UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2015

Or

 

o 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:

 

BOREAL WATER COLLECTION, INC.

(Exact name of registrant as specified in its charter)

     
Nevada   98-0453421
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification Number)
     
Boreal Water Collection, Inc.    
4496 State Road 42 North    
Kiamesha Lake, NY   12751 
 (Address of principal executive offices)   (Zip Code)
     

Registrant’s telephone number, including area code: 845-794-0400

Copies of correspondence to:

     

Mrs. Francine Lavoie

Boreal Water Collection, Inc.

4496 State Road 42 North

Kiamesha Lake, NY 12751

 

Peter J. Wilke, Esq.
8117 W Manchester Ave, Suite 700

Playa del Rey, CA 90293

 

 

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

     
    Name of each exchange on which
Title of each class to be so registered   each class is to be registered
Not Applicable   Not Applicable
     

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

Common Stock
(Title of Class)

 

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 o   Accelerated filer o   Non-accelerated filer o   Smaller Reporting Company x
 
(Do not check if a smaller reporting company)

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of May 6, 2015, there were 2,021,625,349 shares of the Registrant's Common Stock, $0.001 par value per share outstanding.

 

 
 

 

Boreal Water Collection Inc.

For The Quarterly Period Ended March 31, 2015

 

TABLE OF CONTENTS

  

    Page
Part I. FINANCIAL INFORMATION    
       
ITEM 1. Financial Statements -    
       
Balance Sheets as of March 31, 2015 (unaudited) and December 31, 2014   1
       
Statement of Income for the three months ended March 31, 2015 and 2014 (unaudited)   2
       
Statement of Stockholders Equity as of March 31, 2015 (unaudited) and December 31, 2014   3
       
Statement of Cash Flows for the three months ended March 31, 2015 and 2014 (unaudited)   4
       
Notes to Financial Statements   5-19
       
ITEM 2. Management’s  Discussion and Analysis of Financial Condition and Results of Operations   20-23
       
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk   24
       
ITEM 4. Controls and Procedures   24
       
Part II. OTHER INFORMATION    
       
ITEM 1. Legal Proceedings   25
       
ITEM 1A. Risk Factors   25
       
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds   25
       
ITEM 3. Defaults upon Senior Securities   26
       
ITEM 4. Mine Safety Disclosures   26
     
ITEM 5. Other Information   26
     
ITEM 6. Exhibits   26
     
Signatures   27

  

i
 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

Boreal Water Collection Inc.

BALANCE SHEETS

 

   March 31,   December 31, 
   2015   2014 
   (unaudited)     
ASSETS        
         
Current assets          
Cash  $125,842   $187,389 
Accounts receivable, less allowance for doubtful accounts of $2,506 at March 31, 2015 and December 31, 2014 respectively   74,139    131,313 
Inventory   239,792    226,899 
Prepaid expenses   51,222    20,963 
Due from related party   9,004     
Deferred financing costs, net of accumulated amortization   42,621    53,036 
Total current assets   542,620    619,600 
           
Property and equipment, net of accumulated depreciation   2,456,687    2,509,117 
           
Other assets          
License, net of accumulated amortization        
Security deposit   4,500    4,500 
Total other assets   4,500    4,500 
           
Total assets  $3,003,807   $3,133,217 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Current liabilities          
Accounts payable and accrued expenses  $464,452   $855,143 
Deferred revenue   5,130    11,471 
Short-term borrowings   1,869,525    1,806,064 
Officer loan payable       250,342 
Current portion of capital lease payable   3,968    3,968 
Total current liabilities   2,343,075    2,926,988 
           
Long-term liabilities          
Accounts payable       2,000 
Capital lease - net of current   2,897    3,925 
Deferred Tax Liability   343,440    343,440 
Total liabilities   2,689,412    3,276,353 
           
Stockholders' equity          
Common stock, $.001 par value; 5,000,000,000 shares authorized, 987,740,405 and 370,131,010 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively   987,739    370,130 
Additional paid-in capital   3,223,821    3,082,161 
Deficit accumulated since January 10, 2006 in connection with quasi reorganization   (3,897,165)   (3,595,427)
Total stockholders' equity   314,395    (143,136)
           
Total liabilities and stockholders' equity  $3,003,807   $3,133,217 

 

The accompanying notes are an integral part of these financial statements.

 

1
 

 

Boreal Water Collection Inc.

STATEMENTS OF OPERATIONS

(unaudited)

 

   Three months ended 
   March 31, 
   2015   2014 
Sales  $531,414   $450,087 
Cost of sales   490,823    410,894 
Gross profit   40,591    39,193 
           
Operating Expenses          
           
Selling and general and administrative   157,770    131,847 
Depreciation and amortization   98,070    102,112 
           
Total expenses   255,841    233,959 
           
Operating income (loss)   (215,250)   (194,766)
           
Other income (expense)          
           
Rental income       1,350 
Interest expense   (84,614)   (31,581)
           
Total other income (expense)   (84,614)   (30,231)
           
Net income (loss) before income taxes   (299,864)   (224,997)
           
Provision for income taxes (benefit)   1,875    375 
           
Net income (loss)  $(301,739)  $(225,372)
           
           
Net loss per weighted share, basic and fully diluted  $(0.001)  $(0.001)
           
           
Weighted average number of common shares outstanding, basic and fully diluted   468,802,389    322,447,351 

 

The accompanying notes are an integral part of these financial statements.

 

2
 

 

Boreal Water Collection Inc.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)

 

   Common Stock   Additional
Paid-in
   Retained     
  Shares  Amount   Capital   Earnings   Total 
Balance, December 31, 2013 (Restated)   322,447,351  $322,447   $2,912,685   $(2,709,759)  $525,372 
                          
 Common shares issued for services   5,000,000   5,000    36,600        41,600 
                          
 Common shares in payment of convertible debt   37,036,786   37,037    90,503        127,540 
                          
 Common shares issued   5,646,873   5,647    42,373        48,020 
                          
 Net loss - December 31, 2014              (885,668)   (885,668)
                        
Balance, December 31, 2014  370,131,010  $370,130   $3,082,161   $(3,595,427)  $(143,136)
                          
 Common shares issued in payment of officer's debt   180,032,305   180,032    76,208        256,240 
                          
 Common shares in payment of convertible debt   133,393,178   133,393    (50,035)       83,358 
                          
 Common shares issued in for services rendered by officers   304,183,912   304,184    115,487        419,671 
                          
 Net loss - March 31, 2015            (301,739)   (301,739)
                         
Balance, March 31, 2015   987,740,405  $987,739   $3,223,821   $(3,897,165)  $314,395 

 

The accompanying notes are an integral part of these financial statements.

 

3
 

 

Boreal Water Collection, Inc.

STATEMENTS OF CASH FLOWS

(unaudited)

 

   Three Months Ended March 31, 
   2015   2014 
Cash flows from operations          
Net income (loss)  $(301,739)  $(225,372)
Adjustment to reconcile net income to net cash:          
Depreciation and amortization   98,070    101,855 
Stock based compensation   42,965     
Changes in operating assets and liabilities:          
Accounts receivable   57,173    26,324 
Inventory   (12,893)   (3,997)
Prepaid expenses   (30,259)   (20,007)
Accounts payable and accrued expenses   (2,985)   109,172 
Deferred financing costs   (33,895)    
Deferred revenue   (6,341)    
Net cash provided for operating activities   (189,904)   (12,025)
Cash Flows from investing activities          
Purchases of property and equipment   (1,328)    
Net cash provided by (used for) investing activities   (1,328)    
Cash flows from financing activities          
Related party advances, net   (9,004)   4,821 
Payments on note payable-other       (3,000)
Proceeds from revenue based factoring   230,000     
Payments on revenue based factoring   (90,283)    
Payments on capital lease obligation   (1,028)   (4,831)
Net cash provided by financing activities   129,685    (3,010)
Net increase (decrease) in cash   (61,547)   (15,035)
Cash, beginning of period   187,389    63,420 
Cash, end of period  $125,842   $48,385 
Supplemental disclosures:          
Cash paid during the year for:          
Interest  $82,549   $375 
Taxes  $1,875   $30,982 
Non-cash investing and financing transactions:          
Issuance of 304,183,912 shares of common stock in connection with stock based compensation  $419,671   $ 
Issuance of 133,393,178 shares of common stock in payment of convertible debt  $83,358   $ 
Issuance of 180,032,305 shares of common stock in payment of officer note payable  $256,240   $ 

  

The accompanying notes are an integral part of these financial statements.

