Nevada
|
98-0440762
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
Large accelerated filer
|
o
|
Accelerated filer
|
o
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
þ
|
(Do not check if a smaller reporting company.)
|
March 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash and cash equivalents
|
$ | 202,344 | $ | 70,214 | ||||
Restricted cash
|
166,384 | 136,358 | ||||||
Accounts receivable, net
|
1,983,978 | 1,830,090 | ||||||
Inventories
|
1,797,202 | 1,924,133 | ||||||
Prepaid expenses
|
321,560 | 571,716 | ||||||
Total current assets
|
4,471,468 | 4,532,511 | ||||||
Property and equipment, net of accumulated depreciation of $1,568,986 and $1,329,724, respectively
|
3,836,797 | 3,635,105 | ||||||
Other assets
|
99,032 | 105,537 | ||||||
Total assets
|
$ | 8,407,297 | $ | 8,273,153 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
||||||||
CURRENT LIABILITIES
|
||||||||
Accounts payable
|
$ | 3,166,621 | $ | 2,422,470 | ||||
Factoring payable
|
1,593,928 | 1,315,931 | ||||||
Accrued expenses
|
535,991 | 478,278 | ||||||
Due to related parties
|
121,589 | 137,291 | ||||||
Guarantee liability
|
120,000 | 120,000 | ||||||
Current matutities of Convertible debentures, net of debt discount
|
312,932 | 100,164 | ||||||
Short-term debt
|
289,733 | 403,874 | ||||||
Current maturities of long-term debt
|
1,069,031 | 991,112 | ||||||
Current portion of capital lease obligation
|
254,669 | 236,043 | ||||||
Derivative liability
|
688,175 | 924,243 | ||||||
Total current liabilities
|
8,152,669 | 7,129,406 | ||||||
Long-term debt (less current maturities)
|
1,062,554 | 1,065,616 | ||||||
Long-term Convertible debentures, net of debt discount
|
- | 12,659 | ||||||
Capital lease obligations (less current maturities)
|
299,836 | 277,523 | ||||||
Contingent consideration payable for acquisition of Turf
|
31,437 | 31,437 | ||||||
Deferred lease cost
|
18,000 | 23,000 | ||||||
Total liabilities
|
9,564,496 | 8,539,641 | ||||||
STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||
Common stock - $0.001 par value, 350,000,000 shares authorized, 151,580,249 and 150,830,249 shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively
|
151,581 | 150,831 | ||||||
Preferred stock - $0.001 par value, 10,000,000 shares authorized in 2011, zero outstanding
|
- | - | ||||||
Additional paid-in capital
|
19,539,779 | 19,142,847 | ||||||
Subscription receivable
|
(1,000 | ) | (1,000 | ) | ||||
Accumulated deficit
|
(20,847,559 | ) | (19,559,166 | ) | ||||
Total stockholders' equity (deficit)
|
(1,157,199 | ) | (266,488 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
$ | 8,407,297 | $ | 8,273,153 |
March 31,
|
||||||||
2013
|
2012
|
|||||||
SALES, NET
|
$ | 3,720,447 | $ | 4,289,985 | ||||
COST OF GOODS SOLD
|
1,867,226 | 2,226,523 | ||||||
GROSS PROFIT
|
1,853,221 | 2,063,462 | ||||||
General and administrative
|
2,750,784 | 2,141,820 | ||||||
Depreciation and amortization
|
239,262 | 151,580 | ||||||
(Gain) Loss on disposal of assets
|
- | 4,085 | ||||||
LOSS FROM OPERATIONS
|
(1,136,825 | ) | (234,023 | ) | ||||
OTHER INCOME (EXPENSE)
|
||||||||
Interest expense
|
(98,226 | ) | (42,641 | ) | ||||
Factoring fees
|
(86,778 | ) | (109,731 | ) | ||||
Amortization of debt discount
|
(205,886 | ) | (10,479 | ) | ||||
Other income, net
|
3,245 | 1,473 | ||||||
Interest income
|
9 | 21 | ||||||
Change in derivative liability
|
236,068 | |||||||
Total other expense
|
(151,568 | ) | (161,357 | ) | ||||
NET LOSS
|
$ | (1,288,393 | ) | $ | (395,380 | ) | ||
NET LOSS PER SHARE (basic and diluted)
|
$ | (0.01 | ) | $ | (0.00 | ) | ||
WEIGHTED AVERAGE SHARES OUTSTANDING
