Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1- BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization and Business Operations
GenuFood Energy Enzymes Corp., USA (the Company or GEEC) was incorporated under the laws of the State of Nevada on June 21, 2010. GEEC is a start-up company and its main focus is to promote market, distribute and export a range of enzyme products for human and animal consumption manufactured in the Unites States for the Asian and ASEAN markets. The Company is the owner of the following trademarks,
ProCellax and ProAnilax.
These trademarks and GEEC as a trademark have been filed with the United States Patent and Trademark Office and registered with China (PRC), Hong Kong, Macau, Taiwan and Singapore. Similarly, these trademarks have been filed with the jurisdictions of Thailand, Malaysia, and Sri Lanka.
The Companys objective is to commence marketing and distribution of American range of enzyme products for human and animal consumption to sole country distributors, wholesalers, dealers and retailers, as well as to the general public following the Companys Multi-Level Marketing Franchise Investor Dealer Related (MLM-FIDR) concept, to begin with, in Taiwan, and then to China, Hong Kong, Macau, Thailand, Malaysia, Singapore and Sri Lanka.
On May 24, 2011, GEEC Internet Sales (Private) Limited (GEECIS), a wholly owned subsidiary of GEEC, was established in the Democratic Socialist Republic of Sri Lanka. GEECIS was established initially to be responsible for GEECs internet sales worldwide, but recently its role has been changed to that of a Sole Country Distributor.
On February 13, 2012 the Company invested and incorporated a wholly owned subsidiary company, GEEC Enzymes (S) Pte Ltd (GESPL) in Singapore with a view to be the Sole Country Distributor for ProCellax and ProAnilax in Singapore. GESPL has started initial test marketing for the range of ProCellax enzymes products.
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.
The Company is in its development stage with no significant revenues. The Companys initial operations include organization, capital formation, target markets identification and developing marketing plans.
The Companys fiscal year end is September 30.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Companys unaudited consolidated financial statements included herein have been prepared in accordance with US GAAP and pursuant to the rules of the SEC. The Company believes that the presentations and disclosures herein are adequate for a fair presentation. The unaudited consolidated financial statements reflect all adjustments necessary for a fair presentation of the interim periods presented. These unaudited interim consolidated financial statements should be read in conjunction with the Companys audited consolidated financial statements included in its Form 10-K filed with the United States Securities and Exchange Commission on January 14, 2013. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.
Development Stage Activities
The accompanying consolidated financial statements have been prepared in accordance with ASC 915-10-05,
Development Stage Entities.
A development - stage company is one in which planned principal operations have not commenced or, if its operations have commenced, but there have been no significant revenues.
Use of Estimates
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (US 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
Our revenues are generated from sales of enzyme products under our private label.
For sales of enzyme products under our private label the Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and reduces it for the amount of estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the products have been shipped to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
Foreign Currency Translation and Transactions
The reporting and functional currency of GEEC is the United States Dollar (U.S. dollar). The functional currency of GEECIS, a wholly owned subsidiary of GEEC, is the Sri Lanka Rupee (LKR). The functional currency of GESPL, a wholly owned subsidiary of GEEC, is the Singapore Dollar (SGD).
For financial reporting purposes, the financial statements of the Companys Sri Lanka subsidiary, which are prepared using the LKR, are translated into the Companys reporting currency, the U.S. dollar. Assets and liabilities are translated using the exchange rate on the balance sheet date, which was 0.0079 as of March 31, 2013 and 0.0077 as of September 30, 2012, respectively. Revenue and expenses are translated using average exchange rates prevailing during each reporting period. The average exchange rate of 0.0079
and 0.0089 was used to translate revenues and expenses for the periods ended March 31, 2013 and March 31, 2012, respectively. Stockholders equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in stockholders equity.