 

4
 

 

Boreal Water Collection, Inc.

Notes to Financial Statements

March 31, 2015

(Unaudited)

 

 

Note 1 – Description of Business and Corporate Information

 

Organization

 

Boreal Water Collection, Inc. (“Boreal” or the “Company”) was incorporated in the State of Nevada on August 21, 2001. The Company is trading on the OTC under the symbol (BRWC.PK).

 

The Company has operated under various names since incorporation, most recently Canadian Blue Gold, Inc. from October 2007 to March 2008, when the name was changed to Boreal Water Collection, Inc.

 

In April 2009, the Company acquired the assets of A.T. Reynolds and Sons, Inc., operating as Leisure Time Spring Water (“Leisure”) in Kiamesha Lake, New York. The Company is a personalized bottled water company specializing in premium custom bottled water, as a contract packer of bottled water focused on value-added products and services. The Company currently offers three types of water: spring water, distilled water, enhanced water, which is customized with minerals, oxygen, and fluoride, and a fourth type to be added, sparkling water. The Company was originally founded in 1884.

 

Accounting period

 

The Company has adopted an annual accounting period of January through December.

 

Note 2 – Summary of Significant Accounting Principles

 

Use of estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities at the date of the financial statements, as well as their related disclosures. Such estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Actual results could significantly differ from those estimates.

 

Cash and cash equivalents

 

The Company considers short-term interest bearing investments with initial maturities of three months or less to be cash equivalents. Cash and cash equivalents consist of cash in banks, free credit on investment accounts and money market accounts.

 

Foreign currency translation

 

The Company complies with Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 830, Foreign Currency Matter. Monetary items are translated at the exchange rate in effect at the balance sheet date; non-monetary items are translated at historical exchange rates. Income and expense items are translated at the average exchange rate for the year. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

 

5
 

 

Boreal Water Collection, Inc.

Notes to Financial Statements

March 31, 2015

(Unaudited)

 

 

Note 2 – Summary of Significant Accounting Principles (continued)

 

Revenue recognition

 

In accordance with the FASB ASC Topic 605, Revenue Recognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collectability is reasonably assured. The Company recognizes revenue on the date the product is shipped, whether it is shipped f.o.b. destination or f.o.b. shipping point, due to the short distance and time it takes for the product to reach its final destination. Product is sold to customers on credit terms established on an individual basis. The credit factors used include historical performance, current economic conditions, and the nature and volume of the product. The company offers very few discounts, allowances, coupons, or other similar incentive programs. Net sales are determined after deduction of any promotional or other allowances in accordance with FASB ASC Topic 605-50. The Company offers its customers a right to return product previously shipped, and when the product is actually returned, the customer’s account is credited for the full value of the returned product. The Company’s normal shipping terms f.o.b. destination, which designates that the Company will pay shipping costs and remain responsible for the goods until the buyer takes possession and f.o.b. shipping point, which indicates that the buyer will pay for shipping costs and takes responsibility for the product when the product is shipped from the Company’s premise. New and certain large customers, which require the purchase of unique materials, are required to pay the Company in advance of production. This helps the Company avoid bad debts and scamming customers. These advances are recorded as deferred revenue. Revenue is recognized when the product is shipped to the customer; the deferred revenue account is then reduced accordingly.

   

Taxes collected from customers and remitted to governmental authorities are excluded from net sales. Freight-in is included in cost of sales and freight charged to customers is included in sales in the Company’s statements of operations. Delivery and related shipping costs are included in sales and general administrative expenses. 

 

Accounts receivable

 

The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s recent loss history and an overall assessment of past due trade accounts receivable outstanding. In accordance with FASB ASC Topic 210-20-45, the Company presents accounts receivable in its balance sheet net of promotional allowances only for customers that it allows net settlement. All other accounts receivable and related promotional allowances are shown on a gross basis.

 

Property and equipment

 

Property and equipment is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Repairs and maintenance are expensed as incurred while betterments and improvements are capitalized. When items are sold or retired, the related cost and accumulated depreciation is removed from the accounts and any gain or loss is included in operations.

 

The Company provides for depreciation and amortization over the following estimated useful lives:

 

Building   40 years
Land improvements   15 years
Machinery and equipment   5-7 years
Computer equipment   3 years
Office equipment   7 years
Trucks and trailers      5 years

 

6
 

 

Boreal Water Collection, Inc.

Notes to Financial Statements

March 31, 2015

(Unaudited)

 

 

Note 2 – Summary of Significant Accounting Principles (continued)

 

Long-Lived Assets

 

In accordance with FASB ASC Topic 360 Property, Plant, and Equipment , the Company records impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts.

 

Fair Value of Financial Instruments

 

The fair values of the Company’s assets and liabilities that qualify as financial instruments under FASB ASC Topic 825, Financial Instruments, approximate their carrying amounts presented in the accompanying balance sheet at March 31, 2015 and 2014.

 

Inventories

 

Inventory is valued at the lower of cost or market, cost being determined by the first-in, first-out (FIFO) method. Inventory costs include direct material, direct labor and a systematic allocation of fixed and variable overhead. Obsolete items are carried at estimated net realizable value.

 

Cost of sales

 

Cost of sales, includes normal direct costs, such as direct labor, freight, purchases of raw materials (caps, water, bottles, boxes, wrapping, ingredients, etc.), adjusted for inventory at the end of each reporting period. Costs of sales also includes indirect costs, such as salary costs for maintenance personnel, supervisors, operation of the quality control lab, equipment and building maintenance, miscellaneous warehouse expenses, licenses and taxes, and payroll taxes and other benefit costs for direct labor and indirect labor personnel.

 

Selling and General Administrative Expenses

 

Selling and general administrative expenses include those type of costs normally included in this functional classification: sales salaries, delivery salaries, repairs, payments made to outside sales representatives, travel related costs, and benefit costs, salaries paid administrative and executive personnel, insurance, benefit costs, office supplies, professional fees, subcontract costs taxes, bank charges, stock-based compensation, postage and shipping, telephone and related communications costs, and similar costs.

 

Earnings per share

 

The Company complies with the accounting and disclosure requirements of FASB ASC 260, Earnings Per Share. Basic earnings per common share ("EPS") calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

 

7
 

 

Boreal Water Collection, Inc.

Notes to Financial Statements

March 31, 2015

(Unaudited)

 

 

Note 2 – Summary of Significant Accounting Principles (continued)

 

Income Taxes

 

The Company accounts for income taxes in accordance with FASB ASC Topic 740 Income Taxes, which requires accounting for deferred income taxes under the asset and liability method. Deferred income tax asset and liabilities are computed for difference between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on the enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce the deferred income tax assets to the amount expected to be realized.

 

The determination of the Company’s provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company’s consolidated financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes in the consolidated financial statements as appropriate.  

 

In accordance with GAAP, the Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce stockholders’ equity. This policy also provides guidance on thresholds, measurement, de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide better consolidated financial statement comparability among different entities. Management’s conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof. Generally, the tax filings are no longer subject to income tax examinations by major taxing authorities for years before 2010. Any potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal, state and local tax laws.  The Company's management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

 

Interest and Penalty Recognition on Unrecognized Tax Benefits 

 

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other operational expenses. No interest expense or penalties have been recognized as of and for the year ended December 31, 2014.

