GFOO Genufood Energy Enzymes Corporation (CE)

Notes to Unaudited Consolidated Financial Statements

NOTE 1- BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Business Operations

GenuFood Energy Enzymes Corp., USA (the “Company” or “GEEC”) was incorporated under the laws of the State of Nevada on June 21, 2010.  GEEC is a start-up company and its main focus is to promote market, distribute and export a range of enzyme products for human and animal consumption manufactured in the Unites States for the Asian and ASEAN markets.  The Company is the owner of the following trademarks,   ProCellax and ProAnilax.    These trademarks and GEEC as a trademark have been filed with the United States Patent and Trademark Office and registered with China (PRC), Hong Kong, Macau, Taiwan and Singapore.  Similarly, these trademarks have been filed with the jurisdictions of Thailand, Malaysia, and Sri Lanka.

The Company’s objective is to commence marketing and distribution of American range of enzyme products for human and animal consumption to sole country distributors, wholesalers, dealers and retailers, as well as to the general public following the Company’s Multi-Level Marketing – Franchise Investor Dealer Related (MLM-FIDR) concept, to begin with, in Taiwan, and then to China, Hong Kong, Macau, Thailand, Malaysia, Singapore and Sri Lanka.

On May 24, 2011, GEEC Internet Sales (Private) Limited (“GEECIS”), a wholly owned subsidiary of GEEC, was established in the Democratic Socialist Republic of Sri Lanka.  GEECIS is established initially to be responsible for GEEC’s internet sales worldwide, but recently its role has been changed to that of a Sole Country Distributor.

On February 13, 2012 the Company invested and incorporated a wholly owned subsidiary company, GEEC Enzymes (S) Pte Ltd (GESPL) in Singapore with a view to be the Sole Country Distributor for ProCellax and ProAnilax in Singapore. GESPL has started initial test marketing for the range of ProCellax enzymes products.

On May 2, 2013, GESPL entered into a Lease Agreement with Harmony Convention Holdings Pte Ltd to lease a store premises at Suntec City Mall for a period of three years.

On August 8, 2013, GEECIS changed the company name from GEEC Internet Sales (Private) Limited to Genufood Enzymes Lanka (Private) Limited (“GELPL”).

On April 9, 2014, GESPL entered into a License Agreement with City Square Mall, City Developments Limited to lease a pushcart store for a period of two month with option to renew.

On May 14, 2014, GESPL entered into a Consignment Agreement with Nature’s Farm Pte Ltd to display and for resale Procellax range of enzyme products at six stores / locations throughout Singapore.

To-date GEPSL has a total of eight stores in Singapore for displaying and for resale of Procellax range of enzyme products whether under lease, consignment or license.

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All significant inter-company accounts and transactions have been eliminated in consolidation.

The Company is in its development stage with no significant revenues.  The Company’s initial operations include organization, capital formation, target markets identification and developing marketing plans.  

The Company’s fiscal year end is September 30.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’s unaudited consolidated financial statements included herein have been prepared in accordance with US GAAP and pursuant to the rules of the SEC.  The Company believes that the presentations and disclosures herein are adequate for a fair presentation. 

Development Stage Activities

The accompanying unaudited consolidated financial statements have been prepared in accordance with ASC 915-10-05,  Development Stage Entities.  A development - stage company is one in which planned principal operations have not commenced or, if its operations have commenced, but there have been no significant revenues.

Use of Estimates

The preparation of the unaudited consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  

Revenue Recognition

Our revenues are generated from sales of enzyme products under our private label.

For sales of enzyme products under our private label – the Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company recognizes revenue when it is realized or realizable and reduces it for the amount of estimated future doubtful accounts.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the products have been shipped to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

Foreign Currency Translation and Transactions

The reporting and functional currency of GEEC is the United States Dollar (“U.S. dollar”).  The functional currency of GELPL, a wholly owned subsidiary of GEEC, is the Sri Lanka Rupee (“LKR”).  The functional currency of GESPL, a wholly owned subsidiary of GEEC, is the Singapore Dollar (“SGD”).