For financial reporting purposes, the financial statements of the Companys Singapore subsidiary, which are prepared using the SGD, are translated into the Companys reporting currency, the U.S. dollar. Assets and liabilities are translated using the exchange rate on the balance sheet date, which was 0.806 as of March 31, 2013 and 0.8145 as of September 30, 2012. Revenue and expenses are translated using average exchange rates prevailing during each reporting period. The 0.8081 average exchange rate was used to translate revenues and expenses for the reporting period ended March 31, 2013. Stockholders equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in stockholders equity.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange differences are included in the statements of operations.
No representation is made that the LKR or SGD amounts could have been, or could be converted into U.S. dollar at the above rates.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with original maturities of three months or less when acquired to be cash equivalents. The Company places the majority of its cash and cash equivalents with financial institutions that are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. As of March 31, 2013, the Company had $857,617 cash in banks, $332,316 and $454,057 of which with two financial institutions, which is $286,373 in excess of FDIC limit. As of September 30, 2012, the Company had $1,166,927 cash in banks, $598,228 and $485,270 of which were with two financial institutions, which is $583,498 in excess of FDIC limit. The Company mitigates this concentration of credit risk by monitoring the credit worthiness of financial institutions and its customers.
In October 2008, the Federal government temporarily increased the FDIC insured limits up to a maximum of $250,000 per depositor until January 1, 2014, after which time the insured limits will return to $100,000.
Cash and cash equivalents which are held in foreign banks were $69,921 and $83,429 as of March 31, 2013 and September 30, 2012, respectively. For Singapores operation, the Company placed its cash and cash equivalents denominated in Singapore Dollars with financial institutions that are insured by the Singapore Deposit Insurance Corporation (SDIC) up to Singapore Dollar 50,000. As of March 31, 2013 and September 30, 2012, $38,664 and $2,566 was insured, respectively. For Sri Lankas operation, the Company placed its cash and cash equivalents denominated in Sri Lanka Rupee with financial institutions that are insured by the Sri Lanka Deposit Insurance Scheme (SLDIS) up to Sri Lanka Rupee 200,000. As of March 31, 2013 and September 30, 2012, $1,580 and $1,540 was insured, respectively.
As of March 31, 2013, the Company and its subsidiaries had a balance of $1,323 for petty cash and cash in transit in total.
Beneficial Conversion Features
From time to time, the Company may issue convertible debt that may have conversion prices that create an embedded beneficial conversion feature pursuant to the Emerging Issues Task Force guidance on beneficial conversion features. A beneficial conversion feature exists on the date a convertible liability is issued when the fair value of the underlying common stock to which the liability is convertible into is in excess of the face value of the liability. In accordance with this guidance, the intrinsic value of the beneficial conversion feature is recorded as a discount on the liability with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the term of the liability using the effective interest method. In cases where the liability relates to amounts owed for direct offering costs of an equity offering, the discount is charged to additional paid in capital with amortization.
Inventories
The Companys inventories include enzyme products, packaging and labeling materials. Inventories are stated at the lower of cost or market value. Cost is determined using the weighted average cost method. As of March 31, 2013 and September 30, 2012, the Company had inventory balances of $155,615 and $93,742, respectively, which was comprised solely of enzyme products, packaging and labeling materials.
Intangible Assets
The Companys intangible assets consist primarily of trademarks, which are carried at amortized cost. The company capitalizes filing and legal fees related to the trademark registration. All trademarks have legal lives from 7 to 10 years and are amortized over their respective legal lives upon approval (see Note 5-Trademarks).
The Company reviews its intangible assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. The Company assesses recoverability by reference to future cash flows from the products underlying these intangible assets. If these estimates change in the future, the Company may be required to record impairment charges for these assets. As of March 31, 2013, no impairment indicators were prevalent.