 

Comprehensive Income

 

The Company complies with FASB ASC Topic 220, Comprehensive Income, which establishes rules for the reporting and display of comprehensive income (loss) and its components. FASB ASC Topic 220 requires the Company’ to reflect as a separate component of stockholders’ equity items of comprehensive income.

 

8
 

 

Boreal Water Collection, Inc.

Notes to Financial Statements

March 31, 2015

(Unaudited)

 

 

Note 2 – Summary of Significant Accounting Principles (continued)

 

Stock-Based Compensation  

 

The Company complies with FASB ASC Topic 718 Compensation – Stock Compensation, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. FASB ASC Topic 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. FASB ASC Topic 718 requires an entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award the requisite service period (usually the vesting period). No compensation costs are recognized for equity instruments for which employees do not render the requisite service. The grant-date fair value of employee share options and similar instruments will be estimated using option-pricing models adjusted for the unique characteristics of those instruments (unless observable market prices for the same or similar instruments are available). If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification. Based on restricted stock awards granted to employees during the three months ended March 31, 2015 and 2014, the Company recorded $42,965 and $0, respectively, as compensation expense under FASB ASC 718.

 

Nonemployee awards

 

The fair value of equity instruments issued to a nonemployee is measured by using the stock price and other measurement assumptions as of the date of either: (i) a commitment for performance by the nonemployee has been reached; or (ii) the counterparty’s performance is complete. Expenses related to nonemployee awards are generally recognized in the same period and in the same period as the Company incurs the related liability for goods and services received. The Company recorded stock compensation of approximately $0 and $0 during the three months ended March 31, 2015 and 2014, respectively, related to consulting services.

 

Valuation of Investments in Securities at Fair Value – Definition and Hierarchy

 

In accordance with GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.

 

In determining fair value, the Company uses various valuation approaches. In accordance with GAAP, a fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

 

The fair value hierarchy is categorized into three levels based on the inputs as follows:

 

Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities the Company has the ability to access.

 

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

 

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

 

9
 

 

Boreal Water Collection, Inc.

Notes to Financial Statements

March 31, 2015

(Unaudited)

 

 

Note 2 – Summary of Significant Accounting Principles (continued)

 

The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors including, the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined.

 

Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities existed. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for securities categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement.

 

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many securities. This condition could cause a security to be reclassified to a lower level within the fair value hierarchy.

 

Valuation Techniques

 

The Company values investments in securities that are freely tradable and are listed on a national securities exchange or reported on the NASDAQ national market at their last sales price as of the last business day of the year.

 

Government Bonds

 

The fair value of sovereign government bonds is generally based on quoted prices in active markets. When quoted prices are not available, fair value is determined based on a valuation model that uses inputs that include interest-rate yield curves, cross-currency-basis index spreads, and country credit spreads similar to the bond in terms of issuer, maturity and seniority.

 

Certificate of Deposits

 

The fair values of the bank certificate of deposits are based on the face value of the certificate of deposits.

 

Recently Adopted Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). It outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that revenue is recognized when a customer obtains control of a good or service. A customer obtains control when it has the ability to direct the use of and obtain the benefits from the good or service. ASU 2014-09 is effective for annual periods beginning after December 15, 2016, including interim periods within that annual period. The Company is in the process of assessing the impact of the adoption of ASU 2014-09 to its financial statements.

 

10
 

 

Boreal Water Collection, Inc.

Notes to Financial Statements

March 31, 2015

(Unaudited)

 

 

Note 2 – Summary of Significant Accounting Principles (continued)

 

In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition of the award. A reporting entity should apply existing guidance in Accounting Standards Codification Topic 718, Compensation-Stock Compensation, as it relates to such awards. The guidance is effective for fiscal years beginning after December 15, 2015, and may be applied prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s financial statements and related disclosures.

 

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The guidance requires an entity to evaluate whether there are conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the financial statements are available to be issued when applicable) and to provide related footnote disclosures in certain circumstances. The guidance is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. We do not believe the adoption of this guidance will have a significant impact the Company’s financial statements and related disclosures.

 

In November 2014, the FASB issued ASU 20-14-16, Derivatives and Hedging - Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. The guidance requires an entity to determine the nature of the host contract by considering the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 and interim periods beginning after December 15, 2016. Early adoption, including adoption in an interim period, is permitted The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s financial statements and related disclosures.

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the "SEC") did not or are not believed by management to have a material impact on the Company's present or future financial statements.

 

Concentration of Credit Risk

 

The Company maintains its cash and cash equivalents in bank deposit accounts, which, at times may exceed federally insured limits. The Company has not experienced any losses in such accounts. Management believes the Company is not exposed to any significant credit risk related to cash and cash equivalents.

 

 

11
 

 

Boreal Water Collection, Inc.

Notes to Financial Statements

March 31, 2015

(Unaudited)

 

 

Note 3 – Going Concern

 

The accompanying financial statements have been prepared assuming that the company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Since January 10, 2006 (date of quasi reorganization), the Company has accumulated a deficit of approximately $3,897,165. Currently, the Company has a minimum cash balance available for the payment of ongoing operating expenses, and its operations is not providing a source of funds from revenues sufficient to cover its operational costs to allow it to continue as a going concern. The continued operations of the Company is dependent upon generating profits from operations and raising sufficient capital through placement of its common stock or issuance of debt securities, which would enable the Company to carry out its business plan. In the event we do not generate sufficient funds from revenues or financing through the issuance of our common stock or from debt financing, we may be unable to fully implement our business plan and pay our obligations as they become due, any of which circumstances would have a material adverse effect on our business prospects, financial condition and results of operations.

 

The accompanying financial statements do not include any adjustments that might be required should the company be unable to recover the value of its assets or satisfy its liabilities.

 

Note 4 – Inventory

 

Inventory consists of the following categories:

   March 31, 2015    December 31, 2014 
Raw materials  $210,351   $204,795 
Finished Goods   29,441    22,103 
Total  $239,792   $226,899 

 

12
 

 

Boreal Water Collection, Inc.

Notes to Financial Statements

March 31, 2015

(Unaudited)

 

 

Note 5 – Property and Equipment

 

Equipment consists of the following categories at March 31, 2015 and December 31, 2014:

 

   March 31,
2015
   December 31,
2014
 
Building  $2,000,000   $2,000,000 
Land   324,000    324,000 
Leasehold improvements   41,621    41,621 
Furniture & fixtures   16,997    16,997 
Computer equipment   27,498    26,169 
Machinery and equipment   1,086,393    1,086,393 
Transportation equipment   50,250    50,250 
    3,546,759    3,545,430 
Less: accumulated depreciation   1,090,072    1,036,313 
Total  $2,456,687   $2,509,117 

 

The Company periodically reviews the carrying value of property, plant, and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition.

 

Note 6 – License

 

On December 17, 2007, the Company entered into an exclusive licensing agreement (“Agreement”) with a Canadian bottle water company to distribute, sell, advertise, promote, and market under private label, its products in the United States., with an original cost of $2.0 million. The Agreement was subsequently revised and replaced with a new Agreement on June 16, 2008 at a cost of $1.022 million. The Company’s President and CEO is the principal shareholder of the Canadian company. The license is being amortized over a five year period from June 16, 2008. At December 31, 2014 and December 31, 2013, the license has been fully amortized.

 

At December 31, 2014 the license has been fully amortized.

 

13
 

 

Boreal Water Collection, Inc.

Notes to Financial Statements

March 31, 2015

(Unaudited)

 

Note 7 – Stockholders’ Equity

 

On June 3, 2014, the Company issued 10,621,266 shares of its $0.001 par value common stock to a third party investor in exchange for the conversion of their loan of $68,082.

 

On July 24, 2014, the Company issued 3 million shares of its $0.001 par value common stock for services rendered.

 

On September 5, 2014, the Company issued 3,750,000 shares of its $0.001 par value common stock to a third party investor for a cash payment of $30,000.

 

On October 15, 2014, the Company issued 2 million shares of its $0.001 par value common stock for services rendered.