For financial reporting purposes, the financial statements of the Company’s Sri Lanka subsidiary, which are prepared using the LKR, are translated into the Company’s reporting currency, the U.S. dollar.  Assets and liabilities are translated using the exchange rate on the balance sheet date, which was 0.0076 and 0.0079 as of March 31, 2014 and 2013, respectively.  Revenue and expenses are translated using average exchange rates prevailing during each reporting period.  The 0.0076 and 0.0079 average exchange rates were used to translate revenues and expenses for the reporting period ended March 31, 2014 and 2013, respectively.  Stockholders’ equity is translated at historical exchange rates.  Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in stockholders’ equity.

For financial reporting purposes, the financial statements of the Company’s Singapore subsidiary, which are prepared using the SGD, are translated into the Company’s reporting currency, the U.S. dollar.  Assets and liabilities are translated using the exchange rate on the balance sheet date, which was 0.79397 and 0.806 as of March 31, 2014 and 2013, respectively.  Revenue and expenses are translated using average exchange rates prevailing during each reporting period.  The 0.7939 and 0.8081 average exchange rates were used to translate revenues and expenses for the reporting period ended March 31, 2014 and 2013.  Stockholders’ equity is translated at historical exchange rates.  Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in stockholders’ equity.

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions.  The resulting exchange differences are included in the statements of operations.

No representation is made that the LKR or SGD amounts could have been, or could be converted into U.S. dollar at the above rates.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with original maturities of three months or less when acquired to be cash equivalents.  The Company places the majority of its cash and cash equivalents with financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000.  As of March 31, 2014, the Company had $666,191 cash in banks, $590,784 of which with one financial institution, which is $340,784 in excess of FDIC limit.  The Company mitigates this concentration of credit risk by monitoring the credit worthiness of financial institutions and its customers. 

In October 2008, the Federal government temporarily increased the FDIC insured limits up to a maximum of $250,000 per depositor.

From time to time, the Company may issue convertible debt that may have conversion prices that create an embedded beneficial conversion feature pursuant to the Emerging Issues Task Force guidance on beneficial conversion features.  A beneficial conversion feature exists on the date a convertible liability is issued when the fair value of the underlying common stock to which the liability is convertible into is in excess of the face value of the liability.  In accordance with this guidance, the intrinsic value of the beneficial conversion feature is recorded as a discount on the liability with a corresponding amount to additional paid in capital.  The debt discount is amortized to interest expense over the term of the liability using the effective interest method.  In cases where the liability relates to amounts owed for direct offering costs of an equity offering, the discount is charged to additional paid in capital with amortization.

Inventories

The Company’s inventories include enzyme products, packaging and labeling materials.  Inventories are stated at the lower of cost or market value.  Cost is determined using weighted average cost method.  As of March 31, 2014 and September 30, 2013, the Company had inventory balances of $267,212 and $110,894, respectively, which was comprised of enzyme products, beverages, packaging and labeling materials.

Enzyme products are typically shipped from manufacturer directly to our customer, with the Company never taking title to the enzymes products prior to shipment.

Intangible Assets

The Company’s intangible assets consist primarily of trademarks, which are carried at amortized cost.  The company capitalizes filing and legal fees related to the trademark registration.  All trademarks have legal lives from 7 to 10 years and are amortized over their respective legal lives upon approval (see Note 5-Trademarks).

The Company reviews its intangible assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable.  The Company assesses recoverability by reference to future cash flows from the products underlying these intangible assets.  If these estimates change in the future, the Company may be required to record impairment charges for these assets.  As of March 31, 2014, no impairment was recorded.

Property, Plant and Equipment

Property, plant and equipment (PP&E) are stated at cost less accumulated depreciation.  Gains or losses on disposals are recorded in the year of disposal.  The cost of improvements that extend the life of property, plant, and equipment are capitalized.  These capitalized costs may include structural improvements, equipment, and fixtures.  All ordinary repair and maintenance costs are expensed as incurred.

