Algae International Group, Inc, based in Bomar, TX,through its operating subsidiary American Seed & OilCompany, Inc, is today primarily in the business of hemp production in Vermont tosupply seed to the expanding hemp farming market, hemp-based consumer productsmarketand hemp-based construction material market. The company is also piloting anumber of other cannabis related products and services.2014marked the first time in 70 years hemp has been grown legally within the UnitedStates. American Seed & Oil Company has established itself as a leader in Vermonthaving recently harvested the largest legal hemp crop within the State of Vermont.American Seed & Oil Company will use the seed from the 2014 crop to reach its goal ofplanting 1,000 acres in 2015. The company did not reveal the location of its Vermont farms.
American Seed & Oil Company also anticipates generatingrevenue through the sale of seeds to other hemp farming operations.A Congressional Research report estimates the hemp consumer products market withinthe United States has exceeded $500,000,000.00 a year and is growing. Hempconsumer products include lotions and other cosmetics, cooking oils and other edibles,nutraceuticals, paper, and construction material to name just a few. Currently, the rawhemp required to supply the U.S. consumer products market comes exclusively fromabroad.
OTC Pink Basic Disclosure Guidelines
1) Name of the issuer and its predecessors (if any)
The Company’s name was changed to Algae International Group, Inc. as of April 1, 2013
(f/k/a)Savanna East Africa, Inc. June 11, 2010 (f/k/a) Nova Energy, Inc. May 30, 2005.
2) Address of the issuer’s principal executive offices
Company Headquarters
2523 Bomar Avenue
Dallas, Texas 75235
Phone: 972.528.0162
Email: [email protected]
3) Security Information
Trading Symbol: ALGA
Exact title and class of securities outstanding: COMMON & PREFERRED “D”
CUSIP: 01551W100
Par or Stated Value: $0.001 (BOTH)
Total shares authorized: 2,000,0000,000/10,000,000 as of: 12/31/14
Total shares outstanding: 43,375,555/100,000 as of: 12/31/14
Transfer Agent
Olde Monmouth Stock Transfer Company, Inc.
200 Memorial Parkway
Atlantic Highlands, New Jersey 07716
Phone: (732)872-2727
Is the Transfer Agent registered under the Exchange Act?* Yes: X No:
*To be included in the OTC Pink Current Information tier, the transfer agent must be registered
under the Exchange Act.
List any restrictions on the transfer of security:
None
Describe any trading suspension orders issued by the SEC in the past 12 months.
None
List any stock split, stock dividend, recapitalization, merger, acquisition, spin-off, or
reorganization either currently anticipated or that occurred within the past 12 months:
None
4) Issuance History
Shares issued for the Period ended December 31, 2014 – 11,520,000
5) Financial Statements
The Company’s Financial Statements are attached at the end of this Disclosure
Statement and incorporated herein by reference.
6) Describe the Issuer’s Business, Products and Services
Describe the issuer’s business so a potential investor can clearly understand the company. In
answering this item, please include the following:
A. A description of the issuer’s business operations;
Algae International Group, Inc., through its operating subsidiary American Seed & Oil
Company, Inc., is today primarily in the business of hemp production in Vermont to
supply seed to the expanding hemp farming market, hemp based consumer products
market, and hemp based construction material market. The Company is also piloting a
number of other cannabis related products and services.
2014, marks the first time in 70 years hemp has been grown legally within the United
States. American Seed & Oil Company has established itself as a leader in Vermont
having recently harvested the largest legal hemp crop within the State of Vermont.
American Seed & Oil Company will use the seed from the 2014 crop to reach its goal of
planting 1,000 acres in 2015. American Seed & Oil Company also anticipates generating
revenue through the sale of seeds to other hemp farming operations.
A Congressional Research report estimates the hemp consumer products market within
the United States has exceeded $500,000,000.00 a year and is growing. Hemp
consumer products include lotions and other cosmetics, cooking oils and other edibles,
nutraceuticals, paper, and construction material to name just a few. Currently, the raw
hemp required to supply the U.S. consumer products market comes exclusively from
abroad.
