INITIAL DECISION RELEASE NO. 702

ADMINISTRATIVE PROCEEDING

FILE NO. 3-16173

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

In the Matter of

the Registration Statement of

Esir1, Inc. 

433 North Camden Drive

6th Floor

Beverly Hills, CA 90210

INITIAL DECISION ON 

DEFAULT

October 24, 2014

APPEARANCES: Melissia A. Buckhalter-Honore for the Division of Enforcement, 

Securities and Exchange Commission 

BEFORE: Brenda P. Murray, Chief Administrative Law Judge

Background

On September 25, 2014, the Securities and Exchange Commission (Commission) in an 

Order Fixing Time and Place of Public Hearing (Hearing Order) and Instituting Proceedings 

Pursuant to Section 8(d) of the Securities Act of 1933 (Securities Act) ordered a hearing on October 

9, 2014. Esir1, Inc. (Esir1), was required to answer the allegations within ten days of service of the 

Hearing Order. Hearing Order at 2; 17 C.F.R. § 201.220(b). The Division of Enforcement 

(Division) filed a Notice of Personal Service (Notice of Service) on October 1, 2014, showing that a 

licensed process server delivered the Hearing Order to Esir1’s registered agent on September 26, 

2014. Notice of Service, Exhibit 1.

On October 1, 2014, I issued an Order stating the hearing would be conducted by video, and 

postponed the start time from 9:30 a.m. EDT to 12:30 p.m. EDT, since the parties are located in 

California. On October 8, 2014, the Division filed a Motion for Issuance of Stop Order Upon 

Default (Motion) with the Declaration of Kendra S. Decker (Decker Decl.) and Ex. A, Esir1’s 

Amendment No. 2 to Form S-1. The Motion also includes the Declaration of Melissia A. 

Buckhalter-Honore (Buckhalter-Honore Decl.) with Ex. 1, Notice of Service; Ex. 2, October 1, 

2014, email from Melissia A. Buckhalter-Honore (Buckhalter-Honore) to Martinez Rise Walden 

(Walden) at Esir1 sending the Hearing Order and a letter announcing that the Division’s files were 

available for inspection by Esir1; Ex. 3, email from Walden at Esir1 on October 1, 2014, to 
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Buckhalter-Honore acknowledging receipt of materials from the Division; and Ex. 4, a certified

copy of Esir1’s Amendment No. 2 to Form S-1.1

Esir1 has not filed an Answer to the Hearing Order, did not participate in the hearing on 

October 9, 2014, and has not filed an opposition to the Division’s Motion. 

Issue

According to the Division, Esir1’s second amendment filed on October 4, 2013, to the Form 

S-1 it filed on July 31, 2013, includes an audit report, which falsely represents it was issued and 

signed by Grant Thornton LLP (Grant Thornton). Hearing Order at 2; Motion at 2, 5. The purpose 

of the proceeding is to determine whether the allegations of the Division are true, to afford 

Respondent an opportunity to establish any defenses to the allegations, and to determine whether a 

stop order should be issued suspending the effectiveness of the Registration Statement. Hearing 

Order at 2. 

Findings 

I admit into evidence the declarations and exhibits that accompany the Division’s Motion

and I take official notice of Esir1’s filings with the Commission, which are publicly available on 

EDGAR. 17 C.F.R. § 201.323. I applied preponderance of the evidence as the standard of proof. 

See Steadman v. SEC, 450 U.S. 91, 101-04 (1981). 

I find Esir1 in default because it did not file an Answer, appear at the hearing, respond to a 

dispositive motion, or otherwise defend the proceeding. See 17 C.F.R. §§ 201.155(a), .220(f), .310. 

Accordingly, I find the allegations in the OIP to be true. 17 C.F.R. § 201.155(a). 

According to its initial Form S-1, the general form for registration of securities under the 

Securities Act, filed July 31, 2013, Walden has been President and Director of Esir1 since its 

inception in January 2009. Esir1 S-1 at 15. In that filing, Esir1 describes itself as a

U.S. domiciled corporation, having a registered office[] in Beverly Hills, CA; as 

well as offices in London, UK and Berlin, Germany . . . . 

Esir1, Inc. is a commercially producing oil and gas company, holding production, 

as well as mineral rights in the form of leaseholds in the United States, specifically 

in the states of Ohio, Nevada and Wyoming . . . . We have hand-picked a team of 

highly-reputed and experienced Oil & Gas veterans who have been instrumental in 

assisting in targeting valuable production and leaseholds in the most highly 

concentrated producing oil trend areas.

