Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
¨
No
x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
¨
No
x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
¨
No
x
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every, Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
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No
¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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. Yes
¨
No
x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one):
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
x
No
¨
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter: There is no public market for the Company’s common stock.
As of February 16, 2017, the registrant had 23,810,861 shares of common stock outstanding.
This report contains forward-looking statements. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the registrant. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Forward-looking statements usually contain the words "estimate," "anticipate," "believe," "expect," or similar expressions, and are subject to numerous known and unknown risks and uncertainties. In evaluating such statements, prospective investors should carefully review various risks and uncertainties identified in this report, including the matters set forth under the captions "Risk Factors" and in the registrant's other SEC filings. These risks and uncertainties could cause the registrant's actual results to differ materially from those indicated in the forward-looking statements. The registrant undertakes no obligation to update or publicly announce revisions to any forward-looking statements to reflect future events or developments.
Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We file reports with the Securities and Exchange Commission ("SEC"). You can read and copy any materials we file with the SEC at the SEC's Public Reference Room located at 100 F. Street, NE, Washington, D.C. 20549, on official business days during the hours of 10 a.m. to 3 p.m. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including the registrant.
PART I
ITEM 1. BUSINESS.
Our Corporate History and Structure
Environmental Packaging Technologies Holdings, Inc. (the "Company", "we, "us", or "our") was incorporated in Nevada on November 17, 2011, under the name "GS Valet, Inc." On December 1, 2011, the Company entered into an agreement with Garden State Valet, LLC, a New Jersey limited liability company ("Garden State Valet"), and the unit-holders of Garden State Valet (the "Unit-holders") to purchase all of the outstanding units of Garden State Valet. Garden State Valet was formed on June 15, 2011.
On August 9, 2013, six investors acquired 27,134,875 shares of our common stock then held by Neil Scheckter, who was our sole officer and director at the time. As a result, there was a change of control, as Mr. Scheckter relinquished his control of the Company and resigned from his positions. Immediately following their acquisition of the shares, one of the investors caused 8,886,663 shares that he acquired from Mr. Scheckter to be cancelled.
Also on August 9 and December 9, 2013, we sold a total of 4,070,581 shares of our common stock to four accredited investors (the "Investors") at $1.965 per share or gross proceeds of $8 million (the "Proceeds"), including $3 million in cash and $5 million in promissory notes issued by Preciosa Streaming Company Inc., a Barbados company ("Preciosa"). Preciosa issued the notes to two of the Investors, who in turn assigned them to us. Preciosa repaid the notes to us in full in September 2013.
On December 9, 2013, we further sold 3,328,181 shares of our common stock at $0.000046 per share for gross proceeds of $153.
We intended to use the Proceeds to pursue a metals streaming business by acquiring and managing precious metals streams, royalties and other similar interests. A stream is a non-operating interest in a mining project that provides the right to purchase metals produced from such project for a fixed price for a specified period of time in exchange for an upfront payment with such terms defined in the metals purchase agreement. Royalties are non-operating interests in mining projects that provide the right to revenue or metals produced from the project after deducting specified costs, if any.
In connection to our metals streaming plans:
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we changed our name from "GS Valet, Inc." to "International Metals Streaming Corp." on September 26, 2013;
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we changed our fiscal year end from September 30 to December 31, effective on September 26, 2013; and
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the operations of Garden State Valet ceased on October 1, 2013.
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On March 10, 2014, due to our determination that the metals streaming business was no longer desirable, we rescinded our transactions with the Investors whereby:
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each Investor agreed to return the shares of our common stock issued to such Investor;
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we remitted to each Investor a portion of the then remaining Proceeds pro rata to the shares of our common stock issued to such Investor; and
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we and the Investors agreed to release all claims we may have against one another.
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Accordingly, 4,070,581 shares in the aggregate were surrendered to us for cancellation. In addition, in November 2015, two additional shareholders surrendered an aggregate 3,328,181 shares of our common stock for cancellation and as thus as of December 31, 2015, there were 26,253,000 shares of our common stock outstanding. On September 22, 2016, the former sole officer and director surrendered an aggregate of 2,442,139 shares of our common which were cancelled for no consideration.
Recent Developments
On December 28, 2016, we entered into an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”) with EPT Acquisition Corporation, a Delaware corporation (“Merger Sub”), and a direct wholly-owned subsidiary of ours and Environmental Packaging Technologies, Inc., a Delaware corporation (“EPT”).
