(Mark One) | ||
[X]
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ]
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Nevada
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98-0531496
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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Large accelerated filer [ ]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
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Smaller reporting company [X]
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|||
(Do not check if a smaller reporting company)
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BLUE EARTH, INC. AND SUBSIDIARIES
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||||||||
(fka Genesis Fluid Solutions Holdings, Inc.)
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||||||||
Condensed Consolidated Balance Sheets
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||||||||
ASSETS
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||||||||
June 30,
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December 31,
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|||||||
2011
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2010
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|||||||
(unaudited)
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||||||||
CURRENT ASSETS
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||||||||
Cash
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$ | 2,255,286 | $ | 3,900,096 | ||||
Accounts receivable, net
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624,223 | - | ||||||
Inventory, net
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361,453 | - | ||||||
Prepaid expenses and deposits
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809,304 | 38,039 | ||||||
Total Current Assets
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4,050,266 | 3,938,135 | ||||||
PROPERTY AND EQUIPMENT, net
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214,047 | 10,932 | ||||||
OTHER ASSETS
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||||||||
Deposits
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17,930 | 3,000 | ||||||
Distributorship and license, net
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2,819,416 | - | ||||||
Total Other Assets
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2,837,346 | 3,000 | ||||||
TOTAL ASSETS
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$ | 7,101,659 | $ | 3,952,067 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
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||||||||
CURRENT LIABILITIES
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||||||||
Warrant derivative liability
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$ | 1,223,960 | $ | 1,288,159 | ||||
Current portion of notes payable
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254,023 | - | ||||||
Accounts payable and accrued expenses
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711,821 | 37,339 | ||||||
Total Current Liabilities
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2,189,804 | 1,325,498 | ||||||
LONG TERM LIABILITIES
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||||||||
Long term portion of notes payable
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117,079 | - | ||||||
Total Liabilities
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2,306,883 | 1,325,498 | ||||||
Commitments and contingencies
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||||||||
STOCKHOLDERS' EQUITY
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||||||||
Preferred stock; 25,000,000 shares authorized
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||||||||
at $0.001 par value, zero
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||||||||
shares issued and outstanding
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- | - | ||||||
Common stock; 100,000,000 shares authorized
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||||||||
at $0.001 par value, 13,707,807 and 11,855,232
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||||||||
shares issued and outstanding, respectively
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13,708 | 11,855 | ||||||
Additional paid-in capital
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15,889,285 | 12,420,166 | ||||||
Accumulated deficit
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(11,108,217 | ) | (9,805,452 | ) | ||||
Total Stockholders' Equity
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4,794,776 | 2,626,569 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 7,101,659 | $ | 3,952,067 |
BLUE EARTH, INC. AND SUBSIDIARIES
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||||||||||||||||
(fka Genesis Fluid Solutions Holdings, Inc.)
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||||||||||||||||
Condensed Consolidated Statements of Operations
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||||||||||||||||
(unaudited)
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||||||||||||||||
For the Three Months Ended
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For the Six Months Ended
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|||||||||||||||
June 30,
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June 30,
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June 30,
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June 30,
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|||||||||||||
2011
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2010
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2011
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2010
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|||||||||||||
REVENUES
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$ | 1,136,614 | $ | - | $ | 2,043,636 | $ | - | ||||||||
COST OF SALES
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357,561 | - | 752,303 | - | ||||||||||||
GROSS PROFIT
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779,053 | - | 1,291,333 | - | ||||||||||||
OPERATING EXPENSES
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||||||||||||||||
General and administrative
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1,363,005 | 210,412 | 2,659,253 | 326,855 | ||||||||||||
Total Operating Expenses
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1,363,005 | 210,412 | 2,659,253 | 326,855 | ||||||||||||
LOSS FROM OPERATIONS
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(583,952 | ) | (210,412 | ) | (1,367,920 | ) | (326,855 | ) | ||||||||
