UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31,June 30, 2010
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 000-53002
EASY ENERGY, INC.
(Exact name of registrant as specified in its charter)
Nevada 26-0204284
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 105 - 5348 Vegas Dr., Las Vegas 89108
(Address of principal executive offices) (Zip Code)
+1 (702) 442-1166
(Registrant's telephone number)
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of May 13,August 6, 2010, the registrant's shares of common stock, par value
$0.00001, outstanding were 103,652,778.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements (unaudited) ...................................................................... 3
Balance Sheets ........................................................Sheets.......................................................... 3
Statements of Operations ..............................................Operations................................................ 4
Statements of Cash Flows ..............................................Flows................................................ 5
Notes to Financial Statements .........................................Statements........................................... 6
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations ........................................Operations.............................................. 14
Item 3 - Quantitative and Qualitative Disclosures About Market Risk......... 17
Item 4T - Controls and Procedures .......................................... 19Procedures........................................... 17
PART II - OTHER INFORMATION
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds ....... 20Proceeds........ 18
Item 6 - Exhibits .......................................................... 20
Signatures ................................................................. 21Exhibits........................................................... 18
Signatures.................................................................. 19
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Easy Energy, Inc.
Balance Sheets
March 31,June 30, 2010 December 31, 2009
--------------------------- -----------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash $ 219,12421,532 $ 105,438
Deposits 162,064 447,865
Inventory 4,031 3,721
Available for sale marketable securities 2,6522,580 --
Inventory 4,031 3,721
Deposits 134,713 447,865
----------- -----------
TOTAL CURRENT ASSETS 387,871162,856 557,024
----------- -----------
OTHER ASSETS
Patent 8,500-- 8,500
----------- -----------
TOTAL OTHER ASSETS 8,500-- 8,500
----------- -----------
TOTAL ASSETS $ 396,371162,856 $ 565,524
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)DEFICIT
CURRENT LIABILITIES
Accounts payable $ 35,16023,992 $ 5,996
Customer deposits 63,51243,617 271,509
Loans payable - related party 247,930153,148 485,199
----------- -----------
TOTAL CURRENT LIABILITIES 346,602220,757 762,704
----------- -----------
LONG TERM LIABILITIES
Loans payable - related parties 220,000 --
----------- -----------
TOTAL OTHER ASSETS 220,000 --LIABILITIES 440,757 762,704
----------- -----------
STOCKHOLDERS' DEFICIT
Preferred stock, $0.0001 par value; 50,000,000 shares authorized;
none issued and outstanding -- --
Common stock, $0.00001 par value, 185,000,000 shares authorized;
103,652,778 and 101,702,778 shares issued and outstanding 1,037 1,017
Additional paid in capital 3,458,9633,474,645 3,347,352
Accumulated Deficit (3,630,230)(3,753,582) (3,545,549)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (170,231)DEFICIT (277,901) (197,180)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITYDEFICIT $ 396,371162,856 $ 565,524
=========== ===========
See accompanying notes to financial statements
3
Easy Energy, Inc.
Statements of Operations
(Unaudited)
For the Three Months Ended March 31,June 30, Six Months Ended June 30,
2010 2009 ------------- -------------2010 2009
------------ ------------ ------------ ------------
Sales
SALES $ 525,58749,000 $ -- Cost of goods sold 349,085$ 574,587 $ --
------------- -------------
Gross Profit 176,502COST OF GOODS SOLD 32,837 -- ------------- -------------381,922 --
------------ ------------ ------------ ------------
GROSS PROFIT 16,163 -- 192,665 --
------------ ------------ ------------ ------------
OPERATING EXPENSES
Research and development - primarily related party 101,697 113,44670,449 169,722 172,145 294,114
General and administrative expenses 159,765 275,636
------------- -------------
Total expenses 261,462 389,082
Interest income (expense) 279 (510)
------------- -------------
Net loss68,639 53,969 228,405 312,325
------------ ------------ ------------ ------------
TOTAL OPERATING EXPENSES 139,088 223,691 400,550 606,439
INTEREST INCOME (427) (39) (148) (549)
------------ ------------ ------------ ------------
NET LOSS $ (84,681)(123,352) $ (389,592)
============= =============
Net loss per common share(223,730) $ (208,033) $ (606,988)
============ ============ ============ ============
NET LOSS PER COMMON SHARE - basic and dilutedBASIC AND DILUTED $ (0.00) $ (0.002) $ (0.00) ============= =============
Weighted average number of common shares
outstanding during the period$ (0.01)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
DURING THE PERIOD - basic and diluted 102,058,333 93,447,221
============= =============BASIC AND DILUTED 103,652,777 95,202,777 102,859,959 94,128,744
============ ============ ============ ============
See accompanying notes to financial statements
4
Easy Energy, Inc.