 

On October 16, 2014, the Company issued 1,896,873 million shares of its $0.001 par value common stock to a third party investor for a cash payment of $18,020.

 

On November 7 and 25, 2014, the Company issued 26,415,520 shares of its $0.001 par value common stock to a third party investor in exchange for the conversion of their loan of $55,000.

 

On January 20, 2015, the Company issued 180,032,305 shares of its $0.001 par value common stock to its majority stockholder in exchange for their conversion of their loan of $ 256,240.

 

On January 22, 2015, the Company issued 16,651,113 shares of its $0.001 par value common stock to a third party investor in exchange for the conversion of their loan of $18,621.

 

On January 23, 2015, the Company issued 203,566,444 shares of its $0.001 par value common stock to related parties in payment of their earned salary and stock awards of $419,671 for the period September 2012 to January 2015.

 

On March 10, 20 and 26, 2015 the Company issued 116,742,065 shares of its $0.001 par value common stock to a third party investor in exchange for their conversion of their loans and accrued interest totaling $ 64,737.

 

14
 

 

Boreal Water Collection, Inc.

Notes to Financial Statements

March 31, 2015

(Unaudited)

 

Note 8 – Income Taxes

 

At March 31, 2015, the Company had approximately $3.8 million of net operating losses (“NOL”) carry-forwards for federal and state income purposes. These losses are available for future years and expire through 2035. Utilization of these losses may be severely or completely limited if the Company undergoes an ownership change pursuant to Internal Revenue Code Section 382.

 

The tax effects of temporary differences and carry forwards that give rise to deferred tax assets and liabilities consist of the following:

 

   March 31,    December 31,  
   2015    2014  
Deferred tax assets:           
Net operating loss carryforwards  $1,363,000   $1,260,000 
Other temporary differences        
Deferred tax assets   1,363,000    1,260,000 
Less:  Valuation allowance   (1,363,000)   (1,260,000)
Net deferred tax asset   $   $ 
Deferred tax liabilities:           
Difference between book and tax basis of assets acquired in bargain asset purchase  $(343,440)  $(343,440)
           
Net deferred tax assets (liabilities)   $(343,440)  $(343,440)

 

The Company has taken a full valuation allowance against the other timing differences and the deferred asset attributable to the NOL carry-forwards of approximately $1,363,000 and $1,260,000 at March 31, 2015 and for the year ended December 31, 2014, respectively, due to the uncertainty of realizing the future tax benefits.

 

The Company did not pay any income taxes during the three months ended March 31, 2015 or the year ended December 31, 2014.

 

Note 9 – Short-Term Borrowings

 

   March 31, 2015   December 31, 2014 
Line of credit  $250,000   $250,000 
Mortgage   900,000    900,000 
JSJ Investments   0    76,256 
Revenue based factoring   28,319    63,066 
LG Capital   78,750    78,750 
Typenex Co-Investment   107,500    107,500 
Auctus Private Equity   75,000    75,000 
Eastmore Capital   75,000    75,000 
Quarter Spot   102,793    130,492 
Platinum   86,561    0 
World Global   115,602    0 
Other   50,000    50,000 
Total  $1,869,525   $1,806,064 

 

During 2009, the Company obtained a revolving line of credit with a commercial bank in the amount of $250,000 at annual interest rate of 5.25%. The line of credit is secured by the Company’s accounts receivable and inventory. On September 22, 2014, the commercial bank in coordination with the Company decided to exercise their right to cancel the line of credit effective February 22, 2015. As of February 22, 2015, the bank has allowed the line of credit with the Company to expire. The commercial bank has however informally agreed to extend the line of credit for six months subject to an appraisal and securing a second mortgage on the real property.

 

15
 

 

Boreal Water Collection, Inc.

Notes to Financial Statements

March 31, 2015

(Unaudited)

 

 

Note 9 – Short-Term Borrowings (continued)

 

In April 2009, the Company acquired the assets of A.T. Reynolds and Sons, Inc. (“Reynolds”), operating as Leisure Time Spring Water (“Leisure”) in Kiamesha Lake, New York (See Note 12). In connection with the acquisition of these assets, the Company assumed a $1.9 million mortgage that was due a commercial bank (“Bank”) against a building and land, included as part of the total assets acquired from Reynolds. On April 3, 2009, the Company entered into a Mortgage Consolidation, Modification and Extension Agreement with the Bank. The Company was required to make interest payments only through April 3, 2011, at which time the entire principal balance was due the Bank. Monthly interest was based on 90-day Libor at 4.50%. The $1.9 million mortgage was personally guaranteed by the Company’s Chief Executive Officer. The balance due against this mortgage at December 31, 2012 was $1,943,426. The balance due the Bank on April 3, 2011 was not paid putting the Company in default under the terms of the original agreement. The Company entered into a Forbearance Agreement (“Agreement”) on May 31, 2011, and upon expiration of that Agreement, the Company entered into an extension to the Agreement on October 3, 2011, which extended the Agreement period until April 3, 2012. On April 3, 2012, the Agreement period was further extended until October 3, 2012. On October 3, 2012 the forbearance agreement expired and the company was in default of its mortgage obligation.

 

Under the terms of the May 31, 2011 Agreement, the Company was required to make monthly principal payments of $15,000 plus all accrued and unpaid interest on the debt obligation. The Company was also assessed a forbearance fee of $19,000, and it was required to provide evidence acceptable to the commercial bank that the Company and Sullivan County had agreed to a payment plan for real estate taxes that were in arrears as of the date of the Agreement. The interest rate based on 90-day Libor rate of 4.0% did not change as a result of the Forbearance Agreement. All loan documents and the Security Agreement remained in full force and effect in accordance with the original terms. Under the terms of the October 3, 2011 Agreement, the commercial bank waived the $15,000 monthly principal payments, but not the interest payments. An additional $19,000 forbearance fee was assessed. All other terms of the original note obligation and the May 31, 2011 Agreement remained in full force and effect. The interest rate based on 90-day Libor rate of 4.625% did not change as a result of this Forbearance Agreement. Under the terms of the April 3, 2012 Agreement, the commercial bank assessed an additional forbearance fee of $19,000, continued to waive the monthly $15,000 principal payment, but not the monthly interest payments. All other terms of the original note obligation and the May 31, 2011 Agreement remained in full force and effect. The 90-day Libor rate of 4.5% did not change as a result of this Forbearance Agreement. The company continued to accrue interest on this obligation until such time as a refinancing plan was finalized.

 

In August 2013 the Company successfully completed negotiations with its Bank to accept $625,000 in satisfaction of its obligations on the mortgage. The difference between the $1.9 mortgage obligation (plus interest) and the $625,000 accepted in satisfaction of the mortgage is shown on the statements of operations as an extraordinary gain from extinguishment of debt. Concurrently the Company secured a new $900,000 mortgage with a “Lender.” This new mortgage bears interest at 12% per annum and is due and payable on August 27, 2014. The new mortgage requires the Company to make monthly interest only payments of $9,000. Under the terms of the new mortgage, the Company has the option to extend the maturity date of the new mortgage for one year providing it pays the Lender a fee of $54,000. During August 2014, the Company elected to extend the mortgage six months until January 31, 2015 by paying $45,000. In January 2015, the Company elected to extend the mortgage an additional six months until July 31, 2015 by paying $27,000.

 

During May and June 2014, the Company entered into a series of unsecured convertible promissory note agreements ("Notes") with JSJ Investments, Inc. ("JSJ" or "holder"). The principal amount for these two Notes total $131,256 with interest from 12% to 15% per annum. The maturity dates are November 2014. There is a 150% cash redemption premium on the principal amount only, upon approval by JSJ. The Note is convertible into the Company’s common stock. The conversion amount is the Note principal plus default interest, if any. During November 2014, JSJ converted $55,000 of their notes into the Company’s common stock for 26,415,520 shares at an exercise price of $0.00225 per share. JSJ Investments, Inc. entered into a convertible promissory note with the Company dated May 25, 2014 (“JSJ Note”). During January and March 2015, JSJ converted their $76,256 of their notes (including accrued interest) into the Company’s common stock for 59,330.032 shares at exercise prices ranging from $.000733333 to $0.001118. The company also entered into another unsecured promissory note dated May 25, 2014 for $68,082 with interest at 12% per annum. This note for $68,082 was immediately converted into the Company’s stock for 10,621,266 shares at an exercise price of $0.00641 per share.