OTHER INCOME (EXPENSE)
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||||||||||||||||
Change in fair value of warrant liability
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107,898 | 423,067 | 64,199 | (39,073 | ) | |||||||||||
Liquidated damages expense
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- | - | - | (68,250 | ) | |||||||||||
Interest income
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1 | 3,783 | 956 | 8,127 | ||||||||||||
Total Other Income (Expense)
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107,899 | 426,850 | 65,155 | (99,196 | ) | |||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
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(476,053 | ) | 216,438 | (1,302,765 | ) | (426,051 | ) | |||||||||
INCOME TAX EXPENSE
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- | (800 | ) | - | (800 | ) | ||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS
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(476,053 | ) | 215,638 | (1,302,765 | ) | (426,851 | ) | |||||||||
GAIN ON DISPOSAL OF DISCONTINUED OPERATIONS, net of income taxes of $0
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- | - | - | - | ||||||||||||
LOSS FROM DISCONTINUED OPERATIONS, net of income taxes of $0
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- | (282,058 | ) | - | (860,329 | ) | ||||||||||
Net loss from discontinued operations, net of income tax
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- | (282,058 | ) | - | (860,329 | ) | ||||||||||
NET LOSS
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$ | (476,053 | ) | $ | (66,420 | ) | $ | (1,302,765 | ) | $ | (1,287,180 | ) | ||||
BASIC AND DILUTED INCOME (LOSS) PER SHARE
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||||||||||||||||
Continuing Operations
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$ | (0.04 | ) | $ | 0.01 | $ | (0.10 | ) | $ | (0.02 | ) | |||||
Discontinued Operations
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- | (0.02 | ) | - | (0.05 | ) | ||||||||||
Net Loss
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$ | (0.04 | ) | $ | (0.00 | ) | $ | (0.10 | ) | $ | (0.07 | ) | ||||
WEIGHTED AVERAGE NUMBER OF COMMON
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||||||||||||||||
SHARES OUTSTANDING BASIC AND DILUTED
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13,575,389 | 17,751,500 | 13,504,978 | 17,175,732 |
BLUE EARTH, INC. AND SUBSIDIARIES
|
||||||||||||||||||||
(fka Genesis Fluid Solutions Holdings, Inc.)
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||||||||||||||||||||
Condensed Consolidated Statements of Stockholders' Equity
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||||||||||||||||||||
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||||||||||||||||||||
Additional
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Total
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|||||||||||||||||||
Common Stock
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Paid-In
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Accumulated
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Stockholders'
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|||||||||||||||||
Shares
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Amount
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Capital
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Deficit
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Equity
|
||||||||||||||||
Balance, December 31, 2009
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17,668,500 | $ | 17,669 | $ | 10,152,118 | $ | (6,217,899 | ) | $ | 3,951,888 | ||||||||||
Common shares issued for consulting services
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83,000 | 83 | 41,417 | - | 41,500 | |||||||||||||||
Liability paid on behalf of the Company
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||||||||||||||||||||
by a shareholder
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- | - | 8,467 | - | 8,467 | |||||||||||||||
Common shares cancelled in
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||||||||||||||||||||
sale of subsidiary
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(6,331,050 | ) | (6,331 | ) | 6,331 | - | - | |||||||||||||
Stock option and warrant expense
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- | - | 1,575,768 | - | 1,575,768 | |||||||||||||||
Stock warrant liability contributed
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||||||||||||||||||||
by shareholders
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- | - | 136,500 | - | 136,500 | |||||||||||||||
Common shares issued for cash
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434,782 | 434 | 499,565 | - | 499,999 | |||||||||||||||
Net loss for the year ended
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||||||||||||||||||||
December 31, 2010
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- | - | - | (3,587,553 | ) | (3,587,553 | ) | |||||||||||||
Balance, December 31, 2010
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11,855,232 | 11,855 | 12,420,166 | (9,805,452 | ) | 2,626,569 | ||||||||||||||
Common stock issued for option cancellation (unaudited)
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72,813 | 73 | 95,711 | - | 95,784 | |||||||||||||||
Stock option and warrant expense (unaudited)
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- | - | 342,179 | - | 342,179 | |||||||||||||||
Common shares issued for consulting services (unaudited)
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350,000 | 350 | 425,650 | - | 426,000 | |||||||||||||||
Common stock issued for acquisition of subsidiary (unaudited)
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1,279,762 | 1,280 | 2,428,729 | - | 2,430,009 | |||||||||||||||
Common stock issued for license (unaudited)
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150,000 | 150 | 176,850 | - | 177,000 | |||||||||||||||
Net loss for the six months ended
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||||||||||||||||||||
June 30, 2011 (unaudited)
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- | - | - | (1,302,765 | ) | (1,302,765 | ) | |||||||||||||
Balance, June 30, 2011 (unaudited)
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13,707,807 | $ | 13,708 | $ | 15,889,285 | $ | (11,108,217 | ) | $ | 4,794,776 |
BLUE EARTH, INC. AND SUBSIDIARIES
|
||||||||
(fka Genesis Fluid Solutions Holdings, Inc.)
