United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-14278
ORGANA GARDENS INTERNATIONAL INC.
NEVADA | 88-01955105 | |
(STATE OF INCORPORATION) | (I.R.S. ID) |
35 South Ocean Avenue, Patchogue, New York, 11772
1-888-488-6882
Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK OTC: BB
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.001
(Title of Class)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common stock, $.001 par value per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. oYes x No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. o Yes x No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes o No
Indicate by check mark if disclosure of delinquent filers pursuant 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. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a smaller reporting company.
Large accelerated filer | o | Accelerated filer | o |
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).oYes x No
As of March 30, 2012, there were 61,046,466 shares of the issuer's $0.001 par value common stock issued and outstanding.
Documents incorporated by reference: None
Organa Gardens International Inc.
FORM 10-K
For The Fiscal Year Ended December 31, 2011
INDEX
PART I | 3 | |
ITEM 1. | BUSINESS | 3 |
ITEM 1A. | RISK FACTORS | 8 |
ITEM 1B. | UNRESOLVED STAFF COMMENTS | 8 |
ITEM 2. | PROPERTIES | 8 |
ITEM 3. | LEGAL PROCEEDINGS | 9 |
ITEM 4. | MINE SAFETEY DISCLOSURES | 9 |
PART II | 9 | |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES | 9 |
ITEM 6. | SELECTED FINANCIAL DATA | 12 |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 13 |
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 14 |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 15 |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 37 |
ITEM 9A. | CONTROLS AND PROCEDURES | 37 |
ITEM 9B. | OTHER INFORMATION | 38 |
PART III | 39 | |
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | 39 |
ITEM 11. | EXECUTIVE COMPENSATION | 39 |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 40 |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 41 |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES | 42 |
PART IV | 43 | |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | 43 |
SIGNATURES | 44 |
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Note About Forward-Looking Statements
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled “Risk Factors” (refer to Part I, Item 1A). We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
PART I
ITEM 1. BUSINESS
GENERAL
The following should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
Our Company, Organa Gardens International Inc., was formed under the laws of the State of Nevada on November 29, 1983 under the name Venture Group, Inc. On February 11, 1986, an amendment to the Articles of Incorporation was filed changing the corporate name to Asdar Corporation. On December 10, 1987, another amendment to the Articles of Incorporation was filed changing the corporate name to Asdar Group. On February 18, 2001, Asdar Group filed a Certificate of Reinstatement with the Secretary of State of Nevada. On April 30, 2002, another amendment to the Articles of Incorporation was filed changing the corporate name to Precise Life Sciences Ltd. Additional amendments to the Articles of Incorporation were filed changing the corporate name as follows:
February 18, 2003 | - Iceberg Brands Corporation |
August 28, 2003 | - Avalon Gold Corporation |
March 22, 2005 | - Avalon Energy Corporation |
September 25, 2007 | - Shotgun Energy Corporation |
April 7, 2009 | - Organa Gardens International Inc. |
Our Company undertook a new venture as of March 2009. Organa Gardens International Inc. has a vertical hydroponics farming system built to make the most efficient use of light, energy, water, land, temperature and production cycle while growing the highest quality and healthiest plants in an optimum, consistent environment unaffected by weather. The Organa Garden Systems (OGS) provide a means for food production and consumption change to global environmental and ecological sustainability through vertical hydroponics rotary farming.
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There are two OGS models; the Discovery (OGS-D) and the Enterprise (OGS-E)
Both the OGS-D and OGS-E are rotary hydroponics vertical farming systems designed with serviceability, ease-of-use and maximum harvest in mind. Both models are modular, allowing them to be expanded by stacking them. Its specially designed waterwheel technology allows the fully automated system to recycle and reuse 95% of the water used while requiring a negligible amount of energy to run.
The Discovery is a strong, low cost ABS plastic model for the home gardener and the Enterprise is a powder-coated steel version for the commercial grower. Both models are modular and can be expanded by stacking them. "The more you stack the more you grow"
Both the OGS-D and OGS-E are rotary hydroponics vertical farming systems designed with serviceability, ease-of-use and maximum harvest in mind. Both models are modular, allowing them to be expanded by stacking them. Its specially designed waterwheel technology allows the fully automated system to recycle and reuse 95% of the water used while requiring a negligible amount of energy to run.
Benefits of the Organa Garden Systems:
- Fresh, nutritious and abundant produce all year-round
- Localized year-round farming possible, eliminating costly transportation,
spoilage and pollution.
- Reduces the use of pesticides and preservatives.
- Urban renewal and sustainable community building.
- Energy and water conservation.
- More frequent harvest.
- Fully automated and easy to operate.
- Business opportunity for the entrepreneurial businessman or established farmer
Our Vertical Hydroponic Farming System Project
On March 6, 2009, the Company signed an agreement to acquire all of the assets of Organa Gardens Inc.(OGI), a Nevada Corporation in the business of hydroponics vertical farming. These assets include, but are not limited to all proprietary designs, engineering, technology, business models, plans and intellectual properties pertaining to the Organa Garden System-Discovery (OGS-D) and the Organa Garden System-Enterprise (OGS-E). Both the OGS-D and OGS-E are a rotary hydroponics vertical farming system designed with serviceability, ease-of-use and maximum harvest in mind. Both models are modular, allowing them to be expanded by stacking them. Its specially designed waterwheel technology allows the fully automated system to recycle and reuse 95% of the water used while requiring a negligible amount of energy to run.
The Company was to issue up to 25,000,000 Rule 144 shares of its common stock to OGI, to be held in trust and released based on the following terms and gross revenue requirements:
(a) Release of 10,000,000 shares of the Company upon signing this Agreement.
(b) Release of 5,000,000 shares of the Company upon attaining $1,000,000 US in gross revenue.
(c) Release of 5,000,000 shares of the Company upon attaining $2,500,000 US in gross revenue.
(d) Release of 5,000,000 shares of the Company upon attaining $4,000,000 US in gross revenue.
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The Company needs to raise up to $500,000 US to market and fulfill the required obligations of OGI as outlined in the supplemental agreement(s) to follow. The Company and Organa Gardens Inc. agree to allow the shares to sit in trust for a period of 5 years in order for OGI to meet its sales goals. Should the requirements not be met in all or part, then all of the remaining shares will be returned back to the treasury of the Company.
However, On June 9, 2009, the Registrant signed an amended agreement to acquire all of the assets of Organa Gardens Inc., a Nevada Corporation in the business of hydroponics vertical farming. These assets include but are not limited to all proprietary designs, engineering, technology, business models, plans and intellectual properties pertaining to the Organa Garden System-Discovery (OGS-D) and the Organa Garden System-Enterprise (OGS-E).
Under the terms of the acquisition, the Registrant will issue 3,500,000 restricted 144 shares to Organa Gardens Inc. and/or its nominees (issued) and render a cash commitment of up to $250,000 to complete the final steps of taking the OGS-D and OGS-E to market. This agreement replaces the agreement dated March 9, 2009.
All research and development costs are expensed as incurred and include costs of consultants who conduct research and development on behalf of the Company. For the year ended December 31, 2011, the Company incurred $Nil (2010 -$7,000) in research and development costs.
Currently, the Company continues the process of applying for a world-wide patent for its vertical hydroponic farming system, Organa Gardens System - Enterprise (OGS-E). The management of Organa Gardens is in the final steps of determining the types of materials that will be used to mass produce the OGS-E units economically so that the units can be sold and used affordably by the general population who would like to grow their own food organically and efficiently.
Powder Coating Project
On July 29, 2011, the Company has signed a Letter of Intent with Integrated Green Technologies LLC (IGT), of Fort Lauderdale, Florida to merge the two companies. A definitive agreement of the merger will be an exchange of restricted shares of the Company’s stock to IGT shareholders effecting a change of business which will still follow the Company’s green mandate. On August 17, 2011 the Company entered into a formal agreement with IGT and is currently conducting its due diligence. IGT is an industrial tools, machinery & equipment manufacturer including consumable supplies & materials. IGT is a distributor of heavy-duty blasting equipment and “green” environmentally safe mobile powder coating systems featuring the pending patent, Triplex Electrostatic/Electrostatic Thermal Spray/Non Electrostatic Thermal Spray and Powder Coating Spray and Conversion Device. The Company had advanced $8,000 to IGT for prepaid expenses as of December 31, 2011. (2010 – Nil). The Company has written off this amount as of December 31, 2011. Upon completion of the due diligence process, the Company will issue a structured release of 60,000,000 restricted shares to be transferred under the Agreement. The structure shall be as follows: upon execution of the Agreement, 30,000,000 shares shall be issued immediately thereafter, an additional 15,000,000 shares shall be issued 120 days following the execution date and the balance of 15,000,000 shares shall be issued 240 days following the execution date. The Company is required to provide $250,000 in funding to IGT over a period of one year. As a result of the due diligence process, the Company is not proceeding with this acquisition due to complications with the current patent filed by IGT. Should IGT move forward and correct the deficiencies with the patent, the Company will re-consider the project.
Our Oil and Gas Properties
1. The Wyoming Property.
The Company owns a 0.7% gross overriding royalty interest on 6,360 acres of oil and natural gas rights located in the Powder River Basin of eastern Wyoming carried at a value of $Nil (2010-$1) due to the uncertainty of realization.
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Based on Organa’s ongoing agreement with respect to the LAK Ranch, if Derek sells any or all of its interest in the LAK Ranch Property, it will pay to Organa, subject to adjustments, 7.5% of the net sales proceeds on the first USD $7,500,000 and 1% on any balance over and above USD$7,500,000.
The Company has received $Nil in oil royalties for the year ended December 31, 2011 (2010 - $Nil).
2. The California Property.
The Company owns a 2% royalty interest in the Harvester Property carried at a value of $Nil (2010-$1) due to the uncertainty of realization.
3. The Utah Property.
On October 26, 2004, the Company entered into a Letter of Intent with Pioneer Oil and Gas (“Pioneer”), whereby the Company could acquire an undivided Eighty-Five Percent (85%) working interest and an undivided Sixty-Eight (68%) net revenue interest in 13,189 acres located in Wasatch County, Utah, known as the “Uinta Basin”. The Company paid Pioneer a deposit of $50,000 for the exclusive right to enter into a Participation Agreement with Pioneer on or before January 18, 2005.
On January 18, 2005, the Company entered into the Participation Agreement with Pioneer as described above. The total consideration paid to Pioneer, including the $50,000 deposit described above, was $706,279. In addition, the Company issued 1,200,000 restricted common shares valued at $264,000 on February 7, 2005 as finders’ fees to certain third parties who were responsible for tabling the Uinta Basin Overpressured Gas Project to the Company. The Company has also committed to paying a 1.5% gross royalty on all revenue received by it from the Uinta Basin Project.
The Company was seeking joint venture drilling partners during 2008 in order to meet its 2010 drilling commitment. The Company was unable to secure a joint venture drilling partner or raise any capital to satisfy an approximate $12,000,000 drilling cost for a 15,000 ft. initial well. Due to this inability to find funding, the Uinta property was being carried at a value of $Nil due to the uncertainty of realization. During the year ended December 31, 2009, the Company re-conveyed its interest in the Uinta property to its original owner, Pioneer Oil and Gas.
Available for Sale Securities – related parties.
Terralene
During 2004, the Company received 111,111 restricted Rule 144 shares of Terralene Fuels Corporation (“Terralene Fuels”), a public company with directors and significant shareholders in common. The restricted shares were received as non-refundable consideration pursuant to agreements with Terralene Fuels dated November 10, 2004 and December 10, 2004 to acquire certain mineral property interests from the Company. These agreements were subsequently terminated.
Effective December 31, 2004 the Company recorded, as other comprehensive loss for the year, a $10,000 unrealized loss in the carrying value of its shares of Terralene Fuels. During the years ended December 31, 2005 and 2006 the Company recorded additional unrealized losses in the carrying value of its shares of Terralene Fuels totalling $90,000 and $8,889 respectively, which were recorded as other comprehensive loss for those years. During the year ended December 31, 2007, the Company sold 2,500 shares resulting in a realized gain of $165 and recorded an additional unrealized loss of $473 in 2007. During the year ended December 31, 2008, the Company sold 10,000 shares resulting in a realized loss of $800 and recorded an additional unrealized loss of $15,026 to December 31, 2008. As a result, the carrying value of the available for sale shares of Terralene Fuels is $2,712 as at December 31, 2008.
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During the year ended December 31, 2009, the Company recorded an unrealized gain of $1,232. As a result, the carrying value of the available for sale shares of Terralene Fuels is $3,945 as at December 31, 2009.
During the year ended December 31, 2010, the Company sold Nil Terralene Fuels shares and recorded an unrealized gain of $11,774. As a result, the carrying value of the available for sale shares of Terralene Fuels is $2,860 as at December 31, 2010. Effective December 31, 2010, the Company recorded a $12,859 write-down of its investment in Golden due to an other-than-temporary decline in the value of the shares.
During the year ended December 31, 2011, the Company sold Nil Terralene Fuels shares and recorded an unrealized loss of $2,623. As a result, the carrying value of the available for sale shares of Terralene Fuels is $237 as at December 31, 2011. Effective December 31, 2011, the Company recorded a $2,909 write-down of its investment in Golden due to an other-than-temporary decline in the value of the shares.
Legacy
During 2003 the Company settled an outstanding debt receivable of $122,988 from Legacy Mining Ltd. (“Legacy”) for the issue of 1,229,880 restricted shares of Legacy representing a then 9.8% interest in Legacy. During 2004, the Company wrote this investment down to $1 because management determined that it was not recoverable within a reasonable period of time.
Effective December 31, 2007, the Company recorded, as other comprehensive income for the year, a $604,440 unrealized gain in the carrying value of its shares of Legacy.
During the year ended December 31, 2008, the Company sold 150,000 Legacy shares resulting in a realized gain of $26,100 and recorded an additional unrealized gain of $270,562 to December 31, 2008. As a result, the carrying value of the available for sale shares of Legacy was $885,502 as at December 31, 2008.
During the year ended December 31, 2009, the Company sold 30,985 Legacy shares resulting in a realized loss of $2,987 (net of commissions of $595) and recorded an additional unrealized loss of $797,161 to December 31, 2009. As a result, the carrying value of the available for sale shares of Legacy is $ 62,934 as at December 31, 2009.
During the year ended December 31, 2010, the Company the Company received 2,627,440 restricted shares of Legacy valued to $131,372 pursuant to a debt settlement and sold Nil Legacy shares. The Company recorded an unrealized gain in the carrying value of its available-for-sale securities totaling $35,021, which was recorded as other comprehensive income (loss). As a result, the carrying value of the available for sale shares of Legacy is $58,822 as at December 31, 2010. Effective December 31, 2010, the Company recorded a $78,823 write-down of its investment in Legacy due to an other-than-temporary decline in the value of the shares.
During the year ended December 31, 2011, the Company sold Nil Legacy shares and recorded an unrealized loss of $52,939. As a result, the carrying value of the available for sale shares of Legacy is $5,882 as at December 31, 2011. Effective December 31, 2011, the Company recorded a $51,469 write-down of its investment in Legacy due to an other-than-temporary decline in the value of the shares.