EPT was incorporated in 2011 with headquarters in Houston, Texas, manufacturing facilities in Zeeland, Michigan, operations in over five countries and sales in over twenty-eight countries throughout the world. EPT believes it has developed an efficient and economical way to safely transport bulk, non-hazardous liquids, offering products that provide innovative solutions to meet growing global demand. It has created a patented transportation system that consists of a two-ply plastic tube encased in a woven material that can be filled with up to 6,340 gallons of liquid. EPT primarily has two separate products – the Big Red Flexitank and its newest product Liquiride, launched in 2016. EPT’s products have been used to ship hundreds of different products from bio diesel, wine, juice, milk, high-fructose corn syrup, and even liquid latex. The Big Red Flexitank is a large single bag that fits within a 20’ shipping container and is secured by bulkheads. It has certifications for shipping on most of the world’s railways, roads and ships – a very difficult and time consuming process. EPT believes that it has the premiere product as it has a long history of the fewest leaks within the industry, with substantially less than 0.1% of all tanks developing a problem. In 2015, EPT sold approximately 20,000 Flexitanks and generated $16.5 million in revenues from those sales.
The newest product, Liquiride, is believed by EPT to be the only liquid shipping product that works for use with standard 40’ and 53’ shipping containers. A unique feature of Liquiride is the capability to have multiple flexitanks filled with different liquids within a single shipping container. EPT also believes that it is also the only product in which temperature control can be guaranteed as it can be shipped within a refrigerated (“reefer”) container. Liquiride has recently received certifications from the US and Canadian rail and highway authorities.
EPT has recently reached a five-year contractual agreement with one of the world’s largest shipping companies for the exclusive use of Liquiride within this company’s ocean-going reefer containers. EPT believe that this relationship will significantly increase revenues over the next several years.
Pursuant to the Merger Agreement, subject to and upon the terms and conditions of the Merger Agreement, Merger Sub shall be merged with and into EPT (the “Merger”) and EPT shall be the surviving corporation of the Merger and EPT shall become, as a result of the Merger, our direct wholly-owned subsidiary.
Immediately following the Merger, we shall have approximately 52,000,000 shares issued and outstanding of which (a) 40,000,000 such shares will be owned by the former EPT Stockholders, and (b) approximately 12,000,000 shares will be owned by our current shareholders. Upon completion of the Merger, the individuals designated by EPT shall be our sole directors and officers our current officer and director shall resign.
The Merger Agreement includes conditions, representations and warranties and covenants of the parties customary for a transaction of this nature. The Merger Agreement may be terminated after March 31, 2017 if the Merger has not closed by that date.
The foregoing descriptions of the Merger Agreement are not complete and are qualified in their entirety by reference to the Merger Agreement, which is referenced by the registrant's Current Report on Form 8-K filed on December 29, 2016.
On February 1, 2017, the Company’s director and holders the majority of the Company’s outstanding stock by written consent approved a name change from International Metals Streaming Corp. to Environmental Packaging Technologies Holdings, Inc. Further, in February 2017, the Company’s director approved a forward split of the Company’s outstanding and authorized common stock at a ratio of 2.17079 to 1. Both actions were filed with Secretary of State of the State of Nevada. The Company also requested that Financial Industry Regulatory Authority (“
FINRA
”) change the symbol from IMST to EPTI. The Company submitted an issuer company-related action notification form to FINRA requesting FINRA approve the name change, forward split and symbol change. The Company received FINRA’s approval on February 14, 2017 with an effective date of February 16, 2017 for the name change and forward stock split. The symbol change will be effective as of February 28, 2017.
Going Concern
Based on our financial history since inception, our independent registered public accounting firm has issued a going concern opinion in its audit report included in the financial statements that are a part of this annual report on Form 10-K (this "Report"). We are a shell company that has generated minimal revenues and, following the termination of our metals streaming business plan and the refund of the remaining Proceeds to the Investors in March 2014, currently has nominal assets. As a shell company, our new business plan is to seek, acquire or merge with a business or company. Our business operations are subject to all the risks and the uncertainties arising from the absence of a significant operating history and limited capital resources. No assurances can be given that we will ever be able to implement our business plan or, if implemented, will be successful. If our business plan is not successful, and we are not able to operate profitably, investors may lose their entire investment in our Company.
Through December 31, 2016, we have incurred $877,553 in losses since our inception. We have not achieved profitability and expect to continue to incur net losses throughout the fiscal year ending December 31, 2017 and, probably, into subsequent fiscal periods.
Shell Company Status
Following our decision to terminate the metals streaming business and to return the remaining Proceeds to the Investors in March 2014, we currently have nominal operations and minimal assets. As such, we are considered to be a shell company under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Accordingly, the securities sold in previous offerings can only be resold through (i) registration under the Securities Act of 1933, as amended (the "Securities Act"), (ii) Section 4(1) of the Securities Act, if available, for non-affiliates, or (iii) by meeting the conditions of Rule 144(i) of the Securities Act.
