0001493152-14-000799.txt : 20140321 0001493152-14-000799.hdr.sgml : 20140321 20140321144016 ACCESSION NUMBER: 0001493152-14-000799 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20131231 FILED AS OF DATE: 20140321 DATE AS OF CHANGE: 20140321 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Aurios Inc. CENTRAL INDEX KEY: 0001434768 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD AUDIO & VIDEO EQUIPMENT [3651] IRS NUMBER: 861037558 STATE OF INCORPORATION: AZ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-53643 FILM NUMBER: 14709806 BUSINESS ADDRESS: STREET 1: 1741 W. UNIVERSITY DRIVE STREET 2: SUITE 146 CITY: TEMPE STATE: AZ ZIP: 85281 BUSINESS PHONE: 602-426-1211 MAIL ADDRESS: STREET 1: 1741 W. UNIVERSITY DRIVE STREET 2: SUITE 146 CITY: TEMPE STATE: AZ ZIP: 85281 10-K 1 form10k.htm ANNUAL REPORT FORM 10-K

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-K

 

(Mark One)

 

[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2013

 

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

 

For the transition period from __________ to __________

 

Commission File Number: 000-53643

 

Aurios Inc.

(Exact name of registrant as specified in its charter)

 

Arizona   86-1037558
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

 

7608 N. Shadow Mountain Rd.

Paradise Valley, AZ 85253

(Address of principal executive offices)

 

(602) 321-1313

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock, no par value
(Title of class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [  ] No [X]

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ] No [X]

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ]     Accelerated filer [  ]
Non-accelerated filer [  ] (Do not check if a smaller reporting company)   Smaller reporting company [X]

 

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

 

As of June 30, 2013, the aggregate market value of the registrant’s common equity held by non-affiliates computed by reference to the average of closing bid and ask prices ($0.08) of the registrant’s most recently completed second fiscal quarter was: $104,800.

 

There were 3,678,000 shares of the registrant’s common stock issued and outstanding as of March 11, 2014.

 

Documents Incorporated by Reference: None.

 

 

 

 
 

 

FORM 10-K

AURIOS INC.

DECEMBER 31, 2013

 

Table of Contents

 

      Page
PART I      
       
Item 1. Business   3
Item 1a. Risk Factors   3
Item 1b. Unresolved Staff Comments   4
Item 2. Properties   4
Item 3. Legal Proceedings   4
Item 4. Mine Safety Disclosures   4
     
PART II      
       
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities   4
Item 6. Selected Financial Data   6
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations   6
Item 7a. Quantitative and Qualitative Disclosures About Market Risk   10
Item 8. Financial Statements and Supplementary Data   10
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure   10
Item 9A. Controls and Procedures   10
Item 9B. Other Information   12
       
PART III      
       
Item 10. Directors, Executive Officers and Corporate Governance   12
Item 11. Executive Compensation   16
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   19
Item 13. Certain Relationships and Related Transactions, and Director Independence   20
Item 14. Principal Accounting Fees and Services   21
       
PART IV      
       
Item 15. Exhibits, Financial Statement Schedules   23
       
  Signature Page   24

 

2
 

 

Note Regarding Forward Looking Statements

 

This Annual Report contains forward-looking statements as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “intends,” and other variations of these words or comparable words. In addition, any statements that refer to expectations, projections or other characterizations of events, circumstances or trends and that do not relate to historical matters are forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Except as required by law, we do not undertake to update or revise any of the forward-looking statements to conform these statements to actual results, whether as a result of new information, future events or otherwise.

 

As used in this Annual Report, “Aurios,” the “Company,” “we,” “us,” or “our” refer to Aurios Inc., unless otherwise indicated.

 

Part I

 

ITEM 1. Business.

 

Until December 31, 2012 we produced, marketed and distributed vibration isolation products to the high-end audio and video markets in the United States and in certain foreign countries. Our products were the Classic MIB, the PRO MIB, the Isotone MIB, the Series 100 Component Shelf, a shelf product, and Pivot Points, a spike mount product.

 

Advanced Vibration Technologies Inc., an Arizona corporation (“AVT”), held the patents respecting our products in the United States and Taiwan. On February 25, 2010 AVT granted us a non-exclusive world-wide license to produce and sell the Pro Max MIB, the Classic MIB and the Isotone MIB under the patents (the “AVT License”). We paid a royalty of 5% of our net sales to AVT for the AVT License. On March 26, 2010, True Gravity Enterprises, Inc. (“TGE”) sold the federally registered trademark respecting the “Aurios” name to us for nominal consideration. We outsourced the manufacture of our products to several qualified machine shops in the Phoenix metropolitan area.

 

The AVT License terminated on December 31, 2012 because AVT sold its business to a third party that is a competitor with the products of Aurios. We sold our remaining inventory and other assets relating to our vibration isolation business effective May 31, 2013 to TGE, an affiliate of our President and principal shareholder.

 

We now have nominal assets and are seeking a new business opportunity. We plan to identify, evaluate, and investigate various companies with the intent to conduct a reverse merger transaction under which we would acquire a target company with an operating business to continue the acquired company’s business as a publicly-held entity. There can be no assurance that we will find a suitable acquisition candidate or, if we do, that the terms will be favorable to our existing shareholders.

 

3
 

 

Our common stock is quoted on the OTC Bulletin Board under the symbol “AURZ.”

 

Effective August 31, 2009, we adopted a 2.5-for-1 forward split of all of our outstanding common stock. All common stock shares and the conversion rate of the Preferred Stock, warrants and options reflected within this report have been adjusted to reflect the split.

 

Our corporate offices are located at 7608 N. Shadow Mountain Rd., Paradise Valley, Arizona 85253 and our telephone number is (602) 321-1313.

 

Employees

 

We have no employees.

 

ITEM 1A. Risk Factors.

 

Not Applicable.

 

ITEM 1B. Unresolved Staff Comments.

 

None.

 

ITEM 2. Description of Property.

 

Our executive office consists of use of office space and storage, to the extent required, that our President has provided to us in his residence located at 7608 N. Shadow Mountain Road, Paradise Valley, AZ 85253 without charge. We believe that our current facilities are adequate to meet our operational needs for the upcoming year.

 

ITEM 3. Legal Proceedings.

 

We are not involved in any pending litigation, legal proceedings or claims.

 

ITEM 4. Mine Safety Disclosures.

 

Not applicable.

 

PART II

 

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

Principal Market and Price Range of Common Stock

 

Our common stock trades on the OTC Bulletin Board (OTCBB) under the symbol “AURZ.” The following table sets forth the high and low closing bid prices for our common stock as reported by the OTCBB. The trading in our common stock has been minimal during the periods shown. The closing price of the common stock on February 28, 2014 was $0.11 per share. The quotations reflect interdealer bid prices without retail markup, markdown or commission and may not represent actual transactions.

 

4
 

 

Year Ended December 31, 2012   High   Low 
1st Quarter    $0.30   $0.06 
2nd Quarter     2.00    0.30 
3rd Quarter     0.35    0.15 
4th Quarter     0.49    0.10 

 

Year Ended December 31, 2013   High   Low 
1st Quarter    $0.49   $0.49 
2nd Quarter     0.49    0.05 
3rd Quarter     0.20    0.10 
4th Quarter     0.13    0.08 

 

Holders of Common Stock and Preferred Stock

 

We had approximately 43 shareholders of record of our common stock as of March 15, 2014.

 

Dividend Policy

 

We have not declared or paid cash dividends on our shares of common stock. The holders of the shares of common stock will be entitled to non-cumulative dividends on the shares of common stock, when and as declared by our board of directors, in its discretion. We intend to retain all future earnings, if any, for our business and do not anticipate paying cash dividends in the foreseeable future.

 

Any future determination to pay cash dividends will be at the discretion of our board of directors and will be dependent upon our financial condition, results of operations, capital requirements, general business conditions and such other factors as our board of directors may deem relevant.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

In July 2007 our stockholders approved the 2007 Stock Option and Restricted Stock Plan (the “Plan”), under which both incentive and non-statutory stock options may be granted to employees, officers, non-employee directors and consultants. A total of 625,000 shares of our common stock are reserved for issuance under the Plan. We have not granted any options under the Plan. Any options that may be granted under the Plan must be at exercise prices not less than the fair market value of such stock at the date of grant, may be exercisable immediately or vest over time as directed by our Board of Directors and would have expiration dates not more than ten years after the date of grant.

 

The following table sets forth certain information regarding the Company’s equity compensation plans as of December 31, 2013.

 

Plan category  Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
   Weighted-average
exercise price of
outstanding options,
warrants and rights
   Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column
(a))
 
Equity compensation plans approved by stockholders   625,000   $-0-    625,000 
Equity compensation plans not approved by stockholders   -0-    -0-    -0- 
Total   625,000   $-0-    625,000 

 

5
 

 

Recent Issuances of Unregistered Securities

 

On August 14, 2012, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann III, respectively all of whom are principal shareholders of the Company, advanced a total of $6,820 to the Company. Each advance bears interest at a rate of 6.0% per annum, with principal and interest due on September 14, 2014. On November 26, 2012, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann III, respectively all of whom are principal shareholders of the Company, advanced a total of $7,000 to the Company. Each advance bears interest at a rate of 6.0% per annum, with principal and interest due on November 26, 2014. As of December 31, 2013 and 2012, there was combined accrued interest on the August 2012 and November 2012 notes of $829 and nil, respectively. See “Item 13. Certain Relationships and Related Transactions, and Director Independence.”

 

On April 12, 2013, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann, all of whom are principal shareholders of the Company, advanced a total of $7,025. We repaid these advances in September 2013 with interest at the rate of 6% per annum totaling approximately $116. See “Item 13. Certain Relationships and Related Transactions, and Director Independence.”

 

On November 25, 2013, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann III, respectively all of whom are principal shareholders of the Company, advanced a total of $3,000 to the Company. Each advance bears interest at a rate of 6.0% per annum, with principal and interest due on November 24, 2014.

 

ITEM 6. Selected Financial Data.

 

Not applicable.

 

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Forward-Looking Statements

 

This Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may,” “should,” “could,” “will,” “plan,” “future,” “continue” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A wide variety of factors could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs. There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be accurate.

 

6
 

 

Factors that could cause or contribute to our actual results to differ materially from those discussed herein or for our stock price to be adversely affected include, but are not limited to: (i) our ability to find a new business opportunity; (ii) our independent registered public accounting firm expressed a going concern opinion; (iii) our ability to raise additional working capital that we may require and, if available, that such working capital will be on terms acceptable to us; (iv) our ability to implement a new business plan; (v) economic and general risks relating to business; (vi) our dependence on key personnel; (vii) our ability to comply with Section 404 of the Sarbanes-Oxley Act of 2002, as it may be required; (viii) our nonpayment of dividends and lack of plans to pay dividends in the future; (ix) future sale of a substantial number of shares of our common stock that could depress the trading price of our common stock, if it trades, lower our value and make it more difficult for us to raise capital; (x) our additional securities available for issuance, which, if issued, could adversely affect the rights of the holders of our common stock; (xi) the illiquidity of the public market for our common stock; (xvii) the price of our stock is likely to be highly volatile because of several factors, including a relatively limited public float; and (xiii) indemnification of our officers and directors.

 

General

 

The following discussion should be read in conjunction with our Financial Statements and notes thereto. The following discussion contains forward-looking statements, including, but not limited to, statements concerning our plans, anticipated expenditures, the need for additional capital and other events and circumstances described in terms of our expectations and intentions. You are urged to review the information set forth under the captions for factors that may cause actual events or results to differ materially from those discussed below.

 

Overview

 

We were formed in August 2001 by our former parent, TGE. Our corporate offices are located at 7608 N. Shadow Mountain Blvd., Paradise Valley, AZ 85253 and our telephone number is (602) 321-1313.

 

We produced, marketed and distributed vibration isolation products to the high-end audio and video markets in the United States and in certain foreign countries. Our products included the Classic MIB, the PRO MIB, the Isotone MIB, the Series 100 Component Shelf, a shelf product, and Pivot Points, a spike mount product.

 

Our vibration isolation products produced superior sound quality by sharpening, not softening, the sound. AVT holds the patents respecting our products in the United States and Taiwan. AVT granted us a non-exclusive world-wide license to sell the products under the patents (“AVT License”). The AVT License automatically renewed each year until December 31, 2012, when it was terminated. We paid AVT a royalty of 5% of our net sales for the license. We outsourced the manufacture of our products to several qualified machine shops in the Phoenix metropolitan area. On March 26, 2010, TGE assigned its federally registered trademark respecting the “Aurios” name to us in consideration of $100.

 

The AVT License terminated on December 31, 2012 because AVT sold its business to a third party who was a competitor with the products of Aurios. We liquidated or sold our remaining inventory. In 2013, we sold our remaining, assets, less cash, to TGE in satisfaction of a Note Payable owing to TGE. The principal amount owing on the Note Payable to TGE was $44,121 and the accrued and owing interest was $18,042 as of May 31, 2013.

 

7
 

 

Given this development, we are now a shell company with nominal assets. We are seeking a new business opportunity. We plan to identify, evaluate, and investigate various companies with the intent to conduct a reverse merger transaction under which we would acquire a target company with an operating business to continue the acquired company’s business as a publicly-held entity. There can be no assurance that we will find a suitable acquisition candidate or, if we do, that the terms will be favorable to our existing shareholders.

 

For the Years Ended December 31, 2013 and 2012

 

Results From Operations

 

Revenues

 

Since our inception, our activities have focused on product and market development with a nominal level of operations. We discontinued our sales of such products on December 31, 2012 because our AVT License terminated. We thus had no revenues for the year ended December 31, 2013 and had $8,908 in revenues for the year ended December 31, 2012.

 

Most of our sales were made through audio equipment distributors, with the balance being direct retail sales. For the year ended December 31, 2012, we had 27%, 25%, 10% and 31% of sales to Music Direct, Absolute Hi End, Mike McKool and Non Stop Audio, respectively, which were four of our distributors. No other customer accounted for more than 10% of sales in the 2012 fiscal year. There were no sales in 2013.

 

Cost of Sales

 

We had no cost of sales on units sold for the year ended December 31, 2013 because we are no longer selling product compared to cost of sales on units sold for the year ended December 31, 2012 of $7,884 (88.5% of revenues).

