Empowered Product Inc (OTC:EMPO)

Item 8.01 Other Events

 
On April 22, 2015, the board of directors of Empowered Products, Inc., a Nevada corporation (the “Company”), unanimously voted in favor of pursuing voluntary deregistration of the Company’s common stock from the Securities Exchange Act of 1934, as amended. The Company intends to file a Form 15 on or about April 30, 2015.

Empowered Products, Inc. and Subsidiaries

Consolidated Statements of Operations

 

		Years Ended December 31,
		2014				2013
Revenue		$	4,467,485			$	4,609,722
Cost of revenue			2,077,516				1,720,703
Gross profit			2,389,969				2,889,019
Selling and distribution			1,680,766				1,173,707
Research and development			146,112				712
General and administrative			1,576,633				1,567,621
Income (loss) from operations			(1,013,542	)			146,979
Interest income			1,566				395
Interest expense			(3,355	)			(13,125	)
Net income (loss)		$	(1,015,331	)		$	134,249
Net income (loss) per share:
Basic		$	(0.02	)		$	0.00
Diluted		$	(0.02	)		$	0.00
Weighted average common shares outstanding for basic			62,788,856				62,588,856
Weighted average common shares outstanding for diluted			62,788,856				62,841,458

 

Management Discussion and Analysis

 

Years Ended December 31, 2014 and 2013

 

Revenue. Revenues for the year ended December 31, 2014 were approximately $4.5 million, compared to revenues of approximately $4.6 million in the comparable period in 2013, a decrease of 2.0%. The 2.0% decrease in revenue was primarily due to fewer pipeline sales into new retail chains. The major chain stores now carrying our lubricant products are Walgreens, CVS, Rite Aid, Kroger/Fred Meyer, HEB, Walmart and Roundy’s Inc.

 

Net income (loss). We had net loss of approximately $1,015,000 for the year ended December 31, 2014 compared with net income of approximately $134,000 for the year ended December 31, 2013. The net loss was primarily the result of the increased expenses in sales and promotions, as well as an increase in research and development.

 

Item 1.01          Entry into a Material Definitive Agreement.

On March 31, 2015, Empowered Products, Inc. (the “Company”) entered into a Shareholder Loan Agreement (the “Agreement”) with Scott Fraser (the “Lender”), who holds a majority of the Company’s issued and outstanding common stock and is the Company’s President and Chief Executive Officer. Under the terms of the Agreement, the Lender agreed to provide the Company with a $250,000 loan, which bears interest at a rate of 2.35 percent per annum, calculated yearly. The loan will be repaid in five consecutive yearly installments of principal and interest beginning on the first anniversary of the Agreement. The Company may prepay the outstanding balance without penalty at any time while not in default. The loan may be accelerated if the Company is in default of the Agreement, including where the Company fails to make a payment or perform any of its obligations, any representation made in connection with the Agreement is materially incorrect or misleading, or if the Company is dissolved, has a petition for bankruptcy filed against it, any of its material assets are attached, or if any event analogous to the preceding events occurs. The loan is secured by the accounts receivable and inventory of the Company.

Item 1.01     Entry into a Material Definitive Agreement.

 
On December 22, 2014, Empowered Products, Inc. (the “Company”) entered into a Shareholder Loan Agreement (the “Agreement”) with Scott Fraser (the “Lender”), who holds a majority of the Company’s issued and outstanding common stock and is the Company’s President and Chief Executive Officer. Under the terms of the Agreement, the Lender agreed to provide the Company with a $250,000 loan, which bears interest at a rate of 2.35 percent per annum, calculated yearly. The loan will be repaid in five consecutive yearly installments of principal and interest beginning on the first anniversary of the Agreement. The Company may prepay the outstanding balance without penalty at any time while not in default. The loan may be accelerated if the Company is in default of the Agreement, including where the Company fails to make a payment or perform any of its obligations, any representation made in connection with the Agreement is materially incorrect or misleading, or if the Company is dissolved, has a petition for bankruptcy filed against it, any of its material assets are attached, or if any event analogous to the preceding events occurs. The loan is secured by the accounts receivable and inventory of the Company.