The Company’s PP&E as of March 31, 2014 and September 30, 2013 consisted of computer equipment, software, furniture and leasehold improvement with useful life of 3 or 5 years.  Depreciation is computed using the straight line method over the estimated useful lives.  Depreciation on leasehold improvements is amortized over the lesser of the useful lives or the term of the lease.

Fair Value of Financial Instruments.

FASB ASC Topic 825 – Financial Instruments requires the Company to disclose, when reasonably attainable, the fair market values of its assets and liabilities which are deemed to be financial instruments.  The Company's financial instruments consist primarily of cash, prepaid expenses, customer deposit, accounts payable and some other current liabilities.  The Company believes that the carrying values of these financial instruments approximate their fair value due to the short-term nature of these items.

As defined in FASB ASC Topic No. 820 – 10 (formerly SFAS 157-Fair Value Measurements), fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  FASB ASC Topic No. 820 – 10 requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements.  The statement requires fair value measurements be classified and disclosed in one of the following categories:

As required by FASB ASC Topic No. 820 – 10, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.  The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

The Company had no instruments re-measured to fair value on a recurring or non-recurring basis as of March 31, 2014 or September 30, 2013.

Basic net earnings (loss) per common share are computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding during the period.  Diluted net earnings (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents.  In periods when losses are reported, which is the case for all periods presented in these consolidated financial statements, the diluted weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.  For the six months ended March 31, 2014 and 2013, the company didn't have any potentially dilutive securities.

Stock-Based Compensation

The Company accounts for its stock-based compensation in which the Company obtains employee services in share-based payment transactions under FASB ASC Topic 718, Compensation – Stock Compensation , which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period.

The Company also adopted FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees , to account for equity instruments issued to parties other than employees for acquiring goods or services.  Such awards for services are recorded at either the fair value of the consideration received or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable.

For the six months ended March 31, 2014 and 2013, the Company did not record any stock-based compensation to employees or non-employees.

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC Topic 740, Income Taxes .  Under FASB ASC Topic 740, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes.  The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

The Company maintains a valuation allowance with respect to deferred tax assets.  The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period.  Based upon the level of losses and projections of the future taxable income over the periods in which the deferred tax assets are deductible, a full valuation allowance has been provided as management believes that it is more likely than not, based upon available evidence, that the deferred tax assets will not be realized.

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset.  Any change in the valuation allowance will be included in income in the year of the change in estimate.

Recently Issued and Newly Adopted Accounting Pronouncements

The Company does not expect that the adoption of recently issued accounting pronouncements will have a material impact on its financial position, results of operations, or cash flows.

NOTE 3 – GOING CONCERN

The Company is a development stage company and has incurred a cumulative net loss since inception of $4,333,030.  As of March 31, 2014, the Company had a positive working capital of $487,683, which, however, might be insufficient to finance the Company's business plan for the next twelve months.  Due to the start-up nature, the Company expects to incur additional losses in the immediate future.  To date, the Company’s cash flow requirements have been primarily met through proceeds received from sales of common stock.  The ability of the Company to emerge from the development stage is dependent upon the Company's successful efforts to raise sufficient capital and attain profitable operations.

Management’s plan includes obtaining additional funds by increasing revenues and equity financing through the participation of its country sole distributors, wholesalers, dealers and retailers in the Multi-Level Marketing – Franchise Investor Dealer Related (MLM-FIDR) concept; however there is no assurance of additional funding being available.  These circumstances raise substantial doubt about the Company’s ability to continue as a going concern.  The accompanying consolidated financial statements do not include any adjustments that might arise as a result of this uncertainty.

NOTE 4 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment (PP&E) as of March 31, 2014 and September 30, 2013 consisted of the computer equipment and software, furniture and leasehold improvement with useful life of 3 or 5 years.  Balances for the PP&E as of March 31, 2014 and September 30, 2013 were as follows:

Depreciation expense for the six months ended March 31, 2014 and 2013 was $21,023 and $1,565, respectively.

