UNITED STATES SECURITIES AND EXCHANGE COMMIS SION

Washington, D.C. 20549


FORM 10-Q


   X .

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014


        .

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to____________


Commission File Number: 000-54758


Environmental Science and Technologies, Inc.

(Exact name of issuer as specified in its charter)


Delaware

 

45-5529607

(State or Other Jurisdiction of incorporation or organization)

 

(I.R.S. Employer I.D. No.)


4 Wilder Dr., #7

Plaistow, NH 03865

(Address of Principal Executive Offices)

 

603-378-0809

(Registrant’s Telephone Number, Including Area Code)


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 checkmark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date 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       . 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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer

        .

Accelerated filer

        .

Non-accelerated filer

        . (Do not check if a smaller reporting company)

Smaller reporting company

   X .


Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes       . No  X .


APPLICABLE ONLY TO CORPORATE ISSUERS


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


The number of shares outstanding of each of the Registrant’s classes of common equity, as of the latest practicable date:


Class

 

Outstanding as of January 22, 2015

Common Capital Voting Stock, $0.0001 par value per share

 

37,115,000 shares






FORWARD LOOKING STATEMENTS


This Quarterly Report on Form 10-Q, Financial Statements and Notes to Financial Statements contain forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended.



2




PART I - FINANCIAL STATEMENTS

 

 

 

Item 1. Financial Statements.

 

 

 

Consolidated Balance Sheets as of March 31, 2014 (Unaudited) and December 31, 2013

4

Consolidated Statements of Operations for the three months ended March 31, 2014 and 2013 (Unaudited)

5

Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013 (Unaudited)

6

Notes to Consolidated Financial Statements (Unaudited)

7

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

16

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

21

 

 

Item 4. Controls and Procedures.

22

 

 

PART II - OTHER INFORMATION

 

 

 

Item 1. Legal Proceedings

22

 

 

Item 1A. Risk Factors

22

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

23

 

 

Item 3. Defaults upon Senior Securities

23

 

 

Item 4. Mine Safety Disclosures

23

 

 

Item 5. Other Information

23

 

 

Item 6. Exhibits

24




3




ENVIRONMENTAL SCIENCE AND TECHNOLOGIES, INC.

Consolidated Balance Sheets


 

 

As of

March 31,

 

As of

December 31,

 

 

2014

 

2013

 

 

(Unaudited)

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

Cash

$

5,579

$

9,680

Accounts receivable

 

141,037

 

30,876

Accounts receivable - related party

 

81,856

 

134,688

Inventory

 

141,977

 

37,587

Prepaid Expenses

 

600

 

600

Total Current Assets

 

371,049

 

213,431

 

 

 

 

 

Non-Current Assets

 

 

 

 

Equipment, net

 

73,724

 

70,796

TOTAL ASSETS

$

444,773

$

284,227

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

Bank Overdraft

$

10,438

$

Accounts payable and accrued expenses

 

719,731

 

484,146

Convertible notes and interest payable

 

151,274

 

151,274

Note payable

 

8,700

 

Due to Officer

 

79,647

 

Due to related party

 

26,000

 

15,000

Total Current Liabilities

 

995,790

 

650,420

 

 

 

 

 

Stockholders' Deficit

 

 

 

 

Preferred stock, $0.0001 par value, 5,000,000 shares authorized; none issued and outstanding

 

 

Common stock, $0.0001 par value, 250,000,000 shares authorized; 28,501,429 and 27,171,429 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively

 

2,850

 

2,717

Common stock to be issued, 32,500 and 515,000 shares issuable at March 31, 2014 and December 31, 2013, respectively

 

3

 

51

Additional paid-in capital

 

488,240

 

403,575

Accumulated deficit

 

(1,042,110)

 

(772,536)

Total Stockholders' Deficit

 

(551,017)

 

(366,193)

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$

444,773

$

284,227


The accompanying notes are an integral part of these unaudited consolidated financial statements.



4




ENVIRONMENTAL SCIENCE AND TECHNOLOGIES, INC.

Consolidated Statements of Operations

(Unaudited)


 

 

Three Months Ended

 

 

March 31,

 

 

2014

 

2013

 

 

 

 

 

Sales

 

 

 

 

Packaging solutions

$

32,074

$

Absorbent products

 

123,385

 

Related Party Revenue

 

161,356

 

Total sales

 

316,815

 

 

 

 

 

 

Cost of goods sold

 

 

 

 

Packaging solutions

 

146,546

 

Absorbent products

 

75,659

 

Shipping - net

 

5,347

 

Total cost of goods sold

 

227,552

 

 

 

 

 

 

Gross profit

 

89,263

 

 

 

 

 

 

Operating Expenses

 

 

 

 

General and Administrative

 

339,192

 

1,924

 

 

 

 

 

Loss from operations

 

(249,929)

 

(1,924)

 

 

 

 

 

Other expense

 

 

 

 

Penalties and Interest

 

(15,946)

 

Interest Expense

 

(3,699)

 

Total other expense

 

(19,645)

 

 

 

 

 

 

Net loss

$

(269,574)

$

(1,924)

 

 

 

 

 

Basic and diluted loss per share

$

(0.01)

$

(0.00)

 

 

 

 

 

Weighted average number of shares outstanding - basic and diluted

 

28,087,651

 

10,000,000


The accompanying notes are an integral part of these unaudited consolidated financial statements.



5




ENVIRONMENTAL SCIENCE AND TECHNOLOGIES, INC.

Consolidated Statements of Cash Flows

(Unaudited)


 

 

For the Three Months Ended

 

 

March 31,

 

 

2014

 

2013

 

 

 

 

 

Cash Flows from Operating Activities

 

 

 

 

Net loss

$

(269,574)

$

(1,924)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

Depreciation and amortization expense

 

6,565

 

Stock-based compensation

 

84,750

 

Expenses paid by officer

 

79,647

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

(57,329)

 

Inventory

 

(104,390)

 

Accounts payable and accrued expenses

 

250,395

 

Net cash used in operating activities

 

(9,936)

 

(1,924)

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

Purchase of equipment

 

(793)

 

Net cash used in investing activities

 

(793)

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

Proceeds from Bank Overdraft

 

6,628

 

Payments from (to) related party

 

 

Proceeds from related party

 

 

1,924

Issuance of common stock for cash

 

 

-

Net cash provided by financing activities

 

6,628

 

1,924

 

 

 

 

 

Increase in Cash and Cash Equivalents

 

(4,101)

 

 

 

 

 

 

Cash and Cash Equivalents--Beginning of Period

 

9,680

 

Cash and Cash Equivalents--End of Period

$

5,579

$

 

 

 

 

 

Supplemental Disclosures

 

 

 

 

Cash paid for Interest

$

3,699

$

 

 

 

 

 

Non-Cash Investing and Financing Activities

 

 

 

 

Common stock issued for consultants

$

84,750

$

Note for purchase of equipment

$

8,700

$

Subscription payable

$

48

$


The accompanying notes are an integral part of these unaudited consolidated financial statements



6




ENVIRONMENTAL SCIENCE AND TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements


NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS


Environmental Science and Technologies, Inc. and subsidiaries (the “Company”), formerly known as APEX 5, Inc., was incorporated under the laws of the State of Delaware on June 18, 2012. On June 21, 2013, the Company completed an acquisition of intangible assets comprised of intellectual property and trademarks from its Chief Executive Officer. In conjunction with the acquisition of the intangible assets, the Company commenced operations. As of June 30, 2013 the Company had more than nominal operations and no longer considered itself to be a “shell company” within the meaning of applicable securities laws. In particular, as of such date, the Company had raised capital, hired employees, leased space, engaged consultants and advisors, conducted extensive sales and marketing related activities (both domestically and internationally), negotiated vendor and supplier relationships and engaged seller’s representatives. Moreover, the Company has, since June 30, 2013, realized material revenues from its EnviroPack and SpillCon businesses, which arose from its sales and marketing activities conducted prior to June 30, 2013. The revenues realized by the Company in July and August, 2013, evidence the magnitude and scope of the sales, marketing and other operational activities conducted by the Company prior to June 30, 2013. In addition to the foregoing, during the three months ended March 31, 2014, the Company realized approximately $317,000 in revenues. Based upon the foregoing, the Company no longer considers itself a “Development Stage Company.”


As of January 2, 2015, the Company’s business is operated through its wholly-owned subsidiary, EnviroPack Technologies, Inc. Effective on or about January 15, 2015, the Company changed its name to The Enviromart Companies, and the Company’s wholly-owned subsidiary, EnviroPack Technologies, Inc., changed its name to Enviromart Industries, Inc. The Company’s wholly owned subsidiary, Remote Aerial Detection Systems, Inc., was intended to be an, intelligence, surveillance, and reconnaissance (ISR) reseller of dedicated mission specific non-aerial ISR and aerial ISR aircraft, platforms for the oil and gas industry, as well as government agencies. RADS has not realized any revenue and is currently inactive.


The Company is a provider of United Nations/Department of Transportation (“UN/DOT”) certified environmental waste packaging solutions, environmental spill response and control products (primarily absorbent products), and sell consumer and commercial spill control products for the hazardous and bio-hazardous waste clean-up markets.


NOTE 2. BASIS OF PRESENTATION


The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.


The Company, through June 30, 2013, had not earned revenue from operations. Accordingly, the Company’s activities through the quarter ended June 30, 2013, were accounted for as those of a “Development Stage Company” in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic No. 915, “ Accounting and Reporting by Development Stage Enterprises ” (“FASB”). Among the disclosures required by ASC 915 were that the Company’s financial statements be identified as those of a development stage company, and that the statements of operations and cash flows disclosed activity since the date of the Company’s inception.