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Available for sale securities – related parties include the following:
December 31, | December 31, | |||||||
2011 | 2010 | |||||||
3,676,335 (2010-3,676,335) shares of Legacy Wine & Spirits | $ | 5,882 | $ | 58,822 | ||||
98,612 (2010- 98,612) shares of Terralene Fuels Corporation. | 237 | 2,860 | ||||||
$ | 6,119 | $ | 61,682 |
Employees.
At December 31, 2011, Organa Gardens International Inc. had 2 full time employee/consultants other than its Officers and Directors.
ITEM 1A. RISK FACTORS
Not applicable to smaller reporting companies
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
As of the dates specified in the following table, Organa Gardens International Inc. held the following property in the following amounts:
Property | December 31, 2011 | December 31, 2010 | ||
Cash and equivalents | US $ 90 | US $ 50 |
Organa Gardens International Inc. defines cash equivalents as all highly liquid investments with a maturity of 3 months or less when purchased. Organa Gardens International Inc. does not presently own any interests in real estate. Organa Gardens International Inc. does not presently own any inventory or equipment.
We do not own any real property. As of August 1, 2010, Organa Gardens International Inc. has leased 1250 sq. ft of office space from Holm Investments Ltd. at $2,500 per month for a period of 3 years.
Organa Gardens International Inc.’s principal corporate offices are located at 35 South Ocean Avenue
Patchogue, NY, 11772 Fax – 1 888 265 0498 Phone – 1 888 488 6882
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ITEM 3. LEGAL PROCEEDINGS
On February 21, 2002, the Company issued 350,000 shares valued at $119,000 to Empire Sterling Corporation for services to be rendered with respect to the acquisition of ACGT Corporation. The shares were to be held in trust and not sold until all necessary financing was in place to complete the ACGT acquisition. Empire Sterling Corporation breached the trust agreement and the Company placed a stop transfer on these shares and requested they be returned to the Company. Empire Sterling Corporation failed to return the share certificate and as such, the Company commenced court proceedings against the principals of Empire Sterling Corporation. The Company argued for an interim injunction against all parties and was successful. On May 9, 2002, the Court ordered Empire Sterling Corporation to deposit the shares with the Court pending judicial disposition. The Company continued to file legal process claiming ownership of the shares and breach of trust inter alia. The Company was successful and has now applied to have the share certificate released and subsequently cancelled. As of December 31, 2011, the Company is still in the legal process of having the certificate released.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
As at December 31, 2011 there were approximately 2,000 holders of the outstanding shares of the Organa Gardens International Inc.'s $0.001 par value common stock. Organa Gardens International Inc. participates in the OTC Bulletin Board Electronic Quotation System maintained by the National Association of Securities Dealers, Inc., under the most recent trading symbol "OGNG". According to quotes provided by stockhouse.com, the Organa Gardens International Inc.'s common stock has closed at:
Quarter | High | Low | ||||||
2009 First Quarter | $ | 0.25 | $ | 0.10 | ||||
2009 Second Quarter | $ | 0.10 | $ | 0.03 | ||||
2009 Third Quarter | $ | 0.04 | $ | 0.02 | ||||
2009 Fourth Quarter | $ | 0.02 | $ | 0.01 | ||||
2010 First Quarter | $ | 0.01 | $ | 0.01 | ||||
2010 Second Quarter | $ | 0.01 | $ | 0.01 | ||||
2010Third Quarter | $ | 0.01 | $ | 0.01 | ||||
2010 Fourth Quarter | $ | 0.01 | $ | 0.01 | ||||
2011 First Quarter | $ | 0.0043 | $ | 0.0025 | ||||
2011 Second Quarter | $ | 0.0184 | $ | 0.012 | ||||
2011Third Quarter | $ | 0.032 | $ | 0.012 | ||||
2011 Fourth Quarter | $ | 0.0099 | $ | 0.002 |
Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
The public may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street NW, Washington, D.C. 20549. The public may also obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov.
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Common Stock. Organa Gardens International Inc. is authorized to issue 200,000,000 shares of common stock, $.001 par value, each share of common stock having equal rights and preferences, including voting privileges. The shares of $.001 par value common stock of Organa Gardens International Inc. constitute equity interests in Organa Gardens International Inc. entitling each shareholder to a pro rata share of cash distributions made to shareholders, including dividend payments. As of December 31, 2011, 61,046,466 shares of the Organa Gardens International Inc.'s common stock were issued and outstanding.
The holders of Organa Gardens International Inc.'s common stock are entitled to one vote for each share of record on all matters to be voted on by shareholders. There is no cumulative voting with respect to the election of directors of Organa Gardens International Inc. or any other matter, with the result that the holders of more than 50% of the shares voted for the election of those directors can elect all of the Directors.
The holders of Organa Gardens International Inc.'s common stock have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to Organa Gardens International Inc.'s common stock. All of the outstanding shares of Organa Gardens International Inc.'s common stock are duly authorized, validly issued, fully paid and non-assessable.
Dividends. The holders of the Organa Gardens International Inc.'s common stock are entitled to receive dividends when, as and if declared by Organa Gardens International Inc.'s Board of Directors from funds legally available therefore; provided, however, that cash dividends are at the sole discretion of Organa Gardens International Inc.'s Board of Directors. In the event of liquidation, dissolution or winding up of Organa Gardens International Inc., the shareholders of common stock are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities of Organa Gardens International Inc. and after provision has been made for each class of stock, if any, having preference in relation to Organa Gardens International Inc.'s common stock.
Organa Gardens International Inc. has never declared or paid any dividends on its common stock. Organa Gardens International Inc. does not intend to declare or pay any dividends in the foreseeable future.
Sales of Securities
(1) | 2011 Stock Transactions |
During the year ended December 31, 2011:
(a) The Company issued 25,000 restricted common shares valued at $125 to a new director for his services.
(b) The Company issued 6,950,000 restricted common shares valued at $99,300 pursuant to deferred compensation agreements.
(c) The Company issued a total of 2,345,000 common shares pursuant to the exercise of options under the Company’s 2009 Stock Incentive and Option Plan. 1,650,000 shares were issued at $0.02 per share to satisfy debt to related parties in the amount of $33,000 and 695,000 shares were issued at $0.01 per share for consulting services.
(d) The Company issued 9,800,000 common shares pursuant to the Company’s 2011 Stock. Incentive and Option Plan with a value of $78,000 for satisfaction of debt to related parties.
(2) | 2010 Stock Transactions |
During the year ended December 31, 2010:
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(a) The Company issued a total of 7,961,033 common shares pursuant to the exercise of options under the Company’s Stock Incentive and Option Plans at prices between $0.0022 and $0.01 per share to satisfy debt to related parties in the amount of $29,913.
(b) The Company issued 1,000,000 restricted common shares valued at $5,000 pursuant to a deferred compensation contract with a related party. See note 6.
(c) The Company issued a total of 1,400,000 common shares pursuant to the exercise of options under the Company’s Incentive plans at prices between $0.003 and $0.01 per share to consultants for services valued at $11,200.
(d) The Company issued 700,300 restricted common shares at $0.01 per share pursuant to a debt settlement with Terralene Fuels Corporation. in the amount of $7,003.
(3) | 2011 Stock Options |
The Company issued a total of 2,345,000 common shares pursuant to the exercise of options under the Company’s 2009 Stock Incentive and Option Plan. 1,650,000 shares were issued at $0.02 per share to satisfy debt to related parties in the amount of $33,000 and 695,000 shares were issued at $0.01 per share for consulting services.
The Company issued 9,800,000 common shares pursuant to the Company’s 2011 Stock. Incentive and Option Plan with a value of $78,000 for satisfaction of debt to related parties.
The Company’s stock option activity is as follows:
Number of options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in years) | ||||||||||
Balance, December 31, 2007 | - | - | - | |||||||||
Granted during 2008 | 419,300 | 0.11 | 5.00 | |||||||||
Exercised during 2008 | (419,300 | ) | 0.11 | |||||||||
Balance, December 31, 2008 | - | - | - | |||||||||
Granted during the period | 8,498,000 | 0.03 | ||||||||||
Exercised during the period | (8,498,000 | ) | 0.03 | |||||||||
Balance, December 31, 2009 | - | - | - | |||||||||
Granted during 2010 | 9,361,033 | 0.03 | ||||||||||
Exercised during 2010 | (9,361,033 | ) | 0.03 | |||||||||
Balance, December 31, 2010 | - | - | - | |||||||||
Granted during the period | 12,145,000 | 0.03 | ||||||||||
Exercised during the period | (12,145,000 | ) | 0.03 | |||||||||
Balance, December 31, 2011 | - | - | - |
On June 30, 2011 the Company filed Registration Statements on Form S-8 to register 9,800,000 to be issue pursuant to the Company’s 2011 Stock. Incentive and Option Plan. All 9,800,000 shares have been granted and exercised under the June 2011 Stock Option Plan.
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(4) | 2010 Stock Options |
During the year ended December 31, 2010, 9,361,033 stock options were granted by the Company, which were immediately exercised at prices between $0.0022 and $0.01 per share to satisfy debt to related parties in the amount of $29,913 and for consultant services valued at $11,200.
The Company’s stock option activity is as follows:
Number of options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in years) | ||||||||||
Balance, December 31, 2007 | - | - | - | |||||||||
Granted during 2008 | 419,300 | 0.11 | 5.00 | |||||||||
Exercised during 2008 | (419,300 | ) | 0.11 | |||||||||
Balance, December 31, 2008 | - | - | - | |||||||||
Granted during the period | 8,498,000 | 0.03 | ||||||||||
Exercised during the period | (8,498,000 | ) | 0.03 | |||||||||
Balance, December 31, 2009 | - | - | - | |||||||||
Granted during the period | 9,361,033 | 0.03 | ||||||||||
Exercised during the period | (9,361,033 | ) | 0.03 | |||||||||
Balance, December 31, 2010 | - | - | - |
As of December 31, 2010, there were no stock options available for grant under the Company’s 2006 Stock Incentive and Option Plan.
As of December 31, 2010, there were no stock options available for grant under the Company’s 2007 Stock Incentive and Option Plan.
As of December 31, 2010, there were 1,705,000 stock options available for grant under the Company’s two 2009 Stock Incentive and Option Plan.
On June 29, 2009, the Company filed Registration Statements on Form S-8 to register 7,500,000 to be issue pursuant to the Company’s 2009 Stock. Incentive and Option Plan. 7,500,000 shares have been granted and exercised under the June 2009 Stock Option Plan. On November 24, 2009, the Company filed Registration Statements on Form S-8 to register 10,000,000 to be issue pursuant to the Company’s 2009 Stock Incentive and Option Plan. 6,655,000 shares have been granted and exercised under the November 2009 Stock Option Plan.
ITEM 6. SELECTED FINANCIAL DATA
FINANCIAL HIGHLIGHTS
Fiscal Year Ended December 31 | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||
Revenue | $ Nil | $ Nil | $ Nil | $ Nil | $ Nil | |||||||||||||||
Operating Loss | (147,748 | ) | (125,528 | ) | (417,393 | ) | (342,795 | ) | (557,266 | ) | ||||||||||
Net Loss | (202,130 | ) | (217,210 | ) | (420,380 | ) | (1,871,917 | ) | (518,789 | ) | ||||||||||
Basic net loss per share | 0.01 | 0.01 | 0.01 | 0.01 | 0.03 | |||||||||||||||
Cash dividends declared per share | - | - | - | - | - | |||||||||||||||
Cash, cash equivalents, and short-term investments | 2,212 | 1,648 | 2,792 | 4,830 | 34,577 | |||||||||||||||
Total assets | 8,331 | 63,333 | 201,047 | 1,042,425 | 2,430,015 | |||||||||||||||
Long-term obligations | - | - | - | - | - | |||||||||||||||
Stockholders’ equity (deficit) | (554,374 | ) | (511,972 | ) | (309,619 | ) | 495,655 | 1,922,877 |
12
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This following information specifies certain forward-looking statements of management of the company. Forward-looking statements are statements that estimate the happening of future events are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as "may", "shall", "will", "could", "expect", "estimate","anticipate", "predict", "probable", "possible", "should", "continue", or similar terms, variations of those terms or the negative 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 reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.
Liquidity and Capital Resources.
For the year ended December 31, 2011, we had total assets of $8,331, compared to total assets in 2010 of $63,333. This includes a cash balance of $90, compared to $50 in 2010. We also have taxes recoverable of $2,122 and available for sale securities with a fair value of $6,119 as at December 31, 2011. The decrease in assets was due to an other than temporary decline in available for sale securities.
At December 31, 2011, we had current liabilities of $562,705, which was represented by accounts payable and accrued liabilities of $483,634 and $79,071 due to related parties. At December 31, 2010 we had current liabilities of $575,305. The decrease in liabilities was due to a decrease in amounts due to related parties. At December 31, 2011, we had a working capital deficiency of $(560,493) (2010 - $(573,657).
We do not believe that our current cash resources will be able to maintain our current operations for an extended period of time. We will be required to raise additional funds or arrange for additional financing over the next 12 months to adhere to our development schedule. No assurance can be given, however, that we will have access to additional cash in the future, or that funds will be available on acceptable terms to satisfy our working capital requirements. If we are not able to arrange for additional funding or if our officers, directors and shareholders stop advancing funds to us, we may be forced to make other arrangements for financing such as loans or entering into strategic alliances. We have not identified any alternative sources of financing.
Results of Operations
We realized $Nil interest and royalty income in 2011 and 2010. During the year ended December 31, 2010 the loss is $202,130 (2010 - $217,210). This decrease in loss was due to a decrease in research and development costs of $7,000.
From inception to December 31, 2011 Organa Gardens International Inc. has incurred cumulative net losses of $24,899,472 resulting primarily from the write-down of $3,815,655 in its interests in oil and gas properties, write-down of $1,406,000 in its interest in ACGT Corporation, write-down of $258,580 of its investment in Legacy Wine & Spirits International Ltd., write-down of its investment in Terralene Fuels Corporation of $15,768 and also as a result of selling, general and administrative expenses including a litigation settlement of $2,291,070; management and consulting fees of $4,905,618, office and general expenses of $2,842,082; professional fees of $1,1179,597; interest expense of $98,282, research & development costs of $278,231 and software development costs of $737,300. In addition, we received $130,000 in property option income as a recorded value of certain restricted shares in Terralene Fuels Corporation
13
The cash and equivalents constitute our present internal sources of liquidity. Because we are not generating any significant revenues, our only external source of liquidity is the sale of our capital stock and any advances from officers, directors or shareholders.
Our Plan of Operation for the Next Twelve Months
We do anticipate that we will need to raise additional capital within the next 12 months in order to continue as a going concern. We will need to fund the research and development of the vertical hydroponic farming system design. To the extent that additional capital is raised through the sale of equity or equity- related securities, the issuance of such securities could result in dilution of our stockholders. There can be no assurance that additional funding will be available on favorable terms, if at all. If adequate funds are not available within the next 12 months, we may be required to curtail our operations significantly or to obtain funds through entering into arrangements with collaborative partners or others that may require us to relinquish rights to certain of our assets that we would not otherwise relinquish.