The Company filed applications for trademarks on three of its products in their target markets: the United States, Singapore, Thailand, Hong Kong, Taiwan, Macau, Sri Lanka and Malaysia.  As of March 31, 2014, the registration for all three products was completed in the United States, China (PRC), Hong Kong, Taiwan, Macau and Singapore, and still pending in other target markets.  As of March 31, 2014, the Company capitalized trademark costs of $37,293.  Accumulated amortization at March 31, 2014 and September 30, 2013 was $6,306 and $5,459, respectively.  During the six months ended March 31, 2014 and 2013, the Company recorded trademark amortization expense of $848 and $1,679.  All trademarks have legal lives from 7 to 10 years and are amortized over their respective legal lives upon approval.

NOTE 6 – COMMON STOCK

The total number of shares of capital stock, which the Company shall have authority to issue, is 500,000,000.  These shares consist of one class of 500,000,000 shares designated as common stock at $0.001 par value (“Common Stock”).

Holders of shares of Common Stock shall be entitled to cast one vote for each share held at all stockholders’ meetings for all purposes, including the election of directors.  The Common Stock does not have cumulative voting rights.

Unless there are prior arrangements made and agreed by the Company in writing, no holder of shares of stock of any class shall be entitled as a matter of right to subscribe for, or purchase, or receive any part of any new or additional issue of shares of stock of any class, or of any securities convertible into shares of any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of a dividend.

On July 6, 2010, 150,000,000 shares were issued to a consultant for services directly related to the S-1 registration and offering.  These shares were valued at $0.25 per share and recorded as a reduction to additional paid- in capital due to it being an offering cost of the future S-1 offering.  As a result of this transaction, additional paid in capital was reduced for the value of the shares equal to $37,500,000.  This reduction was offset by recording an increase to common stock according to the par value of the shares issued equal to $150,000, and increasing additional paid in capital by $37,350,000.  Due to the offsetting entries to additional paid in capital from the transaction, the net effect on equity was a reduction to additional paid in capital for $150,000 and an increase to the value of common stock for $150,000.  In addition to this share issuance, the Company issued an additional 50,000,000 shares to the consultant for offering costs.  The 50,000,000 additional shares were issued to convert the $50,000 payable owed to the consulting company (see Note 8).  Through March 31, 2012, the Company paid a total of $345,000 cash to this consultant for offering costs.

As of March 31, 2014 and 2013, nothing additional is owed to the consultant.

On July 6, 2010, the Company received stock subscriptions from investors at various prices;

1.

58,000,000 shares of Common Stock sold to twelve stockholders, at a purchase price of $0.001 per share for cash received  of $58,000,

2.

113,000 shares of Common Stock sold to eleven stockholders at a price of $0.10 for cash received  of $11,300,

3.

106,672 shares of Common Stock sold to sixteen stockholders at a price of $0.15 per share for cash received  of $16,000,

4.

50,000 shares of Common Stock sold to two stockholders at a price of $0.20 per share for cash received  of $10,000,

5.

18,800 shares of Common Stock sold to eight stockholders at a price of $0.25 per share for cash received of $9,700. 

6.

20,000 shares were sold to directors for total consideration of $5,000 on August 9, 2010.

During 2011, pursuant to the terms of the Sole Distributorship Agreement dated October 11, 2010, the Company sold to Taiwan Cell Energy Enzymes Corporation (“TCEEC”) 125,000,000 shares of its common stock at price $0.008 per share for total proceeds of $1,000,000.  The value of the shares issued was evaluated and found to be worth more than the cash received at a total value of $1,274,705.  The difference of $274,705 represented compensation to the distributor.

1.

Risk adjusted discount rate – 18.77%

2.

Long-Term growth rate – 12.30%

3.

Discount for lack of marketability – 53.14%

The specific value ascribed to the long term growth rate was based on the expectation of the Company’s consistent long term growth within the current target markets and calculated based on guidance from the Company’s valuation expert regarding industry results for long term growth within the industry.  The growth rate used was based on the median historical growth rate of 535 companies selling within emerging markets with businesses related to the following: Food Processing, Retail (Distribution); and Retail (Specialty Lines).  Since the Company believes that there is high demand for its products, it had no reason to think that the Company’s long term growth rate would be below industry benchmarks.  Given the Company’s inception stage of operations and strong market demand for its product, the Company believes that the 12.3% growth rate is reasonable and comparable to similar companies within the field.