Current Business Plan
On December 28, 2016, we entered into the Merger Agreement with Merger Sub and Environmental Packaging Technologies, Inc., a Delaware corporation (“EPT”).
See Business – Recent Developments
We are not currently engaged in any substantive business activity except the search for potential assets, property or businesses to acquire, and we have no current plans to engage in any other activity in the foreseeable future unless and until we complete any such acquisition. In our present form, we are deemed to be a shell company seeking to acquire or merge with a business or company. We do not intend to restrict our search for business opportunities to any particular business or industry, and the areas in which we will seek out business opportunities or acquisitions, reorganizations or mergers may include all lawful businesses. We recognize that the number of suitable potential business ventures that may be available to us may be extremely limited, and may be restricted as to acquisitions, reorganizations and mergers with businesses or entities that desire to avoid what such entities may deem to be the adverse factors related to an initial public offering as a method of "going public." The most prevalent of these factors include substantial time requirements, legal and accounting costs, the inability to obtain an underwriter who is willing to publicly offer and sell securities on behalf of the particular issuer, the lack of or the inability to obtain the required financial statements for such an undertaking, state limitations on the amount of dilution to public investors in comparison to the shareholders of any such entities, along with other conditions or requirements imposed by various federal and state securities laws, rules and regulations and federal and state agencies that implement them.
If the merger with EPT is not completed, during the next 12 months, our only foreseeable cash requirements will relate to the payment of our SEC reporting filing expenses, including associated legal and accounting fees; costs incident to reviewing or investigating any potential business venture; and maintaining our good standing as a corporation in our state of organization. We anticipate that these funds will be provided to us in the form of loans from our present management. There are no written agreements requiring our management to provide these cash resources.
Competition
Management believes that there are literally thousands of shell companies engaged in endeavors similar to those engaged in by the Company; many of these companies have substantial current assets and cash reserves. Competitors also include thousands of other publicly-held companies whose business operations have proven unsuccessful, and whose only viable business opportunity is that of providing a publicly-held vehicle through which a private entity may have access to the public capital markets via a reverse reorganization or merger. There is no reasonable way to predict our competitive position or that of any other entity in these endeavors; however, we, having limited assets and no cash reserves, will no doubt be at a competitive disadvantage in competing with entities that have significant cash resources and have recent operating histories when compared with the lack of any substantive operations by the Company.
Government Regulations
Smaller Reporting Company
We are a "smaller reporting company," which designation relieves us of some of the informational requirements of Regulation S-K promulgated by the Securities Exchange Commission ("SEC").
Sarbanes/Oxley Act
We are also subject to the Sarbanes-Oxley Act of 2002, or "SOX Act." The SOX Act created a strong and independent accounting oversight board to oversee the conduct of auditors of public companies and strengthens auditor independence. It also requires steps to enhance the direct responsibility of senior members of management for financial reporting and for the quality of financial disclosures made by public companies; establishes clear statutory rules to limit, and to expose to public view, possible conflicts of interest affecting securities analysts; creates guidelines for audit committee members' appointment, compensation and oversight of the work of public companies' auditors; management assessment of our internal controls; auditor attestation to management's conclusions about internal controls; prohibits certain insider trading during pension fund blackout periods; requires companies and auditors to evaluate internal controls and procedures; and establishes a federal crime of securities fraud, among other provisions. Compliance with the requirements of the SOX Act will substantially increase our legal and accounting costs.
Emerging Growth Company
We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or "JOBS Act." As long as we remain an "emerging growth company," we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not an "emerging growth company," like those applicable to a "smaller reporting company," including, but not limited to, a scaled down description of our business in SEC filings; no requirements to include risk factors in Exchange Act filings; no requirement to include certain selected financial data and supplementary financial information in SEC filings; not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements that we file under the Exchange Act; no requirement for the SOX Act Section 404(b) auditor attestations of internal control over financial reporting; and exemptions from the requirements of holding an annual nonbinding advisory vote on executive compensation and seeking nonbinding stockholder approval of any golden parachute payments not previously approved. We are also only required to file audited financial statements for the previous two fiscal years when filing registration statements, together with reviewed financial statements of any applicable subsequent quarter.
We may take advantage of these reporting exemptions until we are no longer an "emerging growth company." We can remain an "emerging growth company" for up to five years. We would cease to be an "emerging growth company" prior to such time if we have total annual gross revenues of $1 billion or more and when we become a "larger accelerated filer," have a public float of $700 million or more or we issue more than $1 billion of non-convertible debt over a three-year period.
Employees
At present, Michael Hlavsa is our sole officer and director. Mr. Hlavsa works on a part-time basis and devotes approximately 5% of his time to our operation. He does not have an employment agreement with us.