Since June 30, 2013, the Company has realized approximately $838,000 in revenues, and therefore no longer considers itself a “Development Stage Company.”


NOTE 3. GOING CONCERN


During the three months ended March 31, 2014, although the Company has generated revenue, thus far it has been unable to generate cash flows sufficient to support its operations and has been dependent on debt and equity financing. In addition to negative cash flow from operations, the Company has experienced recurring net losses, and has an accumulated deficit of $1,142,110 as of March 31, 2014. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.



7




NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Use of Estimates and Assumptions


The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.


Principles of Consolidation


The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Remote Aerial Detection Systems, Inc., EnviroPack Technologies, Inc., SpillCon Solutions, Inc, and SorbTech Manufacturing, Inc. All inter-company accounts and transactions have been eliminated in consolidation.


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.


Accounts Receivable


In the normal course of business, the Company extends credit to customers that satisfy defined credit criteria. Accounts receivable is recorded at carrying value, which approximates fair value, and is presented in the Company's unaudited consolidated balance sheets net of any allowance for doubtful accounts. As of March 31, 2014, an allowance for doubtful accounts had not been deemed necessary, and therefore, not recorded.


Inventory


The Company’s inventory is stated at the lower of cost or estimated realizable value, with cost primarily determined on a weighted-average cost basis on the first-in, first-out (“FIFO”) method. The Company continuously evaluates the composition of its inventory, assessing slow-turning product. Estimated realizable value of inventory is determined based on an analysis of historical sales trends of our individual products, the impact of market trends and economic conditions, and a forecast of future demand, giving consideration to the value of current orders in-house relating to the future sales of inventory. Estimates may differ from actual results due to quantity, quality, and mix of products in inventory, customer demand, and market conditions. The Company’s historical estimates of these costs and any provisions have not differed materially from actual results. Any reserves for inventory shrinkage, representing the risk of physical loss of inventory, are adjusted based upon physical inventory counts. As of March 31, 2014, an inventory reserve of $7,193 has been recorded.


Concentration of Risk


Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash. Our cash balances are maintained in accounts held by major banks and financial institutions located in the United States. The Company occasionally maintains amounts on deposit with a financial institution that are in excess of the federally insured limits. The risk is managed by maintaining all deposits in high quality financial institutions.


For the three months ended March 31, 2014, one customer represented 51% of our total revenue and one customer represented 32% of our total revenue. Thus, two of our customers represented an aggregate of 83% of our total revenue. The loss of either of these customers would have a material adverse effect on our business.


Machinery and Equipment


Equipment is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method based upon the estimated useful life of depreciable assets, which is three years for machinery and equipment.



8




Long-lived Assets


Machinery and equipment, along with other long-lived assets, are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be recoverable, or are less than their fair value. In evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from the use of the asset and its eventual disposition. To the extent that estimated future undiscounted net cash flows attributable to the asset are less than the carrying value, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value, considering external market participant assumptions. Assets to be disposed of and for which there is a committed plan of disposal are reported at the lower of carrying value or fair value less costs to sell.


Income Taxes


Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. As of March 31, 2014, all deferred tax assets continue to be fully reserved.


Basic Earnings (Loss) Per Share


Basic EPS is based on the weighted average number of common shares outstanding. Diluted EPS is based on the weighted average number of common shares outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net income/loss available to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Weighted average number of shares used to calculate basic and diluted loss per share is considered the same as the effect of dilutive shares is anti-dilutive for all periods presented. As of March 31, 2014, there were 1,200,000 common stock equivalents related to outstanding convertible notes that were not included in the dilutive earnings per share calculation as their effect is anti-dilutive.


Revenue Recognition


Revenue is recognized across all segments of the business when there is persuasive evidence of an arrangement, delivery has occurred, price has been fixed or is determinable, and collectability is reasonably assured. Revenue is recognized at the time title passes and risk of loss is transferred to customers.


Sales Reserves and Uncollectible Accounts


A significant area of judgment affecting reported revenue and net income is estimating sales reserves, which represent that portion of gross revenues not expected to be realized. In particular, revenue is reduced by estimates of returns, discounts, markdowns, and operational chargebacks. In determining estimates of returns, discounts, markdowns and operational chargebacks, management analyzes current economic and market conditions. We review and refine these estimates on a quarterly basis. As of March 31, 2014, a sales reserve had not been deemed necessary, and therefore, not recorded.


Cost of Goods Sold and Selling Expenses


Cost of goods sold includes the expenses incurred to acquire and produce inventory for sale, including product costs, freight-in, and any import costs, as well as changes in reserves for shrinkage and inventory realizability. Any costs of selling merchandise, including those associated with preparing the merchandise for sale, such as picking, packing, warehousing, and order charges (“handling costs”), are included in general and administrative fees.


Stock-Based Compensation


The Company expenses all stock-based payments to employees and non-employee directors based on the grant date fair value of the awards over the requisite service period, adjusted for estimated forfeitures.



9




Convertible Notes


The Company records a discount to convertible notes for the intrinsic value of conversion options embedded in debt instruments, as appropriate. Debt discounts under these arrangements are amortized to noncash interest expense using the effective interest rate method over the term of the related debt to their date of maturity.


If a security or instrument becomes convertible only upon the occurrence of a future event outside the control of the Company, or, is convertible from inception, but contains conversion terms that change upon the occurrence of a future event, then any contingent beneficial conversion feature is measured and recognized when the triggering event occurs and contingency has been resolved.


Recent Accounting Guidance


In July 2012, the FASB issued revised guidance surrounding testing indefinite-lived intangible assets for impairment as Accounting Standards Update (“ASU”) No. 2012 – 02, “Testing Indefinite-Lived Intangible Assets for Impairment” (“ASU 2012 – 02”). ASU 2012 – 02 simplifies the testing of indefinite-lived intangible assets for impairment by providing entities with the option of performing a qualitative assessment to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. The results of such assessment may be used as a basis for determining whether it is necessary to perform the quantitative impairment test required under ASC topic 350, “Intangibles — Goodwill and Other” (“ASC 350”). The application of ASU 2012 – 02 did not have an impact on the Company's consolidated financial statements.


ASU 2013 – 11, “Income Taxes (Topic 740) – Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” was issued in July, 2013. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The Company does not expect adoption of this ASU to have a material impact on its financial statements.


NOTE 5. INVENTORY


Inventory consisted of finished goods and raw materials amounting to $47,147 and $102,023, respectively, as of March 31, 2014 and $26,579 and $18,201, respectively, as of December 31, 2013. The Company had an inventory reserve of $7,193 as of March 31, 2014 and December 31, 2013.


NOTE 6. EQUIPMENT


Equipment, net consisted of the following as of March 31, 2014 and December 31, 2013:


 

 

March 31,

2014

 

December 31, 2013

Machinery and equipment

$

87,749

$

78,256

Less: accumulated depreciation

 

(14,025)

 

(7,460)

Equipment, net

$

73,724

$

70,796


The Company recorded depreciation expense of $6,565 for the three months ended March 31, 2014.



10




NOTE 7. CONVERTIBLE NOTES


During August, 2013, the Company issued convertible promissory notes to accredited investors in the principal amounts of $100,000 and $50,000. These notes bear interest at a rate of 10% per annum and have a one year term. The $100,000 note is convertible into shares of common stock at the rate of $0.125 per share. The convertible note in the principal amount of $100,000 was amended in July 2014 to extend its maturity date to July 15, 2015 and to make it non-interest bearing. The convertible note in the principal amount of $50,000 was amended in September 2014 (effective July 31, 2014) to extend its maturity date to September 10, 2015, reduce the conversion rate of the note from $0.125 to $0.05 per share, allow the note holder to elect to receive stock in lieu of cash for his interest and issue the note holder 100,000 shares of common stock in consideration of this agreement upon execution. On January 21, 2015, the Company and the holders of these notes agreed to reduce the conversion price of the notes to $.025 per share, in consideration for which the holders agreed to extend the maturity date of the notes for an additional one year period (until July 15, 2016 in the case of the $100,000 notes and September 16, 2016 in the case of the $50,000 note). In addition, on January 21, 2015, the Company and its CEO, who is a significant shareholder, issued a convertible note payable to the CEO in the principal amount of $100,000, with a conversion feature whereby such note is also convertible into common stock at the rate of $.025 per share. See Note 11 Related Party Transactions for disclosure concerning amounts owed to our CEO. See also Note 13 – Subsequent Events.


At the time of issuance the Company assessed the conversion feature to determine if it contained a beneficial conversion feature (BCF) as per ASC 470. The Company determined it did not have a BCF since the conversion price was greater than the market price of the common stock on the date of issuance.


As of March 31, 2014 the Company owed principal of $150,000 and accrued interest of $1,274 related to the convertible promissory notes (not including amounts owed to the CEO, which amounts were unsecured advances as of such date).


NOTE 8. NOTES PAYABLE


During March, 2014, the Company issued a promissory note in the principal amount of $8,700 for the purchase of equipment. This note bears no interest and matures on March 5, 2015. As of March 31, 2014, the Company owed principal of $8,700 related to this note.


NOTE 9. LEASES


The Company leases its primary facility in Plaistow, New Hampshire for $7,500 per month from an entity owned beneficially by the Company’s CEO and significant shareholder. The lease commenced on May 1, 2013 and expires on April 30, 2015. See Note 11 – Related Party Transactions.


The Company’s future minimum lease payments are as follows:


2014-remainder

 

67,500

2015

 

30,000

Total

$

97,500


NOTE 10. INTANGIBLE ASSETS


On June 21, 2013, the Company issued an aggregate of 3,250,000 shares of its common stock to an officer of the Company for the purchase of intellectual property and trademarks. Given that the officer owned more than 50% of the Company’s stock at the time the transaction consummated, it was deemed to be between entities under common control. Accordingly, the asset is required to be recorded at historical cost. As such, the asset was valued at $-0- since the officer had not incurred any cost in creation of the intellectual property or trademarks. Had the officer owned less than 50% of the Company’s stock, the asset would have been recognized at fair value, which is $0.10 per share or $325,000. See Notes 11 and 12.


