control of disease outbreaks in the hatchery consists of regular inspection, growth rates, color and larvae is checked for proper shape. Proper hygiene practices within the hatchery minimize problems with Bacteria. In general, scallops are harder to handle and transport and care needs to be taken when moving them. Scallops can develop a stress related disease that can be avoided by proper handling conditions such as temperature, moisture rates and time before getting back in the water (maximum time being 24 hours).
Boring sponges and worms can adversely impact our scallop yield.
Boring sponges and worms are organisms that make holes in the scallop’s shell, weakening it and requiring the scallop to make repairs. Secreting additional layers of shell material to mend these holes directs energy away from growth and maintenance of the scallop. In cases of severe infestation, the adductor muscle may be reduced in weight by up to 50%, and the meat may be discolored.
Our business would be adversely affected if our scallop crop is infected by flatworm.
Flatworms can be devastating, destroying all seed within 2 weeks. Island Scallops has managed to minimize this problem and keep mortalitieswrite down by keeping the seeds in the pond a little longer so it becomes larger, making the time spent in the first net culture less. We then move the seeds to a larger mesh net culture, which causes the flatworms to fall off and no longer pose a problem. This husbandry technique alleviates the problem to a large degree.
Scallops raised in the open ocean are subject to a variety of predators that could adversely impact crop yield.
Starfish are a major predator of scallops, particularly in bottom culture. If the hanging techniques are far enough from the bottom, even during extreme low tides, then this is not problematic. Since starfish and crabs have a free-swimming larval stage as part of their life cycle, it is possible that these larvae can settle within the “grow-out” nets and settle there and prey on these scallops. However, with proper husbandry techniques these effects can be minimized.
Our business would be adversely affected if a majority of our scallop crop experiences fouling.
Fouling is caused by settlement and growth of several organisms such as macroalgae, bryozoans, barnacles and mussels on the nets. Heavy fouling of culture nets and scallops impedes growth of the scallops. Since most fouling occurs in shallower waters, hanging scallops at deeper depths can reduce fouling. If culture systems are managed properly, fouling is not a problem.
Aquaculture can be subject to a variety of growing conditions that can adversely affect product growth and development.
Certain growing conditions and sea conditions can affect the quality and quantity of scallops produced, decreasing the supply of our products and negatively impacting profitability. Extreme wave actions tend to make scallops seasick. In cases of extreme seasickness, scallops stop feeding and growth is reduced. This may create mortality by weakening the scallops and making them susceptible to other problems and diseases. Currently, the water leases owned by Island Scallops are located in areas where this will prove to be less problematic. Additionally, if other environmental conditions are unfavorable, growing conditions in the ocean can greatly inhibit scallop growth. Generally this risk is mitigated by year-to-year variations in growing conditions. However, we cannot guarantee that we will not be negatively affected, at least in the short term, if we experience poor growing conditions.
Increased mortality rates would adversely impact our business.
In general, increased mortality rates in juveniles are due to improper feeding and hatchery husbandry. Once scallops are introduced to the ocean, increased mortality rates are caused by the above factors as well as fluctuations in salinity and currents. Given the location of Island Scallops’ current farming areas, the salinity and currents should not be problematic. Mortality rates can also increase due to overcrowding problems. In cases of extreme overcrowding scallops actually bite each other and their shells become damaged.
If we are unable to expand our tenures, our projected production may be delayed.
To increase our production capacity, we must expand our tenures. However, expanding tenures requires local and national government approval, which can be a timely and costly process. Expansion of two of our tenures, Hindoo Creek and Deep Bay, was approved and the expansion of these sites is complete. Another tenure, Bowser, was recently approved for partial conversion (one-third or 308 acres) to the off-bottom (suspended) culture and construction of this off bottom farm is now underway. Our Denman tenure, although approved for expansion by all national government agencies, requires zoning approval from the local Islands Trust. Our initial zoning application was denied, but we are considering our options for appeal. The capacity to be gained by expanding the Denman tenure is small, but valuable nevertheless. Based on our current estimates of near-term sales and capital costs of expanding our farms to increase future crop yields, we will require additional financings to continue our expansion. As we have yet to raise additional capital and our sales have increased at a slower than expected pace, we have already scaled back some of our expansion plans and may have to further scale back the plans outlined herein. If expansion of our tenures is denied or delayed due to lack of available funds, it will limit our production capacity.
Business Risks
We will require additional capital to fund our current business plan.
Our success is dependent on future financings. The aquaculture or marine farming industry is a capital-intensive business, which requires substantial capital expenditures to develop and acquire farms and to improve or expand current production. Further, the farming of marine life and acquisition of additional farms may require substantial amounts of working capital. We project the need for significant capital spending and increased working capital requirements over the next several years. There can be no assurance that we will be able to secure such financing on terms, which are acceptable, if at all. The failure to secure future financing with favorable terms could have a material adverse effect on our business and operations.
We are dependent on certain key existing and future personnel.
Our success will depend, to a large degree, upon the efforts and abilities of our officers and key management employees such as Mr. Saunders, Ms. Lisa Vernon, Mr. Bruce Evans and Brenden Frehlich. The loss of the services of one or more of these or other key employees could have a material adverse effect on our operations. We currently maintain key man life insurance on Mr. Saunders for a value of $1,000,000. We have an employment agreement with Mr. Saunders that expired in June 2008, but we are currently operating as if this employment agreement is still in effect while we discuss the terms of a new agreement with him. We do not maintain key man insurance for, nor do we currently have employment agreements with, any of our other key employees. In addition, as our business plan is implemented, we will need to recruit and retain additional management and key employees in virtually all phases of our operations. Key employees will require a strong background in the marine aquaculture industry. We cannot assure that we will be able to successfully attract and retain key personnel.
The fact that our directors and officers own approximately 28% of our capital stock and 56% of our voting capital stock may decrease your influence on shareholder decisions.
Our executive officers and directors, in the aggregate, beneficially own approximately 28% of our capital stock and 56% of our voting capital stock. As a result, our officers and directors, will have the ability to influence our management and affairs and the outcome of matters submitted to shareholders for approval, including the election and removal of directors, amendments to our bylaws and any merger, consolidation or sale of all or substantially all of our assets.
Our acquisitions and potential future acquisitions involve a number of risks.
Our potential future acquisitions involve risks associated with assimilating these operations into our company; integrating, retaining and motivating key personnel; integrating and managing geographically-dispersed operations integrating the technology and infrastructures of disparate entities; and risks inherent in the husbandry and farming of marine species.
We may have difficulty competing with larger and better-financed companies in our sector.
In general, the aquaculture industry is intensely competitive and highly fragmented. Many of our competitors have greater financial, technical, marketing and public relations resources than we presently have. Our sales may be harmed to the extent we are not able to compete successfully against such seafood producers.
Contamination of our seafood would harm our business.
Because our products are designed for human consumption, our business is subject to certain hazards and liabilities related to food products, such as contamination. A discovery of contamination in any of our products, through tampering or otherwise, could result in a recall of our products. Any such recall would significantly damage our reputation for product quality, which we believe is one of our principal competitive assets, and could seriously harm our business and sales. Although we maintain insurance to protect against such risks, we may not be able to maintain such insurance on acceptable terms and such insurance may not be adequate to cover any resulting liability.
We may experience barriers to conducting business due to potential government regulations.
There are no hatchery/producer competitors in the scallop farming business in British Columbia. The United States presently will not allow the farming of this hybrid species in their waters, without an Environmental Review. If new quarantine facilities are constructed in British Columbia or the United States this may have a material adverse affect on our business.
Our business may be adversely affected price by volatility.
If market prices for Island Scallops’ products decrease, we will incur a loss of profits. However, our operational costs will increase because we will have to produce the same quantity to meet the current demand, which will decrease profit margin. This form of price volatility would be detrimental for our business.
Foreign exchange rates risks, political stability risk, and/or the imposition of adverse trade regulations could harm our business.
We conduct some of our business in foreign currencies. Our profitability depends in part on revenues received in United States dollars as a result of sales into the United States. A decline in the value of the United States dollar against the Canadian dollar would adversely affect earnings from salesinvestment in the United States. As part of our plans to acquire other businesses we may expand our operations to other countries, operate those businesses in foreign currencies, and export goods from those countries. Thus far, we have not engaged in any financial hedging activities to offset the risk of exchange rate fluctuations. We may in the future, on an as-needed basis, engage in limited financial hedging activities to offset the risk of exchange rate fluctuations. There is a risk that a shift in certain foreign exchange rates or the imposition of unforeseen and adverse political instability and/or trade regulations could adversely impact the costs of these items and the liquidity of our assets, and have an adverse impact on our operating results. In addition, the imposition of unforeseen and adverse trade regulations could have an adverse effect on our exported seafood operations. We expect the volume of international transactions to increase, which may increase our exposure to future exchange rate fluctuations.
We have one major customer and any disagreement with that customer could have a material adverse affect on our business.
As a result of our recent sales agreement with Fanny Bay, Fanny Bay has effectively become the sole distributor of our scallops outside of the European market. Such a large customer will account for a significant portion of our sales and, as a result, any disagreements or problems with Fanny Bay could have a material adverse effect on our business and operations.
There may not be sufficient liquidity in the market for our securities in order for investors to sell their securities.
There is currently only a limited public market for our common stock, which is listed on the Over-the-Counter Bulletin Board, and there can be no assurance that a trading market will develop further or be maintained in the future. During the month of November 2009, our common stock traded an average of approximately 1,500 shares per day. As of December 9, 2009, the closing bid price of our common stock was $0.05 per share. As of August 31, 2009, we had approximately 56 shareholders of record of our common stock, 13 shareholders of record of our Series A Preferred Stock, 3 shareholders of record of our Series B Preferred Stock, 2 shareholder of record of our Series C Preferred Stock and 9 shareholders of record of our Series D Preferred Stock not including shares held in street name. In addition, during the past two years our common stock has had a trading range with a low price of $010 per share and a high price of $1.45 per share.
The market price of our common stock may be volatile.
The market price of our common stock has been and will likely continue to be highly volatile, as is the stock market in general, and the market for OTC Bulletin Board quoted stocks in particular. Some of the factors that may materially affect the market price of our common stock are beyond our control, such as changes in financial estimates by industry and securities analysts, conditions or trends in the industry in which we operate or sales of our common stock. These factors may materially adversely affect the market price of our common stock, regardless of our performance. In addition, the public stock markets have experienced extreme price and trading volume volatility. This volatility has significantly affected the market prices of securities of many companies for reasons frequently unrelatedRegreen Technologies Inc. due to the operating performanceuncertainty of the specific companies. These broad market fluctuations may adversely affect the market price of our common stock.
The outstanding warrants may adversely affect us in the future and cause dilution to existing shareholders.
There are currently 802,285 warrants outstanding. The terms of these warrants expire as early as 2010 and as late as 2011. The exercise price of these warrants range from $1.15 to $2.25 per share, subject to adjustment in certain circumstances. Exercise of the warrants may cause dilution in the interests of other shareholders as a result of the additional common stock that would be issued upon exercise. In addition, sales of the shares of our common stock issuable upon exercise of the warrants could have a depressive effect on the price of our stock, particularly if there is not a coinciding increase in demand by purchasers of our common stock. Further, the terms on which we may obtain additional financing during the period any of the warrants remain outstanding may be adversely affected by the existence of these warrants as well.
The outstanding options may adversely affect us in the future and cause dilution to existing shareholders.
There are currently 5,892,000 options outstanding. The terms of these options expire as early as 2010 and as late as 2015. The exercise price of these options range from $0.15 to $1.50 per share, subject to adjustment in certain circumstances. Exercise of the options may cause dilution in the interests of other shareholders as a result of the additional common stock that would be issued upon exercise. In addition, sales of the shares of our common stock issuable upon exercise of the options could have a depressive effect on the price of our stock, particularly if there is not a coinciding increase in demand by purchasers of our common stock. Further, the terms on which we may obtain additional financing during the period any of the options remain outstanding may be adversely affected by the existence of these options as well.
Our common stock may be considered a “penny stock” and may be difficult to sell.
The SEC has adopted regulations which generally define a “penny stock” to be an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock is less than $5.00 per share and, therefore, it may be designated as a “penny stock” according to SEC rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of investors to sell their shares.
Our Auditors have given the Company a “Going Concern” opinion, raising substantial doubt about our ability to continuing to fund our operations.
Prior to the completion of our initial Preferred Stock Financing, working capital had been primarily financed with various forms of debt. We have suffered operating losses since inception in our efforts to establish and execute our business strategy. As of August 31, 2009, we had a cash balance of approximately $12,000. After the completion of the recent Series D preferred financing, management believed that we had adequate funds to maintain our business operations into our 2009 fiscal year and/or until we become cash flow positive, but we continued to suffer operational losses in our 2009 and 2008 fiscal year. Until our operations are able to demonstrate and maintain positive cash flows, we may require additional working capital to fund our ongoing operations and execute our business strategy of expanding our operations. In fact, based on our current estimates of future sales and capital costs of expanding our farms in order to increase future crop yields, we will require additional financings to continue expand our operations. Based on these factors, there is substantial doubt about our ability to continueRegreen as a going concern.
ITEMLiquidity and Capital Resources
We have an accumulated deficit at August 31, 2023 of $52,655,280. We expect to incur substantial expenses and generate continued operating losses until we generate revenues sufficient to meet our obligations. At August 31, 2023, the Company had cash of $23,250. We will need to rely on private capital investment or loans to fund future operations for the next 12 months.
Cash Flows
The following table summarizes, for the periods indicated, selected items in our Statements of Cash Flows:
| | Years Ended August 31, | |
| | 2023 | | | 2022 | |
Net cash (used in) provided by: | | | | | | |
Operating activities | | $ | (593,160 | ) | | $ | (1,073,866 | ) |
Financing activities | | $ | 417,511 | | | $ | 1,178,000 | |
Operating Activities
Cash used in operating activities was $593,160 and $1,073,866 for the years ended August 31, 2023, and 2022, respectively. The decrease in cash used for operating activities was related primarily to an increase in accounts payable.
Financing Activities
Cash provided by financing activities was $417,511 and $1,178,000 for the years ended August 31, 2023, and 2022, respectively. The decrease in cash provided by financing activities was primarily due to a decrease in the issuances of common stock for cash.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements including arrangements that would affect the liquidity, capital resources, market risk support and credit risk support or other benefits.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk.
As a "smaller reporting company", we are not required to provide the information required by this Item.
Item 8. Financial Statements and Supplementary Data
The following consolidated financial statements are filed as part of this Annual Report:
ASTRA ENERGY INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Ocean Smart, Astra Energy, Inc. (formerly Edgewater Foods International, Inc.)
Qualicum Beach, British Columbia, Canada
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Ocean Smart,Astra Energy, Inc. (the “Company”and Subsidiaries (“the Company”) as of August 31, 20092023 and 2008,2022, and the related consolidated statements of operations, stockholders' equity,stockholders’ deficit, and cash flows for each of the years then ended. in the two-year period ended August 31, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2023 and 2022 and the results of its operations and its cash flows for each of the years in the two-year period ended August 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has an accumulated deficit and minimal revenue. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on thesethe Company’s financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included considerationAs part of our audits, we are required to obtain an understanding of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.
In our opinion,Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements referredthat were communicated or required to above present fairly,be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in all material respects,any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Accounting Treatment of Investments – Refer to Note 4 to the Financial Statements
Critical Audit Matter Description
The Company acquired a 50% ownership interest in Astra-Holcomb Energy Systems, LLC during the year ended August 31, 2023. As this is a significant transaction during the year and judgment is required related to the accounting and disclosure related to the purchase, we determined that this is a critical audit matter.
How the Critical Audit Matter was Addressed on the Audit
Our principal audit procedures consisted of the following, among others:
| · | Testing of the purchase price and valuation of the investment. |
| | |
| · | Evaluation of the subsequent accounting for the investment through year end. |
|
|
Fruci & Associates II, PLLC – PCAOB ID #05525 We have served as the Company’s auditor since 2021. |
Spokane, Washington
January 15, 2024
ASTRA ENERGY INC.
CONSOLIDATED BALANCE SHEETS
| | August 31, 2023 | | | August 31, 2022 (Restated) | |
ASSETS | | | | | | |
Current assets: | | | | | | |
Cash | | $ | 23,250 | | | $ | 198,899 | |
Other receivable – related party (Note 6) | | | - | | | | 194,520 | |
Total current assets | | | 23,250 | | | | 393,419 | |
Investment (Note 4) | | | 2,725,000 | | | | — | |
Operating leases, right of use assets (Note 5) | | | 4,818,471 | | | | — | |
| | | | | | | | |
Total Assets | | $ | 7,566,721 | | | $ | 393,419 | |
| | | | | | | | |
LIABILITIES & STOCKHOLDERS’ DEFICIT | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 265,917 | | | $ | 49,344 | |
Accounts payable - related parties (Note 8) | | | 322,500 | | | | 107,200 | |
Refundable deposits | | | 190,000 | | | | — | |
Due to related party (Note 7) | | | — | | | | 270,185 | |
Accrued interest payable | | | 6,840 | | | | 630 | |
Loan payable-related party (Note 9) | | | 93,011 | | | | | |
Note payable (Note 10) | | | 100,000 | | | | — | |
Debenture payable (Note 11) | | | 20,000 | | | | 20,000 | |
Operating lease liability – current portion | | | 127,460 | | | | — | |
Total current liabilities | | | 1,125,728 | | | | 447,359 | |
Operating lease liability – net of current portion (Note 6) | | | 4,691,011 | | | | — | |
Total Liabilities | | | 5,816,739 | | | | 447,359 | |
| | | | | | | | |
Commitments and contingencies | | | — | | | | — | |
| | | | | | | | |
Stockholders' Deficit: | | | | | | | | |
Series A Preferred stock, par $0.001, 8,000,000 shares authorized; 7,774 shares issued and outstanding | | | 8 | | | | 8 | |
Series B Preferred stock, par $0.0001, 100,000 shares authorized; 207 shares issued and outstanding | | | — | | | | — | |
Series C Preferred stock, par $0.001, 1,000,000 shares authorized; 747,870 shares issued and outstanding | | | 748 | | | | 748 | |
Series D Preferred stock, par $0.001, 380,000 shares authorized; 304,558 shares issued and outstanding | | | 305 | | | | 305 | |
Series A1 Preferred stock, par $0.001, 1 share authorized; no shares issued and outstanding, respectively | | | — | | | | — | |
Common stock, $0.001 par value; 100,000,000 shares authorized; 67,638,982 and 50,355,540 shares issued and outstanding, respectively. | | | 67,639 | | | | 50,356 | |
Stock subscriptions receivable | | | (5,000 | ) | | | (5,000 | ) |
Common stock to be issued | | | - | | | | 20,000 | |
Additional paid-in capital | | | 54,341,562 | | | | 42,104,418 | |
Accumulated deficit | | | (52,655,280 | ) | | | (42,224,735 | ) |
Total Stockholders’ Deficit | | | 1,749,982 | | | | (53,900 | ) |
| | | | | | | | |
Total Liabilities and Stockholders’ Deficit | | $ | 7,566,721 | | | $ | 393,419 | |
The accompanying notes are an integral part of these consolidated financial positionstatements.
ASTRA ENERGY INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| | For the Years Ended August 31, | |
| | 2023 | | | 2022 (Restated) | |
Revenue | | $ | — | | | $ | 25,000 | |
| | | | | | | | |
Operating Expenses: | | | | | | | | |
General and administrative | | | 127,037 | | | | 179,132 | |
Inventory impairment | | | — | | | | 75,000 | |
Business development | | | 819,715 | | | | 712,683 | |
Consulting - related party | | | 3,460 | | | | 60,000 | |
Executive compensation | | | 1,693,250 | | | | 1,034,450 | |
Stock compensation-consulting | | | 701,612 | | | | 595,500 | |
Total operating expenses | | | 3,345,074 | | | | 2,656,765 | |
| | | | | | | | |
Loss from operations | | | (3,345,074 | ) | | | (2,631,765 | ) |
| | | | | | | | |
Other Income (Expense): | | | | | | | | |
Foreign exchange | | | 2,208 | | | | (13 | ) |
Interest expense | | | (13,510 | ) | | | (2,767 | ) |
Interest expense – debt discount | | | (69,250 | ) | | | — | |
Early payment penalty | | | (20,706 | ) | | | — | |
Impairment loss | | | (7,049,213 | ) | | | (9,701,000 | ) |
Loss on issuance of convertible debt | | | (36,242 | ) | | | — | |
Change in fair value of derivative | | | (50,570 | ) | | | — | |
Gain on extinguishment of debt | | | 151,812 | | | | — | |
Total other expense | | | (7,085,471 | ) | | | (9,703,780 | ) |
| | | | | | | | |
Loss before provision for income taxes | | | (10,430,545 | ) | | | (12,335,545 | ) |
Provision for income taxes | | | — | | | | — | |
| | | | | | | | |
Net Loss | | $ | (10,430,545 | ) | | $ | (12,335,545 | ) |
| | | | | | | | |
Net loss per share, basic and diluted | | $ | (0.15 | ) | | $ | (0.27 | ) |
Weighted average shares outstanding, basic and diluted | | | 70,475,577 | | | | 45,567,354 | |
The accompanying notes are an integral part of Ocean Smart, Inc. asthese consolidated financial statements.