 

Gross Margin

 

Gross margin for the year ended December 31, 2013 was $-0- (0% of revenues) because we sold no product in 2013 compared to $1,024 (11.5% of revenues) for the year ended December 31, 2012.

 

Other Income

 

We had other income for the year ended December 31, 2013 of $32,200 and $50,650 of other income for the year ended December 31, 2012. The other income we had for the year ended December 31, 2013 related to deposits made by third parties under agreements in anticipation of a possible transaction. We did not reach a definitive agreement with such parties on the possible transactions and we recorded income upon expiration of the agreement relating to the forfeiture of the deposits. The other income we had for the year ended December 31, 2012 related to standstill agreements we entered into with FastLane Retail Systems, Inc. providing for exclusivity in negotiations between the parties for a possible transaction. We did not reach a definitive agreement with FastLane on the possible transaction and we recorded income upon expiration of the standstill agreements.

 

General and Administrative Expenses

 

In fiscal 2013 and 2012, our President provided administrative services to us, and office and warehouse space for us in his residence at no cost to us. In the year ended December 31, 2013, we had additional expenses consisting of legal expenses of $13,248 and accounting expenses of $28,888, most of which were related to complying with our reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In the year ended December 31, 2012, we had additional expenses consisting of legal expenses of $13,772 and accounting expenses of $35,751, most of which were related to complying with our reporting obligations under the Exchange Act.

 

8
 

 

Interest Expense

 

Interest expense was $5,567 and $8,797 for the years ended December 31, 2013 and 2012, respectively. The decrease was primarily related to satisfaction of the Note payable to TGE.

 

Income Tax Provision

 

We had a potential tax provision benefit of approximately $8,700 and $5,600 for the years ended December 31, 2013 and 2012, respectively, arising from losses generated during the aforementioned periods. We have fully reserved against these benefits due to the uncertainty of their realization.

 

Net Loss

 

For the reasons listed above, for the years ended December 31, 2013 and 2012, we recorded a net loss of $22,281 and $14,388, respectively, an increase in our net loss of $7,893.

 

Basic and Diluted Loss per Share

 

The basic and diluted loss per share were <$0.01> and <$0.00> for the years ended December 31, 2013 and 2012, respectively, for the reasons previously noted.

 

Liquidity and Capital Resources

 

Our independent registered public accounting firm has rendered a going concern opinion. We provided for our cash requirements in 2013 and 2012 from loans from our three principal shareholders and from certain stand-still fees we received from third parties in 2013 and 2012. In this regard, we received a deposit of $12,000 in February 2013 from a third party with whom we were discussing a possible merger transaction and a $10,000 loan in July 2013 from a third party and a deposit of $10,200 towards the closing of a merger. The deposit was forfeited and the loan was retained and recognized as income because no transaction ultimately occurred between the parties.

 

We believe that we will obtain sufficient capital to operate for the next twelve months through the sale of debt or equity securities, deferral of payment of certain accounts payable, extension of outstanding debt obligations and, if we are able to, by generating operating income through the acquisition of an operating entity that produces positive cash flow. We can make no assurances that we will be successful in this regard. If our revenues do not increase and our cash flow is not positive or not sufficient to meet our working capital needs, we will need to seek to raise capital through the sale of our equity or debt securities. We have no commitments for obtaining such financing and there can be no assurance that we could obtain the necessary funds or obtain them on terms favorable to us. Any future financing may be on terms that substantially dilute the ownership interests of present shareholders. If we are unable to raise sufficient additional capital as necessary, we may have to suspend or contract our activities or cease activities entirely. We do not anticipate that we will have any large capital requirements over the next twelve months.

 

As of December 31, 2013, we had a working capital deficit of $203,328 and no long-term debt.

 

Capital Commitments

 

We had no material commitments for capital expenditures.

 

Off-Balance Sheet Arrangements

 

There were no off-balance sheet arrangements as of December 31, 2013 and December 31, 2012.

 

9
 

 

Critical Accounting Policies and Estimates

 

Our financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles. Preparation of the statements in accordance with these principles requires that we make estimates, using available data and our judgment, for such things as valuing assets, accruing liabilities and estimating expenses.

 

Our significant accounting policies are summarized in Note 1 to our financial statements included in Item 8 “Financial Statements” of this report. The selection and application of any accounting policy may involve some level of subjective judgments and estimates in their selection and application, and may be susceptible to uncertainties and changing conditions.

 

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable

 

ITEM 8. Financial Statements and Supplementary Data.

 

The financial statements of the Company are included as an exhibit to this Form 10-K commencing on page F-1.

 

ITEM 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

 

None.

 

ITEM 9A. Controls and Procedures.

 

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our President, Chief Executive Officer and Chief Financial Officer, Paul Attaway, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on his evaluation as of December 31, 2013, the end of the period covered by this Annual Report on Form 10-K, he concluded that our disclosure controls and procedures were not effective, for the reasons discussed below, at a reasonable assurance level to ensure that the information required to be disclosed in reports filed or submitted under the Exchange Act, including this Annual Report, were recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and was accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

10
 

 

Management’s Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed 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 and includes those policies and procedures that:

 

    Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
       
    Provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
       
    Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

 

In connection with the filing of our Annual Report on Form 10-K, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2013. In making this assessment, our management used the criteria set forth by Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework. Based on our assessment using those criteria, management believes that, as of December 31, 2013, our internal control over financial reporting was not effective based on those criteria.

 

In connection with our evaluation, we identified a material weakness in our internal control over financial reporting as of December 31, 2013. A material weakness is a deficiency, or combination of deficiencies, that creates a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected in a timely manner. The material weakness related to our Company is due to not having the adequate personnel to address the reporting requirements of a public company. We do not believe that this material weakness has resulted in deficient financial reporting because we have worked through the audit process to review our transactions to assure compliance with professional standards. Accordingly, while we identified a material weakness in our system of internal control over financial reporting as of December 31, 2013, we believe that we have taken reasonable steps to ascertain that the financial information contained in this report is in accordance with generally accepted accounting principles.

 

This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.

 

Changes in Internal Control Over Financial Reporting

 

There have been no changes in our internal control over financial reporting during the year ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, such controls.

 

11
 

 

ITEM 9B. Other Information.

 

None.

 

PART III

 

ITEM 10. Directors, Executive Officers and Corporate Governance.

 

The following table sets forth the names, positions and ages of our directors and executive officers. Our directors were elected by the unanimous written consent of our stockholders in lieu of a meeting. Our directors are typically elected at each annual meeting and serve for one year or until their successors are elected and qualify. Officers are elected by our board of directors and their terms of office are at the discretion of our board.

 

Name   Age   Position with Company
         
Paul Attaway   50   President, Chief Financial Officer and Director since 2001
Timothy Louis   49   Secretary, Treasurer and Director since 2004

 

Paul Attaway has served as an officer and director of the Company since its incorporation in August 2001. In 1997, Mr. Attaway founded True Gravity Enterprises, Inc., a privately held corporation that designed and manufactured vibration control solutions for the semiconductor and life science industries and he has been its principal shareholder and executive officer since then. TGE sold substantially all of its assets to AVT in February 2010. In April 2010, Attaway co-founded CTP Funding, LLC (“CTP”), a private mortgage lender. He practiced law for two years from 1988 to 1990 in Phoenix, Arizona with Streich Lang Weeks & Cardon. From 1990 to 1995, he worked for a family business, MM Systems Corporation, which manufactures and sells building materials worldwide. From 1995 to 1997, Mr. Attaway left the family business and started Tekton Inc., a privately held corporation that designs and manufactures seismic isolation systems for network server racks. Mr. Attaway sold Tekton, Inc. in 2004. Mr. Attaway holds a B.S.B.A. with a major in finance from Georgetown University and a J.D. from the University of Georgia School of Law. Mr. Attaway divides his time between TGE, CTP and the Company as the businesses require in a manner sufficient to discharge his fiduciary duties to all three entities.

 

Timothy Louis has served as an officer and director of the Company since July 2004. Since 1995, Mr. Louis has been the principal of Desert Capital Investments, L.L.C., a venture capital investment firm. Its venture investments include Frye-Louis Capital Management, Mobility Electronics, The Schirf Brewing Company, TGE, The rSmart Group, BH USA and PIVOT Cycles, Inc. He has served as a board member of companies such as Johnson Polymer, Inc (an affiliate company of S.C. Johnson Wax) and non-profit companies such as A.T. Still University, Desert Voices Oral Learning Center and The Phoenix Art Museum. Since 2001 he has served as the Vice President - Finance at The rSmart Group, a provider of enterprise open source applications in the global education software and services market. From 1990 to 2002 he was an owner/director of Frye-Louis Capital Management, Inc., a high net worth family asset management firm based in Chicago. The firm was sold to Credit Suisse Private Bank in 2002. Mr. Louis has a B.S. in Communication Disorders and a M.A. in Audiology and Hearing Impairment from Northwestern University, and a M.B.A. in Financial Management and Markets from Arizona State University.

 

Board of Directors and Committee Meetings

 

Our Board of Directors held four meetings during the fiscal year ended December 31, 2013. In addition, our Board of Directors acted by unanimous written consent during fiscal year ended December 31, 2013. Both of our directors attended at least 75% of the meetings of the Board of Directors in the fiscal year ended December 31, 2013. We have no Committees of our Board. Our directors are expected, absent exceptional circumstances, to attend all Board meetings and meetings of any committees on which they serve.

 

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Committees of the Board of Directors

 

We do not have Audit, Compensation or Nominating and Governance Committees. Our full Board of Directors discharges the duties that such committees would normally have. We do not have such committees because of our stage of development and because our Board of Directors consists of only two members.

 

Our full Board is comprised of two Directors, one of whom is independent, as defined by the rules and regulations of the Securities and Exchange Commission. The members of our Board of Directors are Paul Attaway and Timothy Louis. The Board of Directors determined that Mr. Louis qualifies as an “audit committee financial expert,” as defined under the rules and regulations of the Securities and Exchange Commission, and is independent as noted above.

 

Under the Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by the Company’s independent accountants must be approved in advance by the Board to assure that such services do not impair the accountants’ independence from the Company. Our full board of directors performs the equivalent functions of an audit committee, therefore, no policies or procedures other than those required by SEC rules on auditor independence, have been implemented.

 

Report of the Board of Directors Serving the Equivalent Functions of an Audit Committee

 

Review and Discussion with Management

 

Our Board has reviewed and discussed with management our audited financial statements for the fiscal year ended December 31, 2013, and the report by our independent registered public accounting firm thereon, the process designed to achieve compliance with Section 404 of the Sarbanes-Oxley Act of 2002, our assessment of internal control over financial reporting.

 

Review and Discussions with Independent Registered Public Accounting Firm

 

Our Board has discussed with Semple, Marchal & Cooper, LLP, our independent registered public accounting firm for fiscal year 2013, the matters the Board, serving the equivalent functions of an audit committee, is required to discuss, which includes, among other items, matters related to the conduct of the audit of our financial statements.

 

Our Board also has received the written disclosures and the letter from Semple, Marchal & Cooper, LLP required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and has discussed with Semple, Marchal & Cooper, LLP any relationships that may impact its independence, and satisfied itself as to the independent registered public accounting firm’s independence.

 

Conclusion

 

Based on the review and discussions referred to above, the Board, serving the equivalent functions of the audit committee, approved our audited financial statements for the fiscal year ended December 31, 2013 be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 for filing with the Securities and Exchange Commission.

 

Board of Directors’ Role in the Oversight of Risk Management

 

We face a variety of risks, including credit, liquidity and operational risks. In fulfilling its risk oversight role, our Board of Directors focuses on the adequacy of our risk management process and overall risk management system. Our Board of Directors believes that an effective risk management system will (i) adequately identify the material risks that we face in a timely manner; (ii) implement appropriate risk management strategies that are responsive to our risk profile and specific material risk exposures; (iii) integrate consideration of risk and risk management into our business decision-making; and (iv) include policies and procedures that adequately transmit necessary information regarding material risks to senior executives and, as appropriate, to the Board or relevant committee.

 

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Our Board of Directors oversees risk management for us. Accordingly, the Board schedules time for periodic review of risk management, in addition to its other duties. In this role, the Board receives reports from management, certified public accountants, outside legal counsel, and to the extent necessary, from other advisors, and strives to generate serious and thoughtful attention to our risk management process and system, the nature of the material risks we face, and the adequacy of our policies and procedures designed to respond to and mitigate these risks.

 

Board Leadership Structure

 

Our Board of Directors does not have a Chairman of the Board due to its small size. Because we do not have a Chairman of the Board, our Board of Directors does not have a policy on whether or not the roles of Chief Executive Officer and Chairman of the Board of Directors should be separate and, if they are to be separate, whether the Chairman of the Board should be selected from the non-employee directors or be an employee. Our Board of Directors believes that it should be free to make a choice from time to time in any manner that is in the best interests of us and our shareholders. If our Board determines that a Chairman of the Board is needed, the Board will appoint a Chairman of the Board whose appointment is in the best interest of the Company and its shareholders. Our Board has determined that our Board leadership structure is appropriate given the size of our Board and the nature of our business.

 

Stockholder Communications with the Board of Directors

 

Stockholders may communicate with the Board of Directors by writing to us as follows: Aurios Inc., attention: Corporate Secretary, 7608 N. Shadow Mountain Road, Paradise Valley, AZ 85253. Stockholders who would like their submission directed to a particular member of the Board of Directors may so specify and the communication will be forwarded as appropriate.

 

Process and Policy for Director Nominations

 

Our full Board will consider candidates for Board membership suggested by Board members, management and our stockholders. In evaluating the suitability of potential nominees for membership on the Board, the Board members will consider the Board’s current composition, including expertise, diversity, and balance of inside, outside and independent directors. The Board considers the general qualifications of the potential nominees, including integrity and honesty; recognized leadership in business or professional activity; a background and experience that will complement the talents of the other board members; the willingness and capability to take the time to actively participate in board and committee meetings and related activities; the extent to which the candidate possesses pertinent technological, political, business, financial or social/cultural expertise and experience; the absence of realistic possibilities of conflict of interest or legal prohibition; the ability to work well with the other directors; and the extent of the candidate’s familiarity with issues affecting our business.

 

While the Board considers diversity and variety of experiences and viewpoints to be important factors, it does not believe that a director nominee should be chosen solely or mainly because of race, color, gender, national origin or sexual identity or orientation. Thus, although diversity may be a consideration in the Board’s process, it does not have a formal policy regarding the consideration of diversity in identifying director nominees.