Security Deposit Asset
The security deposit is a refundable deposit, lodged with the Sampath Bank, for a facility to receive internet sales funds. In the event this facility was not obtained and instructions have been given to the Bank to refund the deposit. As of March 31, 2013, GESPL had a balance of $11,284 for refundable security deposit for the lease of office premises. As of March 31, 2013, GESPL had a balance of $12,090 for refundable security deposit for goods and services tax registration. During the six months ended March 31, 2013, GESPL paid a deposit of $484 for rent of credit card terminals. As of March 31, 2013, the Company had a balance of $1,652 for a refundable security deposit to a consulting company.
Customer Deposit
The customer deposit represents money received by the Company in advance and will not be recognized as revenue until the products are shipped to customer.
Property, Plant and Equipment
Property, plant and equipment (PP&E) are stated at cost less accumulated depreciation. Gains or losses on disposals are recorded in the year of disposal. The cost of improvements that extend the life of property, plant, and equipment are capitalized. These capitalized costs may include structural improvements, equipment, and fixtures. All ordinary repair and maintenance costs are expensed as incurred.
The Companys PP&E as of March 31, 2013 and September 30, 2012 consisted of computer equipment and software with useful lives of five and three years, respectively. Depreciation is computed using the straight line method over the estimated useful lives.
Fair Value of Financial Instruments
FASB ASC Topic 825
Financial Instruments
requires the Company to disclose, when reasonably attainable, the fair market values of its assets and liabilities which are deemed to be financial instruments. The Company's financial instruments consist primarily of cash, prepaid expenses, customer deposit, accounts payable and some other current liabilities. The Company believes that the carrying values of these financial instruments approximate their fair value due to the short-term nature of these items.
As defined in FASB ASC Topic No. 820 10 (formerly SFAS 157-Fair Value Measurements), fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC Topic No. 820 10 requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements. The statement requires fair value measurements be classified and disclosed in one of the following categories:
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Level 1:
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Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
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Level 2:
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Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs such as interest rates and yield curves that are observable at commonly quoted intervals.
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Level 3:
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Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity).
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As required by FASB ASC Topic No. 820 10, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Companys assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.
The Company had no instruments re-measured to fair value on a recurring or non-recurring basis as of March 31, 2013 or December 31, 2012.
Net Earnings (Loss) Per Share
Basic net earnings (loss) per common share are computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding during the period. Diluted net earnings (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for all periods presented in these consolidated financial statements, the diluted weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. For the six months ended March 31, 2013 and 2012, the company didn't have any potentially dilutive securities.
Stock-Based Compensation
The Company accounts for its stock-based compensation in which the Company obtains employee services in share-based payment transactions under FASB ASC Topic 718,
Compensation Stock Compensation
, which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period.
The Company also adopted FASB ASC Topic 505-50,
Equity-Based Payments to Non-Employees
, to account for equity instruments issued to parties other than employees for acquiring goods or services. Such awards for services are recorded at either the fair value of the consideration received or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable.
No stock based compensation was recorded during the six months ended March 31, 2013 or March 31, 2012.
Income Taxes
The Company accounts for income taxes in accordance with FASB ASC Topic 740,
Income Taxes
. Under FASB ASC Topic 740, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Companys financial position and results of operations for the current period. Based upon the level of losses and projections of the future taxable income over the periods in which the deferred tax assets are deductible, a full valuation allowance has been provided as management believes that it is more likely than not, based upon available evidence, that the deferred tax assets will not be realized.
As of March 31, 2013, the Company has a tax receivable balance of $7,885. The tax receivable is related to the goods and services tax (GST) refund claimable from Singapore by the Singapore operations for the three months ended March 31, 2013. The Company recorded the amount as a current asset and offset such asset upon receiving refund from the tax authority without impacting revenues or expenses.
Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
Recently Issued and Newly Adopted Accounting Pronouncements
In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, Technical Corrections and Improvements in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.
In August 2012, the FASB issued ASU 2012-03, Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update) in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.
In July 2012, the FASB issued ASU 2012-02, Intangibles Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entitys financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 did not have a material impact on our financial position or results of operations.