Statements of Cash Flows
(Unaudited)
For the 3Six Months Ended March 31,June 30,
2010 2009
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (84,681) $(389,592)$(208,033) $(606,988)
Adjustments to reconcile net loss to net cash
used in operating activitiesactivities:
Stock issued for services 25,000 105,000
Options issued for services 6,88022,562 --
Changes in operating assets and liabilitiesliabilities:
Impairment loss 8,500 --
Prepaid expenses -- 36,02262,291
Inventory (310) --(11,844)
Deposits 285,801313,152 --
Accounts payable 29,164 25,06417,996 216
Customer deposits (207,997)(227,892) --
--------- ---------
Net Cash generated from (Used In)Used In Operating Activities 53,857 (223,506)(49,025) (451,325)
--------- ---------
CASH FLOWS USED FROM INVESTING ACTIVITIES
Increase in patent costs -- (8,500)
Increase in available for sale marketable securities (2,652)(2,580) --
--------- ---------
Net Cash Used In Investing Activities (2,652)(2,580) (8,500)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related party loans 370,964 111,876383,182 324,456
Repayments on related party loans (388,233)(495,233) --
Proceeds from stock issued for cash 79,750 --20,000
--------- ---------
Net Cash Provided By (Used In) Financing Activities 62,481 111,876(32,301) 344,456
--------- ---------
Net increase (decrease)decrease in cash 113,686 (120,130)(83,906) (115,369)
Cash - beginning of period 105,438 124,533
--------- ---------
Cash - end of period $ 219,12421,532 $ 4,4039,164
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year/period for:
Interest $ -- $ --
========= =========
Taxes $ -- $ --
========= =========
See accompanying notes to financial statements
5
Easy Energy, Inc.
Notes to Financial Statements
March 31,June 30, 2010
Unaudited
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited condensed interim financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America and the rules and regulations of the United States
Securities and Exchange Commission for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
The financial information as of December 31, 2009 is derived from the audited
financial statements presented in the Company's Annual Report on Form 10-K for
the year ended December 31, 2009. The unaudited condensed interim financial
statements should be read in conjunction with the Company's Annual Report on
Form 10-K, which contains the audited financial statements and notes thereto,
together with the Management's Discussion and Analysis, for the year ended
December 31, 2009.
Certain information or footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted, pursuant to the
rules and regulations of the Securities and Exchange Commission for interim
financial reporting. Accordingly, they do not include all the information and
footnotes necessary for a comprehensive presentation of financial position,
results of operations, or cash flows. It is management's opinion, however, that
all material adjustments (consisting of normal recurring adjustments) have been
made which are necessary for a fair financial statement presentation. The
results for the interim period are not necessarily indicative
of the results to be expected for the full year.
The unaudited interim financial statements should be read in conjunction with
the Company's Annual Report on Form 10-K for the year ended December 31, 2009,
which contains the audited financial statements and notes thereto, together with
the Management's Discussion and Analysis of Financial Condition and Results of
Operation, for the period ended December 31, 2009. The interim results for the period ended March 31,June 30, 2010 are not necessarily
indicative of results for the full fiscal year.
NOTE 2 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Easy Energy, Inc. (the "Company") was incorporated under the laws of the State
of Nevada on May 17, 2007. The Company is headquartered in Karmiel, Israel.
The Company is in the business of developing and manufacturing battery charging
solutions for portable electronic devices. The Company has received purchase
orders for its YoGen(R) product and has begun manufacturing the product. Our
principal business plan is to manufacture and market the product globally and/or
seek third party entities interested in licensing the rights to manufacture and
market a man-powered charger. Our target market will be consumers of disposable
and rechargeable batteries, those who heavily depend on their portable
electronic devices, especially mobile phone users, and those who are looking for
"green" rechargeable energy sources.
During 2010, the Company emerged from the development stage as operations began.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America, or U.S. GAAP, requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
6
Easy Energy, Inc.
Notes to Financial Statements
March 31, 2010
Unaudited
expenses during the reporting period. Actual results could differ from those
estimates.
6
Easy Energy, Inc.
Notes to Financial Statements
June 30, 2010
Unaudited
RISKS AND UNCERTAINTIES
The Company's operations are subject to significant risk and uncertainties
including financial, operational, technological, intense competition, and
regulatory risks including the potential risk of business failure. The risk of
social and governmental factors is also a concern since the Company operates in
Israel and its sole supplier is based in China.
See Note 3 regarding going concern matters.
CASH
The Company considers all highly liquid instruments purchased with a maturity of
three months or less to be cash equivalents. There were no cash equivalents at
March 31, 2010 and December 31, 2009, respectively.
The Company minimizes its credit risk associated with cash by periodically
evaluating the credit quality of its primary financial institution. The balance
at times may exceed federally insured limits.
INVESTMENTS
(A) CLASSIFICATION OF SECURITIES
ASC 320, "ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES"
("ASC 320"), as amended and interpreted, requires that at the time of purchase,
designation of a security as held-to-maturity, available-for-sale or trading
depending on ability and intent to hold such security to maturity. Securities
classified as trading and available-for-sale are reported at fair value, while
securities classified as held-to-maturity are reported at amortized cost. The
Company may sell securities as part of the management of the investment
portfolio. Accordingly, all securities held at March 31,June 30, 2010 are designated as
available for sale. Any unrealized gains and losses would beare reported in as other
comprehensive income as a component ofin the statement of stockholders' equity.
(B) OTHER THAN TEMPORARY IMPAIRMENT
ASC 320 provides guidance on determining when an investment is other than
temporarily impaired. The Company reviews its equity investment portfolio for
any unrealized losses that would be deemed other-than-temporary and require the
recognition of an impairment loss in income. If the cost of an investment
exceeds its fair value, the Company evaluates, among other factors, general
market conditions, the duration and extent to which the fair value is less than
cost, and the Company's intent and ability to hold the investments. Management
also considers the type of security, related-industry and sector performance, as
well as published investment ratings and analyst reports, to evaluate its
portfolio. Once a decline in fair value is determined to be other than
7
Easy Energy, Inc.