Principal Executive Office
Our principal executive office is located at 12303 Airport Way, Suite 200, Broomfield, Colorado 80021. Our main telephone number is (954) 868-7366.
ITEM 1A. RISK FACTORS
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
ITEM 2. PROPERTIES
The Company neither rents nor owns any properties. The Company utilizes the office space and equipment of its sole officer at no charge.
ITEM 3. LEGAL PROCEEDINGS
We were not subject to any legal proceedings during the twelve months ended December 31, 2016 and 2015. We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our Company.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Notes to Consolidated Financial Statements
December 31, 2016
NOTE 1 – NATURE OF BUSINESS
Overview of Organization
Environmental Packaging Technologies Holdings, Inc. (the "Company") was incorporated in the state of Nevada on November 17, 2011, under the name "GS Valet, Inc." On December 1, 2011, the Company entered into an agreement with Garden State Valet, LLC, a New Jersey limited liability company ("Garden State Valet"), and the unit-holders of Garden State Valet (the "Unit-holders") to purchase all of the outstanding units of Garden State Valet. Garden State Valet was formed on June 15, 2011.
Change in Control
On August 9, 2013, six accredited investors (the "Purchasers") acquired 27,134,875 shares of the Company's common stock in the aggregate then held by its former sole officer and director who, prior to such acquisition, held approximately 77.22% of the then issued and outstanding shares of common stock. Immediately thereafter, the Company caused 8,886,663 shares of its common stock that one of the Purchasers purchased to be cancelled pursuant to a Cancellation Agreement that the Company entered into with such Purchaser on August 9, 2013. As a result, the former sole officer and director relinquished his control of the Company and resigned, and a new sole officer and director was appointed in his place.
In connection with the change of control transaction, effective September 26, 2013, the Company changed its name from "GS Valet, Inc." to "International Metals Streaming Corp."
Effective September 26, 2013, the Company's board of directors approved a change in its fiscal year end from September 30 to December 31. The Company filed a Transition Report on Form 10-Q for the three months ended December 31, 2012 with the Securities and Exchange Commission (the "SEC") in connection therewith.
Until October 1, 2013, the Company, through Garden State Valet, provided valet parking management services for hotels, restaurants, country clubs, retail centers and private events in New Jersey. The operations of Garden State Valet ceased on October 1, 2013. The Company then planned to pursue a metals streaming business by acquiring and managing precious metals streams, royalties and other similar interests. As of December 31, 2013, however, the Company had not entered into any definitive agreement in connection with such business. In March 2014, the Company determined that the metals streaming business was no longer desirable, and have ceased pursuing such business. As of September 30, 2016, the Company currently has nominal operations and minimal assets. As such, the Company is considered to be a shell company under the Securities Exchange Act of 1934, as amended.
On December 28, 2016, the Company, EPT Acquisition Corporation, a newly-formed Delaware corporation and a direct wholly-owned subsidiary of the Company (“
Merger Sub
”), and Environmental Packaging Technologies, Inc., a Delaware corporation (“
EPT
”) entered into an Agreement of Merger and Plan of Reorganization (the “
Merger Agreement
”)
Pursuant to the Merger Agreement, subject to and upon the terms and conditions of the Merger Agreement, Merger Sub shall be merged with and into EPT (the “
Merger
”) and EPT shall be the surviving corporation of the Merger and EPT shall become, as a result of the Merger, a direct wholly-owned subsidiary of the Company.
Immediately following the Merger, the Company shall have approximately 52,000,000 shares issued and outstanding of which (a) 40,000,000 such shares will be owned by the former EPT Stockholders, and (b) approximately 12,000,000 shares will be owned by the Company’s shareholders. Upon completion of the Merger, the individuals designated by EPT shall be our sole directors and officers and our officer and director shall resign.
The Merger Agreement includes conditions, representations and warranties and covenants of the parties customary for a transaction of this nature. The Merger Agreement may be terminated after March 31, 2017 if the Merger has not closed by that date.
As of December 31, 2016, the conditions precedent to complete the merger transaction had not been satisfied.
ENVIRONMENTAL PACKAGING TECHNOLOGIES HOLDINGS, INC
.
(FORMERLY INTERNATIONAL METALS STREAMING CORP
.)
Notes to Consolidated Financial Statements
December 31, 2016
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. As of December 31, 2016, there were no transactions in Merger Sub trial balance.
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Significant accounting policies are as follows:
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.
Cash
The Company presently maintains any cash in an attorney trust account until such time that the Company establishes a bank account.
Income (Loss) Per Share
The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260,
Earnings per Share.
Basic earnings per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. During the years ended December 31, 2016 and 2015, there were no potentially dilutive debt or equity instruments outstanding.