NOTE 3 GOING CONCERN
The Company is a development stage company and has incurred a cumulative net loss since inception of $1,627,131. As of March 31, 2013, the Company had a positive working capital of $939,701, which, however, might be insufficient to finance the Company's business plan for the next twelve months. Due to the start-up nature, the Company expects to incur additional losses in the immediate future. To date, the Companys cash flow requirements have been primarily met through proceeds received from sales of common stock. The ability of the Company to emerge from the development stage is dependent upon the Company's successful efforts to raise sufficient capital and attain profitable operations.
Managements plan includes obtaining additional funds by increasing revenues and equity financing through the participation of its country sole distributors, wholesalers, dealers and retailers in the Multi-Level Marketing Franchise Investor Dealer Related (MLM-FIDR) concept; however there is no assurance of additional funding being available. These circumstances raise substantial doubt about the Companys ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might arise as a result of this uncertainty.
NOTE 4 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment (PP&E) as of March 31, 2013 and September 30, 2012 consisted solely of the computer equipment and software with useful life of 5 and 3 years, respectively. Balances for the PP&E as of March 31, 2013 and September 30, 2012 were as follows:
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March 31, 2013
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September 30, 2012
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Computer equipment & software
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$
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9,766
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$
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6,664
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Less: accumulated depreciation
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(2,755)
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(1,188)
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Property, plant and equipment, net
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$
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7,011
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$
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5,476
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Depreciation expense for the six months ended March 31, 2013 and 2012 was $1,565 and $376, respectively.
NOTE 5 TRADEMARKS
The Company filed applications for trademarks on three of its products in their target markets: the United States, Singapore, Thailand, Hong Kong, Taiwan, Macau, Sri Lanka and Malaysia. As of December 31, 2012, the registration for all three products was completed in the United States, China (PRC), Hong Kong, Taiwan, Macau and Singapore, and still pending in other target markets. As of March 31, 2013 and September 30, 2012, the Company capitalized trademark costs of $35,945 and $31,183, respectively. Accumulated amortization at March 31, 2013 and September 30, 2012 was $4,338 and $2,659, respectively. During the six months ended March 31, 2013 and 2012, the Company recorded trademark amortization expense of $1,679 and $1,006. All trademarks have legal lives from 7 to 10 years and are amortized over their respective legal lives upon approval.
NOTE 6 COMMON STOCK
The total number of shares of capital stock, which the Company shall have authority to issue, is 500,000,000. These shares consist of one class of 500,000,000 shares designated as common stock at $0.001 par value (Common Stock).
Holders of shares of Common Stock shall be entitled to cast one vote for each share held at all stockholders meetings for all purposes, including the election of directors. The Common Stock does not have cumulative voting rights.
Unless there are prior arrangements made and agreed by the Company in writing, no holder of shares of stock of any class shall be entitled as a matter of right to subscribe for, or purchase, or receive any part of any new or additional issue of shares of stock of any class, or of any securities convertible into shares of any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of a dividend.
On July 6, 2010, 150,000,000 shares were issued to a consultant for services directly related to the S-1 registration and offering. These shares were valued at $0.25 per share and recorded as a reduction to additional paid- in capital due to it being an offering cost of the future S-1 offering. As a result of this transaction, additional paid in capital was reduced for the value of the shares equal to $37,500,000. This reduction was offset by recording an increase to common stock according to the par value of the shares issued equal to $150,000, and increasing additional paid in capital by $37,350,000. Due to the offsetting entries to additional paid in capital from the transaction, the net effect on equity was a reduction to additional paid in capital for $150,000 and an increase to the value of common stock for $150,000. In addition to this share issuance, the Company issued an additional 50,000,000 shares to the consultant for offering costs. The 50,000,000 additional shares were issued to convert the $50,000 payable owed to the consulting company (see Note 8). Through March 31, 2012, the Company paid a total of $345,000 cash to this consultant for offering costs. As of March 31, 2013 nothing additional is owed to the consultant related to the S-1 registration and offering.