Notes to Financial Statements
March 31, 2010
Unaudited
temporary, an impairment charge is recorded and a new cost basis in the
investment is established. If market, industry, and/or investee conditions
deteriorate, the Company may incur future impairments. The Company has not
recorded any equity investment losses for the three and six months ended March 31,June
30, 2010.
INVENTORY
Inventory, consisting of finished goods, are stated at the lower of cost or
market using the first-in, first-out (FIFO) valuation method.
7
Easy Energy, Inc.
Notes to Financial Statements
June 30, 2010
Unaudited
DEPOSITS
The Company purchases its inventory from its suppliers through a letter of
credit. The funds are held in banks which are released once the product is ready
to be shipped. At March 31, 2010 and December 31, 2009, the Company had deposits
of $162,064 and $447,865, respectively.
LONG-LIVED ASSETS
The Company carries long-lived assets at the lower of their carrying amount or
their fair value. The Company periodically reviews the carrying values of
long-lived assets when events or changes in circumstances indicate that it is
more likely than not that the carrying value may exceed the fair value, and
record an impairment charge when considered necessary.
When circumstances indicate that an impairment of value may have occurred, the
Company tests such assets for recoverability by comparing the estimated
undiscounted future cash flows expected to result from the use of such assets
and their eventual disposition to their carrying amounts. If the undiscounted
future cash flows are less than the carrying amount of the asset, an impairment
loss, measured as the excess of the carrying value of the asset over its
estimated fair value, is recognized. Fair value, for purposes of calculating
impairment, is measured based on estimated future cash flows, discounted at a
market rate of interest.
As of March 31, 2010, the Company incurred patent related costs of $8,500 for
its intellectual property.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is the amount at which the instrument
could be exchanged in a current transaction between willing parties, other than
in a forced sale or liquidation. The carrying amounts of the Company's short
term financial instruments, approximate fair value due to the relatively short
period to maturity for these instruments.
8
Easy Energy, Inc.
Notes to Financial Statements
March 31, 2010
Unaudited
REVENUE RECOGNITION AND CUSTOMER DEPOSITS
The Company records revenue when all of the following have occurred: (1)
persuasive evidence of an arrangement exists, (2) the product is delivered, (3)
the sales price to the customer is fixed or determinable, and (4) collectability
of the related customer receivable is reasonably assured. There is no stated
right of return for products. Sales are recognized
upon shipment of products to customers.
InThere is no stated right of return for products, however, in the event that the
Company ceases a customer relationship, the Company is obligated to re-purchase
any unsold inventory held by the customer. To date, the Company has not had any
instance of this occurrence.
In the event that there is a defective product, the Company would be requiredis obligated to
replace the defect. To date, the Company has not had any instance of this
occurrence.
The Company collects a percentage of the sales price from its customers in
advance of shipment. Upon shipment, customer deposits become earned revenues.
The Company had $63,512$43,617 and $271,509 of such deposits on hand as of March 31,June 30,
2010 and December 31, 2009, respectively.
RESEARCH AND DEVELOPMENT
Research and development is expensed as incurred.
SHARE-BASED PAYMENTS
Generally, all forms of share-based payments, including stock option grants,
restricted stock grants and stock appreciation rights are measured at their fair
value on the awards' grant date, based on the estimated number of awards that
are ultimately expected to vest. Share-based compensation awards issued to
non-employees for services rendered are recorded at either the fair value of the
services rendered or the fair value of the share-based payment, whichever is
more readily determinable. The expense resulting from share-based payments are
recorded as general and administrative expense.
EARNINGS PER SHARE
In accordance with accounting guidance now codified as FASB ASC Topic 260,
"EARNINGS PER SHARE," basic earnings (loss) per share is computed by dividing
net income (loss) by weighted average number of shares of common stock
outstanding during each period. Diluted earnings (loss) per share is computed by
dividing net income (loss) by the weighted average number of shares of common
stock, common stock equivalents and potentially dilutive securities outstanding
during the period.
9
Easy Energy, Inc.
Notes to Financial Statements
March 31, 2010
Unaudited
The Company had the following potential common stock equivalents at March 31,June 30,
2010 and December 31, 2009:
March 31,June 30, 2010 December 31, 2009
--------------------------- -----------------
Warrants 18,929,440 18,529,440
Options 500,0001,000,000 --
---------- ----------
Total common stock equivalents 19,429,44019,929,440 18,529,440
========== ==========
Since the Company reflected a net loss in for the period ended March 31,June 30, 2010 and
2009, respectively, the effect of considering any common stock equivalents, if
outstanding, would have been anti-dilutive. A separate computation of diluted
earnings (loss) per share is not presented.
SEGMENT INFORMATION
During8
Easy Energy, Inc.
Notes to Financial Statements
June 30, 2010
and 2009, the Company only operated in one segment; therefore,
segment information has not been presented.Unaudited
RECENT ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update No. 2010-06, "IMPROVING DISCLOSURES ABOUT FAIR VALUE
MEASUREMENTS ("ASU 2010-06"). ASU 2010-06 amends ASC 820, "FAIR VALUE
MEASUREMENTS" ("ASC 820") to require a number of additional disclosures
regarding fair value measurements. The amended guidance requires entities to
disclose the amounts of significant transfers between Level 1 and Level 2 of the
fair value hierarchy and the reasons for these transfers, the reasons for any
transfers in or out of Level 3, and information in the reconciliation of
recurring Level 3 measurements about purchases, sales, issuances and settlements
on a gross basis. The ASU also clarifies the requirement for entities to
disclose information about both the valuation techniques and inputs used in
estimating Level 2 and Level 3 fair value measurements. The amended guidance was
effective for financial periods beginning after December 15, 2009, except the
requirement to disclose Level 3 transactions on a gross basis, which becomes
effective for financial periods beginning after December 15, 2010. ASU 2010-06
did not have a significant effect on the Company's consolidated financial
position or results of operations.