|
151,494,138 | 110,151,678 |
Common stock
|
Subscription
|
Accumulated
|
||||||||||||||||||||||
Number
|
Par Value
|
APIC
|
Receivable
|
Deficit
|
Total
|
|||||||||||||||||||
Balance, December 31, 2012
|
150,830,249 | 150,831 | 19,142,847 | (1,000 | ) | (19,559,166 | ) | (266,488 | ) | |||||||||||||||
Stock based compensation
|
750,000 | 750 | 396,932 | - | 397,682 | |||||||||||||||||||
Net loss
|
- | - | - | - | (1,288,393 | ) | (1,288,393 | ) | ||||||||||||||||
Balance March 31, 2013
|
151,580,249 | $ | 151,581 | $ | 19,539,779 | $ | (1,000 | ) | $ | (20,847,559 | ) | $ | (1,157,199 | ) |
March 31,
|
||||||||
2013
|
2012
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net loss
|
$ | (1,288,393 | ) | $ | (395,380 | ) | ||
Adjustments to reconcile net loss to net cash
|
||||||||
used for operating activities:
|
||||||||
Amortization of debt discount
|
205,886 | 10,479 | ||||||
(Gain) Loss on disposal of assets
|
- | 4,085 | ||||||
Depreciation and amortization, net disposals
|
239,262 | 151,580 | ||||||
Bad debt expense
|
21,000 | 9,000 | ||||||
Stock and warrant based compensation
|
397,682 | 314,746 | ||||||
Change in derivative liability
|
(236,068 | ) | - | |||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(174,888 | ) | (130,286 | ) | ||||
Inventory
|
126,931 | (109,627 | ) | |||||
Prepaid expenses
|
250,156 | 119,097 | ||||||
Other assets
|
505 | (30,144 | ) | |||||
Accounts payable
|
744,151 | 215,512 | ||||||
Accrued expenses
|
52,715 | (8,314 | ) | |||||
Accrued expense to related parties
|
(15,703 | ) | (18,272 | ) | ||||
CASH PROVIDED BY OPERATING ACTIVITIES
|
323,236 | 132,476 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Restricted cash
|
(30,026 | ) | 33,521 | |||||
Purchase of fixed assets
|
(113,643 | ) | (105,673 | ) | ||||
CASH USED IN INVESTING ACTIVITIES
|
(143,669 | ) | (72,152 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Borrowing on debt
|
- | 130,000 | ||||||
Repayment of long term debt
|
(147,211 | ) | (208,414 | ) | ||||
Repayment of capital leases
|
(64,082 | ) | (27,126 | ) | ||||
Repayment of short-term debt
|
(114,141 | ) | - | |||||
Net factoring advances
|
277,997 | (55,515 | ) | |||||
Proceeds from sales of units in private placement, net
|
- | 125,000 | ||||||
CASH USED IN FINANCING ACTIVITIES
|
(47,437 | ) | (36,055 | ) | ||||
NET INCREASE IN CASH
|
132,131 | 24,269 | ||||||
CASH AT BEGINNING OF PERIOD
|
70,214 | 126,456 | ||||||
CASH AT END OF PERIOD
|
$ | 202,344 | $ | 150,725 | ||||
Supplemental Disclosures of Cash Flow Information
|
||||||||
Cash paid for interest and factoring cost
|
$ | 180,504 | $ | 138,847 | ||||
Non-cash investing and financing transactions:
|
||||||||
Notes issued for purchase of property and equipment
|
$ | 222,291 | $ | 91,668 | ||||
Debt discount on shares issued with convertible debt
|
- | 71,291 | ||||||
Stock issued for accounts payable conversion
|
- | 26,297 | ||||||
Value of capitalize lease issued
|
105,021 | - |
As of March 31,
2013
|
As of December 31,
2012
|
|||||||
Trade receivables
|
$
|
2,042,978
|
$
|
1,868,090
|
||||
Less: Allowance for doubtful accounts
|
(59,000
|
)
|
(38,000
|
)
|
||||
Net accounts receivable
|
$
|
1,983,978
|
$
|
1,830,090
|
As of March 31,
2013
|
As of December 31,
2012
|
|||||||
Raw materials
|
$
|
860,177
|
$
|
744,149
|
||||
Finished goods
|
937,025
|
1,179,984
|
||||||
Total inventory
|
$
|
1,797,202
|
$
|
1,924,133
|
● Level 1 -
|
unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.
|
● Level 2 -
|
inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.
|
● Level 3 -
|
unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.