Organa Gardens International Inc. does not anticipate some expenditures within the next 12 months for further research and development of its vertical hydroponic farming system design .The Company may elect to raise funds for further research and development through equity financing or possible joint venture partnerships. Organa Gardens International Inc. does not anticipate any significant exploration costs within the next 12 months, nor does the Organa Gardens International Inc. anticipate that it will lease or purchase any significant equipment within the next 12 months. Organa Gardens International Inc. does not anticipate a significant change in the number of its employees within the next 12 months. However, Organa Gardens International Inc.will be required to raise $500,000 for its new hydroponic vertical farming project – See above.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Securities held in our equity and other investments portfolio and equity derivatives are subject to price risk, and generally are not hedged.
14
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Organa Gardens International, Inc.
New York, USA
We have audited the accompanying balance sheets of Organa Gardens International, Inc. (formerly Shotgun Energy Corporation) (a development stage company) as of December 31, 2011 and 2010, and the related statements of operations, stockholders’ (deficit) and cash flows for each of the years in the two-year period ended December 31, 2011 and for the cumulative period from January 1, 1996 (inception of development stage) through to December 31, 2011. Organa Gardens International Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Organa Gardens International as of December 31, 2011 and 2010, and the results of its activities and cash flows for each of the years in the two-year period ended 2011 and for the cumulative period from January 1, 1996 (inception) to December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s current liabilities exceed current assets, has incurred significant losses since inception and further losses are anticipated in the development of its vertical hydroponic farming system, all of which raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ L.L. Bradford & Company, LLC
Las Vegas, Nevada
March 30, 2012
15
ORGANA GARDENS INTERNATIONAL INC.
(A Development Stage Company)
BALANCE SHEETS
December 31, 2011 | December 31, 2010 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 90 | $ | 50 | ||||
Taxes recoverable | 2,122 | 1,598 | ||||||
TOTAL CURRENT ASSETS | 2,212 | 1,648 | ||||||
AVAILABLE FOR SALE SECURITIES – related parties | 6,119 | 61,682 | ||||||
OIL AND GAS PROPERTIES, (full cost method of accounting, unproven) | - | 3 | ||||||
TOTAL ASSETS | $ | 8,331 | $ | 63,333 | ||||
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued liabilities | $ | 483,634 | $ | 486,715 | ||||
Due to related parties | 79,071 | 88,590 | ||||||
TOTAL CURRENT LIABILITIES | 562,705 | 575,305 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
STOCKHOLDERS’ (DEFICIT) | ||||||||
Convertible preferred stock: | ||||||||
- Class A voting stock, $0.001 par value, 5,000,000 shares authorized | - | - | ||||||
- Class B voting stock, $0.001 par value, 5,000,000 shares authorized | - | - | ||||||
Common stock, $.001 par value, 200,000,000 shares authorized | ||||||||
61,046,466 (December 31, 2010 – 41,926,466) shares issued and outstanding | 61,046 | 41,926 | ||||||
Additional paid-in capital | 24,341,653 | 24,143,398 | ||||||
Deferred compensation | (62,590 | ) | (6,128 | ) | ||||
Deficit accumulated during the development stage | (20,438,839 | ) | (20,236,709 | ) | ||||
Deficit accumulated prior to the development stage | (4,460,633 | ) | (4,460,633 | ) | ||||
Accumulated other comprehensive income | 4,989 | 6,174 | ||||||
TOTAL STOCKHOLDERS’ (DEFICIT) | (554,374 | ) | (511,972 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) | $ | 8,331 | $ | 63,333 |
The accompanying notes are an integral part of these financial statements
16
ORGANA GARDENS INTERNATIONAL INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Year ended December 31, 2011 | Year ended December 31, 2010 | Cumulative from January 1, 1996 (inception of development stage) to December 31, 2011 | ||||||||||
GENERAL AND ADMINISTRATIVE EXPENSES | ||||||||||||
Litigation settlement | $ | - | $ | - | $ | 2,291,070 | ||||||
Management and consulting fees | 36,046 | 13,336 | 4,905,618 | |||||||||
Consulting fees – stock based compensation | - | - | 1,919,869 | |||||||||
Exploration costs | - | - | 113,678 | |||||||||
Loss on settlement of debt | - | - | 718,784 | |||||||||
General and administrative | 86,463 | 79,276 | 2,842,082 | |||||||||
Professional fees | 25,239 | 25,916 | 1,179,597 | |||||||||
Interest expense | - | - | 98,282 | |||||||||
Research and development costs | - | 7,000 | 285,231 | |||||||||
Software development costs | - | - | 737,300 | |||||||||
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES | 147,748 | 125,528 | 15,091,511 | |||||||||
OTHER (INCOME) EXPENSES | ||||||||||||
Interest, royalty and other income | - | - | (82,138 | ) | ||||||||
(Gain)/loss on sale of securities – related party | - | - | (21,541 | ) | ||||||||
Property Option Income | - | - | (130,000 | ) | ||||||||
Write-down of securities - Legacy Wine & Spirits International | 51,469 | 78,823 | 258,580 | |||||||||
Write-down of securities - Terralene Fuels Corporation | 2,909 | 12,859 | 15,768 | |||||||||
Write-down of interest in ACGT Corporation | - | - | 1,406,000 | |||||||||
Write-down of interest in oil and gas properties | 4 | - | 3,815,659 | |||||||||
Loss on Iceberg Drive Inn investment | - | - | 85,000 | |||||||||
TOTAL OTHER (INCOME) EXPENSES | 54,382 | 91,682 | 5,347,328 | |||||||||
Loss before income taxes | (202,130 | ) | (217,210 | ) | (20,438,839 | ) | ||||||
Income tax provision | - | - | - | |||||||||
NET LOSS | $ | (202,130 | ) | $ | (217,210 | ) | $ | (20,438,839 | ) |
BASIC AND DILUTED NET LOSS PER SHARE | $ | (0.00 | ) | $ | (0.01 | ) | ||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 48,723,356 | 34,047,269 |
The accompanying notes are an integral part of these financial statements
17
ORGANA GARDENS INTERNATIONAL INC. | ||||||||||
(An Exploration Stage Company) | ||||||||||
STATEMENT OF STOCKHOLDERS’ EQUITY | ||||||||||
FOR THE PERIOD FROM JANUARY 1, 1996 (INCEPTION OF EXPLORATION STAGE) TO DECEMBER 31, 2011 |
Number Of Shares | Amount | Additional Paid In | Accumulated Other | Deferred Compensation | Subscriptions | Treasury Stock | Promissory Notes | Deficit Accumulated | Total | |||||||||||||||||||||||||||||||
Balance, January 1, 1996 | 4,162 | $ | 4 | $ | 4,361,896 | $ | - | $ | - | $ | - | $ | (199,167 | ) | $ | - | $ | (4,460,633 | ) | $ | (297,900 | ) | ||||||||||||||||||
Shares issued to settle litigation – Jan. 9, 1996 | 417 | - | 2,469,882 | - | - | - | - | - | - | 2,469,882 | ||||||||||||||||||||||||||||||
1 | (1 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
Net loss for the year ended December 31, 1996 | - | - | - | - | - | - | - | - | (2,726,232 | ) | (2,726,232 | ) | ||||||||||||||||||||||||||||
Balance, December 31, 1996 | 4,579 | 5 | 6,831,777 | - | - | - | (199,167 | ) | - | (7,186,865 | ) | (554,250 | ) | |||||||||||||||||||||||||||
Shares issued to settle note payable and accrued interest –Jan. 25, 1997 | 4,167 | 4 | 476,996 | - | - | - | - | - | - | 477,000 | ||||||||||||||||||||||||||||||
Shares issued for services at $90.06 per share – April 15, 1997 | 458 | - | 41,250 | - | - | - | - | - | - | 41,250 | ||||||||||||||||||||||||||||||
Shares issued for services at $30.50 per share – May 26, 1997 | 3,458 | 3 | 105,497 | - | - | - | - | - | - | 105,500 | ||||||||||||||||||||||||||||||
Net loss for the year ended December 31, 1997 | - | - | - | - | - | - | - | - | (93,933 | ) | (93,933 | ) | ||||||||||||||||||||||||||||
Balance, December 31, 1997 | 12,662 | 12 | 7,455,520 | - | - | - | (199,167 | ) | - | (7,280,798 | ) | (24,433 | ) | |||||||||||||||||||||||||||
Shares issued for services at $14.40 per share – Dec. 28, 1998 | 1,667 | 2 | 23,998 | - | - | - | - | - | - | 24,000 | ||||||||||||||||||||||||||||||
Shares issued for services at $6.00 per share – Dec. 28, 1998 | 125 | - | 750 | - | - | - | - | - | - | 750 | ||||||||||||||||||||||||||||||
Net loss for the year ended December 31, 1998 | - | - | - | - | - | - | - | - | (45,655 | ) | (45,655 | ) | ||||||||||||||||||||||||||||
Balance, December 31, 1998 | 14,454 | 14 | 7,480,268 | - | - | - | (199,167 | ) | - | (7,326,453 | ) | (45,338 | ) | |||||||||||||||||||||||||||
- | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Shares issued for services at $27.38 – Dec. 28, 1999 | 1,333 | 1 | 36,499 | - | - | - | - | - | - | 36,500 | ||||||||||||||||||||||||||||||
Net loss for the year ended December 31, 1999 | - | - | - | - | - | - | - | - | (26,218 | ) | (26,218 | ) | ||||||||||||||||||||||||||||
Balance, December 31, 1999 | 15,787 | 15 | 7,516,767 | - | - | - | (199,167 | ) | - | (7,352,671 | ) | (35,056 | ) | |||||||||||||||||||||||||||
Correction of treasury stock | - | (199,167 | ) | - | - | - | 199,167 | - | - | - | ||||||||||||||||||||||||||||||
Shares issued for software development at $36.00 per share– March 23, 2000 | 16,667 | 17 | 599,983 | - | - | - | - | - | - | 600,000 | ||||||||||||||||||||||||||||||
Shares issued for services and interest at $12.00 per share –Sept. 22, 2000 | 1,104 | 1 | 13,249 | - | - | - | - | - | - | 13,250 | ||||||||||||||||||||||||||||||
Shares issued for interest in oil and gas property at $34.80 per share – Sept. 22, 2000 | 45,833 | 46 | 1,594,954 | - | - | - | - | - | - | 1,595,000 | ||||||||||||||||||||||||||||||
Shares issued for services and advances at $50.40 per share – Sept. 24, 2000 | 6,083 | 6 | 306,594 | - | - | - | - | - | - | 306,600 | ||||||||||||||||||||||||||||||
Shares issued for services at $90.00 per share – Nov. 6, 2000 | 3,953 | 4 | 355,796 | - | - | - | - | - | - | 355,800 | ||||||||||||||||||||||||||||||
Share reconciliation | (8 | ) | - | (1 | ) | - | - | - | - | - | - | (1 | ) | |||||||||||||||||||||||||||
Net loss for the year ended December 31, 2000 | - | - | - | - | - | - | - | - | (1,223,108 | ) | (1,223,108 | ) | ||||||||||||||||||||||||||||
Balance, December 31, 2000 | 89,419 | 89 | 10,188,175 | - | - | - | - | - | (8,575,779 | ) | 1,612,485 | |||||||||||||||||||||||||||||
Common stock subscriptions, 8,333 shares at $84.00 per | ||||||||||||||||||||||||||||||||||||||||
share, net of finder’s fee of $70,000 – Jan. 30, 2001 | - | - | - | - | - | 630,000 | - | 630,000 | ||||||||||||||||||||||||||||||||
Shares issued for Harvester Property finder’s fee at $70.14 per share – Feb. 27, 2001 | 417 | - | 29,250 | - | - | - | - | - | 29,250 | |||||||||||||||||||||||||||||||
Shares issued for debt at $86.40 per share – March 27, 2001 | 3,594 | 4 | 310,513 | - | - | - | - | - | 310,517 | |||||||||||||||||||||||||||||||
Shares issued for cash at $60.00 per share – July 13, 2001 | 2,917 | 3 | 174,997 | - | - | - | - | - | 175,000 | |||||||||||||||||||||||||||||||
Shares issued for debt at $60.00 per share – Aug. 15, 2001 | 3,620 | 4 | 217,225 | - | - | - | - | - | 217,229 | |||||||||||||||||||||||||||||||
Common stock subscriptions, 50 shares at $60.00 per share– July 10, 2001 | - | - | - | - | - | - | 3,000 | - | 3,000 | |||||||||||||||||||||||||||||||
Shares issued for cash at $32.40 per share, net of finder’s fee of $30,000 – Oct. 12, 2001 | 8,333 | 8 | 269,992 | - | - | - | - | - | 270,000 | |||||||||||||||||||||||||||||||
Shares issued for debt at $48.00 per share – Nov. 5, 2001 | 4,403 | 4 | 211,329 | - | - | - | - | - | 211,333 | |||||||||||||||||||||||||||||||
Shares issued for deferred compensation at $56.39 per share –Nov. 15, 2001 | 1,667 | 2 | 93,998 | - | (94,000 | ) | - | - | - | - | ||||||||||||||||||||||||||||||
Deferred compensation expense recorded in the year | - | - | - | - | 3,917 | - | - | - | 3,917 | |||||||||||||||||||||||||||||||
Net loss for the year ended December 31, 2001 | - | - | - | - | - | - | - | (3,120,340 | ) | (3,120,340 | ) | |||||||||||||||||||||||||||||
Balance, December 31, 2001 | 114,370 | 114 | 11,495,479 | - | (90,083 | ) | - | 633,000 | - | (11,696,119 | ) | 342,391 | ||||||||||||||||||||||||||||
Shares returned to treasury and cancelled – Jan. 21, 2002 | (396 | ) | - | (9,500 | ) | - | - | - | - | - | (9,500 | ) | ||||||||||||||||||||||||||||
Shares issued from stock subscriptions – Jan. 31, 2002 | 8,333 | 8 | 629,992 | - | - | - | (630,000 | ) | - | - | ||||||||||||||||||||||||||||||
Shares issued for services at $40.80 per share – Feb. 19, 2002 | 7,634 | 8 | 311,470 | - | - | - | - | - | 311,478 | |||||||||||||||||||||||||||||||
Shares issued for acquisition of rights at $39.60 per share –March 6, 2002 | 33,333 | 33 | 1,319,967 | - | - | - | - | - | 1,320,000 | |||||||||||||||||||||||||||||||
Shares issued for services at $40.80 per share – March 31, 2002 | 2,917 | 3 | 118,997 | - | - | - | - | - | 119,000 | |||||||||||||||||||||||||||||||
Shares issued for services at $16.80 per share – May 21, 2002 | 35,810 | 36 | 601,574 | - | - | - | - | - | 601,610 | |||||||||||||||||||||||||||||||
Shares returned to treasury and cancelled – June 5, 2002 | (833 | ) | (1 | ) | (32,999 | ) | - | - | - | - | - | (33,000 | ) | |||||||||||||||||||||||||||
Shares issued for cash at $60.00 per share – Sept. 5, 2002 | 50 | - | 3,000 | - | - | - | (3,000 | ) | - | - | ||||||||||||||||||||||||||||||
Shares issued for services at $9.60 per share – Sept 5, 2002 | 17,667 | 18 | 169,582 | - | - | - | - | - | 169,600 | |||||||||||||||||||||||||||||||
Shares issued for fees at $9.60 per share – Sept. 5, 2002 | 3,333 | 3 | 31,997 | - | - | - | - | - | 32,000 | |||||||||||||||||||||||||||||||
Shares issued for deferred compensation at $1.44 per share – Dec. 13, 2002 | 541,667 | 542 | 779,458 | - | (780,000 | ) | - | - | - | - | ||||||||||||||||||||||||||||||
Shares issued for services at $1.44 per share – Dec. 16, 2002 | 307,500 | 308 | 442,492 | - | - | - | - | - | 442,800 | |||||||||||||||||||||||||||||||
Deferred compensation expense recorded in the year | - | - | - | - | 44,707 | - | - | - | 44,707 | |||||||||||||||||||||||||||||||
Net loss for the year ended December 31, 2002 | - | - | - | - | - | - | - | (3,360,353 | ) | (3,360,353 | ) | |||||||||||||||||||||||||||||
Balance, December 31, 2002 | 1,071,385 | 1,072 | 15,861,509 | - | (825,376 | ) | - | - | - | (15,056,472 | ) | (19,267 | ) | |||||||||||||||||||||||||||