NOTE 3 GOING CONCERN
As reflected in the accompanying unaudited condensed interim financial
statements, the Company has a net loss of $84,681$208,033 and net cash used in
operations of $49,025 for the threesix months ended March 31,June 30, 2010, and a working
capital deficit and stockholders' deficit of $170,231$57,901 and $277,901, respectively,
at March 31,June 30, 2010.
The ability of the Company to continue its operations is dependent on
Management's plans, which include the raising of capital through debt and/or
equity markets with some additional funding from other traditional financing
sources, including term loans and notes, until such time that funds provided by
10
Easy Energy, Inc.
Notes to Financial Statements
March 31, 2010
Unaudited
operations are sufficient to fund working capital requirements. The Company may
need to incur additional liabilities with certain related parties to sustain the
Company's existence.
The Company will require additional funding to finance the growth of its current
and expected future operations as well as to achieve its strategic objectives.
The Company believes its current available cash along with anticipated revenues
may be insufficient to meet its cash needs for the near future. There can be no
assurance that financing will be available in amounts or terms acceptable to the
Company, if at all.
The accompanying unaudited condensed interim financial statements have been
prepared on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. These
accompanying unaudited condensed interim financial statements do not include any
adjustments relating to the recovery of the recorded assets or the
classification of the liabilities that might be necessary should the Company be
unable to continue as a going concern.
9
Easy Energy, Inc.
Notes to Financial Statements
June 30, 2010
Unaudited
NOTE 4 INVESTMENT IN MARKETABLE SECURITIES AND FAIR VALUE
ASC 820 defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. Under GAAP, fair value of such securities is determined
based upon a hierarchy that prioritizes the inputs to valuation techniques used
to measure fair values into three broad levels.
The fair value of the Company's financial assets and liabilities reflects the
Company's estimate of amounts that it would have received in connection with the
sale of the assets or paid in connection with the transfer of the liabilities in
an orderly transaction between market participants at the measurement date. In
connection with measuring the fair value of its assets and liabilities, the
Company seeks to maximize the use of observable inputs (market data obtained
from sources independent from the Company) and to minimize the use of
unobservable inputs (the Company's assumptions about how market participants
would price assets and liabilities).
The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value
the assets and liabilities:
Level 1: Quoted prices in active markets for identical assets or
liabilities. An active market for an asset or liability is a
market in which transactions for the asset or liability occur
with sufficient frequency and volume to provide pricing
information on an ongoing basis.
Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2
inputs include quoted prices in active markets for similar assets
or liabilities and quoted prices for identical assets or
liabilities in markets that are not active.
11
Easy Energy, Inc.
Notes to Financial Statements
March 31, 2010
Unaudited
Level 3: Unobservable inputs based on the Company's assessment of the
assumptions that market participants would use in pricing the
asset or liability.
As of March 31,June 30, 2010, investment in marketable securities consisted solely of
Israeli government bonds, which are classified as available for sale marketable
securities and is carried at fair value.
Level 1: Quoted Level 2: Quoted Level 3:
Prices in Active Prices in Inactive Significant
Markets for Markets for Unobservable Total at
Identical Assets Identical Assets Inputs March 31, 2010
---------------- ---------------- ------ --------------
Israeli Bonds $ -- $2,652 -- $2,652
------ ------ ------ ------
Total $ -- $2,652 -- $2,652
====== ====== ======Level 1: Level 2:
Quoted Prices Quoted Prices
in Active in Inactive Level 3:
Markets for Markets for Significant
Identical Identical Unobservable Total at
Assets Assets Inputs June 30, 2010
------ ------ ------ -------------
Israeli Bonds $ -- $2,580 -- $2,580
----- ------ ----- ------
Total $ -- $2,580 -- $2,580
===== ======
NOTE 5 STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEAR ENDED DECEMBER 31, 2009:
During 2009, the Company had the following private placements:
(A) APRIL 1, 2009
* 400,000 shares for $20,000 ($0.05/share)
(B) JULY 23, 2009
* 1,000,000 shares for $65,000 ($0.065/share)
(C) NOVEMBER 15, 2009
* 2,500,000 shares for $125,000 ($0.05/share)
(D) NOVEMBER 20, 2009
* 2,500,000 shares for $125,000 ($0.05/share)
During 2009, the Company had the following issuances of stock for services:
12===== ======
10
Easy Energy, Inc.
Notes to Financial Statements
March 31,June 30, 2010
Unaudited
(A) MARCH 29, 2009
* 1,250,000 shares having a fair value of $87,500 ($0.07/share), based upon the
quoted closing trading price.
(B) JULY 2, 2009
* 250,000 shares having a fair value of $17,500 ($0.07/share), based upon the
quoted closing trading price.
(C) NOVEMBER 20, 2009
* 500,000 shares having a fair value of $25,000 ($0.05/share), based upon the
quoted closing trading price. These shares were issued as a direct offering cost
in connection with funds raised in private placements. The net effect on equity
is $0.NOTE 5 STOCKHOLDERS' DEFICIT
FOR THE THREESIX MONTHS ENDED MARCH 31,JUNE 30, 2010:
(A) STOCK AND OPTIONS
*OPTIONS.