 

Stockholder Recommendations for Director Nominations. Our Board of Directors does not have a formal policy with respect to consideration of any director candidate recommendation by stockholders. While the Board of Directors may consider candidates recommended by stockholders, it has no requirement to do so. To date, no stockholder has recommended a candidate for nomination to the Board. Given that we have not received director nominations from stockholders in the past and that we do not canvass stockholders for such nominations, we believe it is appropriate not to have a formal policy in that regard. We do not pay a fee to any third party to identify or evaluate or assist in indentifying or evaluating potential nominees.

 

14
 

 

Stockholder recommendations for director nominations may be submitted to the Company at the following address: Aurios Inc., attention: Corporate Secretary, 7608 N. Shadow Mountain Road, Paradise Valley, AZ 85253. Such recommendations will be forwarded to the Board for consideration, provided that they are accompanied by sufficient information to permit the Board to evaluate the qualifications and experience of the nominees, and provided that they are in time for the Board to do an adequate evaluation of the candidate before the annual meeting of stockholders. The submission must be accomplished by a written consent of the individual to stand for election if nominated by the Board of Directors and to serve if elected and to cooperate with a background check.

 

Stockholder Nominations of Directors. The bylaws of the Company provide that in order for a stockholder to nominate a director at an annual meeting, the stockholder must give timely, written notice to the Secretary of the Company and such notice must be received at the principal executive offices of the Company not less than 120 days before the date of its release of the proxy statement to stockholders in connection with its previous year’s annual meeting of stockholders. Such stockholder’s notice shall include, with respect to each person whom the stockholder proposes to nominate for election as a director, all information relating to such person, including such person’s written consent to being named in the proxy statement as a nominee, serving as a director, that is required under the Securities Exchange Act of 1934, as amended, and cooperating with a background investigation. In addition, the stockholder must include in such notice his name and address, as they appear on the Company’s records, of the stockholder proposing the nomination of such person, and the name and address of the beneficial owner, if any, on whose behalf the nomination is made, the class and number of shares of capital stock of the Company that are owned beneficially and of record by such stockholder of record and by the beneficial owner, if any, on whose behalf the nomination is made, and any material interest or relationship that such stockholder of record and/or the beneficial owner, if any, on whose behalf the nomination is made may respectively have in such business or with such nominee. At the request of the Board of Directors, any person nominated for election as a director shall furnish to the Secretary of the Company the information required to be set forth in a stockholder’s notice of nomination which pertains to the nominee.

 

To be timely in the case of a special meeting or if the date of the annual meeting is changed by more than thirty (30) days from such anniversary date, a stockholder’s notice must be received at the principal executive offices of the Corporation no later than the close of business on the tenth day following the earlier of the day on which notice of the meeting date was mailed or public disclosure of the meeting date was made.

 

Code of Ethics and Conduct

 

Our Board of Directors has adopted a Code of Ethics and Conduct that is applicable to all of our employees, officers and directors. Our Code of Ethics and Conduct is intended to ensure that our employees act in accordance with the highest ethical standards. A copy of our Code of Ethics and Conduct may be obtained by sending a written request to us at 7608 N. Shadow Mountain Road, Paradise Valley, AZ 85253, Attn: Paul Attaway and the Code of Ethics and Conduct is filed as an exhibit to this Annual Report on Form 10-K.

 

Section 16(a) Beneficial Ownership Reporting

 

Section 16(a) of the Exchange Act, requires our executive officers and directors, and persons who own more than ten percent (10%) of our common stock, to file with the Securities and Exchange Commission reports of ownership of, and transactions in, our securities and to provide us with copies of those filings. To our knowledge, based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during the year ended December 31, 2013, all filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with during fiscal year 2013.

 

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ITEM 11. EXECUTIVE COMPENSATION.

 

The table below sets forth all cash compensation paid or proposed to be paid by us to the chief executive officer and the most highly compensated executive officers, and key employees for services rendered in all capacities to us during fiscal years 2013 and 2012.

 

Summary Compensation Table

 

Name and
Principal Position
(a)
  Year
(b)
  Salary ($) (c)  Bonus ($) (d)  Stock Awards ($) (e)  Option Awards ($) (f)  Non-Equity Incentive Plan Compensation ($) (g)  Nonqualified
Deferred Compensation Earnings
($) (h)
  All Other Compensation ($) (i)  Total ($) (j)
                            
Paul Attaway,

President and Chief Financial Officer

  2013
2012
  No compensation paid or options issued         
                            

Timothy Louis,

Secretary and Treasurer

 

2013

2012

  No compensation paid or options issued         

 

Mr. Attaway and Mr. Louis received no compensation in 2013 and 2012.

 

Compensation Policy. Our executive compensation plan is based on attracting and retaining qualified professionals who possess the skills and leadership necessary to enable us to achieve earnings and profitability growth to satisfy our stockholders. We must, therefore, create incentives for these executives to achieve both company and individual performance objectives through the use of performance-based compensation programs.

 

No one component is considered by itself, but all forms of the compensation package are considered in total. Wherever possible, objective measurements will be utilized to quantify performance, but many subjective factors still come into play when determining performance.

 

Compensation Components. We expect that the main elements of our compensation package will consist of base salary, stock options and bonus.

 

Base Salary. The base salary for each executive officer will be reviewed and compared to the prior year, with considerations given for increase. During 2013 and 2012 the executive officers received no compensation. As we grow and if financial conditions improve, we plan to establish base salaries for all executive officers and to review them periodically for possible adjustments. At the appropriate point, we will base salary adjustments on both the individuals and our performance and will include both objective and subjective criteria specific to each executive’s role and responsibility with us.

 

Stock Options. No stock options were issued to our officers during fiscal years 2013 and 2012.

 

Bonuses. To date, we have not granted bonuses. When considered, our bonuses will be related to meeting certain performance criteria that are directly related to areas within the executive’s responsibilities with us, such as production of product and sales of product to customers. If we grow, we will create a more defined bonus program to attract and retain our employees at all levels.

 

Other. At this time, we have no profit sharing plan in place for employees. However, this is another area of consideration to add such a plan to provide yet another level of compensation to our compensation plan.

 

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Stock Options. The board of directors adopted the 2007 Stock Option and Restricted Stock Plan (the “Plan”) on July 1, 2007 and the shareholders approved the Plan on July 8, 2007. The Plan authorizes us to issue up to 625,000 shares of our common stock upon exercise of options and grant of restricted stock awards. We have not issued any options under the Plan.

 

Employment Contracts; Termination of Employment and Change-in-Control Arrangements. We have no employment or change-in-control agreements with either Paul Attaway or Timothy Louis.

 

Compensation Committee Interlocks and Insider participation

 

Our Board of Directors functions as our compensation committee. Mr. Louis is not currently and has not ever been an employee of the Company.

 

Outstanding Equity Awards at Fiscal Year-End

 

       

Option Awards 

     

Stock Awards 

Name (a)

 

Number of
Securities
Underlying
Unexercised
Options
(#)(b)

 

Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)(c)

 

Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)(d)

 

Option
Exercise
Price
($) (e)

 

Option
Expiration
Date
(f)

 

Number of
Shares or
Units of
Stock
That
Have Not
Vested
(#) (g)

 

Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($) (h)

 

Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#) (i)

 

Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($) (j)

     
Paul Attaway   No outstanding equity awards.
     
Timothy Louis   No outstanding equity awards.

 

The table above indicates that no options were granted under the Plan to directors and officers in fiscal 2013.

 

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Stock Option Plan

 

The board of directors adopted the Plan on July 1, 2007 and the shareholders approved the Plan on July 8, 2007. The Plan authorizes us to issue up to 625,000 shares of our common stock upon exercise of options and grant of restricted stock awards. We have not issued any options under the Plan.

 

The Plan authorizes us to grant (i) to the key employees incentive stock options to purchase shares of common stock and non-qualified stock options to purchase shares of common stock and restricted stock awards, and (ii) to non-employee directors and consultants non-qualified stock options and restricted stock. Our Board of Directors will administer the Plans by making recommendations to the board or determinations regarding the persons to whom options or restricted stock should be granted and the amount, terms, conditions and restrictions of the awards.

 

The Plan allows for the grant of incentive stock options, non-qualified stock options and restricted stock awards. Incentive stock options granted under the Plan must have an exercise price at least equal to 100% of the fair market value of the common stock as of the date of grant. Incentive stock options granted to any person who owns, immediately after the grant, stock possessing more than 10% of the combined voting power of all classes of our stock, or of any parent or subsidiary corporation, must have an exercise price at least equal to 110% of the fair market value of the common stock on the date of grant. Non-statutory stock options may have exercise prices as determined by our Board of Directors.

 

The Board of Directors is also authorized to grant restricted stock awards under the Plan. A restricted stock award is a grant of shares of the common stock that is subject to restrictions on transferability, risk of forfeiture and other restrictions and that may be forfeited in the event of certain terminations of employment or service prior to the end of a restricted period specified by the Board of Directors.

 

Compensation of Directors

 

Directors who are neither our employees nor of our affiliates receive no cash compensation for serving on our Board of Directors. We have one independent director. We reimburse independent directors for any travel or other out-of-pocket expenses related to their service on the Board of Directors. When we add independent Board members we expect that they will receive compensation of options or shares of common stock of the Company for each year for their service on the Board of Directors and for serving without directors and officers’ liability insurance in place.

 

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Director Compensation

 

Name (a)

 

Fees
Earned
Or Paid
in Cash
($) (b)

 

Stock
Awards
($) (c)

 

Option
Awards
($) (d) 

 

Non-Equity
Incentive Plan
Compensation
($) (e)

 


Nonqualified
Deferred
Compensation
Earnings
($) (f)

 

All Other
Compensation
($) (g)

 

Total
($) (h)

             
Paul Attaway,

President, Chief Financial Officer and Director

          No compensation paid or awards made in 2013 and 2012.
             
Timothy Louis,

Secretary, Treasurer and Director

        No compensation paid or awards made in 2013 and 2012.

 

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

The following table sets forth, as of December 31, 2013, the number and percentage of outstanding shares of common stock beneficially owned by (a) each person known by us to beneficially own more than five percent of such stock, (b) each director of the Company, (c) each named officer of the Company, and (d) all our directors and executive officers as a group.

 

Name and Address of Beneficial Owner(1)  Amount and
Nature of
Beneficial
Ownership(2)
   Percent
of
Class(4)
 
Paul Attaway(3) (4)   1,254,666    33.5 
Timothy Louis   100,000    2.4 
Ira J. Gaines(4)   656,666    17.5 
Christian J. Hoffmann, III(4) (5)   606,666    16.2 
All officers and directors as a group (two persons)   1,354,666    35.02 

 

 

(1)   The address of these persons is c/o 7608 N. Shadow Mountain Rd., Paradise Valley, Arizona 85281.
     
(2)   The foregoing beneficial owners hold investment and voting power in their shares.
     
(3)   Paul Attaway owns 66% of the capital stock of TGE, which is a former shareholder of the Company and the Company’s former parent company.
     
(4)   Includes 33,333 shares of common stock issuable to each person upon exercise of a warrant exercisable within sixty (60) days and includes 33,333 shares for each person issuable upon conversion of Series A Convertible Notes. See “Certain Relationships and Related Transactions, and Director Independence.”
     
(5)    Mr. Hoffmann is a partner of Quarles & Brady LLP, the former legal counsel of the Company. Such law firm holds a promissory note convertible into 147,490 shares of common stock and a warrant exercisable to purchase 147,490 shares of our common stock. Mr. Hoffmann disclaims ownership of such shares and they are not included in his totals in the table.

 

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ITEM 13. Certain Relationships and Related Transactions, and Director Independence.

 

The Company had a note payable to a related party, TGE, in the amount of $-0- and $44,121 as of December 31, 2013 and 2012, respectively, bearing interest at a rate of 8.25%. All outstanding principal and interest was originally due and payable on December 15, 2010 and such date was extended several times to January 15, 2014. Effective May 31, 2013, the Company sold all of its assets relating to its vibration isolation products to TGE for a price of $62,161, which was the outstanding principal balance and accrued interest on the note due as of May 31, 2013. The assets included the existing product inventory and other assets, which was $1,155 and $474, respectively, at May 31, 2013, assembly devices, drawings, trade name and related intellectual property. The note payable to TGE has been satisfied by the exchange of the note for the assets, which extinguished the Company’s obligation to TGE.

 

The Company and TGE, its affiliate and former parent, entered into an administrative services/rental agreement with TGE on January 1, 2009. Under such agreement, TGE performs certain administrative duties for Aurios and provides it office space as required at $1,500 per month. Aurios has no employees and contracts with TGE for all services. Paul Attaway controls TGE as its principal shareholder, and an officer and director. This agreement was terminated on February 25, 2010 as a result of the sale of substantially all of TGE’s assets to AVT. Mr. Attaway provided administrative services, office and warehouse space in his residence to the Company in 2013 and 2012 at no cost.

 

On April 12, 2013, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann, all of whom are principal shareholders of the Company, advanced a total of $7,025. These advances were repaid in September 2013 with interest at the rate of 6% per annum totaling approximately $116.

 

During 2013 and 2012, the Company paid $13,248 and $13,772, respectively, in fees to Quarles & Brady LLP, in which Mr. Hoffmann, a principal shareholder of the Company, is a partner. The principal shareholder also performed or supervised a majority of the legal services performed for the Company.

 

On December 15, 2010 the Company sold $10,000 principal amount of a Series A Convertible Note (the “Series A Note”) to Paul J. Attaway, President, a director and principal shareholder of the Company. The Series A Note bears interest at 6% per annum, was due and payable on December 14, 2013 and is convertible into common stock at a price of $0.30 per share. Maturity has been extended to December 15, 2014. In connection with each Series A Note, the Company issued a warrant exercisable to purchase 33,333 shares of common stock at a price of $0.30 per share through December 14, 2020. Also on such date the Company sold two additional Series A Notes, each in the principal amount of $10,000, to Ira J. Gaines and Christian J. Hoffmann, III, both principal shareholders of the Company, and issued each of them a warrant to purchase 33,333 shares of common stock. The Series A Notes and warrants were on the same terms as those issued to Mr. Attaway.