On September 23, 2013, the Company issued an aggregate of 350,000 shares of its common stock and agreed to pay $25,000 in ten equal monthly installments to a third party for the purchase of intellectual property, patents and unregistered trademarks at a price of $0.10 per share resulting in an aggregate purchase price of $60,000.



11




On December 31, 2013, the Company evaluated the carrying value of the intangible assets as it related to the likelihood that their full value would be received. Based on the evaluation, the Company determined that the value of the assets should be permanently impaired as the trademarks are unregistered and the patents were either expired or would be expiring within the next 12 months.


The Company realized a charge of $60,000 related to the impairment of these assets.


NOTE 11. RELATED PARTY TRANSACTIONS


On March 6, 2013, an officer of the Company contributed $500 to the Company. The amount was considered a contribution to capital.


From the Company’s inception date (June 18, 2012) through June 30, 2013, a former officer of the Company paid $2,924 of the Company’s expenses. The related liability was released by the former officer and settled in full during the quarter ended June 30, 2013. The settlement was considered a contribution to capital.


The Company leases its facility, which consists of 10,000 square feet of office and warehouse space located in Plaistow, New Hampshire for $7,500 per month from an entity owned beneficially by the Company’s CEO, who is a significant shareholder. The lease is a gross lease under which the landlord pays all taxes, maintenance and repairs, and insurance. The lease commenced on May 1, 2013 and expires on April 30, 2015. As of March 31, 2014, $11,000 is owed to the landlord under this agreement.


During May 2013, the Company entered into an arrangement with Enco Industries, Inc. (“Enco”), a company that is controlled by the Company’s CEO and significant shareholder, under which Enco provided administrative and support related services, including warehouse personnel, to the Company for a fixed price of $15,000 per month. This agreement was terminated in December, 2013. During the three months ended March 31, 2014, no costs were incurred under this agreement. In the normal course of business, the Company also sells materials to this related party. During the three months ended March 31, 2014, the Company sold $161,356 worth of materials in arms-length transactions to this related party. As of March 31, 2014, the Company was due $81,856 related to these sales.


During the three months ended June 30, 2013, the Company’s board of directors authorized the issuance of an aggregate of 11,221,429 founders’ shares, at a price of $0.0001 per share, being the par value per share. Of the 11,221,429 founders’ shares, 2,921,429 shares were authorized for issuance to individuals who are not considered related parties. The aggregate purchase price was $1,123. See Note 12 - Stockholders’ Equity.


On June 21, 2013, the Company issued an aggregate of 3,250,000 shares of its common stock to its CEO for the purchase of intellectual property and trademarks. Given that the officer owned more than 50% of the Company’s stock at the time, the asset is required to be recorded at historical cost. As such, the asset was valued at $-0- since the officer had not incurred any cost in creation of the intellectual property or trademarks. Had the officer owned less than 50% of the Company’s stock, the asset would have been recognized at fair value, which is $0.10 per share or $325,000. See 12 – Stockholders’ Equity.


As of March 31, 2014, $10,000 of the $25,000 cash portion of the consideration paid for the purchase of intellectual property had been paid. The remaining $15,000 is included on the consolidated balance sheet as a due to related party because the seller of the intellectual property was hired as an employee of the Company subsequent to the effectiveness of the transaction.


During the three months ended March 31, 2014, the Company's CEO paid $79,647 in expenses of the Company through the use of his personal funds and personal credit cards. This balance is reflected in the account captioned “Due to Officer.”


NOTE 12. STOCKHOLDERS’ EQUITY


Founders’ Shares


During the three months ended June 30, 2013, the Company’s board of directors authorized the issuance of an aggregate of 11,221,429 founders’ shares, at a price of $0.0001 per share, being the par value per share. The aggregate purchase price was $1,123.


Private Offering


During May, 2013, the Company sold 2,100,000 shares of its common stock to accredited investors, at a price of $0.10 per share, in connection with a private placement of the Company’s common stock for proceeds totaling $210,000.



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In addition, in September, 2013 the Company sold 100,000 shares of its common stock to an accredited investor, at a price of $0.25 per share, in connection with a private placement of the Company’s common stock for proceeds totaling $25,000.


Common Stock Issued for the Purchase of Assets


On July 29, 2013, the Company issued an aggregate of 3,250,000 shares of its common stock to an officer of the Company for the purchase of intellectual property and trademarks. Given that the officer owned more than 50% of the Company’s stock at the time, the asset is required to be recorded at historical cost. As such, the asset was valued at $-0- since the officer had not incurred any cost in creation of the intellectual property or trademarks. Had the officer owned less than 50% of the Company’s stock, the asset would have been recognized at fair value, which is $0.10 per share or $325,000.


On September 30, 2013, the Company agreed to issue an aggregate of 350,000 shares of its common stock and agreed to pay $25,000 in cash to a third party for the purchase of intellectual property, patents and unregistered trademarks at a price of $0.10 per share. The aggregate purchase price was $60,000.


Stock-Based Compensation


On July 22, 2013, the Company issued 100,000 shares of its common shares to a consultant as a retainer for services to be provided. The shares were valued at $10,000 or $0.10 per share. The consultant received an additional 25,000 shares for services on August 1, 2013 and 32,500 shares on September 1, October 1, November 1 and December 1, 2013. These shares were valued at $15,500 or $0.10 per share. As of December 31, 2013, 65,000 shares had not yet been issued. During the three months ended March 31, 2014, the consultant received 97,500 shares for his services. These shares were valued at $9,750 or $0.10 per share. The consultant was scheduled to receive an additional 32,500 shares per month for services, for so long as he remains a consultant to the Company. As of March 31, 2014, 32,500 shares had not yet been issued. See Note 13 Subsequent Events.


On July 31, 2013, a consultant received 60,000 shares of the Company’s common stock for services, valued at $6,000 or $0.10 per share.


On July 31, 2013, an employee received 350,000 shares of the Company’s common stock as compensation for services. The shares were valued at $35,000 or $0.10 per share.


In January, 2014, the Company issued an aggregate of 750,000 shares of common stock to Network 1 Financial Securities LLC (“Network 1”) and its designees as compensation for services to be rendered in connection with a placement agent agreement entered into with Network One. These shares were valued at $0.10 per share.


NOTE 13. SUBSEQUENT EVENTS


On July 12, 2014, the Company sold 3,000,000 shares of its common stock to a single accredited investor, at a price of $0.002 per share, in connection with a private placement of the Company’s common stock for gross proceeds totaling $6,000.


From March 31, 2014 through December 31, 2014, the Company's CEO paid $59,342 in expenses of the Company through the use of his personal funds and personal credit cards. This balance is reflected in the account captioned “Due to Officer.”


On July 14, 2014, the Company and its CEO, Michael R. Rosa, entered into an agreement with Mark Shefts under which:


(1)

Mr. Shefts: (i) agreed to provide management advisory services to the Company for a period of one year, for $1,000 per month, (ii) made a $125,000 equity investment into the Company, in exchange for 10 million shares of the Company’s common stock, (iii) agreed to extend the maturity date of his convertible promissory note in the principal amount of $100,000 until July 15, 2015 and made the note non-interest bearing, and (iv) has the option of becoming CEO and a member of the board of the Company;


(2)

The Company agreed to issue to Mr. Shefts or his designee 10 million shares of its common stock, in consideration for the $125,000 investment;



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(3)

Mr. Shefts and the Company’s CEO agreed to endeavor for a specified time to appoint a mutually agreeable person to act as a director of the Company. In the event that Mr. Shefts and the Company’s CEO are unable to agree on a third director, Mr. Shefts would have the right to appoint the third director;


(4)

Michael R Rosa, CEO of the Company, surrendered approximately 6,692,500 shares of the Registrant’s common stock to the treasury, which have been restored to the status of authorized but unissued shares; and


(5)

Mr. Rosa has accepted a promissory note in the amount of $98,268 for amounts he has advanced on behalf of the Company. This note is non-interest bearing and matures July 15, 2015.


The Agreement also provides that if the Board of Directors should at any time determine to discontinue the business operations of the Company, then, subject to compliance with applicable laws, the Company will transfer to Michael R. Rosa its discontinued operating businesses, in exchange for his surrendering to the Company all shares of common stock of the Company owned or controlled by him.


In connection with the foregoing transaction, the Company, on July 14, 2014, sold to Mark Shefts (an accredited investor) 10,000,000 shares of its common stock, for aggregate consideration of $125,000 (a per-share price of $.0125).


In August, 2014, the Company entered into an agreement with a consultant to provide accounting services. Under this agreement, the consultant is compensated for his services at a rate of $75 per hour for the first 20 hours per week, then 1,000 shares per hour for every hour, or partial hour, thereafter. These shares are valued at $0.0125 per share. Through December 31, 2014, the Company had issued 54,000 and owed an additional 141,000 shares under this agreement. This agreement was terminated as of December 31, 2014. Effective as of January 2, 2015, the consultant became the Company’s CFO.


On or about August 12, 2014, we received a Notice of Debarment from the US Defense Logistics Agency (“DLA”) (the “Notice”). The Notice (i) prevents us from bidding on new government contracts and (ii) precludes the renewal of any existing contract that is otherwise renewable. The Notice was issued to us because our CEO (who is also a significant shareholder of our company) is affiliated with a company that is alleged to have sold products to the DLA that did not conform to the applicable contract. The DLA has not alleged any wrongdoing whatsoever with respect to our company or its contracts with the DLA.


