[x]
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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[
]
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
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Nevada
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20-3113571
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(State
or other jurisdiction
of
incorporation or organization)
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(IRS
Employer Identification
No.)
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PART
I - FINANCIAL INFORMATION
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Item
1. Financial Statements
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3
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Consolidated
Balance Sheets at November 30, 2008 (unaudited) and August 31,
2008
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3
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Unaudited
Consolidated Statements of Operations for the three months ended November
30, 2008 and 2007
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4
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Unaudited
Consolidated Statements of Cash Flows for the three months
ended November 30, 2008 and 2007
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5
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Unaudited
Notes to Consolidated Financial Statements
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6
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Item
2. Management’s Discussion and Analysis or Plan of
Operation
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10
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Item 3. Quantitative and Qualitative Disclosures About Market Risk |
15
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Item
4T. Controls and Procedures
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15
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PART
II – OTHER INFORMATION
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16
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Item
1. Legal Proceedings
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16
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Item 1A. Risk Factors |
16
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Item
2. Unregistered Sales of Equity Securities And Use Of
Proceeds
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16
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Item
3. Defaults Upon Senior Securities
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17
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Item
4. Submission Of Matters To A Vote Of Security
Holders
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17
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Item
5. Other Information
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17
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Item
6. Exhibits
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18
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EDGEWATER
FOODS INTERNATIONAL, INC.
CONSOLIDATED
BALANCE SHEETS
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||||||||
November
30,
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August
31,
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|||||||
2008
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2008
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|||||||
(Unaudited)
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||||||||
ASSETS
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||||||||
Current
assets:
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||||||||
Cash | $ | 292,412 | $ | 712,298 | ||||
Accounts
receivable, net
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225,448 | 195,402 | ||||||
Inventory | 1,035,168 | 1,290,702 | ||||||
Other
current assets
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49,176 | 80,011 | ||||||
Total
current assets
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1,602,204 | 2,278,413 | ||||||
Property,
plant and equipment, net
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3,390,349 | 3,982,336 | ||||||
Long-term
inventory
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966,685 | 986,327 | ||||||
Loans
receivable, related party
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148,299 | 114,079 | ||||||
Investments
in other assets
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3,225 | 3,758 | ||||||
Total assets | $ | 6,110,762 | $ | 7,364,913 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
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||||||||
Current
liabilities:
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||||||||
Short term debt | $ | 136,446 | $ | 109,648 | ||||
Line of credit | 105,468 | 124,766 | ||||||
Current portion of long term debt
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409,258 | 396,885 | ||||||
Accounts payable and accrued liabilities
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886,999 | 991,061 | ||||||
Total
current liabilities
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1,538,171 | 1,622,360 | ||||||
Long
term debt, net current portion
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385,704 | 548,004 | ||||||
Total liabilities | 1,923,875 | 2,170,364 | ||||||
Stockholders'
equity
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||||||||
Series
A Preferred stock, par $0.001, 10,000,000
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7,774 | 7,774 | ||||||
authorized,
7,773,998 issued and outstanding
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||||||||
at
November 30 and August 31, 2008, respectively
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||||||||
Series
B Preferred stock, par $0.001, 220
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- | - | ||||||
authorized,
207 issued and outstanding at
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||||||||
November
30 and August 31, 2008, respectively
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||||||||
Series
C Preferred stock, par $0.001, 1,000,000
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748 | 748 | ||||||
authorized,
747,870 issued and outstanding
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||||||||
at
November 30 and August 31, 2008 respectively
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||||||||
Series
D Preferred stock, par $0.001, 380,000
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305 | 305 | ||||||
authorized,
304,558 issued and outstanding
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||||||||
at
November 30 and August 31, 2008, respectively
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||||||||
Common
stock, par $0.0001, 100,000,000 authorized,
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2,448 | 2,448 | ||||||
24,479,150
issued and outstanding at November 30
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||||||||
August
31, 2008, respectively
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||||||||
Additional
paid in capital
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27,535,144 | 27,497,781 | ||||||
Accumulated
deficit
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(22,450,260 | ) | (22,103,314 | ) | ||||
Accumulated
other comprehensive income (loss) -
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||||||||
foreign
exchange adjustment
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(909,272 | ) | (211,193 | ) | ||||
Total stockholders' equity | 4,186,887 | 5,194,549 | ||||||
Total
liabilities and stockholders' equity
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$ | 6,110,762 | $ | 7,364,913 |
EDGEWATER
FOODS INTERNATIONAL, INC.
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||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
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||||||||
THREE
MONTHS ENDED NOVEMBER 30, 2008 and 2007
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||||||||
(unaudited)
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||||||||
2008
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2007
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|||||||
Revenue
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$ | 577,105 | $ | 429,202 | ||||
Cost
of goods sold
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640,319 | 534,850 | ||||||
Gross
(loss)
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(63,214 | ) | (105,648 | ) | ||||
Expenses:
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||||||||
General
and administrative expenses
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187,567 | 685,677 | ||||||
Salaries
and benefits
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84,925 | 95,234 | ||||||
Stock
compensation expense
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- | 38,250 | ||||||
Total
operating expenses
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(272,492 | ) | (819,161 | ) | ||||
Loss
from operations
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(335,706 | ) | (924,809 | ) | ||||
Other
income (expense):
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||||||||
Interest
income (expense), net
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(11,240 | ) | 4,006 | |||||
Other
income (expense)
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- | 7,488 | ||||||
Total
other income (expense), net
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(11,240 | ) | 11,494 | |||||
Net
loss
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(346,946 | ) | (913,315 | ) | ||||
Deemed
dividend for beneficial
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||||||||
conversion
feature
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- | (163,386 | ) | |||||
Net
loss applicable to
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||||||||
common
shareholders
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(346,946 | ) | (1,076,701 | ) | ||||
Foreign
currency translation gain (loss)
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(698,079 | ) | 248,056 | |||||
Accumulated
other comprehensive
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||||||||
loss
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$ | (1,045,025 | ) | $ | (828,645 | ) | ||
Net
loss per Share
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||||||||
Basic
and diluted
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$ | (0.01 | ) | $ | (0.05 | ) | ||
Weighted
average shares outstanding
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||||||||
Basic
and diluted
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24,479,150 | 23,720,852 |
EDGEWATER
FOODS INTERNATIONAL, INC.