Empowered Products, Inc. and Subsidiaries

Consolidated Condensed Statements of Operations

(Unaudited)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2014				2013				2014				2013
Revenue		$	1,075,824			$	1,527,571			$	3,655,310			$	3,686,516
Cost of revenue			509,637				522,856				1,596,751				1,335,507
Gross profit			566,187				1,004,715				2,058,559				2,351,009
Selling and distribution			517,137				368,647				1,399,997				826,222
General and administrative			332,986				362,515				1,191,891				1,210,519
Income (loss) from operations			(283,936	)			273,553				(533,329	)			314,268
Interest income			39				67				47				279
Interest expense			(669	)			(4,464	)			(2,540	)			(12,653	)
Net income (loss)		$	(284,566	)		$	269,156			$	(535,822	)		$	301,894
Earnings (loss) per share:
Basic		$	(0.00	)		$	0.00			$	(0.01	)		$	0.00
Diluted		$	(0.00	)		$	0.00			$	(0.01	)		$	0.00
Weighted average common shares outstanding:
Basic			62,788,856				62,588,856				62,788,856				62,522,189
Diluted			62,788,856				63,591,493				62,788,856				62,691,216

Management Discussion and Analysis

Revenue for the three months ended September 30, 2014 was approximately $1.1 million as compared to approximately $1.5 million in the comparable period in 2013. The 30% decrease in revenue from the comparable period in 2013 was primarily attributable to 2013 sales reflecting an initial sale into a national retail chain’s sales pipeline. In addition, our freight revenue decreased and returns, promotional allowances, discounts and coupon rebates increased due to increased focus on product promotions to the consumer. These costs were charged directly to revenue. Sales in 2013 benefited from the initial fill orders into the distribution chains of major retailers on which we typically have better margins.

No expense or benefit from income taxes was recorded in the three months ended September 30, 2014 or 2013 due to our net loss and the available net operating loss carry forwards utilized, respectively.

We had net loss of approximately $286,000 for the three months ended September 30, 2014 compared with a net income of approximately $269,000 for the three months ended September 30, 2013.

Empowered Products, Inc. and Subsidiaries

Consolidated Condensed Statements of Operations

(Unaudited)

		Three Months Ended June 30,								Six Months Ended June 30,
		2014				2013				2014				2013
Revenue		$	1,236,874			$	1,325,926			$	2,579,486			$	2,158,945
Cost of revenue			618,507				482,679				1,087,218				813,561
Gross profit			618,367				843,247				1,492,268				1,345,384
Selling and distribution			428,964				260,989				883,068				456,184
General and administrative			346,759				269,357				858,592				848,485
Income (loss) from operations			(157,356	)			312,901				(249,392	)			40,715
Interest income			7				72				8				212
Interest expense			(824	)			(4,072	)			(1,872	)			(8,189	)
Net income (loss)		$	(158,173	)		$	308,901			$	(251,256	)		$	32,738
Earnings (loss) per share:
Basic		$	(0.00	)		$	0.00			$	(0.00	)		$	0.00
Diluted		$	(0.00	)		$	0.00			$	(0.00	)		$	0.00
Weighted average common shares outstanding:
Basic			62,788,856				62,588,856				62,788,856				62,488,856
Diluted			62,788,856				62,791,949				62,788,856				62,516,921

Management Discussion and Analysis

Revenue for the three months ended June 30, 2014 was approximately $1.2 million as compared to approximately $1.3 million in the comparable period in 2013. The 7% decrease in revenue was primarily attributable to our largest and most successful coupon campaign during this quarter, across 7,400 Walgreen stores, which was charged directly to revenue. This rebate campaign increased our overall sales volume, however, the coupon rebates reduced this increase in sales by approximately $395,000. In addition, we increased our returns allowance this quarter for approximately $98,000 as one of our retail chains, Meijer, removed our lubricant products from their 160 stores in July pending FDA clearance, which we anticipate will occur in late 2014 or early 2015. The major chain stores now carrying our lubricant products are Walgreens, CVS, Rite Aid, Kroger/Fred Meyer, HEB and Walmart.

We had net loss of approximately $158,000 for the three months ended June 30, 2014 compared with a net income of approximately $309,000 for the three months ended June 30, 2013.

Empowered Products, Inc. and Subsidiaries

Consolidated Statements of Operations

		Years Ended December 31,
		2013				2012
Revenue		$	4,609,722			$	3,000,451
Cost of revenue			1,720,703				1,348,616
Gross profit			2,889,019				1,651,835
Selling and distribution			1,173,707				897,055
Research and development			712				721
General and administrative			1,567,621				1,039,312
Income (loss) from operations			146,979				(285,253	)
Interest income			395				121
Interest expense			(13,125	)			(22,275	)
Net income (loss)		$	134,249			$	(307,407	)
Net income (loss) per share:
Basic		$	0.00			$	(0.00	)
Diluted		$	0.00			$	(0.00	)
Weighted average common shares outstanding for basic			62,588,856				62,388,856
Weighted average common shares outstanding for diluted			62,841,458				62,388,856