As a result of the Notice, we are not able to bid on any new US government contracts that might otherwise be of interest to us, unless and until the Notice is withdrawn or rescinded as a result of our negotiations with the government or through an adjudication on the merits.


On November 3, 2014, the Company filed a letter with DLA opposing the proposed notice of debarment which notice was based on the Company’s affiliation with the other company. DLA has not yet acted upon the matter.


Currently, there are no government contracts on which we are interested in bidding. During each of the quarterly periods ended December 31, 2013 and March 31, 2014, we realized approximately $100,000 in revenues from government contracts. These contracts have been substantially fulfilled.


If we are unable to have the Notice rescinded/terminated, we will not be able to bid on future US government contracts, in which case there could be an adverse effect on our revenues and profitability, unless we are able to replace the resulting revenue loss. We intend to vigorously pursue rescission/termination of the Notice.


The convertible note in the principal amount of $100,000 held by Shefts Family LP, a significant shareholder, was amended in July 2014 to extend its maturity date to July 15, 2015 and to make it non-interest bearing. The convertible note in the principal amount of $50,000 was amended in September 2014 (effective July 31, 2014) to extend its maturity date to September 10, 2015, reduce the conversion rate of the note from $0.125 to $0.05 per share, allow the note holder to elect to receive stock in lieu of cash for his interest and issue the note holder 100,000 shares of common stock in consideration of this agreement upon execution. On January 21, 2015, the Company and the holders of these notes agreed to reduce the conversion price of the notes to $.025 per share, in consideration for which the holders agreed to extend the maturity date of the notes for an additional one year period (until July 15, 2016 in the case of the $100,000 notes and September 16, 2016 in the case of the $50,000 note). In addition, on January 21, 2015, the Company and its CEO, who is a significant shareholder, issued a convertible note payable to the CEO in the principal amount of $100,000, with a conversion feature whereby such note is also convertible into common stock at the rate of $.025 per share.



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On September 26, 2014, the Company entered into an agreement with Rushcap Group, Inc., a significant shareholder, to provide to the Company a revolving line of credit to purchase inventory. The maximum borrowing amount under this agreement is $300,000. Interest is charged at a rate of 3.5% per advance for the first 30 day period or portion thereof, then 1.5% per 30 day period or portion thereof until paid with a maximum borrowing term of 120 days per advance. Payments are due within 30 days of the Company receiving payment from the customer for invoices which are funded under this agreement. As of January 15, 2015, $250,000 in advances have been received under this agreement.


The Company issued the 32,500 shares of its common stock that were recorded as common shares to be issued as of March 31, 2014.


As of March 31, 2014, the company was delinquent with respect to the payment of Payroll Taxes for the period July 1, 2013 through March 31, 2014 in the amount of $87,485. As of January 12, 2015, the Company owed an aggregate of $121,536, including $34,049 in penalties and interest related to these delinquencies. In addition, as of January 12, 2015, the Company is delinquent with respect to the payment of Payroll Taxes for the period April 1, 2014 through June 30, 2014 in the amount of $32,067, including $472 in penalties and interest. Accordingly, at January 12, 2015, the Company owes an aggregate of $153,603, including $34,521 in penalties and interest. The Company believes that it will be able to secure a waiver of penalties in the aggregate approximate amount of $31,000, leaving the Company with a payroll tax liability (including interest) of approximately $122,000. The company expects to pay this amount out in installments over a three year period (approximately $3,500 per month). Since June 30, 2014, the Company has been current in the payment of its payroll taxes.


On January 12, 2015, the Company approved an amendment to its certificate of incorporation to change its name to “The Enviromart Companies.” The Company’s wholly owned subsidiary, EnviroPack Technologies, Inc., also approved, on January 12, 2015, an amendment to its certificate of incorporation to change its name to “Enviromart Industries, Inc.” Effective as of January 2, 2015, all of the Company’s business will be conducted through Enviromart Industries, Inc., its wholly owned subsidiary (f/k/a EnviroPack Technologies, Inc.). The Company expects these amendments to be effective on or about January 15, 2015.


On January 22, 2015, we sold an aggregate of 1,848,871 shares of our common stock to two accredited investors at a price per share of $.002, for aggregate consideration of $3,697



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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.


Forward-looking Statements


Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.


Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.


Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.


Overview


On June 21, 2013, the Company completed the acquisition of certain assets from Michael R. Rosa, its chief executive officer, and commenced business operations. Since completing the acquisition, the Company has raised capital, hired employees, leased space, engaged consultants and advisors, conducted extensive sales and marketing related activities both domestically and internationally, negotiated vendor relationships and engaged seller’s representatives. As of June 30, 2013 the Company had more than nominal operations and no longer considered itself to be a “shell company” within the meaning of applicable securities laws. The Company has, since June 30, 2013, realized revenues from its EnviroPack and SpillCon businesses. The Company’s business had, through December 31, 2014, been operated through four wholly-owned subsidiaries, each of which is a Delaware corporation: Remote Aerial Detection Systems, Inc. (“RADS”), EnviroPack Technologies, Inc., SpillCon Solutions, Inc. and SorbTech Manufacturing, Inc. RADS has not realized and revenue and is currently inactive.


As of January 2, 2015, the Company’s business is operated through its wholly-owned subsidiary, EnviroPack Technologies, Inc. Effective on or about January 15, 2015, the Company changed its name to The Enviromart Companies, and the Company’s wholly-owned subsidiary, EnviroPack Technologies, Inc., changed its name to Enviromart Industries, Inc. The Company’s wholly owned subsidiary, Remote Aerial Detection Systems, Inc., was intended to be an, intelligence, surveillance, and reconnaissance (ISR) reseller of dedicated mission specific non-aerial ISR and aerial ISR aircraft, platforms for the oil and gas industry, as well as government agencies. RADS has not realized any revenue and is currently inactive.


The Company is a provider of United Nations/Department of Transportation (“UN/DOT”) certified environmental waste packaging solutions, environmental spill response and control products (primarily absorbent products), and sell consumer and commercial spill control products for the hazardous and bio-hazardous waste clean-up markets.


The Company, through June 30, 2013, had not earned revenue from operations. Accordingly, previously, the Company’s activities had been accounted for as those of a “ Development Stage Company ” as set forth in Financial Accounting Standards Board (‘FASB”) Accounting Standards Codification (“ASC”) 915. Among the disclosures required by ASC 915 are that the Company’s financial statements be identified as those of a development stage company, and that the statements of operations, stockholders’ equity and cash flows disclose activity since the date of the Company’s inception. Since June 30, 2013, the Company has realized approximately $1,539,000 in revenues, and therefore no longer considers itself a “Development Stage Company.”


As the Company only established its business operations on June 21, 2013 (and was a shell company prior to such date), the Company has no meaningful historical business operations, with which to compare the current calendar year period. Since the Company has no comparable historical business operations, the following discussion omits discussion of income from continuing operations, expenses and other matters related to “results of operations,” as well as information relating to the statement of cash flows, as the Company does not believe that analysis of this information would be meaningful to investors.



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Recent Developments


During the year ended December 31, 2014, the Company's CEO paid $138,989 in expenses of the Company through the use of his personal funds and personal credit cards. See Below.


On July 12, 2014, the Company sold 3,000,000 shares of its common stock to a single accredited investor for gross proceeds of $6,000 (a per share price of $.002).


From March 31, 2014 through July 14, 2014, a consultant who is affiliated with a significant shareholder received 32,500 per month for seven months, for a total of 130,000 shares, for services per an agreement dated July 22, 2013. These shares were valued at $13,000, or $0.10 per share. This agreement was terminated on July 14, 2014.


On July 14, 2014, the Company and its CEO, Michael R. Rosa, entered into an agreement with Mark Shefts, as follows:


(1)

Mr. Shefts: (i) agreed to provide management advisory services to the Company for a period of one year, for $1000 per month, (ii) made a $125,000 equity investment into the Company, in exchange for 10 million shares of the Registrant’s common stock, (iii) agreed to extend the maturity date of his convertible promissory note in the principal amount of $100,000 until July 15, 2015 and make the note non-interest bearing, and (iv) has the option of becoming CEO and a member of the board of the Company;


(2)

The Company agreed issue to Mr. Shefts or his designee 10 million shares of its common stock, in consideration for the $125,000 investment;


(3)

Mr. Shefts and the Company’s CEO agreed to endeavor for a specified of time to appoint a mutually agreeable person to act as a director of the Company. In the event that Mr. Shefts and the Company’s CEO are unable to agree on a third director, Mr. Shefts would have the right to appoint the third director;


(4)

Michael R Rosa, CEO of the Company, surrendered approximately 6,692,500 shares of the Registrant’s common stock to the treasury, to be restored to the status of authorized but unissued shares; and


(5)

Mr. Rosa agreed to accept a promissory note in the amount of $98,268 for amounts he has advanced on behalf of the Company through June 30, 2014. This note is non-interest bearing and matures July 15, 2015.


The Agreement also provides that if the Board of Directors should at any time determine to discontinue the business operations of the Company, then, subject to compliance with applicable laws, the Company will transfer to Michael R. Rosa its discontinued operating businesses, in exchange for his surrendering to the Company all shares of common stock of the Company owned or controlled by him.


In connection with the foregoing transaction, the Company, on July 14, 2014, sold to Rushcap Group, Inc. (Mark Shefts’ designee) (an accredited investor) 10,000,000 shares of its common stock, for aggregate consideration of $125,000 (a per-share price of $.0125).


Except as disclosed herein, we are not a party to any pending legal proceeding and. to the knowledge of our management, no federal, state or local governmental agency is presently contemplating any proceeding against us.