Id. at 12. The original filing included the report of an independent registered public accounting 

firm, AdviseLLP, which audited Esir1’s balance sheets for 2011 and 2012, dated June 6, 2013. Id.

at 18.

 1 Walden informed the Division on October 1, 2014, that the registered agent had not yet provided 

her with the Hearing Order. The Division emailed Walden the Hearing Order and Walden 

acknowledged receipt on October 1, 2014. Motion, Buckhalter-Honore Decl. at 2.
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Esir1 filed delaying amendments on August 8 and 9, 2013, and it filed a Form S-1/A on 

August 19, 2013 (Amendment No.1), and a Form S-1/A on October 4, 2013 (Amendment No. 2). 

Amendment No.1 included the same independent report by AdviseLLP included in the original 

Form S-1. Amendment No. 1 at 18. Amendment No. 2 included a report dated August 19, 2013, 

and purportedly signed by Grant Thornton in which Grant Thornton represents that it audited 

Esir1’s balance sheets as of July 31, 2011, 2012, and 2013, and the statements of operations and 

cash flows for those same years. Amendment No. 2 at 18.

Kendra S. Decker (Decker), a Grant Thornton partner in the SEC Regulatory Matters group,

provided conclusive, undisputed testimony that Esir1’s representation in its Amendment No. 2 is 

false, and that Grant Thornton did not audit Esir1’s financials or provide an audit report for Esir1. 

Decker Decl. Esir1 is not listed in Grant Thornton’s customer database; and various Grant 

Thornton partners in its Los Angeles, California office, which covers the Southern California region

where Esir1 is located, who would have been aware of an Esir1 audit, had no knowledge of an audit

of Esir1 or of Esir1 being a Grant Thornton client. Id. at 2. Decker noted that the audit was not 

prepared in Grant Thornton’s standard audit report format, there was no consent filed with the 

filing, and the “Experts” section of Amendment No. 2 identified another accounting firm and did 

not mention Grant Thornton. Id.

Conclusions of Law

Section 8(d) of the Securities Act states:

If it appears to the Commission at any time that the registration statement includes 

any untrue statement of a material fact or omits to state any material fact required to 

be stated therein or necessary to make the statements therein not misleading, the 

Commission may, after notice by personal service or the sending of confirmed 

telegraphic notice, and after opportunity for hearing (at a time fixed by the 

Commission) within fifteen days after such notice by personal service or the sending 

of such telegraphic notice, issue a stop order suspending the effectiveness of the 

registration statement. 

15 U.S.C. § 77h(d). 

I find that the purported Grant Thornton audit report in Esir1’s Amendment No. 2 

constitutes an untrue statement of a material fact. A fact is material if an investor would consider it 

significant in making an investment decision. See Petrofab Int’l, Inc., Securities Act Release No. 

6769, 1988 SEC LEXIS 782, at *16 (Apr. 20, 1988) (“Information in a registration statement is 

material when there is a substantial likelihood that a reasonable investor would attach importance to 

it in determining whether to purchase the security in question.” (citing TSC Indus., Inc. v. 

Northway, Inc., 426 U.S. 438, 449 (1976))). Investors would consider the fact that Esir1 included a 

falsified independent audit report in its registration statement important because it casts doubt on 

the integrity of Esir1’s management and the reliability of Esir1’s financial statements.

Order

Pursuant to Section 8(d) of the Securities Act of 1933, I ORDER that the effectiveness of the 

registration statement filed by Esri1, Inc., be, and hereby is, suspended.
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This Initial Decision shall become effective in accordance with and subject to the provisions of 

Rule 360. See 17 C.F.R. § 201.360. Pursuant to that Rule, a party may file a petition for review of this 

Initial Decision within twenty-one days after service of the Initial Decision. A party may also file a 

motion to correct a manifest error of fact within ten days of the Initial Decision, pursuant to Rule 111. 

See 17 C.F.R. § 201.111. If a motion to correct a manifest error of fact is filed by a party, then that 

party shall have twenty-one days to file a petition for review from the date of the undersigned’s order 

resolving such motion to correct a manifest error of fact. The Initial Decision will not become final 

until the Commission enters an order of finality. The Commission will enter an order of finality unless 

a party files a petition for review or motion to correct a manifest error of fact or the Commission 

determines on its own initiative to review the Initial Decision as to a party. If any of these events 

occurs, the Initial Decision shall not become final as to that party. 

In addition, a respondent has the right to file a motion to set aside a default within a 

reasonable time, stating the reasons for the failure to appear or defend, and specifying the nature of 

the proposed defense. 17 C.F.R. § 201.155(b). The Commission can set aside a default at any time 

for good cause. Id.

_______________________________

Brenda P. Murray

Chief Administrative Law Judge