|
Carrying Value at
|
Fair Value Measurement at March 31, 2013
|
|||||||||||||||
March 31, 2013
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Derivative convertible debt liability
|
$
|
437,332
|
$
|
-
|
$
|
-
|
$
|
437,332
|
||||||||
Derivative warrant liability
|
$
|
250,843
|
$
|
-
|
$
|
-
|
$
|
250,843
|
||||||||
Total derivative liability
|
$
|
688,175
|
$
|
-
|
$
|
-
|
$
|
688,175
|
Accounts
|
||||||||
receivable
|
Revenue
|
|||||||
Customer A
|
24
|
%
|
17
|
%
|
||||
Customer B
|
13
|
%
|
21
|
%
|
||||
Customer C
|
10
|
%
|
21
|
%
|
||||
47
|
%
|
59
|
%
|
Accounts
|
||||||||
receivable
|
Revenue
|
|||||||
Customer A
|
24
|
%
|
20
|
%
|
||||
Customer B
|
22
|
%
|
27
|
%
|
||||
Customer C
|
7
|
%
|
26
|
%
|
||||
53
|
%
|
73
|
%
|
As of March 31,
2013
|
As of December 31,
2012
|
|||||||
Plant, property and equipment
|
$
|
1,882,816
|
$
|
1,813,884
|
||||
Vehicles
|
2,335,393
|
2,068,292
|
||||||
Equipment under capital lease
|
1,034,487
|
929,466
|
||||||
Office furniture and equipment
|
153,187
|
153,187
|
||||||
5,405,883
|
4,964,829
|
|||||||
Less: accumulated depreciation
|
(1,569,086
|
)
|
(1,329,724
|
)
|
||||
Net property and equipment
|
$
|
3,836,797
|
$
|
3,635,105
|
As of March 31,
2013
|
As of December 31,
2012
|
|||||||
Note payable dated January 1, 2010.The note bears interest at 12.00 per annum and is payable in installments of $150, maturing January 2013. The note is secured by equipment.
|
$ | 0 | $ | 89 | ||||
Note payable for the purchase of a vehicle dated October 19, 2010. The note bears interest at 9.49 percent per annum and is payable in installments of $1,072 maturing in November 2015. The note is secured by a vehicle.
|
30,212 | 32,672 | ||||||
Note payable for the purchase of a vehicle dated April 1, 2010. The note bears interest at 7.5 percent per annum and is payable in installments of $872 maturing in January 2015. The note is secured by a vehicle.
|
19,745 | 21,959 | ||||||
Unsecured notes payable. The notes bear interest at 5 percent per annum and are due between September 30, 2012 and July 22, 2013
|
273,000 | 273,000 | ||||||
Unsecured promissory note payable in connection with the drilling program. The note bears interest at 5 percent per annum and was due April 30, 2009. The note has been extended indefinitely.
|
86,968 | 86,968 | ||||||
On November 10, 2009, the Company borrowed $52,186 for the purchase of a vehicle. The note bears interest at 4.90% per year, is secured by the vehicle purchased and is payable in 60 monthly payments of $982.
|
18,806 | 21,501 | ||||||
On November 10, 2009, the Company borrowed $57,372 for the purchase of a vehicle. The note bears interest at 6.25% per year, is secured by the vehicle purchased and is payable in 60 monthly payments of $1,118.
|
21,057 | 24,214 | ||||||
On February 15, 2011, the Company borrowed $102,402 for the purchase of a vehicle. The note bears interest at 7.9% per year, is secured by the vehicle purchased and is payable in 48 monthly payments of $1,214.
|
51,222 | 57,652 | ||||||
On March 11, 2011, the Company borrowed $166,387 for the purchase of a vehicle. The note has an implied interest at 3.0% per year, is secured by the vehicle purchased and is payable in 48 monthly payments of $3,466.
|
83,081 | 93,480 | ||||||
On March 15, 2011, the Company borrowed $62,067 for the purchase of a vehicle. The note has an implied interest at 3.0% per year, is secured by the vehicle purchased and is payable in 60 monthly payments of $1,035.
|
37,240 | 40,344 | ||||||
On April 9, 2011, the Company borrowed $76,507 for the purchase of a vehicle. The notes has an implied interest at 3.0% per year, is secured by the vehicle purchased and is payable in 60 monthly payments of $1,376.
|
49,833 | 53,570 | ||||||
On April 30, 2011, the Company borrowed $42,275 for the purchase of a vehicle. The note bears interest at 7.9% per year, is secured by the vehicle purchased and is payable in 60 monthly payments of $858.
|
28,760 | 30,740 |
On May 24 and May 29, 2011, the Company borrowed $95,074 for the purchase of vehicles. The notes bear interest at 3.0% per year, is secured by the vehicles purchased and is payable in 60 Monthly payments of $1,705.