American Seed & Oil Company expects the U.S. home grown hemp market to take
years to catch up with the existing and growing demand for hemp consumer products
and services. Accordingly, American Seed & Oil Company has established an
international hemp trade company to source fair trade, organically grown hemp from
abroad to supply the U.S. consumer hemp market.
Recognizing that the hemp and the overall cannabis market within the U.S. is in its
infancy, American Seed & Oil Company continues to pilot a number of additional
cannabis business concepts. Existing pilots include hemp clothing, branded hemp
edibles and medical marijuana.
The parent holding Company, Algae International Group, Inc. continues to explore
opportunities to produce economically viable biodiesel from algae both domestically and
abroad. However, the Company?s primary thrust today is within the cannabis market.
B. Date and State (or Jurisdiction) of Incorporation:
April 7, 1999 - Nevada
C. the issuer’s primary and secondary SIC Codes;
7380 Misc. Business Services
D. the issuer’s fiscal year end date;
June 30th
E. principal products or services, and their markets;
Hemp and Cannabis related business(s).
7) Describe the Issuer’s Facilities
The Company leases office space in Dallas, Texas at the address described herein.
The Company leases land and improved property for both outdoor and indoor cultivation
purposes.
The Company leases equipment for the processing of harvested materials.
In conjunction with a legacy operation, the Company owns oil and gas equipment condom
manufacturing tools and equipment.
8) Officers, Directors, and Control Persons
A. Steven Rash – President/CEO/Sole Director
B. Legal/Disciplinary History. Please identify whether any of the foregoing persons
have, in the last five years, been the subject of:
1. A conviction in a criminal proceeding or named as a defendant in a pending
criminal proceeding (excluding traffic violations and other minor offenses);
None
2. The entry of an order, judgment, or decree, not subsequently reversed,
suspended or vacated, by a court of competent jurisdiction that permanently or
temporarily enjoined, barred, suspended or otherwise limited such person’s
involvement in any type of business, securities, commodities, or banking
activities;
None
3. A finding or judgment by a court of competent jurisdiction (in a civil action),
the Securities and Exchange Commission, the Commodity Futures Trading
Commission, or a state securities regulator of a violation of federal or state
securities or commodities law, which finding or judgment has not been
reversed, suspended, or vacated; or
None
4. The entry of an order by a self-regulatory organization that permanently or
temporarily barred suspended or otherwise limited such person’s involvement
in any type of business or securities activities.
None
C. Beneficial Shareholders. Provide a list of the name, address and shareholdings or
the percentage of shares owned by all persons beneficially owning more than ten
percent (10%) of any class of the issuer’s equity securities. If any of the beneficial
shareholders are corporate shareholders, provide the name and address of the
person(s) owning or controlling such corporate shareholders and the resident
agents of the corporate shareholders.
Leonard (Ed) Bollen owns Series “D” Voting Control Preferred Shares
9) Third Party Providers
Please provide the name, address, telephone number, and email address of each of the
following outside providers that advise your company on matters relating to operations,
business development and disclosure:
Legal Counsel
Law Offices of Lawrence W. Bailey, 8330 LBJ Freeway Suite B350, Dallas, Texas 75243-1166
10) Issuer Certification
The issuer shall include certifications by the chief executive officer and chief financial
officer of the issuer (or any other persons with different titles, but having the same
responsibilities).
The certifications shall follow the format below:
I, Steven Rash certify that:
1. I have reviewed this 12/31/2014 quarterly disclosure statement of Algae International
Group, Inc.;
2. Based on my knowledge, this disclosure statement 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 disclosure statement; and
3. Based on my knowledge, the financial statements, and other financial information
included or incorporated by reference in this disclosure statement, fairly present in all
material respects the financial condition, results of operations and cash flows of the
issuer as of, and for, the periods presented in this disclosure statement.