 

In December 2010 we issued the law firm of Quarles and Brady, LLP, our former legal counsel, a Series B Convertible Note in the principal amount of $44,248 to represent amounts we owed to such firm under certain outstanding invoices. Such Note was due and payable on January 15, 2013, bears interest at 3% per annum and is convertible into shares of our common stock at a price of $0.30 per share for a total of 147,490 shares. Maturity has been extended to December 15, 2014. The Note is payable prior to its maturity date if the Company raises $100,000 or more from the sale of its debt or equity securities to one or more third parties in a transaction or series of transactions or in the event of a merger, sale of all or substantially all of its assets or similar transaction. In addition, the Company issued warrants in connection with the Note, which warrants are exercisable to purchase 147,490 shares of common stock at a price of $0.30 per share through December 30, 2020. Mr. Hoffmann, a principal shareholder of the Company, is a partner of Quarles & Brady, LLP.

 

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On August 14, 2012, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann III, respectively all of whom are principal shareholders of the Company, advanced a total of $6,820 to the Company. Each advance bears interest at a rate of 6.0% per annum, with principal and interest due on September 14, 2014. On November 26, 2012, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann III, respectively all of whom are principal shareholders of the Company, advanced a total of $7,000 to the Company. Each advance bears interest at a rate of 6.0% per annum, with principal and interest due on November 26, 2014. As of December 31, 2013 and 2012, there was combined accrued interest on the August 2012 and November 2012 notes of $829 and nil, respectively.

 

On November 25, 2013, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann III, respectively all of whom are principal shareholders of the Company, advanced a total of $3,000 to the Company. Each advance bears interest at a rate of 6.0% per annum, with principal and interest due on November 24, 2014.

 

Director Independence

 

Paul Attaway and Timothy Louis are the sole directors of the Company. Mr. Attaway is not considered “independent” in accordance with rule 5605(a)(2) of the NASDAQ Marketplace Rules. The Board of Directors has determined that Mr. Louis is independent in accordance with the Nasdaq and SEC rules. We are currently traded on the OTC Bulletin Board, which does not require that a majority of the board be independent. If we ever become an issuer whose securities are listed on a national securities exchange or on an automated inter-dealer quotation system of a national securities association, which has independent director requirements, we intend to comply with all applicable requirements relating to director independence.

 

ITEM 14. Principal Accounting Fees and Services.

 

The following table is a summary of the fees billed to us by Semple, Marchal & Cooper, LLP for professional services for the fiscal years ended December 31, 2013 and December 31, 2012:

 

Fee Category:  Fiscal
2013 Fees
   Fiscal
2012 Fees
 
Audit Fees  $21,000   $29,100 
Audit-Related Fees   0    0 
Tax Fees   1,500    1,500 
All Other Fees   0    0 
Total Fees  $22,500   $30,600 

 

Audit Fees. Such amount consists of fees billed for professional services rendered in connection with the audit of our annual financial statements and review of the interim financial statements included in our quarterly reports. It also includes services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings or engagements.

 

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Audit-Related Fees. Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include accounting consultations in connection with acquisitions, attest services that are not required by statute or regulation, and consultations concerning financial accounting and reporting standards.

 

Tax Fees. Tax fees consist of fees billed for professional services related to tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and international tax compliance, tax audit defense, customs and duties, mergers and acquisitions, and international tax planning.

 

All Other Fees. Consists of fees for services other than the services reported above. In fiscal 2013 and 2012, there were no fees related to this category.

 

Our Board of Directors’ practice is to consider and approve in advance all proposed audit and non-audit services to be provided by our independent registered public accounting firm. All of the fees shown above were approved by the Board of Directors functioning as the audit committee.

 

The audit report of Sample, Marchal & Cooper, LLP on the financial statements of the Company for the year ended December 31, 2013 did not contain an adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles except as it relates to the substantial doubt of the Company’s ability to continue as a going concern. The audit report for the year ended December 31, 2012 did not contain an adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles except as it relates to the substantial doubt of the Company’s ability to continue as a going concern.

 

During our fiscal years ended December 31, 2013 and 2012, there were no disagreements with Semple, Marchal & Cooper, LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to Semple, Marchal & Cooper, LLP’s satisfaction would have caused it to make reference to the subject matter of such disagreements in connection with its reports on the financial statements for such periods.

 

During our fiscal years ended December 31, 2013 and 2012, there were no reportable events (as described in Item 304(a)(1)(v) of Regulation S-K).

 

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PART IV

 

ITEM 15. Exhibits, Financial Statement Schedules.

 

Exhibit
Number
  Description   Incorporated by Reference to:   Filed Herewith
3.1   Articles of Incorporation of the Company, dated August 9, 2001.   Exhibit 3.1 of the Company’s Form S-1, filed May 8, 2009, No. 333-150881 (the “S-1”).    
3.2   Amendment to the Articles of Incorporation of the Company, dated September 28, 2007.   Exhibit 3.2 of the S-1.    
3.3   Amendment to the Articles of Incorporation of the Company, dated October 10, 2007.   Exhibit 3.3 of the S-1.    
3.4   By-laws of the Company.   Exhibit 3.4 of the S-1.    
3.5   Amended and Restated By-laws of the Company.   Exhibit 3.5 of the Company’s Form 10-K, filed March 31, 2010, No. 000-53643.    
4.1   Form of Common Stock Certificate.   Exhibit 4.1 of the S-1.    
4.2   Form of Series A Convertible Preferred Stock Certificate.   Exhibit 4.2 of the S-1.    
5.1   Opinion of Quarles & Brady LLP as to the legality of securities being registered (includes consent).   Exhibit 5.1 of the S-1.    
10.1   2007 Stock Option and Restricted Stock Plan.   Exhibit 10.1 of the S-1.    
10.2   Form of Stock Option Agreement (ISO and Non-Qualified) 2007 Stock Option Plan.   Exhibit 10.2 of the S-1.    
10.3   License Agreement with True Gravity Enterprises, Inc., dated July 2, 2007.   Exhibit 10.3 of the S-1.    
10.4   Management and Rental Agreement between True Gravity Enterprises, Inc. and the Company dated January 1, 2007.   Exhibit 10.4 of the S-1.    
10.5   Promissory Note between the Company and True Gravity Enterprises, Inc., dated January 1, 2007, in the principal amount of $44,121.35.   Exhibit 10.5 of the S-1.    
10.6   Stock Purchase Agreement between True Gravity Enterprises, Inc. and Paul Attaway, dated December 31, 2007.   Exhibit 10.6 of the S-1.    
10.7   Form of Subscription Agreement related to 2007 private placement of preferred shares.   Exhibit 10.7 of the S-1.    
10.8   Management and Rental Agreement between True Gravity Enterprises, Inc. and the Company dated January 1, 2009.   Exhibit 10.8 of the S-1.    
10.9   License Agreement with Advanced Vibration Technologies Inc.   Exhibit 10.9 of the Company’s Form 10-K, filed April 15, 2011, No. 000-53643.    
10.10   Management and Rental Agreement between Advanced Vibration Technologies Inc. and the Company dated February 25, 2010   Exhibit 10.10 of the Company’s Form 10-K, filed April 15, 2011, No. 000-53643.    
10.11   Asset Purchase and Sale Agreement between Aurios Inc. and True Gravity Enterprises, Inc.   Exhibit 10.11 of the Company’s Form 10-Q, filed August 19, 2013    
14.1   Code of Ethics and Conduct.   Exhibit 14.1 of the Company’s Form 10-K, filed April 15, 2011, No. 000-53643.    
23.1   Consent of Semple, Marchal & Cooper LLP.   Exhibit 23.1 of the S-1.    
23.2   Consent of Quarles & Brady LLP (Included in 5.1 above).   Exhibit 5.1 of the S-1.    
31.1   Certification of Paul Attaway, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       X
31.2   Certification of Paul Attaway, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       X
32.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.       X
99.1   Audited Financial Statements of Aurios Inc. as of and for the years ended December 31, 2013 and 2012.       X
101.INS*   XBRL Instance Document.        
101.SCH*   XBRL Taxonomy Extension Schema Document.        
101.CAL*   XBRL Calculation Linkbase Document.        
101.DEF*   XBRL Taxonomy Definition Linkbase Document        
101.LAB*   XBRL Taxonomy Labels Linkbase Document.        
101.PRE*   XBRL Taxonomy Presentation Linkbase Document.        

 

* XBRL related information in Exhibit 101 to this annual report on Form 10-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

 

23
 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Date: March 21, 2014
   
  Aurios Inc.
     
  By: /s/ Paul Attaway
  Name: Paul Attaway
  Title: President, Chief Executive Officer,
    Chief Financial Officer and Director

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

Signature and Title   Date
   
/s/ Paul Attaway   March 21, 2014
Paul Attaway, President, Chief Executive Officer,  
Chief Financial Officer,    
Principal Accounting Officer and Director    
     
/s/ Timothy Louis   March 21, 2014
Timothy Louis, Secretary, Treasurer and Director    

 

24
 

EX-31.1 2 ex31-1.htm EXHIBIT 31.1 Exhibit 31.1

 

Exhibit 31.1

 

CERTIFICATIONS

 

I, Paul Attaway, Chief Executive Officer of Aurios Inc., certify that;

 

(1)I have reviewed this Annual Report on Form 10-K of Aurios 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13-15(e) and 15d-15(e)) an internal control over financial reporting (as defined in Exchange Act Rules 13a-15(1) 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 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.

 

(5)The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of 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: March 21, 2014

 

By: /s/ Paul Attaway  
Name: Paul Attaway  
Title: Chief Executive Officer  

 

 
 

EX-31.2 3 ex31-2.htm EXHIBIT 31.2 Exhibit 31.2

 

Exhibit 31.2

 

CERTIFICATIONS

 

I, Paul Attaway, Chief Financial Officer of Aurios Inc., certify that;

 

(1) I have reviewed this Annual Report on Form 10-K of Aurios 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13-15(e) and 15d-15(e)) an internal control over financial reporting (as defined in Exchange Act Rules 13a-15(1) 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 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.

 

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of 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: March 21, 2014

 

By: /s/ Paul Attaway  
Name: Paul Attaway  
Title: Chief Financial Officer  

.

 
 

 

EX-32.1 4 ex32-1.htm EXHIBIT 32.1 Exhibit 32.1

 

Exhibit 32.1

 

CERTIFICATION OF

EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of Aurios Inc. (the “Company”) on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

 

(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.

 

  Date: March 21, 2014
     
  By: /s/ Paul Attaway
  Name: Paul Attaway
  Title: Chief Executive Officer and Chief Financial Officer

 

 
 

 

EX-99.1 5 ex99-1.htm EXHIBIT 99.1 Exhibit 99.1

 

Exhibit 99.1

 

Index to Financial Statements

 

  Page (s)
   
Report of Independent Registered Public Accounting Firm F-2
   
Financial Statements:  
   
Balance Sheets - December 31, 2013 and 2012 F-3
   
Statements of Operations for the Years Ended December 31, 2013 and 2012 F-4
   
Statements of Changes in Stockholders’ Equity/(Deficit) for the Years Ended December 31, 2013 and 2012 F-5
   
Statements of Cash Flows for the Years Ended December 31, 2013 and 2012 F-6
   
Notes to Financial Statements F-7 to F-14

 

F-1
 

 

Report of Independent Registered Public Accounting Firm

 

Board of Directors and Stockholders

Aurios Inc.

 

We have audited the accompanying balance sheets of Aurios Inc. as of December 31, 2013 and 2012 and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Aurios Inc. at December 31, 2013 and 2012, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 8 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Semple, Marchal & Cooper, LLP  
   
Certified Public Accountants  
   
Phoenix, Arizona  
March 21, 2014  

 

F-2
 

 

AURIOS INC.

BALANCE SHEETS

 

   December 31, 2013   December 31, 2012 
         
ASSETS          
Current Assets:          
Cash  $758   $318 
Inventory   -    2,310 
Other assets   -    474 
           
Total Assets  $758   $3,102 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY / (DEFICIT)          
Current Liabilities:          
Accounts payable  $102,512   $90,622 
Accrued interest   10,506    23,150 
Notes payable - related parties   91,068    36,820 
Total Current Liabilities   204,086    150,592 
Long-Term Liabilities:          
Notes payable - related parties   -    95,369 
Total Liabilities   204,086    245,961 
Stockholders’ Equity / (Deficit):          
Convertible preferred stock - no par value; 10,000,000 shares authorized, no shares issued and outstanding   -    - 
Common stock - no par value; 90,000,000 shares authorized, 3,678,000 shares issued and outstanding at December 31, 2013 and 2012, respectively   197,795    197,795 
Additional paid-in capital   98,936    37,124 
Accumulated deficit   (500,059)   (477,778)
Total Stockholders’ Equity/(Deficit)   (203,328)   (242,859)
Total Liabilities and Stockholders’ Equity / (Deficit)  $758   $3,102 

 

The Accompanying Notes are an Integral

Part of the Financial Statements

 

F-3
 

 

AURIOS INC.

STATEMENTS OF OPERATIONS

 

   Years Ended 
   December 31, 
   2013   2012 
         
Sales  $-   $8,908 
           
Cost of Sales   -    7,884 
           
Gross Profit   -    1,024 
           
General and Administrative Expenses   48,824    57,185 
           
Loss from Operations   (48,824)   (56,161)
           
Other (Income) /Expense   (32,200)   (50,570)
Interest Expense   5,657    8,797 
Total Other (Income) /Expense   (26,543)   (41,773)
           
Net Loss  $(22,281)  $(14,388)
           
Loss per share - basic and diluted  $(0.01)  $(0.00)
           
Weighted average shares outstanding   3,678,000    3,678,000 

 

The Accompanying Notes are an Integral

Part of the Financial Statements

 

F-4
 

 

AURIOS INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

For the years ended December 31, 2013 and 2012

 

   Common Stock   Preferred Stock   Paid-in   Accumulated   Equity 
   Shares   Amount   Shares   Amount   Capital   Deficit   (Deficit) 
                             
Balance at December 31, 2011   3,678,000   $197,795    -   $-   $37,124   $(463,390)  $(228,471)
                                    
Net loss for the year ended December 31, 2012                            (14,388)   (14,388)
                                    
Balance at December 31, 2012   3,678,000    197,795    -    -    37,124    (477,778)   (242,859)
                                    
Capital contribution                       61,812         61,812 
                                    
Net Loss for the year ended December 31, 2013                            (22,281)   (22,281)
                                    
Balance at December 31, 2013   3,678,000   $197,795   $-   $-   $98,936   $(500,059)  $(203,328)

 

The Accompanying Notes are an Integral

Part of the Financial Statements

 

F-5
 

 

AURIOS INC.