|
63,317 | 67,947 | ||||||
On July 20, 2011 the Company borrowed $31,690 for the purchase of equipment. The notes bear interest at a range of 10.5% to 12.0% per year, is secured by the equipment purchased and is payable in 36 monthly payments of $1,039.
|
15,302 | 17,953 | ||||||
On July 28, 2011, the Company borrowed $116,416 for the purchase of vehicle. The note bear interest at 6.74% per year, is secured by the vehicle purchased and is payable in 36 monthly payments of $3,581.
|
54,652 | 64,376 | ||||||
On August 13, 2011, the Company borrowed $60,229 for the purchase of vehicle. The note bear interest at 7.74% per year, is secured by the vehicle purchased and is payable in 60 monthly payments of $1,217.
|
43,733 | 46,515 | ||||||
On October 4, 2011, the Company borrowed $40,225 for the purchase of a vehicle. The note bears interest at 5.9% per year, is secured by the vehicle purchased and is payable in 36 monthly payments of $1,224.
|
22,063 | 25,378 | ||||||
On October 28, 2011, the Company borrowed $38,733 for the purchase of a vehicle. The note has an implied interest of 3.0% per year, is secured by the vehicle purchased and is payable in 36 monthly payments of $1,076.
|
21,518 | 24,746 | ||||||
On November 2, 2011, the Company borrowed $34,058 for the purchase of a vehicle. The note bears interest at 6.4% per year, is secured by the vehicle purchased and is payable in 36 monthly payments of $1,045.
|
19,678 | 22,468 | ||||||
On November 30, 2011, the Company borrowed $62,684 for the purchase of a vehicle. The note bears interest at 6.4% per year, is secured by the vehicle purchased and is payable in 36 monthly payments of $1,923.
|
37,941 | 43,049 | ||||||
On November 21, 2011, the Company borrowed $39,540 for the purchase of a vehicle. The note has an implied interest of 3.0% per year, is secured by the vehicle purchased and is payable in 36 monthly payments of $1,098.
|
23,065 | 26,360 | ||||||
On January 30, 2012, the Company purchased a vehicle by issuing debt of $59,744 with an annual interest rate of 6.4% and a term of 36 months.
|
39,412 | 44,229 | ||||||
On March 19, 2012 the Company purchased a vehicle by issuing debt of $50,328 with an annual interest rate of 5.9% and a term of 36 months and payments of 1,532.
|
35,839 | 39,868 | ||||||
On May 7, 2012, the Company purchased vehicles by issuing debt of $ 106,253 with an annual interest rate of 6.4% and a term of 36 months and payments of $3,260.
|
81,486 | 89,874 | ||||||
On May 29, 2012, the Company purchased a vehicle by issuing debt of $49,004 with an annual interest rate of 6.4% and a term of 36 months with payments of $1,500.
|
37,609 | 41,468 |
On May 25, 2012, the Company reach agreement with a Vendor to exchange payable for a term debenture of $450,000 with an annual interest rate of prime plus 1.5% payable monthly of $10,000 plus interest.
|
374,751 | 394,751 | ||||||
On June 15, 2012, the Company purchased a vehicle by issuing debt of $46,115 with an annual interest rate of 4.74% and a term of 36 months with payments of $1,379.
|
36,403 | 40,081 | ||||||
On July 14, 2012, the Company purchased a vehicle by issuing debt of $57,082 with an annual interest rate of 5.89% and a term of 36 months with payments of $1,738.
|
46,729 | 51,210 | ||||||
On August 17, 2012, the Company purchased a vehicle by issuing debt of $46,651 with an annual interest rate of 4.74% and a term of 36 months with payments of $1,395.
|
38,071 | 41,777 | ||||||
On September 4, 2012, the Company purchased a vehicle by issuing debt of $40,451 with an annual interest rate of 5.89% and a term of 36 months with payments of $1,094.
|
31,317 | 34,111 | ||||||
On October 24, 2012, the Company purchased a vehicle by issuing debt of $40,248 with an annual interest rate of 4.24% and a term of 36 months with payments of $1,067.
|
32,169 | 35,008 | ||||||
On October 20, 2012, the Company purchased equipment by issuing debt of $101,448 with an annual interest rate of 7.15% and a term of 36 months with payments of $2,522.
|
73,203 | 79,385 | ||||||
On November 24, 2012, the Company purchased a vehicle by issuing debt of $43,539 with an annual interest rate of 4.24% and a term of 36 months with payments of $1,159.
|
35,967 | 39,039 | ||||||
On December 5, 2012, the Company purchased a vehicle by issuing debt of $56,822 with an annual interest rate of 4.24% and a term of 36 months with payments of $1,505.