Shares issued for stock options at $1.80 – Jan. 2, 2003 | 25,000 | 25 | 44,975 | - | - | - | - | - | 45,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $1.80 –Jan. 24, 2003 | 8,333 | 8 | 14,992 | - | - | - | - | - | 15,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $1.80 –Feb.18, 2003 | 8,333 | 8 | 14,992 | - | - | - | - | - | 15,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $1.80 – Feb.25, 2003 | 20,833 | 21 | 37,479 | - | - | - | - | - | 37,500 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $1.80 – Mar.3, 2003 | 162,500 | 163 | 292,337 | - | - | - | - | - | 292,500 | |||||||||||||||||||||||||||||||
Shares returned to treasury and cancelled – Mar. 6, 2003 | (111 | ) | - | (5,500 | ) | - | - | - | - | - | (5,500 | ) | ||||||||||||||||||||||||||||
Shares issued for cash at $1.50 per share – Mar. 17,2003 | 66,667 | 67 | 99,933 | - | - | - | - | - | 100,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $1.80 – May 12, 2003 | 58,333 | 58 | 104,942 | - | - | - | - | - | 105,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $1.80 – May 30, 2003 | 58,333 | 58 | 104,942 | - | - | - | - | - | 105,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.36 – June 13, 2003 | 75,000 | 75 | 26,925 | - | - | - | - | - | 27,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.36 – June 23, 2003 | 25,000 | 25 | 8,975 | - | - | - | - | - | 9,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.36 – June 26, 2003 | 8,333 | 8 | 2,992 | - | - | - | - | - | 3,000 | |||||||||||||||||||||||||||||||
Shares returned to treasury and cancelled – July 11, 2003 | (66,667 | ) | (67 | ) | (39,933 | ) | - | - | - | - | - | (40,000 | ) | |||||||||||||||||||||||||||
Shares issued for stock options at $.36 – July 24, 2003 | 27,083 | 27 | 9,723 | - | - | - | - | - | 9,750 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.36 – August 1, 2003 | 22,917 | 23 | 8,227 | - | - | - | - | - | 8,250 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.36 – August 3, 2003 | 8,333 | 8 | 2,992 | - | - | - | - | - | 3,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.36 – August 11, 2003 | 18,750 | 19 | 6,731 | - | - | - | - | - | 6,750 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.36 – August 14, 2003 | 6,250 | 6 | 2,244 | - | - | - | - | - | 2,250 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.48 – August 14, 2003 | 35,417 | 35 | 16,965 | - | - | - | - | - | 17,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.48 - August 29, 2003 | 106,250 | 106 | 50,894 | - | - | - | - | - | 51,000 | |||||||||||||||||||||||||||||||
Shares issued for services at $0.90 per share – October 3, 2003 | 92,222 | 92 | 82,908 | - | - | - | - | - | 83,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.57 – October 3, 2003 | 141,667 | 142 | 80,608 | - | - | - | - | - | 80,750 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.57 – October 6, 2003 | 50,000 | 50 | 28,450 | - | - | - | - | - | 28,500 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.48– October 21, 2003 | 133,333 | 133 | 63,867 | - | - | - | - | - | 64,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.33- October 24, 2003 | 37,042 | 37 | 12,187 | - | - | (10,984 | ) | - | - | 1,240 | ||||||||||||||||||||||||||||||
Shares issued for stock options at $.27 – October 27, 2003 | 133,333 | 133 | 35,867 | - | - | (36,000 | ) | - | - | - | ||||||||||||||||||||||||||||||
Shares issued for mining property at $.54 – October 27, 2003 | 16,667 | 17 | 8,983 | - | - | - | - | - | 9,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.24 – November 3, 2003 | 145,000 | 145 | 34,655 | - | - | (34,800 | ) | - | - | - | ||||||||||||||||||||||||||||||
Shares issued for stock options at $.24 – November 12, 2003 | 166,667 | 167 | 39,833 | - | - | (40,000 | ) | - | - | - | ||||||||||||||||||||||||||||||
Shares issued for stock options at $.24 – November 13, 2003 | 61,667 | 62 | 14,738 | - | - | (14,800 | ) | - | - | - | ||||||||||||||||||||||||||||||
Shares issued for stock options at $.24 – November 18, 2003 | 215,000 | 215 | 51,385 | - | - | (51,600 | ) | - | - | - | ||||||||||||||||||||||||||||||
Shares issued for stock options at $.24 – November 24, 2003 | 182,958 | 183 | 43,727 | - | - | (43,910 | ) | - | - | - | ||||||||||||||||||||||||||||||
Shares returned to treasury and cancelled – December 15, 2003 | (20,000 | ) | (20 | ) | (17,980 | ) | - | - | - | - | - | (18,000 | ) | |||||||||||||||||||||||||||
Stock Based Compensation | - | - | 651,000 | - | - | - | - | - | 651,000 | |||||||||||||||||||||||||||||||
Deferred compensation expense recorded in the year | - | - | - | - | 352,332 | - | - | - | 352,332 | |||||||||||||||||||||||||||||||
Net loss for the year ended December 31, 2003 | - | - | - | - | - | - | - | (2,170,465 | ) | (2,170,465 | ) | |||||||||||||||||||||||||||||
Balance, December 31, 2003 | 3,101,828 | 3,101 | 17,797,564 | - | (473,044 | ) | (232,094 | ) | - | - | (17,226,937 | ) | (131,410 | ) | ||||||||||||||||||||||||||
Shares issued for services at $0.36 – January 15, 2004 | 350,000 | 350 | 125,650 | - | (126,000 | ) | - | - | - | - | ||||||||||||||||||||||||||||||
Share subscriptions received – January 21, 2004 | - | - | - | - | - | 232,094 | - | - | 232,094 | |||||||||||||||||||||||||||||||
Shares issued for debt at $0.33 – February 11, 2004 | 516,667 | 517 | 169,983 | - | - | - | - | - | 170,500 | |||||||||||||||||||||||||||||||
Shares issued for mineral property at $0.33 – February 27, 2004 | 333,333 | 333 | 109,667 | - | - | - | - | - | 110,000 | |||||||||||||||||||||||||||||||
Shares issued for debt at $0.24 – May 26, 2004 | 833,333 | 833 | 199,167 | - | - | - | - | - | 200,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.18 – July 7, 2004 | 458,333 | 458 | 82,042 | - | - | - | - | - | 82,500 | |||||||||||||||||||||||||||||||
Shares returned and cancelled – July 9, 2004 | (70,000 | ) | (70 | ) | (18,930 | ) | - | - | - | - | - | (19,000 | ) | |||||||||||||||||||||||||||
Shares issued for stock options at $.24 – September 17, 2004 | 333,333 | 333 | 79,667 | - | - | - | - | - | 80,000 | |||||||||||||||||||||||||||||||
Shares returned and cancelled – September 28, 2004 | (333,333 | ) | (333 | ) | (79,667 | ) | - | - | - | - | - | (80,000 | ) | |||||||||||||||||||||||||||
Shares issued for stock options at $.18 – September 28, 2004 | 375,000 | 375 | 67,125 | - | - | - | - | - | 67,500 | |||||||||||||||||||||||||||||||
Shares issued for services at $0.36 – October 1, 2004 | 33,333 | 33 | 12,967 | - | (13,000 | ) | - | - | - | - | ||||||||||||||||||||||||||||||
Shares issued for stock options at $.24 – October 7, 2004 | 200,000 | 200 | 47,800 | - | - | - | - | - | 48,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.24 – November 22, 2004 | 1,100,000 | 1,100 | 262,900 | - | - | - | - | - | 264,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $.24 – November 23, 2004 | 233,333 | 233 | 55,767 | - | - | - | - | - | 56,000 | |||||||||||||||||||||||||||||||
Shares returned and cancelled – November 23, 2004 | (100,000 | ) | (100 | ) | (23,900 | ) | - | - | - | - | - | (24,000 | ) | |||||||||||||||||||||||||||
Shares returned and cancelled – November 24, 2004 | (21,667 | ) | (21 | ) | (10,479 | ) | - | - | - | - | - | (10,500 | ) | |||||||||||||||||||||||||||
Shares issued for salaries – December 1, 2004 | 33,333 | 33 | 19,967 | - | - | - | - | - | 20,000 | |||||||||||||||||||||||||||||||
Shares returned and cancelled – November 23, 2004 | (666,667 | ) | (666 | ) | (159,334 | ) | - | - | - | - | - | (160,000 | ) | |||||||||||||||||||||||||||
Shares issued for stock options at $0.24 - December 8, 2004 | 416,667 | 417 | 99,583 | - | - | - | - | - | 100,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.24 - December 13, 2004 | 158,333 | 158 | 37,842 | - | - | - | - | - | 38,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.24 - December 16, 2004 | 258,333 | 258 | 61,742 | - | - | - | - | - | 62,000 | |||||||||||||||||||||||||||||||
Stock Based Compensation | - | - | 338,500 | - | - | - | - | - | 338,500 | |||||||||||||||||||||||||||||||
Deferred compensation expense recorded in the year | - | - | - | - | 418,582 | - | - | - | 418,582 | |||||||||||||||||||||||||||||||
Unrealized losses on available for sale securities | - | - | - | (10,000 | ) | - | - | - | - | (10,000 | ) | |||||||||||||||||||||||||||||
Net loss for the year ended December 31, 2004 | - | - | - | - | - | - | - | (1,678,056 | ) | (1,678,056 | ) | |||||||||||||||||||||||||||||
Balance, December 31, 2004 | 7,543,492 | 7,542 | 19,275,623 | (10,000 | ) | (193,462 | ) | - | - | - | (18,904,993 | ) | 174,710 | |||||||||||||||||||||||||||
Shares issued for stock options at $0.84 – January 20, 2005 | 166,667 | 167 | 139,833 | - | - | - | - | - | 140,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.78 – January 21, 2005 | 100,000 | 100 | 77,900 | - | - | - | - | - | 78,000 | |||||||||||||||||||||||||||||||
Shares issued for services at $0.78 – January 21, 2005 | 16,667 | 17 | 12,983 | - | - | - | - | - | 13,000 | |||||||||||||||||||||||||||||||
Shares issued for cash at $0.15 – February 4, 2005, net of finder’s fee of $130,900 | 1,983,333 | 1,983 | 759,617 | - | - | - | - | - | 761,600 | |||||||||||||||||||||||||||||||
Shares issued for finder’s fees at $0.66 – February 7, 2005 | 598,333 | 598 | 394,302 | - | - | - | - | - | 394,900 | |||||||||||||||||||||||||||||||
Shares issued for services at $0.66 – February 7, 2005 | 83,333 | 83 | 54,917 | - | - | - | - | - | 55,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.60 - February 10, 2005 | 21,667 | 22 | 12,978 | - | - | - | - | - | 13,000 | |||||||||||||||||||||||||||||||
Shares issued for services at $0.54 – February 17, 2005 | 33,333 | 33 | 17,967 | - | - | - | - | - | 18,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.54 – February 25, 2005 | 8,333 | 8 | 4,492 | - | - | - | - | - | 4,500 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.54 – March 22, 2005 | 62,667 | 63 | 33,777 | - | - | - | - | - | 33,840 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.42 – April 7, 2005 | 83,333 | 83 | 34,917 | - | - | - | - | - | 35,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.33 - April 21, 2005 | 166,667 | 167 | 54,833 | - | - | - | - | - | 55,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.39 – May 17, 2005 | 150,000 | 150 | 58,350 | - | - | - | - | - | 58,500 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.33 - April 29, 2005 | 83,333 | 83 | 27,417 | - | - | - | - | - | 27,500 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.39 – May 26, 2005 | 216,667 | 217 | 84,283 | - | - | - | - | - | 84,500 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.39 – June 14, 2005 | 83,333 | 83 | 32,417 | - | - | - | - | - | 32,500 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.39 – June 28, 2005 | 108,333 | 108 | 42,142 | - | - | - | - | - | 42,250 | |||||||||||||||||||||||||||||||
Shares issued for services at $0.42 – June 28, 2005 | 133,333 | 133 | 55,867 | - | - | - | - | - | 56,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.36 – August 10, 2005 | 205,000 | 205 | 73,595 | - | - | - | - | - | 73,800 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.36 – August 11, 2005 | 41,667 | 42 | 14,958 | - | - | - | - | - | 15,000 | |||||||||||||||||||||||||||||||
Shares returned and cancelled– August 30, 2005 | (41,667 | ) | (42 | ) | (16,208 | ) | - | - | - | - | - | (16,250 | ) | |||||||||||||||||||||||||||
Shares issued for stock options at $0.33 – August 12, 2005 | 575,000 | 575 | 189,175 | - | - | - | - | - | 189,750 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.33 – September 14, 2005 | 85,000 | 85 | 27,965 | - | - | - | - | - | 28,050 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.33 – September 22, 2005 | 83,333 | 83 | 27,417 | - | - | - | - | - | 27,500 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.33 – October 12, 2005 | 81,667 | 82 | 26,868 | - | - | - | - | - | 26,950 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.39 – November 30, 2005 | 33,333 | 33 | 12,967 | - | - | - | - | - | 13,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $0.33 – December 21, 2005 | 94,000 | 94 | 30,926 | - | - | - | - | - | 31,020 | |||||||||||||||||||||||||||||||
Stock based compensation | - | - | 620,640 | - | - | - | - | - | 620,640 | |||||||||||||||||||||||||||||||
Deferred compensation expense recorded in the year | - | - | - | - | 125,172 | - | - | - | 125,172 | |||||||||||||||||||||||||||||||
Unrealized losses on available for sale securities | - | - | - | (90,000 | ) | - | - | - | - | (90,000 | ) | |||||||||||||||||||||||||||||
Net loss for the year ended December 31, 2005 | - | - | - | - | - | - | - | (1,950,963 | ) | (1,950,963 | ) | |||||||||||||||||||||||||||||
Balance December 31, 2005 | 12,800,157 | 12,797 | 22,182,918 | (100,000 | ) | (68,290 | ) | - | - | - | (20,855,956 | ) | 1,171,469 | |||||||||||||||||||||||||||
Shares issued for stock options at $0.33 – January 16, 2006 | 66,667 | 67 | 21,933 | - | - | - | - | - | - | 22,000 | ||||||||||||||||||||||||||||||
Shares issued for stock options at $0.33 – February 6, 2006 | 66,667 | 67 | 21,933 | - | - | - | - | - | - | 22,000 | ||||||||||||||||||||||||||||||
Shares issued for stock options at $0.33 – February 23, 2006 | 33,333 | 33 | 10,967 | - | - | - | - | - | - | 11,000 | ||||||||||||||||||||||||||||||
Shares issued for services at $0.36 – January 21, 2006 | 33,333 | 33 | 11,967 | - | - | - | - | - | - | 12,000 | ||||||||||||||||||||||||||||||
Shares issued for cash at $0.10 – May 12, 2006, net of fees and expenses of $151,455 | 2,666,667 | 2,667 | 645,878 | - | - | - | - | - | - | 648,545 | ||||||||||||||||||||||||||||||
Shares issued for finder’s fees – May 6, 2006 - | 400,000 | 400 | (400 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
Shares issued for services at $0.36– May 23, 2006 | 16,667 | 17 | 7,483 | - | - | - | - | - | - | 7,500 | ||||||||||||||||||||||||||||||
Shares issued for stock options at $0.36 – May 24, 2006 | 33,333 | 33 | 11,967 | - | - | - | - | - | - | 12,000 | ||||||||||||||||||||||||||||||
Shares issued for services at $0.45 – May 25, 2006 | 166,667 | 167 | 74,833 | - | (75,000 | ) | - | - | - | - | - | |||||||||||||||||||||||||||||
Shares returned on reduction of finders’ fee – September 27, 2006 | (133,333 | ) | (133 | ) | 133 | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
Shares issued for stock options at $0.30 – October 2, 2006 | 1,891,667 | 1,892 | 565,608 | - | - | - | - | (567,500 | ) | - | - | |||||||||||||||||||||||||||||
Shares issued for stock options at $0.30 – October 3, 2006 | 175,000 | 175 | 52,325 | - | - | - | - | (52,500 | ) | - | - | |||||||||||||||||||||||||||||
Shares issued for services at $0.30 – November 1, 2006 | 160,000 | 160 | 47,840 | - | (48,000 | ) | - | - | - | - | - | |||||||||||||||||||||||||||||
Shares issued for services at $0.36 – December 12, 2006 | 23,333 | 23 | 8,377 | - | - | - | - | - | - | 8,400 | ||||||||||||||||||||||||||||||
Stock based compensation | - | - | 241,000 | - | - | - | - | - | - | 241,000 | ||||||||||||||||||||||||||||||