STATEMENTS OF CASH FLOWS

 

   Years Ended 
   December 31, 
   2013   2012 
         
Increase / (Decrease) in Cash flows          
Cash flows from operating activities:          
Net Loss  $(22,281)  $(14,388)
Adjustments to reconcile net loss to net cash used by operating activities:          
Amortization of debt discount   -    1,702 
Inventory reserve   1,155    - 
Changes in Assets and Liabilities:          
Accounts receivable   -    2,250 
Inventory   -    (115)
Other assets   -    (474)
Accounts payable   13,168    683 
Deferred income   -    (16,500)
Accrued interest   5,398    6,077 
           
Net cash used by operating activities   (2,560)   (20,765)
           
Cash flows from financing activities:          
Proceeds from notes payable - related party   10,025    16,820 
Repayment of notes payable - related party   (7,025)   (3,000)
Net cash provided by financing activities   3,000    13,820 
           
Net change in cash and cash equivalents   440    (6,945)
           
Cash and cash equivalents at beginning of period   318    7,263 
           
Cash and cash equivalents at end of period  $758   $318 
           
Supplemental Information:          
Interest paid  $116   $1,018 
Income taxes paid  $-   $- 
           
Non-cash investing and financing activities          
Related party debt and accrued interest converted to equity  $61,812   $- 

 

The Accompanying Notes are an Integral

Part of the Financial Statements

 

F-6
 

 

AURIOS INC.

NOTES TO FINANCIAL STATEMENTS

 

Note 1
Summary of Significant Accounting Policies, Nature of Operations and Use of Estimates

 

Nature of Corporation

 

Aurios Inc. (the “Company” or “we”) is a corporation which was formed under the laws of the State of Arizona on August 7, 2001. Its principal business activity was the marketing of vibration and motion control technology to the audio/video markets. The Company’s sales occurred throughout the United States. The Company is a former wholly-owned subsidiary of True Gravity Enterprises Inc. (“TGE”). On December 31, 2007, the principal shareholder, who is also a director and officer of the Company, purchased all of the stock owned by TGE. Through June 30, 2007, TGE paid all Company expenses including payroll and vendors. It charged the Company $1,500 per month as a rent and management fee. Beginning June 30, 2007, the Company began paying its vendors, but continued to contract with TGE for rent and for certain services performed by TGE. On February 25, 2010, TGE sold substantially all of its assets to Advanced Vibration Technologies Inc., an Arizona corporation (“AVT”). Pursuant to a Management and Rental Agreement between AVT and the Company, the Company entered into an agreement to pay AVT $1,500 per month for rent and certain management services. This agreement expired on July 31, 2010. The Company no longer pays a management or rental fee. Effective December 31, 2012, the AVT License that granted us a non-exclusive world-wide license to produce and sell our products was terminated. As such, we no longer have revenue generating operations. We are now a shell company with nominal assets and are seeking a new business opportunity.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are used when estimating the fair values of stock-based issuances, as well as the recoverability of inventory. These are discussed in the respective notes to the financial statements.

 

Revenue Recognition

 

The Company previously derived its revenues primarily from the sale of vibration and motion control devices through sales from the Company’s website and its distributors. Revenues were recognized at the time the sale was completed and shipped. Once shipped, title to the products, as well as the risks and rewards of ownership, were passed to the customers.

 

Advertising Costs

 

Advertising costs are expensed as incurred. The Company incurred no advertising expense for the years ended December 31, 2013 and 2012.

 

Cash and Cash Equivalents

 

For financial accounting purposes, cash and cash equivalents are considered to be all highly liquid investments with a maturity of three (3) months or less at the time of purchase.

 

Accounts Receivable

 

The Company provided for potentially uncollectible accounts receivable by use of the allowance method. The allowance was provided based upon a review of the individual accounts outstanding and the Company’s prior history of uncollectible accounts receivable. The Company charged off uncollectible receivables when all reasonable collection efforts have been taken. As of December 31, 2013 and 2012, there was no provision for uncollectible trade accounts receivable. The Company does not accrue interest charges on delinquent accounts receivable. The accounts are generally unsecured.

 

F-7
 

 

AURIOS INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

 

Note 1

Summary of Significant Accounting Policies, Nature of Operations and Use of Estimates (Continued)

 

Inventory

 

Inventory, consisting primarily of finished goods, are stated at the lower of cost (first-in, first-out method) or market value. We regularly assess inventory quantities on hand and record provisions for excess and obsolete inventory based primarily on our estimated forecast of product demand. As of December 31, 2013 and 2012 there was no provision for obsolete inventory. Inventory at December 31, 2013 and 2012 was determined using a perpetual inventory system with periodic counts.

 

Deferred Income Taxes

 

Deferred income taxes are provided for under the asset and liability method, whereby deferred tax assets and liabilities are recognized for deductible temporary differences and operating loss carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that the carryforwards will not be utilized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company’s policy is to classify any interest and penalties to income tax expense in the financial statements. During the years ended December 31, 2013 and 2012, the Company did not incur any penalties or interest related to income taxes.

 

Discount on Debt

 

During the year ended December 31, 2010, the Company issued convertible debt instruments together with detachable warrants. This resulted in a beneficial conversion feature and the value of the warrants creating a discount on the debt. The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the straight line method which approximates the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense.

 

In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the common shares at the commitment date to be received upon conversion.

 

New Accounting Pronouncements

 

There have been no recent accounting pronouncements issued which are expected to have a material effect on the Company’s financial statements.

 

Stock-Based Compensation

 

The Company recognizes stock-based compensation based on the fair value of the award on the date of grant. The fair value of option and warrant grants is estimated as of the date of grant utilizing the Black-Scholes option-pricing model.

 

F-8
 

 

AURIOS INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

 

Note 1

Summary of Significant Accounting Policies, Nature of Operations and Use of Estimates (Continued)

 

Earnings Per Share

 

The earnings per share accounting guidance provides for the calculation of basic and diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity.

 

As of December 31, 2013 and 2012, warrants to purchase 247,489 shares of the Company’s common stock were not included in the determination of diluted loss per share, as they were antidilutive, and would decrease the loss per share. In addition, the notes payable and related accrued interest, were convertible into 325,533 and 314,947 shares of common stock as of December 31, 2013 and 2012, respectively, which also would have been anti-dilutive and have been excluded in the calculation of loss per share.

 

Fair Values of Financial Instruments

 

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts payable, and short-term loans approximate their fair values because of the relatively short-term maturity of these instruments, or for long-term debt based on borrowing rates currently available to the Company for loans with similar terms and maturities.

 

Note 2

Related Party Transactions

 

The Company had a note payable to a related party, TGE, in the amount of $-0- and $44,121 as of December 31, 2013 and 2012, respectively, bearing interest at a rate of 8.25%. All outstanding principal and interest was originally due and payable on December 15, 2010 and such date was extended several times to January 15, 2014. Effective May 31, 2013, the Company sold all of its assets relating to its vibration isolation products to TGE for a price of $62,161, which was the outstanding principal balance and accrued interest on the note due as of May 31, 2013. The assets included the existing product inventory and other assets, which was $1,155 and $474, respectively, at May 31, 2013, assembly devices, drawings, trade name and related intellectual property. The note payable to TGE has been satisfied by the exchange of the note for the assets, which extinguished the Company’s obligation to TGE.

 

AVT had granted the Company a non-exclusive world-wide license to sell its products under the patents AVT held (“AVT License”). The AVT License terminated on December 31, 2012 because AVT sold its business to a third party that is a competitor with the products of Aurios. As a result, earlier this year the Company indicated that it intended to sell its remaining inventory and this transaction helped the Company achieve this goal, as well as reduce its debt. Given the related party nature of the debt, the debt extinguished in excess of the carrying value of the assets was recorded as a contribution to capital in the amount of $61,812.

 

F-9
 

 

AURIOS INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

 

Note 2

Related Party Transactions (Continued)

 

On March 26, 2010, TGE, the Company’s affiliate and former parent, assigned the Company its federally registered trademark “Aurios” in consideration for a payment of $100. On April 1, 2010, TGE assumed ownership from the Company of all parts and raw materials maintained in the inventory. The Company maintained only a finished goods inventory. Total purchases from TGE for the years ended December 31, 2013 and 2012 were $-0- and $8,223, respectively.

 

On December 15, 2010, the Company issued convertible promissory notes in the amount of $10,000 each to Ira J. Gaines, Paul Attaway, and Christian J. Hoffmann III, all of whom are principal shareholders of the Company, for a total of $30,000 that they loaned to the Company. Each note bears interest at a rate of 6.0% per annum with principal and interest due on December 14, 2011. In December 2011, the maturity date of the notes and, along with accrued interest, were extended to December 14, 2013. In December 2013, maturity was extended to December 15, 2014. The notes and any accrued interest are convertible into common stock of the Company at a rate of $0.30 per share. As of December 31, 2013 and 2012, there was accrued interest on the notes of $5,350 and $3,721, respectively. In addition, each note holder was issued 33,333 common stock warrants for a total of 99,999 warrants. The warrants vested immediately, have an exercise price of $0.30 per share and have a 10-year term expiring December 14, 2020. As a result of the warrants and the conversion feature, a discount was recorded on the debt in the amount of $15,000. The discount was amortized over the original one-year term of the debt.

 

On August 14, 2012, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann III, respectively all of whom are principal shareholders of the Company, advanced a total of $6,820 to the Company. Each advance bears interest at a rate of 6.0% per annum, with principal and interest due on September 14, 2014. The notes and accrued interest on the notes are convertible into common stock of the Company at a rate of $0.30 per share. On November 26, 2012, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann III, respectively all of whom are principal shareholders of the Company, advanced a total of $7,000 to the Company. Each advance bears interest at a rate of 6.0% per annum, with principal and interest due on November 26, 2014. The notes and accrued interest on the notes are convertible into common stock of the Company at a rate of $0.30 per share. As of December 31, 2013 and 2012, there was combined accrued interest on the August 2012 and November 2012 notes of $829 and nil, respectively.

 

On April 12, 2013, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann, all of whom are principal shareholders of the Company, advanced a total of $7,025. We repaid these advances in September 2013 with interest at the rate of 6% per annum totaling approximately $116.

 

On November 25, 2013, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann, III, respectively, all of whom are principal shareholders of the Company, advanced a total of $3,000 to the Company. Each advance bears interest at a rate of 6.0% per annum, with principal and interest due on November 24, 2014. As of December 31, 2013, there was accrued interest on the advances of $17.

 

During the years ended December 31, 2013 and 2012, the Company paid $13,248 and $13,772, respectively, in legal services to a firm in which a principal stockholder of Aurios is a partner. He also performed or supervised the legal services rendered by his law firm to the Company until it ceased its representation of the Company during 2013. As of December 31, 2013 and 2012, the Company owed its former law firm $70,897 and $58,760, respectively. In addition, on December 31, 2010, the Company issued a note to such firm representing $44,248 in outstanding invoices that the Company owed. The note bears interest at a rate of 3.0% per annum, with all outstanding principal and interest due on January 15, 2012, or earlier upon the occurrence of certain events. In January 2012, the maturity date of the note was extended to January 14, 2013. In January 2013, maturity was extended to January 15, 2014. In January 2014, the maturity was extended to December 15, 2014. The note is convertible into shares of the Company’s common stock at a rate of $0.30 per share. As of December 31, 2013 and 2012, there was accrued interest on the note of $4,041 and $2,695, respectively. The law firm was also issued 147,490 common stock warrants, which vested immediately, have an exercise price of $0.30 per share, and have a 10-year term expiring December 30, 2020. As a result of the warrants and the conversion feature, a discount was recorded on the debt in the amount of $22,124 in 2010. The discount was amortized over the original one year term of the debt. During the years ended December 31, 2013 and 2012, the Company recorded interest expense related to the discount of $0 and $1,702, respectively. As of December 31, 2013 and 2012, there was no remaining unamortized discount.

 

F-10
 

 

AURIOS INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

 

Note 2

Related Party Transactions (Continued)

 

The convertible debts’ if-converted value is less than the carrying amount of its principal and accrued interest by approximately $72,000 at December 31, 2013.

 

Note 3

Concentration of Credit Risk

 

The Company maintains cash accounts at a financial institution. At December 31, 2013 and 2012, the Company had no uninsured cash and cash equivalents.

 

For the year ended December 31, 2012, the Company had 93% of sales to four customers. As of December 31, 2012 receivables from these customers were $0.

 

Note 4

Other Income

 

On November 10, 2011 the Company entered into an agreement with FastLane Retail Systems, Inc. (“FastLane”) under which it agreed to negotiate only with FastLane regarding a possible transaction until January 10, 2012. FastLane paid the Company $16,500 in consideration for entering into this agreement. The payment was non-refundable except if the Company violated its terms. The agreement expired on January 10, 2012 with no definitive agreement between the parties and the income was recognized at that time as other income.

 

On February 3, 2012 the Company entered into another agreement with FastLane under which it agreed to negotiate only with FastLane regarding a possible transaction. FastLane paid the Company $10,000 in consideration for entering into this agreement, which was to expire on March 30, 2012. The payment was non-refundable except if the Company violated its terms. The agreement expired on March 30, 2012 with no definitive agreement between the parties and the income was recognized at that time as other income.

 

On March 27, 2012 the Company entered into another agreement with FastLane under which it agreed to negotiate only with FastLane regarding a possible transaction. FastLane paid the Company $15,000 in consideration for entering into this agreement, which expired on May 1, 2012. The payment was non-refundable except if the Company violated its terms. The agreement expired on May 1, 2012 with no definitive agreement between the parties and the income was recognized at that time as other income.

 

On April 30, 2012 the Company entered into another agreement with FastLane under which it agreed to negotiate only with FastLane regarding a possible transaction. FastLane paid the Company $9,150 in consideration for entering into this agreement, which was to expire on May 30, 2012. The payment was non-refundable except if the Company violates its terms. The agreement expired on May 30, 2012 with no definitive agreement between the parties and the income was recognized at that time as other income.