Financial Instruments
ASC 820,
Fair Value Measurements
requires disclosure of the fair value of financial instruments. The Company's balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.
Reclassification
Certain prior year amounts have been reclassified to conform to the current year presentation.
Income taxes
Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carry forwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is not more likely than not that these deferred income tax assets will be realized.
The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of December 31, 2016 and 2015, the Company has not recorded any unrecognized tax benefits.
ENVIRONMENTAL PACKAGING TECHNOLOGIES HOLDINGS, INC
.
(FORMERLY INTERNATIONAL METALS STREAMING CORP
.)
Notes to Consolidated Financial Statements
December 31, 2016
Recently Issued Standards
In January 2017, FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company does not expect the adoption of this amendment to have a material effect on its financial condition and results of operations
In October 2016, the FASB issued ASU No 2016-16 - Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 will require the tax effects of intercompany transactions, other than sales of inventory, to be recognized currently, eliminating an exception under current GAAP in which the tax effects of intra-entity asset transfers are deferred until the transferred asset is sold to a third party or otherwise recovered through use. The guidance will be effective for the first interim period of our 2019 fiscal year, with early adoption permitted. The Company does not expect the adoption of this amendment to have a material effect on its financial condition and results of operations.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, in an effort to reduce the diversity of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of this amendment to have a material effect on its financial condition and results of operations.
In June 2016, the FASB Issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” and clarifies the objective of the collectability criterion, presentation of taxes collected from customers, non-cash consideration, contract modifications at transition, completed contracts at transition and how guidance in Topic 606 is retrospectively applied. The amendments do not change the core principle of the guidance in Topic 606. The effective dates are the same as those for Topic 606. The Company does not expect the adoption of this amendment to have a material effect on its financial condition and results of operations.
In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which provides further guidance on identifying performance obligations and improves the operability and understandability of licensing implementation guidance. The effective date for ASU 2016-10 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years. The Company does not expect the adoption of this amendment to have a material effect on its financial condition and results of operations.
On March 30, 2016, the FASB issued ASU No. 2016-09, Compensation- Stock Compensation Improvements to Employee Share-Based Payment Accounting, which simplifies various aspects related to the accounting and presentation of share-based payments. The amendments require entities to record all tax effects related to share-based payments at settlement or expiration through the income statement and the windfall tax benefit to be recorded when it arises, subject to normal valuation allowance considerations. All tax-related cash flows resulting from share-based payments are required to be reported as operating activities in the statement of cash flows. The updates relating to the income tax effects of the share-based payments including the cash flow presentation must be adopted either prospectively or retrospectively. Further, the amendments allow the entities to make an accounting policy election to either estimate forfeitures or recognize forfeitures as they occur. If an election is made, the change to recognize forfeitures as they occur must be adopted using a modified retrospective approach with a cumulative effect adjustment recorded to opening retained earnings. The effective date of the new standard for public companies is for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of this amendment to have a material effect on its financial condition and results of operations.
ENVIRONMENTAL PACKAGING TECHNOLOGIES HOLDINGS, INC
.
(FORMERLY INTERNATIONAL METALS STREAMING CORP
.)
Notes to Consolidated Financial Statements
December 31, 2016
On March 15, 2016, the FASB issued ASU No. 2016-07, Investment—Equity Method and Joint ventures (Topic 323), To simplify the accounting for equity method investments, the amendments in the Update eliminate the requirement in Topic 323 that an entity retroactively adopt the equity method of accounting if an investment qualifies for use of the equity method as a result of an increase in the level of ownership or degree of influence. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application is permitted. The Company does not expect the adoption of this amendment to have a material effect on its financial condition and results of operations.
On March 3, 2016, the FASB issued ASU No. 2016-04, Liabilities —Extinguishments of Liabilities Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products, when an entity sells a prepaid stored-value product (such as gift cards, telecommunication cards, and traveler’s checks), it recognizes a financial liability for its obligation to provide the product holder with the ability to purchase goods or services at a third-party merchant. When a prepaid stored-value product goes unused wholly or partially for an indefinite time period, the amount that remains on the product is referred to as breakage. There currently is diversity in the methodology used to recognize breakage. Subtopic 405-20 includes derecognition guidance for both financial liabilities and nonfinancial liabilities, and Topic 606, Revenue from Contracts with Customers, includes authoritative breakage guidance but excludes financial liabilities. The amendments in this Update provide a narrow scope exception to the guidance in Subtopic 405-20 to require that breakage be accounted for consistent with the breakage guidance in Topic 606. The amendments in this Update are effective for public business entities, certain not-for-profit entities, and certain employee benefit plans for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Earlier application is permitted, including adoption in an interim period. The Company does not expect the adoption of this amendment to have a material effect on its financial condition and results of operations.