2/23/15
/s/Steven Rash
CEO
ALGAE INTERNATIONAL GROUP, INC.
BALANCE SHEET AS OF 12/31/2014
ASSETS
CURRENT ASSETS:
Related party receivables $ 66,500
Total current assets 66,500
Long Term Note Receivable, including accrued interest 316,685
Furniture and Equipment, net 397,500
TOTAL ASSETS $ 780,685
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 162,640
Accrues interest 462,014
Accrued salaries 160,000
Advances payable 100,000
Advances payable – related parties 330,000
Due to related parties 7,500
Derivative liabilities 2,288,840
Promissory note payable – related party, current 160,000
Convertible notes payable, current 1,173,578
Convertible notes payable – related party 1,196,059
Total current liabilities 6,040,631
Promissory note payable, non-current 74,469
Total liabilities 6,115,100
STOCKHOLDERS DEFICIT:
Series D preferred stock, authorized 100,000
shares, par value $0.001, 100,000 I/O 100
Common stock, authorized 2,000,000,000
shares, par value $0.001, 43,375,555 shares I/O 43,375
Additional paid-in capital 242,423
Accumulated deficit during development stage (5,565,651)
Total stockholders’ deficit (5,279,753)
TOTAL LIABILITES AND STOCKHOLDERS’
DEFICIT $ 835,347
ALGAE INTERNATIONAL GROUP, INC.
STATEMENT OF OPERATIONS AS OF 12/31/2014
Operating Expenses:
General and administrative expenses $ 150,000
Total operating expenses 150,000
Loss from operations (150,000)
Non-operating income (expense):
Interest Income 12,935
Interest and finance costs (64,393)
Total non-operating income (expense) (51,458)
Net Loss $ (201,458)
Weighted average shares outstanding:
Basic 43,375,555
Diluted 43,375,555
Loss per share attributed to Algae International
Common stockholders:
Basic $ (0.005)
Diluted $ (0.005)
ALGAE INTERNATIONAL GROUP, INC.
STATEMENT OF CASH FLOWS AS OF 12/31/2014
CASH FLOWS OPERATING ACTIVITES:
Net Loss $ (201,458)
Adjustments to reconcile net loss including
noncontrolling interest to net cash used in
operating activities:
Interest Receivable (12,935)
Change in current assets and liabilities:
Accounts payable and accrued expenses 1,610
Net cash used in operating activities (212,783)
NET DECREASE IN CASH AND CASH
EQUIVALENTS $ (212,783)
NOTE 1 - GENERAL ORGANIZATION AND BUSINESS
History of the Company
Algae International Group, Inc. (f/k/a Savanna East Africa, Inc., f/k/a Nova Energy, Inc.)
was incorporated in Nevada in 1995, and is a publicly traded company presently listed
on www.otcmarkets.com, symbol “ALGA”.
The Company was historically focused primarily on the recovery of oil and gas reserves
through acquisition and project development, specializing in mature and marginal field
enhancement, developmental exploration drilling and low risk exploration opportunities in
Texas and North Dakota regions. On January 25, 2010, Daymon Bodard, the then sole
director and officer of the Company, effected a transfer of control of the Company.
After January 25, 2010, the Company's updated and expanded business plan was
centered around a number of diverse opportunities in East Africa, initially centered in
Kenya. The Company also continued its oil and gas exploration. On April 26, 2010, the
Company purchased oil drilling equipment in Texas for purposes of engaging in such oil
and gas exploration.
In connection with the Company’s updated business plan, on June 11, 2010, the
Company amended its certificate of incorporation to change its name from Nova Energy,
Inc. to Savanna East Africa, Inc.