On January 26, 2010, the Company issued 500,000 shares of common stock for
consulting services, having a fair value of $25,000 ($0.05/share), based upon
the quoted closing trading price. In addition the Company granted the consultant
500,000 options at an exercise price of $0.15 per share, which expire three
years from issuance. The options vest evenly over a period of 5 months starting
February 1, 2010. The Company determined the fair value of thethese 500,000 options
was $17,200, based$17,181. For the six months ended June 30, 2010, the Company expensed
$17,181.
On May 17, 2010 the Company granted the same consultant an additional 500,000
options at an exercise price of $0.04 per share, which expires three years from
issuance. 100,000 options vest immediately upon execution of this agreement, and
100,000 options will vest monthly, on the first day of each month, during the
term of this agreement. The Company determined the fair value of these 500,000
options was $13,407. For the six months ended June 30, 2010, the Company
expensed $5,362.
The Company considered the following assumptions:assumptions in determining fair value for
its 2010 stock option grants:
Expected term 3 years
Expected volatility 111% - 150%
Expected dividends 0%
Risk free interest rate 1.30% - 1.40%
Expected forfeitures 0%
The consultant is also receiving $1,000/$4,000/month as additional consideration.
1311
Easy Energy, Inc.
Notes to Financial Statements
March 31,June 30, 2010
Unaudited
The following is a summary of the Company's options that are outstanding and
exercisable at March 31,June 30, 2010 as follows:
Weighted
Average
Weighted Remaining
Average Contractual
Exercise Life in Intrinsic
Options Price Years Value
------- ----- ----- -----
Balance - December 31, 2009 -- $ -- -- $ --
Granted 500,0001,000,000 $ 0.150.10
Exercised -- $ --
Forfeited/Cancelled -- $ --
------- --------------- --------
Balance - March 31,June 30, 2010 - outstanding 500,0001,000,000 $ 0.15 2.830.10 2.73 $ --5,000
========= ======== ===== ======= ====== ===== ======
Balance - March 31,June 30, 2010 - exercisable 200,000700,000 $ 0.15 2.830.10 2.73 $ --5,000
========= ======== ===== ======= ====== ===== ======
(B) WARRANTS
*
On March 29, 2010, the Company issued 1,450,000 shares and 400,000 warrants in a
private placement for $79,750 ($0.055/share). The warrants expire in two years
and have an exercise price of $0.12/share.
WARRANTS ISSUED FOR SERVICES AND OFFERING COSTS
In 2009, the Company issued 2,500,000 warrants for direct offering costs having
a fair value of $25,000. Since this was a direct offering cost, the net effect
to equity was $0. These warrants had an exercise price of $0.15/share and expire
two years from issuance.
The Company determined the fair value of warrants granted based upon the
following assumptions:
2009
-------
Expected term 5 years
Expected volatility 150%
Expected dividends 0%
Risk free interest rate 0.30%
Expected forfeitures 0%
14
Easy Energy, Inc.
Notes to Financial Statements
March 31, 2010
Unaudited
The following is a summary of the Company's warrants that are outstanding and
exercisable at March 31,June 30, 2010 is as follows:
Weighted
Average
Weighted Remaining
Average Contractual
Exercise Life in Intrinsic
Warrants Price Years Value
-------- ----- ----- -----
Balance - December 31, 2008 16,029,440 $ 0.25
4.04 $ --
Granted 2,500,000 $ 0.15
Exercised -- $ --
Forfeited/Cancelled -- $ --
---------- ------
Balance - December 31, 2009 18,529,440 $ 0.24
2.89 $ --
========== ====== ===== ======
Granted 400,000 $ 0.12
Exercised -- $ --
Forfeited/Cancelled -- $ --
---------- ------
Balance - March 31,June 30, 2010 - outstanding 18,929,440 $ 0.24 2.632.38 $ --
========== ====== ===== ======
Balance - March 31,June 30, 2010 - exercisable 18,929,440 $ 0.24 2.632.38 $ --
========== ====== ===== ======
12
Easy Energy, Inc.
Notes to Financial Statements
June 30, 2010
Unaudited
NOTE 6 CONTINGENCIES
From time to time, the Company may become involved in various lawsuits and legal
proceedings, which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other
matters may arise that may harm its business. The Company is currently not aware
of any such legal proceedings or claims that it believes will have, individually
or in the aggregate, a material adverse affect on its business, financial
condition or operating results.
NOTE 7 RELATED PARTY TRANSACTIONS
(A) DEBT
During the threesix months ended March 31,June 30, 2010, the Company received $370,964$72,808 in
advances from its Chief Executive Officer and an affiliate. These advances were
non-interest bearing, unsecured and due on demand. During the threesix months ended
March 31,June 30, 2010, the Company repaid $388,233$263,689 to the Chief Executive Officer and an
affiliate. As a result, the amount due to this individual at June 30, 2010 was
$153,148.
On March 28, 2010, the Company received $220,000 from family members of a
Company director. The loan is non-interest bearing and due January 1, 2012. In
the event of default, the Company would be required to issue 4,000,000 shares of
common stock at the market price. 15
Easy Energy, Inc.
Notes to Financial Statements
March 31, 2010
UnauditedThese loans have been classified as long term.