In December of 2011 the Company’s distributor Taiwan Cell Energy Enzymes Corporation (“TCEEC”) agreed to contribute $279,705 related to subsequent valuations of the shares originally purchased by the distributor for $1,000,000.  The Company collected the full $279,705 during the period ended September 30, 2012 inclusive of $5,000 paid to the valuer as professional fees.

During the year ended September 30, 2012 the Company sold 10,000,000 shares for $0.30 per share for total proceeds of $3,000,000.  Of this amount $888,700 was collected during the year ended September 30, 2012 leaving $2,111,300 outstanding as of September 30, 2012.  Of this amount, $155,000 was collected during the six months ended March 31, 2013 and the remaining $1,956,300 was held as a subscription receivable at March 31, 2013.  The remaining amount was due in April of 2013 from TCEEC per the related signed promissory note agreement between both parties.  On February 27, 2013, the Promissory Note was cancelled since TCEEC could not honor.  The subscription receivable balance of $1,956,300 was transferred to an existing shareholder and a related party.  During the year ended September 30, 2013, $1,611,300 was collected, therefore the balance of subscription receivable as of September 30, 2013 was $500,000.  The remaining balance is due on December 31, 2013.

During the period ended March 31, 2013 the Company signed a Term Sheet with Kodiak Capital Group (“Kodiak”) in respect of a future potential investment of US$3,000,000 to be received in draws by the Company with shares to be granted at a discount to trading prices.  With execution of the term sheet the Company was required to pay $15,000 in cash and issue shares worth $150,000.  These amounts were recorded as offering costs based on the future prospective offering.  These shares have been issued in May 2013, therefore the balance of stock payable as of September 30, 2013 was zero.  On July 11, 2013 the Company signed the Registration Rights Agreement and Investment Agreement with Kodiak Capital Group.  Pursuant to the Investment Agreement, the Company have the right to “put” to Kodiak (“the Put Right’) up to $3 million in shares of our common stock to Kodiak to purchase our common stock for a purchase price equal to 80% of the volume Weighted Average Price which is defined as the lowest closing “best bid” price of the common stock during the five consecutive trading days immediately following the date of our notice to Kodiak of our intention to “put”.  Kodiak has indicated that they will resell those shares in the open market, resell our shares to other investors through negotiated transactions, or hold our shares in its portfolio.  Kodiak cannot own more than 9.99% of the total number of shares issued and outstanding on the Closing Date in accordance to Rule 13d-1(j) of the Securities Exchange Act,  1934 as amended.  The line of credit expires after the $3 million has been drawn or six months after the registration statement being declared effective by the United States Securities and Exchange Commission.  On February 11, 2014, the Company issued the first put to Kodiak for $200,000.  On February 19, 2014, the Company issued 1,000,000 common shares to Kodiak for $200,000 cash proceeds received from the put.

The Company received $1,611,300 from previously subscribed shares during the year ended September 30, 2013.

The Company paid $178,141 and $0 in offering costs during the year ended September 30, 2013 and 2012, respectively.

On December 20, 2013, the Company’s Board of Directors resolved to cancel Share Certificate #1190 for 1,666,667 shares following Yi Feng Chou’s inability to pay the Promissory Note dated April 19, 2013 for $500,000.

On December 26, 2013, the Company’s Board of Directors resolved to approve the sale of the 1,666,667 shares to Access Equity Capital Management Corp for $500,000 supported by a Promissory Note due on March 31, 2014.  During the six months ended March 31, 2014, the Company received $500,000 from Access Equity Capital Management Corp (“AECM”) being the final part payment of the Promissory Note.  Therefore, the balance of subscription receivable as of March 31, 2014 is zero.