On December 10, 2010, the Company entered into a share exchange agreement with
Savanna East Africa Limited (“SEA Kenya”). Pursuant to the exchange agreement, the
Company issued 100,000 shares of Series A Preferred Stock in exchange for 70,000
ordinary shares of SEA Kenya, which 70,000 ordinary shares represents 70% of the
outstanding capital stock of SEA Kenya. The accompanying consolidated financial
statements include those of the 70%-owned subsidiary.
SEA Kenya is a Kenyan corporation engaged in the business of identifying, acquiring
and developing early stage and start up business operations or acquiring various
resources to support the development of early stage and start-up business opportunities.
The Company acquired SEA Kenya with the intent to pursue business opportunities in
Kenya.
On March 5, 2013, the Company entered into an agreement to acquire Algae
International Group, Inc. in a reverse merger transaction. In accordance with the
agreement the Company executed a 1 for 20,0000 reverse split. The Company also
retired the Series ‘A’ Preferred Stock and issued Series ‘D’ Preferred Stock with the
same provisions as the original Series ‘A.’ The Series ‘D’ was issued to the shareholders
of Algae International Group. The transaction also included a change of the Company
name from Savanna East Africa, Inc. to Algae International Group, Inc. The African
subsidiary SEA Kenya and the Oil and Gas subsidiary, Nova Energy, remain intact
subsequent to the execution of the acquisition agreement.
On October 10, 2013, Management resolved to exit the business of developing an
operation to produce biodiesel from Algae. In conjunction with the exit, the subsidiary
operation dedicated to the development of biodiesel from Algae was sold in exchange
for a $285,000 note with a 10 year term, bearing 10% annual interest. Simultaneously,
the executive management and directors, John Potter and Chris Paine, resigned their
positions. Further transactions in conjunction with the resolution to exit the business of
developing an operation to produce biodiesel from Algae included the appointment of
Edward Bollen as the CEO and sole director of the Company.
Current Business Operation
On January 20, 2014, Management launched a project to redirect the Company’s
business development efforts. Stemming from the collateral experience garnered from
the Company’s brief stint in the business of organic growing and cold pressing of oil from
organic mass, management made the decision to leverage that experience within the
more viable hemp and cannabis market. In conjunction with the launch of the new
project, the Company entered into a number of business development agreements that
cumulatively represent a material capital commitment. The Company engaged services
to build a hemp and cannabis growing capacity, a hemp and cannabis testing facility and
a hemp and cannabis related clothing business. Collectively, the agreements to initiate
the aforementioned business development make up a year long, $600,000 capital
project. The service providers have acknowledged the Company’s current financial
position and the inherent risk associated with the Company’s ability to perform. In light of
the risk, the potential project asset value has not been recorded on the balance sheet at
this time. The expenses will be amortized over the life of the project.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The Company follows accounting standards set by the FASB.
The accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America (“GAAP”).
References to GAAP issued by the FASB in these footnotes are to the FASB Accounting
Standards Codification, sometimes referred to as the Codification or ASC.
Management's Use of Estimates - These financial statements have been prepared in
accordance with accounting principles generally accepted in the United States and,
accordingly, require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Cash and cash equivalents - Cash and cash equivalents are comprised of certain highly
liquid investments with maturities of three months or less when purchased.
Equipment - The Company records its equipment at historical cost. The Company
expenses maintenance and repairs as incurred. Upon disposition of equipment, the
gross cost and accumulated depreciation are written off and the difference between the
proceeds and the net book value is recorded as a gain or loss on sale of assets. The
Company provides for a five-year useful life for depreciation of its equipment, and
depreciation begins upon the Company’s placing the fixed assets into service.
Intangible and Long-Lived Assets - The Company follows FASB ASC 360-10, “Property,
Plant, and Equipment,” which established a “primary asset” approach to determine the
cash flow estimation period for a group of assets and liabilities that represents the unit of
accounting for a long-lived asset to be held and used. Long-lived assets to be held and
used are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The carrying
amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted
cash flows expected to result from the use and eventual disposition of the asset. Longlived
assets to be disposed of are reported at the lower of carrying amount or fair value
less cost to sell. Through December 31, 2014, the Company had not experienced
impairment losses on its long-lived assets. Recoverability is assessed based on the
carrying amount of the asset and its fair value which is generally determined based on
the sum of the undiscounted cash flows expected to result from the use and the eventual
disposal of the asset, as well as specific appraisal in certain instances. An impairment
loss is recognized when the carrying amount is not recoverable and exceeds fair value.