Interest accrued on promissory notes receivable | - | - | - | - | - | - | - | (15,500 | ) | - | (15,500 | ) | ||||||||||||||||||||||||||||
Deferred compensation expense recorded in the year | - | - | - | - | 134,492 | - | - | - | - | 134,492 | ||||||||||||||||||||||||||||||
Unrealized losses on available for sale securities | - | - | - | (8,889 | ) | - | - | - | - | - | (8,889 | ) | ||||||||||||||||||||||||||||
Net loss for the year ended December 31, 2006 | - | - | - | - | - | - | - | - | (738,090 | ) | (738,090 | ) | ||||||||||||||||||||||||||||
Balance December 31, 2006 | 18,400,158 | 18,398 | 23,904,762 | (108,889 | ) | (56,798 | ) | - | - | (635,500 | ) | (21,594,046 | ) | 1,527,927 | ||||||||||||||||||||||||||
Shares issued for services at $0.27 – January 16, 2007 | 3,333 | 3 | 897 | - | - | - | - | - | - | 900 | ||||||||||||||||||||||||||||||
Shares returned against promissory notes – April 25, 2007 | (733,333 | ) | (733 | ) | (219,267 | ) | - | - | - | 220,000 | - | - | ||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.30 – April 26, 2007 | 266,667 | 267 | 79,733 | - | - | (30,000 | ) | - | - | 50,000 | ||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.30 – June 5, 2007 | 66,667 | 67 | 19,933 | - | - | (20,000 | ) | - | - | - | ||||||||||||||||||||||||||||||
Shares issued for services at $ 0.24 – June 12, 2007 | 133,333 | 133 | 31,867 | - | - | - | - | - | 32,000 | |||||||||||||||||||||||||||||||
Shares returned against promissory notes – June 19, 2007 | (833,333 | ) | (833 | ) | (249,167 | ) | - | - | - | 250,000 | - | - | ||||||||||||||||||||||||||||
Shares issued for stock options at $0.30 - July 15, 2007 | 16,667 | 17 | 4,983 | - | 5,000 | |||||||||||||||||||||||||||||||||||
Shares returned against promissory notes – August 15, 2007 | (133,333 | ) | (133 | ) | (39,867 | ) | 40,000 | - | ||||||||||||||||||||||||||||||||
Shares issued for services at $ 0.24 – August 15, 2007 | 133,333 | 133 | 31,867 | - | (32,000 | ) | - | - | - | - | ||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.21 – September 21, 2007 | 33,333 | 33 | 6,967 | - | - | - | - | - | 7,000 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.21 – September 26, 2007 | 41,667 | 42 | 8,708 | - | - | - | - | - | 8,750 | |||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.17 – October 30, 2007 | 100,000 | 100 | 16,900 | 17,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.17 – November 1, 2007 | 200,000 | 200 | 33,800 | 34,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.17 – December 20, 2007 | 160,000 | 160 | 27,040 | (25,500 | ) | 1,700 | ||||||||||||||||||||||||||||||||||
Shares cancelled - December 31, 2007 | (166,667 | ) | (166 | ) | 166 | - | ||||||||||||||||||||||||||||||||||
Shares cancelled - December 31, 2007 | (166,667 | ) | (166 | ) | (49,834 | ) | 50,000 | - | ||||||||||||||||||||||||||||||||
Shares returned and cancelled - December 31, 2007 | (150,000 | ) | (150 | ) | (25,350 | ) | 25,500 | - | ||||||||||||||||||||||||||||||||
Share reconciliation | 1,008 | - | - | - | ||||||||||||||||||||||||||||||||||||
Stock based compensation | 52,149 | 52,149 | ||||||||||||||||||||||||||||||||||||||
Settlement of promissory notes including interest | 125,500 | 125,500 | ||||||||||||||||||||||||||||||||||||||
Deferred compensation expense recorded in the year | 39,798 | 39,798 | ||||||||||||||||||||||||||||||||||||||
Unrealized gains on available for sale securities | 614,942 | 614,942 | ||||||||||||||||||||||||||||||||||||||
Net loss for the year ended December 31, 2007 | - | - | - | - | - | - | - | (593,789 | ) | (593,789 | ) | |||||||||||||||||||||||||||||
Balance December 31, 2007 | 17,372,833 | $ | 17,372 | $ | 23,636,287 | $ | 506,053 | $ | (49,000 | ) | $ | - | $ | - | $ | - | $ | (22,187,835 | ) | $ | 1,922,877 | |||||||||||||||||||
Shares issued for stock options at $ 0.13 – January 4, 2008 | 200,000 | 200 | 25,800 | 26,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for services at $ 0.11 – February 27, 2008 | 50,000 | 50 | 5,450 | 5,500 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.10 – July 18, 2008 | 219,300 | 219 | 21,711 | 21,930 | ||||||||||||||||||||||||||||||||||||
Shares issued for services at $ 0.11 – September 12, 2008 | 25,000 | 25 | 1,725 | 1,750 | ||||||||||||||||||||||||||||||||||||
Stock based compensation | 16,579 | 16,579 | ||||||||||||||||||||||||||||||||||||||
Deferred compensation expense recorded in the year | 32,000 | 32,000 | ||||||||||||||||||||||||||||||||||||||
Unrealized gains on available for sale securities | 340,936 | 340,936 | ||||||||||||||||||||||||||||||||||||||
Net loss for the year ended December 31, 2008 | - | - | - | - | - | - | - | (1,871,917 | ) | (1,871,917 | ) | |||||||||||||||||||||||||||||
Balance December 31, 2008 | 17,867,133 | 17,866 | $ | 23,707,552 | $ | 846,989 | $ | (17,000 | ) | $ | - | $ | - | $ | - | $ | (24,059,752 | ) | $ | 495,655 | ||||||||||||||||||||
Balance, December 31, 2008 | 17,867,133 | 17,866 | 23,707,552 | 846,989 | (17,000 | ) | 0 | 0 | 0 | (24,059,752 | ) | 495,655 | ||||||||||||||||||||||||||||
Shares issued for cash at $0.07 -April 9, 2009 | 200,000 | 200 | 13,800 | 14,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for cash at $0.10 -April 9, 2009 | 250,000 | 250 | 24,750 | 25,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for cash at $0.10 -April 27, 2009 | 50,000 | 50 | 4,950 | 5,000 | ||||||||||||||||||||||||||||||||||||
Shares issued hydroponic vertical farming design valued at $0.03 - June 9,2009 | 3,500,000 | 3,500 | 101,500 | 105,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.03 – July 21, 2009 | 500,000 | 500 | 14,500 | 15,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.03 – August 7, 2009 | 2,000,000 | 2,000 | 58,000 | 60,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.03 – August 10, 2009 | 15,000 | 15 | 435 | 450 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.03 – August 25, 2009 | 1,010,000 | 1,010 | 29,290 | 30,300 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.03 – September 1, 2009 | 65,000 | 65 | 1,885 | 1,950 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0 03 – September 8, 2009 | 500,000 | 500 | 14,500 | 15,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.03 – September 14, 2009 | 283,000 | 284 | 8,206 | 8,490 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.03 – September 17, 2009 | 100,000 | 100 | 2,900 | 3,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.03 – September 23, 2009 | 2,950,000 | 2,950 | 85,550 | 88,500 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.03 – October 22, 2009 | 900,000 | 900 | 26,100 | 27,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for deferred compensation at $ 0.0152 – November 18, 2009 | 500,000 | 500 | 7,100 | (7,600 | ) | - | ||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.02 – December 16, 2009 | 175,000 | 175 | 3,325 | 3,500 | ||||||||||||||||||||||||||||||||||||
Deferred compensation expense | 8,844 | 8,844 | ||||||||||||||||||||||||||||||||||||||
Unrealized losses on available for sale securities | (795,927 | ) | (795,927 | ) | ||||||||||||||||||||||||||||||||||||
Net loss | (420,380 | ) | (420,380 | ) | ||||||||||||||||||||||||||||||||||||
Balance, December 31, 2009 | 30,865,133 | 30,865 | 24,104,343 | 51,062 | (15,756 | ) | 0 | 0 | 0 | (24,480,132 | ) | (309,618 | ) | |||||||||||||||||||||||||||
Shares issued for stock options at $ 0.01 – January 25, 2010 | 805,000 | 805 | 7,245 | 8,050 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.01 – March 9, 2010 | 300,000 | 300 | 2,700 | 3,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.01 – March 23, 2010 | 100,000 | 100 | 900 | 1,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $ 0.01 – April 15, 2010 | 1,000,000 | 1,000 | 9,000 | 10,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for deferred compensation at $ 0.005 – May 26, 2010 | 1,000,000 | 1,000 | 4,000 | (5,000 | ) | 0 | ||||||||||||||||||||||||||||||||||
Shares issued for stock options at $0.003 - October 27, 2010 | 400,000 | 400 | 800 | 1,200 | ||||||||||||||||||||||||||||||||||||
Shares issued for stock options at $0.0022 - November 24, 2010 | 6,756,033 | 6,756 | 8,107 | 14,863 | ||||||||||||||||||||||||||||||||||||
Shares issued for debt to related parties at $0.01- December 9, 2010 | 700,300 | 700 | 6,303 | 7,003 | ||||||||||||||||||||||||||||||||||||
Deferred compensation expense | 14,628 | 14,628 | ||||||||||||||||||||||||||||||||||||||
Unrealized losses on available for sale securities | (136,570 | ) | (136,570 | ) | ||||||||||||||||||||||||||||||||||||
Write down of securities | 91,682 | (91,682 | ) | |||||||||||||||||||||||||||||||||||||
Net loss | (217,210 | ) | (217,210 | ) | ||||||||||||||||||||||||||||||||||||
Balance, December 31, 2010 | 41,926,466 | 41,926 | 24,143,398 | 6,174 | (6,128 | ) | (24,697,342 | ) | (695,336 | ) | ||||||||||||||||||||||||||||||
Shares issued for services at $0.005 - January 13, 2011 | 25,000 | 25 | 100 | 125 | ||||||||||||||||||||||||||||||||||||
Shares issued for debt to related parties at $0.02 - April 1, 2011 | 1,650,000 | 1,650 | 31,350 | 33,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for services at $0.01 - April 18, 2011 | 695,000 | 695 | 6,255 | 6,950 | ||||||||||||||||||||||||||||||||||||
Shares issued for deferred compensation at $ 0.015 – July 7, 2011 | 6,500,000 | 6,500 | 91,000 | (97,500 | ) | 0 | ||||||||||||||||||||||||||||||||||
Shares issued for debt to related parties at $0.012 - August 2, 2011 | 1,400,000 | 1,400 | 15,400 | 16,800 | ||||||||||||||||||||||||||||||||||||
Shares issued for debt to related parties at $0.012 - August 15, 2011 | 1,800,000 | 1,800 | 19,800 | 21,600 | ||||||||||||||||||||||||||||||||||||
Shares issued for debt to related parties at $0.012 - August 19, 2011 | 1,500,000 | 1,500 | 16,500 | 18,000 | ||||||||||||||||||||||||||||||||||||
Shares issued for debt to related parties at $0.012 - September 12, 2011 | 700,000 | 700 | 7,700 | 8,400 | ||||||||||||||||||||||||||||||||||||
Shares issued for deferred compensation at $ 0.015 – December 1, 2011 | 450,000 | 450 | 1,350 | (1,800 | ) | 0 | ||||||||||||||||||||||||||||||||||
Shares issued for debt to related parties at $0.003 - December 29, 2011 | 4,400,000 | 4,400 | 8,800 | 13,200 | ||||||||||||||||||||||||||||||||||||
Deferred compensation expense | 42,838 | 42,838 | ||||||||||||||||||||||||||||||||||||||
Unrealized losses on available for sale securities | (55,563 | ) | (55,563 | ) | ||||||||||||||||||||||||||||||||||||
Write down of securities | 54,378 | (54,378 | ) | |||||||||||||||||||||||||||||||||||||
Net loss | (202,130 | ) | (202,130 | ) | ||||||||||||||||||||||||||||||||||||
Balance, December 30, 2011 | 61,046,466 | 61,046 | 24,341,653 | 4,989 | (62,590 | ) | (24,899,472 | ) | (554,374 | ) |
The accompanying notes are an integral part of these financial statements
18
ORGANA GARDENS INTERNATIONAL INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Year ended December 31, 2011 | Year ended December 31, 2010 | January 1,1996-inception of development stage to December 31, 2011 | ||||||||||
Net loss for the year | $ | (202,130 | ) | $ | (217,210 | ) | $ | (20,438,839 | ) | |||
Adjustments to reconcile net loss to net cash from operating activities: | ||||||||||||
- fees and services paid for with common shares | 49,913 | 25,828 | 3,491,638 | |||||||||
- non cash research and development | - | - | 105,000 | |||||||||
- other stock based compensation | - | - | 1,919,468 | |||||||||
- interest paid for with common shares | - | - | 80,872 | |||||||||
- loss on settlement of debt | - | - | 718,784 | |||||||||
- software development costs paid for with common shares | - | - | 600,000 | |||||||||
- non cash exploration costs | - | - | 110,000 | |||||||||
- write-down of interest in oil and gas properties | 4 | - | 2,970,722 | |||||||||
- write-down of equities in Legacy Wine & Spirits Int’l. | 51,469 | 78,823 | 258,580 | |||||||||
- write-down of equities in Terralene Fuels Corporation | 2,909 | 12,859 | 15,768 | |||||||||
- write-down of interest in ACGT Corporation | - | - | 2,250,937 | |||||||||
- loss on Iceberg Drive Inn investment | - | - | 85,000 | |||||||||
- (gain)/loss on securities held for resale | - | - | (21,816 | ) | ||||||||
- non cash option income received in shares | - | - | (130,000 | ) | ||||||||
- interest accrued on promissory notes receivable | - | - | (63,136 | ) | ||||||||
- other non-cash expenses | - | - | 2,557,382 | |||||||||
- net changes in working capital items | (3,605 | ) | (3,843 | ) | 325,254 | |||||||
CASH FLOWS USED IN OPERATING ACTIVITIES | (101,440 | ) | (103,543 | ) | (5,164,386 | ) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Interest received on promissory notes | - | - | 63,136 | |||||||||
Investment in Iceberg Acquisition Corporation | - | - | (120,000 | ) | ||||||||
Proceeds from sale of securities – related party | - | - | 136,790 | |||||||||
Interest in oil and gas properties – net of finders fees | - | - | (1,522,804 | ) | ||||||||
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES | - | - | (1,442,878 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Net proceeds on sale of common stock | - | - | 5,098,325 | |||||||||
Net advances (to) from related parties | 101,480 | 102,001 | 1,089,029 | |||||||||
Advances receivable | - | - | 420,000 | |||||||||
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 101,480 | 268,263 | 6,607,354 | |||||||||
INCREASE (DECREASE) IN CASH | 40 | (1,542 | ) | 90 | ||||||||
CASH, BEGINNING OF YEAR | 50 | 1,592 | - | |||||||||
CASH, END OF YEAR | $ | 90 | $ | 50 | $ | 90 |
The accompanying notes are an integral part of these financial statements
19
ORGANA GARDENS INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
The Company was incorporated as Venture Investments Inc. under the Laws of the State of Nevada on November 29, 1983. The Company underwent a name change to Asdar Group on December 10, 1987, a name change to Precise Life Sciences Ltd. on April 30, 2002, a name change to Iceberg Brands Corporation on February 18, 2003, a name change to Avalon Gold Corporation on August 28, 2003, a name change to Avalon Energy Corporation on March 22, 2005, a name change to Shotgun Energy Corporation on September 25, 2007 and a name change to Organa Gardens International Inc.on April 7, 2009. The Company was dormant from 1991 to 1996 and currently has no revenue generating operations. The Company was considered a development stage company since January 1, 1996 and as a result of changing its business focus to vertical hydroponic farming is considered to be a development stage company. Expected operations will consist of growing fruits and vegetables using a rotary hydroponics vertical farming system designed with serviceability, ease-of-use and maximum harvest in mind.