On July 6, 2010, the Company received stock subscriptions from investors at various prices;
1.
58,000,000 shares of Common Stock sold to twelve stockholders, at a purchase price of $0.001 per share for cash received of $58,000,
2.
113,000 shares of Common Stock sold to eleven stockholders at a price of $0.10 for cash received of $11,300,
3.
106,672 shares of Common Stock sold to sixteen stockholders at a price of $0.15 per share for cash received of $16,000,
4.
50,000 shares of Common Stock sold to two stockholders at a price of $0.20 per share for cash received of $10,000,
5.
18,800 shares of Common Stock sold to eight stockholders at a price of $0.25 per share for cash received of $9,700.
6.
20,000 shares were sold to directors for total consideration of $5,000 on August 9, 2010.
During 2011, pursuant to the terms of the Sole Distributorship Agreement dated October 11, 2010, the Company sold to Taiwan Cell Energy Enzymes Corporation (TCEEC) 125,000,000 shares of its common stock at price $0.008 per share for total proceeds of $1,000,000. The value of the shares issued was evaluated and found to be worth more than the cash received at a total value of $1,274,705. The difference of $274,705 represented compensation to the distributor.
The Company considered a third party valuation report to assist with valuing the underlying share issuances associated with the Sole Distributorship Agreement using the weighted discounted cash flow method and discounted market multiple method. The following values represent assumptions and key inputs to this model:
1.
Risk adjusted discount rate 18.77%
2.
Long-Term growth rate 12.30%
3.
Discount for lack of marketability 53.14%
The specific value ascribed to the long term growth rate was based on the expectation of the Companys consistent long term growth within the current target markets and calculated based on guidance from the Companys valuation expert regarding industry results for long term growth within the industry. The growth rate used was based on the median historical growth rate of 535 companies selling within emerging markets with businesses related to the following: Food Processing, Retail (Distribution); and Retail (Specialty Lines). Since the Company believes that there is high demand for its products, it had no reason to think that the Companys long term growth rate would be below industry benchmarks. Given the Companys inception stage of operations and strong market demand for its product, the Company believes that the 12.3% growth rate is reasonable and comparable to similar companies within the field.
In December of 2011 the Companys distributor Taiwan Cell Energy Enzymes Corporation (TCEEC) agreed to contribute $279,705 related to subsequent valuations of the shares originally purchased by the distributor for $1,000,000. The Company collected the full $279,705 during the year ended September 30, 2012 inclusive of $5,000 paid to the value as professional fees.
During the year ended September 30, 2012 the Company sold 10,000,000 shares for $0.30 per share for total proceeds of $3,000,000. Of this amount, $491,589 was collected during the six months ended March 31, 2013 and the remaining $1,819,711 was held as a subscription receivable at March 31, 2013. The remaining amount is due in April of 2013 from TCEEC per the related signed promissory note agreement between both parties. On February 27, 2013, the Promissory Note cancelled since TCEEC could not honor.
During the period ended March 31, 2013 the Company signed a Term Sheet with Kodiak Capital Group in respect of a future potential investment of US$3,000,000 to be received in draws by the Company with shares to be granted at a discount to trading prices. The final terms of the agreement were not executed as of March 31, 2013, however with execution of the term sheet the Company was required to pay $15,000 in cash and issue shares worth $150,000. These amounts were recorded as offering costs based on the future prospective offering and accrued for within accounts payable and stock payable as of March 31, 2013.
As of March 31, 2013, $22,121 was accrued as an offering cost due to the cost being directly related to the funds raised during six months ended.
NOTE 7 RELATED PARTY TRANSACTIONS
On August 9, 2010, the Company sold 20,000 shares of common stock at $0.25 a share to its directors for total consideration of $5,000.