 

F-11
 

 

AURIOS INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

 

The Company received a deposit of $12,000 in February 2013 from a third party with whom it was discussing a possible merger transaction. Such deposit was forfeited when no transaction occurred between the parties and was recognized at that time as other income.

 

On July 31, 2013 Argent Offset, LLC, a third party, advanced $10,000 to the Company. The promissory note that the Company issued to the lender bears interest at the rate of 10% per annum and is due 180 days from the date of issuance. The note is unsecured and the Company used the proceeds for working capital. The Company and Argent entered into a standstill agreement in September 2013 in anticipation of a possible transaction between them. Argent made payments of $10,200 under such agreement. Argent subsequently defaulted under the agreement and the note was cancelled and the Company retained all amounts Argent loaned and paid to the Company under the terms of the agreement.

 

Note 5

Stockholders’ Equity (Deficit)

 

Stock Options:

 

The Company, under its 2007 Stock Option Plan, is authorized to grant options for up to 625,000 shares of common stock, no par value. Options may be granted as incentive stock options or nonqualified stock options. Incentive stock options shall not be granted at less than one hundred percent (100%) of the fair market value of the common stock on the date of the grant, and have exercise terms of up to ten years with vesting periods determined at the discretion of the Company’s board of directors. As of December 31, 2013 no stock options had been granted.

 

Warrants:

 

The fair value of warrant grants is estimated as of the date of grant utilizing the Black-Scholes option-pricing model with the following weighted average assumptions for all grants: 5 year expected life of warrants using the “plain vanilla method”, which management believes approximates the actual expected term, risk-free interest rates of 2.01% - 2.11%, volatility of approximately 32.4%, and a 0% dividend yield.

 

On December 15, 2010, the Company granted warrants to purchase shares of common stock at $0.30 per share to Ira Gaines, Paul Attaway, and Christian Hoffmann, III, respectively, all of whom are principal shareholders of the Company, each were issued 33,333 common stock warrants for a total of 99,999 total warrants. The warrants vested immediately, have an exercise price of $0.30 per share and have a 10 year term expiring December 14, 2020. The Company valued the warrants at $0.10 per warrant using the Black-Scholes option pricing model.

 

On December 31, 2010, the Company granted 147,490 warrants to purchase shares of common stock at $0.30 per share to its former law firm of Quarles & Brady LLP. The warrants vested immediately, have an exercise price of $0.30 per share and have a 10-year term expiring December 30, 2020. The Company valued the warrants at $0.10 per warrant using the Black-Scholes option pricing model.

 

Warrants Outstanding and Exercisable 
              
            Weighted 
            Average 
    Weighted       Remaining 
    Average   Aggregate   Contractual 
Number of   Exercise   Intrinsic   Life 
Shares   Price   Value   (In Years) 
                 
247,489   $0.30   $-    6.99 

 

F-12
 

 

AURIOS INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

 

Note 6

Income Taxes

 

The provisions for income tax expense consist of the following:

 

   Year Ended 
   December 31, 
  2013   2012 
Deferred:        
Income tax benefit at statutory rates  $8,700   $5,600 
Valuation allowance of net operating loss   (8,700)   (5,600)
   $-   $- 

 

The Company’s deferred tax asset consists of the following:

 

   2013   2012 
Deferred tax asset:          
Net operating loss carryforward  $182,500   $173,800 
Less: Valuation allowance   (182,500)   (173,800)
Net deferred tax asset  $-   $- 

 

As of December 31, 2013 and 2012, the Company had net operating loss carryforwards of approximately $468,000 and $446,000, respectively. The loss carryforwards, unless utilized, will expire from 2027 through 2033.

 

Our federal and state tax returns are subject to changes upon examination. For federal income tax purposes, years 2010 through 2013 are open for examination and for state income tax purposes the years 2009 through 2013 are open for examination.

 

Note 7

Subsequent Events

 

On January 3, 2014, we entered into a letter of intent (“LOI”) with iPure, Inc. for a possible merger transaction. Pursuant to the terms of the LOI, iPure was to deposit $150,000 into an escrow account on or before January 8, 2014 and $25,000 was released as a non-refundable deposit. As of January 31, 2014, iPure had failed to consummate the transaction and the deposit was forfeited.

 

F-13
 

 

AURIOS INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

 

Note 8

Going Concern

 

The Company has incurred an accumulated deficit and has had negative cash flows from its operations. Realization of the Company’s assets is dependent upon the Company’s ability to meet its future financing requirements and the success of future operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

The Company has no expansion plans that would require significant infusions of capital into its operations; however, it expects that it will need additional working capital in the next twelve months if it does not generate positive cash flow from operations. No assurances can be given that the Company will be able to raise such additional capital, when needed or at all, or that such capital, if available, will be on terms acceptable to the Company. If the Company is unable to raise additional funds, it could be required to either substantially reduce or terminate its operations.

 

F-14
 

 

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Provision for Income Tax Expense (Details) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Income Tax Disclosure [Abstract]    
Income tax benefit at statutory rates $ 8,700 $ 5,600
Valuation allowance of net operating loss (8,700) (5,600)
Total      
XML 15 R9.htm IDEA: XBRL DOCUMENT v2.4.0.8
Concentration of Credit Risk
12 Months Ended
Dec. 31, 2013
Risks and Uncertainties [Abstract]  
Concentration of Credit Risk

Note 3

Concentration of Credit Risk

 

The Company maintains cash accounts at a financial institution. At December 31, 2013 and 2012, the Company had no uninsured cash and cash equivalents.

 

For the year ended December 31, 2012, the Company had 93% of sales to four customers. As of December 31, 2012 receivables from these customers were $0.

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Related Party Transactions
12 Months Ended
Dec. 31, 2013
Related Party Transactions [Abstract]  
Related Party Transactions

Note 2

Related Party Transactions

 

The Company had a note payable to a related party, TGE, in the amount of $-0- and $44,121 as of December 31, 2013 and 2012, respectively, bearing interest at a rate of 8.25%. All outstanding principal and interest was originally due and payable on December 15, 2010 and such date was extended several times to January 15, 2014. Effective May 31, 2013, the Company sold all of its assets relating to its vibration isolation products to TGE for a price of $62,161, which was the outstanding principal balance and accrued interest on the note due as of May 31, 2013. The assets included the existing product inventory and other assets, which was $1,155 and $474, respectively, at May 31, 2013, assembly devices, drawings, trade name and related intellectual property. The note payable to TGE has been satisfied by the exchange of the note for the assets, which extinguished the Company’s obligation to TGE.

 

AVT had granted the Company a non-exclusive world-wide license to sell its products under the patents AVT held (“AVT License”). The AVT License terminated on December 31, 2012 because AVT sold its business to a third party that is a competitor with the products of Aurios. As a result, earlier this year the Company indicated that it intended to sell its remaining inventory and this transaction helped the Company achieve this goal, as well as reduce its debt. Given the related party nature of the debt, the debt extinguished in excess of the carrying value of the assets was recorded as a contribution to capital in the amount of $61,812.

 

On March 26, 2010, TGE, the Company’s affiliate and former parent, assigned the Company its federally registered trademark “Aurios” in consideration for a payment of $100. On April 1, 2010, TGE assumed ownership from the Company of all parts and raw materials maintained in the inventory. The Company maintained only a finished goods inventory. Total purchases from TGE for the years ended December 31, 2013 and 2012 were $-0- and $8,223, respectively.

 

On December 15, 2010, the Company issued convertible promissory notes in the amount of $10,000 each to Ira J. Gaines, Paul Attaway, and Christian J. Hoffmann III, all of whom are principal shareholders of the Company, for a total of $30,000 that they loaned to the Company. Each note bears interest at a rate of 6.0% per annum with principal and interest due on December 14, 2011. In December 2011, the maturity date of the notes and, along with accrued interest, were extended to December 14, 2013. In December 2013, maturity was extended to December 15, 2014. The notes and any accrued interest are convertible into common stock of the Company at a rate of $0.30 per share. As of December 31, 2013 and 2012, there was accrued interest on the notes of $5,350 and $3,721, respectively. In addition, each note holder was issued 33,333 common stock warrants for a total of 99,999 warrants. The warrants vested immediately, have an exercise price of $0.30 per share and have a 10-year term expiring December 14, 2020. As a result of the warrants and the conversion feature, a discount was recorded on the debt in the amount of $15,000. The discount was amortized over the original one-year term of the debt.

 

On August 14, 2012, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann III, respectively all of whom are principal shareholders of the Company, advanced a total of $6,820 to the Company. Each advance bears interest at a rate of 6.0% per annum, with principal and interest due on September 14, 2014. The notes and accrued interest on the notes are convertible into common stock of the Company at a rate of $0.30 per share. On November 26, 2012, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann III, respectively all of whom are principal shareholders of the Company, advanced a total of $7,000 to the Company. Each advance bears interest at a rate of 6.0% per annum, with principal and interest due on November 26, 2014. The notes and accrued interest on the notes are convertible into common stock of the Company at a rate of $0.30 per share. As of December 31, 2013 and 2012, there was combined accrued interest on the August 2012 and November 2012 notes of $829 and nil, respectively.

 

On April 12, 2013, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann, all of whom are principal shareholders of the Company, advanced a total of $7,025. We repaid these advances in September 2013 with interest at the rate of 6% per annum totaling approximately $116.

 

On November 25, 2013, Ira J. Gaines, Paul Attaway and Christian J. Hoffmann, III, respectively, all of whom are principal shareholders of the Company, advanced a total of $3,000 to the Company. Each advance bears interest at a rate of 6.0% per annum, with principal and interest due on November 24, 2014. As of December 31, 2013, there was accrued interest on the advances of $17.

 

During the years ended December 31, 2013 and 2012, the Company paid $13,248 and $13,772, respectively, in legal services to a firm in which a principal stockholder of Aurios is a partner. He also performed or supervised the legal services rendered by his law firm to the Company until it ceased its representation of the Company during 2013. As of December 31, 2013 and 2012, the Company owed its former law firm $70,897 and $58,760, respectively. In addition, on December 31, 2010, the Company issued a note to such firm representing $44,248 in outstanding invoices that the Company owed. The note bears interest at a rate of 3.0% per annum, with all outstanding principal and interest due on January 15, 2012, or earlier upon the occurrence of certain events. In January 2012, the maturity date of the note was extended to January 14, 2013. In January 2013, maturity was extended to January 15, 2014. In January 2014, the maturity was extended to December 15, 2014. The note is convertible into shares of the Company’s common stock at a rate of $0.30 per share. As of December 31, 2013 and 2012, there was accrued interest on the note of $4,041 and $2,695, respectively. The law firm was also issued 147,490 common stock warrants, which vested immediately, have an exercise price of $0.30 per share, and have a 10-year term expiring December 30, 2020. As a result of the warrants and the conversion feature, a discount was recorded on the debt in the amount of $22,124 in 2010. The discount was amortized over the original one year term of the debt. During the years ended December 31, 2013 and 2012, the Company recorded interest expense related to the discount of $0 and $1,702, respectively. As of December 31, 2013 and 2012, there was no remaining unamortized discount.

 

The convertible debts’ if-converted value is less than the carrying amount of its principal and accrued interest by approximately $72,000 at December 31, 2013.

XML 19 R2.htm IDEA: XBRL DOCUMENT v2.4.0.8
Balance Sheets (USD $)
Dec. 31, 2013
Dec. 31, 2012
Current Assets:    
Cash $ 758 $ 318
Inventory    2,310
Other assets    474
Total Assets 758 3,102
Current Liabilities:    
Accounts payable 102,512 90,622
Accrued interest 10,506 23,150
Notes payable - related parties 91,068 36,820
Total Current Liabilities 204,086 150,592
Long Term Liabilities    
Notes payable - related parties 0 95,369
Total Liabilities 204,086 245,961
Stockholders' Equity / (Deficit):    
Convertible preferred stock - no par value; 10,000,000 shares authorized, no shares issued and outstanding      
Common stock - no par value; 90,000,000 shares authorized, 3,678,000 shares issued and outstanding at December 31, 3013 and 2012, respectively 197,795 197,795
Additional paid-in capital 98,936 37,124
Accumulated deficit (500,059) (477,778)
Total Stockholders' Equity / (Deficit) (203,328) (242,859)
Total Liabilities and Stockholders' Equity / (Deficit) $ 758 $ 3,102
XML 20 R6.htm IDEA: XBRL DOCUMENT v2.4.0.8
Statements of Cash Flows (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Cash flows from operating activities:    
Net loss $ (22,281) $ (14,388)
Adjustments to reconcile net loss to net cash used by operating activities:    
Amortization of debt discount    1,702
Inventory Reserve 1,155   
Changes in Assets and Liabilities:    
Accounts receivable    2,250
Inventory    (115)
Other assets    (474)
Accounts payable 13,168 683
Deferred income    (16,500)
Accrued interest 5,398 6,077
Net cash used by operating activities (2,560) (20,765)
Cash flows from financing activities:    
Proceeds from notes payable - related party 10,025 16,820
Repayment of notes payable - related party (7,025) (3,000)
Net cash provided by financing activities 3,000 13,820
Net change in cash and cash equivalents 440 (6,945)
Cash and cash equivalents at beginning of period 318 7,263
Cash and cash equivalents at end of period 758 318
Supplemental Information:    
Interest paid 116 1,018
Income taxes paid      
Non-cash investing and financing activities    
Related party debt and accrued interest converted to equity $ 61,812 $ 0
XML 21 R22.htm IDEA: XBRL DOCUMENT v2.4.0.8
Stockholders' Equity (Deficit) (Details Narrative) (USD $)
0 Months Ended 12 Months Ended
Dec. 31, 2010
Dec. 31, 2010
Dec. 15, 2010
Dec. 31, 2013
Percentage of fair market value for incentive stock options       100.00%
Warrant granted to purchase of common stock, price per share     $ 0.30  
Issuance of warrants to purchase of common stock     99,999  
Issuance of warrants to purchase of common stock, price per share $ 0.30 $ 0.30 $ 0.30  
Common Stock warrants maturity period   10 years 10 years 10 years
Warrants expiration date Dec. 30, 2020 Dec. 30, 2020 Dec. 14, 2020  
Warrant, price per unit 0.10 0.10 0.10  
Warrants granted   147,490   147,490
Warrants exercise price 0.30 0.30 0.30  
Ira J Gaines [Member]
       