 

16
 

 

Boreal Water Collection, Inc.

Notes to Financial Statements

December 31, 2014

(Unaudited)

 

 

Note 9 – Short-Term Borrowings (continued)

 

On August 14, 2014, the Company entered into a “Revenue Based Factoring (RBF/ACH) Agreement” (“Agreement”) with Strategic Funding Source, Inc. (“SFS”), a New York based company. The Company, pursuant to the Agreement, sold future receipts, accounts, written contracts and other obligations to SFS (“receipts”). The sale price is $100,000.00. The company will make a total of approximately 189 daily loan payments of $740. SFS purchased a total of $140,000.00 in receipts. The purchase price was received by the Company on August 22, 2014. The Agreement has an indefinite term, lasting until the Company completes its obligations contained therein. SFS has a security interest in all accounts, chattel paper, equipment, general intangibles, instruments and inventory. Mrs. Francine Lavoie, sole member of the Board of Directors and Company CEO, has also personally guaranteed the Agreement.

 

On October 2, 2014, the Company entered into a convertible promissory note with LG Capital for $78,750 with interest at 8% per annum and matures on October 1, 2015. The Note is convertible into the Company’s common stock.

 

On October 14, 2014, the Company entered into a convertible promissory note with Typenex Co-Investment for $107,500 with interest at 10% per annum and matures on July 14, 2015. The Note is convertible into the Company’s common stock.

 

On October 15, 2014, the Company entered into a convertible promissory note with Auctus Private Equity for $75,000 with interest at 8% per annum and matures on July 15, 2015. The Note is convertible into the Company’s common stock.

 

On October 15, 2014, the Company entered into a convertible promissory note with Eastmore Capital for $75,000 with interest at 8% per annum and matures on July 15, 2015. The Note is convertible into the Company’s common stock.

 

On December 4, 2014, the Company entered into a Promissory Note with Quarter Spot, a Virginia based company. The Company, pursuant to the Agreement, sold future receipts, accounts, written contracts and other obligations to Quarter Spot. The sale price is $137,250. The company will make a total of approximately 257 daily loan payments of $673. SFS has a security interest in all accounts, chattel paper, equipment, general intangibles, instruments and inventory.

 

On February 18, 2015, the Company entered into a Promissory Note with Platinum Rapid Funding Group, a New York based company. The Company, pursuant to the Agreement, sold future receipts, accounts, written contracts and other obligations to Platinum Rapid Funding. The sale price is $100,000. The company will make a total of approximately 147 daily loan payments of $918. Platinum purchased a total of $135,000.00 in receipts. Platinum has a security interest in all accounts, chattel paper, equipment, general intangibles, instruments and inventory.

 

On February 23, 2015, the Company entered into a Promissory Note with World Global Financing, Inc., a Florida based company. The Company, pursuant to the Agreement, sold future receipts, accounts, written contracts and other obligations to World Global. The sale price is $130,000. The company will make a total of approximately 168 daily loan payments of $1,014. World Global purchased a total of $170,300 in receipts. World Global has a security interest in all accounts, chattel paper, equipment, general intangibles, instruments and inventory.

 

During June 2013, a third party loaned the Company $50,000 bearing interest at 6.8% and maturing May 2015 (as amended in November 2014).

 

Note 10 – Related Party

 

At March 31, 2015 and December 31, 2014, the Company owed a related party $0 and $0, respectively, for ongoing operating and purchase transactions with the related party company.

 

On July 31, 2014 the related party assigned $250,342 of the approximately $330,000 debt owed by Boreal to the company’s principal shareholder. This note bears interest at 5% and matures on December 31, 2014. The $250,342 owed to the principal shareholder (including accrued interest of $5,898) was paid in January 2015 to the principal shareholder by converting their loans into 180,032,305 shares of the Company’s common stock.

 

For the three months ended March 31, 2015 and 2014 the Company made purchases from the related party of $7,289 and $12,924 respectively and made sales to the related party of $0 and $0, respectively.

 

17
 

 

Boreal Water Collection, Inc.

Notes to Financial Statements

March 31, 2015

(Unaudited)

 

 

Note 11 – Commitments and Contingencies

 

The Company is party to a forty year exclusive agreement (“Agreement”), with an original effective date of November 1, 1995, modified on April 25, 2000, to reduce certain minimum guarantee and compensation provisions of the Agreement. The Agreement provides that the Company shall draw not less than seven million (7,000,000) gallons or water from certain springs on an annual basis. During the remainder of the first twenty-five (25) years of the Agreement, the Company pays one cent ($0.01 per gallon for the first five million (5,000,000) gallons of water drawn and three-fourth of one cent ($0.0075) for all gallonage thereafter, but not less than $65,000 per year regardless of the actual gallonage drawn, payable in monthly installments of $5,416. In event that drought or other conditions reduce the capacity of the springs, so that the springs cannot meet the minimum guarantee, the minimum guarantee shall be reduced in accordance with an agreed to formula. For the last fifteen years of the agreement, which expires October 31, 2035, the Agreement provides that the Company shall pay one and one-quarter cents ($0.0125) per gallon for the first five million (5,000,000) gallons and for gallons thereafter the Company shall pay one cent ($0.01) per gallon, with an annual minimum of $82,500, payable in monthly installments of $6,875. The Company is responsible for all maintenance and repairs, utilities, and capital improvement costs incurred in connection with the water collection facility, which includes storage tanks, a pump building, piping, and other related equipment necessary for and related to the harvesting of water from the springs. The Agreement also provides that the owner of springs may sell water from the springs under certain conditions, provided, however, that the charge per gallon sold shall not be less than the price per gallon paid by the Company, with such proceeds divided equally between the Company and the owner. The Company has an option of first refusal in the event that the owner enters into an agreement for the sale of all or a portion of the real property, which includes the springs located on the real property. Upon execution of a valid binding contract between the owner and a third party, which contract shall be made subject to the terms of the option, the owner shall provide the Company a copy of the contract and it shall have thirty (30) days from date of delivery or mailing within which to exercise its option by delivering to the owner a check in the amount of the contract deposit, in which event the owner and the Company shall be bound by the contract sale.

 

The future minimum payments due under the terms of the Agreement are as follows:

 

Years Ending        
December 31,        
  2015     $ 65,000  
  2016       65,000  
  2017       65,000  
  2018       65,000  
  2019       65,486  
  Thereafter       1,280,347  
        $ 1,605,834  

   

18
 

 

Boreal Water Collection, Inc.

Notes to Financial Statements

March 31, 2015

(Unaudited)

 

 

Note 12 – Litigation

 

A “Summons with Notice” (but not a Complaint), naming BRWC, Mrs. Lavoie and Mr. Cortellazi, who was a Canadian citizen trying to buy controlling interest in the Company during 2011, as defendants, was filed on March 14, 2012 in the Sullivan County, New York Supreme Court (and later served on BRWC and Mrs. Lavoie) by counsel for plaintiffs (the proposed CEO and former Boreal employee, who were brought into the negotiations by Mr. Cortellazi, to assist him in his effort to buy controlling interest of the Company from Mrs. Lavoie). The index number of the court filing is 2012-676. The Company and Mrs. Lavoie have retained counsel.

 

A Complaint was served, seeking damages totaling $53,600 plus $15,000 in attorney’s fees, alleging violations of Article 11 of New York’s General Obligations Law. Defendants BRWC and Mrs. Lavoie filed an Answer and Counterclaims, dated September 24, 2012. Counterclaims were filed against Cortellazi, who admitted his role in the scheme, and others for fraud, defamation and slander, and damages, including punitive damages and attorney’s fees (See statement of changes in stockholders’ equity for reference to 3.0 million shares not previously recognized).