On March 31, 2014, 2,024,444 shares were issued to Access Finance and Securities (NZ) Ltd (“AFS”) for conversion of debt of $303,666.  The value of the shares issued was less than the value of the debt converted.  Due to the transaction being with a related party no gain was recorded and the entire debt was relieved to common stock and additional paid in capital.

On March 31, 2014, 2,319,140 shares were issued to AMCM for conversion of debt of $347,871.  The value of the shares issued was less than the value of the debt converted.  Due to the transaction being with a related party no gain was recorded and the entire debt was relieved to common stock and additional paid in capital.

On August 9, 2010, the Company sold 20,000 shares of common stock at $0.25 a share to its directors for total consideration of $5,000.

The CEO of the Company is the managing director of a consulting company, who provides consulting services for the Company.  In January 2011, the Company converted $50,000 owed to this consulting company into 50,000,000 shares of the Company’s common stock at the price of $0.001 per share.  The $50,000 was recorded as an offering cost when owed due to the cost being directly related to the stock offering.  The Company issued this consulting company an additional 150,000,000 shares valued at $150,000 also recorded as offering costs.  From inception through September 30, 2011, the Company issued the aforementioned 200,000,000 shares recorded at $200,000 and paid total cash of $345,000 for offering costs.  The Company also paid a total $100,000 for consulting services to this company during the year ended September 30, 2011 which was expensed as professional fees.

During the year ended September 30, 2011, the Company’s President, Chief Executive Officer, Chief Financial Officer, and director, Mr. Yi Lung Lin paid some operating expenses on behalf of the Company.  The amounts due to him for these expenses were $1,250 and $0 as of September 30, 2013 and September 30, 2012, respectively.  

During the twelve months ended September 30, 2012, the Company paid one of the directors of GEECIS $11,550 for IT consulting services.

On September 21, 2010, the Company entered into a Sole Marketing Agent Agreement with Access Management Consulting and Marketing Pte.  Ltd. (“AMCM”) for the marketing of the Company’s range of enzyme products and to source, select and interview country sole distributors for the distribution of our range of enzyme products to the world at large.  The Company’s President, Chief Executive Officer, Chief Financial Officer, and director, Mr. Yi Lung Lin, is also the President and Managing Director of AMCM.

On October 11, 2010, the Company entered into a Sole Distributorship Agreement (General Outlet-Human Consumption) with Taiwan Cell Energy Enzymes Corporation (“TCEEC”) for marketing and distribution of the Company’s enzyme products in the Republic of China (Taiwan).  Mr. Chen Wen Hsu, one of the Company’s directors, has voting and investment control over TCEEC.  As was provided for under the Sole Distributorship Agreement, during the year ended September 30, 2011, TCEEC had invested in the Company by subscribing to 125,000,000 shares of the Company’s common stock at a price of $0.008 per share, for total proceeds of $1 million.  The value of the shares issued was evaluated and found to be worth more than the cash received at a total value of $1,274,705.  The difference of $274,705 represented compensation to the distributor.

During the year ended September 30, 2012 and September 30, 2011, the Company recognized $60,993 and $120,558, respectively, in related party revenue from its customer TCEEC who is controlled by one of the Company’s directors Ken Wen Hsu.

During the year ended September 30, 2013 and September 30, 2012, the Company recognized $1,653 and $0, respectively, in related party revenue from Yi Lung Lin who is the President of the Company and Access Management Consulting and Marketing Pte Ltd (AMCM) where Yi Lung Lin is the Managing Director of AMCM.

During the twelve months ended September 30, 2012, the Company collected $279,705 of contribution receivable of capital from its customer TCEEC who is controlled by the Company director Ken Wen Hsu.

During the year ended September 30, 2012, the Company received a total of $850,000 from TCEEC for 2,833,333 shares issued to them during the year then ended.  TCEEC owed an additional $2,111,300 to the Company as of September 30, 2012 for 7,037,667 shares issued during the year then ended.

During the year ended September 30, 2012, the Company received a total of $9,000 from Access Equity Capital Management (“AECM”), a company controlled by Mr. Yi Lung Lin, in consideration of 30,000 shares issued to them.