On or about August 12, 2014, we received a Notice of Debarment from the US Defense Logistics Agency (“DLA”) (the “Notice”). The Notice (i) prevents us from bidding on new government contracts and (ii) precludes the renewal of any existing contract that is otherwise renewable. The Notice was issued to us because our CEO (who is also a significant shareholder of our company) is affiliated with a company that is alleged to have sold products to the DLA that did not conform to the applicable contract. The DLA has not alleged any wrongdoing whatsoever with respect to our company or its contracts with the DLA.


As a result of the Notice, we are not able to bid on any new US government contracts that might otherwise be of interest to us, unless and until the Notice is withdrawn or rescinded as a result of our negotiations with the government or through an adjudication on the merits.


Currently, there are no government contracts on which we are interested in bidding. During each of the quarterly periods ended December 31, 2013 and September 30, 2014, we realized approximately $100,000 in revenues from government contracts. These contracts have been substantially fulfilled.



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On November 3, 2014, the Company filed a letter with DLA opposing the proposed notice of debarment which is based on the Company’s affiliation with the other company. DLA has not yet acted upon the matter.


If we are unable to have the Notice rescinded/terminated, we will not be able to bid on future US government contracts, in which case there could be an adverse effect on our revenues and profitability, unless we are able to replace the resulting revenue loss. We intend to vigorously pursue rescission/termination of the Notice.


In August, 2014, the Company entered into an agreement with a consultant whereby the consultant was compensated for his services at a rate of $75 per hour for the first 20 hours per week, then 1,000 shares per hour for every hour, or partial hour, thereafter. These shares are valued at $0.0125 per share. Through December 31, 2014, the Company has issued 54,000 shares and is obligated to issue an additional 141,000 shares under this agreement. This agreement was terminated as of December 31, 2014. Effective as of January 2, 2015, the consultant became our CFO.


In September 26, 2014, the Company entered into an agreement with Rushcap Group, Inc. (controlled by Mark Shefts (a significant shareholder)) to provide a revolving line of credit to purchase inventory to the Company. The maximum borrowing amount under this agreement is $300,000. Interest is charged at a rate of 3.5% per advance for the first 30 day period or portion thereof, then 1.5% per 30 day period or portion thereof until paid with a maximum borrowing term of 120 days per advance. Payments are due within 30 days of the Company receiving payment from the customer for invoices which are funded under this agreement. Through December 31, 2014, $200,000 had been advanced to the company under this agreement (currently outstanding).


The convertible note in the principal amount of $100,000 was amended in July 2014 to extend its maturity date to July 15, 2015 and to make it non-interest bearing. The convertible note in the principal amount of $50,000 was amended in September 2014 (effective July 31, 2014) to extend its maturity date to September 10, 2015, reduce the conversion rate of the note from $0.125 to $0.05 per share, allow the note holder to elect to receive stock in lieu of cash for his interest and issue the note holder 100,000 shares of common stock in consideration of this agreement upon execution. On January 21, 2015, the Company and the holders of these notes agreed to reduce the conversion price of the notes to $.025 per share, in consideration for which the holders agreed to extend the maturity date of the notes for an additional one year period (until July 15, 2016 in the case of the $100,000 notes and September 16, 2016 in the case of the $50,000 note). In addition, on January 21, 2015, the Company and its CEO, who is a significant shareholder, issued a convertible note payable to the CEO in the principal amount of $100,000, with a conversion feature whereby such note is also convertible into common stock at the rate of $.025 per share.


On January 12, 2015, the Company approved an amendment to its certificate of incorporation to change its name to “The Enviromart Companies.” The Company’s wholly owned subsidiary, EnviroPack Technologies, Inc., also approved, on January 12, 2015, an amendment to its certificate of incorporation to change its name to “Enviromart Industries, Inc.” Effective as of January 2, 2015, all of the Company’s business will be conducted through Enviromart Industries, Inc., its wholly owned subsidiary (f/k/a EnviroPack Technologies, Inc.). The Company expects these amendments to be effective on or about January 15, 2015.


On January 22, 2015, we sold an aggregate of 1,848,871 shares of our common stock to two accredited investors at a price per share of $.002, for aggregate consideration of $3,697


Critical Accounting Policies and Significant Judgments and Estimates


The Securities and Exchange Commission (“SEC”) issued disclosure guidance for “critical accounting policies.” The SEC defines “critical accounting policies” as those that require the application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.


Our significant accounting policies are described below. We anticipate that the following accounting policies will require the application of our most difficult, subjective or complex judgments:


Basis of Presentation


The Company, through June 30, 2013, had not earned revenue from operations. Accordingly, through the quarter ended June 30, 2013, the Company’s activities were accounted for as those of a “Development Stage Company” as set forth in FASB ASC 915. Among the disclosures required by ASC 915 are that the Company’s financial statements be identified as those of a development stage company, and that the statements of operations, stockholders’ equity and cash flows disclose activity since the date of the Company’s inception.



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Since completing the acquisitions on June 21, 2013, the Company has raised capital, hired employees, leased space, engaged consultants and advisors, conducted extensive sales and marketing related activities both domestically and internationally, negotiated vendor relationships and engaged seller’s representatives. The Company has, since June 30, 2013, realized approximately $848,000 in revenues, primarily from its EnviroPack and SpillCon businesses. Accordingly, the Company no longer considered itself to be a development stage company during the quarter ended March 31, 2014.


Accounts Receivable


In the normal course of business, the Company extends credit to customers that satisfy defined credit criteria. Accounts receivable is recorded at carrying value, which approximates fair value, and is presented in the Company's unaudited consolidated balance sheets net of any allowance for doubtful accounts. As of March 31, 2014, an allowance for doubtful accounts had not been deemed necessary, and therefore, not recorded.


Inventory


The Company’s inventory is stated at the lower of cost or estimated realizable value, with cost primarily determined on a weighted-average cost basis on the first-in, first-out (“FIFO”) method. The Company continuously evaluates the composition of its inventory, assessing slow-turning product. Estimated realizable value of inventory is determined based on an analysis of historical sales trends of our individual products, the impact of market trends and economic conditions, and a forecast of future demand, giving consideration to the value of current orders in-house relating to the future sales of inventory. Estimates may differ from actual results due to quantity, quality, and mix of products in inventory, customer demand, and market conditions. The Company’s historical estimates of these costs and any provisions have not differed materially from actual results. Any reserves for inventory shrinkage, representing the risk of physical loss of inventory, are adjusted based upon physical inventory counts. As of March 31, 2014, an inventory reserve of $7,193 has been recorded.


Concentration of Risk


Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash. Our cash balances are maintained in accounts held by major banks and financial institutions located in the United States. The Company occasionally maintains amounts on deposit with a financial institution that are in excess of the federally insured limits. The risk is managed by maintaining all deposits in high quality financial institutions.


For the three months ended March 31, 2014, two customers represented in the aggregate 83% of our sales (one customer represented 51% of our sales and the other represented 32% of our sales. The loss of either one of these customers would have a material adverse effect on our business, operating results and financial condition.


Machinery and Equipment


Equipment is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method based upon the estimated useful life of depreciable assets, which is three years for machinery and equipment.


Long-lived Assets


Machinery and equipment, along with other long-lived assets, are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be recoverable, or are less than their fair value. In evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from the use of the asset and its eventual disposition. To the extent that estimated future undiscounted net cash flows attributable to the asset are less than the carrying value, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value, considering external market participant assumptions. Assets to be disposed of and for which there is a committed plan of disposal are reported at the lower of carrying value or fair value less costs to sell.



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Income Taxes


Income taxes are provided in accordance with FASB ASC 740 “ Accounting for Income Taxes” . A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. There were no current or deferred income tax expenses or benefits, as the Company did not having any material operations for the period ended December 31, 2012. As of March 31, 2014, all deferred tax assets continue to be fully reserved.


Revenue Recognition


Revenue is recognized across all segments of the business when there is persuasive evidence of an arrangement, delivery has occurred, price has been fixed or is determinable, and collectability is reasonably assured. Revenue is recognized at the time title passes and risk of loss is transferred to customers.


Sales Reserves and Uncollectible Accounts


A significant area of judgment affecting reported revenue and net income is estimating sales reserves, which represent that portion of gross revenues not expected to be realized. In particular, wholesale revenue is reduced by estimates of returns, discounts, markdowns, and operational chargebacks. In determining estimates of returns, discounts, markdowns and operational chargebacks, management analyzes current economic and market conditions. We review and refine these estimates on a quarterly basis. As of March 31, 2014, a sales reserve had not been deemed necessary, and therefore, not recorded.


Liquidity and Capital Resources


Currently, we have only minimal operating capital. Accordingly, we have an immediate and urgent need for additional capital to fund our business operations. Although the $250,000 in inventory financing we received through January 21, 2015, is helping to fund limited sales, the lack of operating capital is nevertheless adversely affecting our ability to purchase needed product inventory and consequently is interfering with our ability to maximize our sales revenue. We are currently in the process of attempting to raise additional capital through the sale of equity and/or debt securities. Sales of additional equity securities (or securities convertible into equity securities) will dilute the percentage ownership interest of existing stockholders in the Company.


To date we have realized only limited operating revenues. We are, however, incurring significant costs and expenses in connection with the establishment of our business, implementation of our business plan and ongoing compliance costs associated with being a public company. Consequently, we are currently experiencing negative cash flows from operations. During the three months ended March 31, 2014, our operating activities used approximately $10,000 in cash (about $3,000 per month). Although our operations only used minimal cash during the current quarter, this is because we were able to fund our operating losses through increased accounts payable and accrued expenses, as well as advances form our CEO. Funding our business through increased accounts payable and accrued expenses is not a sustainable way to fund our operating activities. We need to raise additional cash immediately in order to fund our business operations and implement our business plan. As a result, we have an immediate and urgent need for additional funds.