Fair Value of Financial Instruments - For certain financial instruments, including
accounts payable, accrued expenses and notes payable, the carrying amounts
approximate fair value due to their relatively short maturities.
ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the
fair value of financial instruments held by the Company. ASC Topic 825, “Financial
Instruments,” defines fair value, and establishes a three-level valuation hierarchy for
disclosures of fair value measurement that enhances disclosure requirements for fair
value measures. The carrying amounts reported in the consolidated balance sheets for
receivables, certain other current assets and current liabilities, including notes payable
and convertible notes, each qualify as financial instruments and are a reasonable
estimate of their fair values because of the short period of time between the origination
of such instruments and their expected realization and their current market rate of
interest. The three levels of valuation hierarchy are defined as follows:
• Level 1 inputs to the valuation methodology are quoted prices for
identical assets or liabilities in active markets.
• Level 2 inputs to the valuation methodology include quoted prices for
similar assets and liabilities in active markets, and inputs that are
observable for the asset or liability, either directly or indirectly, for
substantially the full term of the financial instrument.
• Level 3 inputs to the valuation methodology are unobservable and
significant to the fair value measurement.
The Company analyzes all financial instruments with features of both liabilities and
equity under ASC 480, “Distinguishing Liabilities From Equity” and ASC 815,
“Derivatives and Hedging.” Derivative liabilities are adjusted to reflect fair value at each
period end, with any increase or decrease in the fair value being recorded in results of
operations as adjustments to fair value of derivatives. The effects of interactions
between embedded derivatives are calculated and accounted for in arriving at the overall
fair value of the financial instruments. In addition, the fair values of freestanding
derivative instruments such as warrant and option derivatives are valued using the
Black-Scholes model.
The Company’s derivative liabilities are carried at fair value totaling $2,288,840 as of
December 31, 2014. The Company’s derivative liabilities are adjusted to reflect fair value
at each period end, with any increase or decrease in the fair value being recorded in
results of operations as change to fair value of derivative liability.
At December 31, 2014, the Company identified the following liability that is required to
be presented on the balance sheet at fair value:
Fair Value Fair Value Measurements at
As of December 31, 2014
December 31,
Using Fair Value Hierarchy
Liabilities 2014 Level 1 Level 2 Level 3
Derivative
Liabilities 2,288,840 - 2,288,840 -
$2,288,840
$2,288,840
For the months ended December 31, 2014, the Company recognized a loss of $0 for the
changes in the valuation of the aforementioned derivative liabilities.
The Company did not identify any other non-recurring assets and liabilities that are
required to be presented in the consolidated balance sheets at fair value in accordance
with ASC 815.
Income Taxes - Deferred income taxes are provided using the liability method whereby
deferred tax assets are recognized for deductible temporary differences and operating
loss and tax credit carry forwards, and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by
a valuation allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred tax assets
and liabilities are adjusted for the effects of the changes in tax laws and rates of the date
of enactment.
When tax returns are filed, it is highly certain that some positions taken would be
sustained upon examination by the taxing authorities, while others are subject to
uncertainty about the merits of the position taken or the amount of the position that
would be ultimately sustained. The benefit of a tax position is recognized in the financial
statements in the period during which, based on all available evidence, management
believes it is more likely than not that the position will be sustained upon examination,
including the resolution of appeals or litigation processes, if any. Tax positions taken are
not offset or aggregated with other positions. Tax positions that meet the more-likelythan-
not recognition threshold are measured as the largest amount of tax benefit that is
more than 50 percent likely of being realized upon settlement with the applicable taxing
authority. The portion of the benefits associated with tax positions taken that exceeds
the amount measured as described above is reflected as a liability for unrecognized tax
benefits in the accompanying balance sheets along with any associated interest and
penalties that would be payable to the taxing authorities upon examination.