On February 24, 2016, the FASB issued ASU No. 2016-02, Leases, requiring lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. For lessees, leases will continue to be classified as either operating or finance leases in the income statement. Lessor accounting is similar to the current model but updated to align with certain changes to the lessee model. Lessors will continue to classify leases as operating, direct financing or sales-type leases. The effective date of the new standard for public companies is for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition and requires application of the new guidance at the beginning of the earliest comparative period presented. The updated standard is effective for us beginning in the first quarter of fiscal 2020. The Company does not expect the adoption of this amendment to have a material effect on its financial condition and results of operations.
In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The purpose is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. This ASU is effective for the Company in the first quarter of 2018. Early adoption is not permitted except for limited provisions. The Company does not expect the adoption of this amendment to have a material effect on its financial condition and results of operations.
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. This is part of FASB's simplification initiative. The amendments in this ASU require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. This ASU is effective for the Company in the first quarter of 2017. Early adoption is permitted. The Company does not expect the adoption of this amendment to have a material effect on its financial condition and results of operations.
In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments which allows entities to recognize adjustments to provisional amounts in the period adjustment is identified rather than retrospectively. In-period adjustments must be disclosed. This ASU is effective for the Company in the first quarter of 2016. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this ASU. Early adoption is permitted for financial statements that have not been issued. The Company does not expect the adoption of this amendment to have a material effect on its financial condition and results of operations.
ENVIRONMENTAL PACKAGING TECHNOLOGIES HOLDINGS, INC
.
(FORMERLY INTERNATIONAL METALS STREAMING CORP
.)
Notes to Consolidated Financial Statements
December 31, 2016
In August 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-15, "Interest - Imputation of Interest (Subtopic 835-30)." ASU 2015-15 provides guidance as to the presentation and subsequent measurement of debt issuance costs associated with line of credit arrangements. We do not expect the adoption of ASU 2015-15 to have a material effect on our financial position, results of operations or cash flows. We do not expect the adoption of ASU 2015-15 to have a material effect on our financial position, results of operations or cash flows.
In August 2015, the FASB issued ASU No. 2015-14, Revenue From Contracts With Customers (Topic 606)." The amendments in this ASU defer the effective date of ASU 2014-09. Public business entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. We do not expect adoption of ASU 2015-14 to have a material effect on our financial position, results of operations or cash flows.
In July 2015, the FASB issued ASU No. 2015-11, "Simplifying the Measurement of Inventory (Topic 330)." ASU 2015-11 simplifies the accounting for the valuation of all inventory not accounted for using the last-in, first-out ("LIFO") method by prescribing that inventory be valued at the lower of cost and net realizable value. ASU 2015-11 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 on a prospective basis. We do not expect the adoption of ASU 2015-11 to have a material effect on our financial position, results of operations or cash flows. We do not expect adoption of ASU 2015-14 to have a material effect on our financial position, results of operations or cash flows
In April 2015, the FASB issued ASU 2015-05, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)." ASU 2015-05 provides guidance regarding the accounting for a customer's fees paid in a cloud computing arrangement; specifically about whether a cloud computing arrangement includes a software license, and if so, how to account for the software license. ASU 2015-05 is effective for public companies' annual periods, including interim periods within those fiscal years, beginning after December 15, 2015 on either a prospective or retrospective basis. Early adoption is permitted. We do not expect the adoption of ASU 2015-05 to have a material effect on our financial position, results of operations or cash flows.
In June 2014, the FASB issued ASU 2014-10, "Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation". The guidance eliminates the definition of a development stage entity thereby removing the incremental financial reporting requirements from U.S. GAAP for development or exploration stage entities, primarily presentation of inception to date financial information. The provisions of the amendments are effective for annual reporting periods beginning after December 15, 2014, and the interim periods therein. The Company has adopted this standard.
In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements – Going Concern (Topic 205-40)", which requires management to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company has adopted this new standard as of the fiscal year ended December 31, 2014 and the Company will continue to assess the impact on its financial statements.
There are various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's financial position, results of operations or cash flows.
NOTE 3 – GOING CONCERN
The Company's financial statements are prepared using US GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company had net income and incurred (losses) of $14,894 and ($99,241) for the years ended December 31, 2016 and 2015, respectively. As of December 31, 2016 and 2015, our accumulated deficit was $877,553 and $892,447, respectively. The Company has not established an ongoing source of revenues sufficient to cover its operating costs, and requires additional capital to commence its operating plan. The ability of the Company to continue as a going concern is dependent on the sufficiency of its capital or obtaining additional capital to fund operating losses. If the Company requires or is unable to obtain additional capital, it could be forced to cease operations. These factors raise substantial doubt about the Company's ability to continue as a going concern.