Management Discussion and Analysis

Years Ended December 31, 2013 and 2012

Revenue. Revenues for the year ended December 31, 2013 were approximately $4.6 million, compared to revenues of approximately $3.0 million in the comparable period in 2012, an increase of 53.6%. The increase in revenue was primarily due to new sales of Pink, Pink Water, Gunoil and Gunoil H2O to national retail chains throughout the United States. The major chain stores now carrying our lubricant products are Walgreens, CVS, Rite Aid, Kroger/Fred Meyer, HEB and Wal-Mart. We also saw a 7.8% increase in sales through our established distributor channels.

income (loss). We had net income of approximately $134,000 for the year ended December 31, 2013 compared with net loss of approximately $307,000 for the year ended December 31, 2012. The increase in our net income was primarily due to increased sales to national retail chains.

Empowered Products, Inc. and Subsidiaries

Consolidated Condensed Statements of Operations

(Unaudited)

 

 

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2013				2012				2013				2012
Revenue		$	1,325,926			$	685,408			$	2,158,945			$	1,501,321
Cost of revenue			482,679				408,770				813,561				693,956
Gross profit			843,247				276,638				1,345,384				807,365
Selling and distribution			260,989				252,679				456,184				529,918
General and administrative			269,357				279,970				848,485				519,146
Income (loss) from operations			312,901				(256,011	)			40,715				(241,699	)
Interest income			72				–				212				–
Interest expense			(4,072	)			(5,603	)			(8,189	)			(11,320	)
Net income (loss)		$	308,901			$	(261,614	)		$	32,738			$	(253,019	)
Earnings (loss) per share:
Basic		$	0.00			$	(0.00	)		$	0.00			$	(0.00	)
Diluted		$	0.00			$	(0.00	)		$	0.00			$	(0.00	)
Weighted average common shares outstanding:
Basic			62,588,856				62,388,856				62,488,856				62,388,856
Diluted			67,288,856				62,388,856				66,063,856				62,388,856

 

LAS VEGAS, June 11, 2013 /PRNewswire/ -- Empowered Products, Inc. (EMPO), an emerging leader in the high-growth sexual wellness sector through its award-winning PINK and GunOil brands, announces that Rite Aid has placed initial orders for Empowered Products' PINK� Silicone feminine lubricant for placement in 4,548 U.S. stores and PINK Water feminine lubricant for placement in 3,705 U.S. stores. Rite Aid anticipates that the products will be on store shelves for its customers starting in July.

Thus far in 2013, Empowered Products has entered into several new sales relationships with major U.S. retailers, thereby increasing the company's shelf-space presence as follows:

• CVS : 5,000 U.S. retail locations
• Wal-Mart: 600 U.S. retail locations
• Walgreens : 250 U.S. retail locations
• Rite Aid: 4,548 U.S. retail locations for PINK� Silicone / 3,705 U.S. retail loations for PINK� Water
• Kroger :1,400 U.S. retail locations
• Target : Online retail sales at Target.com

Scott Fraser, president and CEO of Empowered Products, commented, "I am proud of our small, independent company and our proprietary wellness formulas, which are now beginning to flourish among those of the major conglomerates such as Procter & Gamble and Johnson & Johnson. We are an active example of a consumer products company to successfully grow beyond its initial niche market into the mainstream consumer retail space."

All EMPO shareholders are encouraged to review our progress with the national chains at this link:

Disclosure: GeoInvesting is providing this information for your edification and in no way has any affiliation with any promoters and/or newsletters disseminating information on EMPO, nor is GeoInvesting being paid to post this information. At times, the GeoTeam may trade P&D's on a long or short basis, depending on how we feel the momentum of the stocks will be affected by the efforts of stock promoters and any ensuing dumps.

Anticipated cash flows from operations and funds available from our credit facilities, together with cash on hand, will provide sufficient liquidity to meet our working capital needs and planned capital expenditures

OTF was incorporated in the State of Nevada on July 10, 2009. Prior to the Merger, OTF was engaged in the business of providing transactional financial, corporate reporting, commercial and digital printing. On June 30, 2011, OTF (i) closed a reverse merger transaction, described below, pursuant to which OTF became the 100% parent of EP Nevada, (ii) assumed the operations of EP Nevada and its subsidiaries and (iii) changed its name from “On Time Filings, Inc.” to “Empowered Products, Inc.” EP Nevada (which was formerly named Empowered Products, Inc.) changed its name to Empowered Products Nevada, Inc. upon its merger with Acquisition Sub. Immediately after the Merger and the completion of EP Nevada’s name change, OTF changed its name to Empowered Products, Inc. by merging with its wholly owned subsidiary, Name Change Merger Sub.