At March 31, 2014, we had a working capital deficiency of approximately $590,000, compared to a working capital deficiency of approximately $419,000 at December 31, 2013.The $171,000 increase in our working capital deficiency was due primarily to a $219,000 increase in accounts payable and accrued expenses, a $79,000 increase in due to officer (related to Company expenses paid directly by our CEO and major shareholder) and a $53,000 decrease in accounts receivable – related party, partially offset by a $104,000 increase in inventory and a $110,000 increase in accounts receivable.


In order to remedy this liquidity deficiency, we need to raise additional capital immediately, and ultimately we will need to generate substantial positive operating cash flows. Our internal sources of funds will consist of cash flows from operations, but not until we begin to realize substantial revenues from the sale of products. As previously stated, as of the date of filing of this quarterly report, we have only limited revenues, and our operations are generating negative cash flows, and thus adversely affecting our liquidity. We intend to raise additional funds through equity and/or debt financing. In addition, we expect that our operations will continue to generate increasing revenues during the first half of 2015, which should improve our liquidity deficiency. If we are unable to raise additional funds in the near term, we will not be able to implement our business plan, and it is unlikely that we will be able to continue as a going concern.



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Subject to the availability of funds, which we currently do not have, we expect to incur approximately $250,000 in capital expenditures over the next 12 months. The purpose of these capital expenditures will be for the installation of a cellulose blending system, along with an industrial sewing machine center for use in a customized cutting and sewing operation, and specific testing equipment for a research and development lab for the SpillCon product line, along with other equipment modifications. We also intend to continue the development of our Environmart.com B2B website.


We expect to fund these capital expenditures through a combination of cash flows from operations (but not until we realize further significant revenue growth) and proceeds from equity/debt financing. If we are unable to generate positive cash flows from operations, and/or raise additional funds (either through debt or equity or a combination thereof), we will be unable to fund our capital expenditures, in which case, there could be an adverse effect on our business and results of operations.


Since March, 2013, we have raised an aggregate of approximately $515,000 from the sale of shares of common stock and convertible promissory notes. We expect to raise additional funds in the near term from the further equity and/or debt offerings. Additional sales of common stock or securities convertible into common stock will reduce the percentage interest of existing stockholders in our Company.


In addition, on September 26, 2014, the Company entered into an agreement with Rushcap Group, Inc. (controlled by Mark Shefts (a significant shareholder)) to provide a revolving line of credit to purchase inventory to the Company. The maximum borrowing amount under this agreement is $300,000. Interest is charged at a rate of 3.5% per advance for the first 30 day period or portion thereof, then 1.5% per 30 day period or portion thereof until paid with a maximum borrowing term of 120 days per advance. Payments are due within 30 days of the Company receiving payment from the customer for invoices which are funded under this agreement. As of January 21, 2015, $250,000 had been advanced to the company under this agreement (currently outstanding).


Due to the previously described inventory funding, the Company has been able to significantly grow its revenue during the fourth quarter of 2014, as compared with the prior three quarters. For the nine month period ended September 30, 2014, the Company had revenues of approximately $1,018,000 (or about $113,000 per month). The Company has realized revenue of approximately $679,000 in the fourth quarter of 2014 (or about $226,000 per month). Accordingly, the Company has doubled its monthly sales revenue in the fourth quarter of 2014, as compared with the nine months ended September 30, 2014. The Company believes this level of sales can be maintained or surpassed during the next calendar year.


As of March 31, 2014, the company was delinquent with respect to the payment of Payroll Taxes for the period July 1, 2013 through March 31, 2014 in the amount of $87,485. As of January 12, 2015, the Company owed an aggregate of $121,536, including $34,049 in penalties and interest related to these delinquencies. In addition, as of January 12, 2015, the Company is delinquent with respect to the payment of Payroll Taxes for the period April 1, 2014 through June 30, 2014 in the amount of $32,067, including $472 in penalties and interest. Accordingly, at January 12, 2015, the Company owes an aggregate of $153,603, including $34,521 in penalties and interest. The Company believes that it will be able to secure a waiver of penalties in the aggregate approximate amount of $31,000, leaving the Company with a payroll tax liability (including interest) of approximately $122,000. The company expects to pay this amount out in installments over a three year period (approximately $3,500 per month). Since June 30, 2014, the Company has been current in the payment of its payroll taxes.


Off-Balance Sheet Arrangements


The Company has no off-balance sheet arrangements as defined in Item 303(a) (4) (ii) of the SEC’s Regulation S-K.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


Not required.



21




ITEM 4. CONTROLS AND PROCEDURES.


Evaluation of Disclosure Controls and Procedures


Disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including the CEO and controller, to allow timely decisions regarding required disclosures.


Under the supervision and with the participation of our management, including our CEO and controller, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, our CEO and controller concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were not effective. We have since March 31, 2014 hired a financial controller (part time) to oversee our books and records, as well as our internal accounting function. Effective January 2, 2105, this person, who is a CPA, became our CFO.


Changes in Internal Control over Financial Reporting


Other than hiring a part time financial controller, during the fiscal quarter covered by this Quarterly Report, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


Except as disclosed herein, we are not a party to any pending legal proceeding, and to the knowledge of our management, no federal, state or local governmental agency is presently contemplating any proceeding against us.


On or about August 12, 2014, we received a Notice of Debarment from the US Defense Logistics Agency (“DLA”) (the “Notice”). The Notice (i) prevents us from bidding on new government contracts and (ii) precludes the renewal of any existing contract that is otherwise renewable. The Notice was issued to us because our CEO (who is also a significant shareholder of our company) is affiliated with a company that is alleged to have sold products to the DLA that did not conform to the applicable contract. The DLA has not alleged any wrongdoing whatsoever with respect to our company or its contracts with the DLA.


As a result of the Notice, we are not able to bid on any new US government contracts that might otherwise be of interest to us, unless and until the Notice is withdrawn or rescinded as a result of our negotiations with the government or through an adjudication on the merits.


On November 3, 2014, the Company filed a letter with DLA opposing the proposed notice of debarment which was based on the Company’s affiliation with the other company. DLA has not yet acted upon the matter.


Currently, there are no government contracts on which we are interested in bidding. During each of the quarterly periods ended December 31, 2013 and September 30, 2014, we realized approximately $100,000 in revenues from government contracts. These contracts have been substantially fulfilled.


If we are unable to have the Notice rescinded/terminated, we will not be able to bid on future US government contracts, in which case there could be an adverse effect on our revenues and profitability, unless we are able to replace the resulting revenue loss. We intend to vigorously pursue rescission/termination of the Notice.


ITEM 1A. RISK FACTORS


Not required.



22




ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


Previously reported in Current Reports on Form 8-K.


On January 22, 2015, we sold an aggregate of 1,848,871 shares of our common stock to two accredited investors at a price per share of $.002, for aggregate consideration of $3,697


ITEM 3. DEFAULTS UPON SENIOR SECURITIES


None.


ITEM 4. MINE SAFETY DISCLOSURES


Not applicable.


ITEM 5. OTHER INFORMATION


N/A



23




ITEM 6. EXHIBITS


 

 

Incorporated by Reference

Exhibit

Exhibit Description

Filed Herewith

Form

Period Ending

Exhibit

Filing Date

3.1

Certificate of Incorporation, as amended

X

 

 

 

 

3.2

By-Laws

 

10

 

3.2

07/09/2012

4.1

Specimen Stock Certificate

 

10

 

4.1

07/09/2012

10.1

Asset purchase agreement between registrant, Michael Rosa and SpillCon Solutions, Inc.

 

8-K

 

10.1

06/27/2013

10.2

Asset purchase agreement between registrant, Michael Rosa and Remote Aerial Detection Systems, Inc.

 

8-K

 

10.2

06/27/2013

10.3

Asset purchase agreement between registrant, Michael Rosa and EnviroPack Technologies, Inc.

 

8-K

 

10.3

06/27/2013

10.4

Asset purchase agreement between registrant, Mark Ceaser and SorbTech Manufacturing, Inc.

 

8-K

 

4.01

09/27/2013

10.5

Agreement between registrant and Network 1 Financial Securities, Inc. dated January 13, 2014

 

10-Q

06/30/2014

10.5

08/19/2014

10.6

Agreement between Mark Shefts, registrant and Michael Rosa dated July 14, 2014

 

10-Q

09/30/2014

10.6

11/19/2014

10.7

Promissory Note with Rushcap Group dated September 26, 2014

 

10-Q

09/30/2014

10.7

11/19/2014

10.8

Inventory Financing Agreement with Rushcap Group dated September 26, 2014

 

10-Q

09/30/2014

10.8

11/19/2014

10.9

First Amended and Restated Convertible Note with Shefts Family LP dated January 21, 2015

X

 

 

 

 

10.10

Convertible Note with Michael R. Rosa dated January 21, 2015

X

 

 

 

 

31.1**

Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

X

 

 

 

 

31.2**

Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

X

 

 

 

 

32.1

Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

X

 

 

 

 

32.2

Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

X

 

 

 

 


** Furnished, not filed



24




SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.


Environmental Science and Technologies, Inc.



By: /s/ George R. Adyns

Name: George R. Adyns

Title: Chief Financial Officer (Principal Financial Officer)


Dated: January 22, 2015



25


EXHIBIT 3.1


STATE OF DELAWARE

CERTIFICATE OF AMENDMENT

OF CERTIFICATE OF INCORPORATION


The corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware does hereby certify:


FIRST: That at a meeting of the Board of Directors of:


Environmental Science and Technologies, Inc.


resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof.


The resolution setting forth the proposed amendment is as follows:


RESOLVED, that the Certificate of Incorporation of this corporation be amended by changing the Article thereof numbered "First” so that, as amended, said Article shall be and read as follows:


The name of the Corporation shall be The Enviromart Companies.