(B) RESEARCH AND DEVELOPMENT
During the Three Months Ended March 31, 2010 and 2009, theThe Company paid $89,000
and $102,500 for product development costs to a companyCompany controlled by the
Company's Chief Executive Officer.Officer:
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
June 30, 2010 June 30, 2009 June 30, 2010 June 30, 2009
------------- ------------- ------------- -------------
$61,500 $133,300 $150,500 $235,800
NOTE 7 CONCENTRATIONS
The Company has the following concentrations for sales and purchases for the threesix
months ended March 31,June 30, 2010 and 2009:
SalesSALES 2010 2009
---- ----
A 75%68% --%
B 18%25% --%
PurchasesPURCHASES 2010 2009
---- ----
A (related party) 44% 90%(RELATED PARTY) 47% 83%
B 53%45% --%
C --% 10%
NOTE 8 SUBSEQUENT EVENTS
The Company has evaluated for subsequent events between the balance sheet date
of March 31, 2010 and May 14, 2010, the date the financial statements were
issued.
1615%
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, or this
Quarterly Report, contains certain forward-looking statements. Forward-looking
statements may include our statements regarding our goals, beliefs, strategies,
objectives, plans, including product and service developments, future financial
conditions, results or projections or current expectations. In some cases, you
can identify forward-looking statements by terminology such as "may," "will,"
"should," "expect," "plan," "anticipate," "believe," "estimate," "predict,"
"potential" or "continue," the negative of such terms, or other comparable
terminology. Such forward-looking statements appear in this Item 2 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations, and include statements regarding our expectations regarding our
short- and long-term capital requirements, our business plan and estimated
expenses for the coming 12 months, and our anticipated launch of our YoGen
Max(TM) product. These statements are subject to known and unknown risks,
uncertainties, assumptions and other factors that may cause actual results to be
materially different from those contemplated by the forward-looking statements.
The business and operations of Easy Energy, Inc. are subject to substantial
risks, which increase the uncertainty inherent in the forward-looking statements
contained in this report.Quarterly Report. Except as required by law, we undertake no
obligation to release publicly the result of any revision to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
Further information on potential factors that could affect our business is
described Item 1A. "Risk Factors" of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2009, or our Annual Report.2009. Readers are also urged to carefully review
and consider the various disclosures we have made in this report.Quarterly Report.
Easy Energy, Inc. (referred to in this Quarterly Report as "Easy Energy", "us",
"we" and "our") was incorporated under the laws of the State of Nevada on May
17, 2007. We are an early stage company. We currently have no employees other
than our Chief Executive Officer and Chief Financial Officer, who are also our
only board members.
Our principal executive office is located at Suite 105 - 5348 Vegas Dr., Las
Vegas, Nevada 89108. Our telephone number is (702) 442-1166. We also have
offices in Israel at 40 Baz St. Karmiel, Israel 20100, Tel. No. +972-4-988 8314.
We do not have any subsidiaries.
We are the sole owner of the YoGen(R) product suite of compact man-powered
generators, which are designed to provide an innovative and effective solution
to the currently underserved need of the almost limitless users of portable
electronics devices for a power source that will ensure those devices' ability
to operate in circumstances in which conventional recharging sources are
unavailable. Included in the product line are the basic YoGen, a slim,
pocket-sized charger for small devices such as cell phones, GPS, iPods, etc.,
which is operated by a convenient pull-cord, and the recently prototyped YoGen
Max, which is intended to replace a conventional cell phone battery and provide
pull-cord charging capability without the need for a stand-alone charger. We
completed the design and began to market the YoGen during 2009.
Our principal business plan is to continue to manufacture and market the YoGen
product and/orand to seek third party entities interested in licensing the rights to
manufacture and market a man-powered charger. Our target market will beconsists of
consumers of disposable and rechargeable batteries, those who heavily depend on
their portable devices, especially cell phone users, and those who are looking
for "green" energy sources. We additionally plan to continue to develop the
YoGen Max and other devices in the YoGen product line.
During the fiscal period ending December 31, 2009 we completed the design of the
YoGen(R) and YoGen Max(TM)Max and started mass production of the YoGen(R)YoGen for sale to our
manufacturer's representatives and global distributors. In January 2010, we
officially launched the YoGen(R)YoGen to the North American markets at the 2010
International Consumer Electronics Show in Las Vegas, Nevada. The YoGen(R)YoGen was
given an award as "Best of CES 2010". The Company expects to introduce the YoGen
Max(TM)Max for sale into the global marketplace during the second half of 2010.
Due to the uncertainty of our ability to meet our current operating and capital
expenses, in theirits report on our audited financial statements for the period ended
December 31, 2009, our independent registered public accounting firm included an
explanatory paragraph regarding our ability to continue as a going concern. Our
financial statements contain additional note disclosures describing the
circumstances that lead to this disclosure by our independent registered public
accounting firm.
14
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31,JUNE 30, 2010 COMPARED TO THE THREE
MONTHS ENDED MARCH 31,JUNE 30, 2009
REVENUES AND COSTS OF REVENUES
During the three months ended March 31,June 30, 2010 we achieved sales of $525,587$49,000
compared to $0 for the three months ended March 31,in June 30, 2009. The increase in revenues is attributable to
sales of our YoGen product to global distributors as we have emerged from our
development stage.
Cost of revenues for the three months ended March 31,June 30, 2010 was $349,085$32,837 compared
to $0 for the three months ended March 31,June 30, 2009. The increase is attributable to
sales of our YoGen product to global distributors.