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||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
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||||||||
THREE
MONTHS ENDED NOVEMBER 30, 2008 and 2007
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||||||||
(unaudited)
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||||||||
2008
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2007
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|||||||
Cash
flows from operating activities:
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||||||||
Net
loss
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$ | (346,946 | ) | $ | (913,315 | ) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities:
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||||||||
Depreciation
and amortization
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121,713 | 140,790 | ||||||
Stock
option expense
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5,363 | 516,701 | ||||||
Common
stock issued for services
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- | 38,250 | ||||||
Changes
in current assets and liabilities:
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||||||||
Accounts
receivable
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(30,046 | ) | (18,338 | ) | ||||
Prepaid
expenses
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30,835 | - | ||||||
Other
current assets
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- | (14,979 | ) | |||||
Loan
receivable
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(55,569 | ) | (11,621 | ) | ||||
Inventory
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41,214 | (218,929 | ) | |||||
Accounts
payable
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(111,757 | ) | 2,769 | |||||
Net
cash used in operating activities
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(345,193 | ) | (478,672 | ) | ||||
Cash
flows from investing activities:
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||||||||
Purchase
of property, plant and equipment
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(80,883 | ) | (331,535 | ) | ||||
Net
cash used in investing activities
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(80,883 | ) | (331,535 | ) | ||||
Cash
flows from financing activities:
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||||||||
Net proceeds from line of credit
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(1,748 | ) | - | |||||
Payment of short term debt
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- | (836 | ) | |||||
Proceeds
from long term debt
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(10,863 | ) | - | |||||
Payment of long term debt
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- | (35,366 | ) | |||||
Preferred stock issued for cash
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- | 800,648 | ||||||
Net
cash provided by (used in) financing activities
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(12,611 | ) | 764,446 | |||||
Foreign
currency translation effect
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18,801 | 101,362 | ||||||
Net
increase (decrease) in cash
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(419,886 | ) | 55,601 | |||||
Cash,
beginning of period
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712,298 | 1,656,868 | ||||||
Cash,
end of period
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$ | 292,412 | $ | 1,712,469 | ||||
Supplemental
disclosure of cash flow information
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||||||||
Net
cash paid
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||||||||
Interest
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$ | - | $ | - | ||||
Income
taxes
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$ | - | $ | - | ||||
Non cash transactions: | ||||||||
Acquisition of Granscal | $ | 87,759 | $ | - |
Number
of Shares
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Weighted
Average Exercise Price
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|||||||
Outstanding,
August 31, 2008
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2,592,000 | 1.23 | ||||||
Granted
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100,000 | 0.45 | ||||||
Exercised
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-- | -- | ||||||
Forfeited
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-- | -- | ||||||
Expired
|
-- | -- | ||||||
Outstanding,
November 30, 2008
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2,692,000 | $ | 1.20 | |||||
Exercisable,
November 30, 2008
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2,592,000 | $ | 1.23 |
Number
of Warrants
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Weighted
Average Exercise Price
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|||||||
Outstanding,
August 31, 2008
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1,381,952 | $ | 1.33 | |||||
Granted
|
-- | -- | ||||||
Exercised
|
-- | -- | ||||||
Forfeited
|
-- | -- | ||||||
Expired
|
-- | -- | ||||||
Outstanding,
November 30, 2008
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1,381,952 | $ | 1.33 | |||||
Exercisable,
November 30, 2008
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1,381,952 | $ | 1.33 |
Proposal
1 - Director Nominee
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FOR
|
WITHHELD
|
Robert
Saunders
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17,709,935
100%
|
0
|
Michael
Boswell
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17,709,935
(100%)
|
0
|
Mark
Elenowitz
|
17,709,935
(100%)
|
0
|
Douglas
MacLellan
|
17,709,935
(100%)
|
0
|
Victor
Bolton
|
17,709,935
(100%)
|
0
|
Javier
Idrovo
|
17,709,935
(100%)
|
0
|
Darryl
Horton
|
17,709,935
(100%)
|
0
|
Proposal
2
|
FOR
|
WITHHELD
|
To
amend our articles of incorporation to change our corporate name to Ocean
Smart, Inc.
|
17,708,801
(99.99%)
|
1,133
(0.006%)
|
3.1
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Articles
of Incorporation, as amended (Incorporated by reference to Exhibit 3.1 to
the Company’s Quarterly Report on Form 10-QSB filed on April 13,
2007).
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3.2
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Amended
and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to the
Company’s Quarterly Report on Form 10-QSB filed on April 13,
2007).
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31.1
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Certification of Chief Executive Officer
and Acting Chief Financial Officer required by Rule
13a-14/15d-14(a) under the Exchange Act
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32.1
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Certification
of Chief Executive Officer and Acting Chief Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002.
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Date: January
20, 2009
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EDGEWATER
FOODS
INTERNATIONAL,
INC.
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By: /s/
Robert Saunders
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Robert
Saunders,
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||
Chief
Executive Officer
|
||
By: /s/ Michael
Boswell
|
||
Michael
Boswell,
Acting
Chief Accounting Officer
|