SECOND: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.


IN WITNESS WHEREOF, said corporation has caused this certificate to be signed this 12 th day of January 2015.


By: /s/ George R. Adyns

Authorized Officer

Title: Chief Financial Officer

Name: George Adyns





CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION


Apex 5 Inc. a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware.


DOES HEREBY CERTIFY:


FIRST: That a meeting of the Board of Directors of Apex 5 Inc. resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows:


RESOLVED that the Certificate of Incorporation of this corporation be amended by changing the Article thereof numbered “FIRST” and “FOURTH” so that, as amended said Article shall be and read as follows:


FIRST: The name of the Corporation is: Environmental Science and Technologies, Inc.


FOURTH: “The total number of authorized shares which the corporation is authorized to issue is 250,000,000 shares of common stock having a par value of $0.000100 per share and 5,000,000 shares of preferred stock having a par value of $0.000100 per share”


SECOND: That thereafter, pursuant to resolution of its Board of Directors, a special meeting of the stockholders of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment.


THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.


IN WITNESS WHEREOF, said Apex 5 Inc. has caused this certificate to be signed by an authorized officer, this 20 th day of December, 2012



By: /s/ Michael R. Rosa

Name: Michael R. Rosa

Title: President, CEO





CERTIFICATE OF INCORPORATION


OF


Apex 5 Inc.


First : the name of the corporation is: Apex 5 Inc .


Second : Its registered office in the State of Delaware is located at 16192 Coastal Highway, Lewes, Delaware 19958, County of Sussex. The registered agent in charge thereof is Harvard Business Services, Inc.


Third : The purpose of the corporation is to engage in any lawful activity for which corporations may be organized under the General Corporation Law of Delaware.


Fourth: The total number of shares of stock which the corporation is authorized to issue is 100,000,000 shares having a par value of $0.0001 per share.


Fifth : The business and affairs of the corporation shall be managed by or under the direction of the board of directors and the directors need not be elected by ballot unless required by the bylaws of the corporation.


Sixth: This Corporation shall be perpetual unless otherwise decided by a majority of the Board of Directors.


Seventh: In furtherance and not in limitation of the powers conferred by the laws of Delaware, the board of directors is authorized to amend or repeal the bylaws.


Eight: The Corporation reserves the right to amend or repeal any provision in this Certificate of Incorporation in the manner prescribed by the laws of Delaware.


Ninth: The incorporator is Richard H. Bell in care of Harvard Business Services, Inc., whose mailing address is 16192 Coastal Highway, Lewes, DE 19958.


Tenth: To the fullest extent permitted by the Delaware General Corporation Law a director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.


I, Richard H. Bell, for the purpose of forming a corporation under the laws of the State of Delaware do make and file this certificate, and do certify that the facts herein stated are true: and have accordingly signed below, this 18 th day of June, 2012.



Signed and Attested to by:


/s/ Richard H. Bell

HARVARD BUSINESS SERVICES, INC.

By Richard H. Bell, Incorporator




EXHIBIT 10.9


THE NOTE EVIDENCED HEREBY HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS.


FIRST AMENDED AND RESTATED

CONVERTIBLE NOTE


The Enviromart Companies

(f/k/a Environmental Science and Technologies, Inc.)


US $100,000

January 21, 2015


EXPLANATORY NOTE:


This First Amended and Restated Convertible Note supersedes that certain convertible promissory note of the Maker dated September 4, 2013 and the Extension Agreement between Maker and Holder dated September 4, 2014.


FOR VALUE RECEIVED, the undersigned, The Enviromart Companies (f/k/a Environmental Science and Technologies, Inc.), a Delaware corporation, with its principal executive offices at 4 Wilder Dr., #7, Plaistow, NH 03865 (“Maker”), hereby promises to pay, subject to Section 4 hereof, to the order of Shefts Family LP, whose address is 160 Summit Ave., Montvale, NJ 07645 (“Holder”), the sum of ONE HUNDRED THOUSAND DOLLARS ( US $100,000) and any other fees and charges, on July 15, 2016 (the “Maturity Date”).


1.

Interest . This note shall be non-interest bearing.


2.

Prepayment . The principal balance of this Note may be prepaid, in whole or in part, prior to Maturity Date, upon 30 days prior written notice to the Holder. The Holder may, at any time prior to the prepayment date, convert all or a portion of the principal being prepaid into shares of common stock, as provided in Section 4 of this Note.


3.

Event of Default . The entire balance of unpaid principal shall, at the option of the Holder, become immediately due and payable if any of the following events shall occur and be continuing:


i.

The Maker shall fail to make any payment herein provided when due; or


ii.

There shall occur a default under any mortgage, indenture, loan agreement or other instrument evidencing indebtedness binding on the Maker or any of its subsidiaries which shall have resulted in the indebtedness evidenced thereby becoming or being declared due and payable prior to the date on which it would otherwise have been due and payable, without such indebtedness having been discharged or such acceleration having been rescinded or annulled; or


iii.

The Maker or any of its subsidiaries shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Maker or any of its subsidiaries seeking to adjudicate it in a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 30 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Maker or any of its subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (iii);





then, and in any such event, the Holder may, by notice to the Maker, declare the Note and all interest thereon to be forthwith due and payable, whereupon the Note and all such interest shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Maker: provided, however, that in the event of any actual or deemed entry of a order for relief with respect to the Maker under the U.S. Federal Bankruptcy Code, the Note and all such interest shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Maker.


All payments due hereunder shall be made at the address of the Holder as set forth in the Subscription Agreement, or at such other place as the Holder may designate from time to time in writing.


4.

Convertibility of Note . At any time after written notice to the Maker (which notice must be delivered on or before the Maturity Date), the unpaid principal amount of this Note and the accrued but unpaid interest shall at the option of the Holder be convertible in whole or in part into shares of Common Stock at a rate equal to $.025 per share. To the extent that the Holder has not, on or before the Maturity Date, delivered the notice of conversion, as permitted by this Section 4, then, any remaining amount of principal, interest or fees/charges due hereunder may be paid in U. S. Dollars. The issuance of the Common Stock upon conversion of this Note shall be subject to compliance with applicable securities laws. The Holder shall execute such documents as the Maker shall reasonably require to insure compliance with such laws.


5.

Conversion of Note . Subject to Section 4, the conversion rights represented by this Note may be exercised in whole, or in part, by the surrender of this Note and the duly executed Notice of Conversion (the form of which is attached as Exhibit A), at the principal office of the Maker. Upon conversion, the Holder shall be entitled to receive, within a reasonable time, a certificate, issued in the Holder’s name or in such name or names as the Holder may direct, which shall evidence the shares of Common Stock issuable upon conversion. The shares of common stock so acquired shall be deemed to be issued as of the close of business on the date on which the Notice of Conversion is received by the Maker. In the event the Note is converted in part, a replacement Note of like tenor evidencing the remaining principal amount owed after the Conversion shall be issued to the Holder.


6.

Adjustments of Conversion Price . In the event of a merger, consolidation, reorganization, recapitalization, or other change in the organizational structure of the Maker, reasonable and appropriate adjustments shall be made by the Board of Directors of the Maker (or if the Maker is not the surviving corporation in any such transaction, the Directors, Board of Directors or its equivalent of the surviving corporation) with respect to the shares of Common Stock the Holder is eligible to receive upon conversion of and pursuant to the terms of the Note. Any such adjustments shall be conclusive and binding on the Holder.


7.

No Rights as Stockholders . Except as set forth below, this Note does not entitle the Holder to any voting rights or other rights as a Stockholder of the Maker prior to conversion and surrender of this Note. Upon valid conversion and surrender of this Note in accordance with the terms hereof, the Holder shall be deemed a Stockholder of Maker.


8.

Sale or Transfer of the Note and Underlying Shares of Common Stock; Legend . The Note and the underlying shares of Common Stock shall not be sold or transferred unless either (i) they first shall have been registered under the Securities Act of 1933, as amended (the “Act”), and applicable state securities laws, or (ii) such sale or transfer is exempt from the registration requirements of the Act and applicable state securities laws. Each certificate, if any, representing the shares of Common Stock issued upon conversion of this Note shall bear a legend substantially in the following form:


THE SHARES OF COMMON STOCK EVIDENCED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS.


Prior to recognizing any transfer, the Company will be entitled to receive a written legal opinion of experienced securities counsel reasonably acceptable to the Company concerning compliance with federal and state securities laws; the expense of such legal opinion shall be paid by the transferor. Such shares of Common Stock may be subject to additional restrictions on transfer imposed under applicable foreign securities laws.





9.

Modifications and Waivers . This Note may not be changed, waived, discharged or terminated except by an instrument in writing signed by the party against which enforcement of the same is sought.


10.

Reserved .


11.

Notices . Any notice, request or other document required or permitted to be given or delivered to the Holder or Maker shall be delivered, or shall be sent by certified or registered mail, postage prepaid, or recognized overnight courier (with signature required) to the Holder at his/its address shown on the books of the Maker or in the case of the Maker, at the address indicated above, or if different, at the principal office of the Maker.


12.

12 . Loss, Theft, Destruction or Mutilation of Note or Certificate Representing Shares of Common Stock . The Maker covenants with the Holder that upon its receipt of evidence reasonably satisfactory to the Maker of the loss, theft, destruction or mutilation of this Note or any certificate evidencing any shares of Common Stock and the posting of a bond reasonably acceptable to the Maker, and upon surrender and cancellation of this Note or certificate evidencing shares of Common Stock, if mutilated, the Maker will make and deliver a new Note or certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Note or certificate.


13.