On February 15, 2012 the Board approved the appointment of Access Management Consulting and Marketing Pte Ltd (AMCM) to provide bookkeeping services in replacement of Albeck Financial Services.  The Company’s President is also the Managing Director of AMCM.

On September 6, 2012, the Board approved a monthly salary of $5,000 to the Company’s President, Yi Lung Lin commencing September 1, 2012.

On September 24, 2012, NATfresh Beverages has purchased USD500,000 worth of IPO GEEC shares from the Company which are originally from the TCEEC’s subscription receivable after TCEEC could not honor the Promissory Note.  Mr. Yi Lung Lin is the President, CEO, CFO, Treasure, Secretary and Principal Accounting Officer of NATfresh Beverages Corp.

On February 27, 2013, the Promissory Note Agreement entered between the Company and TCEEC was cancelled since TCEEC could not honor. Shares issued in relation to the subscription receivable were cancelled and reissued to AECM and an existing shareholder, both of which have signed a Promissory Note Agreement with the Company respectively to assure the obligation.

On April 19, 2013, AECM signed a Promissory Note amounted to USD $985,932 for purchase of IPO shares of GEEC from TCEEC’s subscription receivable.  In July 2013, AECM paid USD $485,932 to GEEC in relation to the Promissory Note dated April 19, 2013.  In September 2013, AECM paid the remaining USD $500,000 to GEEC in relation to the said Promissory Note.

During the year ended September 30, 2013, the Company received a total of $155,000 from TCEEC, $270,368 from an existing shareholder and $1,185,932 from a related party, respectively for the subscription receivable.

On February 14, 2014, the District Court, District of Nevada under civil claim action / case no. 2:13-cv-00435-RCJ-CWH awarded a default judgment of $150,170.50 and costs.  The Company will account for this event when the funds are collected and therefore all contingencies are resolved.

On March 31, 2014, 2,024,444 shares were issued to AFS for conversion of debt of $303,666.

On March 31, 2014, 2,319,140 shares were issued to AMCM for conversion of debt of $347,871.

During the six months ended March 31, 2014, the Company received a total of $500,000 from a related party for the subscription receivable.

During the six months ended March 31, 2014 and 2013, the Company generated $85,085 and $1,653, respectively, in revenue on sales to related parties.

As of March 31, 2014 and 2013 there were amounts due from related parties of $30,602 and $2,418 respectively.

As of March 31, 2014 and 2013 there were amounts due to related parties of $362,359 and $47,497 respectively.

NOTE 8 - COMMITMENTS

During the year ended September 30, 2013, the Company leased a virtual office.  The original lease term was from September 1, 2012 through September 30, 2013, and was subject to the annual renewal.  On February 23, 2013, the Company entered into a virtual office agreement in Los Angeles.  The Agreement is on a month to month basis.  One month’s written notification is required by either party to terminate this Agreement.  During the year ended September 30, 2012, GESPL entered into a lease agreement for office premises.  The lease term was from October 1, 2012 through March 31, 2013.  GESPL did not opt to renew the lease at the expiration of the lease on March 1, 2013.  During the year ended September 30, 2013 GESPL entered into a memorandum of understanding with a related party for sharing of office premises for three years and a lease agreement with Harmony Convention Holding Pte Ltd for provision of retail shop premises for three years. 

                                                                                  Fiscal year end 9/30:

On March 14, 2013 the Company has instructed their Attorney, Atkinson Law Associates P.C. to file a Complaint with the United States District Court, District of Nevada for a civil claim against Taiwan Cell Energy Enzymes Corporation in respect of a breach of contract arising from the Sole Distributorship Agreement (General Outlet – Human Consumption) and Private Placement dated October 11, 2010.  Case 2:13-cv-00435. 

On February 14, 2014, the District Court, District of Nevada under civil claim action / case no. 2:13-cv-00435-RCJ-CWH awarded a default judgment of $150,170.50 and costs against Taiwan Cell Energy Enzymes Corporation.