ASTRA ENERGY INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED AUGUST 31, 2023 AND 2022
| | Series A Preferred | | | Series A1 Preferred | | | Series B Preferred | | | Series C Preferred | | | Series D Preferred | | | Common Stock | | | Common Stock to | | | Stock Subscription | | | Additional Paid-In | | | Accumulated | | | | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Be Issued | | | Receivable | | | Capital | | | Deficit | | | Total | |
Balance, August 31, 2021 | | | 15,774 | | | $ | 16 | | | | 1 | | | $ | — | | | | 207 | | | $ | — | | | | 747,870 | | | $ | 748 | | | | 304,558 | | | $ | 305 | | | | 42,549,540 | | | $ | 42,550 | | | $ | 100,000 | | | $ | (100,000 | ) | | $ | 29,795,766 | | | $ | (29,889,190 | ) | | $ | (49,805 | ) |
Common stock issued for services - related party | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 525,000 | | | | 525 | | | | — | | | | — | | | | 410,475 | | | | — | | | | 411,000 | |
Preferred shares cancelled – related party | | | (8,000 | ) | | | (8 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 8 | | | | — | | | | — | |
Common stock issued for services | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,045,000 | | | | 1,045 | | | | — | | | | — | | | | 985,405 | | | | — | | | | 986,450 | |
Common stock issued for inventory | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 150,000 | | | | 150 | | | | — | | | | — | | | | 74,850 | | | | — | | | | 75,000 | |
Prepaid common stock issued for acquisition | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,800,000 | | | | 3,800 | | | | — | | | | — | | | | 9,697,200 | | | | - | | | | 9,701,000 | |
Common stock issued for cash | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,286,000 | | | | 2,286 | | | | (80,000 | ) | | | 95,000 | | | | 1,140,714 | | | | — | | | | 1,158,000 | |
Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (12,335,545 | ) | | | (12,335,545 | ) |
Balance, August 31, 2022 (Restated) | | | 7,774 | | | | 8 | | | | 1 | | | | — | | | | 207 | | | | — | | | | 747,870 | | | | 748 | | | | 304,558 | | | | 305 | | | | 50,355,540 | | | | 50,356 | | | | 20,000 | | | | (5,000 | ) | | | 42,104,418 | | | | (42,224,735 | ) | | | (53,900 | ) |
Common stock issued for services - related party | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,615,000 | | | | 3,615 | | | | — | | | | — | | | | 1,515,135 | | | | — | | | | 1,518,750 | |
Common stock issued for services | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,640,000 | | | | 1,640 | | | | — | | | | — | | | | 582,510 | | | | — | | | | 584,150 | |
Common stock issued for Holcomb and Regreen | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,459,442 | | | | 11,459 | | | | — | | | | — | | | | 9,855,568 | | | | — | | | | 9,867,027 | |
Common stock issued for cash and accounts payable | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 569,000 | | | | 569 | | | | (20,000 | ) | | | — | | | | 283,931 | | | | — | | | | 264,500 | |
Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (10,430,545 | ) | | | (10,430,545 | ) |
Balance, August 31, 2023 | | | 7,774 | | | $ | 8 | | | | 1 | | | $ | — | | | | 207 | | | $ | — | | | | 747,870 | | | $ | 748 | | | | 304,558 | | | $ | 305 | | | | 67,638,982 | | | $ | 67,639 | | | $ | — | | | $ | (5,000 | ) | | $ | 54,341,562 | | | $ | (52,655,280 | ) | | $ | 1,749,982 | |
The accompanying notes are an integral part of these consolidated financial statements.
ASTRA ENERGY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Non Cash Activities
| | For the Years Ended August 31, | |
| | 2023 | | | 2022 (Restated) | |
CASH FLOW FROM OPERATING ACTIVITIES: | | | | | | |
Net loss | | $ | (10,430,545 | ) | | $ | (12,335,545 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
Stock based compensation | | | 692,009 | | | | 986,450 | |
Stock based compensation – related party | | | 1,518,750 | | | | 411,000 | |
Impairment expense | | | 7,049,212 | | | | 9,701,000 | |
Debt discount amortization | | | 69,250 | | | | — | |
Loss on issuance of convertible debt | | | 36,242 | | | | — | |
Early payment penalty | | | 20,706 | | | | — | |
Change in fair value of derivative | | | 50,570 | | | | — | |
Gain on extinguishment of debt | | | (151,812 | ) | | | — | |
Changes in assets and liabilities: | | | | | | | | |
Receivable-related party | | | 194,520 | | | | | |
Accounts payable | | | 216,613 | | | | 106,029 | |
Accounts payable – related parties | | | 215,300 | | | | 57,200 | |
Due to a related party | | | (270,185 | ) | | | — | |
Customer deposits | | | 190,000 | | | | — | |
Accrued interest | | | 6,210 | | | | — | |
Net Cash Used in Operating Activities | | | (593,160 | ) | | | (1,073,866 | ) |
| | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | — | | | | — | |
| | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
Proceeds from sale of shares | | | 224,500 | | | | 1,158,000 | |
Proceeds from debenture | | | — | | | | 20,000 | |
Proceeds from loan payable | | | 100,000 | | | | — | |
Proceeds from loan payable-related party | | | 93,011 | | | | — | |
Repayment of convertible note payable | | | — | | | | — | |
Net Cash Provided by Financing Activities | | | 417,511 | | | | 1,178,000 | |
| | | | | | | | |
Net Change in Cash | | | (175,649 | ) | | | 104,134 | |
Cash at Beginning of Year | | | 198,899 | | | | 94,765 | |
Cash at End of Year | | $ | 23,250 | | | $ | 198,899 | |
| | | | | | | | |
Cash paid during the period for: | | | | | | | | |
Interest | | $ | 3,055 | | | $ | 2,767 | |
Income taxes | | $ | — | | | $ | — | |
| | | | | | | | |
Non Cash Activities | | | | | | | | |
Stock issued for acquisition-Holcomb | | $ | 2,725,000 | | | | — | |
Operating lease | | $ | 4,818,471 | | | | — | |
Stock issued for acquisition-Regreen | | | 7,049,212 | | | | 9,071,000 | |
The accompanying notes are an integral part of these consolidated financial statements.
ASTRA ENERGY INC.
Notes to the Consolidated Financial Statements
August 31, 2009 and 2008, and2023
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Astra Energy, Inc. (the “Company”, “Astra”), was incorporated in the resultsState of its operations and its cash flows for eachNevada on June 12, 2000.
A Certificate of Amendment was filed on August 22, 2020 with the Nevada Secretary of State changing the name of the years then endedCompany to Astra Energy, Inc.
The Company is an emerging leader in conformitythe acquisition and development of technology in the Waste-to-Energy project sector.
On October 17, 2019, there was an order by the Eight Judicial District Court of Clark County Nevada appointing a Custodian to the Company. The custodianship was discharged on June 18, 2020.
On September 15, 2021, the Company affected a forward stock split of 3 for 1 which was approved by the Financial Industry Regulatory Authority (“FINRA”). All shares throughout these statements reflect the forward split.
On September 21, 2021, the Company incorporated a wholly owned subsidiary in Uganda called Astra Energy Africa - SMC Limited.
On October 12, 2021, the Company incorporated a majority owned subsidiary in Uganda called Astra Energy Services Limited. The Company is owned 80% by Astra Energy Inc. and 20% by Ssingo Oils and Gas - SMC Limited of Mityana, Uganda.
On November 15, 2021, the Company incorporated a wholly owned subsidiary in the State of California called Astra Energy California, Inc. On October 26, 2023, the name of the subsidiary was changed to Astra Biofuels Inc.
On December 22, 2021, the Company incorporated a subsidiary in Tanzania called Astra Energy Tanzania Limited. The Company is owned 80% by Astra Energy Inc. and 20% by Kiluwa Group of Companies Limited of Kinondoni, Tanzania.
On August 17, 2022, the Company incorporated a wholly owned subsidiary in the State of Florida called Astra Holcomb Energy Systems Inc.
On October 27, 2022, the Company acquired 50% of the outstanding shares of Astra-Holcomb Energy Systems LLC., a Delaware entity, in exchange for 5 million shares of the Company’s common stock. Astra-Holcomb Energy Systems LLC holds the exclusive rights to manufacture and distribute the patented Holcomb Energy System In-Line Power Generator. There are no other assets and no liabilities in Astra-Holcomb Energy Systems LLC.
As at August 31, 2023, the Company has acquired a 28% interest in Regreen Technologies, Inc. in exchange for 7,759,442 common shares of the Company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
As discussed in Note 2 to the consolidated financial statements, the Company's absence of significant revenues, recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2010 raise substantial doubt about its ability to continue as a going concern. The 2009 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ LBB & Associates Ltd., LLP
LBB & Associates Ltd., LLP
Houston, Texas
December 11, 2009
| OCEAN SMART, INC. | | | | |
| (FORMERLY EDGEWATER FOODS INTERNATIONAL, INC.) | | | | |
| CONSOLIDATED BALANCE SHEETS | | | | |
| AUGUST 31, 2009 and 2008 | | | | |
| | | | | | | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| ASSETS | | | | |
| | | | | | | |
| Current assets: | | | | | | |
| Cash | | $ | 12,356 | | | $ | 712,298 | |
| Accounts receivable, net | | | 233,376 | | | | 195,402 | |
| Inventory | | | 553,311 | | | | 1,290,702 | |
| Other current assets | | | 52,056 | | | | 80,011 | |
| | | | | | | | | |
| Total current assets | | | 851,099 | | | | 2,278,413 | |
| | | | | | | | | |
| Property, plant and equipment, net | | | 3,350,709 | | | | 3,982,336 | |
| | | | | | | | | |
| Long-term inventory | | | 1,075,463 | | | | 986,327 | |
| | | | | | | | | |
| Loans receivable, related party | | | - | | | | 114,079 | |
| | | | | | | | | |
| Other assets | | | 9,335 | | | | 3,758 | |
| | | | | | | | | |
| Total assets | | $ | 5,286,606 | | | $ | 7,364,913 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | |
| | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Short term debt | | $ | 161,932 | | | $ | 109,648 | |
| Line of credit | | | 75,194 | | | | 124,766 | |
| Current portion of long term debt | | | 354,318 | | | | 396,885 | |
| Accounts payable and accrued liabilities | | | 1,111,503 | | | | 991,061 | |
| | | | | | | | | |
| Total current liabilities | | | 1,702,947 | | | | 1,622,360 | |
| | | | | | | | | |
| Long term debt, net current portion | | | 598,306 | | | | 548,004 | |
| | | | | | | | | |
| Total liabilities | | | 2,301,253 | | | | 2,170,364 | |
| | | | | | | | | |
| Commitments and contingencies | | | | | | | | |
| Stockholders' equity | | | | | | | | |
| Series A Preferred stock, par $0.001, 10,000,000 | | | 7,774 | | | | 7,774 | |
| authorized, 7,773,998 issued and outstanding | | | | | | | | |
| at August 31, 2009 and 2008, respectively | | | | | | | | |
| Series B Preferred stock, par $0.001, 100 | | | - | | | | - | |
| authorized, 207 issued and outstanding at | | | | | | | | |
| August 31, 2009 and 2008, respectively | | | | | | | | |
| Series C Preferred stock, par $0.001, 1,000,000 | | | 748 | | | | 748 | |
| authorized, 747,870 issued and outstanding | | | | | | | | |
| at August 31, 2009 and 2008, respectively | | | | | | | | |
| Series D Preferred stock, par $0.001, 380,000 | | | 305 | | | | 305 | |
| authorized, 304,558 issued and outstanding | | | | | | | | |
| at August 31, 2009 and 2008, respectively | | | | | | | | |
| Common stock, par $0.0001, 100,000,000 authorized, | | | 2,592 | | | | 2,448 | |
| 25,920,296 and 24,479,150 issued and outstanding at | | | | | | | | |
| August 31, 2009 and 2008, respectively | | | | | | | | |
| Additional paid in capital | | | 28,372,640 | | | | 27,497,781 | |
| Accumulated deficit | | | (25,008,570 | ) | | | (22,103,314 | ) |
| Accumulated other comprehensive income (loss) - | | | | | | | | |
| foreign exchange adjustment | | | (390,136 | ) | | | (211,193 | ) |
| | | | | | | | | |
| Total stockholders' equity | | | 2,985,353 | | | | 5,194,549 | |
| | | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 5,286,606 | | | $ | 7,364,913 | |
See accompanying notes to consolidated financial statements
| OCEAN SMART, INC. | |
| (FORMERLY EDGEWATER FOODS INTERNATIONAL, INC.) | |
| CONSOLIDATED STATEMENTS OF OPERATIONS | |
| YEARS ENDED AUGUST 31, 2009 and 2008 | |
| | | | | | | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Revenue | | $ | 1,890,536 | | | $ | 1,584,027 | |
| Cost of goods sold | | | 2,576,938 | | | | 2,062,758 | |
| | | | | | | | | |
| Gross profit (loss) | | | (686,402 | ) | | | (478,731 | ) |
| | | | | | | | | |
| Expenses: | | | | | | | | |
| General and administrative expenses | | | 1,641,470 | | | | 3,185,460 | |
| | | | | | | | | |
| Total operating expenses | | | (1,641,470 | ) | | | (3,185,460 | ) |
| | | | | | | | | |
| Loss from operations | | | (2,327,872 | ) | | | (3,664,191 | ) |
| | | | | | | | | |
| Other income (expense): | | | | | | | | |
| Interest expense, net | | | (57,285 | ) | | | (10,993 | ) |
| Other income (expense) | | | 120,304 | | | | (5,938 | ) |
| | | | | | | | | |
| Total other income (expense), net | | | 63,019 | | | | (16,931 | ) |
| | | | | | | | | |
| Net loss | | | (2,264,853 | ) | | | (3,681,122 | ) |
| | | | | | | | | |
| Dividend on preferred stock | | | (640,403 | ) | | | (630,142 | ) |
| | | | | | | | | |
| Deemed dividend for beneficial | | | | | | | | |
| conversion feature | | | - | | | | (163,386 | ) |
| | | | | | | | | |
| Deemed dividend for exchange of | | | | | | | | |
| warrants for series D preferred | | | - | | | | (100,360 | ) |
| | | | | | | | | |
| Net loss applicable to | | | | | | | | |
| common shareholders | | | (2,905,256 | ) | | | (4,575,010 | ) |
| | | | | | | | | |
| Foreign currency translation | | | (178,943 | ) | | | (105,649 | ) |
| | | | | | | | | |
| Comprehensive loss | | $ | (3,084,199 | ) | | $ | (4,680,659 | ) |
| | | | | | | | | |
| Net loss per Share | | | | | | | | |
| Basic and diluted | | $ | (0.12 | ) | | $ | (0.19 | ) |
| | | | | | | | | |
| Weighted average shares outstanding | | | | | | | | |
| Basic and diluted | | | 25,242,856 | | | | 23,993,935 | |
See accompanying notes to consolidated financial statements
OCEAN SMART, INC.
(FORMERLY EDGEWATER FOODS INTERNATIONAL, INC.America (“U.S. GAAP”)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY FOR THE YEARS ENDED AUGUST 31, 2000 and 2008
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other Comprehensive | | | | | | | |
| | | Preferred Stock | | | | | | | | | | | | | | | | | | Income - | | | | | | | |
| | | Series A | | | Series B | | | Series C | | | Series D | | | Common Stock | | | Additional Paid in | | | Foreign Exchange | | | Accumulated | | | | |
| | | Number | | | Value | | | Number | | | Value | | | Number | | | Value | | | Number | | | Value | | | Number | | | Value | | | Capital | | | Adjustment | | | Deficit | | | Total | |
| Balance at August 31, 2007 | | | 7,773,998 | | | $ | 7,774 | | | | 207 | | | $ | - | | | | - | | | $ | - | | | | - | | | $ | - | | | | 23,712,700 | | | $ | 2,371 | | | $ | 22,471,315 | | | $ | (105,544 | ) | | $ | (17,528,303 | ) | | $ | 4,847,613 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Comprehensive loss | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (3,681,122 | ) | | | (3,681,122 | ) |
| Foreign | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (105,649 | ) | | | | | | | (105,649 | ) |
| Total comprehensive loss | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (3,786,771 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock option expense | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,780,882 | | | | | | | | | | | | 1,780,882 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock Issued for services | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 85,000 | | | | 9 | | | | 90,591 | | | | | | | | | | | | 90,600 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock issued for dividends | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 681,450 | | | | 68 | | | | 630,075 | | | | | | | | (630,143 | ) | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred Series C Stock issued in connection with financing | | | | | | | | | | | | | | | | | | | 747,870 | | | | 748 | | | | | | | | | | | | | | | | | | | | 799,900 | | | | | | | | | | | | 800,648 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Deemed Dividend | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 163,386 | | | | | | | | (163,386 | ) | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred Series D Stock issued in connection with financing | | | | | | | | | | | | | | | | | | | | | | | | | | | 37,500 | | | | 38 | | | | - | | | | | | | | 1,461,539 | | | | | | | | | | | | 1,461,577 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred Series D Stock issued in connection with warrant exchange | | | | | | | | | | | | | | | | | | | | | | | | | | | 267,058 | | | | 267 | | | | - | | | | | | | | 100,093 | | | | | | | | (100,360 | ) | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at August 31, 2008 | | | 7,773,998 | | | | 7,774 | | | | 207 | | | | - | | | | 747,870 | | | | 748 | | | | 304,558 | | | | 305 | | | | 24,479,150 | | | | 2,448 | | | | 27,497,781 | | | | (211,193 | ) | | | (22,103,314 | ) | | | 5,194,549 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Comprehensive loss | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (2,264,853 | ) | | | (2,264,853 | ) |
| Foreign | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (178,943 | ) | | | | | | | (178,943 | ) |
| Total comprehensive loss | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (2,443,796 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock issued in Granscal acquisition | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 400,000 | | | | 40 | | | | 31,960 | | | | | | | | | | | | 32,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock option expense | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 185,100 | | | | | | | | | | | | 185,100 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock Issued for services | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 150,000 | | | | 15 | | | | 17,485 | | | | | | | | | | | | 17,500 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock issued for dividends | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 891,146 | | | | 89 | | | | 640,314 | | | | | | | | (640,403 | ) | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at August 31, 2009 | | | 7,773,998 | | | $ | 7,774 | | | | 207 | | | $ | - | | | | 747,870 | | | $ | 748 | | | | 304,558 | | | $ | 305 | | | | 25,920,296 | | | $ | 2,592 | | | $ | 28,372,640 | | | $ | (390,136 | ) | | $ | (25,008,570 | ) | | $ | 2,985,353 | |
See accompanying notes to consolidated financial statements
| OCEAN SMART, INC. | |
| (FORMERLY EDGEWATER FOODS INTERNATIONAL, INC.) | |
| CONSOLIDATED STATEMENTS OF CASHFLOWS | |
| YEARS ENDED AUGUST 31, 2009 and 2008 | |
| | | | | | | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Cash flows from operating activities: | | | | | | |
| | | | | | | |
| Net loss | | $ | (2,264,853 | ) | | $ | (3,681,122 | ) |
| | | | | | | | | |
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | | | | | | | | |
| Depreciation and amortization | | | 570,617 | | | | 563,456 | |
| Stock option expense | | | 185,100 | | | | 1,780,882 | |
| Common stock issued for services | | | 17,500 | | | | 90,600 | |
| Inventory impairment | | | 75,000 | | | | - | |
| | | | | | | | | |
| Changes in current assets and liabilities: | | | | | | | | |
| Accounts receivable | | | (37,974 | ) | | | (121,979 | ) |
| Prepaid expenses | | | 27,955 | | | | - | |
| Other current assets | | | - | | | | (18,769 | ) |
| Loan receivable, related party | | | 117,624 | | | | (31,819 | ) |
| Inventory | | | 472,804 | | | | (449,516 | ) |
| Accounts payable | | | 123,447 | | | | 269,769 | |
| | | | | | | | | |
| Net cash used in operating activities | | | (712,780 | ) | | | (1,598,498 | ) |
| | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
| Other assets | | | (5,672 | ) | | | - | |
| Purchase of property, plant and equipment | | | (84,179 | ) | | | (1,592,581 | ) |
| | | | | | | | | |
| Net cash used in investing activities | | | (89,851 | ) | | | (1,592,581 | ) |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| | | | | | | | | |
| Net proceeds (payments) from line of credit | | | (42,591 | ) | | | 131,917 | |
| Proceeds from short term debt | | | 41,293 | | | | - | |
| Payment of short term debt | | | (45,444 | ) | | | (821 | ) |
| Proceeds from long term debt | | | 84,895 | | | | 29,798 | |
| Payment of long term debt | | | - | | | | (114,224 | ) |
| Common stock issued for cash | | | - | | | | - | |
| Proceeds from exercise of warrants | | | - | | | | - | |
| Preferred stock issued for cash | | | - | | | | 2,262,225 | |
| | | | | | | | | |
| Net cash provided (used in) by financing activities | | | 38,153 | | | | 2,308,895 | |
| | | | | | | | | |
| Foreign currency translation effect | | | 64,536 | | | | (62,386 | ) |
| | | | | | | | | |
| Net decrease in cash | | | (699,942 | ) | | | (944,570 | ) |
| | | | | | | | | |
| Cash, beginning of period | | | 712,298 | | | | 1,656,868 | |
| | | | | | | | | |
| Cash, end of period | | $ | 12,356 | | | $ | 712,298 | |
| | | | | | | | | |
| Supplemental disclosure of cash flow information | | | | | | | | |
| | | | | | | | | |
| Non cash transactions | | | | | | | | |
| Acquisition of Granscal | | $ | 85,759 | | | $ | - | |
| Issuance of stock for dividends | | $ | 640,403 | | | $ | 630,142 | |
| | | | | | | | | |
| Net cash paid | | | | | | | | |
| Interest | | $ | - | | | $ | 42,059 | |
| Income taxes | | $ | - | | | $ | - | |
See accompanying notes to consolidated financial statements
OCEAN SMART, INC.
(FORMERLY EDGEWATER FOODS INTERNATIONAL, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation, Organization and Nature of Operations
Ocean Smart, Inc. (or “Ocean Smart” formerly Edgewater Foods International, Inc.), a Nevada Corporation, is the parent company of Island Scallops Ltd., a Vancouver Island aquaculture company. Island Scallops was established in 1989 and for over 20 years has operated a scallop farming and marine hatchery business. Island Scallops is dedicated to the farming, processing and marketing of high quality, high value marine species (scallops).
On January 12, 2009, we held our annual shareholder meeting where our shareholders voted by proxy to approved changing our corporate name to Ocean Smart, Inc. The name change became effective on March 3, 2009 however we were not notified by the state of Nevada until March 30, 2009. Accordingly, we reported the name change on a Current Report on Form 8-K with the Securities and Exchange Commission and filed it on March 30, 2009.
We have evaluated subsequent events through December 11, 2009, the date the financial statements were available to be issued.
Note 2. Going Concern
Prior to the completion of our initial Preferred Stock Financing, working capital had been primarily financed with various forms of debt. We have suffered operating losses since inception in our efforts to establish and execute our business strategy. As of August 31, 2009, we had a cash balance of approximately $12,000. After the completion of the recent Series D preferred financing (see Note 13 – Series D Preferred Stock Financing for additional information), management believed that we had adequate funds to maintain our business operations into our 2010 fiscal year and/or until we become cash flow positive, but we continued to suffer operational losses in our 2009 and 2008 fiscal years. Until our operations are able to demonstrate and maintain positive cash flows, we may require additional working capital to fund our ongoing operations and execute our business strategy of expanding our operations. In fact, based on our current estimates of future sales and capital costs of expanding our farms in order to increase future crop yields, we will require additional financings to continue expand our operations. Based on these factors, there is substantial doubt about our ability to continue as a going concern.