Warrant granted to purchase of common stock, price per share     $ 0.30  
Issuance of warrants to purchase of common stock     33,333  
Paul Attaway [Member]
       
Warrant granted to purchase of common stock, price per share     $ 0.30  
Issuance of warrants to purchase of common stock     33,333  
Christian J. Hoffmann III [Member]
       
Warrant granted to purchase of common stock, price per share     $ 0.30  
Issuance of warrants to purchase of common stock     33,333  
Warrant [Member]
       
Warrants fair value assumptions, expected term       5 years
Warrants fair value assumptions, volatility rate       32.40%
Warrants fair value assumptions, dividend yield       0.00%
Warrant [Member] | Minimum [Member]
       
Warrants fair value assumptions, risk free interest rate       2.01%
Warrant [Member] | Maximum [Member]
       
Warrants fair value assumptions, risk free interest rate       2.11%
2007 Stock Option Plan [Member]
       
Maximum number of stock options authorized to grant       625,000
XML 22 R24.htm IDEA: XBRL DOCUMENT v2.4.0.8
Income Taxes (Details Narrative) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Income Tax Disclosure [Abstract]    
Net operating carry forward losses $ 468,000 $ 446,000
Expiration dates of carry forward losses expire from 2027 through 2033  
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Summary of Significant Accounting Policies, Nature of Operations and Use of Estimates
12 Months Ended
Dec. 31, 2013
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies, Nature of Operations and Use of Estimates

Note 1
Summary of Significant Accounting Policies, Nature of Operations and Use of Estimates

 

Nature of Corporation

 

Aurios Inc. (the “Company” or “we”) is a corporation which was formed under the laws of the State of Arizona on August 7, 2001. Its principal business activity was the marketing of vibration and motion control technology to the audio/video markets. The Company’s sales occurred throughout the United States. The Company is a former wholly-owned subsidiary of True Gravity Enterprises Inc. (“TGE”). On December 31, 2007, the principal shareholder, who is also a director and officer of the Company, purchased all of the stock owned by TGE. Through June 30, 2007, TGE paid all Company expenses including payroll and vendors. It charged the Company $1,500 per month as a rent and management fee. Beginning June 30, 2007, the Company began paying its vendors, but continued to contract with TGE for rent and for certain services performed by TGE. On February 25, 2010, TGE sold substantially all of its assets to Advanced Vibration Technologies Inc., an Arizona corporation (“AVT”). Pursuant to a Management and Rental Agreement between AVT and the Company, the Company entered into an agreement to pay AVT $1,500 per month for rent and certain management services. This agreement expired on July 31, 2010. The Company no longer pays a management or rental fee. Effective December 31, 2012, the AVT License that granted us a non-exclusive world-wide license to produce and sell our products was terminated. As such, we no longer have revenue generating operations. We are now a shell company with nominal assets and are seeking a new business opportunity.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are used when estimating the fair values of stock-based issuances, as well as the recoverability of inventory. These are discussed in the respective notes to the financial statements.

 

Revenue Recognition.

  

The Company previously derived its revenues primarily from the sale of vibration and motion control devices through sales from the Company’s website and its distributors. Revenues were recognized at the time the sale was completed and shipped. Once shipped, title to the products, as well as the risks and rewards of ownership, were passed to the customers.

 

Advertising Costs

 

Advertising costs are expensed as incurred. The Company incurred no advertising expense for the years ended December 31, 2013 and 2012.

 

Cash and Cash Equivalents

 

For financial accounting purposes, cash and cash equivalents are considered to be all highly liquid investments with a maturity of three (3) months or less at the time of purchase.

 

Accounts Receivable

 

The Company provided for potentially uncollectible accounts receivable by use of the allowance method. The allowance was provided based upon a review of the individual accounts outstanding and the Company’s prior history of uncollectible accounts receivable. The Company charged off uncollectible receivables when all reasonable collection efforts have been taken. As of December 31, 2013 and 2012, there was no provision for uncollectible trade accounts receivable. The Company does not accrue interest charges on delinquent accounts receivable. The accounts are generally unsecured.

 

Inventory

 

Inventory, consisting primarily of finished goods, are stated at the lower of cost (first-in, first-out method) or market value.

We regularly assess inventory quantities on hand and record provisions for excess and obsolete inventory based primarily on our estimated forecast of product demand. As of December 31, 2013 and 2012 there was no provision for obsolete inventory. Inventory at December 31, 2013 and 2012 was determined using a perpetual inventory system with periodic counts.

 

Deferred Income Taxes

 

Deferred income taxes are provided for under the asset and liability method, whereby deferred tax assets and liabilities are recognized for deductible temporary differences and operating loss carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that the carryforwards will not be utilized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company’s policy is to classify any interest and penalties to income tax expense in the financial statements. During the years ended December 31, 2013 and 2012, the Company did not incur any penalties or interest related to income taxes.

 

Discount on Debt

 

During the year ended December 31, 2010, the Company issued convertible debt instruments together with detachable warrants. This resulted in a beneficial conversion feature and the value of the warrants creating a discount on the debt. The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the straight line method which approximates the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense.

 

In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the common shares at the commitment date to be received upon conversion.

 

New Accounting Pronouncements

 

There have been no recent accounting pronouncements issued which are expected to have a material effect on the Company’s financial statements.

 

Stock-Based Compensation

 

The Company recognizes stock-based compensation based on the fair value of the award on the date of grant. The fair value of option and warrant grants is estimated as of the date of grant utilizing the Black-Scholes option-pricing model.

 

Earnings Per Share

 

The earnings per share accounting guidance provides for the calculation of basic and diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity.

 

As of December 31, 2013 and 2012, warrants to purchase 247,489 shares of the Company’s common stock were not included in the determination of diluted loss per share, as they were antidilutive, and would decrease the loss per share. In addition, the notes payable and related accrued interest, were convertible into 325,533 and 314,947 shares of common stock as of December 31, 2013 and 2012, respectively, which also would have been anti-dilutive and have been excluded in the calculation of loss per share.

 

Fair Values of Financial Instruments

 

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts payable, and short-term loans approximate their fair values because of the relatively short-term maturity of these instruments, or for long-term debt based on borrowing rates currently available to the Company for loans with similar terms and maturities.

XML 25 R3.htm IDEA: XBRL DOCUMENT v2.4.0.8
Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2013
Dec. 31, 2012
Statement of Financial Position [Abstract]    
Preferred stock, par value      
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued      
Preferred stock, shares outstanding      
Common stock, no par value      
Common stock, shares authorized 90,000,000 90,000,000
Common stock, shares issued 3,678,000 3,678,000
Common stock, shares outstanding 3,678,000 3,678,000
XML 26 R17.htm IDEA: XBRL DOCUMENT v2.4.0.8
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2013
Income Tax Disclosure [Abstract]  
Provision for Income Tax Expense

The provisions for income tax expense consist of the following:

 

    Year Ended  
    December 31,  
    2013     2012  
Deferred:            
Income tax benefit at statutory rates   $ 8,700     $ 5,600  
Valuation allowance of net operating loss     (8,700 )     (5,600 )
    $ -     $ -  

Schedule of Deferred Tax Asset

The Company’s deferred tax asset consists of the following:

 

    2013     2012  
Deferred tax asset:                
Net operating loss carryforward   $ 182,500     $ 173,800  
Less: Valuation allowance     (182,500 )     (173,800 )
Net deferred tax asset   $ -     $ -  

 

XML 27 R1.htm IDEA: XBRL DOCUMENT v2.4.0.8
Document and Entity Information (USD $)
12 Months Ended
Dec. 31, 2013
Mar. 11, 2014
Jun. 30, 2013
Document And Entity Information      
Entity Registrant Name Aurios Inc.    
Entity Central Index Key 0001434768    
Document Type 10-K    
Document Period End Date Dec. 31, 2013    
Amendment Flag false    
Current Fiscal Year End Date --12-31    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Filer Category Smaller Reporting Company    
Entity Public Float     $ 104,800
Entity Common Stock, Shares Outstanding   3,678,000  
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2013    
XML 28 R18.htm IDEA: XBRL DOCUMENT v2.4.0.8
Summary of Significant Accounting Policies, Nature of Operations and Use of Estimates (Details Narrative) (USD $)
12 Months Ended 0 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Jun. 30, 2007
True Gravity Enterprises Inc [Member]
Feb. 25, 2010
Advanced Vibration Technologies Inc [Member]
Payment for rent and management fee     $ 1,500 $ 1,500
Advertising expense 0 0    
Provision for uncollectable accounts receivable 0 0    
Warrants issued to purchase of common stock 247,489 247,489    
Provision for obsolete inventory $ 0 $ 0    
Notes payable and related accrued interest convertible into common stock 325,533 314,947    
XML 29 R4.htm IDEA: XBRL DOCUMENT v2.4.0.8
Statements of Operations (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Income Statement [Abstract]    
Sales    $ 8,908
Cost of Sales    7,884
Gross Profit    1,024
General and Administrative Expenses 48,824 57,185
Loss from Operations (48,824) (56,161)
Other (Income) / Expense (32,200) (50,570)
Interest Expense 5,657 8,797
Total Other (Income)/Expense (26,543) (41,773)
Net Income $ (22,281) $ (14,388)
Loss per shares - basic and diluted $ (0.01) $ 0
Weighted average shares outstanding 3,678,000 3,678,000
XML 30 R12.htm IDEA: XBRL DOCUMENT v2.4.0.8
Income Taxes
12 Months Ended
Dec. 31, 2013
Income Tax Disclosure [Abstract]  
Income Taxes

Note 6

Income Taxes

 

The provisions for income tax expense consist of the following:

 

    Year Ended  
    December 31,  
    2013     2012  
Deferred:            
Income tax benefit at statutory rates   $ 8,700     $ 5,600  
Valuation allowance of net operating loss     (8,700 )     (5,600 )
    $ -     $ -  

 

The Company’s deferred tax asset consists of the following:

 

    2013     2012  
Deferred tax asset:                
Net operating loss carryforward   $ 182,500     $ 173,800  
Less: Valuation allowance     (182,500 )     (173,800 )
Net deferred tax asset   $ -     $ -  

 

As of December 31, 2013 and 2012, the Company had net operating loss carryforwards of approximately $468,000 and $446,000, respectively. The loss carryforwards, unless utilized, will expire from 2027 through 2033.

 

Our federal and state tax returns are subject to changes upon examination. For federal income tax purposes, years 2010 through 2013 are open for examination and for state income tax purposes the years 2009 through 2013 are open for examination.

XML 31 R11.htm IDEA: XBRL DOCUMENT v2.4.0.8
Stockholders' Equity (Deficit)
12 Months Ended
Dec. 31, 2013
Stockholders' Equity Note [Abstract]  
Stockholders' Equity (Deficit)

Note 5

Stockholders’ Equity (Deficit)

 

Stock Options:

 

The Company, under its 2007 Stock Option Plan, is authorized to grant options for up to 625,000 shares of common stock, no par value. Options may be granted as incentive stock options or nonqualified stock options. Incentive stock options shall not be granted at less than one hundred percent (100%) of the fair market value of the common stock on the date of the grant, and have exercise terms of up to ten years with vesting periods determined at the discretion of the Company’s board of directors. As of December 31, 2013 no stock options had been granted.

 

Warrants:

 

The fair value of warrant grants is estimated as of the date of grant utilizing the Black-Scholes option-pricing model with the following weighted average assumptions for all grants: 5 year expected life of warrants using the “plain vanilla method”, which management believes approximates the actual expected term, risk-free interest rates of 2.01% - 2.11%, volatility of approximately 32.4%, and a 0% dividend yield.

 

On December 15, 2010, the Company granted warrants to purchase shares of common stock at $0.30 per share to Ira Gaines, Paul Attaway, and Christian Hoffmann, III, respectively, all of whom are principal shareholders of the Company, each were issued 33,333 common stock warrants for a total of 99,999 total warrants. The warrants vested immediately, have an exercise price of $0.30 per share and have a 10 year term expiring December 14, 2020. The Company valued the warrants at $0.10 per warrant using the Black-Scholes option pricing model.

 

On December 31, 2010, the Company granted 147,490 warrants to purchase shares of common stock at $0.30 per share to its former law firm of Quarles & Brady LLP. The warrants vested immediately, have an exercise price of $0.30 per share and have a 10-year term expiring December 30, 2020. The Company valued the warrants at $0.10 per warrant using the Black-Scholes option pricing model.