Going Concern
The financial statements have been prepared on the basis of a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated any revenues or completed development of any commercially acceptable products or services to date and has incurred losses of $24,899,472 since inception, and further significant losses are expected to be incurred in the development of its vertical hydroponic farming system. The Company will depend almost exclusively on outside capital through the issuance of common shares to finance ongoing operating losses and to fund the acquisition and development of its vertical hydroponic farming system. The ability of the Company to continue as a going concern is dependent on raising additional capital and ultimately on generating future profitable operations. There can be no assurance that the Company will be able to raise the necessary funds when needed to finance its ongoing costs. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying financial statements do not include any adjustments relative to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying financial statements are presented in United States dollars and are prepared in accordance with accounting principles generally accepted in the United States.
Use of Estimates and Assumptions
Preparation of the Company’s financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
20
Mineral property costs
Mineral property acquisition, exploration and development costs are expensed as incurred until such time as economic reserves are quantified. To date the Company has not established any proven or probable reserves on its mineral properties. The Company has adopted the provisions of ASC Topic 410 “Asset Retirement and Environmental Obligations” which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment, or other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets. The adoption of this standard has had no effect on the Company’s financial position or results of operations. As at December 31, 2011, any potential obligations relating to the retirement of the Company’s assets are not yet determinable.
Oil and Gas Properties
The Company utilizes the full cost method to account for its investment in oil and gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves, including such costs as leasehold acquisition costs, capitalized interest costs relating to unproved properties, geological expenditures, tangible and intangible development costs including direct internal costs are capitalized to the full cost pool. As at December 31, 2011, the Company has no properties with proven reserves. When the Company obtains proven oil and gas reserves, capitalized costs, including estimated future costs to develop the reserves and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves.
Investments in unproved properties and major development projects including capitalized interest, if any, are not depleted until proved reserves associated with the projects can be determined. If the future exploration of unproved properties are determined uneconomical the amount of such properties are added to the capitalized cost to be depleted. As at December 31, 2008, all of the Company's oil and gas properties were unproved and were excluded from depletion. At December 31, 2011, the Company’s unproved oil and gas properties were fully impaired.
The capitalized costs included in the full cost pool are subject to a "ceiling test", which limits such costs to the aggregate of the estimated present value, using a ten percent discount rate, of the future net revenues from proved reserves, based on current economic and operating conditions plus the lower of cost and estimated net realizable value of unproven properties.
Sales of proved and unproved properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in the statement of operations.
21
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Concentration of Credit Risk
Cash in bank accounts is at risk to the extent that it exceeds U.S.Federal Deposit Insurance Corporation and Canadian Deposit Insurance Corporation insured amounts. To minimize risk, the Company places its cash with high credit quality institutions. All cash is deposited in one prominent Canadian financial institution.
Fair Value of Financial Instruments
The Company’s financial instruments include cash, receivables, available-for-sale securities and due to related parties. Management believes the fair values of these financial instruments approximate their carrying values due to their short-term nature.
The Company adopted ASC Topic 820-10 for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Topic 820-10 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements Topic 820-10 defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.
In addition to defining fair value, Topic 820-10 expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
* Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. |
* Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
* Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. |
In general, and where applicable, we use quoted prices in an active market for identical derivative assets and liabilities that are traded on exchanges. These derivative assets and liabilities are included in Level 1.
22
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign Currency Translation
The financial statements are presented in United States dollars. In accordance with ASC Topic 830 “Foreign Currency Matters”, foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates that prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at exchange rates prevailing at the transaction date. Revenue and expenses are translated at average rates of exchange during the year. Related translation adjustments are reported as a separate component of stockholders’ equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations.
Available For Sale Securities – related parties
The Company holds marketable equity securities which are available-for-sale and as such, their carrying value is adjusted to market at the end of each reporting period. As required by ASC Topic 220 (formerly SFAS 130),, unrealized gains and losses on these investments are recorded as a component of accumulated other comprehensive income (loss) and are recorded as a component of net income (loss) when realized. However, if there is a permanent decline in the market value of available-for-sale securities, this permanent market value adjustment is taken into income in the period.
Stock-Based Compensation
On January 1, 2006, the Company adopted the fair value recognition provisions of ASC Topic 718 & 505. Prior to January 1, 2006, the Company accounted for share-based payments under the recognition and measurement provisions of ASC Topic 718. In accordance with ASC Topic 718 no compensation cost was required to be recognized for options granted that had an exercise price equal to the market value of the underlying common stock on the date of grant. . The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.
In addition, deferred stock compensation related to non-vested options is required to be eliminated against additional paid-in capital. The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC Topic 718 & 505. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable.
Research and Development Costs
Expenditure on research activities, undertaken with the prospect of obtaining new scientific or technical knowledge and understandings are expensed as incurred and include costs of consultants who conduct research and development on behalf of the Company.
23
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes
The Company follows the liability method of accounting for income taxes as set forth in ASC Topic 740-10. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment. A valuation allowance is provided for deferred tax assets if it is more likely than not that the Company will not realize the future benefit, or if the future deductibility is uncertain. In accordance with ASC 740-10. This interpretation introduces a new approach that changes how enterprises recognize and measure tax benefits associated with tax positions and how enterprises disclose uncertainties related to income tax positions in their financial statements.
Recent Accounting Pronouncements
In May 2011, FASB issued ASU 2011-04 “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” The amendments in this update result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, the Board does not intend for the amendments in this update to result in a change in the application of the requirements in Topic 820. Some of the amendments clarify the Board’s intent about the application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. For public entities, the new guideline is effective for interim and annual periods beginning after December 15, 2011 and should be applied prospectively. The Company does not expect that the guidance effective in future periods will have a material impact on its consolidated financial statements.
In May 2011, the FASB issued ASC Update No. 2011-05, Comprehensive Income (Topic 820): Presentation of Comprehensive Income. Update No. 2011-05 requires that net income, items of other comprehensive income and total comprehensive income be presented in one continuous statement or two separate consecutive statements. The amendments in this Update also require that reclassifications from other comprehensive income to net income be presented on the face of the financial statements. We are required to adopt Update No. 2011-05 for our first quarter ending March 31, 2012, with the exception of the presentation of reclassifications on the face of the financial statements, which has been deferred by the FASB under ASC Update No. 2011-12, Comprehensive Income (Topic 820): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income. Our adoption of Update No. 2011-05 is not expected impact our future results of operations or financial position.
24
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
In December 2011, the Financial Accounting Standards Board (“FASB”) released Accounting Standards Update No. 2011-10 (“ASU 2011-10”), Property, Plant and Equipment (Topic 360): Derecognition of in Substance Real Estate—a Scope Clarification (a consensus of the FASB Emerging Issues Task Force). ASU 2011-10 clarifies when a parent (reporting entity) ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt, the reporting entity should apply the guidance for Real Estate Sale (Subtopic 360-20). The provisions of ASU 2011-10 are effective for public companies for fiscal years and interim periods within those years, beginning on or after June 15, 2012. When adopted, ASU 2011-10 is not expected to materially impact our consolidated financial statements.
NOTE 3 – AVAILABLE FOR SALE SECURITIES – RELATED PARTIES
Terralene Fuels
During 2004, the Company received 111,111 restricted Rule 144 shares of Terralene Fuels Corporation (“Terralene Fuels”), a public company with directors and significant shareholders in common. The restricted shares were received as non-refundable consideration pursuant to agreements with Terralene Fuels dated November 10, 2004 and December 10, 2004 to acquire certain mineral property interests from the Company. These agreements were subsequently terminated.
Effective December 31, 2004 the Company recorded, as other comprehensive loss for the year, a $10,000 unrealized loss in the carrying value of its shares of Terralene Fuels. During the years ended December 31, 2005 and 2006 the Company recorded additional unrealized losses in the carrying value of its shares of Terralene Fuels totalling $90,000 and $8,889 respectively, which were recorded as other comprehensive loss for those years. During the year ended December 31, 2007, the Company sold 2,500 shares resulting in a realized gain of $165 and recorded an additional unrealized loss of $473 in 2007. During the year ended December 31, 2008, the Company sold 10,000 shares resulting in a realized loss of $800 and recorded an additional unrealized loss of $15,026 to December 31, 2008. As a result, the carrying value of the available for sale shares of Terralene Fuels is $2,712 as at December 31, 2008.
During the year ended December 31, 2009, the Company recorded an unrealized gain of $1,232. As a result, the carrying value of the available for sale shares of Terralene Fuels is $3,945 as at December 31, 2009.
During the year ended December 31, 2010, the Company sold Nil Terralene Fuels shares and recorded an unrealized gain of $11,774. As a result, the carrying value of the available for sale shares of Terralene Fuels is $2,860 as at December 31, 2010. Effective December 31, 2010, the Company recorded a $12,859 write-down of its investment in Golden due to an other-than-temporary decline in the value of the shares.
During the year ended December 31, 2011, the Company sold Nil Terralene Fuels shares and recorded an unrealized loss of $2,623. As a result, the carrying value of the available for sale shares of Terralene Fuels is $237 as at December 31, 2011. Effective December 31, 2011, the Company recorded a $2,909 write-down of its investment in Golden due to an other-than-temporary decline in the value of the shares.
25
NOTE 3 – AVAILABLE FOR SALE SECURITIES – RELATED PARTIES (con’t.)
Legacy
During 2003 the Company settled an outstanding debt receivable of $122,988 from Legacy Mining Ltd. (“Legacy”) for the issue of 1,229,880 restricted shares of Legacy representing a then 9.8% interest in Legacy. During 2004, the Company wrote this investment down to $1 because management determined that it was not recoverable within a reasonable period of time.
Effective December 31, 2007, the Company recorded, as other comprehensive income for the year, a $604,440 unrealized gain in the carrying value of its shares of Legacy.
During the year ended December 31, 2008, the Company sold 150,000 Legacy shares resulting in a realized gain of $26,100 and recorded an additional unrealized gain of $270,562 to December 31, 2008. As a result, the carrying value of the available for sale shares of Legacy was $885,502 as at December 31, 2008.
During the year ended December 31, 2009, the Company sold 30,985 Legacy shares resulting in a realized loss of $2,987 (net of commissions of $595) and recorded an additional unrealized loss of $797,161 to December 31, 2009. As a result, the carrying value of the available for sale shares of Legacy is $ 62,934 as at December 31, 2009.
During the year ended December 31, 2010, the Company the Company received 2,627,440 restricted shares of Legacy valued to $131,372 pursuant to a debt settlement and sold Nil Legacy shares. The Company recorded an unrealized gain in the carrying value of its available-for-sale securities totaling $35,021, which was recorded as other comprehensive income (loss). As a result, the carrying value of the available for sale shares of Legacy is $58,822 as at December 31, 2010. Effective December 31, 2010, the Company recorded a $78,823 write-down of its investment in Legacy due to an other-than-temporary decline in the value of the shares.
During the year ended December 31, 2011, the Company sold Nil Legacy shares and recorded an unrealized loss of $52,939. As a result, the carrying value of the available for sale shares of Legacy is $5,882 as at December 31, 2011. Effective December 31, 2011, the Company recorded a $51,469 write-down of its investment in Legacy due to an other-than-temporary decline in the value of the shares.