Note 3. Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the acquired entities since their respective dates of acquisition. All significant inter-company amounts have been eliminated.
Cash and equivalents
Cash and equivalents include cash and highly liquid short term market investments with original maturity terms of three months or less. We have not experienced any losses, in such accounts and believe it is not exposed to any significant credit risk on cash and cash equivalents.
Accounts receivable
Accounts receivable is presented net of $392 allowance for doubtful accounts. The allowance for doubtful accounts reflects estimates of probable losses in accounts receivable. The allowance is determined based on balances outstanding for over 90 days at the period end date, historical experience and other current information.
Loans receivable
Loans receivable is presented net of an allowance for loan losses, as necessary. The loans are written off when collectability becomes uncertain.
Inventory
Ocean Smart maintains inventories of raw materials for its aquaculture products, of biomass (inventory of live aquaculture product being actively cultivated), and of finished goods (aquaculture product ready for sale). Inventories are reported at the lesser of cost or estimated net realizable value. Biomass and finished goods includes direct and reasonably attributable indirect production costs related to hatchery, cultivation, harvesting, and processing activities. Carrying costs per unit are determined on a weighted average basis.
In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company evaluates the carrying value of its inventory for impairment whenever events or changes in circumstances indicate that such carrying values may not be recoverable. The Company uses its best judgment based on the current facts and circumstances relating to its business when determining whether any significant impairment factors exist. The Company’s management performs an undiscounted cash flow analysis to determine if impairment exists. If impairment exists, the Company measures the impairment based on the difference between the inventory’s carrying amount and its fair value, and the impairment is charged to operations in the period in which the inventory impairment is determined by management. Based on its analysis, the Company believes that impairment of $75,000 of the carrying value of its current inventory assets existed at August 31, 2009. There can be no assurance, however, that market conditions will not change or demand for the Company’s products will continue or allow the Company to realize the value of its long-lived assets and prevent future impairment.
Management has classified the costs of crops expected to be sold beyond a 12-month cycle from the date of the financial statements as noncurrent.
Reclassifications
Certain amounts in the 2008 financial statements have been reclassified to conform to the 2009 financial statement presentation.
Long term investments
Long term investments are recorded at cost. We review our investments periodically to assess whether there is an “other than temporary” decline in the carrying value of the investment. We consider whether there is an absence of an ability to recover the carrying value of the investment by reference to projected undiscounted future cash flows for the investment. If the projected undiscounted future cash flow is less than the carrying amount of the asset, the asset is deemed impaired. The amount of the impairment is measured as the difference between the carrying value and the fair value of the asset.
Property, plant, and equipment
Property, plant and equipment are carried at cost, less accumulated depreciation. Depreciation is included with general and administrative expenses and in some cases cost of goods sold in the accompanying statement of operations and calculated by using the straight-line method for financial reporting. The recovery classifications for these assets are listed as follows:
| Years |
Facility and operating plant
| |
| |
| |
| |
| |
| |
| |
Expenditures for maintenance and repairs are charged against income as incurred whereas major improvements are capitalized.
Impairment of long-lived assets
We monitor the recoverability of long-lived assets, including property, plant and equipment, inventory and intangible assets, based upon estimates using factors such as expected future asset utilization, business climate, and undiscounted cash flows resulting from the use of the related assets or to be realized on sale. Our policy is to write down assets to the estimated net recoverable amount, in the period in which it is determined likely that the carrying amount of the asset will not be recoverable. At August 31, 2009, management performed an undiscounted cash flow analysis to determine that impairment of $75,000 existed in carrying value our 2006 scallop year class inventory. As such, the impairment of $75,000 was charged against operations during the year ended August 31, 2009.
Government assistance
Government assistance we receive, such as grants, subsidies, and tax credits, is recorded as a recovery of the appropriate related expenditure in the period that the assistance is received.
We have received government assistance in the form of loans, for which repayment may not be required if we fail to meet sufficient future revenue levels to repay these loans based on a percentage of gross sales for certain products over a defined period of time. Such assistance, if received, is initially recorded as a liability, until such time as all conditions for forgiveness are met, and is then recognized as other income in that period.
Farm license costs
We must pay annual license costs in respect to government-granted tenures that it holds, which gives us the right to use certain offshore ocean waters for the purpose of aquaculture farming. Such license costs are recognized as an expense over the period of the license.
Research and development costs
Development costs include costs of materials, wages, and reasonably attributable indirect costs incurred by us which are directly attributable to the development of hatchery techniques for sablefish and shellfish. These costs are expensed when incurred.
Research costs are expensed when incurred.
Income taxes
We calculate our provision for income taxes in accordance with Statement of Financial Accounting Standards No. 109 (Accounting for Income Taxes) (“SFAS 109”), which requires an asset and liability approach to financial accounting for income taxes. This approach recognizes the amount of taxes payable or refundable for the current year, as well as deferred tax assets and liabilities attributable to the future tax consequences of events recognized in the financial statements and tax returns. Deferred income taxes are adjusted to reflect the effects of enacted changes in tax laws or tax rates. Deferred income tax assets are recorded in the financial statements if realization is considered more likely than not.
Revenue recognition
We recognize revenue when it is realized or realizable, and earned. We consider revenue realized or realizable and earned when there is persuasive evidence of a contract, the product has been delivered or the services have been provided to the customer, the sales price is fixed or determinable, and collectability is reasonably assured.
Our revenue is derived principally from the sale of scallops we produce or purchase from third parties, and from the sale of seed and farm supplies to other aquaculture farms.
Cost of goods
Cost of goods sold consists primarily of farming, harvesting and processing costs associated with the growth, transfer and sales preparation of our products (principally scallops). These costs consist primarily of salaries and benefits and allocated overhead costs for consulting and support personnel engaged in the farming, harvesting and processing of our products. All costs are recognized at time of delivery.
Financial instruments
The carrying amount of our financial instruments, which includes cash, accounts receivable, loans receivable, accounts payable and accrued liabilities, short term debt, shareholder debt, and long term debt, approximate fair value based on either i) the short-term nature of the instrument or ii) the reasonableness of the interest rate as compared to market rates for the long-term instruments. Nonfinancial assets and liabilities that the Company measures at fair value on a non-recurring basis consist primarily of property and equipment, goodwill, and intangible assets, which are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). It is management’s opinion that we are not exposed to significant interest, currency or credit risk arising from these financial instruments unless otherwise noted.
Fair value
Effective September 1, 2008, the Company adopted changes issued by the Financial Accounting Standards Board (“FASB”) to fair value accounting. This guidance defines fair value as the price that would be received to sell an asset or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:
Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Examples of the assets carried at Level 1 fair value generally are equities listed in active markets and investments in publicly traded mutual funds with quoted market prices.
Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the asset/liability’s anticipated life.
Level 3—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
The availability of observable inputs can vary and is affected by a wide variety of factors, including, for example, the type of a security, whether the security is new and not yet established in the marketplace, and other characteristics particular to a transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. When observable prices are not available, the Company either uses implied pricing from similar instruments or valuation models based on net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors. Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those it believes market participants would use in pricing the asset or liability at the measurement date. As noted above the Company’s financial instruments approximate their fair value due to the short-term nature of these instruments.
Derivative Financial Instruments
In connection with the sale of debt or equity instruments, we may sell options or warrants to purchase our common stock. In certain circumstances, these options or warrants may be classified as derivative liabilities, rather than as equity. Additionally, the debt or equity instruments may contain embedded derivative instruments, such as embedded derivative features, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.
We account for all derivatives financial instruments in accordance with SFAS No. 133. Derivative financial instruments are recorded as liabilities in the consolidated balance sheet, measured at fair value. When available, quoted market prices are used in determining fair value. However, if quoted market prices are not available, we estimate fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques.
The identification of, and accounting for, derivative instruments is complex. Our derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income, in the period in which the changes occur. For options, warrants and bifurcated embedded derivative features that are accounted for as derivative instrument liabilities, we estimate fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. The valuation techniques require assumptions related to the remaining term of the instruments and risk-free rates of return, our current common stock price and expected dividend yield, and the expected volatility of our common stock price over the life of the option. The identification of, and accounting for, derivative instruments and the assumptions used to value them can significantly affect our financial statements.
Derivative financial instruments that are not designated as hedges or that do not meet the criteria for hedge accounting under SFAS No. 133 are recorded at fair value, with gains or losses reported currently in earnings. All derivative financial instruments we held as of August 31, 2009 and 2008 were not designated as hedges.
Foreign exchange
The functional currency of our foreign subsidiary is the local foreign currency (Canadian dollars). All assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate prevailing on the balance sheet date. Revenues, costs and expenses are translated at average rates of exchange prevailing during the period. Translation adjustments resulting from translation of the subsidiaries' accounts are accumulated as a separate component of shareholders' equity. Gains and losses resulting from foreign currency transactions are included in the consolidated statements of operations and have not been significant.
EstimatesThe preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities revenues, expenses and disclosure of contingent assets and liabilities. Suchliabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include providing for amortizationthe estimated useful lives of property plant, and equipment, and valuation of inventory.equipment. Actual results could differ from thesethose estimates.
ConcentrationPrinciples of risk
We operateConsolidationThese financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are all entities (including structured entities) which the Company controls. For accounting purposes, control is established by an investor when it is exposed to, or has rights to, variable returns from its involvement with the entity and when it can affect those returns through its power over the entity. All inter-company balances and transactions are eliminated upon consolidation.
Cash and Cash Equivalents
The Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less as cash and cash equivalents. The carrying amount of financial instruments included in cash and cash equivalents approximates fair value because of the short maturities for the instruments held. The Company had no cash equivalents as of August 31, 2023 and 2022.
Inventory
Inventory is carried at the lower of cost or net realizable value, with the cost being determined on a first-in, first-out (FIFO) basis. The Company periodically reviews physical inventory and will record a reserve for excess and/or obsolete inventory if necessary.
Leases
In February, 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the regulated aquaculture industry. Material changeslease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company must discount lease payments based on an estimate of its incremental borrowing rate which is based on the interest rate of similar debt outstanding. The Company uses a discount rate of 10% per annum which is the same rate of interest being paid on a current outstanding loan.
Stock-based Compensation
We account for equity-based transactions with employees and non-employees under the provisions of FASB ASC Topic 718, “Compensation – Stock Compensation” (Topic 718), which establishes that equity-based payments to employees and non-employees are recorded at the grant date the fair value of the equity instruments the entity is obligated to issue when the employees and non-employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments. Topic 718 also states that observable market prices of identical or similar equity or liability instruments in this industryactive markets are the best evidence of fair value and, if available, should be used as the basis for the measurement for equity and liability instruments awarded in these share-based payment transactions. However, if observable market prices of identical or similar equity or liability instruments are not available, the applicable regulations couldfair value shall be estimated by using a valuation technique or model that complies with the measurement objective, as described in FASB ASC Topic 718.
Revenue Recognition
The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following steps:
| · | Identification of a contract with a customer; |
| · | Identification of the performance obligations in the contract; |
| · | Determination of the transaction price; |
| · | Allocation of the transaction price to the performance obligations in the contract; and |
| · | Recognition of revenue when or as the performance obligations are satisfied. |
Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. For the year ended August 31, 2023, the Company has 7,774 potentially dilutive shares from Series A preferred stock and 304,558 potentially dilutive shares from the Series D preferred stock and 20,000 potentially dilutive common shares relating to the Convertible Debenture. Any potentially dilutive shares have not been included due to their anti-dilutive effect, as the Company as a net loss.
| | 2023 | | | 2022 | |
Net Loss | | $ | (10,430,545 | ) | | $ | (12,335,445 | ) |
Weighted average shares outstanding, basic and diluted | | | 70,475,577 | | | | 45,567,354 | |
Net loss per share, basic and diluted | | $ | (0.15 | ) | | $ | (0.27 | ) |
The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented.
Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic No. 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as described below:
Level 1: Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly.
Level 2 inputs include quoted prices for similar assets, quoted prices in markets that are not considered to be active, and observable inputs other than quoted prices such as interest rates.
Level 3: Level 3 inputs are unobservable inputs.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a significantmaterial impact on our business.
its financial position or results of operations.NOTE 3 – GOING CONCERN
As reflected in the accompanying financial statements, the Company has an accumulated deficit of $52,655,280 as of August 31, 2023, and minimal revenue. These factors raise substantial doubt about its ability to continue as a going concern. The qualityfinancial statements have been prepared assuming that the Company will continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and quantityclassification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
In order to continue as a going concern, the Company is planning to secure its financial capital in various ways. It will finance its operations initially through shareholder loans from the principals and through private placement investment offerings. The Company may decide to finance its project development stage by way of an equity offering by issuing shares or by engaging venture capital firms that invest in early-stage companies. Venture capital firms August do more than just supply money to small new opportunities. They can also provide advice on potential products, customers, and key employees.
The company will also look to develop a relationship with a bank or banks with the intention of demonstrating a track record of progress and building value and securing some form of financing in the future. Once Astra Energy Inc. has a record of at least earning significant revenues, and better still of earning profits, the firm can make a credible promise to pay interest, and so it becomes possible for the firm to borrow money. Firms have two main methods of borrowing: banks and bonds.
If Astra Energy is earning profits (their revenues are greater than costs), the Company can choose to reinvest some of these profits in equipment, structures, and research and development. For many established companies, reinvesting their own profits is one primary source of financial capital.
Another source of financial capital that will be considered at the project development stage of a specific project is a bond. A bond is a financial contract: a borrower agrees to repay the amount that was borrowed and also a rate of interest over a period of time in the future. A corporate bond is issued by firms, but bonds are also issued by various levels of government. For example, a municipal bond is issued by cities, a state bond by U.S. states, and a Treasury bond by the federal government through the U.S. Department of the aquaculture products we cultivate, harvestTreasury. A bond specifies an amount that will be borrowed, the interest rate that will be paid, and process couldthe time until repayment. Given the nature of the renewable industry regarding long term power purchase agreements or offtake agreements bonds are a very cost effective and reliable method of funding projects.
NOTE 4 - INVESTMENT
The investment of $2,725,000 relates to the acquisition of 50% of the outstanding shares of Astra-Holcomb Energy Systems LLC., a Delaware entity, in exchange for 5 million shares of the Company’s common stock. The value of the acquisition was based on the closing stock price of the Company’s shares on the date of the agreement. Astra-Holcomb Energy Systems LLC holds the exclusive rights to manufacture and distribute the patented Holcomb Energy System In-Line Power Generator. There are no other assets and no liabilities in Astra-Holcomb Energy Systems LLC. There was no impact to the results of operations for the year ended August 31, 2023, as the Company only issued common stock. The valuation of the investment is based on deemed value of patents, the size of the potential market for the technology and numerous expressions of interest to purchase product. If the Company fails to raise the necessary capital to set up manufacturing and distribution, this investment would be impacted by biologicalat risk and environmental risks suchwould become subject to impairment in full.
NOTE 5 - OPERATING LEASES
The value of these leases is based primarily on engineering studies and letters from government agencies accepting preliminary studies for the installation of renewable energy sources and the provision of Power Purchase Agreements. If the Company fails to raise the necessary capital for the installations of energy and does not receive the Power Purchase Agreements, the total value of these leases would be subject to impairment in full.
On May 10, 2023, Astra Energy Zanzibar Limited entered into a Lease Agreement with Revolutionary Government of Zanzibar, for 3.457 Hectares (approximately 8.5 acres) of land at Kibele South Region of Unguja. The term of the lease is 33 years with yearly lease payments of $6,914 payable on or before December 1st of each year.
On May 10, 2023, Astra Energy Zanzibar Limited entered into a Lease Agreement with Revolutionary Government of Zanzibar, for 80.35 Hectares (approximately 198.5 acres) of land at Kibele South Region of Unguja. The term of the lease is 33 years with yearly lease payments of $160,700 payable on or before December 1st of each year.
| | Balance Sheet Classification | | August 31, 2023 | |
Asset | | | | | |
Operating lease asset | | Right of use asset | | $ | 4,818,471 | |
Total lease asset | | | | $ | 4,818,471 | |
| | | | | | |
Liability | | | | | | |
Operating lease liability – current portion | | Current operating lease liability | | $ | 127,460 | |
Operating lease liability – noncurrent portion | | Long-term operating lease liability | | | 4,691,011 | |
Total lease liability | | | | $ | 4,818,471 | |
Future Minimum Lease Payments are as contamination, parasites, predators, disease and pollution. These factors could severely restrict our ability to successfully market our products.
Follows:For the year ended August 31: | | | |
2024 | | $ | 167,614 | |
2025 | | | 167,614 | |
2026 | | | 167,614 | |
2027 | | | 167,614 | |
2028 | | | 167,614 | |
Thereafter | | | 4,693,192 | |
Total payments | | | 5,531,262 | |
Less: imputed interest | | | (712,791 | ) |
Lease liability as of August 31, 2023 | | $ | 4,818,471 | |
NOTE 6 – OTHER RECEIVABLE – RELATED PARTY
During the year ended August 31, 2009, one customer, Fanny Bay Oysters, accounted for 65% of our revenues2023, the Company advanced $194,520 to Regreen Technologies Inc., a related party. The advance was expensed to business development costs during the year ended August 31, 2023. This offsetting transaction was mutually agreed on and we therefore are materially dependent upon Fanny Bay Oysters. approved by the Company and Regreen.
NOTE 7 – DUE TO A RELATED PARTY
During the year ended August 31, 2008, three customers, Sea World Fisheries, Turning Point2023, Regreen Technologies Inc., a related party, advanced $270,185 to the Company. The advance was expensed to business development costs during the year ended August 31, 2023. This offsetting transaction was mutually agreed on and Organic Ocean Seafood, Inc., individually accounted for 12%, 12%approved by the Company and 10% of our revenues, respectively. These remain our customers; however we now sell throughRegreen.
NOTE 8 – OTHER RELATED PARTY TRANSACTIONS
During the year ended August 31, 2023, the Company entered into a single distributor, Fanny Bay Oysters.
Location risk
Most, if not all, of our aquaculture are concentrated in one growing region off the coast of Vancouver Island, British Columbia. As such, if there were a major environmental disaster, our ongoing operations could be materially impacted.
Stock-based compensation
We account for stock-based employee compensation arrangements using the fair value method in accordanceservices agreement with the provisionsCEO and director of a wholly-owned subsidiary, whereby the FASB issued StatementCompany agreed to issue 200,000 common shares. The shares were valued based on the closing stock price of Financial Accounting Standards No, 123 (revised 2004) (Share-Based Payment) (“SFAS 123R”). SFAS 123R is a revision of SFAS 123 (Accounting for Stock-Based Compensation), and supersedes Accounting Principles Beard (“APB”) Opinion No. 25 (Accounting for Stock Issued to Employees). SFAS 123R requires that the fair value of employees awards issued, modified, repurchased or cancelled after implementation, under share-based payment arrangements, be measured as of the date the award is issued, modified, repurchased or cancelled. The resulting cost is then recognized in the statement of earnings over the service period.
We periodically issue common stock for acquisitions and services rendered. Common stock issued is valued at the estimated fair market value, as determined by our management and board of directors. Management and the board of directors consider market price quotations, recent stock offering prices and other factors in determining fair market value for purposes of valuing the common stock. The fair value of each option granted is estimated$2.10 on the date of
grant using the
Black-Scholes option-pricing modelagreement, for total non-cash compensation of $420,000.During the year ended August 31, 2023, the Company entered into a services agreement with the various weighted average assumptions, including dividend yield, expected volatility, average risk-free interest rateVice President of a wholly-owned subsidiary, whereby the Company agreed to issue 200,000 common shares. The shares were valued based on the closing stock price of $2.33 on the date of the agreement, for total non-cash compensation of $466,000. During the year ended August 31, 2023, the Vice President received $12,000 cash for services rendered.
During the year ended August 31, 2023, the Company entered into a services agreement with the Chief Operating Officer of a wholly-owned subsidiary, whereby the Company agreed to issue 90,000 common shares. The shares were valued based on the closing stock price of $0.25 on the date of the agreement, for total non-cash compensation of $22,500. The COO was entitled to invoice the Company for $12,500 for services for the month of January, 2023. The services agreement was terminated effective February 1, 2023 and expected lives.
Basic and diluted net loss per share
Basic income or loss per share includes no dilution and is computed by dividing net income or loss by the
weighted-average number ofCOO has not invoiced the subsidiary for any services.During the year ended August 31, 2023, the Company issued 100,000 common shares outstanding forto the period. Diluted income or loss per share includesCorporate Communications Officer pursuant to an agreement dated January 1, 2021. The shares were valued based on the potential dilution that could occur if securities or other contracts to issue commonclosing stock were exercised or converted into common stock (usingprice of $0.05 on the treasury stock method for stock options and using the if-converted method for convertible notes), if dilutive.
The following is a reconciliationdate of the
numerators and denominatorsagreement, for total non-cash compensation of $5,000. This agreement was terminated effective August 31, 2022.During the year ended August 31, 2023, the Company issued 2,000,000 common shares to the President in exchange for services. The shares were valued based on the closing stock price of $0.21 on the date of the basicagreement, for total non-cash compensation of $420,000.
During the year ended August 31, 2023, the Company issued 1,000,000 common shares to the former CEO of a wholly owned subsidiary in exchange for services. The shares were valued based on the closing stock price of $0.21 on the date of the agreement, for total non-cash compensation of $210,000.
During the year ended August 31, 2023, the Company issued 75,000 common shares to a director of the Company in exchange for services. The shares were valued based on the closing stock price of $0.17 on the date of the agreement, for total non-cash compensation of $12,750.
During the year ended August 31, 2023, the Company entered into a services agreement with the CEO and diluted net incomedirector for cash compensation of $10,000 per share computations:
| | | Year ending August 31, 2009 | | | Year ending August 31, 2008 |
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month commencing December 1, 2022. The
treasury stock effectterm of
options and warrantsthe agreement is for one year. The Company owes $90,000 to
purchase shares of common stock outstandingthe President at August 31,
2009 and 2008 has not been included in the calculation of the net loss per share as such effect would have been anti-dilutive. As a result of these items, the basic and diluted loss per share for2023 (nil – August 31, 2022).During the year endingended August 31, 2009 and 2008 presented are identical.