|
48,065 | 50,945 | ||||||
On February 28, 2013, the Company purchased a vehicle by issuing debt of $40,208 with an annual interest rate of 4.24% and a term of 36 months with payments of $1,194
|
39,156 | - | ||||||
On February1, 2013, the Company purchased vehicles by issuing debt of $71,469 with an annual interest rate of 4.24% and a term of 36 months with payments of $2,122.
|
69,600 | - | ||||||
On March 1, 2013, the Company purchased a vehicle by issuing debt of $54,256 with an annual interest rate of 4.24% and a term of 36 months with payments of $1,610.
|
54,256 | - | ||||||
On March 25, 2013, the Company purchased a vehicle by issuing debt of $56,358 with an annual interest rate of 4.24% and a term of 36 months with payments of $1,673.
|
56,357 | - | ||||||
Total
|
2,131,585 | 2,056,728 | ||||||
Less current maturities
|
(1,069,031 | ) | (991,112 | ) | ||||
Total long-term debt
|
$ | 1,062,554 | $ | 1,065,616 |
2014
|
$
|
1,069,031
|
||
2015
|
662,056
|
|||
2016
|
385,069
|
|||
2017
|
15,429
|
Year
|
Borrowing
|
Term in months
|
Monthly payment
|
As of March 31, 2013
|
||||||||||||||||||||
Warehouse equipment
|
2013
|
$ | 26,313 | 36 | $ | 731 | 25,242 | |||||||||||||||||
Vehicles
|
2009-2011 | $ | 368,766 | 21-72 | $ | $ | 887-1,905 | 110,782 | ||||||||||||||||
Office equipment
|
2011 | $ | 10,140 | 24 | $ | 260 | 5,720 | |||||||||||||||||
Special purpose equipment
|
2011-2012 | $ | 483,092 | 36 | $ | 1,692-3,702 | 337,905 | |||||||||||||||||
Special purpose equipment
|
2013 | $ | 78,708 | 48 | $ | 1,534 | 74,856 | |||||||||||||||||
Total capital lease
|
554,505 | |||||||||||||||||||||||
less current portion
|
(254,669 | ) | ||||||||||||||||||||||
Total long-term capital lease
|
$ | 299,836 |
2014
|
$
|
254,669
|
||
2015
|
$
|
207,480
|
||
2016
|
$
|
56,920
|
||
2017
|
$
|
35,436
|
As of March 31,
2013
|
As of December 31,
2012
|
|||||||
On January 27, 2012, the Company received proceeds of $130,000 from the sale of 16% Convertible Subordinated Debentures. On March 1, 2013, June 1, 2013 and September 1, 2013, the Company shall redeem one quarter, one quarter and one half, respectively, of the face value of the balance of the Debentures
|
$
|
130,000
|
$
|
130,000
|
||||
On November 14, 2012, the Company received proceeds of $1,000,000 from the sale of 16% Convertible Subordinated Debentures. Interest is due March 1, 2013, June 1, 2013 and September 1, 2013.
|
1,000,000
|
1,000,000
|
||||||
Total
|
1,130,000
|
1,130,000
|
||||||
Less debt discount
|
(817,068
|
)
|
(1,017,177
|
)
|
||||
Less current maturities, net of debt discount
|
(312,932
|
)
|
(100,164
|
|||||
Total Long-term convertible debentures
|
$
|
-
|
$
|
12,659
|
Warrant
|
Debenture
|
|||||||
Stock price
|
$
|
0.10
|
$
|
0.10
|
||||
Term
|
4.6 Years
|
1.2Years
|
||||||
Volatility
|
115%-419
|
%
|
115% -156
|
%
|
||||
Risk-free interest rate
|
0.22
|
%
|
0.63.