Applicable interest and penalties associated with unrecognized tax benefits are
classified as additional income taxes in the statements of operations.
Net Loss Per Share - Earnings per share is calculated in accordance with the ASC 260-
10, “Earnings Per Share.” Basic earnings per share is based upon the weighted average
number of common shares outstanding. Diluted earnings per share is based on the
assumption that all dilutive convertible shares and stock options were converted or
exercised. Dilution is computed by applying the treasury stock method. Under this
method, options and warrants are assumed to be exercised at the beginning of the
period (or at the time of issuance, if later), and as if funds obtained thereby were used to
purchase common stock at the average market price during the period.
For the months ended December 31, 2014, 100,237,008 potentially dilutive shares,
respectively, were excluded from the shares used to calculate diluted earnings per share
as their inclusion would be anti-dilutive.
Revenue Recognition - Revenue is recognized in the period that services are provided.
The Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”)
Topic 13. SAB Topic 13 requires that four basic criteria must be met before revenue can
be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has
occurred; (3) the selling price is fixed and determinable; and (4) collectability is
reasonably assured. Determination of criteria (3) and (4) are based on management’s
judgments regarding the fixed nature of the selling prices of the service provided and the
collectability of those amounts. Oil and gas revenue is received on a monthly basis
subject to oil production and sales to refineries. Revenue can be affected by weather
conditions and/or market deliveries.
Segment Reporting - FASB ASC 280, “Segment Reporting” requires use of the
“management approach” model for segment reporting. The management approach
model is based on the way a company’s management organizes segments within the
company for making operating decisions and assessing performance. The Company
determined it has one operating segment as of September 30, 2014.
NOTE 3 – GOING CONCERN
The Company has suffered recurring losses from operations and has a working capital
deficit and stockholders' deficit, and in all likelihood will be required to make significant
future expenditures in connection with continuing business development efforts along
with general administrative expenses. These conditions raise substantial doubt about the
Company’s ability to continue as a going concern. The accompanying financial
statements have been prepared assuming that the Company will continue as a going
concern. The Company’s activities have been primarily supported by loans from various
parties. The Company has sustained losses in all previous reporting periods, with a net
loss of $201,458 for the months ended December 31, 2014. Management continues to
seek funding from its shareholders and other qualified investors to pursue its business
plan. The Company continues to seek funding for all of the projects and operational
requirements for the continuing fiscal year.
NOTE 4 –LONG-TERM NOTE RECEIVABLE
On October 10, 2013, the Company’s board of directors authorized the sale, transfer and
conveyance of all its rights in the Company’s Pacific Algae joint venture to AlgaePur,
LLC in return for 10% note receivable in the amount of $285,000 that becomes due on
October 10, 2023. The Company recognized a gain of $250,000 sale of these assets.
The note receivable balance at September 30, 2014 includes accrued interest receivable
of $31,685.
NOTE 5 –FURNITURE AND EQUIPMENT
Furniture and equipment consists of drilling equipment of $397,500 that has not been
placed in service.
NOTE 6 – CONVERTIBLE NOTES PAYABLE
Convertible Note #1
On April 5, 2010, the Company entered into a Note and Warrant Purchase Agreement
pursuant to which the Company issued and sold, a secured convertible note (the
“convertible note”) in the aggregate principal amount of $1,226,500 and a warrant to
purchase up to 50 shares of common stock of the Company. The convertible note was
due on April 4, 2012 and interest on the outstanding principal balance of the convertible
note is 6% per annum and interest was due payable in full by April 4, 2012. The note is
currently in default. The convertible note is secured by certain mortgage notes issued to
the Company in the aggregate amount of $1,000,000. The Company also received initial
proceeds of $100,000. The note holder has the right to convert the note to shares of
common stock in tranches in certain specified amounts, which conversions are
conditioned upon payment in full of the amounts owed under the mortgage notes. The
number of shares of common stock to be issued upon a conversion is determined by
dividing (a) the conversion amount by (b) 70% of the average volume-weighted average
price (the “VWAP”) for the three (3) trading days with the lowest VWAP during the twenty
(20) trading days immediately preceding the date set forth on the conversion notice. The
principal balance at December 31, 2014 is $538,425.