Recent accounting pronouncements
FASB Establishes Accounting Standards Codification ™
In June 2009,2023, the FASB issued Accounting Standards Update No. 2009-01, “Generally Accepted Accounting Principles” (ASC Topic 105) which establishes the FASB Accounting Standards Codification (“the Codification” or “ASC”) as the official single sourceCEO made total cash advances of authoritative U.S. generally accepted accounting principles (“GAAP”). All existing accounting standards are superseded. All other accounting guidance not included in the Codification will be considered non-authoritative. The Codification also includes all relevant Securities and Exchange Commission (“SEC”) guidance organized using the same topical structure in separate sections within the Codification.
Following the Codification, the Financial Accounting Standards Board will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASU”) which will serve to update the Codification, provide background information about the guidance and provide the basis for conclusions on the changes$127,011 to the Codification.
Company for working capital. The Codification is not intended to change GAAP, but it will change the way GAAP is organized and presented. The Codification is effective for our first quarter 2010 financial statements and the principal impact on our financial statements is limited to disclosures as all future references to authoritative accounting literature will be referenced in accordance with the Codification. In order to ease the transitionCompany owes $127,011 to the Codification, we are providing the Codification cross-reference alongside the references to the standards issued and adopted prior to the adoption of the Codification.
In December 2007, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin 110 (“SAB 110”). SAB 110 states that the staff will continue to accept, under certain circumstances, the use of the simplified method for estimating the expected term of “plain vanilla” share options in accordance with SFAS 123(R) beyond December 31, 2007. The Company believes there will be no material impact on the Company’s financial statements upon adoption of this standard.
In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements, and an amendment of ARB Statement No. 51.” SFAS No. 160 amends Accounting Research Bulletin (ARB) No. 51, “Consolidated Financial Statements,” to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 clarifies that a non-controlling interest in a subsidiary, which is sometimes referred to as a minority interest, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, SFAS No. 160 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and the non-controlling interest. SFAS No. 160 will be effective for the Company on August 31, 2009, and is not expected to have a significant impact on the Company’s financial condition or results of operations.
In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations (Revised)”, to replace SFAS No. 141, “Business Combinations. SFAS No. 141(R) requires the use of the acquisition method of accounting, defines the acquirer, establishes the acquisition date and broadens the scope to all transactions and other events in which one entity obtains control over one or more other businesses. This statement is effective for business combinations or transactions entered into for fiscal years beginning on or after December 15, 2008. The Company is evaluating the impact of SFAS No. 141 (R). The Company believes there will be no material impact on the Company’s financial statements upon adoption of this standard.
Management has evaluated other recent accounting pronouncements and does not believe that the adoption of these would have a material impact on our consolidated financial statements.
In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”), which delayed the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on at least an annual basis, until fiscal years beginning after November 15, 2008. Nonfinancial assets and liabilities that the Company measures at fair value on a non-recurring basis consist primarily of property and equipment, goodwill, and intangible assets, which are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The adoption of FSP FAS 157-2 did not have a material impact on the Company’s consolidated financial statements
In May 2009, the Financial Accounting Standards Board (“FASB”) issued accounting guidance, effective for financial statements issued for interim and annual periods ending after June 15, 2009, which requires us to disclose the date through which we have evaluated subsequent events and whether the date corresponds with the release of our financial statements. (See Note 1)
Note 4. Property, Plant and Equipment
Property, plant and equipmentCEO at August 31,
2009, consisted2023 (nil – August 31, 2022). The debt is unsecured, non interest bearing and has no terms of
repayment.During the following:
| | | Cost | | | Accumulated Amortization | | | Net Book Value |
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Depreciation expense for the yearsyear ended August 31, 2009 was approximately $571,000.
Property, plant and equipment2023, the Company accrued $40,000 in fees to the CEO of a wholly owned subsidiary. The Company owes $9,750 to the CEO at August 31,
2008, consisted of2023 ($nil – August 31, 2022).During the following:
| | | Cost | | | Accumulated Amortization | | | Net Book Value |
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Depreciation expense for the yearsyear ended August 31, 2008 was approximately $563,000.
Note 5. Acquisition2023, the CEO of Granscal
Granscal Tenure
On October 31, 2008,a wholly owned subsidiary made total cash advances of $6,250 to the Company finalized a Share Exchange Agreement with Granscal Sea Farms Ltd., a Kanish Bayfor working capital. The Company and Granscal’s sole shareholder. Pursuantowes $6,250 to the Agreement, Granscal’s sole shareholder assigned and transferred all of his Granscal shares to Island Scallop in exchange for: (i) 400,000 restricted shares of our common stock; (ii) a sum equal to 50% of the gross revenue Island Scallops earns on account of the sale of Granscal’s 2004, 2005 and 2006 brood year inventory currently in the water – to be paid when Island Scallops consummates the sale of inventory; and (iii) an aggregate cash fee of CDN$30,000. Pursuant to the Agreement; Island Scallops also agreed to pay the CDN$35,000 that Granscal owes to the Bank of Montreal. The 400,000 shares issued were valued at $0.08 per share, the closing bid of our common stock on the date the merger closed. Therefore, total aggregate value of the shares recognized by the company was $32,000.
The CDN$30,000 cash fee shall be paid in CDN$5,000 monthly installments beginning on September 30, 2008 and continuing until the cash fee is fully paid. The cash fee is secured by a Promissory Note between Island Scallop and Granscal’s sole shareholder, who is also Granscal’s Chief Executive Officer. The Promissory Note does not contain any interest, but is immediately due and payable if Island Scallop remains in default of the Promissory Note after a 10 day cure period. The note is currently in default, but the note holder has not taken further action to enforce payment of the arrears liability and we are currently working to modify repayment terms.
Note 6. Related Party Transactions
At August 31, 2008, we had five secured non-interest notes receivable from RKS Laboratories, Inc., a Vancouver research and development company that is working towards developing superior strains of scallops with beneficial traits such as higher meat yield and rapid growth, totaling $114,079. Robert Saunders, our President and CEO owns 100% of RKS.
Note 7. Investments in Tenures
Ocean Smart carries its Investment in Tenures at $3,663 and $3,758 at August 31,
20092023 (nil – August 31, 2022). The debt is unsecured, non interest bearing and
2008, respectively. This amount representshas no terms of repayment.During the carrying costs of certain shellfish tenures acquired by Island Scallops’ subsidiaries. Shellfish tenures are government-granted rights allowing limited use of offshore waters foryear ended August 31, 2023, the purposes of cultivation of shellfish.Company accrued $60,000 in fees to the President. The granting of shellfish tenure rights areCompany owes $86,500 to the responsibility of the Provincial (British Columbia) Government. The Shellfish tenures held by Ocean Smart and our subsidiaries have expiration dates ranging from 2021 to 2024.
These tenures are considered to have an indefinite useful life because renewal on expiration is anticipated, and are not subject to amortization.
Note 8. Accounts Payable and Accrued Liabilities
Included in accounts payable and accrued liabilities are balances outstanding related to credit cards held in the name(s) of our shareholders totaling $62,539 and $33,292President at August 31,
2009 and 2008, respectively. We used these credit cards as2023 ($57,500 – August 31, 2022).During the year ended August 31, 2023, the Company accrued $90,000 in fees to the CEO of a means of short term financing and incur interest charges on such unpaid balances.
Included in accounts payable and accrued liabilitieswholly owned subsidiary. The Company owes $90,000 to the CEO at August 31,
2009 and 2008 is $144,303 and $95,065 of principal due and interest accrued2023 ($nil – August 31, 2022).During the year ended August 31, 2023, the Company paid $20,000 in respectfees to the loan fromformer CEO of a wholly owned subsidiary.
During the National Research Council of Canada Industrial Research Assistance Program (see Note 11 – Long Term Debt for additional information).
Note 9. Short Term Debt
Includedyear ended August 31, 2023, the Company accrued $24,000 in
short-term debtfees to the Chief Financial Officer. The Company owes $10,750 to the Chief Financial Officer at August 31,
2009 and 2008, are estimated royalties of US$60,948 and US$62,522 payable2023 ($nil – August 31, 2022).During the year ended August 31, 2023, the Company accrued $24,000 in fees to a third party from whom the former sole shareholder of Island Scallops originally acquiredCorporate Secretary. The Company owes $11,500 to the shares of Island Scallops. The 1992 share purchase agreement (for Island Scallops) provided that the third party was to receive 3% of revenues from Island Scallops as earned, on a quarterly basis, throughout the period from December 1, 1992 to November 30, 2002. The third party holds a first charge (or first lien) over our inventory (including broodstock) in the amount of CDN$350,000 in support of its royalty entitlement. The third party has not taken further action to enforce payment of the arrears liability. To date, we have accrued the entire balance of US$60,948 as a current liability and we plan to pay it with available funds in the near future.
Included in short-term notes payableCorporate Secretary at August 31, 2009 and 2008,2023 ($nil – August 31, 2022).NOTE 9 - LOAN PAYABLE-RELATED PARTY
During the year ended August 31, 2023, the CEO advanced $93,011 to repay an outstanding Company loan. The advance from the CEO is an unsecured, non-interest bearing demand loan payable to an individual with a face value of US$45,939 and US$47,126 with no specific terms of repayment. However, the lender had previously informally requested that the loan be repaid in full by October 6, 2008. The individual has not taken further action to enforce payment of the arrears liability.
Included in short-term debt at August 31, 2009 is US$13,736 secured by a Promissory Note between Island Scallop and Granscal’s sole shareholder, who is also Granscal’s Chief Executive Officer. The Promissory Note does not contain any interest, but is immediately due and payable if Island Scallop remains in default of the Promissory Note after a 10 day cure period (see Note 5 - Acquisition of Granscal for additional information). Also included in short-term debt at August 31, 2009 is an auto loan for US$41,309. The loan is repayable at US$328 (CDN$356) per month and has
anno repayment terms.NOTE 10 - NOTE PAYABLE
On February 16, 2023, the Company entered into a Loan agreement, wherein the Company promised to pay TTII Strategic Acquisitions & Equity, Inc. $100,000 with interest rate of 8.55%.
Note 10. Line of Credit
Included in line of credit at August 31, 2009 is a bank line of credit. The line is a US$76,000 bank line of credit for Island Scallops. The interest rate10% per annum on the line of credit is 12% as of August 31, 2009 and the balance due is US$75,194.
Included in line of credit at August 31, 2008 are two bank lines of credit. The first line is a $78,000 bank line of credit for Island Scallops. The interest rate on the line of credit is 7.5% as of August 31, 2008. At August 31, 2008, the balance due is US$77,795. The second line was for US50,000 bank line of credit for Island Scallops. The interest rate on the line of credit is 6.5% as of August 31, 2008. At August 31, 2008, the balance due is US$46,971. This second line of credit was subject to a personal guarantee by our Chairman and CEO, Robert Saunders.
Note 11. Long Term Debt
These consolidated financial statements include a Western Diversification Program non-interest bearing loan to Island Scallops that originally required repayment equal to 12% of gross revenues from our scallop sales, payable semi-annually, with no specified due date. The repayment terms have been formally amended several times. Most recently, as ofor before February 28, 2009, we reached an agreement with the Western Diversification Program to revise the repayment terms of the remaining balance of $392,154 (representing $141,902 overdue and a balance of $250,252). Beginning February 28, 2009, we began repaying the overdue amount at rate of $916 (CDN$1,000) per month through December 31, 2009. Commencing January 31, 2010, we will begin paying $4,579 (CDN$5,000) per month towards the overdue balance. Starting January 31, 2011, our monthly repayment amount will be the greater of 4% of Island Scallops’ gross monthly revenues or $9,158 (CDN$10,000) per month. Under the terms of the modified agreement, the overdue amount will also bear interest at an annual rate of 3%. Starting January 31, 2012, we will begin repaying the balance of $250,252 at the greater of 4% of Island Scallops gross monthly revenues or $9,158 (CDN$10,000) per month. At August 31, 2009, the balance due is $388,428, of which US$138,107 is reflected in the current portion of long term debt and the remaining balance of US$250,321 is reflected as long term debt.
These consolidated financial statements include Island Scallops’ unsecured loan from the National Research Council of Canada Industrial Research Assistance Program which requires quarterly payments commencing March 1, 2003 equal to 3% of gross revenues of Island Scallops until the earlier of full repayment or December 1, 2012. If at December 1, 2012, Island Scallops has not earned sufficient revenues to repay the original loan amount, the remaining portion of the loan is to be forgiven. Amounts currently due at August 31, 2009, bear interest at a rate of 1% per month. At August 31, 2009, Island Scallops is in arrears in respect to the payment of these amounts. The National Council of Canada Industrial Research Assistance Program has requested payment of the $144,303 that they claim is owed under this loan agreement. As such, at August 31, 2009, US$144,303 is included in accounts payable and accrued liabilities and the remaining principal balance of US$216,211 is reflected in the current portion of long term debt. We are seeking to renegotiate the repayment terms with NRC.
These consolidated financial statements include Island Scallop’s mortgage loan repayable at $3,045 (CDN$3,325 per month (interest only calculated at 10.5% per annum).16, 2024. The loan is secured by a
first chargepatent held by Regreen Technologies, Inc.NOTE 11 – DEBENTURE PAYABLE
On January 11, 2022, the Company entered into a Convertible Debenture agreement, wherein the Company promised to pay the Holders $20,000 with interest of 8% per annum on or before January 11, 2024. The Holders have the real propertyright to convert any time within 2 years with a conversion price of Island Scallops. At$1.00 per share subject to adjustments as set out in the Debenture. As of August 31, 2009,2023 there was $1,470 interest owing to the principal due is $347,985.
AsHolders.NOTE 12 – PREFERRED STOCK
Series A Convertible Preferred
The Series A Convertible Preferred have a result, at August 31, 2009, we had $952,624conversion rate of long-term debt less a current portion$0.75 per share and voting rights on an as converted basis. The holders of $354,318 for a balancerecord of $598,306. Principal payments due within eachshares of the next five fiscal years and subsequently, in respect to long term debt are approximately as follows:
Note 12. Series CA Preferred Stock Financing
We completed a private equity financingare entitled to receive, out of
$897,444 on November 5, 2007, with one accredited investor. Net proceeds fromany assets at the
offering are approximately $801,000. As parttime legally available therefor and when and as declared by the Board of
this financing,Directors, dividends at the
investor returned the Series J Warrant, Series D Warrant, Series E Warrant and Series F Warrant that they received as a resultrate of
our Series B financing completed on January 16, 2007. Pursuant to this financing, we issued 747,8708% per annum in shares of our
common stock. On January 19, 2022, 8,000 shares of Series
CA Preferred Stock were cancelled. The shares were cancelled at the direction of the holder of the Series A Preferred Stock. Subsequent to the cancellation, 7,774 shares of Series A Preferred Stock remain outstanding.Series A1 Preferred
On April 24, 2020, the Company created and filed a Certificate of Designation for one share of Series A1 Preferred Stock, par value $0.001 per share$0.0001. On January 21, 2022, the board of directors of the Company changed the designation of Series A1 by eliminating its conversion and voting rights. On January 13, 2022, the Company and the investor also received one of eachsole shareholder of the following warrants: (i) Series A Warrant, (ii) A1 Preferred share entered into a share cancellation agreement, whereby, the sole shareholder of the Series A1 Preferred Shares agreed to the cancellation of the one share of Series A1 Preferred Shares issued and outstanding.
Series B Warrant, (iii) Series C Warrant, (iv) Series J Warrant, (v) Series D Warrant, (vi) Series E Warrant, and (vii) Series F Warrant, each to purchase a number ofPreferred
The Company has authorized 207 shares of common stock equalSeries B Preferred Stock. The conversion rights of Series Preferred B were required to fifty percent (50%)be exercised within 5 years. The conversion rights have expired without any of the number of shares of common stock issuable upon conversion of the purchaser’s preferred stock, except for thebeing converted. Series J Warrants, which shall entitle the investorB shares are not entitled to purchase a number of shares of our dividends or liquidation preferences and have no voting rights.
Series C Preferred Stock equal to one hundred percent (100%) of the number
The Company has authorized 1,000,000 shares of Series C Preferred Stock it received in the financing. Each of the Warrants has a term of 5 years, except for the Series J Warrants, which have a term of 1 year.Stock. Each share of the preferred stockSeries C is convertible into one fully paid and nonassessable share of our common stock at an initial conversion price of $1.20, subject to adjustment. WeThe conversion rights of Series Preferred C were obligatedrequired to file a registration statement on or before Decemberbe exercised within 5 2007 providing for the resaleyears. The conversion rights have expired without any of the shares of common stock issuable upon conversion of the preferred stock and the shares of common stock underlying the Warrants and underlying the preferred stock issuable upon exercise of the Warrants. In connection with the financing, our management agreed not to sell any of our securities owned by them, their affiliates or anyone they have influence over until the registration statementbeing converted.
Series D Preferred
The Company has been effective for nine months. In connection with the financing, a deemed dividend was recorded for $163,386 based on the relative fair values of the preferred shares and warrants.
In connection with this financing, we paid cash compensation to a placement consultant in the amount of approximately $72,000 and issued him placement consultant warrants, exercisable for a period of three years from the date of issue. The placement consultant's warrants allow him to purchase up to (i) 74,787authorized 380,000 shares of Series C Preferred Stock, and each of the following warrants, which are identical to the warrants issued to the investors of the financing: (i) Series A Warrant, (ii) Series B Warrant, (iii) Series C Warrant, (iv) Series D Warrant, (v) Series J Warrant, (vi) Series E Warrant, and (vii) Series F Warrant, each to purchase 37,393 shares of common stock, except for the Series J Warrants, which shall entitle the Consultant to purchase 74,787 shares of our Series C Preferred Stock.
The net proceeds from the financing are to be used for working capital and general corporate purposes.
Note 13. Series D Preferred Stock Financing
On May 29, 2008, we signed a Series D Convertible Preferred Stock Purchase Agreement with one accredited investor whereby such investor was committed, subject to the satisfaction of certain closing conditions, to purchase $1,500,000 of our Series D Preferred Shares. As part of this financing, we also entered into an Exchange Agreement with the investor and certain other holders of our outstanding warrants, whereby the Series J Warrant that the investor received pursuant to the financing we closed on November 5, 2007, as disclosed in the Form 8-K filed on November 7, 2007, was cancelled, and the investor and certain other holders of our outstanding warrants returned to us warrants to purchase an aggregate of 24,941,605 shares of our common stock, which the investor and such other warrant holders received pursuant to the financings we closed on: (i) April 12, 2006, as disclosed in our Form 8-K filed on April 14, 2007; (ii) May 30, 2006, as disclosed in our Form 8-K filed on May 30, 2006; and (iii) November 5, 2007, as disclosed in our Form 8-K filed on November 7, 2007, in exchange for an aggregate of 267,059 Series D Preferred Shares. The net proceeds from the financing are to be used for supplies, processing plant upgrades, working capital and general corporate purposes. All of the closing conditions were satisfied and accordingly we completed the private equity financing and received net proceeds of approximately $1.46 million on June 11, 2008. In connection with the financing, a deemed dividend was recorded for $100,360 based on the relative fair values of the preferred shares and exchanged warrants.
Pursuant to the financing, we filed a Certificate of Designation of the Relative Rights and Preferences of our Series D Convertible Preferred Stock on May 29, 2008. The Certificate of Designation designates 380,000 shares of our authorized preferred stock as Series D Convertible Preferred Stock, which ranks junior to our Series A, Series B and Series C Convertible Preferred Stock, but senior to our common stock. Except with respect to specified transactions that mayAugust affect the rights, preferences, privileges or voting power of the Series D Preferred Shares and except as otherwise required by Nevada law, the Series D Preferred Shares have no voting rights. At any time on or after the issuance date, the holder of any Series D Preferred Shares may,August, at the holder'sholder’s option, elect to convert all or any portion of the Series D Preferred Shares held by such person into a number of fully paid and nonassessable shares of common stock equal to the quotient of (i) the stated value ($40.00 per share) of the Series D Preferred Shares being converted divided by (ii) the conversion price, which initially is $0.80 per share, subject to certain adjustments.In the event of our liquidation, dissolution or winding up, the holders shall be entitled to receive, a liquidation preferenceout of the assets of the Company available for distribution, an amount equal to 120%the Liquidation Preference Amount which is the product of the stated valuestocks Stated Value of $40.00 per Series D Preferred Share
.
Note 14. Preferredshare plus 120% before any payment or distribution of assets to the holders of Common Stock Dividends
Preferred Stock Dividends Issued in Fiscal Year Endingor any other Junior Stock. NOTE 13 – COMMON STOCK
During the year ended August 31, 2008
| Date | | Preferred Stock | Common Shares Issued | Dividend Value |
| | | | | |
| 12/31/2007 | | Series A | 172,750 | $ 223,500 |
| 12/31/2007 | | Series B | 45,999 | $ 62,600 |
| 12/31/2007 | | Series C | 17,883 | $ 24,300 |
| | | | | |
| 6/30/2008 | | Series A | 322,228 | $ 231,100 |
| 6/30/2008 | | Series B | 85,515 | $ 61,800 |
| 6/30/2008 | | Series C | 37,075 | $ 26,800 |
Preferred Stock Dividends Issued2022, the Company issued 200,000 common shares at a price of $0.90 per share in
Fiscal Year Endingexchange for services for total non-cash compensation of $180,000. The shares were valued based on the closing stock price on the date of the agreement.During the year ended August 31, 2009
| Date | | Preferred Stock | Common Shares Issued | Dividend Value |
| | | | | |
| 12/31/2008 | | Series A | 324,691 | $ 232,900 |
| 12/31/2008 | | Series B | 86,454 | $ 62,500 |
| 12/31/2008 | | Series C | 37,482 | $ 27,000 |
| | | | | |
| 6/30/2009 | | Series A | 320,269 | $ 229,700 |
| 6/30/2009 | | Series B | 85,278 | $ 61,600 |
| 6/30/2009 | | Series C | 36,972 | $ 26,700 |
Note 15. Contingent Liabilities
Neither we nor our wholly owned subsidiary maintain insurance covering2022, the replacementCompany issued 500,000 common shares at a price of our inventory. Consequently, we are exposed to financial losses or failure as a result$0.78 per share in exchange for services for total non-cash compensation of this risk.