 

In October 2013, the parties to this action reached a settlement in the amount of $30,000, which provided that the Company would make monthly cash payments of $1,000 per month over a 30 month period of time and also reissue three million shares in exchange for the same shares in Gambino’s possession.

 

The Company may be defendant in various suits and claims that arise in the normal course of business. In the opinion of management, the ultimate disposition of these other suits and claims will have no material effect on the Company’s financial position, liquidity, or results of operations.

 

Note 13 – Subsequent Event

 

During April and May 2015 Ms. Lavoie and Mr. Umecki have elected to convert the amount due for their earned salary and stock awards into shares of the company stock in accordance with the terms of theirs contract. During April and May 2015, the Company issued a total of 140,953,085 shares of its common stock in payment of earned salary and stock awards for the period March 1, 2015 to April 30, 2015.

 

During April and May various convertible notes totaling approximately $114,000 were converted into 319,317,146 shares of the Company’s common stock.

 

As a part of a true-up provision of Ms. Lavoie contract, during May 2015 the Company issued 573,614,695 shares of its common stock.

 

19
 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

THE DISCUSSION IN THIS SECTION CONTAINS CERTAIN STATEMENTS OF A FORWARD-LOOKING NATURE RELATING TO FUTURE EVENTS OR OUR FUTURE PERFORMANCE. WORDS SUCH AS "ANTICIPATES," "BELIEVES," "EXPECTS," "INTENDS," "FUTURE," "MAY" AND SIMILAR EXPRESSIONS OR VARIATIONS OF SUCH WORDS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, BUT ARE NOT THE ONLY MEANS OF IDENTIFYING FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE ONLY PREDICTIONS AND ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY.

 

IN EVALUATING SUCH STATEMENTS, YOU SHOULD CONSIDER VARIOUS RISK FACTORS, INCLUDING BUT NOT LIMITED TO, THE INHERENT DIFFICULTY IN OPERATING A “GOING CONCERN;” THE EFFECT IF THERE WERE TO BE SIGNIFICANT CHANGES IN MANAGEMENT PERSONNEL; POTENTIAL PRODUCT LIABILITY ISSUES; DIFFICULTY IN MEETING COMPETITOR CHALLENGES SUCH AS THE INTRODUCTION OF NEW PRODUCTS; INCREASED RESEARCH AND DEVELOPMENT AND/OR EQUIPMENT ACQUISITION COSTS; CHANGES IN GENERAL ECONOMIC CONDITIONS AND/OR THE INDUSTRY IN WHICH THE COMPANY COMPETES; CHANGES IN THE QUALITY AND/OR SOURCES OF RAW MATERIALS; MAJOR GOVERNMENT REGULATION CHANGES AND/OR ISSUE(S); FLUCTUATIONS IN WORK FORCE QUALITY AND AVAILABILITY; LABOR DISRUPTIONS (SUCH AS RAW MATERIAL, CONTAINER MANUFACTURE, PRODUCT TRANSPORTATION STOPPAGES OR SLOWDOWNS); ANY OF WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.

 

A. RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2015 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2014

 

We are a calendar year corporation and report our financial information on both a quarterly and annual basis. Our management team is dedicated to building valuable, long-term relationships with existing and new customers. This dedication, developing and nurturing long-term relationships with our customers, old and new, drives our sales, marketing, customer service activities. We remain committed to providing our customers with a quality product, competitively priced, and delivered or made available for pickup on the dates specified in each sales order, because we recognize that long-term relationships are based on mutual trust between the supplier and the customer.

 

Comparison of three months ended March 31, 2015 to the three months ended March 31, 2014

 

The Company reported a net loss of $301,739 and $225,372 for the quarterly periods ended March 31, 2015 and 2014, respectively, an increase in net loss of $76,367, or 33.9%. The details of this decrease in net loss are discussed in the paragraphs below.

 

For the quarters ended March 31, 2015 and 2014, we reported sales of $531,414 and $450,087, an increase of $81,327, or 18%. This increase is attributable to increases in one gallon sales of $72,331, co-packing house brands of $2,000, transportation sales of $1,274, pallets sales of $838 and label sales of $15,375, partially offset by decreases in miscellaneous sales of $1,742 and co-packing sales of $8,749.

 

For the quarters ended March 31, 2015 and 2014, cost of sales and the gross profit percentages were 92% and 91% and the gross profit percentages were 8% and 9%, respectively. The increase in cost of sales and the resulting decrease in gross profit is a direct result of lower gross margins for our one gallon line.

 

Selling and general administrative expenses increased $25,923, or 19.6% to $157,770 for the quarterly period ended March 31, 2015 from $131,847 reported for the comparable period in 2014. As a percentage of sales, selling and general administrative expenses increased to 30% for the quarter ended March 31, 2015 from 29% for the same period in 2014. Direct selling expenses increased $2,418, to $51,937 in the quarterly period ended March 31, 2015 from $49,518 reported for the comparable period in 2014. This increase is partially due to the opening of a new sales office location in China. Direct selling expenses are comprised of delivery, advertising, and related travel costs.

 

General administrative expenses increased $23,505, or 28.6%, to $105,833 for the three month period ended March 31, 2015 from $82,238 reported for the comparable period in 2014. The increase in general and administrative expenses is attributable to increases in stock based compensation of $42,965, bank fees of $2,759, public trade fees of $3,312, D&O insurance of $463, property tax of $104, miscellaneous expenses of $1,137 and office supplies of $758, partially offset by decreases in bonuses of $3,150, salaries of $11,385, payroll taxes of $901, insurance of $2,909, professional fees of $7,000, and utilities of $2,648.

 

20
 

 

For the three month period ended March 31, 2015 and 2014, we reported interest expense of $84,614 and $31,581, respectively an increase of $53,033. Debt obligations and interest paid against these debt obligations are discussed in Note 8-9 to our financial statements for the three month periods ended March 31, 2015.

 

Other income totaled $0 and $1,350 for the three month periods ended March 31, 2015 and 2014, respectively, a decrease of $1,350.

 

For the three month periods ended March 31, 2015 and 2014, the Company did not pay any federal income taxes.

 

LIQUIDITY AND CAPITAL RESOURCES

 

At March 31, 2015, the Company had an accumulated deficit since January 10, 2006 (the date of quasi reorganization) of $3,897,165. Liquid assets at March 31, 2015 consisted primarily of cash and cash equivalents of $125,842. Current liabilities of $2,343,075 exceeded current assets by $1,800,455. Historically, we have financed our business through cash generated from ongoing operations, proceeds from sale of common stock to third party investors, borrowings from financial institutions, advances received from related parties, and officers of the Company. The company is currently pursuing financing alternatives.

 

Cash decreased $61,547 to $125,842 at March 31, 2015, as compared to $187,389 at December 31, 2014, which results from the following:

 

Net loss  $(301,739)
      
Adjustments to reconcile net loss to net cash   141,035 
      
Changes in operating assets and liabilities   (29,200)
      
Net cash used by operating activities   (189,904)
      
Investing activities   (1,328)
      
Financing activities   129,685 
      
Net decrease in cash  $(61,547)

 

Cash used by our operating activities for the three months ended March 31, 2015 was approximately $189,904, comprised of a net loss of $301,739, noncash reconciling adjustments of $141,035, changes in operating assets and liabilities of $29,200.

 

The $29,200 change in operating assets and liabilities is primarily attributable to increases in deferred financing costs of $33,895, increases in prepaid expenses of $30,259, increases in inventory of $12,893, increases in deferred revenue of $6,341 and increases in accounts payable and accrued expenses of $2,985, partially offset by decreases in accounts receivable of $57,173.

 

Net cash used for investing activities increased $1,328, from $0 for the comparable period in 2014.