ENVIRONMENTAL PACKAGING TECHNOLOGIES HOLDINGS, INC
.
(FORMERLY INTERNATIONAL METALS STREAMING CORP
.)
Notes to Consolidated Financial Statements
December 31, 2016
NOTE 4 – NOTES PAYABLE, THIRD PARTY
On April 4, 2014, the Company issued a note payable to a third party in the amount of $57,039. The note was due and payable on April 4, 2015 and carries an interest rate of 8% per annum. As of December 31, 2016 and 2015, there is $0 and $7,951, respectively in accrued interest related to the note payable included in accrued expenses.
On April 2, 2015, the Company issued a note payable to a third party in the amount of $2,500. The note is due and payable on April 2, 2016 and carries an interest rate of 8% per annum. As of December 31, 2016 and 2015, there is $0 and $150, respectively in accrued interest related to the note payable included in accrued expenses.
On November 12, 2015, the Company issued a note payable to a third party in the amount of $2,948. The note is due and payable on November 11, 2016 and carries an interest rate of 8% per annum. As of December 31, 2016 and 2015, there is $0 and $32, respectfully in accrued interest related to the note payable included in accrued expenses.
On March 30, 2016, the Company issued a note payable to a third party in the amount of $18,290. The note is due and payable on March 29, 2017 and carries an interest rate of 8% per annum. As of December 31, 2016 there is $738 in accrued interest related to the note payable included in accrued expenses.
On September 30, 2016, the Company issued a note payable to a third party in the amount of $15,000. The note is due and payable on September 29, 2017 and carries an interest rate of 8% per annum. As of December 31, 2016, there is $0 in accrued interest related to the note payable included in accrued expenses.
Effective September 30, 2016, the Company was able to secure release of obligations of $108,688 with respect to the above notes payable and accrued interest which was recorded as gain on forgiveness of debt.
NOTE 5 – INCOME TAXES
The Company utilizes ASC 740 “Income Taxes”, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the consolidated financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between consolidated financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
For the years ended December 31, 2016 and 2015, the Company had available for U.S federal income tax purposes net operating loss carryovers of approximately $877,553 and $892,447 respectively, which expire beginning in year 2031. The net operating loss carryovers may be subject to limitations under Internal Revenue Code due to significant changes in the Company’s ownership. The Company has provided a full valuation allowance against the full amount of the net operating loss benefit, since, in the opinion of management, based upon the earnings history of the Company it is more likely than not that the benefits will not be realized.
The income tax provision (benefit) consists of the following:
|
|
|
December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Federal:
|
|
|
|
|
|
|
|
Current
|
|
$
|
5,213
|
|
|
$
|
(34,734
|
)
|
|
Deferred
|
|
|
(312,357
|
)
|
|
|
(277,622
|
)
|
|
|
|
|
(307,144
|
)
|
|
|
(312,356
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Change in valuation allowance
|
|
|
307,144
|
|
|
|
312,356
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision (benefit)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Following tax rates were used to calculate deferred taxes for the years ended December 31, 2016 and 2015:
|
Statutory federal income tax rate
|
|
|
35.00
|
%
|
|
Effective tax rate
|
|
|
35.00
|
%
|
The provisions of ASC 740 require companies to recognize in their financial statements the impact of a tax position if that position is more likely than not to be sustained upon audit, based upon the technical merits of the position. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure.
Management does not believe that the Company has any material uncertain tax positions requiring recognition or measurement in accordance with the provisions of ASC 740. Accordingly, the adoption of these provisions of ASC 740 did not have a material effect on the Company’s financial statements. The Company’s policy is to record interest and penalties on uncertain tax positions, if any, as income tax expense.
All tax years for the Company remain subject to future examinations by the applicable taxing authorities.
ENVIRONMENTAL PACKAGING TECHNOLOGIES HOLDINGS, INC
.
(FORMERLY INTERNATIONAL METALS STREAMING CORP
.)
Notes to Consolidated Financial Statements
December 31, 2016
NOTE 6 – COMMITMENTS AND CONTINGENCIES
The Company has no commitments or contingencies as of December 31, 2016 and 2015.
From time to time, the Company may become a party to litigation matters involving claims against the Company. Management believes that it is adequately insured for its operations and there are no current matters that would have a material effect on the Company's financial position or results of operations.
NOTE 7 – RELATED PARTY TRANSACTIONS
During the years ended December 31, 2016 and 2015, the Company incurred consulting fees of $3,500 and $6,000 respectively, provided by its current officer and director.
NOTE 8 – EQUITY
Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.0001 per share ("Preferred Stock"). No Preferred Stock has been issued to date.