Note 16. Income Taxes
We did not provide any current or deferred United States federal, state or foreign income tax provision or benefit for the period presented because we have experienced operating losses since inception. We have provided a full valuation allowance$390,000. The shares were valued based on the
deferred tax asset, consisting primarilyclosing stock price on the date of
unclaimed researchthe agreement.During the year ended August 31, 2022, the Company issued 70,000 common shares at a price of $1.06 per share in exchange for services for total non-cash compensation of $74,200. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 50,000 common shares at a price of $0.51 per share in exchange for services for total non-cash compensation of $25,500. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 25,000 common shares at a price of $0.53 per share in exchange for services for total non-cash compensation of $13,250. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 50,000 common shares at a price of $1.00 per share in exchange for services for total non-cash compensation of $50,000. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 100,000 common shares at a price of $2.28 per share in exchange for services for total non-cash compensation of $228,000. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 50,000 common shares at a price of $0.51 per share in exchange for services for total non-cash compensation of $25,500. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2022, the Company issued 150,000 common shares at a price of $0.50 per share in exchange for inventory. The shares were valued based on the price at which the Company was completing private placements and development expenditures, because of uncertainty regarding our ability to realizeupon mutual agreement by the benefit.
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposesCompany and the amounts usedcreditor.During the year ended August 31, 2022, the Company sold 2,286,000 Units of its common stock at $0.50, for income tax purposes. Significant componentstotal cash proceeds of $1,143,000.
During the year ended August 31, 2023, the Company sold 569,000 Units of its common stock at $0.50 per unit for total cash proceeds of $284,500.
During the year ended August 31, 2023, the Company issued 100,000 common shares in exchange for services for total non-cash compensation of $60,000. The shares were valued based on the closing stock price on the date of the net deferred taxesagreement.
During the year ended August 31, 2023, the Company issued 250,000 common shares in exchange for services for total non-cash compensation of $287,500. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2023, the Company issued 50,000 common shares in exchange for services for total non-cash compensation of $15,000. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2023, the Company issued 240,000 common shares in exchange for services for total non-cash compensation of $50,400. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2023, the Company issued 50,000 common shares in exchange for services for total non-cash compensation of $8,000. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2023, the Company issued 250,000 common shares in exchange for services for total non-cash compensation of $40,000. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2023, the Company issued 200,000 common shares in exchange for services for total non-cash compensation of $28,000. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2023, the Company issued 75,000 common shares in exchange for services for total non-cash compensation of $8,250. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2023, the Company issued 250,000 common shares in exchange for services for total non-cash compensation of $31,250. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2023, the Company issued 75,000 common shares in exchange for services for total non-cash compensation of $15,750. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2023, the Company issued 100,000 common shares in exchange for services for total non-cash compensation of $40,000. The shares were valued based on the closing stock price on the date of the agreement.
During the year ended August 31, 2023, the Company issued 5,000,000 common shares at a price of $0.545 per share in exchange for a 50% interest in Astra-Holcomb Energy Systems Inc. The shares were valued based on the closing price at the date of agreement.
During the year ended August 31, 2022, the Company issued 11,300,000 common shares in exchange for an interest in Regreen Technologies Inc. The shares were valued based on the closing price at the date of agreements. 10 million shares are being held in escrow pending certain performance criteria. There is uncertainty as to the performance criteria being met and the Company has written down the value of the shares issued to zero as an impairment loss of $9,701,000.
During the year ended August 31, 2023, the Company issued 6,459,442 common shares at an average price of $1.05 per share in exchange for a 9.5% interest in Regreen Technologies Inc. The shares were valued based on the closing price at the date of agreement. There is uncertainty as to future value of Regreen Technologies shares and the Company has written down the value of the shares issued to zero as an impairment loss of $7,049,212.
Refer to Note 8 for related party transactions.
NOTE 14 – STOCK SUBSCRIPTIONS RECEIVABLE
During the year ended August 31, 2022, the Company issued 10,000 common shares pursuant to a Share Subscription Agreement in exchange for $5,000. The shares are included in the total number of shares issued and outstanding at August 31, 20092023.
NOTE 15 – WARRANTS
During the year ended August 31, 2023, the Company sold 569,000 Units of its common stock. Each Unit consists of one common share and 2008 areone warrant to purchase one additional share of common stock.
The aggregate fair value of the 569,000 warrants, totaled $132,250 based on the Black Scholes Merton pricing model. The value of the warrants has been netted against the proceeds of the offering and accounted for in additional paid in capital. The Warrants must be exercised at the earlier of two years from the date of issuance, or within 30 days after the Company stock closes at or above $1.00 for five consecutive trading days.
A summary of quantitative information about significant unobservable inputs used to measure the fair value of the warrants is as follows
:
| | | August 31, | | | August 31, | |
| | | 2009 | | | 2008 | |
| Deferred tax asset attributable to: | | | | | | |
Net operating loss carryover | | | | | | | | |
Less, valuation allowance | | | | | | | | |
Total net deferred tax asset | | | | | | | | |
We follow Statementfollows:Inputs | | | |
Stock price | | $ | 0.45 – 2.20 | |
Exercise price | | $ | 1.00 | |
Volatility (annual) | | 657.8%-769.9 | % |
Risk-free rate | | | 4.38 | % |
Dividend rate | | | — | |
Years to maturity | | | 2.00 | |
| | Number of Warrants | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contract Term | | | Intrinsic Value | |
Outstanding, August 31, 2021 | | | — | | | | — | | | | — | | | | |
Issued | | | 2,326,000 | | | $ | 1.00 | | | | 2.00 | | | | |
Cancelled | | | — | | | $ | — | | | | — | | | | |
Exercised | | | — | | | $ | — | | | | — | | | | |
Outstanding, August 31, 2022 | | | 2,326,000 | | | $ | 1.00 | | | | 1.51 | | | | |
Issued | | | 569,000 | | | $ | 1.00 | | | | 2.00 | | | | |
Cancelled | | | — | | | $ | — | | | | — | | | | |
Exercised | | | — | | | $ | — | | | | — | | | | |
Outstanding, August 31, 2023 | | | 2,895,000 | | | $ | 1.00 | | | | 0.56 | | | $ | — | |
NOTE 16 – INCOME TAXES
At August 31, 2023, the Company had net operating loss carry forwards of Financial Accounting Standards Number 109 (SFAS 109), “Accounting for Income Taxes.” SFAS No. 109 requiresapproximately $7,529,000 that may be offset against future taxable income. No tax benefit has been reported in the August 31, 2023 or 2022 financial statements since the potential tax benefit is offset by a valuation allowance if any,of the same amount.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to reduceas the Tax Cut and Jobs Act (the “Tax Act”). The Tax Act establishes new tax laws that affects 2018 and future years, including a reduction in the U.S. federal corporate income tax rate to 21% effective January 1, 2018.
The provision for Federal income tax consists of the following for the years ended August 31, 2023 or 2022:
| | 2023 | | | 2022 | |
Federal income tax benefit attributable to: | | | | | | |
Current operations | | $ | 699,000 | | | $ | 553,000 | |
Less: valuation allowance | | | (699,000 | ) | | | (553,000 | ) |
Net provision for Federal income taxes | | $ | — | | | $ | — | |
The cumulative tax effect at the expected rate of 21% (the U.S. federal income tax rate of 21% is being used due to the new tax law recently enacted) of significant items comprising our net deferred tax assets reported if, basedamount is as follows as of August 31, 2023 or 2022:
| | 2023 | | | 2022 | |
Deferred Tax Assets: | | | | | | |
NOL Carryover | | $ | 7,529,000 | | | $ | 6,830,000 | |
Less valuation allowance | | | (7,529,000 | ) | | | (6,830,000 | ) |
Net deferred tax assets | | $ | — | | | $ | — | |
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards August be limited as to use in future years. The Company is evaluating the effects of its recent change in ownership on its NOL.
ASC Topic 740 provides guidance on the weight of the evidence,accounting for uncertainty in income taxes recognized in a company’s financial statements. Topic 740 requires a company to determine whether it is more likely than not that some portion or alla tax position will be sustained upon examination based upon the technical merits of the deferredposition. If the more-likely-than-not threshold is met, a company must measure the tax assets will not be realized. Management has determined that a valuation allowance of approximately $5,330,000 and $4,386,000 at August 31, 2009 and 2008 is necessaryposition to reduce the deferred tax assets todetermine the amount that will more than likely than not be realized. The change in valuation allowance for 2009 and 2008 was approximately $946,000 and $845,000 respectively.
At August 31, 2009, and 2008 we had net operating loss carry forwards amounting to
approximately $11,359,000 and $9,296,000 for U.S. and Canadian tax purposes, respectively, that expires in various amounts beginning in 2010 and 2009recognize in the
U.S.financial statements.The Company includes interest and Canada, respectively.
The federal statutory tax rate reconciled topenalties arising from the effective tax rate for 2009 and 2008 are as follows:
| | | 2009 | | | 2008 | |
Tax at U.S. statutory rate | | | | | | | | |
State tax rate, net of federal benefits | | | | | | | | |
Foreign tax rate in excess of U.S. statutory rate | | | | | | | | |
Change in valuation allowance | | | | | | | | |
| | | | | | | | |
Note 17. Stock Compensation, Stock Option and Warrants
Stock Compensation in Fiscal Year Ending August 31, 2008
| Date | | Shareholder | Common Shares Issued | Value |
| | | | | |
| 10/31/2007 | | Pacific Crab Seafood | 25,000 | $ 32,000 |
| 11/30/2007 | | Pacific Crab Seafood | 5,000 | $ 6,250 |
| 1/1/2008 | | Pacific Crab Seafood | 5,000 | $ 6,750 |
| 2/1/2008 | | Pacific Crab Seafood | 5,000 | $ 4,900 |
| 3/4/2008 | | Pacific Crab Seafood | 5,000 | $ 4,750 |
| 1/1/2008 | | Pacific Crab Seafood | 5,000 | $ 4,750 |
| 1/1/2008 | | Consulting for Strategic Growth | 25,000 | $ 23,750 |
| 5/19/2008 | | Pacific Crab Seafood | 5,000 | $ 4,000 |
| 6/20/2008 | | Pacific Crab Seafood | 5,000 | $ 4,000 |
Stock Compensation in Fiscal Year Ending August 31, 2009
| Date | | Shareholder | Common Shares Issued | Value |
| | | | | |
| 1/1/2009 | | Leslie Romough | 400,000 | $ 32,000 |
| 3/1/2009 | | International Consulting Company S.A | 50,000 | $ 9,500 |
| 3/23/2009 | | Gallatin Consulting, Inc | 100,000 | $ 8,000 |
Stock Options
In August 2005, our Boardunderpayment of
Directors approved the “Edgewater Foods International 2005 Equity Incentive Plan.” The Board of Directors reserved 5,000,000 shares of our common stock to be issuedincome taxes in the
formstatements of
incentive and/or non-qualified stock optionsoperations in the provision for
employees, directors and consultants to Ocean Smart.income taxes. As of August 31,
2009, our Board of Directors2023, the Company had
authorizedno accrued interest or penalties related to uncertain tax positions.NOTE 17 – RESTATEMENT
The financial statements for the year ended August 31, 2022, are being restated to correct the accounting for the issuance of 2,992,000 options to employees.
During the years ended August 31, 2009 and 2008, $185,100 and $1,780,882 in stock option expenses were recognized respectively. An additional, $5,363 will be recognized in the three month period ending November 30, 2009.
Stock option activity during the period ending August 31, 2009 and 2008, was as follows:
| | | Number of Shares | | | Weighted Average Exercise Price |
Outstanding, August 31, 2007 | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Outstanding, August 31, 2008 | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Outstanding, August 31, 2009 | | | | | | | |
Exercisable, August 31, 2009 | | | | | | | |
At August 31, 2009, 62,000 of the exercisable options expire in August 2010, 3,200,000 of the exercisable options expire in March 2012, 190,000 of exercisable options expire in April of 2012, 2,090,000 of the exercisable options expire in August 2012 with the remaining balance of 220,000 having an expiration date of August 2015.
Warrant activity during the period ending August 31, 2009 and 2008, was as follows:
| | | Number of Warrants | | | Weighted Average Exercise Price |
Outstanding, August 31, 2007 | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Outstanding, August 31, 2008 | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Outstanding, August 31, 2009 | | | | | | | |
Exercisable, August 31, 2009 | | | | | | | |
At August 31, 2009, if all options and warrants were exercised and all shares of preferred stock were converted, the company would have 58,908,486 shares of common stock outstanding.
Note 18. Boardfor the potential acquisition of Directors Reorganization
Since we were unable to meet certain performance targetsan interest in Regreen Technologies, Inc. The reporting of the value of the shares as
set forth ina prepaid asset has been restated as an impairment loss.Per ASC 250-10 Accounting Changes and Error Corrections, the Series D Convertible Preferred Stock Purchase Agreement, Series D Preferred Stockholders invoked their right to demand that our BoardAugust 31, 2022 financial statements have been restated for the following.
August 31, 2022 |
| | As Reported | | | Adjusted | | | As Restated | |
ASSETS | | | | | | | | | |
Current assets: | | | | | | | | | |
Cash | | $ | 198,899 | | | $ | — | | | $ | 198,899 | |
Prepaid stock for acquisition | | | 27,026,000 | | | | (27,026,000 | ) | | | - | |
Other receivable-related party | | | 194,520 | | | | — | | | | 194,520 | |
Total Assets | | $ | 27,419,419 | | | $ | (27,026,000 | ) | | $ | 393,419 | |
| | | | | | | | | | | | |
LIABILITIES & STOCKHOLDERS’ EQUITY | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | |
Accounts payable | | $ | 49,344 | | | $ | — | | | $ | 49,344 | |
Accounts payable- related parties | | | 107,200 | | | | — | | | | 107,200 | |
Due to a related party | | | 270,185 | | | | — | | | | 270,185 | |
Accrued interest payable | | | 630 | | | | — | | | | 630 | |
Debenture payable | | | 20,000 | | | | — | | | | 20,000 | |
Total Liabilities | | | 447,359 | | | | — | | | | 447,359 | |
| | | | | | | | | | | | |
Stockholders' Deficit: | | | | | | | | | | | | |
Series A Preferred stock, par $0.001, 8,000,000 shares authorized; 7,774 shares issued and outstanding | | | 8 | | | | — | | | | 8 | |
Series B Preferred stock, par $0.00001, 100,000 shares authorized; 207 shares issued and outstanding | | | - | | | | — | | | | — | |
Series C Preferred stock, par $0.001, 1,000,000 shares authorized; 747,870 shares issued and outstanding | | | 748 | | | | — | | | | 748 | |
Series D Preferred stock, par $0.001, 380,000 shares authorized; 304,558 shares issued and outstanding | | | 305 | | | | — | | | | 305 | |
Series A1 Preferred stock, par $0.001, 1 share authorized; 1 share issued and outstanding | | | — | | | | — | | | | — | |
Common stock, $0.001 par value; 100,000,000 shares authorized; 57,855,540 and 50,355,540 shares issued and outstanding, respectively, as of February 28, 2023 | | | 57,856 | | | | (7,500 | ) | | | 50,356 | |
Stock subscriptions receivable (Note 13) | | | (5,000 | ) | | | — | | | | (5,000 | ) |
Common stock to be issued | | | 20,000 | | | | — | | | | 20,000 | |
Additional paid-in capital | | | 59,421,878 | | | | (17,317,500 | ) | | | 42,104,378 | |
Accumulated deficit | | | (32,523,735 | ) | | | (9,701,000 | ) | | | (42,224,735 | ) |
Total Stockholders’ Equity | | | 26,972,060 | | | | (27,026,000 | ) | | | (53,940 | ) |
| | | | | | | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 27,419,419 | | | $ | (27,026,000 | ) | | $ | 393,419 | |
Statement of Directors be reduced from seven members to five members and their right to appoint a majority of such directors. We held a special board meeting on May 21, 2009, during whichOperations for the Board approved reducing our board to five members and appointing the two Series D nominees, Christopher Wall and Michael Ross to our Board; the Board also resolved that Mr. Robert Saunders, our CEO, Mr. Michael Boswell, our Acting CAO and Javier Idrovo will remain on the Board.
Note 19. Commitments and Contingencies
Corporate Offices
For the fiscal year ended August 31,
2008, our U.S. corporate office was located at 400 Professional Drive, Suite 310, Gaithersburg, Maryland 20878. This space was provided on a rent free basis by one2022 | | As Reported | | | Adjusted | | | As Restated | |
Revenue | | $ | 25,000 | | | $ | — | | | $ | 25,000 | |
Operating expenses | | | | | | | | | | | | |
General and administrative | | | 179,132 | | | | — | | | | 179,132 | |
Inventory impairment | | | 75,000 | | | | - | | | | 75,000 | |
Business development | | | 712,683 | | | | - | | | | 712,683 | |
Consulting-related party | | | 60,000 | | | | - | | | | 60,000 | |
Executive compensation | | | 1,034,450 | | | | - | | | | 1,034,450 | |
Stock compensation-consulting | | | 595,500 | | | | - | | | | 595,500 | |
Total operating expenses | | | 2,656,765 | | | | - | | | | 2,656,765 | |
| | | | | | | | | | | | |
Loss from operations | | | (2,631,765 | ) | | | - | | | | (2,631,765 | ) |
Other Income (Expense) | | | | | | | | | | | | |
Foreign exchange | | | (13 | ) | | $ | — | | | $ | (13 | ) |
Interest expense | | | (2,767 | ) | | | — | | | | (2,767 | ) |
Impairment loss | | | - | | | | (9,701,000 | ) | | | (9,701,000 | ) |
Total other expense | | | (2,780 | ) | | | (9,701,000 | ) | | | (9,703,780 | ) |
| | | | | | | | | | | | |
Loss before provision for income taxes | | | (2,634,545 | ) | | | (9,701,000 | ) | | | (12,335,545 | ) |
Provision for income taxes | | | - | | | | — | | | | - | |
Net loss | | | (2,634,545 | ) | | | (9,701,000 | ) | | | (12,335,545 | ) |
| | | | | | | | | | | | |
Net loss per share, basic and diluted | | | (0.06 | ) | | | - | | | | (0.27 | ) |
Weighted average shares outstanding, basic and diluted | | | 70,475,577 | | | | - | | | | 45,567,354 | |
Consolidated Statement of our shareholders. As a result, we did not recognize rental expense inCash Flow for the fiscal year.
Employment Agreements
We entered into an employment agreement with Mr.year ended August 31, 2022 | | As Reported | | | Adjusted | | | As Restated | |
Net loss | | $ | (2,635,545 | ) | | $ | (9,701,000 | ) | | $ | (12,335,545 | ) |
Adjustments to reconcile net loss to net cash | | | | | | | | | | | | |
Impairment loss | | | - | | | | 9,701,000 | | | | 9,701,000 | |
Consolidated Statement of Stockholders Deficit for the year ended August 31, 2022
Prepaid Common stock issued for acquisition
| | As Reported | | | Adjusted | | | As Restated | |
Common Stock - Shares | | | 11,300,000 | | | | (7,500,000 | ) | | | 3,800,000 | |
Common Stock - Amount | | $ | 11,300 | | | $ | (7,500 | ) | | $ | 3,800 | |
Additional Paid-In Capital | | $ | 27,014,700 | | | | (17,317,500 | ) | | | 9,697,200 | |
Total | | $ | 27,026,000 | | | | (17,325,000 | ) | | | 9,701,000 | |
Net loss
| | As Reported | | | Adjusted | | | As Restated | |
Accumulated Deficit | | $ | (2,634,545 | ) | | | (9,701,000 | ) | | | (12,335,545 | ) |
Balance, August 31, 2022
| | As Reported | | | Adjusted | | | As Restated | |
Additional Paid-In Capital | | $ | 59,421,878 | | | | (17,317,460 | ) | | | 42,104,418 | |
Accumulated deficit | | $ | (32,523,735 | ) | | | (9,701,000 | ) | | | (42,224,735 | ) |
Total | | $ | 26,972,060 | | | | (27,025,960 | ) | | | (53,900 | ) |
NOTE 18 – SUBSEQUENT EVENTSSubsequent events include those occurring through to January 15, 2024.
On September 15, 2023, Robert Saunders as our Chairman and President effective on June 29, 2005. Subsequently in August 2005, Mr. SaundersHolcomb was appointed CEO by our Board of Directors. Mr. Saunders will serve at the pleasure ofto the Board of Directors. For serving as President, Mr. Saunders’ compensation will be US $60,000 per annum. Additionally, we agreedDirectors
During the quarter ended November 30, 2023, the Company issued 5,000,000 common shares in exchange for the exclusive, global rights to grant Mr. Saunders a signing bonusmanufacture the Holcomb In-Line Power Generator.
During the quarter ended November 30, 2023, the Company issued 125,000 common shares in exchange for services.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There were no disagreements related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and interim periods.
Item 9A. Controls and Procedures
Evaluation of US $150,000 to be paid on closing of at least US $3,500,000 in third party financingDisclosure Controls and increase his compensation to $120,000 per annum if we receive at least US $5,000,000 in outside funding. AfterProcedures
Under the completionsupervision and with the participation of our Series A Preferred Stock Financing, Mr. Saunders was due the signing bonus of $150,000management, including our principal executive officer and a monthly salary of $10,000 per month beginning in August 2006. However, Mr. Saunders agreed to reduce his monthly salary to $5,000 per month until such time that we become significantly cash flow positive for its operations. As of August 31, 2008 we had paid Mr. Saunders $100,000 of the $150,000 bonus that was due under the terms of the agreement. Additionally, we are currently discussing possible restructuring/payment terms of the accrued salary of $250,000principal financial officer, as of August 31, 2009 until such time that we become significantly cash flow positive for its operations. As of August 31, 2009, the term of the initial employment agreement had expired and we are currently discussing finalizing a new employment agreement. Until a new agreement is completed, we will continue to operate under the terms of this agreement.
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
We have had no disagreements with our certified public accountants with respect to accounting practices or procedures or financial disclosure.
ITEM 9A. CONTROLS AND PROCEDURES
Quarterly Evaluation of Controls
As of the end of the period covered by this annual report, on Form 10-K, the Company evaluatedwe conducted an evaluation of the effectiveness of the design and operation of (i) theirour disclosure controls and procedures, as defined in Rules 13a-15(e) and (ii) their internal control over financial reporting. The evaluators who performed this evaluation were our Chief Executive Officer, Robert Saunders and Acting Chief Accounting Officer, Michael Boswell; their conclusions, based on and as of the date of the Evaluation (i) with respect to the effectiveness of our Disclosure Controls and (ii) with respect to any change in our Internal Controls that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect our Internal Controls are presented below.