|
%
|
||||
Exercise prices
|
$
|
0.085 to $0.00336
|
$
|
0.085 to $0.0645
|
||||
Dividend yield
|
0.00
|
%
|
0.00
|
%
|
Number of
warrants
|
Weighted
Average Exercise
Price
|
Weighted
Average Term
(Years)
|
||||||||||
Warrants outstanding at December 31, 2012
|
57,942,278
|
0.17
|
1.20
|
|||||||||
Granted during the period
|
-
|
-
|
-
|
|||||||||
Exercised during period
|
-
|
|||||||||||
Forfeited during the period
|
(-
|
)
|
-
|
|||||||||
Warrants outstanding at March 31, 2013
|
57,942,278
|
$
|
0.17
|
1.00
|
Year
|
Amount
|
|||
2013
|
-
|
|||
2014
|
2,055,238
|
|||
2015
|
43,122,334
|
|||
2016
|
1,000,000
|
|||
2017
|
11,764,706
|
|||
Total
|
57,942,278
|
Number of
Shares
|
Weighted-
average
Exercise
Price
|
Weighted-
average
Remaining
Contractual
Term (years)
|
||||||||||
Outstanding at December 31, 2012
|
52,975,000
|
$
|
0.11
|
6.58
|
||||||||
Granted
|
-
|
$
|
-
|
-
|
||||||||
Exercised
|
-
|
-
|
-
|
|||||||||
Expired/Forfeited
|
(20,000
|
)
|
0.14
|
-
|
||||||||
Outstanding at March 31, 2013
|
52,955,000
|
0.11
|
6.33
|
|||||||||
Exercisable at March 31, 2013
|
24,907,000
|
$
|
0.13
|
6.33
|
||||||||
Exercisable at December 31, 2012
|
24,907,000
|
$
|
0.13
|
6.33
|
March 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
Due to officer
|
$
|
65,799
|
$
|
81,501
|
||||
Due to ESP Enterprises
|
$
|
55,790
|
$
|
55,790
|
●
|
Surfactants that are highly effective in treating production and injection problems at the customer wellhead;
|
●
|
Well completion and work-over chemicals that maximize productivity from new and existing wells;
|
●
|
Bactericides that kill water borne bacterial growth, thus preventing corrosion and plugging of the customer wellhead and flowline;
|
●
|
Scale compounds that prevent or treat scale deposits;
|
●
|
Corrosion inhibitors, which are organic compounds that form a protective film on metal surfaces to insulate the metal from its corrosive environment;
|
●
|
Antifoams that provide safe economic means of controlling foaming problems;
|
●
|
Emulsion breakers, which are chemicals specially formulated for crude oils containing produced waters;
|
●
|
Paraffin chemicals that inhibit and/or dissolve paraffin to prevent buildup (their effectiveness is not diminished when used in conjunction with other chemicals); and
|
●
|
Water clarifiers that solve any and all of the problems associated with purifying effluent water and that improve appearance.
|
●
|
Personalized service;
|
●
|
Expedited field analysis; and
|
●
|
Convenience and access to the best available market rates and products offered by our suppliers that we can produce and supply for our customers.
|
Three months Ended
March 31,
|
$
Increase
|
%
Increase
|
||||||||||||||
2013
|
2012
|
(Decrease)
|
(Decrease)
|
|||||||||||||
Sales
|
$
|
3,720,447
|
$
|
4,289,985
|
$
|
(569,538
|
)
|
(13)
|
%
|
|||||||
Cost of goods sold
|
1,867,226
|
2,226,523
|
(359,297
|
)
|
(16)
|
%
|
||||||||||
Gross profit
|
1,853,221
|
2,063,462
|
(210,241
|
)
|
(10)
|
%
|
||||||||||
Total general and administrative expenses
|
2,750,784
|
2,141,820
|
608,964
|
28
|
%
|
|||||||||||
Depreciation and amortization expense
|
239,262
|
151,580
|
87,682
|
58
|
%
|
|||||||||||
Gain on
|
||||||||||||||||
Loss from operations
|
(1,136,825
|
)
|
(234,023
|
)
|
(902,802
|
)
|
386
|
%
|
||||||||
Total other income (expense)
|
(151,568
|
)
|
(161,357
|
)
|
9,789
|
(6)
|
%
|
|||||||||
Net loss
|
$
|
(1,288,393
|
)
|
$
|
(395,380
|
)
|
$
|
(893,013
|
)
|
226
|
%
|
Three months ended March 31,
|
||||||||
2013
|
2012
|
|||||||
Net loss
|
$ | (1,288,393 | ) | $ | (395,380 | ) | ||
Add back interest and factoring expense, net of interest income
|
185,185 | 152,351 | ||||||
Add back depreciation and amortization
|
239,262 | 151,580 | ||||||
Add back amortization debt discount
|
205,886 | 10,479 | ||||||
Add back stock-based compensation
|
397,682 | 314,746 | ||||||
Addback change in derivative liability
|
(236,068 | ) | - | |||||
Modified EBITDA
|
$ | (496,446 | ) | $ | 233,776 |
(a)
|
During the quarter ending December 31, 2008, the Company filed the following Exhibits and Form 8Ks:
|
October 17, 2008, filed an 8K for: Item 1.02, Termination of a Material Definitive Agreement November 5, 2008,filed an 8K for: Item 1.01 Entry into a Material Definitive Agreement, Item 2.01 Completion of Acquisition of Disposition of Assets, Item 9.01Agreement December 15, 2008, filed an 8K for: Item 8.01 Other Events, Item 9.01 Letter of Intent December 29, 2009, filed an 8K for: Item 4.01 Changes in Registrant’s Certifying Accountant, Item 9.01 Letter January 6, 2009, filed an 8K for: Item 1.01 Entry into a Material Definitive Agreement, Item 2.01 Completion of Acquisition of Disposition of Assets, Item 5.01 Changes in Control of the Registrant, Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Officers, Item 9.01 Stock Purchase Agreements