17
RESEARCH AND DEVELOPMENT
Research and development costs for the three months ended March 31,June 30, 2010
decreased to $101,697$70,449 from $113,446$169,722 for the three months ended March 31,June 30, 2009. The
decrease is primarily attributable to a decrease in the amount spent on
development of our YoGen product, offset by an increase in the amount spent on
development of our new YoGen Max product and our YoGen BAT, as well as an
increase in our YoGen BAT.patent expenses.
GENERAL AND ADMINISTRATIVE
General and administrative expenses for the three months ended March 31,June 30, 2010
decreasedincreased to $159,765$68,639 from $275,636$53,969 for the three months ended March 31,June 30, 2009. The
decrease is primarily attributable to a decrease in consulting and marketinglegal expenses, offset by an
increase in professionaltravel and accounting fees.
NET LOSS
We incurred a loss of $84,681$123,352 for the three months ended March 31,June 30, 2010 compared
to $389,592$223,730 for the three months ended March 31,June 30, 2009. Net loss per share from
operations for the three months ended March 31,June 30, 2010 and 2009 respectively was $0.$0 and $0.00,
respectively. The decrease in net loss for the three months ended March 31,June 30, 2010
is primarily attributable to the revenues from sales of our YoGen product to
global distributors and a decrease in research and development expenses, offset
by the increase in the costs of revenues.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2010 COMPARED TO THE SIX
MONTHS ENDED JUNE 30, 2009
REVENUES AND COSTS OF REVENUES
During the six months ended June 30, 2010 we achieved sales of $574,587 compared
to $0 as of June 30, 2009. The increase in revenues is attributable to sales of
our YoGen product to global distributors as we have emerged from our development
stage.
Cost of revenues for the six months ended June 30, 2010 was $381,922 compared to
$0 for the six months ended June 30, 2009. The increase is attributable to sales
of our YoGen product to global distributors.
RESEARCH AND DEVELOPMENT
Research and development costs for the six months ended June 30, 2010 decreased
to $172,145 from $294,114 for the six months ended June 30, 2009. The decrease
is primarily attributable to a decrease in the amount spent on development of
our YoGen product, offset by an increase in the amount spent on development of
our new YoGen Max product and our YoGen BAT, as well as an increase in our
patent expenses.
15
GENERAL AND ADMINISTRATIVE
General and administrative expenses for the six months ended June 30, 2010
decreased to $228,405 from $312,325 for the six months ended June 30, 2009. The
decrease is primarily attributable to a decrease in marketing, consulting and
legal expenses, offset by an increase in travel, accounting and public relation
fees.
NET LOSS
We incurred a loss of $208,033 for the six months ended June 30, 2010 compared
to $606,988 for the six months ended June 30, 2009. Net loss per share from
operations for the three months ended June 30, 2010 and 2009 was $0 and $0.01,
respectively. The decrease in net loss for the six months ended June 30, 2010 is
primarily attributable to the revenues from sales of our YoGen product to global
distributors, a decrease in research and development expenses and a decrease in
general and administrative expenses, offset by the increase in the costs of
revenues.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31,June 30, 2010, total current assets were $387,871$162,856 and total current
liabilities were $346,602,$220,757, resulting in a working capital surplusdeficit of $41,269.$57,901. We
finance our operations and plan to continue doing so with a combination of stock
issuances, loans and revenues from product sales. Our loans have come from our
Chief Executive Officer and an affiliate entity.entity as described in Note 6 to the
financial statements. Cash on March 31,hand as of June 30, 2010 was $219,124.$21,532. Our cash
resources at March 31,June 30, 2010 have comeresulted from a long termlong-term loan of $220,000 described
below and stock issued in a private placement transaction of $79,750 described
below, offset by a decrease in shareholder loans and net loss in the threesix months
ended March 31,June 30, 2010.
Operating activities generatedused cash of $53,857 for$49,025 during the threesix months ended March
31,June 30,
2010. Cash generated from operating activities forin the threesix months ended March 31,June 30,
2010 resulted primarily from a $285,801$313,152 decrease in deposits maintained by the
Company with various manufacturers prior to the completion of inventory held for
resale, due to sale of inventory by the Company, a $25,000 stock issuance for
services and a $29,164$17,996 increase in accounts payable, offset by a $84,681$208,033 net
loss and a $207,997$227,892 decrease of customers' deposits, which resulted from the
increase of sales.sales described above.
Investing activities used cash of $2,652 in$2,580 during the threesix months ended March 31,June 30,
2010 as a result of purchasing available for sale marketable debt securities.
Financing activities generated aused cash amount of $62,481$32,301 during the threesix months ended March 31,June 30,
2010. Cash generated from financing activities for the threesix month period ended
March 31,June 30, 2010 resulted primarily from $370,964$383,182 in short-term and long-term
related party loans and the issuance of common stock and warrants of $79,750,
offset by $388,233$495,233 of repayments of related party loans.
On March 29, 2010, certain non-U.S. investors purchased 1,450,000 of our common shares at
a price of $0.055 per share and 400,000 warrants for aggregate proceeds of
$79,750. Each warrant is exercisable into one common share at an exercise price
of $0.12 for a two-year period expiring March 29, 2012.
Our loans tocurrent loan from a related party as of March 31,June 30, 2010 decreased to $247,930$153,148
compared to $485,199 as of December 31, 2009. The decrease is attributable to
our payment of a portion of the loan back to the related party. The outstanding
$247,930$153,148 constitutes advances from our Chief Executive Officer, which advances
are non-interest bearing, unsecured and due on demand.