CEO and CFO Certifications
Attached to this annual report, as Exhibits 31.1 and 31.2, are certain certifications of the CEO and Acting CAO, which are required in accordance with the Exchange Act and the Commission’s rules implementing such section (the "Rule 13a-14(a)/15d-14(a) Certifications"). This section of the annual report contains the information concerning the Evaluation referred to in the Rule 13a-14(a)/15d-14(a) Certifications. This information should be read in conjunction with the Rule 13a-14(a)/15d-14(a) Certifications for a more complete understanding of the topic presented.
Disclosure Controls and Internal Controls
Disclosure Controls are procedures designed with the objective of ensuring that information required to be disclosed in the Company's reports filed with the Securities and Exchange Commission15d-15(e) under the Securities Exchange Act such as this annual report, is recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms. Disclosure Controls are also designed with the objective of ensuring that material information relating to the Company is made known to the CEO and the Acting CAO by others, particularly during the period in which the applicable report is being prepared. Internal Controls, on the other hand, are procedures which are designed with the objective of providing reasonable assurance that (i) the Company's transactions are properly authorized, (ii) the Company’s assets are safeguarded against unauthorized or improper use, and (iii) the Company's transactions are properly recorded and reported, all to permit the preparation of complete and accurate financial statements in conformity with accounting principles generally accepted in the United States.
Limitations on the Effectiveness of Controls
The Company's management does not expect that their Disclosure Controls or their Internal Controls will prevent all error and all fraud. A control system, no matter how well developed and operated, can provide only reasonable, but not absolute assurance that the objectives of the control system are met. Further, the design of the control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of a system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or because the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Scope of the Evaluation
The CEO and Acting CAO’s evaluation of the our Disclosure Controls and Internal Controls included a review of the controls’ (i) objectives, (ii) design, (iii) implementation, and (iv) the effect of the controls on the information generated for use in this annual report. In the course of the Evaluation, the CEO and Acting CAO sought to identify data errors, control problems, acts of fraud, and they sought to confirm that appropriate corrective action, including process improvements, was being undertaken. This type of evaluation is done on a quarterly basis so that the conclusions concerning the effectiveness of our controls can be reported in our quarterly reports on Form 10-K and annual reports on Form 10-K. The overall goals of these various evaluation activities are to monitor our Disclosure Controls and Internal Controls, and to make modifications if and as necessary.1934. Our external auditors also review Internal Controls in connection with their audit and review activities. Our intent in this regard is that the Disclosure Controls and the Internal Controls will be maintained as dynamic systems that change (including improvements and corrections) as conditions warrant.
Among other matters, the Evaluation was to determine whether there were any significant deficiencies or material weaknesses in our Internal Controls, which are reasonably likely to adversely affect our ability to record, process, summarize and report financial information, or whether the Evaluators identified any acts of fraud, whether or not material, involving management or other employees who have a significant role in our Internal Controls. This information was important for both the Evaluation, generally, and because the Rule 13a-14(a)/15d-14(a) Certifications, Item 5, require that the CEO and Acting CAO disclose that information to our Board (audit committee), and our independent auditors, and to report on related matters in this section of the annual report. In the professional auditing literature, "significant deficiencies" are referred to as "reportable conditions". These are control issues that could have significant adverse affect on the ability to record, process, summarize and report financial data in the financial statements. A "material weakness" is defined in the auditing literature as a particularly serious reportable condition where the internal control does not reduce, to a relatively low level, the risk that misstatement cause by error or fraud may occur in amounts that would be material in relation to the financial statements and not be detected within a timely period by employee in the normal course of performing their assigned functions. The Evaluators also sought to deal with other controls matters in the Evaluation, and in each case, if a problem was identified, they considered what revisions, improvements and/or corrections to make in accordance with our ongoing procedures.
Conclusions
Based upon the Evaluation, our disclosure controls and procedures are designed to provide reasonable assurance of achievingthat the information required to be included in our objectives. Our CEOSEC reports is recorded, processed, summarized and Acting CAOreported within the time periods specified in SEC rules and forms, relating to the Company, including our consolidated subsidiaries, and was made known to them by others within those entities, particularly during the period when this report was being prepared. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures arewere not effective at that reasonable assurance level to ensure thatas of August 31, 2023 because of the material information relating to us is made known to management, including the CEO and Acting CAO, particularly during the period when our periodic reports are being prepared, and that our Internal Controls are effective at that assurance level to provide reasonable assurance that our financial statements are fairly presented inconformity with accounting principles generally accepted in the United States. Additionally, there has been no changeweaknesses identified in our Internal Controls that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to affect, our Internal Controls.
internal controls over financial reporting.Management’s Report on Internal Controls OverControl over Financial Reporting
Board of Directors and Ocean Smart, Inc.:
The Management of Ocean Smart, Inc.the Company is responsible for establishing and maintaining adequate internal control over financial reporting, foras such term is defined in Rules 13a-15(f) and 15d-15(f) under the Company. TheExchange Act. As of August 31, 2023, management assessed the effectiveness of the Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U. S. generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U. S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; (iii) provide reasonable assurance regarding prevention of timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effectbased on the financial statements, and (iv) provide reasonable assurance that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company.
Internal control over financial reporting includes the controls themselves, monitoring and internal auditing practices and actions taken to correct deficiencies as identified.
Because of its inherent limitations, internal control over financial reporting, no matter how well designed, may not prevent or detect misstatements. Accordingly, evencriteria for effective internal control over financial reporting
can provide only reasonable assuranceestablished in “Internal Control - Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). A Material weakness is a control deficiency (within the meaning of Public Company Accounting Oversight Board (United States) Auditing Standard No. 2) or a combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Based on such assessment, management concluded that as of August 31, 2023, our internal control over financial reporting was not effective. Management has identified the following material weakness: | · | inadequate segregation of duties consistent with control objectives |
| | |
| · | insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements |
Planned Remediation
With the oversight of senior management and our audit committee, we are taking the steps below and plan to financial statement preparation. Also,take additional measures to remediate the underlying causes of the material weaknesses:
| · | The Company will take steps to remediate the control activities material weakness through the documentation of processes and controls for transactions that occur in the course of business, and in the financial statement close, reporting and disclosure processes. |
| | |
| · | The Company will formalize our process and documentation for monitoring internal control over financial reporting. The documentation will serve as the evidence to ascertain whether the control activities are present and functioning, and provide a foundation for the Company to communicate internal control deficiencies in a timely manner to those parties responsible for taking corrective action. |
In addition, under the direction of the audit committee of the Board of Directors, management will continue to review and make necessary changes to the overall design of the Company’s internal control environment, as well as to refine policies and procedures to improve the overall effectiveness of internal control over financial reporting was made as of a specific date. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, orCompany.
We cannot be assured that the degreemeasures we have taken to date, or plan to implement, will be sufficient to remediate the material weaknesses we have identified or avoid potential future material weaknesses.
This Annual Report on Form 10-K does not include an attestation report of compliance with the policies or procedures may deteriorate.
Management conducted an assessment ofCompany’s independent registered public accounting firm regarding the effectiveness of the Company’s internal control over financial reporting, as of August 31, 2009, based on criteria for effectivesuch report is not required due to the Company’s status as a smaller reporting company.Change in Internal Control over Financial Reporting
Except as discussed above, there have been no changes in the Company’s internal controlcontrols over financial reporting described in “Internal Control—Integrated Framework” issued byduring the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included an evaluation of the design ofyear ended August 31, 2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reportingreporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable
Part III
Item 10. Directors, Executive Officers and testing of the operational effectiveness of its internal control over financial reporting. Management reviewed the results of its assessment with the Audit Committee of the Company’s Board of Directors.
Based on this assessment, management determined that, as of August 31, 2009, Ocean Smart, Inc. maintained effective internal control over financial reporting.
Although currently we do not identify any material weaknesses in the process of self assessment, we have recognized significant weaknesses in internal controls. Currently we do not have sufficient in-house expertise in US GAAP reporting. Instead, we rely very much on the expertiseCorporate GovernanceDirectors, Executive Officers and knowledge of external financial advisors in US GAAP conversion. External financial advisors have helped prepare and review the consolidated financial statements. Although we have not identified any material errors with our financial reporting or any material weaknesses with our internal controls, no assurances can be given that there are no such material errors or weaknesses existing. We are seeking to recruit experienced professionals to augment and upgrade our financial staff to address issues of timeliness and completeness in US GAAP financial reporting. In addition, we do not believe we have sufficient documentation with our existing financial processes, risk assessment and internal controls. We plan to work closely with external financial advisors to document the existing financial processes, risk assessment and internal controls systematically.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
OCEAN SMART, INC
/s/ Robert Saunders
Robert Saunders
Chief Executive Officer
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Significant EmployeesThe following table and text set forth the names and ages of allour current directors, and executive officers and significant employees as of November 28, 2008. The Board of Directors is comprised of only one class.December 15, 2023. All of the directors will serve until the next annual meeting of shareholders, which is anticipated to be held in February __, 2010, andstockholders or until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. Dr. Kristina Miller, our Chief Scientific Advisor is the wife of Robert Saunders, our Chairman, CEO and President; otherwise, thereThere are no family relationships among ourany of the directors and executive officers. Also provided herein are brief descriptionsFrom time to time, our directors have received compensation in the form of cash and equity grants for their services on the Board.
Name | | Age | | Title |
| | | | |
Ronald Loudoun | | 60 | | Chief Executive Officer and Director |
| | | | |
Kermit Harris | | 49 | | President and Director. |
| | | | |
David F. Lutz | | 72 | | Director |
| | | | |
Benjamin N. Grier | | 57 | | Director |
| | | | |
Robert Holcomb | | 80 | | Director |
| | | | |
Daniel Claycamp | | 59 | | President and Director of Astra-Holcomb Energy Systems Inc., a wholly owned subsidiary of the Company. |
| | | | |
Rachel Boulds | | 53 | | Chief Financial Officer |
| | | | |
Lisa Thompson | | 48 | | Corporate Secretary of our Company and Corporate Secretary of Astra-Holcomb Energy Systems Inc., a wholly owned subsidiary |
The background and principal occupations of the business experiencedirectors and officers of each director, executive officer and advisor during the past five years and an indication of directorships held by each director in other companies subject to the reporting requirements under the Federal securities laws.
Name | | Age | | Position | |
Robert Saunders | | 56 | | CEO and President | |
Javier Idrovo | | 41 | | Company are as follows: Ronald W. Loudoun – (Age 60) - Director, | |
Michael Boswell | | 40 | | Director, Acting Chief accounting Office | |
Christopher Wall | | 37 | | Chairman | |
Michael Ross | | 41 | | Director | |
Robert Saunders, CEO and President. Mr. Saunders has directed all researchChairman of Astra Energy Inc.- Director of Regreen Technologies Inc.
Ronald W. Loudoun, age 60, is the CEO and development efforts at Island Scallops since its establishment. After studying for his B.Sc. at the University of British Columbia in the early 1970's, Mr. Saunders has worked exclusively in the aquaculture research and development field. His efforts have primarily involved designing and implementing innovative culture technology and methods for new aquaculture species in British Columbia. Mr. Saunders has direct experience with managing projects similar to the type proposed, such as developing the hatchery technology for producing the Japanese scallop and the development of sablefish aquaculture.
Javier Idrovo, Director. Mr. Idrovo has been involved in the food industry since 2001 when he joined Dole Food Company, Inc. as Vice President of Strategy. In 2004, Mr. Idrovo was promoted to Senior Vice President of Strategy. In 2005, he became Vice President and CFO of Dole Packaged Foods, one of the operating divisions of Dole Food Company. In 2006, he was promoted to President of Dole Packaged Foods and held that title until March 2008. Prior to joining Dole, Mr. Idrovo worked as a management consultant for The Boston Consulting Group, Inc. holding positions of increasing responsibility from Associate Consultant to Manager. As a consultant, Mr. Idrovo worked for clients on projects that focused on strategy issues as well as organizational effectiveness issues across a number of industries including, but not limited to, Telecommunications, Retailing, Manufacturing, and Financial Services. He received a Bachelor of Science degree in 1989 and a Master of Engineering degree in 1990 both from Harvey Mudd College. Mr. Idrovo also received a Master of Business Administration degree from Harvard Business School in 1995.
Michael Boswell,Director and Acting Chief Accounting Officer. Mr. Boswell is a co-founder and member in TriPoint Capital Advisors, LLC, a boutique merchant bank focused on small and mid-sized growth companies and a co founder of the TriPoint family of companies. Mr. Boswell provides high-level financial services to start-up businesses and small to mid-sized companies. Mr. Boswell is currently a member of the board of directors and chairman of the audit committee of Radiant Pharmaceutical, Inc. (AMEX: RPC), a publicly held biotechnology firm. Mr. Boswell is also currently a director of Global Growth Acquisition Corp. 1, a Cayman Islands corporation. Mr. Boswell holds the Series 24, 82 and 63 licenses and is also President, COO and Chief Compliance Officer of TriPoint Global Equities, LLC, a FINRA member firm. Prior to the founding of TriPoint, Mr. Boswell had a number of executive positions focusing on business development and management consulting. Mr. Boswell also spent eight years as a senior analyst and/or senior engineer for various branches of the United States Government. He earned a MBA from John Hopkins University and a BS degree in Mechanical Engineering from University of Maryland.
Christopher Wall, Chairman. Mr. Wall is Chairman of the Board of Ocean Smart. Additionally, he currently handles assessment, restructuringour Company. He is has extensive business development experience in the renewable energy market, and recapitalization, monitoringhas maintained a longstanding interest in both communicating the need for, and salesourcing new methods for conscious minded development and growth. He is a successful business strategist with more than 30 years’ experience as an entrepreneur and real estate developer. He possesses an excellent background in new business development, multi-site operations, performance quality and improvement, and product branding and creation. Distinguished as a meticulous, methodical, hands-on-leader, Mr. Loudoun has been the catalyst for advancement in many business ventures.Kermit A. Harris, age 49, is a founder, President and Director of distressed portfolio assets at Vision Capital Advisors, a New York based Hedge fundour Company. Mr. Harris has proven and unique transformational leadership skills with over $900twenty years of experience in real estate acquisition/land development, commercial financing, business development, and restaurant industries. He has demonstrated high quality cross-functional management qualifications, business strategy, international/governmental engagement, and dynamic leadership. Mr. Harris developed the Company’s renewable division as well as the global bio-fuel supply chain using Regreen Technology. He has full oversight of the entire organization domestic and abroad, working closely with COO Dan Claycamp. Kermit has been with the Company since 2019. From January 2017 to January 2019, he was the Business Development/Acquisition Manager for the Donato Group, Inc. where his responsibilities included identifying opportunities to enhance and streamline operations within any construction/development project to increase the satisfaction levels of municipalities, development entity, and investors when working with their staff/sub-contractors and partners. None of the companies where Mr. Harris was employed prior to being employed by the registrant was a parent, subsidiary or other affiliate of the registrant. These skills working with private and public companies are used to carry out the strategic initiatives of our Company. He is a graduate of Eastern Michigan University’s Gary Owen College of Business, with a Finance Major.
Daniel L. Claycamp, 58 years of age, CEO and Director of Astra-Holcomb Energy Systems Inc., and a former COO and Director of our Company. Mr. Claycamp has 36 years of management experience in Plant Construction, Manufacturing, Engineering and Production of Food Grade and USP Grade Chemicals, Corn Milling, Flour Milling, Wet Milling, Oat Milling, Extrusion, Oil Extraction, Ethanol, and Mixing and Blending of Food Grade Ingredients. Skills include: Management of operations, construction, engineering, maintenance, distribution, purchasing, human relations, and accounting management. Strengths in plant management, project management, engineering, plant design and construction, plant operations, risk management, budget finance, quality and safety programs, and team based continuous improvement projects. During the years 2017 and 2018 Dan was the General Manager of Elemental Processing, LLC located in Lexington Kentucky. His responsibilities included engineering, design of new facilities and the management of the employees on the projects. During 2018 he was hired as Vice President of GenCanna Global USA, Inc. where he Managed a $120M capital project responsible for developing, designing, engineering, and constructing a Food Grade Hemp Processing Facility, Storage Elevator, Receiving, Grinding, and Screening, Extraction, RPI, Mixing and Blending, Formulations, and Packaging facilities for processed Hemp products in Mayfield, Kentucky. He remained in this position until he joined the Issuer as the COO in February 2021. None of the companies where Mr. Claycamp was employed prior to being employed by the registrant was a parent, subsidiary or other affiliate of the registrant.
His educational background consists of AC/DC Electrical Theory, Allen Bradley PLC Programming, and Electrical Motor Controls and Circuits: Rend Lake College, Whittington, IL 1997 and he holds a B.S. in Milling Science and Management from Kansas State University in 1986. His managerial and technical experience with private and public companies involved in the renewable energy industry qualifies him as a major part of the Company’s mission.
David F. Lutz, CPA/ABV, CVA/ABAR, CBA, 72 years of age, Director has extensive experience in small business management consulting, corporate finance, and business valuation. He has performed and supervised over 200 business valuations. He helped build a valuation department that produced over 500 business valuations a year. In corporate finance he helped structure, underwrite, and syndicate over $100 million in assets under management. Priorprivate and public stock offerings. With over 18 years’ experience in the brokerage industry and seven years’ experience with a major Chicago-based management consulting firm, Mr. Lutz has acquired a unique and diverse experience in legal and business matters uncommon among business valuation experts.
Mr. Lutz has worked with businesses in numerous industries and has assisted clients for a variety of purposes, including merger and acquisitions, sale, succession planning, estate and gift tax, divorce, employee stock ownership plans (ESOPS), various litigation and economic damage matters. He has developed reports to joining Vision, he was Directorassist the emerging company to achieve its goals and has developed strategies to assist the established company to enhance and improve its value in the future.
In addition to a Certified Public Accountant (CPA), Mr. Lutz’s valuation credentials include the Accredited in Business Valuation (ABV) designation issued by the American Institute of Corporate Development for Organica AG, DirectorCertified Public Accountants (AICPA) and the Certified Valuation Analyst (CVA), Certified Business Appraiser (CBA), and Accredited in Business Appraisal Review (ABAR) designations issued by the National Association of Certified Valuation Analysts (NACVA).
He earned the ‘The Best Certified Business Appraisal’ Award from the Institute of Business Development for Harbor Technology Group, and an Associate for Scient Corp. Appraisers (IBA) prior to its merger/acquisition by NACVA. This award has been earned by only eight other individuals since the IBA was founded in 1978, see attached award letter.
Mr. Wall hasLutz is a B.A.member of the American Institute of Certified Public Accountants (AICPA), the National Association of Certified Valuation Analysts (NACVA). He was a Captain in Philosophy and Economics from Columbia University. He servesthe United States Air Force as a Director on the BoardBudget Officer. He earned his Bachelor of 4 Elements, Inc and; he is also Chairman of the Board Halo Technology Holdings.
Michael Ross, Director. Michael Ross is President of Joseph Capital and of Berkeley Financial, and has experience from several bulge bracket institutions.
Significant Employees
The following are employees who are not executive officers, but who are expected to make significant contributions to our business:
Bruce Evans, Farm Manager. Mr. Bruce Evans has been involvedScience in shellfish production since 1985. He successfully established an oyster business, employing methods of long-line and beach culture production. That business is still in operation today, producing 7,000 gals of shucked oysters annually and employing 3 full time people and 4 part time people. He moved to Island Scallops in 1989. Mr. Evans was responsible for securing the leases from the Provincial government for this scallop grow-out project. He built the established long-line systems that currently produce scallops for Island Scallops. Mr. Evans worked with a Japanese scallop farmer for two years in B.C. and spent a month working on highly acclaimed scallop farms in Japan. Mr. Evans has BS in Marine Biology fromAccounting at the University of Victoria.
Northern Colorado and graduate work in business administration and accountancy at the University of Oklahoma.Benjamin N. Grier, JD, CPA, CTP, 56 years of age, Director, brings with him 20 plus years of experience in accounting and auditing, finance, treasury, tax and legal matters. Mr. Grier’s expertise includes, financial audits, investments and cash management, financial planning & analysis (FP&A), tax, and risk and litigation management, and negotiations.
Mr. Grier has held the position of Director of Treasury Services since August 2007 with a large insurance company and served as Assistant General Counsel at the same company from 2004 to 2007. From 2000 to 2003, Mr. Grier was Associate General Counsel at another Michigan based insurance company. Mr. Grier previously worked as an attorney and an accountant in private practice and as a Credit Analyst and Commercial Loan Officer at a Michigan based bank.
Mr. Grier obtained his Juris Doctor (Tax Law), Cum Laude, from Michigan State University – College of Law and a Bachelor of Arts in Financial Administration from Michigan State University. Mr. Grier is a Certified Treasury Professional (CTP) and is a Licensed Attorney and Certified Public Accountant in the State of Michigan.
Dr. Kristina M. Miller, ChiefRobert Holcomb MD, Ph.D., 80 years of age, Director, is Co-Owner, Co-Founder, and Co-Manager of Holcomb Scientific Advisor.
Research, Irish-based research, and development company setting a new industry standard in electric power generation.With decades of experience across the medical, scientific, and energy industries, Dr. MillerHolcomb is currently Heada pioneer in modern invention with hundreds of patents across a range of industries from breakthrough clean energy solutions to medical devices such as MagnaBloc, which achieved approximately $1 billion in worldwide sales. He has also patented numerous environmentally friendly products, processes, and devices, including a CO2 converter that captures CO2 in power plant emissions and in the atmosphere and converts it back to its base elements, and a unique water purification system.
He spent almost 20 years as a child and adult neurologist on the faculty of the Molecular Genetics SectionVanderbilt University School of Medicine in Nashville, one of the nation’s longest serving and most prestigious academic medical centers. During this time, he regularly published articles in a series of medical and scientific journals and traveled around the world delivering lectures.
Rachel Boulds, CPA, age 53, is the contracted Chief Financial Officer of our Company with over 20 years of experience in the Pacific Regionaudit and related financial reporting fields. She is responsible for the DepartmentCompany’s financial reporting, audit consulting, bookkeeping, and business operation consulting services. preparation of Fisheriesperiod-end financial statements, footnotes and Oceans, Canada (DFO).Management Discussion and Analysis in conformity with US GAAP and SEC reporting rules as well as consultation on complex accounting matters and working closely with client staff, auditors and legal counsel to prepare, review and file periodic public financial information, including Forms 10-Q and 10-K. After graduating from San Jose University with a BS in Accounting, she stared her career in the audit department of Price WaterhouseCooper. Rachel Boulds, CPA has been engaged in her sole accounting practice which she has led since 2009.