Available for sale securities – related parties include the following:
December 31, | December 31, | |||||||
2011 | 2010 | |||||||
3,676,335 (2010-3,676,335) shares of Legacy Wine & Spirits | $ | 5,882 | $ | 58,822 | ||||
98,612 (20010- 98,612) shares of Terralene Fuels Corporation | 237 | 2,860 | ||||||
$ | 6,119 | $ | 61,682 |
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NOTE 4 – OIL AND GAS PROPERTIES
Oil and gas properties include the following:
December 31, | December 31, | |||||||
2011 | 2010 | |||||||
Acquisition and exploration costs, unproved, not subject to depletion. | $ | - | $ | 3 |
The Company's oil and gas activities are currently conducted in the United States. The following costs were incurred in oil and gas acquisition and exploration activities:
Harvester Property, California, USA:
The Company owns a 2% royalty interest carried at a value of $Nil due to the uncertainty of realization.
LAK Ranch Oil Project, Wyoming, USA:
The Company owns a 0.7% gross overriding royalty interest on 6,360 acres of oil and natural gas rights located in the Powder River Basin of eastern Wyoming carried at a value of $Nil due to the uncertainty of realization.
Uinta Basin Property, Utah:
On October 26, 2004, the Company entered into a Letter of Intent with Pioneer Oil and Gas (“Pioneer”), whereby the Company could acquire an undivided Eighty-Five Percent (85%) working interest and an undivided Sixty-Eight (68%) net revenue interest in 13,189 acres located in Wasatch County, Utah, known as the “Uinta Basin”. The Company paid Pioneer a deposit of $50,000 for the exclusive right to enter into a Participation Agreement with Pioneer on or before January 18, 2005.
On January 18, 2005, the Company entered into the Participation Agreement with Pioneer as described above. The total consideration paid to Pioneer, including the $50,000 deposit described above, was $706,279. In addition, the Company issued 1,200,000 restricted common shares valued at $264,000 on February 7, 2005 as finders’ fees to certain third parties who were responsible for tabling the Uinta Basin Overpressured Gas Project to the Company. The Company has also committed to paying a 1.5% gross royalty on all revenue received by it from the Uinta Basin Project.
As part of the agreement, Pioneer has agreed to provide the Company with 2-D seismic data crossing the acreage. Any additional seismic that Pioneer or the Company may mutually agree to acquire over the acreage shall be paid for entirely by the Company with the parties owning the data in the same proportion as their working interest in the acreage. In addition, the Company will be required to drill an initial test well at a location on the acreage mutually agreed upon by Pioneer and the Company. The Company will serve as the Operator in drilling the acreage.
The Company shall pay One Hundred Percent (100%) of all costs of drilling the first two wells drilled on the acreage along with 100% of all costs of logging or testing the wells. If either of the first two test wells is deemed a dry hole, the Company shall pay One Hundred Percent (100%) of all costs of plugging and abandoning such well(s) and restoration of the surface upon which the well(s) reached its authorized depth and completion of all tests
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NOTE 4 – OIL AND GAS PROPERTIES (con’t.)
deemed necessary by the Operator. If the Company elects to complete either or both of the first two wells drilled on the acreage, the Company shall pay One Hundred Percent (100%) of all completion costs through the tanks along with any costs associated to hook up the well(s) to pipeline for the well(s) to be capable of producing into a commercial pipeline for sale. After the first two wells drilled, if productive, are hooked-up to a pipeline and capable of producing oil and gas in commercial quantities, the Company shall pay 85% of all costs of operating the first two wells and Pioneer shall pay 15% of the operation costs of such wells as reflected in their working interest ownership in such wells. The Company is required to drill a well on the acreage before November 1, 2010, or the acreage acquired will revert back to Pioneer. During the year ended December 31, 2008 the Company incurred $Nil (2007 -$508,435) on exploration of the property. The Company was seeking joint venture drilling partners during 2008 in order to meet its 2010 drilling commitment. The Company was unable to secure a joint venture drilling partner or raise any capital to satisfy an approximate $12,000,000 drilling cost for a 15,000 ft. initial well. Due to this inability to find funding, the Uinta property was being carried at a value of $Nil due to the uncertainty of realization. During the year ended December 31, 2009, the Company re-conveyed its interest in the Uinta property to its original owner, Pioneer Oil and Gas.
NOTE 5 – ACQUISITION
On March 6, 2009, the Company has signed an agreement to acquire all of the assets of Organa Gardens Inc.(OGI), a Nevada Corporation in the business of hydroponics vertical farming. These assets include, but are not limited to all proprietary designs, engineering, technology, business models, plans and intellectual properties pertaining to the Organa Garden System-Discovery (OGS-D) and the Organa Garden System-Enterprise (OGS-E). Both the OGS-D and OGS-E are a rotary hydroponics vertical farming system designed with serviceability, ease-of-use and maximum harvest in mind. Both models are modular, allowing them to be expanded by stacking them. Its specially designed waterwheel technology allows the fully automated system to recycle and reuse 95% of the water used while requiring a negligible amount of energy to run.
The Company will issue up to 25,000,000 Rule 144 shares of its common stock to OGI, to be held in trust and released based on the following terms and gross revenue requirements:
(a) Release of 10,000,000 shares of the Company upon signing this Agreement.
(b) Release of 5,000,000 shares of the Company upon attaining $1,000,000 US in gross revenue.
(c) Release of 5,000,000 shares of the Company upon attaining $2,500,000 US in gross revenue.
(d) Release of 5,000,000 shares of the Company upon attaining $4,000,000 US in gross revenue.
None of these shares have been issued to date and the agreement has not yet been finalized.
The Company will raise up to $500,000 US to market and fulfill the required obligations of OGI as outlined in the supplemental agreement(s) to follow. The Company and Organa Gardens Inc.agree to allow the shares to sit in trust for a period of 5 years in order for OGI to meet its sales goals. Should the requirements not be met in all or part, then all of the remaining shares will be returned back to the treasury of the Company.
On June 9, 2009, the Registrant signed an amended agreement to acquire all of the assets of Organa Gardens Inc., a Nevada Corporation in the business of hydroponics vertical farming. These assets include but are not limited to all proprietary designs, engineering, technology, business models, plans and intellectual properties pertaining to the Organa Garden System-Discovery (OGS-D) and the Organa Garden System-Enterprise (OGS-E).
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NOTE 5 – ACQUISITION (con’t.)
Under the terms of the acquisition, the Company issued 3,500,000 restricted 144 shares to Organa Gardens Inc.and/or its nominees (issued) and render a cash commitment of up to $250,000 to complete the final steps of taking the OGS-D and OGS-E to market. This agreement replaces the agreement dated March 9, 2009.
All research and development costs are expensed as incurred and include costs of consultants who conduct research and development on behalf of the Company. For the year ended December 30, 2011, the Company incurred $Nil (2010 -$7,000) in research and development costs.
On July 29, 2011, the Company has signed a Letter of Intent with Integrated Green Technologies LLC (IGT), of Fort Lauderdale, Florida to merge the two companies. A definitive agreement of the merger will be an exchange of restricted shares of the Company’s stock to IGT shareholders effecting a change of business which will still follow the Company’s green mandate. On August 17, 2011 the Company entered into a formal agreement with IGT and is currently conducting its due diligence. IGT is an industrial tools, machinery & equipment manufacturer including consumable supplies & materials. IGT is a distributor of heavy-duty blasting equipment and “green” environmentally safe mobile powder coating systems featuring the pending patent, Triplex Electrostatic/Electrostatic Thermal Spray/Non Electrostatic Thermal Spray and Powder Coating Spray and Conversion Device. The Company had advance $8,000 to IGT for prepaid expenses as of December 31, 2011. (2010 – Nil). The Company has written off this amount as of December 31, 2011. Upon completion of the due diligence process, the Company will issue a structured release of 60,000,000 restricted shares to be transferred under the Agreement. The structure shall be as follows: upon execution of the Agreement, 30,000,000 shares shall be issued immediately thereafter, an additional 15,000,000 shares shall be issued 120 days following the execution date and the balance of 15,000,000 shares shall be issued 240 days following the execution date. The Company is required to provide $250,000 in funding to IGT over a period of one year. As a result of the due diligence process, the Company is not proceeding with this acquisition due to complications with the current patent filed by IGT. Should IGT move forward and correct the deficiencies with the patent, the Company will re-consider the project.
NOTE 6 – DEFERRED COMPENSATION
On August 15, 2007, the Company entered into an agreement with Palisades Financial Ltd., (“Palisades”) a private company owned by a significant shareholder of the Company, for a four year term, whereby Palisades will provide investor relations services to the Company (valued at $32,000) in exchange for 133,333 restricted shares of the Company’s common stock. Palisades will provide services such as researching, editing and generating a company profile, relaying the Company’s business perspectives and distribution of corporate updates, including press releases.
On November 18, 2009 the Company entered into an agreement with Compte de Sierge Accomodative Corp. (“Compte”), a private company controlled by a significant shareholder, with an eighteen month term, whereby Compte provides investor relations services to the Company specific to the hydroponic vertical farming project (valued at $7,600) in exchange for 500,000 restricted shares of the Company’s common stock.
On May 15, 2010, the Company entered into an agreement with Domain Land Holdings Ltd. (“Domain”), a private company controlled by a significant shareholder, with a two-year term, whereby Domain provides investment-banking services to the Company (valued at $5,000) in exchange for 1,000,000 restricted shares of the Company’s common stock.
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NOTE 6 – DEFERRED COMPENSATION (continued)
On July 1, 2011 the Company entered into an agreement with Compte de Sierge Accomodative Corp. (“Compte”), a private company controlled by a significant shareholder, with an eighteen month term, whereby Compte provides investor relations services to the Company specific to the hydroponic vertical farming project (valued at $22,500) in exchange for 1,500,000 restricted shares of the Company’s common stock.
On July 1, 2011, the Company entered into an agreement with Charlton Investments Ltd. (“Charlton”), a private company controlled by a significant shareholder, with a two-year term, whereby Charlton provides investment-banking services to the Company (valued at $30,000) in exchange for 2,000,000 restricted shares of the Company’s common stock.
On July 1, 2011, the Company entered into agreements with three consultants, for a twelve month term, whereby the consultants provide consulting services to the Company (valued at $45,000) in exchange for 3,000,000 shares of the Company’s common stock.
On December 1, 2011, the Company entered into an agreement with a consultant, for a twelve month term, whereby the consultant will provide consulting services to the Company (valued at $1,800) in exchange for 450,000 shares of the Company’s common stock.
The Company amortizes the costs of these services over the respective terms of the contracts. During the years ended December 31, 2011 and 2010, the Company recorded amortization of deferred compensation totaling $42,838 and $14,628 respectively. As of December 31, 2011 the unamortized portion of the deferred compensation totaled $62,590. (December 31, 2010 - $6,128).
NOTE 7 - STOCKHOLDERS’EQUITY
(1) | 2011 Stock Transactions |
During the year ended December 31, 2011:
(a) The Company issued 25,000 restricted common shares valued at $125 to a new director for his services.
(b) The Company issued 6,950,000 restricted common shares valued at $99,300 pursuant to deferred compensation agreements. (See Note 6)
(c) The Company issued a total of 2,345,000 common shares pursuant to the exercise of options under the Company’s 2009 Stock Incentive and Option Plan. 1,650,000 shares were issued at $0.02 per share to satisfy debt to related parties in the amount of $33,000 and 695,000 shares were issued at $0.01 per share for consulting services totaling $6,950.
(d) The Company issued 9,800,000 common shares pursuant to the Company’s 2011 Stock. Incentive and Option Plan with a value of $78,000 for satisfaction of debt to related parties.
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NOTE 7 - STOCKHOLDERS’EQUITY (continued)
(2) | 2010 Stock Transactions |
During the year ended December 31, 2010:
(a) The Company issued a total of 7,961,033 common shares pursuant to the exercise of options under the Company’s Stock Incentive and Option Plans at prices between $0.0022 and $0.01 per share to satisfy debt to related parties in the amount of $29,913.
(b) The Company issued 1,000,000 restricted common shares valued at $5,000 pursuant to a deferred compensation contract with a related party. See note 6.
(c) The Company issued a total of 1,400,000 common shares pursuant to the exercise of options under the Company’s Incentive plans at prices between $0.003 and $0.01 per share to consultants for services valued at $11,200.
(d) The Company issued 700,300 restricted common shares at $0.01 per share pursuant to a debt settlement with Terralene Fuels Corporation in the amount of $7,003.
(3) | 2011 Stock Options |
The Company issued a total of 2,345,000 common shares pursuant to the exercise of options under the Company’s 2009 Stock Incentive and Option Plan. 1,650,000 shares were issued at $0.02 per share to satisfy debt to related parties in the amount of $33,000 and 695,000 shares were issued at $0.01 per share for consulting services.
The Company issued 9,800,000 common shares pursuant to the Company’s 2011 Stock. Incentive and Option Plan with a value of $78,000 for satisfaction of debt to related parties.
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NOTE 7 - STOCKHOLDERS’EQUITY (continued)
The Company’s stock option activity is as follows:
Number of options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in years) | ||||||||||
Balance, December 31, 2007 | - | - | - | |||||||||
Granted during 2008 | 419,300 | 0.11 | 5.00 | |||||||||
Exercised during 2008 | (419,300 | ) | 0.11 | |||||||||
Balance, December 31, 2008 | - | - | - | |||||||||
Granted during the period | 8,498,000 | 0.01 | ||||||||||
Exercised during the period | (8,498,000 | ) | 0.01 | |||||||||
Balance, December 31, 2009 | - | - | - | |||||||||
Granted during 2010 | 9,361,033 | 0.01 | ||||||||||
Exercised during 2010 | (9,361,033 | ) | 0.01 | |||||||||
Balance, December 31, 2010 | - | - | - | |||||||||
Granted during the period | 12,145,000 | 0.01 | ||||||||||
Exercised during the period | (12,145,000 | ) | 0.01 | |||||||||
Balance, December 31, 2011 | - | - | - |
As of December 31, 2011, there were no stock options available for grant under the Company’s 2006 Stock Incentive and Option Plan.
As of December 31, 2011, there were no stock options available for grant under the Company’s 2007 Stock Incentive and Option Plan.
As of December 31, 2011, there were no stock options available for grant under the Company’s two 2009 Stock Incentive and Option Plan.
As of December 31, 2011, there were no stock options available for grant under the Company’s 2011 Stock Incentive and Option Plan.
On June 30, 2011 the Company filed Registration Statements on Form S-8 to register 9,800,000 to be issue pursuant to the Company’s 2011 Stock. Incentive and Option Plan. All 9,800,000 shares have been granted and exercised under the June 2011 Stock Option Plan.
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NOTE 7 - STOCKHOLDERS’EQUITY (continued)
(4) | 2010 Stock Options |
During the year ended December 31, 2010, 9,361,033 stock options were granted by the Company, which were immediately exercised at prices between $0.0022 and $0.01 per share to satisfy debt to related parties in the amount of $29,913 and for consultant services valued at $11,200.
The Company’s stock option activity is as follows:
Number of options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in years) | ||||||||||
Balance, December 31, 2007 | - | - | - | |||||||||
Granted during 2008 | 419,300 | 0.11 | 5.00 | |||||||||
Exercised during 2008 | (419,300 | ) | 0.11 | |||||||||
Balance, December 31, 2008 | - | - | - | |||||||||
Granted during the period | 8,498,000 | 0.03 | ||||||||||
Exercised during the period | (8,498,000 | ) | 0.03 | |||||||||
Balance, December 31, 2009 | - | - | - | |||||||||
Granted during the period | 9,361,033 | 0.01 | ||||||||||
Exercised during the period | (9,361,033 | ) | 0.01 | |||||||||
Balance, December 31, 2010 | - | - | - |
As of December 31, 2010, there were no stock options available for grant under the Company’s 2006 Stock Incentive and Option Plan.