 

Cash provided for financing activities was approximately $129,685, comprised of proceeds from revenue based factoring of $230,000 partially offset by advances to related parties of $9,004, payments for capital leases of $1,028 and payments on revenue based factoring of $90,283.

 

21
 

 

In April 2009, the Company acquired the assets of A.T. Reynolds and Sons, Inc. (“Reynolds”), operating as Leisure Time Spring Water (“Leisure”) in Kiamesha Lake, New York (See Note 12). In connection with the acquisition of these assets, the Company assumed a $1.9 million mortgage that was due a commercial bank (“Bank”) against a building and land, included as part of the total assets acquired from Reynolds. On April 3, 2009, the Company entered into a Mortgage Consolidation, Modification and Extension Agreement with the Bank. The Company was required to make interest payments only through April 3, 2011, at which time the entire principal balance was due the Bank. Monthly interest was based on 90-day Libor at 4.50%. The $1.9 million mortgage was personally guaranteed by the Company’s Chief Executive Officer. The balance due against this mortgage at December 31, 2012 was $1,943,426. The balance due the Bank on April 3, 2011 was not paid putting the Company in default under the terms of the original agreement. The Company entered into a Forbearance Agreement (“Agreement”) on May 31, 2011, and upon expiration of that Agreement, the Company entered into an extension to the Agreement on October 3, 2011, which extended the Agreement period until April 3, 2012. On April 3, 2012, the Agreement period was further extended until October 3, 2012. On October 3, 2012 the forbearance agreement expired and the company was in default of its mortgage obligation.

 

Under the terms of the May 31, 2011 Agreement, the Company was required to make monthly principal payments of $15,000 plus all accrued and unpaid interest on the debt obligation. The Company was also assessed a forbearance fee of $19,000, and it was required to provide evidence acceptable to the commercial bank that the Company and Sullivan County had agreed to a payment plan for real estate taxes that were in arrears as of the date of the Agreement. The interest rate based on 90-day Libor rate of 4.0% did not change as a result of the Forbearance Agreement. All loan documents and the Security Agreement remained in full force and effect in accordance with the original terms. Under the terms of the October 3, 2011 Agreement, the commercial bank waived the $15,000 monthly principal payments, but not the interest payments. An additional $19,000 forbearance fee was assessed. All other terms of the original note obligation and the May 31, 2011 Agreement remained in full force and effect. The interest rate based on 90-day Libor rate of 4.625% did not change as a result of this Forbearance Agreement. Under the terms of the April 3, 2012 Agreement, the commercial bank assessed an additional forbearance fee of $19,000, continued to waive the monthly $15,000 principal payment, but not the monthly interest payments. All other terms of the original note obligation and the May 31, 2011 Agreement remained in full force and effect. The 90-day Libor rate of 4.5% did not change as a result of this Forbearance Agreement. The company continued to accrue interest on this obligation until such time as a refinancing plan was finalized.

 

In August 2013 the Company successfully completed negotiations with its Bank to accept $625,000 in satisfaction of its obligations on the mortgage. The difference between the $1.9 mortgage obligation (plus interest) and the $625,000 accepted in satisfaction of the mortgage is shown on the statements of operations as an extraordinary gain from extinguishment of debt. Concurrently the Company secured a new $900,000 mortgage with a “Lender.” This new mortgage bears interest at 12% per annum and is due and payable on August 27, 2014. The new mortgage requires the Company to make monthly interest only payments of $9,000. Under the terms of the new mortgage, the Company has the option to extend the maturity date of the new mortgage for one year providing it pays the Lender a fee of $54,000. . During August 2014, the Company elected to extend the mortgage six months until January 31, 2015 by paying $45,000. In January 2015, the Company elected to extend the mortgage an additional six months until July 31, 2015 by paying $27,000.

 

During May and June 2014, the Company entered into a series of unsecured convertible promissory note agreements ("Notes") with JSJ Investments, Inc. ("JSJ" or "holder"). The principal amount for these two Notes total $131,256 with interest from 12% to 15% per annum. The maturity dates are November 2014. There is a 150% cash redemption premium on the principal amount only, upon approval by JSJ. The Note is convertible into the Company’s common stock. The conversion amount is the Note principal plus default interest, if any. During November 2014, JSJ converted $55,000 of their notes into the Company’s common stock for 26,415,520 shares at an exercise price of $0.00225 per share. JSJ Investments, Inc. entered into a convertible promissory note with the Company dated May 25, 2014 (“JSJ Note”). During January and March 2015, JSJ converted their $76,256 of their notes (including accrued interest) into the Company’s common stock for 59,330.032 shares at exercise prices ranging from $.000733333 to $0.001118. The company also entered into another unsecured promissory note dated May 25, 2014 for $68,082 with interest at 12% per annum. This note for $68,082 was immediately converted into the Company’s stock for 10,621,266 shares at an exercise price of $0.00641 per share.

 

On August 14, 2014, the Company entered into a “Revenue Based Factoring (RBF/ACH) Agreement” (“Agreement”) with Strategic Funding Source, Inc. (“SFS”), a New York based company. The Company, pursuant to the Agreement, sold future receipts, accounts, written contracts and other obligations to SFS (“receipts”). The sale price is $100,000.00. The company will make a total of approximately 189 daily loan payments of $740. SFS purchased a total of $140,000.00 in receipts. The purchase price was received by the Company on August 22, 2014. The Agreement has an indefinite term, lasting until the Company completes its obligations contained therein. SFS has a security interest in all accounts, chattel paper, equipment, general intangibles, instruments and inventory. Mrs. Francine Lavoie, sole member of the Board of Directors and Company CEO, has also personally guaranteed the Agreement.

 

22
 

 

On October 2, 2014, the Company entered into a convertible promissory note with LG Capital for $78,750 with interest at 8% per annum and matures on October 1, 2015. The Note is convertible into the Company’s common stock.

 

On October 14, 2014, the Company entered into a convertible promissory note with Typenex Co-Investment for $107,500 with interest at 10% per annum and matures on July 14, 2015. The Note is convertible into the Company’s common stock.

 

On October 15, 2014, the Company entered into a convertible promissory note with Auctus Private Equity for $75,000 with interest at 8% per annum and matures on July 15, 2015. The Note is convertible into the Company’s common stock.

 

On October 15, 2014, the Company entered into a convertible promissory note with Eastmore Capital for $75,000 with interest at 8% per annum and matures on July 15, 2015. The Note is convertible into the Company’s common stock.

 

On December 4, 2014, the Company entered into a Promissory Note with Quarter Spot, a Virginia based company. The Company, pursuant to the Agreement, sold future receipts, accounts, written contracts and other obligations to Quarter Spot. The sale price is $137,250. The company will make a total of approximately 257 daily loan payments of $673. SFS has a security interest in all accounts, chattel paper, equipment, general intangibles, instruments and inventory.

 

On February 18, 2015, the Company entered into a Promissory Note with Platinum Rapid Funding Group, a New York based company. The Company, pursuant to the Agreement, sold future receipts, accounts, written contracts and other obligations to Platinum Rapid Funding. The sale price is $100,000. The company will make a total of approximately 147 daily loan payments of $918. Platinum purchased a total of $135,000.00 in receipts. Platinum has a security interest in all accounts, chattel paper, equipment, general intangibles, instruments and inventory.

 

On February 23, 2015, the Company entered into a Promissory Note with World Global Financing, Inc., a Florida based company. The Company, pursuant to the Agreement, sold future receipts, accounts, written contracts and other obligations to World Global. The sale price is $130,000. The company will make a total of approximately 168 daily loan payments of $1,014. World Global purchased a total of $170,300 in receipts. World Global has a security interest in all accounts, chattel paper, equipment, general intangibles, instruments and inventory.

 

During June 2013, a third party loaned the Company $50,000 bearing interest at 6.8% and maturing May 2015 (as amended in November 2014).