Lisa V. Thompson, age 48, is the Company’s Corporate Secretary and the Corporate Secretary of Astra-Holcomb Energy Systems Inc. She has over 20 years-experience as a dependable and resourceful securities paralegal specialist. As the Corporate Secretary, she excels at communication and collaborating with a diverse range of legal and company personnel, executive officers and board of directors. She conducts all legal business professionally with corporate counsel and with minimal supervision. Lisa is experienced in the preparation of regulatory filings for US and Canadian Securities Commissions. She is extremely organized with advanced technical and corporate skills. Her position with our publicly traded Company is very valuable. From 2016 to January of 2020, Ms. Thompson was the operations manager for PubCo Reporting Services, Inc. which was an EDGAR Filer and Corporate Secretary Consulting Services. In January of 2020 she started Meraki Corporate Services, Inc. where she provides corporate secretary consulting services. She has been a research scientist at DFOunder contract as an employee with our company since obtaining her PhD in Biological SciencesOctober 1, 2020. None of the companies where Lisa holds Legal Secretary and Paralegal certificates from StanfordCapilano University, in 1992. North Vancouver BC; Legal Secretary Certificate and Business Management Diploma from Kwantlen University College, Richmond BC.
The Molecular Genetics section she oversees contains a staffBoard and Committees
Our Board has one committee, the Audit Committee.
Audit Committee
David F. Lutz and Benjamin N. Grier are the members of 26, including scientists, biologists, computer analysts and research technicians. Dr. Miller conducts research on the genetic composition, adaptation, immunity and physiology of wild and domesticated fish and shellfish species using both molecular and genomic approaches. She has been a leader in the development of molecular technologies to aid in the conservation and management of aquatic resources. In the past 10 years, she has published over 40 scientific peer-reviewed journal manuscripts, and her group has been the focus of numerous magazine and newspaper articles. Dr. Miller brings a strong scientific component to the management of Ocean Smart, Inc., and she will serve as Chief Scientific Advisor. In addition to her PhD, Dr. Miller received a BSc in Zoology from University of California, Davis in 1983, and a MSc in Biology from University of British Columbia in 1986. Dr. Miller is Robert Saunders, our Chairman, CEO and President’s wife.
We currently have three committees appointed by our Board of Directors:
· | Acquisition/Business Opportunity Committee which is comprised of Javier Idrovo, Michael Ross and Christopher Wall.
|
· | Audit/Finance Committee which is comprised of Michael Boswell (Chair), Javier Idrovo and Michael Ross.
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· | Compensation Committee which is comprised of Javier Idrovo, Michael Ross and Christopher Wall.
|
Audit Committee and Financial Expert
We have an Audit/ FinanceDavid F. Lutz serves as the chairperson. David F. Lutz and Benjamin N. Grier Committee
meet the independence standards promulgated by the SEC and by NASDAQ as
specified in Section 3(a)(58)(A)such standards apply specifically to members of audit committees.David Lutz, a member of the Securities Exchange Act of 1934, as amended, composed of Michael Boswell (Chair), Javier Idrovo and Michael Ross. The Audit/Finance Committee focuses its efforts on assisting our Board of Directors to fulfill its oversight responsibilities with respect to our:
● Quarterly and annual consolidatedaudit committee is an “audit committee financial statements and financial information filed with the Securities and Exchange Commission;
● System of internal controls;
● Financial accounting principles and policies;
● Internal and external audit processes; and
● Regulatory compliance programs.
The committee meets periodically with management to consider the adequacy of our internal controls and financial reporting process. It also discusses these matters with our independent auditors and with appropriate financial personnel that we employ. The committee reviews our financial statements and discusses them with management and our independent auditors before those financial statements are filed with the Securities and Exchange Commission.
The committee has the sole authority to retain and dismiss our independent auditors and periodically reviews their performance and independence from management. The independent auditors have unrestricted access and report directly to the committee.
Audit Committee Financial Expert
Michael Boswell is our Audit Committee Financial Expert,expert,” as that term is defined in Item
407407(d)(5)(ii) of Regulation
S-BS-K, and
the Board has determined that Mr. Boswell is not independent,David F. Lutz and Benjamin N. Grier are both “independent” as that term is defined in
Section 121Rule 5605(a) of the
American Stock Exchange’s Listing StandardsNasdaq Marketplace Rules.We adopted and Section 10A(m)(3)approved a charter for the Audit Committee. In accordance with our Audit Committee Charter, our Audit Committee shall perform several functions, including:
| · | evaluate the independence and performance of, and assesses the qualifications of, our independent auditor, and engages such independent auditor; |
| | |
| · | approve the plan and fees for the annual audit, quarterly reviews, tax and other audit-related services, and approves in advance any non-audit service to be provided by the independent auditor; |
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| · | monitor the independence of the independent auditor and the rotation of partners of the independent auditor on our engagement team as required by law; |
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| · | review the financial statements to be included in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and reviews with management and the independent auditors the results of the annual audit and reviews of our quarterly financial statements; |
| · | oversee all aspects our systems of internal accounting control and corporate governance functions on behalf of the board; |
| | |
| · | review and approves in advance any proposed related-party transactions and report to the full Board of Directors on any approved transactions; and |
| | |
| · | provide oversight assistance in connection with legal, ethical and risk management compliance programs established by management and the Board of Directors, including Sarbanes-Oxley Act implementation, and makes recommendations to the Board of Directors regarding corporate governance issues and policy decisions. |
It is determined that David F. Lutz possesses accounting or related financial management experience that qualifies him as an “audit committee financial expert” as defined by the rules and regulations of the Securities Exchange ActSEC.
Independence of 1934. Mr. Boswell’s qualificationsthe Board
As required under the Nasdaq Stock Market listing standards, a majority of the members of a listed company’s Board of Directors must qualify as “independent,” as affirmatively determined by the Board of Directors. Our Board has undertaken a review of the independence of each director. Based on information provided by each director concerning her or his background, employment, and affiliations, our board has determined that David F. Lutz and Benjamin N. Grier do not have relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the listing requirements and rules of Nasdaq.
In making this determination, the Board found that none of these directors had a material or other disqualifying relationship with the Company.
Conflicts of Interest
Members of our management are associated with other firms involved in a range of business activities. Consequently, there are potential inherent conflicts of interest in their acting as officers and directors of our company. Although the directors are engaged in other business activities, we anticipate they will devote an audit committeeimportant amount of time to our affairs.
Our officers and directors are now and may in the future become shareholders, officers or directors of other companies, which may be formed for the purpose of engaging in business activities similar to ours. Accordingly, additional direct conflicts of interest may arise in the future with respect to such individuals acting on behalf of us or other entities. Moreover, additional conflicts of interest may arise with respect to opportunities which come to the attention of such individuals in the performance of their duties or otherwise. Currently, we do not have a right of first refusal pertaining to opportunities that come to their attention and may relate to our business operations.
Our officers and directors are, so long as they are our officers or directors, subject to the restriction that all opportunities contemplated by our plan of operation which come to their attention, either in the performance of their duties or in any other manner, will be considered opportunities of, and be made available to us and the companies that they are affiliated with on an equal basis. A breach of this requirement will be a breach of the fiduciary duties of the officer or director. If we or the companies with which the officers and directors are affiliated both desires to take advantage of an opportunity, then said officers and directors would abstain from negotiating and voting upon the opportunity. However, all directors may still individually take advantage of opportunities if we should decline to do so. Except as set forth above, we have not adopted any other conflict of interest policy with respect to such transactions.
Involvement in Certain Legal Proceedings
No director, person nominated to become a director, executive officer, promoter or control person of the Company has, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law; (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto; (iv) been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (a) Any Federal or State securities or commodities law or regulation; or (b) any law or regulation respecting financial expert are describedinstitutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) any law or regulation prohibiting mail or wire fraud or fraud in his biography above.
Complianceconnection with any business entity; nor (v) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 16(a)3(a)(26) of the Exchange Act
(15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 16(a)1(a)(29) of the Commodity Exchange Act requires our officers, directors and(7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons who own more than 10% of any class of our securities registered under Section 12(g) of the Exchange Act to file reports of ownership and changes in ownershipassociated with the SEC. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
Based on our review of copies of such reports, we believe that there was compliance with all filing requirements of Section 16(a) applicable to our officers, directors and 10% stockholders during fiscal 2009.
a member (covering stock, commodities or derivatives exchanges, or other SROs).Code of ethics
On August 3, 2005, weConduct and EthicsWe have adopted a written code of ethics that applies to our Chief Executive Officerall directors, officers and Principal Financialemployees in accordance with the rules of the NASDAQ Stock Market and Accounting Officer. You may obtainthe SEC. We have filed a copy of our code of ethics as an exhibit to our Registration Statement filed on Form S-1. You will be able to review these documents by accessing our public filings at the SEC’s web site at sec.report. In addition, a copy of the code of ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our codescode of ethics at no cost,in a Current Report on Form 8-K.
Item 11. Executive Compensation
The following tables set forth certain information concerning all compensation paid, earned or accrued for service by written request to Ocean Smart, Inc., 5552 West Island Highway, Qualicum Beach, British Columbia, Canada V9K 2C8; or, by oral request at: (250) 757-9811.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) |
| (a) | (b) | (c) | (d) | (e) | (f) |
Robert Saunders Chief Executive Officer | | | | | |
Robert Saunders Chief Executive Officer | | | | | |
Michael Boswell Acting Chief Accounting Officer | | | | | |
Michael Boswell Acting Chief Accounting Officer | | | | | |
| Name and Principal Position | Year | Non-Equity Incentive Plan Compensation ($) | Non-Qualified Deferred Compensation Earnings ($) | All other Compensation | Total ($) |
| (a) | (b) | (g) | (h) | (i) | (j) |
Robert Saunders Chief Executive Officer | | | | | |
Robert Saunders Chief Executive Officer | | | | | |
Michael Boswell Acting Chief Accounting Officer | | | | | |
Michael Boswell Acting Chief Accounting Officer | | | | | |
(1) In June 2005, we entered into an employment agreement with Robert Saunders, our Chairman, CEOPresident, Chief Operating Officer, Principal Financial Officer and President. Mr. Saunders will serve atCorporate Secretary in the pleasurefiscal years ended August 31, 2023 and 2022. This table consists of all the executive officers of the Board of Directors. Pursuant to his employment agreement, Mr. Saunders’ compensation will be $60,000 (USD) per annum for his services as our President. Additionally, we agreed to grant Mr. Saunders a signing bonus of US $150,000 to be paid on closing ofCompany who served in such capacity at least US $3,500,000 in third party financing and increase his compensation to $120,000 per annum if we receive at least US $5,000,000 in outside funding. After the completion of our Series A Preferred Stock Financing, Mr. Saunders was due the signing bonus of $150,000 and a monthly salary of $10,000 per month beginning in August 2006. However, Mr. Saunders agreed to reduce his monthly salary to $5,000 per month until such time that we become significantly cash flow positive for its operations. This agreement expired in June 2008 and we are currently operating as if this employment agreement is still in effect as we discuss a new agreement with Mr. Saunders. As of August 31, 2009, we had paid Mr. Saunders $100,000 of the $150,000 bonus that was due under the terms of the agreement. Additionally, we are currently discussing possible restructuring/payment terms of the accrued salary, until such time that we become significantly cash flow positive for its operations.
(2) Mr. Boswell served as our President from March to June 2005, at which time Mr. Saunders replaced Mr. Boswell as President. Mr. Boswell has served as our Acting Chief Accounting Officer since August 2005. Mr. Boswell indirectly owns a minority interest in TriPoint Capital Advisors, LLC, a significant shareholder and party with which we maintain a consulting agreement. In August 2006, the Board approved the Compensation Committee’s recommendation to pay TriPoint $15,000 per month, which includes fees for Mr. Boswell’s services as our Acting Chief Accounting during 2005, however TriPoint agreed to reduce such fee to $7,000 per month until our cash flow position improves, at which time the Committee will reconvene and recommend a return to $15,000 per month. In addition, TriPoint has agreed not to accept any additional fees, other than expenses, until we are sufficiently funded to carry out our business and operations. As of February of 2009, TriPoint agree to accrue their monthly fee of $7,000 per month on a go forward basis until the company’s cash position improves. According to the above reasons, Mr. Boswell did not receive any compensation in 2009 and only received the options listed in the table above in 2007.
(3) On August 17, 2007, Mr. Saunders and Mr. Boswell were granted five-year nonqualified stock options, pursuant to our 2005 Equity Plan, that vested on a 1/12 monthly basis over a twelve month period beginning on the grant date. The exercise price of the options is $1.21, which represents 110% of the closing price of our common stock on August 17, 2007. Based on the Black-Scholes option pricing model, the total fair value of these options were determined to be $247,815 and $322,159 for Mr. Saunders and Mr. Boswell, respectively. Since these options vested monthly, the company incurred a monthly cost of $20,651 and $26,847 respectively between August 2007 and July 2008. As of August 31, 2008, all of these stock options costs had been realized.
Outstanding Equity Awards at Fiscal Year-End
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date |
| (a) | (b) | (c) | (d) | (e) | (f) |
| | | | | |
| | | | | |
| Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares of Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested |
| (a) | (g) | (h) | (i) | (j) |
| | | | |
| | | | |
(1) Pursuant to our 2005 Equity Incentive Plan, Mr. Saunders and Mr. Boswell were granted five-year nonqualified stock options on August 17, 2007 that vest on a 1/12 monthly basis over a twelve month period beginning on the grant date. The exercise price of the options is $1.21, which represents 110% of the closing price of our common stock on August 17, 2007. As of August 31, 2008 all of these options have vested.
Retirement/Resignation Plans
We do not have any plans or arrangements in place regarding the payment to any of our executive officers following such persons retirement or resignation.
Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity incentive Plan Compensation ($) |
| (a) | (b) | (c) | (d) | (e) |
| | | | |
| | | | |
| | | | |
| Name | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All other Compensation ($) | Total ($) |
| (a) | (f) | (g) | (h) |
| | | |
| | | |
| | | |
(1) At the end of the fiscal year, 5,892,000 options are outstanding.
(2) year.2023 AND 2022 SUMMARY COMPENSATION TABLE
Name and Principal position | | Year | | Salary ($) | | | Bonus ($) | | | Stock awards ($) | | | Option awards ($) | | | Non-equity incentive plan compensation ($) | | | Change in pension value and nonqualified deferred compensation earnings ($) | | | All other compensation ($) | | | Total ($) | |
Ronald Loudoun | | 2023 | | $ | 90,000 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | $ | 90,000 | |
CEO (1) | | 2022 | | $ | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | $ | - | |
Kermit Harris | | 2023 | | $ | 60,000 | | | $ | - | | | $ | 420,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 60,000 | |
President | | 2022 | | $ | 60,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 67,500 | |
Daniel Claycamp(2) | | 2023 | | $ | 40,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 40,000 | |
CEO, Astra-Holcomb Energy Systems Inc. | | 2022 | | $ | 120,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 120,000 | |
Rachel Boulds | | 2023 | | $ | 24,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 24,000 | |
CFO | | 2022 | | $ | 24,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 24,000 | |
Lisa Thompson(3) | | 2023 | | $ | 24,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 24,000 | |
Corporate Secretary | | 2022 | | $ | 24,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 24,000 | |
| (1) | Mr. Loudoun was appointed CEO and director of the Company on July 3, 2023. |
| | |
| (2) | Mr. Claycamp was appointed a director of the Company on August 4, 2021 and as COO on February 1, 2021. Mr. Claycamp resigned both positions on November 3, 2022. Mr. Claycamp was appointed as CEO and a director of Astra-Holcomb Energy Systems Inc. on August 17, 2022. |
| | |
| (3) | Mrs. Thompson was appointed Corporate Secretary of the Company on October 1, 2020 and was appointed Corporate Secretary of Astra-Holcomb Energy Systems Inc. on August 17, 2022. |
Compensation of Executive Officers
Each of the executive officers has a services or consulting agreement with our company.
On September 8, 2008, our boardOctober 1, 2020, we entered into a services agreement with Kermit Harris, wherein, Mr. Harris will receive a monthly fee of directors authorized$5,000. In addition, Mr. Harris received 500,000 pre-split shares of common stock of the issuanceCompany pursuant to his agreement. On January 16, 2023, Mr. Harris received 2,000,000 common shares in exchange for services rendered.
On October 3, 2020, we entered into a services agreement with Lisa Thompson, wherein, Ms. Thompson will receive a monthly fee of $2,000. In addition, Ms. Thompson received 100,000 pre-split shares of common stock of the Company pursuant to her agreement.
On January 16, 2021, we entered into a contract services agreement with Rachel Boulds, wherein, Ms. Boulds will receive a monthly fee of $2,000. In addition, Ms. Boulds received 50,000 pre-split shares of common stock of the Company pursuant to her agreement.
On February 1, 2021, we entered into a consulting agreement with Daniel Claycamp, wherein Mr. Claycamp will receive an aggregatehourly fee for services. In addition, Mr. Claycamp received 250,000 pre-split shares of 100,000 options to purchase our common stock pursuant to his agreement. On February 11, 2022, Mr. Claycamp received an additional 250,000 shares of common stock.
On December 1, 2022, we entered into a services agreement with Ronald Loudoun, wherein, Mr. Loudoun will receive a monthly fee of $10,000.
The Company does not have a compensation committee. Given the nature of the Company’s business and the current composition of management, the board of directors does not believe that the Company requires a compensation committee at this time.
Compensation of Directors
We have no arrangements for the remuneration of our 2005 Equity Plandirectors, except that they will be entitled to Mr. Idrovo. The options vest in two equal installments over the next two years (on September 8, 2009 and 2010). Each option is exercisablereceive reimbursement for a period of five years from the issuance date and has an exercise price of $0.45. Basedactual, demonstrable out-of-pocket expenses, including travel expenses, if any, made on the Black-Scholes option pricing model, we will incur approximately $43,000 through August 31, 2010 for these options. However, as of August 31, 2009, Mr. Idrovo 50,000 of these options have vest and we have incurred stock option expenses of roughly $22,000.
Our directors who are employees do not receive any compensation from us for services rendered as directors. The Board has created three classes of fees for outside directors: (1) outside directors who are “independent,” as definedour behalf in the Exchange Act will be paid $500 per meeting, whether telephonic or in person for director fee – there shall not be any fees for written consents in lieuinvestigation of board meetings and (2) outside directors who are not “independent” will not receive any fees at this time, but once our cash flow position improves, the Compensation Committee will reconvene and make recommendations. Additionally, although we do not currently have an arrangement or agreement to provide stock based compensation to our outside directors, we may, from time to time, grant outside directors incentive stock options pursuant to our 2005 Equity Incentive Plan.
ITEMbusiness opportunities.Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Securities authorized for issuance under equity compensation plans. Please see Part II, Item 5: “Market for Common Equity and Related Stockholder Matters” above.
Security Ownership of Certain Beneficial Owners and Management
As used in this section, the term beneficial ownership with respect to a security is defined by Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as consisting of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power (including the power to dispose of or direct the disposition of) with respect to the security through any contract, arrangement, understanding, relationship or otherwise, subject to community property laws where applicable.
As of December 9, 2009, we had a total of 25,920,296 shares of common stock, 7,773,998 shares of Series A Preferred Stock, 207 shares of Series B Preferred Stock, 747,870 shares of Series C Preferred Stock and 304,558 shares of Series D Preferred Stock issued and outstanding, which are our only issued and outstanding equity securities. However, our preferred stock does not have any voting rights except with respect to specified transactions that may affect the rights, preferences, privileges or voting power of such class and except as otherwise required by Nevada law. (For further information regarding the preferred stock see “Description of Securities”) At the date of this Prospectus, each share of our Series A Preferred Stock and Series C Preferred Stock is convertible into one share of common stock; each share of our Series B Preferred Stock is convertible into a number of fully paid and nonassessable shares of our common stock equal to the quotient of the liquidation preference amount per share ($10,000) divided by the conversion price, which initially is $1.15 per share, subject to certain adjustments, or approximately 8,696 shares of common for each share of converted Series B Preferred Stock; and, each share of our Series D Preferred Stock is convertible into a number of fully paid and nonassessable shares of our common stock equal to the quotient of the stated value of the Series D Preferred Stock ($40) divided by the conversion price, which initially is $0.80 per share, subject to certain adjustments.