OtherOur long term loans payable to related parties as of March 31,June 30, 2010 increased to
$220,000 compared to $0 as of December 31, 2009. TheOn March 28, 2010, the Company
received the $220,000 non-interest bearing loan due January 1, 2012 on March 28, 2010 from family
members of Mr. Emanuel Cohen, a director of the Company. In the event of
default, the Company would be required to issue 4,000,000 shares of common stock
on the default date.
18For a further discussion of our loans from related parties, please see the
section captioned "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Related Person Transactions" in our Annual Report
on Form 10-K for the year ended December 31, 2009.
16
GOING CONCERN
We have generated revenues since inception but they were not an adequate source
of cash to fund future operations. Our current cash may not be sufficient to
meet our anticipated requirements for the next 12 months. We believe that our
future growth will depend upon the success of our sales. There is no assurance,
however, that such growth may be achieved. Our future sustainability also
depends on our ability to raise sufficient capital to meet our future expenses,
either by making additional private placement offerings of our stock, incurring
additional debt or a combination of stock and debt offerings.
It is likely that we will need to raise additional working capital to fund our
ongoing operations and growth. The amount of our future capital requirements
depends primarily on the rate at which we increase our revenues and
correspondingly decrease our use of cash to fund operations. Cash used for
operations will be affected by numerous known and unknown risks and
uncertainties including, but not limited to, our ability to successfully market
our products and services and the degree to which competitive products and
services are introduced to the market. As long as our cash flow from operations
remains insufficient to completely fund operations, we will continue depleting
our financial resources and seeking additional capital through equity and/or
debt financing. If we raise additional capital through the issuance of debt,
this will result in increased interest expense. If we raise additional funds
through the issuance of equity or convertible debt securities, the percentage
ownership of our company held by existing stockholders will be reduced and those
stockholders may experience significant dilution. In addition, new securities
may contain rights, preferences or privileges that are senior to those of our
common stock.
There can be no assurance that acceptable financing to fund our ongoing
operations can be obtained on suitable terms, if at all. If we are unable to
obtain the financing necessary to support our operations, we may be unable to
continue as a going concern. In that event, we may be forced to cease operations
and our stockholders could lose their entire investment in our Company.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements, including any outstanding
derivative financial statements, off-balance sheet guarantees, interest rate
swap transactions or foreign currency contracts. We do not engage in trading
activities involving non-exchange traded contracts.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4T. CONTROLS AND PROCEDURES.
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as
amended, or the 1934 Act, as of the end of the period covered by this quarterly
report,Quarterly
Report, being the fiscal quarter ended March 31,June 30, 2010, we have carried out an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures.
This evaluation was carried out under the supervision and with the participation
of our management, including our Chief Executive Officer and Chief Financial
Officer. Based upon the results of that evaluation, our Chief Executive Officer
and Chief Financial Officer have concluded that, as of the end of the period
covered by this quarterly report,Quarterly Report, our disclosure controls and procedures were
ineffective, as they did not provide reasonable assurance that material
information related to us is recorded, processed and reported in a timely
manner.
Our small size makes the proper identification and authorization of transactions
difficult, as we have essentially only two individuals overseeing this process.
Given our small size, we also have difficulties with separation of duties for
handling, approving and coding invoices, entering transactions into the
accounts, writing checks and requests for wire transfers. Additionally, our
officers are also our sole board members. This does not provide an adequate
level of layers of internal controls, which in turn make it difficult to
accumulate information required to be disclosed by us in the reports that we
file or submit under the 1934 Act. Based on the foregoing, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were ineffective as of March 31,June 30, 2010.
There was no change to our internal control over financial reporting that
occurred during the quarter ended March 31,June 30, 2010 that has materially affected, or
is reasonably likely to materially affect our internal control over financial
reporting.
1917
PART II - OTHER INFORMATION
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On March 29,May 17, 2010, we closed a private placement offeringissued options to non-U.S. investorspurchase 500,000 shares of 1,450,000our common
shares at a price of $0.055 per share and 400,000 warrants
for aggregate proceeds of $79,750. Each warrant is exercisable into one common
sharestock, at an exercise price per share of $0.12 for$0.04 and a two-year period expiring March 29,
2012.
On January 26, 2010, we issued 500,000 sharesdetermined fair value of
$13,407, to a consultant of the Company for services having a fair value of $17,200 ($0.055/share), based upon the quoted closing
trading price.
These issuances wereto us. The options expire
three years from issuance. This issuance was deemed exempt under Regulation S
and/or Regulation D under the Securities Act of 1933, as amended, or the Act,
and/or Section 4(2) of the Act.
ITEM 6. EXHIBITS.
Exhibit Number Exhibit Description
- -------------------- -------------------
31.1 - Rule 13a-14(a)/15d-14(a) Certification of Principal Executive
Officer*
31.2 - Rule 13a-14(a)/15d-14(a) Certification of Principal Financial
Officer*
32.1 - Section 1350 Certification of Principal Executive Officer**
32.2 - Section 1350 Certification of Principal Financial Officer**
- ----------
* Filed herewithherewith.
** Furnished herewith.
2018
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EASY ENERGY, INC.
By: /s/ Guy Ofir
------------------------------------------------------------------------------------
Guy Ofir, Chief Executive Officer
(Principal Executive Officer)
Dated: May 14,2010August 6, 2010
By: /s/ Emanuel Cohen
------------------------------------------------------------------------------------
Emanuel Cohen, Chief Financial
Officer (Principal Financial and
Accounting Officer)
Dated: May 14,2010
21August 6, 2010
19