|
|
(b)
|
Exhibits
|
Exhibit
|
||
Number
|
Description
|
|
1.1
|
Licensing Agreement with Peter Hughes (incorporated by reference from our Registration Statement on Form SB-2 filed on April 18, 2006)
|
|
3.1
|
Articles of Incorporation (incorporated by reference from our Registration Statement on Form SB-2 filed on April 18, 2006)
|
|
3.2
|
Amended and Restated Bylaws (incorporated by reference from our Proxy Statement filed on Janary 24, 2013)
|
|
3.3
|
Articles of Merger filed with the Secretary of State of Nevada on September 19, 2007 and which is effective September 28, 2007 (incorporated by reference from our Current Report on Form 8-K filed on September 28, 2007)
|
|
3.4
|
Certificate of Change filed with the Secretary of State of Nevada on September 19, 2007 and which is effective September 28, 2007 (incorporated by reference from our Current Report on Form 8-K filed on September 28, 2007)
|
|
4.1
|
Regulation “S” Securities Subscription Agreement (incorporated by reference from our Registration Statement on Form SB-2 filed on April 18, 2006)
|
|
10.1
|
Share Purchase Agreement dated November 21, 2007 among our company, Pantera Oil and Gas PLC, Aurora Petroleos SA and Boreal Petroleos SA (incorporated by reference from our Current Report on Form 8-K filed on November 26, 2007)
|
|
10.2
|
Form of Advisory Board Agreement (incorporated by reference from our Current Report on Form 8-K filed on February 4, 2008)
|
|
10.3
|
Equity Financing Agreement dated February 12, 2008 with FTS Financial Investments Ltd. (incorporated by reference from our Current Report on Form 8-K filed on February 15, 2008)
|
|
10.4
|
Return to Treasury Agreement dated February 26, 2008 with Peter Hughes (incorporated by reference from our Current Report on Form 8-K filed on February 28, 2008)
|
|
10.5
|
Amending Agreement dated March 17, 2008 with Artemis Energy PLC, Aurora Petroleos SA and Boreal Petroleos SA (incorporated by reference from our Current Report on Form 8- K filed on March 19, 2008)
|
|
10.6
|
Subscription Agreement dated February 28, 2008 with Trius Energy, LLC (incorporated by reference from our Quarterly Report on Form 10-QSB filed on April 14, 2008)
|
|
10.7
|
Joint Venture Agreement dated February 24, 2008 with Trius Energy, LLC (incorporated by reference from our Quarterly Report on Form 10-QSB filed on April 14, 2008)
|
|
10.8
|
Second Amending Agreement dated July 30, 2008 among our company, Artemis Energy PLC (formerly Pantera Oil and Gas PLC), Aurora Petroleos SA and Boreal Petroleos SA (incorporated by reference from our Current Report on Form 8- K filed on August 5, 2008)
|
10.9
|
Amended and Restated Share Purchase Agreement dated September 9, 2008 among company, Artemis Energy PLC (formerly Pantera Oil and Gas PLC), Aurora Petroleos SA and Boreal Petroleos SA (incorporated by reference from our Annual Report on for 10-KSB filed on September 15, 2008)
|
|
10.10
|
Agreement dated October 31, 2008 with Lakehills Production, Inc. and a private equity drilling fund (incorporated by reference from our Current Report on Form 8-K filed on November 5, 2008)
|
|
10.11
|
Security Purchase Agreement for 16% Subordinated Convertible Debenture Agreement and warrants
|
|
10.12
|
Confidential Private Placement Memorandum for Accredited Investors Only dated May 15, 2012 and Warrant Agreement
|
|
10.13
|
Employment Agreement Robert Geiges as Chief Financial Officer dated January 4, 2013
|
|
10.14* | Resignation Notification from Robert Geiges as Chief Financial Officer received May 13, 2013, effective May 15, 2013. | |
10.15* | Resignation Notification from William Cox as Board Member received May 13, 2013. | |
14.1
|
Code of Ethics (incorporated by reference from our Annual Report on Form 10-KSB filed on August 28, 2007)
|
|
31.1*
|
Certification of Principal Executive Officer pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2*
|
Certification of Principal Financial Officer pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1*
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2*
|
Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
ESP RESOURCES, INC.