Related Stockholder MattersThe following table sets forth, as of August 31, 2009: (a)2023, certain information concerning the names and addresses of each beneficial owner of more than five percent (5%)ownership of our common stockCommon Stock by: (i) each stockholder known by us to own beneficially 5% or more of our outstanding Common Stock; (ii) each director; (iii) each named executive officer; and preferred stock (taken together(iv) all of our executive officers and directors as one class) known to us,a group, and their percentage ownership:
Title of Class | | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | | Percentage | |
Common | | Ronald Loudoun(1) Vancouver, BC | | | 9,989,714 | | | | 13.28 | % |
Common | | Kermit A Harris(2) Southfield, Michigan | | | 3,500,000 | | | | 4.65 | % |
Common | | Rachel Boulds(3) Murray, UT | | | 150,000 | | | | .019 | % |
Common | | Daniel L Claycamp(4) West Frankfort, IL | | | 250,000 | | | | 0.33 | % |
| | | | | | | | | | |
Common | | Lisa Thompson(5) Langley, British Columbia, Canada | | | 250,000 | | | .0.33 | % |
Common | | David F. Lutz(6) Golden, CO | | | 50,000 | | | | .006 | % |
Common | | Benjamin N. Grier(7) Southfield, MI | | | 110,000 | | | | .014 | % |
Common | | Albert Mardikian(8) Huntington Beach, CA | | | 10,000,000 | | | | 13.3 | % |
Common | | Robert Holcomb(9) Sarasota, FL | | | 10,000,000 | | | | 13.3 | % |
| | Directors and Officers as a Group (9 persons) | | | 34,299,714 | | | | 45.23 | % |
__________
(1) | Includes 3,989,714 shares held by Alita Capital Inc., of which Mr. Loudoun is the controlling shareholder and 6,000,000 shares held by Trimark Capital Partners Inc. Mr. Loudoun was appointed CEO and Chairman of the Board on July 3, 2023. |
| |
(2) | Mr. Harris was appointed President and Director on October 1, 2020 |
| |
(3) | Ms. Boulds was appointed CFO on January 19, 2021. |
| |
(4) | Mr. Claycamp was appointed a director of the Company on August 4, 2021 and as COO on February 1, 2021. Mr. Claycamp resigned both positions on November 3, 2022. Mr. Claycamp was appointed as CEO and a director of Astra-Holcomb Energy Systems Inc. on August 17, 2022. |
| |
(5) | Ms. Thompson was appointed Corporate Secretary of the Company on October 1, 2020 and as Corporate Secretary of Astra-Holcomb Energy Systems Inc. on August 17, 2022. |
| |
(6) | Mr. Lutz was appointed a director on July 28, 2022. |
| |
(7) | Mr. Grier was appointed a director on July 28, 2022. |
| |
(8) | Mr. Mardikian is a Director of Regreen Technologies Inc. |
| |
(9) | Includes 10,000,000 shares held by HRE Scientific Holdings Ltd. Mr. Holcomb is the controlling shareholder of HRE Scientific Holdings Ltd. Mr. Holcomb was appointed a director on September 15, 2023. |
The number of shares of common stock and preferred stock beneficially owned by each suchentity, person, director or executive officer is determined in accordance with the rules of the SEC, and the percentinformation is not necessarily indicative of our common stock and preferred stock so owned; and (b)beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares over which the names and addresses of each director and executive officer, the number of shares our common stock and preferred stock beneficially owned, and the percentage of our common stock and preferred stock so owned, by each such person, and by all of our directors and executive officers as a group. Each personindividual has sole or shared voting and investment power with respect toor dispositive power as well as any shares that the shares of our common stock and preferred stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock and preferred stock, except as otherwise indicated. Individual beneficial ownership also includes shares of common stock that a personindividual has the right to acquire within 60 days from December 9, 2009.
| Name and Address | Amount and Nature of Beneficial Ownership | Percentage Of Voting of Securities (1) |
Robert Saunders President and CEO Qualicum Beach, British Columbia Canada V9K 2C8 | | |
| | | |
Christopher Wall Chairman 20 West 55th St., 5th Floor New York, NY 10019 | | |
| | | |
Michael Ross Director 400 Professional Drive Suite 310 Gaithersburg, MD 20879 | | |
| | | |
Javier Idrovo Director 400 Professional Drive Suite 310 Gaithersburg, MD 20879 | | |
| | | |
Michael Boswell Director and Acting Chief Accounting Officer 400 Professional Drive Suite 310 Gaithersburg, MD 20879 | | |
| | | |
Vision Opportunity Master Fund, Ltd. 20 West 55th St., 5th Floor New York, NY 10019 | | |
| | | |
All directors and officers as a group (5 persons) | | |
_________________
(1) All Percentages have been rounded up toof the nearest one hundredth of one percent and such percentage is based upon the amount of outstanding our common stock and preferred stock, on an as converted basis. The percentage assumes in the case of each shareholder listed in the above list that all warrants or options held by such shareholder that are exercisable currently or within 60 days were fully exercised by such shareholder, withoutdate through the exercise of any stock option, warrants or optionsother rights. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and dispositive power with respect to all shares of common stock held by any other shareholders.
(2) In addition to his stock ownership, Mr. Saunders was granted 300,000 five-year nonqualified stock options on August 17, 2007 that vested on a 1/12 monthly basis over a twelve month period beginningperson. The percentage of shares beneficially owned is computed on the grant date. The exercise pricebasis of the options is $1.21, which represents 110% of the closing price66,774,540 shares of our common stock on August 17, 2007. Alloutstanding as of these options vested on August 17, 2008.
(3) Mr. Wall holds not stock directly, however, is an employeethe date of
Vision Capital Opportunity Fund. As described below in footnote 8, Vision owns directly or indirectly Vision owns 2,204,296this annual report.The following table sets forth, as of November 30, 2023, certain information concerning the beneficial ownership of our Preferred Stock:
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |
Preferred A | Vision Opportunity Master Fund, Ltd. 317 Madison Avenue, Suite 1220, New York, NY | 7,774 | 100 | % |
Item 13. Certain Relationships and Related Transactions, and Director Independence
On October 1, 2020, the Company entered into a services agreement with the President, whereby the Company agreed to pay a monthly fee of $5,000 until terminated by either party. The company also issued 500,000 pre-split common shares to the President upon execution of common stock, 5,238,333the Agreement. The shares were valued at $0.008 for total non-cash compensation of common stock issuable upon conversion of their Series A Convertible Preferred Stock, 1,495,740 shares of common stock issuable upon conversion of their Series B Convertible Preferred Stock, 747,870 shares of common stock issuable upon conversion of their Series C Convertible Preferred Stock, 12,714,650 shares of common stock issuable upon the conversion of their Series D Convertible Preferred Stock and 740,627 shares of common stock received as dividends.
(4) Mr. Ross owns 652,788 shares of common stock, 223,333 shares of common stock issuable upon conversion of their Series A Convertible Preferred Stock, 302,400 shares of common stock issuable upon the conversion of their Series D Convertible Preferred Stock and 129,055 shares of common stock received as dividends.
(5) On September 8, 2008, our board of directors authorized the issuance of an aggregate of 100,000 options to purchase our common stock pursuant to our 2005 Equity Plan to Mr. Idrovo. The options shall vest in two equal installments over the next two years (on September 8, 2009 and 2010). Each option is exercisable for a period of five years from the issuance date and has an exercise price of $0.45 respectively.$12,500. As of August 31, 2008, Mr. Idrovo had not yet been granted any options. As of November 28, 2008, none of these options have vested and none will vest within 60 days from such date.
(6) Mr. Boswell and his wife jointly own Invision, LLC, which owns 38,000 shares of our voting stock. Additionally, Invision, LLC is2022, the Company owes $70,000 to the President for accrued fees.On October 1, 2020, the Company entered into a 30% member of TriPoint Capital Advisors, LLC, which owns 3,000,000 shares of our voting stock. Therefore, Mr. Boswell beneficially owns 938,000 shares of our voting stock.
(7) In addition to his stock ownership, Mr. Boswell was granted 390,000 five-year nonqualified stock options on August 17, 2007 that vested on a 1/12 monthly basis over a twelve month period beginning on the grant date. The exercise price of the options is $1.21, which represents 110% of the closing price of our common stock on August 17, 2007. All of these options vested on August 17, 2008.
(8) Vision owns 2,204,296 shares of common stock, 5,238,333 shares of common stock issuable upon conversion of their Series A Convertible Preferred Stock, 1,495,740 shares of common stock issuable upon conversion of their Series B Convertible Preferred Stock, 747,870 shares of common stock issuable upon conversion of their Series C Convertible Preferred Stock, 12,714,650 shares of common stock issuable upon the conversion of their Series D Convertible Preferred Stock and 1,072,214 shares of common stock received as dividends. However, based upon the terms of the preferred stock, Vision may not convert its preferred stock if on any date, it would be deemed the beneficial owner of more than 4.99% of the then outstanding shares of our common stock. However, Vision can elect to waive the cap upon 61 days notice to us or less if, and only if less than 61 days remain on the term of the warrant and in such case the waiver will not be effective until the warrant’s expiration date.
Changes in Control
To the best of our knowledge, there are no arrangements that could cause a change in our control.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We are party to a consultingservices agreement with TriPoint Capital Advisors, LLC, a company in which Mark Elenowitz, a director and one of our significant shareholders, indirectly owns a 40% interest. Michael Boswell, our acting Chief Accounting Officer and one of our directors, indirectly owns a 30% interest in TriPoint. Louis Taubman, our outside corporate and securities counsel also indirectly owns an interest (30%) in TriPoint. Our Board recently approved the Compensation Committee’s recommendation of a flat rate $15,000 per month fee, which shall be reduced to $7,500 per month until our cash flow position improves, forCorporate Secretary, whereby the legal services Louis Taubman provides us. The Board also approved the recommendation of a $15,000 per month fee, which shall be reduced to $7,000 per month until our cash flow position improves, for the Acting CFO type services and financial advisory services Michael Boswell and TriPoint, respectively, provide us. Additionally, our corporate offices in Gaithersburg, Maryland are currently provided by Tripoint Holdings, LLC, the parent company of Tripoint at no cost to us.
Island Scallops, our wholly owned subsidiary, in June 2008 transferred 100% ownership of RKS Laboratories, Inc. to Robert Saunders, our Chairman, CEO and President. RKS is a Vancouver Island research and development that is working towards developing superior strains of scallops (developed by Island Scallops and known as the Qualicum Beach Scallop) with beneficial traits such as higher meat yield and rapid growth. Island ScallopsCompany agreed to
transfer its ownershippay a monthly fee of
RKS in consideration$2,000 until terminated by either party. The company also issued 100,000 pre-split common shares to the Corporate Secretary for
total non-cash compensation of $2,500.On January 1, 2021, the grantCompany entered into a services agreement with the Corporate Communications Officer for cash compensation of $2,500 per month. The company also issued 50,000 pre-split common shares to Island Scallops by RKSthe officer for total non-cash compensation of $2,500.
On January 16, 2021, the Company entered into a services agreement with the Chief Financial Officer for cash compensation of $2,000 per month. The company also issued 50,000 pre-split common shares to the officer for total non-cash compensation of $37,500.
On December 1, 2022, the Company entered into a services agreement with the Chief Executive Officer for cash compensation of $10,000 per month.
Item 14. Principal Accountant Fees and Robert Saunders of a right of first refusal to commercialize any intellectual property developed by RKS. Island Scallops has the right to acquire or use any intellectual property from RKS at RKS’ cost, in perpetuity or until such time as RKS shall cease to exist. Between June 2006 and August 2009, Island Scallops agreed to loan RKS a total of approximately $199,000. Originally, we carried this amount as loan related party loan receivable, but given that lack of any repayments to date, we expensed the entire amount in 2009.
ITEM 14. PRINCIPAL ACCOUTNING FEES AND SERVICES
(1) AUDIT FEES
The aggregateServices | | 2023 | | | 2022 | |
Audit Fees | | $ | 25,000 | | | $ | 25,820 | |
Audit-Related Fees | | $ | - | | | $ | - | |
Tax Fees | | $ | - | | | $ | - | |
All Other Fees | | $ | - | | | $ | - | |
Audit fees billedrepresent fees for professional services rendered by LBB & Associates, Ltd., LPP (formerly Lopez, Blevins, Bork & Associates, LLP)our principal accountants for the audit of the registrant'sour annual financial statements and review of the financial statements included in the registrant's Form 10-Kour Forms 10-Q or services that are normally provided by the accountantour principal accountants in connection with statutory and regulatory filings or engagementsengagements.
Audit-related fees represent professional services rendered for fiscal years 2009assurance and 2008 were approximately $90,000 and $99,000 respectively.
(2) AUDIT-RELATED FEES
NONE
(3) TAX FEES
NONE
(4) ALL OTHER FEES
NONE
(5) AUDIT COMMITTEE POLICIES AND PROCEDURES
The policyrelated services by the accounting firm that are reasonably related to the performance of the audit or review of our
Audit Committee is to pre-approve allfinancial statements that are not reported under audit
and permissible non-auditfees.Tax fees represent professional services to be performedrendered by the Company’s independent auditors during the fiscal year.
Noaccounting firm for tax compliance, tax advice, and tax planning. All other fees represent fees billed for products and services related to Audit-Related Fees, Tax Fees or All Other Fees described above, were approvedprovided by the Audit Committee.
ITEM 15. EXHIBITS LIST
accounting firm, other than the services reported for the other three categories.Exhibit Number
| Description
|
| Articles of Incorporation of the Company, as amended. (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-QSB for the quarter ending February 28, 2007, which was filed on April 13, 2007.)
|
| Amended and restated Bylaws of the Company (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-QSB for the quarter ending February 28, 2007, which was filed on April 13, 2007.)
|
| Contents |
Part IV
Item 15. Exhibits
The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Securities and Exchange Commission.
| | | | Incorporated by Reference | | Filed | |
Exhibit No. | | Exhibit Description | | Form | | Exhibit | | Filing Date | | Herewith | |
3.1 | | Articles of Incorporation | | 10-KSB | | 3.1 | | 12/14/2005 | | | |
3.2 | | Amended and Restated Bylaws | | 8-K | | 3.1 | | 08/16/2005 | | | |
3.3 | | Amendment to Articles of Incorporation | | 10-KSB | | 3.1 | | 11/28/2006 | | | |
3.4 | | Amendment to the Articles of Incorporation indicating name change and forward stock split | | 8-K | | 3.1 | | 09/15/2021 | | | |
4.1 | | Form of Certificate of Designation of Rights and Preferences of Series A Convertible Preferred Stock | | 8-K | | 10.3 | | 04/14/2006 | | | |
4.2 | | Form of Certificate of Designation of Rights and Preferences of Series B Convertible Preferred Stock | | 8-K | | 10.3 | | 01/18/2007 | | | |
4.3 | | Form of Certificate of Designation of Rights and Preferences of Series C Convertible Preferred Stock | | 8-K | | 10.3 | | 11/07/2007 | | | |
4.4 | | Form of Certificate of Designation of Rights and Preferences of Series D Convertible Preferred Stock | | 8-K | | 10.3 | | 05/30/2008 | | | |
4.5 | | Certificate, Amendment or Withdrawal of Designation filed with the Nevada Secretary of State on January 21, 2022. | | 8-K | | 4.16 | | 02/03/2022 | | | |
10.1 | | Exclusive Technology Licensing and Distribution Agreement for the Island of Jamaica dated February 24, 2021. | | 8-K | | 10.1 | | 03/17/2021 | | | |
10.2 | | Sale and Purchase Agreement for the Country of Jamaica dated March 5, 2021 | | 8-K | | 10.2 | | 03/17/2021 | | | |
10.3 | | Exclusive Technology Licensing and Distribution Agreement for the Province of Alberta dated March 1, 2021 | | 8-K | | 10.3 | | 03/17/2021 | | | |
10.4 | | Sale and Purchase Agreement for the Province of Alberta dated March 5, 2021 | | 8-K | | 10.4 | | 03/17/2021 | | | |
10.5 | | Effective November 1, 2021, the Company entered into an Exclusive Licensing Agreement and Promissory Note with Corporate Guarantee with Albert Mardikian, Regreen Technologies Inc. and Global Sustainable Technologies Inc. | | 8-K | | 10.1 | | 11/15/2021 | | | |
10.6 | | Employment Agreement with Kermit Harris naming him President of the Registrant dated October 1, 2020, | | S-1 | | 10.6 | | 03/03/2022 | | | |
10.7 | | Service Agreement with Lisa Thompson as corporate Secretary dated October 3, 2020 | | S-1 | | 10.7 | | 03/03/2022 | | | |
10.8 | | Consulting Agreement with Heidi Thomasen dated January 1, 2021 | | S-1 | | 10.8 | | 03/03/2022 | | | |
10.9 | | Agreement with Rachel Boulds, CPA as contracted Chief Financial Officer dated January 16, 2021 | | S-1 | | 10.9 | | 03/03/2022 | | | |
10.10 | | Agreement with Dan Claycamp appointing him as Chief Operating Officer dated February 1, 2021 | | S-1 | | 10.10 | | 03/03/2022 | | | |
10.11 | | Stock Cancellation Agreement dated January 13, 2022 | | 8-K | | 10.12 | | 02/03/2022 | | | |
10.12 | | Loan/Convertible Debenture dated January 11, 2022 | | S-1 | | 10.12 | | 06/02/2022 | | | |
10.13 | | Uganda Investment Authority Investment License dated November 5, 2021 | | S-1 | | 10.13 | | 06/02/2022 | | | |
10.14 | | Supply and Installation Contract for Green Hygienics Holdings Inc. dated January 12, 2022 | | S-1 | | 10.14 | | 06/02/2022 | | | |
10.15 | | Common Stock Purchase Agreement between the Company and Albert Mardikian | | 8-K | | 10.1 | | 08/10/2022 | | | |
10.16 | | Addendum to Common Stock Purchase Agreement | | 8-K | | 10.2 | | 08/10/2022 | | | |
10.17 | | Common Stock Purchase Agreement between the Company and Alpha Ventures LLC | | 8-K | | 10.1 | | 08/24/2022 | | | |
10.18 | | Common Stock Purchase Agreement between the Company and Garan SAS Di Serapian Aradavast Carlo & Co. | | 8-K | | 10.1 | | 09/22/2022 | | | |
10.19 | | Common Stock Purchase Agreement between the Company and Hagop Istanboulli | | 8-K | | 10.2 | | 09/22/2022 | | | |
10.20 | | Common Stock Purchase Agreement between the Company and Rafi Istanboulli | | 8-K | | 10.3 | | 09/22/2022 | | | |
10.21 | | Common Stock Purchase Agreement between the Company and Chant Istanboulli | | 8-K | | 10.4 | | 09/22/2022 | | | |
10.22 | | Common Stock Purchase Agreement between the Company and Jack Koumjian | | 8-K | | 10.5 | | 09/22/2022 | | | |
14.1 | | Code of Ethics | | 10-K | | 14.1 | | 12/14/2022 | | | |
21.1 | | List of Subsidiaries | | 10-K | | 21.1 | | 12/14/2022 | | | |
31.1 | | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer | | 10-K | | 31.1 | | 12/14/2022 | | | |
31.2 | | Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer | | 10-K | | 31.2 | | 12/14/2022 | | | |
32.1 | | Section 1350 Certification of Principal Executive Officer | | 10-K | | 32.1 | | 12/14/2022 | | | |
32.2 | | Section 1350 Certification of Principal Financial Officer | | 10-K | | 32.2 | | 12/14/2022 | | | |
99.5 | | Audit Committee Charter | | 10-K | | 99.5 | | 12/14/2022 | | | |
101.INS | Inline XBRL Instance Document. | | | | | | | | x | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | | | | | | | | x | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | | | | | | | | x | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | | | | | | | | x | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | | | | | | | | x | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | | | | | | | | x | |
104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | | | | | | | | x | |
Item 16. Form 10-K Summary
We have elected to not provide information under this Item.
|
| Form of Certificate of Designation of Rights and Preferences of Series A Convertible Preferred Stock. (Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on April 14, 2006).
|
| Form of certificate representing shares of the Company’s Series A Preferred Stock.
|
| |
SIGNATURES
Pursuant to the requirements of the Company’s Series B Preferred Stock.
| Form of certificate representing shares of the Company’s Series C Preferred Stock.
|
| Form of Series A Convertible Preferred Stock Purchase Agreement, dated April 12, 2006, by and between the Company and each of the Purchasers thereto (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 14, 2006).
|
| Form of Registration Rights Agreement, dated April 12, 2006, by and between the Company and each of the Purchasers thereto. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 14, 2006).
|
| Form of Individual Lock-Up Agreement dated April 12, 2006 by and between the Company and each of the shareholders listed therein. (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on April 14, 2006).
|
| Form of Lock-Up Agreement dated April 12, 2006 by and between the Company and World Wide Mortgage Corporation. (Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on April 14, 2006).
|
| Form of Series A Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on April 14, 2006).
|
| Form of Series B Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on April 14, 2006).
|
| Form of Series C Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed on April 14, 2006).
|
| Form of Series D Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on April 14, 2006).
|
| Form of Series E Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed on April 14, 2006).
|
| Form of Series F Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K filed on April 14, 2006).
|
| Form of Series G Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K filed on April 14, 2006).
|
| Form of Series H Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K filed on April 14, 2006).
|
| Form of Series J Warrant dated April 12, 2006. (Incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K filed on April 14, 2006).
|
| Form of Series A Convertible Preferred Stock Purchase Agreement, dated May 30, 2006, by and between the Company and each of the Purchasers thereto (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 30, 2006).
|
| Form of Registration Rights Agreement, dated May 30, 2006, by and between the Company and each of the Purchasers thereto. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 30, 2006).
|
| Form of Series A Warrant dated May 30, 2006. (Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on May 30, 2006).
|
| Form of Series B Warrant dated May 30, 2006. (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on May 30, 2006).
|
| Form of Series C Warrant dated May 30, 2006. (Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on May 30, 2006).16, 2005).
|
| Form of Series D Warrant dated may 30, 2006. (Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on May 30, 2006).
|
| Amendment to Registration Rights Agreement dated May 30, 2006(Incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on August 16, 2005).
|
+ Filed herewith
| Form of Joinder Agreement to the Series A Convertible Preferred Stock Purchase Agreement, dated May 30, 2006, by and between the Company and each of the Purchasers thereto (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 30, 2006).
|
| Form of Joinder Agreement to the Registration Rights Agreement, dated May 30, 2006, by and between the Company and each of the Purchasers thereto. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 30, 2006).
|
| Form of Series C Convertible Preferred Stock Purchase Agreement, dated November 5, 2007, by and between the Company and each of the Purchasers thereto (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 7, 2007).
|
| Form of Registration Rights Agreement by and between the Company and each of the Purchasers thereto (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 7, 2007).
|
| Form of Certificate of Designation of Rights and Preferences of Series C Convertible Preferred Stock (Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 7, 2007).
|
| Form of Lock-Up Agreement by and between the Company and each of the shareholders listed therein (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on November 7, 2007).
|
| Form of Warrants (Incorporated by reference to Exhibits 10.5 through 10.11 to the Company’s Current Report on Form 8-K filed on November 7, 2007).
|
| Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
| Certification of Acting Chief Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
| Certification of Chief Executive Officer and Acting Chief Accounting Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
+ Filed herewith
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrantRegistrant has duly caused this report on Form 10-K/A Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized.
ASTRA ENERGY INC.
/s/ Robert SaundersRonald Loudoun | | | Dated: December 14, 2009January 26, 2024 |
Robert Saunders
| | Date |
CEO | | |
/s/ Rachel Boulds | | January 26, 2024 |
Rachel Boulds | | Date |
Chief Financial Officer | | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on 10-K/A Amendment No. 1 has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
/s/ Kermit Harris | | January 26, 2024 |
Kermit Harris | | Date |
President and Chief Executive OfficerDirector | | |
/s/ Daniel Claycamp | | January 26, 2024 |
Daniel Claycamp | | Date |
Director | | |
/s/ David F. Lutz | | January 26, 2024 |
David F. Lutz | | Date |
Director | | |
/s/ Benjamin N. Grier | | January 26, 2024 |
Benjamin N. Grier | | Date |
Director | | |
| |
| | 18 |
/s/ Michael Boswell | | Dated: December 14, 2009 |
Michael Boswell
Director & Acting Chief Accounting Officer
| | |
| | |
/s/ Christopher Wall | | |
Christopher Wall
Director
| | Dated: December 14, 2009 |
| | |
/s/ Michael Ross | | |
Michael Ross
Director
| | Dated: December 14, 2009 |
| | |
/s/ Javier Idrovo | | Dated: December 14, 2009 |
Javier Idrovo
Director
| | |