As of December 31, 2010, there were no stock options available for grant under the Company’s 2007 Stock Incentive and Option Plan.
As of December 31, 2010, there were 1,705,000 stock options available for grant under the Company’s two 2009 Stock Incentive and Option Plan.
On June 29, 2009, the Company filed Registration Statements on Form S-8 to register 7,500,000 to be issue pursuant to the Company’s 2009 Stock. Incentive and Option Plan. 7,500,000 shares have been granted and exercised under the June 2009 Stock Option Plan. On November 24, 2009, the Company filed Registration Statements on Form S-8 to register 10,000,000 to be issue pursuant to the Company’s 2009 Stock Incentive and Option Plan. 6,655,000 shares have been granted and exercised under the November 2009 Stock Option Plan.
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NOTE 8– RELATED PARTY TRANSACTIONS
During the year ended December 31, 2011, the Company incurred $6,125 (2010 -$2,930) in management fees to directors. As at December 31, 2011 the Company owes $Nil in management fees (2010 - $9,000).
During the year ended December 31, 2011 the Company incurred $31,572 (2010 - $29,313) in rent and office expenses to a private company controlled by a shareholder.
During the year ended December 31, 2011, significant shareholders and companies controlled by significant shareholders earned $42,838 (2010 - $14,628) pursuant to prepaid services agreements.
The following amounts are due to related parties at:
December 31, 2011 | December 31, 2010 | |||||||
Director | $ | - | $ | 9,000 | ||||
Significant shareholders | 79,071 | 79,590 | ||||||
$ | 79,071 | $ | 88,590 |
All related party transactions are in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
NOTE 9 – SUPPLEMENTAL CASH FLOW INFORMATION
Year ended December 31, 2011 | Year ended December 31, 2010 | |||||||
Cash paid during the year for: | ||||||||
Interest | $ | - | $ | - | ||||
Income taxes | $ | - | $ | - |
During the year ended December 31, 2011 the Company issued:
· | 25,000 restricted common shares valued at $125 to a new director for his services. |
· | 6,950,000 restricted common shares valued at $99,300 pursuant to deferred compensation agreements. (See Note 6) |
· | 9,800,000 common shares at $0.012 per share pursuant to the Company’s 2011 Stock. Incentive and Option Plan with a value of $78,000 for satisfaction of debt to related parties. |
· | 2,345,000 common shares pursuant to the exercise of options under the Company’s 2009 Stock Incentive and Option Plan. 1,650,000 shares were issued at $0.02 per share to satisfy debt to related parties in the amount of $33,000 and 695,000 shares were issued at $0.01 per share for consulting services. |
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NOTE 9 – SUPPLEMENTAL CASH FLOW INFORMATION (continued)
During the year ended December 31, 2010 the Company issued:
· | 9,361,033 stock options were granted by the Company, which were immediately exercised at prices between $0.0022 and $0.01 per share to satisfy debt to related parties in the amount of $29,913 and for consultant services valued at $11,200. |
· | 1,000,000 restricted common shares valued at $5,000 pursuant to a deferred compensation contract with a related party. See note 6. |
· | 700,300 restricted common shares at $0.01 per share pursuant to a related party debt settlement in the amount of $7,003. |
NOTE 10 – COMMITMENTS AND CONTINGENCIES
On February 21, 2002, the Company issued 350,000 shares valued at $119,000 to Empire Sterling Corporation for services to be rendered with respect to the acquisition of ACGT Corporation (“ACGT”). The shares were to be held in trust and not sold until all necessary financing was in place to complete the ACGT acquisition. Empire Sterling Corporation breached the trust agreement and the Company placed a stop transfer on these shares and requested they be returned to the Company. Empire Sterling Corporation failed to return the share certificate and as such, the Company commenced court proceedings against the principals of Empire Sterling Corporation. The Company argued for an interim injunction against all parties and was successful. On May 9, 2002, the Court ordered Empire Sterling Corporation to deposit the shares with the Court pending judicial disposition. The Company continued to file legal process claiming ownership of the shares and breach of trust inter alia. The Company was successful and has now applied to have the share certificates released and subsequently cancelled. As of December 31, 2011, the Company is still in the process of having the certificates released.
In February, 2008, the Company received a demand notice from CGG Veritas for failure to pay an outstanding balance of $317,380 pursuant to a Master Agreement and Job Supplement for the Shotgun Draw 2D Seismic Program in Utah. In accordance with Section 15.3 of the Master Agreement and Job Supplement dated March 21, 2007, CGG has demanded payment by April 25, 2008. If CGG Veritas is forced to proceed with litigation of this matter, it will seek reimbursement of its attorneys’ fees and expenses related to the litigation. The Company is currently examining various alternatives to resolve this matter. CGG Veritas has not proceeded with litigation as of December 31, 2011.
As of August 1, 2010, the Company has leased 1250 sq. ft of office space from Holm Investments Ltd. at $2,500 per month for a period of 3 years.
NOTE 11 – INCOME TAXES
Potential benefits of United States Federal income tax losses are not recognized in the accounts until realization is more likely than not. As of December 31, 2011, the Company has combined net operating losses carried forward totaling approximately $24,900,000 for tax purposes which expire through 2030. Availability of loss usage is subject to change of ownership limitations under Internal Revenue Code 382 for 2002 and prior year’s losses. Pursuant to SFAS No. 109, the Company is required to compute tax asset benefits for net operating losses carried forward. Future tax benefits which
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NOTE 11 – INCOME TAXES (continued)
may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry forwards.
A reconciliation of income tax computed at the federal and state statutory tax rates is as follows:
Year ended December 31, 2011 | Year ended December 31, 2010 | |||||||
Federal income tax provision at statutory rate | (35.00 | )% | (35.00 | )% | ||||
State income tax provision at statutory rate, net of federal income tax effect | (0.00 | ) | (0.00 | ) | ||||
Total income tax provision rate | (35.00 | )% | (35.00 | )% |
The actual income tax provisions differ from the expected amounts calculated by applying the federal income tax statutory rate to the Company’s loss before income taxes. The components of these differences are as follows:
Year ended December 31, 2010 | Year ended December 31, 2009 | |||||||
Loss before income taxes | $ | (202,130 | ) | $ | (217,210 | ) | ||
Corporate tax rate | 35.00 | % | 35.00 | % | ||||
Expected tax expense (recovery) | (70,746 | ) | (76,024 | ) | ||||
Non-deductable stock based compensation | - | - | ||||||
Unrecognized loss carry forward and other | - | - | ||||||
Income tax provision | $ | - | $ | - |
The Company’s tax-effected deferred income tax assets and liabilities are estimated as follows:
2011 | 2010 | |||||||
Non-capital loss carry forwards | $ | 8,167,000 | $ | 8,167,000 | ||||
Valuation allowance | (8,167,000 | ) | (8,167,000 | ) | ||||
Net deferred tax asset | $ | - | $ | - |
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Management's Report on Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed by, or under the supervision of, a public company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”) including 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 assets of the company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has assessed the effectiveness of our internal control over financial reporting as of December 31, 2011. In making this assessment, our management used the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management, with the participation of the Chief Executive and Chief Financial Officers, believes that, as of December 31, 2011, we did not maintain effective internal control over financial reporting due to the material weakness described below.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. We identified the following material weakness in our assessment of the effectiveness of internal control over financial reporting:
37
We did not design and implement adequate controls related to the accounting of marketable securities, specifically in this instance, applying guidance to other than temporary decline in value of the marketable securities.
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report
Code of Ethics
We intend to adopt a code of ethics in 2012 that applies to our principle executive officer, principal financial officer, principle accounting officer or controller, other persons performing similar functions. We intend to post the text of our code of ethics on our website in connection with our "Investor Relations" materials. In addition, we intend to promptly disclose (1) the nature of any amendment to our code of ethics that applies to our principle executive officer principal financial officer, principle accounting officer or controller, other persons performing similar functions (2) the nature of any wavier, including an implicit wavier, from a provision of our code of ethics that is granted to one of these specific officers, the name of such person who
is granted the waiver and the date of the waiver on our web site in the future.
We do not currently have a code of ethics as this is a new regulatory requirement and we are examining the various form and contents of other companies written code of ethics, discussing the merits and meaning of a code of ethics to determine the best form for our Company.
ITEM 9B. OTHER INFORMATION
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Executive Officers and Directors. We are dependent on the efforts and abilities of certain of our senior management. The interruption of the services of key management could have a material adverse effect on our operations, profits and future development, if suitable replacements are not promptly obtained. We anticipate that we will enter into employment agreements with each of our key executives; however, no assurance can be given that each executive will remain with us during or after the term of his or her employment agreement. In addition, our success depends, in part, upon our ability to attract and retain other talented personnel. Although we believe that our relations with our personnel are good and that we will continue to be successful in attracting and retaining qualified personnel, there can be no assurance that we will be able to continue to do so. Our officers and directors will hold office until their resignation or removal.
Our directors and principal executive officers are as specified on the following table:
Name and Address | Age | Position | Date of Appointment | |||
Jaclyn Cruz | 36 | President & Director & CEO | November 18, 2008 | |||
Sharon Deutsch | 58 | Secretary, Treasurer & Director & CFO | June 21, 2011 |
The chart above specifies Organa Gardens International Inc.’s current officers and directors. All directors of the Company hold office until the next annual meeting or until their successors have been elected and qualified. All officers serve at the discretion of the Board of Directors. There are no familial relationships between our officers and directors.
Section 16(a) Beneficial Ownership Reporting Compliance. Not all of our officers, directors, and principal shareholders have filed all reports required to be filed by those persons on, respectively, a Form 3 (Initial Statement of Beneficial Ownership of Securities), a Form 4 (Statement of Changes of Beneficial Ownership of Securities), or a Form 5 (Annual Statement of Beneficial Ownership of Securities).
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by us for the last three fiscal years ending December 31, 2011 for each or our officers. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation discussed addresses all compensation awarded to, earned by, or paid to named officers.
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SUMMARY COMPENSATION TABLE
Name and Principal Position | Year | Salary (US$) | Bonus (US$) | Stock Awards (US$) | Option Awards (US$) | Non-Equity Incentive Plan Compensation (US$) | Nonqualified Deferred Compensation Earnings (US$) | All Other Compensation (US$) | Total (US$) | ||||||||||||||||||||||||
Jaclyn | 2009 | 1,660 | 0 | 1,750 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Cruz | 2010 | 500 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
President | 2011 | 4,000 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Sharon | |||||||||||||||||||||||||||||||||
Deutsch | |||||||||||||||||||||||||||||||||
Director | 2011 | 1,000 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
We have no employment agreements with any of our director and sole officer. We do not contemplate entering into any employment agreements until such time as we begin profitable operations. There is no assurance that we will ever generate revenues from our operations. The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officer. There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our officers and directors other than as described herein.
Stock-based Compensation. During the year ended December 31, 2011, $Nil (2010-$Nil) in stock-based compensation was recorded in our financial statements. Stock-based compensation is an estimate of the intrinsic value placed in respect to stock options granted to officers, directors, employees and an estimate of the fair value of stock options granted to consultants using the Black-Scholes option pricing model. We do not expect further stock-based compensation in 2012.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding the beneficial ownership of our common stock as of December 31, 2011, by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, each of our directors and named executive officers, and all of our directors and executive officers as a group.
Title of Class | Name of Beneficial Owner | Amount & Nature of Beneficial Owner | Percent of Class Common Stock | ||||||||
Jaclyn Cruz | P.O. Box 63 | 25,000 | 0.0006 | % | |||||||
President/.Director/CEO | Farmingville, New York | ||||||||||
11738 | |||||||||||
Sharon Deutsch | 35 South Ocean Ave. | - | 0.00 | % | |||||||
Secretary /Director /CFO | Patchogue, New York | ||||||||||
11772 |
All directors and Officers as a group 25,0000.0006%
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(1) The beneficial owners of these shares are not known to Organa Gardens International Inc.Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. In accordance with Securities and Exchange Commission rules, shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the table are deemed beneficially owned by the optionees. Subject to community property laws, where applicable, the persons or entities named in the table above have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them.
No changes in the Company's internal controls over financial reporting occurred during the year ended December 31, 2011 and 2010 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
During the year ended December 31, 2011, the Company incurred $6,125 (2010 -$2,930) in management fees to directors. As at December 31, 2011 the Company owes $Nil in management fees (2010 - $9,000).
During the year ended December 31, 2011 the Company incurred $31,572 (2010 - $29,313) in rent and office expenses to a private company controlled by a shareholder.
During the year ended December 31, 2011, significant shareholders and companies controlled by significant shareholders earned $42,838 (2010 - $14,628) pursuant to prepaid services agreements.
The following amounts are due to related parties at:
December 31, 2011 | December 31, 2010 | |||||||
Director | $ | - | $ | 9,000 | ||||
Significant shareholders | 79,071 | 79,590 | ||||||
$ | 79,071 | $ | 88,590 |
All related party transactions are in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
1. Audit Fees: Aggregate fees billed for each of the last two (2) fiscal years for professional services rendered by the principal accountant for the audit of the annual financial statements and review of financial statements included on Form 10-Q:
2010: $23,000
2011: $15,400
2. Audit-Related Fees: Aggregate fees billed in each of the last two (2) fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the financial statements and are not reported previously.
2010: $0
2011: $0
3. Tax Fees: Aggregate fees billed in each of the last two (2) fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.
2010: $0
2011: $0
4. All Other Fees: Aggregate fees billed in each of the last two (2) fiscal years for products and services provided by the principal accountant, other than the services previously reported.
2010: $0
2011: $0
5. Audit Committee Pre-Approval Procedures. The Board of Directors has not, to date, appointed an Audit Committee.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit 31.1 - | Section 906 Certification of Periodic Report of the ChiefExecutive Officer. |
Exhibit 31.2 - | Section 906 Certification of Periodic Report of the ChiefFinancial Officer. |
Exhibit 32.1 - | Section 302 Certification of Periodic Report of the ChiefExecutive Officer. |
Exhibit 32.1 - | Section 302 Certification of Periodic Report of the ChiefFinancial Officer. |
b) Form 8-K
8-K filed February 3, 2012 with respect with respect to a change in Directors.
8-K filed August 23, 2011 with respect to a material definitive agreement.
8-K filed June 24, 2011 with respect to a change in Directors.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused to be signed on its behalf by the undersigned, whereunto duly authorized.
ORGANA GARDENS INTERNATIONAL INC. | ||
Date: March 30, 2012 | ||
By: | /s/ Jaclyn Cruz | |
Jaclyn Cruz |
Pursuant to the requirements of the Securities and Exchange Act of 1934, this amended report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates included.
By: | /s/ Jaclyn Cruz | Date: March 30, 2012 | |
Jaclyn Cruz, Director and President | |||
By: | /s/ Matt Kelly | Date: March 30, 2012 | |
Matt Kelly, Secretary and Treasury |
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