|
|||
Date: May 15, 2013
|
By:
|
/s/ David Dugas
|
|
David Dugas
|
|||
Chief Executive Officer and Director
|
|||
(Principal Executive Officer)
|
ESP RESOURCES, INC.
|
|||
Date: May 15, 2013
|
By:
|
/s/ Robert Geiges
|
|
Robert Geiges
|
|||
Chief Financial Officer
|
|||
(Principal Financial Officer)
|
ESP RESOURCES, INC.
|
|||
Date: May 15, 2013
|
By:
|
/s/ David Dugas
|
|
David Dugas
|
|||
Chief Executive Officer and Director
|
|||
(Principal Executive Officer)
|
|||
Date: May 15, 2013
|
By:
|
/s/ Tony Primeaux
|
|
Tony Primeaux
|
|||
Secretary and Director
|
|||
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2013 of ESP Resources, Inc.;
|
|
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’s other certifying officer 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 Rules 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 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: May 15, 2013
|
/s/ David Dugas
|
||
David Dugas
|
|||
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2013 of ESP Resources, Inc.;
|
|
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’s other certifying officer 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 Rules 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 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: May 15, 2013
|
/s/ Robert H. Geiges
|
||
Robert H. Geiges
|
|||
Chief Financial Officer
|
1)
|
The 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 Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ David Dugas
|
|||
David Dugas
|
|||
Chief Executive Officer
|
|||
May 15, 2013
|
1)
|
The 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 Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Robert H. Geiges
|
||
Robert H. Geiges
|
||
Chief Financial Officer
|
||
May 15, 2013
|
6. Capitalized leases (Details) (USD $)
|
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Total capital lease | $ 554,505 | |
less current portion | (254,669) | (236,043) |
Total long-term capital lease | 299,836 | 277,523 |
Warehouse equipment [Member]
|
||
Year | 2013 | |
Borrowing | 26,313 | |
Term in months | 36 months | |
Monthly payment | 731 | |
Total capital lease | 25,242 | |
Vehicles [Member]
|
||
Year | 2009-2011 | |
Borrowing | 368,766 | |
Total capital lease | 110,782 | |
Vehicles [Member] | Minimum [Member]
|
||
Monthly payment | 887 | |
Vehicles [Member] | Maximum Member]
|
||
Term in months | 21 months | |
Monthly payment | 1,905 | |
Office Equipment [Member]
|
||
Year | 2011 | |
Borrowing | 10,140 | |
Term in months | 24 months | |
Monthly payment | 260 | |
Total capital lease | 5,720 | |
Special purpose equipment [Member]
|
||
Year | 2011-2012 | |
Borrowing | 483,092 | |
Term in months | 36 months | |
Total capital lease | 337,905 | |
Special purpose equipment [Member] | Minimum [Member]
|
||
Term in months | 72 months | |
Monthly payment | 1,692 | |
Special purpose equipment [Member] | Maximum Member]
|
||
Monthly payment | 3,702 | |
Special purpose equipment other [Member]
|
||
Year | 2013 | |
Borrowing | 78,708 | |
Term in months | 48 months | |
Monthly payment | 1,534 | |
Total capital lease | $ 74,856 |
9. Stockholders Equity (Details Narrative) (USD $)
|
3 Months Ended | |
---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
|
Stockholders Equity Details Narrative | ||
Amount of amortization of stock based compensation resulting from stock and warrents issued in previous periods | $ 206,890 | $ 199,696 |
Amortization of stock based compensation resulting from stock and warrants issued in previous periods | 120,792 | 115,050 |
Fair value of the unvested shares for stock options granted in prior years | 12,079 | |
Unrecognized compensation cost related to non-vested stock options | 1,966,928 | |
Unrecognized compensation cost related to non-vested stock options recognized period | 3 years | |
Intrinsic value stock options | $ 0 |
9. Stockholders Equity (Details 1) (Common Stock Warrant [Member])
|
Mar. 31, 2013
|
---|---|
Common Stock Warrant [Member]
|
|
2013 | |
2014 | 2,055,238 |
2015 | 43,122,334 |
2016 | 1,000,000 |
2017 | 11,764,706 |
Total | 57,942,278 |
2. Going Concern (Details Narrative) (USD $)
|
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Going Concern Details Narrative | ||
Cash and cash equivalents | $ 202,344 | $ 70,214 |
Deficit working capital | $ 3,681,201 |
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