The CEO of the Company is the managing director of a consulting company, who provides consulting services for the Company. In January 2011, the Company converted $50,000 owed to this consulting company into 50,000,000 shares of the Companys common stock at the price of $0.001 per share. The $50,000 was recorded as an offering cost when owed due to the cost being directly related to the stock offering. The Company issued this consulting company an additional 150,000,000 shares valued at $150,000 also recorded as offering costs. From inception through September 30, 2011, the Company issued the aforementioned 200,000,000 shares recorded at $200,000 and paid total cash of $345,000 for offering costs. The Company also paid a total $100,000 for consulting services to this company during the year ended September 30, 2011 which was expensed as professional fees.
During the year ended September 30, 2011, the Companys President, Chief Executive Officer, Chief Financial Officer, and director, Mr. Yi Lung Lin paid some operating expenses on behalf of the Company. The amounts due to him for these expenses were $1,250 and $0 as of March 31, 2013 and September 30, 2012, respectively.
During the twelve months ended September 30, 2012, the Company paid one of the directors of GEECIS $11,550 for IT consulting services.
During the twelve months ended September 30, 2012, the Company reimbursed one of the directors of GEECIS $8,076
for rent and utilities in Sri Lanka.
On September 21, 2010, the Company entered into a Sole Marketing Agent Agreement with Access Management Consulting and Marketing Pte. Ltd. (Access Management Consulting) for the marketing of the Companys range of enzyme products and to source, select and interview country sole distributors for the distribution of our range of enzyme products to the world at large. The Companys President, Chief Executive Officer, Chief Financial Officer, and director, Mr. Yi Lung Lin, is also the President and Managing Director of Access Management Consulting.
On October 11, 2010, the Company entered into a Sole Distributorship Agreement (General Outlet-Human Consumption) with Taiwan Cell Energy Enzymes Corporation (TCEEC) for marketing and distribution of the Companys enzyme products in the Republic of China (Taiwan). Mr. Chen Wen Hsu, one of the Companys directors, has voting and investment control over TCEEC. As was provided for under the Sole Distributorship Agreement, during the year ended September 30, 2011, TCEEC had invested in the Company by subscribing to 125,000,000 shares of the Companys common stock at a price of $0.008 per share, for total proceeds of $1 million. The value of the shares issued was evaluated and found to be worth more than the cash received at a total value of $1,274,705. The difference of $274,705 represented compensation to the distributor.
During the year ended September 30, 2012 and September 30, 2011, the Company recognized $60,993 and $120,558, respectively, in related party revenue from its customer TCEEC who is controlled by one of the Companys directors Ken Wen Hsu.
During the six months ended March 31, 2013 and March 31, 2012, the Company recognized $1,653 and $0, respectively, in related party revenue from Yi Lung Lin who is the President of the Company and Access Management Consulting and Marketing Pte Ltd (AMCM) where Yi Lung Lin is the Managing Director of AMCM.
During the twelve months ended September 30, 2012, the Company collected $279,705 of contribution receivable of capital from its customer TCEEC who is controlled by the Company director Ken Wen Hsu.
During the year ended September 30, 2012, the Company received a total of $850,000 from TCEEC for 2,833,333 shares issued to them during the year then ended. TCEEC owed an additional $2,111,300 to the Company as of September 30, 2012 for 7,037,667 shares issued during the year then ended.
During the year ended September 30, 2012, the Company received a total of $9,000 from Access Equity Capital Management, a company controlled by Mr. Yi Lung Lin, in consideration of 30,000 shares issued to them.
On February 15, 2012 the Board approved the appointment of Access Management Consulting and Marketing Pte Ltd (AMCM) to provide bookkeeping services in replacement of Albeck Financial Services. The Companys President is also the Managing Director of AMCM.
On September 6, 2012, the Board approved a monthly salary of $5,000 to the Companys President, Yi Lung Lin commencing September 1, 2012.