Common Stock
The Company is authorized to issue 108,539,500 shares of common stock with a par value of $0.0001 per share ("Common Stock"). On October 7, 2013, the Company's board of directors approved a 2.5 for 1 forward stock-split of its issued and outstanding shares of Common Stock. On February 1, 2017, the Company’s board of directors approved a 2.17079 for 1 forward stock-split of its issued and outstanding shares of Common Stock (the "Stock Split") which was approved by FINRA.on February 14, 2017 with an effective date of February 16, 2017. These notes and the accompanying consolidated financial statements give retroactive effect to the Stock Forward Split. The Company had 23,810,861 and 26,253,000 shares of Common Stock issued and outstanding at December 31, 2016 and 2015, respectively.
On August 9, 2013, the Company sold 3,052,864 shares of Common Stock (the "Initial Shares") at $1.965 per share to two accredited investors (the "Initial Investors"). The closing thereof occurred on August 9, 2013 with gross proceeds to the Company of $6 million in connection thereof, comprised of $1 million in cash and $5 million in promissory notes issued by Preciosa Streaming Company Inc., a Barbados company ("Preciosa"). Preciosa issued the promissory notes to the Initial Investors, who, in turn, assigned them to the Company at the Closing pursuant to a Note Assignment Agreement entered into by and between Company and each Initial Investor on August 9, 2013. Preciosa repaid these notes in full to the Company on September 20, 2013. Preciosa also reimbursed to the Company $28,263 in legal fees incurred by the Company. The cash proceeds from issuance of the Initial Shares were placed into a trust account maintained by the Company's counsel until such time that the Company could establish a bank account. However, on March 11, 2014, the proceeds, less the costs incurred in the pursuit of the metals streaming business, were returned to the investors.
On August 9, 2013, the Company caused 8,886,663 shares of Common Stock held by a stockholder to be cancelled pursuant to a Cancellation Agreement entered into by and between the Company and such stockholder on August 9, 2013. The Company recognized a loss of $164 on the cancellation of this stock.
ENVIRONMENTAL PACKAGING TECHNOLOGIES HOLDINGS, INC
.
(FORMERLY INTERNATIONAL METALS STREAMING CORP
.)
Notes to Consolidated Financial Statements
December 31, 2016
On December 9, 2013, the Company sold 1,017,716 shares of Common Stock (with the Initial Shares, collectively the "Shares") at $1.965 per share to two accredited investors (with the Initial Investors, collectively the "Investors"). The closing thereof occurred on December 9, 2013, with gross proceeds to the Company of $2 million. The cash proceeds from issuance of these shares were placed into a trust account maintained by the Company's counsel until such time that the Company could establish a bank account. However, on March 11, 2014, the proceeds, less the costs incurred in the pursuit of the metals streaming business, were returned to the investors.
On December 9, 2013, the Company sold 3,328,181 shares of Common Stock at $0.000046 per share for gross proceeds of $153.
On March 10, 2014, due to its determination that the metals streaming business was no longer desirable, the Company and the Investors rescinded their transactions pertaining to the Shares. In connection with such rescission: (a) each Investor agreed to return that portion of the Shares issued to such Investor, (b) the Company agreed to return the proceeds from the sale of the Shares to the Investors, net of all payments therefrom by the Company as of the date of the rescission, and (c) the Company and the Investors each agreed to release all claims that each of them may have against the other.
On March 11, 2014, $7,389,184 of the $8 million proceeds from the sale of 4,070,581 shares of Common Stock, less costs of $610,816, was returned to the Investors. In connection therewith, the certificates representing such shares have been surrendered to the Company for cancellation.
On November 5, 2015, two shareholders surrendered an aggregate of 3,328,181 shares of Common Stock to the Company and cancelled for no consideration.
On September 22, 2016, the former sole officer and director surrendered an aggregate of 2,442,139 shares of Common Stock to the Company which were cancelled for no consideration.
NOTE 9 – SUBSEQUENT EVENTS
On February 1, 2017, the Company’s director and holders the majority of the Company’s outstanding stock by written consent approved a name change from International Metals Streaming Corp. to Environmental Packaging Technologies Holdings, Inc. Further, in February 2017, the Company’s director approved a forward split of the Company’s outstanding and authorized common stock at a ratio of 2.17079 to 1. The Company also requested that Financial Industry Regulatory Authority (“
FINRA
”) change the symbol from IMST to EPTI. The Company submitted an issuer company-related action notification form to FINRA requesting FINRA approve the name change, forward split and symbol change. The Company received FINRA’s approval on February 14, 2017 with an effective date of February 16, 2017.
The Company has evaluated subsequent events through the date these consolidated financial statements, and determined that there are no additional reportable subsequent events.