Binding Effect on Successors . This Note shall be binding upon any business association succeeding the Maker by merger, consolidation or acquisition of all or substantially all of the Maker’s assets.


14.

Governing Law . This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Delaware, without regard to the conflict of law principles thereof.



IN WITNESS WHEREOF, The Enviromart Companies (f/k/a Environmental Science and Technologies, Inc.) and the Holder have caused this Amended and Restated Note to be executed as an instrument under seal by their respective representatives thereunto duly authorized.


ORIGINAL ISSUANCE DATE:

January 21, 2015


The Enviromart Companies

Shefts Family LP

(f/k/a Environmental Science and Technologies, Inc.)


/s/ George R. Adyns

/s/ Mark Shefts

George R. Adyns, Chief Financial Officer

Mark Shefts, duly authorized




EXHIBIT 10.10


THE NOTE EVIDENCED HEREBY HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS.


CONVERTIBLE NOTE


The Enviromart Companies

(f/k/a Environmental Science and Technologies, Inc.)


US $100,000

January 21, 2015


FOR VALUE RECEIVED, the undersigned, The Enviromart Companies (f/k/a Environmental Science and Technologies, Inc.), a Delaware corporation, with its principal executive offices at 4 Wilder Dr., #7, Plaistow, NH 03865 (“Maker”), hereby promises to pay, subject to Section 4 hereof, to the order of Michael R. Rosa, whose address is c/o The Enviromart Companies, 4 Wilder Dr., #7, Plaistow, NH 03865 (“Holder”), the sum of ONE HUNDRED THOUSAND DOLLARS ( US $100,000) and any other fees and charges, on July 15, 2016 (the “Maturity Date”).


1.

Interest . This Note shall be non-interest bearing.


2.

Prepayment . The principal balance of this Note may be prepaid, in whole or in part, prior to Maturity Date, upon 30 days prior written notice to the Holder. The Holder may, at any time prior to the prepayment date, convert all or a portion of the principal being prepaid into shares of common stock, as provided in Section 4 of this Note.


3.

Event of Default . The entire balance of unpaid principal shall, at the option of the Holder, become immediately due and payable if any of the following events shall occur and be continuing:


i.

The Maker shall fail to make any payment herein provided when due; or


ii.

There shall occur a default under any mortgage, indenture, loan agreement or other instrument evidencing indebtedness binding on the Maker or any of its subsidiaries which shall have resulted in the indebtedness evidenced thereby becoming or being declared due and payable prior to the date on which it would otherwise have been due and payable, without such indebtedness having been discharged or such acceleration having been rescinded or annulled; or


iii.

The Maker or any of its subsidiaries shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Maker or any of its subsidiaries seeking to adjudicate it in a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 30 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Maker or any of its subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (iii);


then, and in any such event, the Holder may, by notice to the Maker, declare the Note and all interest thereon to be forthwith due and payable, whereupon the Note and all such interest shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Maker: provided, however, that in the event of any actual or deemed entry of a order for relief with respect to the Maker under the U.S. Federal Bankruptcy Code, the Note and all such interest shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Maker.





All payments due hereunder shall be made at the address of the Holder as set forth in the Subscription Agreement, or at such other place as the Holder may designate from time to time in writing.


4.

Convertibility of Note . At any time after written notice to the Maker (which notice must be delivered on or before the Maturity Date), the unpaid principal amount of this Note and the accrued but unpaid interest shall at the option of the Holder be convertible in whole or in part into shares of Common Stock at a rate equal to $.025 per share. To the extent that the Holder has not, on or before the Maturity Date, delivered the notice of conversion, as permitted by this Section 4, then, any remaining amount of principal, interest or fees/charges due hereunder may be paid in U. S. Dollars. The issuance of the Common Stock upon conversion of this Note shall be subject to compliance with applicable securities laws. The Holder shall execute such documents as the Maker shall reasonably require to insure compliance with such laws.


5.

Conversion of Note . Subject to Section 4, the conversion rights represented by this Note may be exercised in whole, or in part, by the surrender of this Note and the duly executed Notice of Conversion (the form of which is attached as Exhibit A), at the principal office of the Maker. Upon conversion, the Holder shall be entitled to receive, within a reasonable time, a certificate, issued in the Holder’s name or in such name or names as the Holder may direct, which shall evidence the shares of Common Stock issuable upon conversion. The shares of common stock so acquired shall be deemed to be issued as of the close of business on the date on which the Notice of Conversion is received by the Maker. In the event the Note is converted in part, a replacement Note of like tenor evidencing the remaining principal amount owed after the Conversion shall be issued to the Holder.


6.

Adjustments of Conversion Price . In the event of a merger, consolidation, reorganization, recapitalization, or other change in the organizational structure of the Maker, reasonable and appropriate adjustments shall be made by the Board of Directors of the Maker (or if the Maker is not the surviving corporation in any such transaction, the Directors, Board of Directors or its equivalent of the surviving corporation) with respect to the shares of Common Stock the Holder is eligible to receive upon conversion of and pursuant to the terms of the Note. Any such adjustments shall be conclusive and binding on the Holder.


7.

No Rights as Stockholders . Except as set forth below, this Note does not entitle the Holder to any voting rights or other rights as a Stockholder of the Maker prior to conversion and surrender of this Note. Upon valid conversion and surrender of this Note in accordance with the terms hereof, the Holder shall be deemed a Stockholder of Maker.


8.

Sale or Transfer of the Note and Underlying Shares of Common Stock; Legend . The Note and the underlying shares of Common Stock shall not be sold or transferred unless either (i) they first shall have been registered under the Securities Act of 1933, as amended (the “Act”), and applicable state securities laws, or (ii) such sale or transfer is exempt from the registration requirements of the Act and applicable state securities laws. Each certificate, if any, representing the shares of Common Stock issued upon conversion of this Note shall bear a legend substantially in the following form:


THE SHARES OF COMMON STOCK EVIDENCED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS.


Prior to recognizing any transfer, the Company will be entitled to receive a written legal opinion of experienced securities counsel reasonably acceptable to the Company concerning compliance with federal and state securities laws; the expense of such legal opinion shall be paid by the transferor. Such shares of Common Stock may be subject to additional restrictions on transfer imposed under applicable foreign securities laws.


9.

Modifications and Waivers . This Note may not be changed, waived, discharged or terminated except by an instrument in writing signed by the party against which enforcement of the same is sought.


10.

Reserved .





11.

Notices . Any notice, request or other document required or permitted to be given or delivered to the Holder or Maker shall be delivered, or shall be sent by certified or registered mail, postage prepaid, or recognized overnight courier (with signature required) to the Holder at his/its address shown on the books of the Maker or in the case of the Maker, at the address indicated above, or if different, at the principal office of the Maker.


12.

Loss, Theft, Destruction or Mutilation of Note or Certificate Representing Shares of Common Stock . The Maker covenants with the Holder that upon its receipt of evidence reasonably satisfactory to the Maker of the loss, theft, destruction or mutilation of this Note or any certificate evidencing any shares of Common Stock and the posting of a bond reasonably acceptable to the Maker, and upon surrender and cancellation of this Note or certificate evidencing shares of Common Stock, if mutilated, the Maker will make and deliver a new Note or certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Note or certificate.


13.

Binding Effect on Successors . This Note shall be binding upon any business association succeeding the Maker by merger, consolidation or acquisition of all or substantially all of the Maker’s assets.


14.

Governing Law . This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Delaware, without regard to the conflict of law principles thereof.



IN WITNESS WHEREOF, The Enviromart Companies (f/k/a Environmental Science and Technologies, Inc.) and the Holder have caused this Note to be executed as an instrument under seal.



ORIGINAL ISSUANCE DATE:

January 21, 2015


The Enviromart Companies

(f/k/a Environmental Science and Technologies, Inc.)


/s/ George R. Adyns

/s/ Michael R. Rosa

George R. Adyns, Chief Financial Officer

Michael R. Rosa



EXHIBIT 31.1


CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, George R. Adyns, certify that:


1.

I have reviewed this Quarterly Report on Form 10-Q of Environmental Science and Technologies, Inc. (the “Registrant”);


2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;


4.

The Registrant other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Registrant and have:


a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)

evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)

disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and


5.

The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions);


a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and


b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.



Date: 01/22/15

 

By:

/s/ George R. Adyns

 

 

 

George R. Adyns, Chief Financial Officer

 

 

 

(Principal Financial Officer)




EXHIBIT 31.2


CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Michael R. Rosa, certify that:


1.

I have reviewed this Quarterly Report on Form 10-Q of Environmental Science and Technologies, Inc. (the “Registrant”);


2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;


4.

The Registrant other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Registrant and have:


a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)

evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)

disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and


5.

The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions);


a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and


b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.



Date: 01/22/15

 

By:

/s/ Michael R. Rosa

 

 

 

Michael R. Rosa, Chief Executive Officer

 

 

 

(Principal Executive Officer)




EXHIBIT 32.1


CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Environmental Science and Technologies, Inc. (the “Registrant”) on Form 10-Q for the quarter ending March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Michael R. Rosa, Chief Executive Officer of the registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


(1)

The Quarterly Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)

The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and result of operations of the Registrant.



Date: 01/22/15

 

By:

/s/ Michael R. Rosa

 

 

 

Michael R. Rosa, Chief Executive Officer

 

 

 

(Principal Executive Officer)




EXHIBIT 32.2


CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Environmental Science and Technologies, Inc. (the “Registrant”) on Form 10-Q for the quarter ending March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, George R. Adyns, Chief Financial Officer of the registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


(1)

The Quarterly Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)

The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and result of operations of the Registrant.



Date: 01/22/15

 

By:

/s/ George R. Adyns

 

 

 

George R. Adyns, Chief Financial Officer

 

 

 

(Principal Financial Officer)