On September 21, 2012, the Board approved the engagement of Millar & Smith PLLC as the immigration lawyer to provide immigration legal service and to apply L-1 visa for the Companys President, YI Lung Lin and L-2 visa for his wife, Wang Huei Ling.
On September 24, 2012, NATfresh Beverages has purchased US $500,000 worth of IPO GEEC shares from the Company. Mr. Yi Lung Lin is the President, CEO, CFO, Treasure, Secretary and Principal Accounting Officer of NATfresh Beverages Corp.
On February 27, 2013, the Promissory Note Agreement entered between the Company and TCEEC was cancelled since TCEEC could not honor.
On March 20, 2013, Access Equity Capital Corp (AECM) directly purchased 333,333 IPO shares of the Company, amounting to $100,000. Mr. Yi Ling Lin is the President of AECM. The shares have not been issued as of March 31, 2013 and were held as stock payable at March 31, 2013.
On March 26, 2013, AECM directly purchased another 333,333 IPO shares of the Company, amounting to $100,000. The shares have not been issued as of March 31, 2013 and were held as stock payable at March 31, 2013.
On March 15, 2013, the Company filed a claim against TCEEC in the United States District Court, District of Nevada for breach of contract pursuant to Clause 13 of the Sole Distributorship Agreement. Total number of the shares at the time of default was 75,000,000. According to the Companys most recent Form S-1/A filing with the United States Securities and Exchange Commission, filed on March 9, 2012, the last subscription agreement the Company signed was at a price of $0.25 per share. At this revised price per share, factoring in: (i) payments actually made, (ii) the fair market value of the remainder of the distribution agreement, and (iii) other costs, the claim is for $17,875,465.
As of March 31, 2013, and as of September 30, 2012 there were amounts due to related parties of $47,497 and $74,467 respectively.
During the six months ended March 31, 2013, the Company received a total of $155,000 from TCEEC and $136,589 from an existing shareholder respectively for subscription receivable.
NOTE 8 COMMITMENTS AND CONTINGENCIES
On September 21, 2010, the Company reached an agreement with Specialty Enzymes and Biochemicals Co. (BSC Biochemicals), USA (SEB) for supplying various types of enzyme product to the Company under the Companys private label. SEB has been in operation since 1957 and is the largest enzyme manufacturer and enzymes provider in the US.
During the year ended September 30, 2012, the Company leased a virtual office. The original lease term was from September 1, 2012 through September 30, 2013, and was subject to the annual renewal. On February 23, 2013, the Company entered into a virtual office agreement in Los Angeles.
The Agreement is on a month to month basis. One months written notification is required by either party to terminate this Agreement. During the year ended September 30, 2012, GESPL entered into a lease agreement for office premises. The lease term was from October 1, 2012 through March 31, 2013. GESPL has the option to renew the lease at the expiration of the lease.
Fiscal year end 9/30:
|
|
2013
|
$27,828
|
2014
|
$ 219
|
2015
|
$ -
|
2016
|
$ -
|
2017
|
$ -
|
On March 14, 2013 the Company has instructed their Attorney, Atkinson Law Associates P.C. to file a Complaint with the United States District Court, District of Nevada for a civil claim against Taiwan Cell Energy Enzymes Corporation in respect of a breach of contract arising from the Sole Distributorship Agreement (General Outlet Human Consumption) and Private Placement dated October 11, 2010. Case 2:13-cv-00435
.
NOTE 9 - SUBSEQUENT EVENTS
On April 30, 2013 the Nevada District Court has entered a Default against Taiwan Cell Energy Enzymes Corp in respect of Case 2:13-cv-00435. This civil case is brought by the Company against Taiwan Cell Energy Enzymes Corp in respect of their breach of contract.
On May 3, 2013, the GESPL accepted an offer from Harmony Convention Holding Pte Ltd for provision of retail shop premise at 3 Temasek Boulevard, #02-333, Suntec City Mall, Singapore 038983.