 

Warrants Outstanding and Exercisable  
                     
                  Weighted  
                  Average  
      Weighted           Remaining  
      Average     Aggregate     Contractual  
Number of     Exercise     Intrinsic     Life  
Shares     Price     Value     (In Years)  
                           
247,489     $ 0.30     $ -       6.99  

XML 32 R23.htm IDEA: XBRL DOCUMENT v2.4.0.8
Warrants Outstanding and Exercisable (Details) (USD $)
12 Months Ended
Dec. 31, 2013
Stockholders' Equity Note [Abstract]  
Warrants Outstanding and Exercisable, Number of Shares 247,489
Warrants Outstanding and Exercisable, Weighted Average Exercise Price $ 0.30
Warrants Outstanding and Exercisable, Aggregate Intrinsic Value   
Warrants Outstanding and Exercisable, Weighted Average Remaining Contractual Life (In Years) 6 years 11 months 27 days
XML 33 R19.htm IDEA: XBRL DOCUMENT v2.4.0.8
Related Party Transactions (Details Narrative) (USD $)
0 Months Ended 12 Months Ended 0 Months Ended 0 Months Ended 4 Months Ended 0 Months Ended 0 Months Ended
May 31, 2013
Dec. 31, 2010
Dec. 31, 2010
Dec. 15, 2010
Mar. 26, 2010
Dec. 31, 2013
Dec. 31, 2012
Jul. 31, 2013
Nov. 26, 2012
Aug. 14, 2012
Nov. 25, 2013
Ira J Gaines [Member]
Apr. 12, 2013
Ira J Gaines [Member]
Nov. 26, 2012
Ira J Gaines [Member]
Aug. 14, 2012
Ira J Gaines [Member]
Nov. 26, 2013
Ira J Gaines [Member]
Sep. 30, 2013
Ira J Gaines [Member]
Dec. 15, 2010
Ira J Gaines [Member]
Nov. 25, 2013
Paul Attaway [Member]
Nov. 26, 2012
Paul Attaway [Member]
Aug. 14, 2012
Paul Attaway [Member]
Aug. 12, 2013
Paul Attaway [Member]
Sep. 30, 2013
Paul Attaway [Member]
Dec. 15, 2010
Paul Attaway [Member]
Nov. 25, 2013
Christian J. Hoffmann III [Member]
Nov. 26, 2012
Christian J. Hoffmann III [Member]
Aug. 14, 2012
Christian J. Hoffmann III [Member]
Sep. 30, 2013
Christian J. Hoffmann III [Member]
Dec. 15, 2010
Christian J. Hoffmann III [Member]
Apr. 12, 2013
Christian J Hoffmann [Member]
Notes payable to TGE           $ 0 $ 44,121                                            
Interest rate on notes payable   3.00% 3.00%       8.25% 10.00%     6.00%     6.00% 6.00%   6.00% 6.00% 6.00% 6.00%     6.00% 6.00% 6.00% 6.00%   6.00%  
Sold all of assets relating vibration isolation products to TGE 62,161                                                        
Accrued interest for notes payable           1,155 474                                            
Capital contribution           61,812                                              
Payment for trademark         100                                                
Goods purchased from TGE           0 8,223                                            
Issued convertible promissory notes, amount       30,000                         10,000           10,000         10,000  
Common stock conversion rate per share       $ 0.30   $ 0.30       $ 0.30                                      
Accrued interest on notes           5,350 3,721   0 829                                      
Accrued interest current and non current           17                                              
Common stock warrants to note holders       99,999                         33,333           33,333         33,333  
Warrants exercise price   0.30 0.30 0.30                                                  
Common Stock warrants maturity period     10 years 10 years   10 years                                              
Warrants expiration date   Dec. 30, 2020 Dec. 30, 2020 Dec. 14, 2020                                                  
Discount on debt   22,124   15,000                                                  
Advanced to company                     3,000 7,025 7,000 6,820       3,000 7,000 6,820 7,025     3,000 7,000 6,820     7,025
Percentage of repayment interest to advances                               6.00%           6.00%         6.00%    
Repayment of Advances to affiliates                               116           116         116    
Unamortized discount against debt           0 1,702                                            
Payment of legal services           13,248 13,772                                            
Obligations owed to law firm           70,897 58,760                                            
Notes issued   44,248 44,248                                                    
Notes and accrued interest, extended maturity date   2014-01-15       2014-01-15         2014-11-24             2014-11-24           2014-11-24          
Accrued interest other notes           4,041 2,695                                            
Common stock warrants issued by law firm     147,490     147,490                                              
Convertible debt           $ 72,000                                              
XML 34 R15.htm IDEA: XBRL DOCUMENT v2.4.0.8
Summary of Significant Accounting Policies, Nature of Operations and Use of Estimates (Policies)
12 Months Ended
Dec. 31, 2013
Accounting Policies [Abstract]  
Nature of Corporation

Nature of Corporation

 

Aurios Inc. (the “Company” or “we”) is a corporation which was formed under the laws of the State of Arizona on August 7, 2001. Its principal business activity was the marketing of vibration and motion control technology to the audio/video markets. The Company’s sales occurred throughout the United States. The Company is a former wholly-owned subsidiary of True Gravity Enterprises Inc. (“TGE”). On December 31, 2007, the principal shareholder, who is also a director and officer of the Company, purchased all of the stock owned by TGE. Through June 30, 2007, TGE paid all Company expenses including payroll and vendors. It charged the Company $1,500 per month as a rent and management fee. Beginning June 30, 2007, the Company began paying its vendors, but continued to contract with TGE for rent and for certain services performed by TGE. On February 25, 2010, TGE sold substantially all of its assets to Advanced Vibration Technologies Inc., an Arizona corporation (“AVT”). Pursuant to a Management and Rental Agreement between AVT and the Company, the Company entered into an agreement to pay AVT $1,500 per month for rent and certain management services. This agreement expired on July 31, 2010. The Company no longer pays a management or rental fee. Effective December 31, 2012, the AVT License that granted us a non-exclusive world-wide license to produce and sell our products was terminated. As such, we no longer have revenue generating operations. We are now a shell company with nominal assets and are seeking a new business opportunity.

Use of Estimates

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are used when estimating the fair values of stock-based issuances, as well as the recoverability of inventory. These are discussed in the respective notes to the financial statements.

Revenue Recognition

Revenue Recognition

 

The Company previously derived its revenues primarily from the sale of vibration and motion control devices through sales from the Company’s website and its distributors. Revenues were recognized at the time the sale was completed and shipped. Once shipped, title to the products, as well as the risks and rewards of ownership, were passed to the customers.

Advertising Costs

Advertising Costs

 

Advertising costs are expensed as incurred. The Company incurred no advertising expense for the years ended December 31, 2013 and 2012.

Cash and Cash Equivalents

Cash and Cash Equivalents

 

For financial accounting purposes, cash and cash equivalents are considered to be all highly liquid investments with a maturity of three (3) months or less at the time of purchase.

Accounts Receivable

Accounts Receivable

 

The Company provided for potentially uncollectible accounts receivable by use of the allowance method. The allowance was provided based upon a review of the individual accounts outstanding and the Company’s prior history of uncollectible accounts receivable. The Company charged off uncollectible receivables when all reasonable collection efforts have been taken. As of December 31, 2013 and 2012, there was no provision for uncollectible trade accounts receivable. The Company does not accrue interest charges on delinquent accounts receivable. The accounts are generally unsecured.

Inventory

Inventory

 

Inventory, consisting primarily of finished goods, are stated at the lower of cost (first-in, first-out method) or market value.

We regularly assess inventory quantities on hand and record provisions for excess and obsolete inventory based primarily on our estimated forecast of product demand. As of December 31, 2013 and 2012 there was no provision for obsolete inventory. Inventory at December 31, 2013 and 2012 was determined using a perpetual inventory system with periodic counts.

Deferred Income Taxes

Deferred Income Taxes

 

Deferred income taxes are provided for under the asset and liability method, whereby deferred tax assets and liabilities are recognized for deductible temporary differences and operating loss carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that the carryforwards will not be utilized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company’s policy is to classify any interest and penalties to income tax expense in the financial statements. During the years ended December 31, 2013 and 2012, the Company did not incur any penalties or interest related to income taxes.

Discount on Debt

Discount on Debt

 

During the year ended December 31, 2010, the Company issued convertible debt instruments together with detachable warrants. This resulted in a beneficial conversion feature and the value of the warrants creating a discount on the debt. The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the straight line method which approximates the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense.

 

In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the common shares at the commitment date to be received upon conversion.

New Accounting Pronouncements

New Accounting Pronouncements

 

There have been no recent accounting pronouncements issued which are expected to have a material effect on the Company’s financial statements.

Stock-Based Compensation

Stock-Based Compensation

 

The Company recognizes stock-based compensation based on the fair value of the award on the date of grant. The fair value of option and warrant grants is estimated as of the date of grant utilizing the Black-Scholes option-pricing model.

Earnings Per Share

Earnings Per Share

 

The earnings per share accounting guidance provides for the calculation of basic and diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity.

 

As of December 31, 2013 and 2012, warrants to purchase 247,489 shares of the Company’s common stock were not included in the determination of diluted loss per share, as they were antidilutive, and would decrease the loss per share. In addition, the notes payable and related accrued interest, were convertible into 325,533 and 314,947 shares of common stock as of December 31, 2013 and 2012, respectively, which also would have been anti-dilutive and have been excluded in the calculation of loss per share.

Fair Values of Financial Instruments

Fair Values of Financial Instruments

 

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts payable, and short-term loans approximate their fair values because of the relatively short-term maturity of these instruments, or for long-term debt based on borrowing rates currently available to the Company for loans with similar terms and maturities.

XML 35 R13.htm IDEA: XBRL DOCUMENT v2.4.0.8
Subsequent Events
1 Months Ended
Dec. 31, 2013
Subsequent Events [Abstract]  
Subsequent Events

Note 7

Subsequent Events

 

On January 3, 2014, we entered into a letter of intent (“LOI”) with iPure, Inc. for a possible merger transaction. Pursuant to the terms of the LOI, iPure was to deposit $150,000 into an escrow account on or before January 8, 2014 and $25,000 was released as a non-refundable deposit. As of January 31, 2014, iPure had failed to consummate the transaction and the deposit was forfeited.

XML 36 R14.htm IDEA: XBRL DOCUMENT v2.4.0.8
Going Concern
12 Months Ended
Dec. 31, 2013
Going Concern  
Going Concern

Note 8

Going Concern

 

The Company has incurred an accumulated deficit and has had negative cash flows from its operations. Realization of the Company’s assets is dependent upon the Company’s ability to meet its future financing requirements and the success of future operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

The Company has no expansion plans that would require significant infusions of capital into its operations; however, it expects that it will need additional working capital in the next twelve months if it does not generate positive cash flow from operations. No assurances can be given that the Company will be able to raise such additional capital, when needed or at all, or that such capital, if available, will be on terms acceptable to the Company. If the Company is unable to raise additional funds, it could be required to either substantially reduce or terminate its operations.

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Stockholders' Equity (Deficit) (Tables)
12 Months Ended
Dec. 31, 2013
Stockholders' Equity Note [Abstract]  
Warrants Outstanding and Exercisable

The Company valued the warrants at $0.10 per warrant using the Black-Scholes option pricing model.

 

Warrants Outstanding and Exercisable  
                     
                  Weighted  
                  Average  
      Weighted           Remaining  
      Average     Aggregate     Contractual  
Number of     Exercise     Intrinsic     Life  
Shares     Price     Value     (In Years)  
                           
247,489     $ 0.30     $ -       6.99  

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Other Income (Details Narrative) (USD $)
0 Months Ended 1 Months Ended
Jul. 31, 2013
Apr. 30, 2012
Mar. 27, 2012
Feb. 03, 2012
Nov. 10, 2011
Dec. 31, 2013
Feb. 28, 2013
Dec. 31, 2012
Dec. 31, 2010
Other Income and Expenses [Abstract]                  
Proceeds received by entering agreement with FastLane Retail Systems, Inc.   $ 9,150 $ 15,000 $ 10,000 $ 16,500        
Proceeds from third party $ 10,000         $ 10,200 $ 12,000    
Interest rate on notes payable 10.00%             8.25% 3.00%
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Income Taxes - Schedule of Deferred Tax Asset (Details) (USD $)
Dec. 31, 2013
Dec. 31, 2012
Income Tax Disclosure [Abstract]    
Net operating loss carryforward $ 182,500 $ 173,800
Less: Valuation allowance (182,500) (173,800)
Net deferred tax asset      
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Statements of Changes in Stockholders' Equity (Deficit) (USD $)
Common Stock [Member]
Preferred Stock [Member]
Additional Paid-In Capital [Member]
Accumulated Deficit [Member]
Total
Balance at Dec. 31, 2011 $ 197,795    $ 37,124 $ (463,390) $ (228,471)
Balance, shares at Dec. 31, 2011 3,678,000        
Net loss       (14,388) (14,388)
Balance at Dec. 31, 2012 197,795    37,124 (477,778) (242,859)
Balance, shares at Dec. 31, 2012 3,678,000        
Capital contribution     61,812   61,812
Net loss       (22,281) (22,281)
Balance at Dec. 31, 2013 $ 197,795   $ 98,936 $ (500,059) $ (203,328)
Balance, shares at Dec. 31, 2013 3,678,000        
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Other Income
12 Months Ended
Dec. 31, 2013
Other Income and Expenses [Abstract]  
Other Income

Note 4

Other Income

 

On November 10, 2011 the Company entered into an agreement with FastLane Retail Systems, Inc. (“FastLane”) under which it agreed to negotiate only with FastLane regarding a possible transaction until January 10, 2012. FastLane paid the Company $16,500 in consideration for entering into this agreement. The payment was non-refundable except if the Company violated its terms. The agreement expired on January 10, 2012 with no definitive agreement between the parties and the income was recognized at that time as other income.

 

On February 3, 2012 the Company entered into another agreement with FastLane under which it agreed to negotiate only with FastLane regarding a possible transaction. FastLane paid the Company $10,000 in consideration for entering into this agreement, which was to expire on March 30, 2012. The payment was non-refundable except if the Company violated its terms. The agreement expired on March 30, 2012 with no definitive agreement between the parties and the income was recognized at that time as other income.

 

On March 27, 2012 the Company entered into another agreement with FastLane under which it agreed to negotiate only with FastLane regarding a possible transaction. FastLane paid the Company $15,000 in consideration for entering into this agreement, which expired on May 1, 2012. The payment was non-refundable except if the Company violated its terms. The agreement expired on May 1, 2012 with no definitive agreement between the parties and the income was recognized at that time as other income.

 

On April 30, 2012 the Company entered into another agreement with FastLane under which it agreed to negotiate only with FastLane regarding a possible transaction. FastLane paid the Company $9,150 in consideration for entering into this agreement, which was to expire on May 30, 2012. The payment was non-refundable except if the Company violates its terms. The agreement expired on May 30, 2012 with no definitive agreement between the parties and the income was recognized at that time as other income.

 

The Company received a deposit of $12,000 in February 2013 from a third party with whom it was discussing a possible merger transaction. Such deposit was forfeited when no transaction occurred between the parties and was recognized at that time as other income.

 

On July 31, 2013 Argent Offset, LLC, a third party, advanced $10,000 to the Company. The promissory note that the Company issued to the lender bears interest at the rate of 10% per annum and is due 180 days from the date of issuance. The note is unsecured and the Company used the proceeds for working capital. The Company and Argent entered into a standstill agreement in September 2013 in anticipation of a possible transaction between them. Argent made payments of $10,200 under such agreement. Argent subsequently defaulted under the agreement and the note was cancelled and the Company retained all amounts Argent loaned and paid to the Company under the terms of the agreement.

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Subsequent Events (Details Narrative) (IPure, Inc [Member], Subsequent Event [Member], USD $)
Jan. 03, 2014
IPure, Inc [Member] | Subsequent Event [Member]
 
Escrow deposit $ 150,000
Released non refundable escrow deposit $ 25,000
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Concentration of Credit Risk (Details Narrative) (USD $)
12 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Risks and Uncertainties [Abstract]    
Uninsured cash and cash equivalents $ 0 $ 0
Percentage of sales to four customers 93.00%  
Receivables from sales to customers $ 0 $ 0