 

Our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern. The accompanying financial statements have been prepared assuming that the company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Currently, we have a minimum cash balance available for the payment of ongoing operating expenses, and our operations is not providing a source of funds from revenues sufficient to cover our operational costs to allow it to continue as a going concern. The continued operations of the Company is dependent upon generating profits from operations and raising sufficient capital through placement of our common stock or issuance of debt securities, which would enable the us to carry out our business plan.

 

The company currently is consuming cash reserves at the rate of approximately $65,000 per month assuming current levels of revenue. In the ensuing months, should the company be unsuccessful in significantly increasing sources of revenue it will be forced to find additional capital to support operations and fund its growth

 

In the event we do not generate sufficient funds from revenues or financing through the issuance of our common stock or from debt financing, we may be unable to fully implement our business plan and pay our obligations as they become due, any of which circumstances would have a material adverse effect on our business prospects.

 

During 2009, the Company obtained a revolving line of credit with a commercial bank in the amount of $250,000 at annual interest rate of 5.25%. The line of credit is secured by the Company’s accounts receivable and inventory. On September 22, 2014, the commercial bank in coordination with the Company decided to exercise their right to cancel the line of credit effective February 22, 2015. As of February 22, 2015, the bank has allowed the line of credit with the Company to expire. The commercial bank has however informally agreed to extend the line of credit for six months subject to an appraisal and securing a second mortgage on the real property.

 

23
 

 

Critical Accounting Policies and Procedures and Recent Accounting Pronouncements

     

The Company’s critical accounting policies and procedures and recent accounting pronouncements are set forth in the Notes to our Financial Statements.

 

Off-Balance Sheet Arrangements

 

None

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

The Company does not invest in market risk sensitive instruments. At times, the Company's cash equivalents consist of overnight deposits with banks and money market accounts. The Company's objective in connection with its investment strategy is to maintain the security of its cash reserves without taking market risk with principal.

  

Item 4. Controls and Procedures

 

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

 

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in the reports filed under the Securities Exchange Act, is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to the Company’s management, including the Company’s chief executive officer/chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

 

The Chief Executive Officer/Chief Financial Officer of the Company has evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer has concluded that these disclosure controls and procedures are effective.  There were no changes in our internal control over financial reporting during the Company's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

 

No changes in the Company's internal control over financial reporting have come to management's attention during the Company's last fiscal quarter that have materially affected, or are likely to materially affect, the Company's internal control over financial reporting.

 

24
 

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

The “Cortellazi, et al Matter:”

 

A “Summons with Notice” (but not a Complaint), naming BRWC, Mrs. Lavoie and Mr. Cortellazi, who was a Canadian citizen trying to buy controlling interest in the Company during 2011, as defendants, was filed on March 14, 2012 in the Sullivan County,

 

New York Supreme Court (and later served on BRWC and Mrs. Lavoie) by counsel for plaintiffs (the proposed CEO and former Boreal employee, who were brought into the negotiations by Mr. Cortellazi, to assist him in his effort to buy controlling interest of the Company from Mrs. Lavoie). The index number of the court filing is 2012-676. The Company and Mrs. Lavoie have retained counsel.

 

A Complaint was served, seeking damages totaling $53,600 plus $15,000 in attorney’s fees, alleging violations of Article 11 of New York’s General Obligations Law. Defendants BRWC and Mrs. Lavoie filed an Answer and Counterclaims, dated September 24, 2012. Counterclaims were filed against Cortellazi, who admitted his role in the scheme, and others for fraud, defamation and slander, and damages, including punitive damages and attorney’s fees (See statement of changes in stockholders’ equity for reference to 3.0 million shares not previously recognized).

 

In October 2013, the parties to this action reached a settlement in the amount of $30,000, which provided that the Company would make monthly cash payments of $1,000 per month over a 30 month period of time and also reissue three million shares in exchange for the same shares in Gambino’s possession

 

The Company may be a defendant in various suits and claims that arise in the normal course of business. In the opinion of management, the ultimate disposition of these other suits and claims, if any, will not likely materially affect the Company’s financial position, liquidity, or results of operations.

 

ITEM 1A. RISK FACTORS.

 

We have elected to be treated as an Emerging Growth Company (EGC) for all purposes under Section 107(a) of the Jobs Act.  Accordingly, we will not be providing risk factors in this 10-Q report.

 

ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES.

     

The following shares were issued pursuant to Section 4(2) of the Securities Act of 1933.

 

On January 20, 2015, the Company issued 180,032,305 shares of its $0.001 par value common stock to its majority stockholder in exchange for their conversion of their loan of $ 256,240.

 

On January 22, 2015, the Company issued 16,651,113 shares of its $0.001 par value common stock to a third party investor in exchange for the conversion of their loan of $18,621.

 

On January 23, 2015, the Company issued 203,566,444 shares of its $0.001 par value common stock to related parties in payment of their earned salary and stock awards of $419,671 for the period September 2012 to January 2015.

 

On March 10, 20 and 26, 2015 the Company issued 116,742,065 shares of its $0.001 par value common stock to a third party investor in exchange for their conversion of their loans and accrued interest totaling $ 64,737.

 

25
 

 

Item 3. Defaults Upon Senior Securities

 

NONE

 

Item 4. Mine Safety Disclosures

 

Not applicable 

 

Item 5. Other Information

 

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

 

Item 6. Exhibits

 

EXHIBIT    
NUMBER   DESCRIPTION
     
31.1   Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
31.2   Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
32.1   Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
32.2   Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
101.INS XBRL   Instance Document
101.SCH XBRL   Taxonomy Extension Scheme
101.CAL XBRL   Taxonomy Extension Calculation Linkbase
101.DEF XBRL   Taxonomy Extension Definition Linkbase
101.LAB XBRL   Taxonomy Extension Label Linkbase
101.PRE XBRL   Taxonomy Presentation Linkbase

 

26
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  Boreal Water Collection LLC  
       
  By: /s/ Francine Lavoie  
  Name: Francine Lavoie  
  Title: Principal Executive Officer, Principal Financial Officer, Controller and Sole Member of the Board of Directors  
  Date: May 12, 2015  

  

 

 

 

 

 

27



EXHIBIT 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Francine Lavoie, certify that:

 

  1. I have reviewed this amendment to quarterly report on Form 10-Q of Boreal Water Collection, Inc. (the “registrant”) for the quarter ended March 31, 2015;
     
  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 13a- 15(e) and 15d- 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules l3a-l5(f) and l5d-15(f)) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officer(s), and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
     

Date: May 12, 2015

  By: /s/ Francine Lavoie     
  Name: Francine Lavoie
  Title: Chief Executive Officer

 



EXHIBIT 31.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Francine Lavoie, certify that:

  

  1. I have reviewed this amendment to quarterly report on Form 10-Q of Boreal Water Collection, Inc. (the “registrant”) for the quarter ended March 31, 2015;
     
  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 13a- 15(e) and 15d- 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules l3a-l5(f) and l5d-15(f)) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officer(s), and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
     

Date: May 12, 2015

  By: /s/ Francine Lavoie       
  Name: Francine Lavoie
  Title: Chief Financial Officer



EXHIBIT 32.1

 

CERTIFICATION OF

PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

Francine Lavoie, Chief Executive Officer of Boreal Water Collection, Inc. (the “Registrant”) certifies, under the standards set forth and solely for the purposes of 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to her knowledge, the Amendment to Quarterly Report on Form 10-Q of the Registrant for the quarter ended March 31, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q Amendment fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

Date: May 12, 2015

 

  By: /s/ Francine Lavoie     
  Name: Francine Lavoie
  Title: Chief Executive Officer

 

A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

 



EXHIBIT 32.2

 

CERTIFICATION OF

PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

Francine Lavoie, Chief Financial Officer of Boreal Water Collection, Inc. (the “Registrant”) certifies, under the standards set forth and solely for the purposes of 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to her knowledge, the Amendment to Quarterly Report on Form 10-Q of the Registrant for the quarter ended March 31, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q Amendment fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

Date: May 12, 2015

 

  By: /s/ Francine Lavoie     
  Name: Francine Lavoie
  Title: Chief Financial Officer

 

A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

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