Convertible Note #2
On December 13, 2010, the Company issued 12% convertible notes in the amount of
$154,000. The holders may convert the principal plus accrued interest into shares of the
Company’s common stock at a price per share equal to 50% of the closing bid price of
the common stock on the date that the Company receives notice of conversion, but not
to exceed $300 per share. All unpaid principal, together with the accrued but unpaid
interest, became due on June 13, 2011. The note is currently in default. The principal
balance at December 31, 2014 is $154,000.
Convertible Note #3
On September 6, 2011, the Company issued 8% convertible notes in the amount of
$480,700. The holders may convert the principal plus accrued interest into shares of the
Company’s common stock at a price per share equal to 50% of the closing bid price of
the common stock on the date that the Company receives notice of conversion, but not
to exceed $500 per share. All unpaid principal, together with the accrued but unpaid
interest, became due on April 2, 2011. The note is currently in default. The principal
balance at December 31, 2014 is $471,153.
Convertible Note #4
On February 25, 2010, the Company issued an 8% convertible note in the amount of
$10,000. The holder may convert the principal plus accrued interest into shares of the
Company’s common stock at a price per share equal to 50% of the closing bid price of
the common stock on the date that the Company receives notice of conversion. All
unpaid principal, together with the accrued but unpaid interest, are due and payable on
December 31, 2011. The note is currently in default. The principal balance at
December 31, 2014 is $10,000.
NOTE 7 – CONVERTIBLE NOTES – RELATED PARTY
Related Party Convertible Note #1
On May 3, 2010, the Company settled certain past-due amounts with its former
President, Daymon Bodar for a convertible promissory note of $1,040,859, which has
been assigned an non-affiliate shareholder. During the year ended June 30, 2011, the
Company converted $49,800 of this note into 1,551 shares of the Company’s common
stock, respectively. The note’s principal balance at December 31, 2014 was $991,059.
Related Party Convertible Note #2
On April 1, 2010, September 30, 2010, September 30, 2010, December 31, 2010, March
31, 2011, September 30, 2011, September 30, 2011, December 31, 2011 and March 31,
2012 the Company converted a total of $205,000 in accrued salaries due to the
Company’s former Chief Operating Officer for convertible notes in the same principal
amount, due on March 31, 2011, December 31, 2010, March 31, 2011, September 30,
2011, December 31, 2011, December 31, 2011, December 31, 2011, December 31,
2012, and December 31, 2012 respectively. The notes accrue interest at 8% per annum.
Principal and accrued and unpaid interest on the notes are convertible into shares of
common stock at a conversion price of 50% of the closing bid price of common stock on
the date of the notice of conversion.
At December 31, 2014, the outstanding principal balance was $199,500.
NOTE 8 –NOTES PAYABLE, RELATED PARTY
Related Party Note Payable #1
On April 26, 2010, the Company purchased certain oil drilling equipment for $397,500,
financed by issuing a promissory note payable. Of this balance, $175,000 was assumed
by the Company’s Chief Executive Officer at the time of the purchase. The note bears
interest at 5% per annum and matured on April 26, 2013. The unpaid amounts after the
maturity date accrued interest at 21% per annum. On June 3, 2010, the Company
received $100,000 from a company majority-owned by the Company’s CEO at the time
of receipt. The amount was been classified as an advance payable. On June 30, 2010,
$200,000 was advanced on behalf of the Company by the Company’s then CEO in
conjunction with the acquisition of an operating company on the same date. The
advance on behalf of the Company was booked as a loan to the Company. In
conjunction with the aforementioned funds advanced to or on behalf of the Company by
the former CEO, that same individual made a number of smaller advances during the
same fiscal year which combined with the amounts memorialized here amounted to
$535,000. The Company recently consolidated restated the loans and advances to
include both regular and default interest into a single convertible note.
As of December 31, 2014 the outstanding principal balance was $729,000.
NOTE 9 –STOCKHOLDERS’ DEFICIT
Common Stock
The total number of shares of stock which the Company has authority to issue is
2,010,000,000, which consists of 2,000,000,000 shares of common stock, par value
$0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share.
Series D Preferred Stock
On September 18, 2013, the Company filed a certificate of designation of Series
D Preferred Stock and the Company issued 100,000 shares of Series D
preferred stock to the former shareholders of Algae (See Note 1). Pursuant to the
certificate of designation:
• 100,000 shares were designated as Series D Preferred Stock.
• Holders of the Series D Preferred Stock will be entitled to receive $1.00
per share of Series D Preferred Stock, prior to any distribution to holders
of common stock, in the event of any liquidation, dissolution or winding up
of the Company.
• Holders of Series D Preferred Stock will be entitled to receive dividends in
the amount of 51% of net income, payable quarterly.
• Holders of Series D Preferred Stock will own 51% of the voting power of
the shareholders of the Company.
The Company may not redeem shares of Series D Preferred Stock without the
written consent of the holders thereof.
NOTE 10 – SUBSEQUENT EVENTS
None
FORWARD LOOKING STATEMENTS
This Quarterly Report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and as such, may involve
risks and uncertainties. These forward looking statements relate to, amongst other
things, current expectation of the business environment in which the company operates,
potential future performance, projections of future performance and the perceived
opportunities in the market. The company's actual performance, results and
achievements may differ materially from the expressed or implied in such forwardlooking
statements as a result of a wide range of factors.
To the extent that any statements made in this report contain information that is not
historical, these statements are essentially forward-looking. Forward-looking statements
can be identified by the use of words such as “expects”, “plans”, “may,”, “anticipates”,
“believes”, “should”, “intends”, “estimates”, and other words of similar meaning. These
statements are subject to risks and uncertainties that cannot be predicted or quantified
and, consequently, actual results may differ materially from those expressed or implied
by such forward-looking statements. Such risks and uncertainties include, without
limitation, marketability of our products; legal and regulatory risks associated with the
share exchange our ability to raise additional capital to finance our activities; the
effectiveness, profitability and; the future trading of our common stock; our ability to
operate as a public company; our ability to protect our proprietary information; general
economic and business conditions; the volatility of our operating results and financial
condition; our ability to attract or retain qualified senior management personnel and
research and development staff; and other risks detailed from time to time in our filings
with the OTC Markets (the “OTC”), or otherwise.
Information regarding market and industry statistics contained in this report is included
based on information available to us that we believe is accurate. It is generally based on
industry and other publications that are not produced for purposes of securities offerings
or economic analysis. Forecasts and other forward-looking information obtained from
these sources are subject to the same qualifications and the additional uncertainties
accompanying any estimates of future market size, revenue and market acceptance of
products and services. We do not undertake any obligation to publicly update any
forward-looking statements. As a result, investors should not place undue reliance on
these forward-looking statements.
FOOD AND DRUG ADMINISTRATION DISCLOSURE (FDA)
The statements found herein have not been evaluated by the Food and Drug
Administration (FDA) and are not intended to diagnose, treat, cure or prevent any
disease or medical condition.
Period Ending December 31, 2014 ALGAE INTERNATIONAL GROUP, INC. and The Company’s Primary Operating Subsidiary AMERICAN SEED & OIL COMPANY