|
||||||||
Condensed Consolidated Statements of Cash Flows
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||||||||
(unaudited)
|
||||||||
|
||||||||
For the Six Months Ended
|
||||||||
June 30,
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June 30,
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|||||||
2011
|
2010
|
|||||||
OPERATING ACTIVITIES
|
||||||||
Net loss
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$ | (1,302,765 | ) | $ | (1,287,180 | ) | ||
Adjustments to reconcile net loss to net cash
|
||||||||
used in operating activities:
|
||||||||
Common stock issued for services
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521,784 | 59,472 | ||||||
Warrant derivative liability
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(64,199 | ) | 39,073 | |||||
Stock option expense
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342,179 | 44,642 | ||||||
Depreciation
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28,999 | - | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
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(504,398 | ) | - | |||||
Inventory
|
(235,826 | ) | - | |||||
Prepaid expenses and deposits
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(751,144 | ) | (350 | ) | ||||
Accounts payable and accrued expenses
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242,163 | 16,637 | ||||||
Net Cash Used in Continuing Operating Activities
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(1,723,207 | ) | (1,127,706 | ) | ||||
Net Cash Provided by Discontinued Operating Activities
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- | 19,782 | ||||||
INVESTING ACTIVITIES
|
||||||||
Purchase of license
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(100,000 | ) | - | |||||
Purchase of property and equipment
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(131,927 | ) | - | |||||
Net Cash Used in Investing Activities
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(231,927 | ) | - | |||||
Net Cash Used in Discontinued Investing Activities
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- | (24,418 | ) | |||||
FINANCING ACTIVITIES
|
||||||||
Cash received in purchase of subsidiary
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404,333 | - | ||||||
Repayment of notes payable
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(94,009 | ) | - | |||||
Net Cash Provided by Financing Activities
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310,324 | - | ||||||
Net Cash Used in Discontinued Financing Activities
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- | (56,042 | ) | |||||
NET DECREASE IN CASH
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(1,644,810 | ) | (1,188,384 | ) | ||||
CASH AT BEGINNING OF PERIOD
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3,900,096 | 4,873,912 | ||||||
CASH AT END OF PERIOD
|
$ | 2,255,286 | $ | 3,685,528 | ||||
SUPPLEMENTAL DISCLOSURES OF
|
||||||||
CASH FLOW INFORMATION:
|
||||||||
CASH PAID FOR:
|
||||||||
Interest (continuing operations)
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$ | - | $ | - | ||||
Income taxes (continuing operations)
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- | 800 | ||||||
NON CASH FINANCING ACTIVITIES:
|
||||||||
Reclassification of note payable-related party to note payable
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$ | - | $ | 12,500 | ||||
Purchase of subsidiary for debt and common stock
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2,430,009 | - | ||||||
Purchase of license for common stock
|
177,000 | - | ||||||
Liability paid by officer on behalf of Company
|
- | 8,467 |
Proforma Condensed Consolidated Statement of Operations
|
||||||||||||||||
|
||||||||||||||||
For the Three Months Ended
|
For the Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
June 30,
|
June 30,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Revenues
|
$ | 1,136,614 | $ | 646,491 | $ | 2,043,636 | $ | 884,043 | ||||||||
Cost of Sales
|
357,561 | 233,615 | 752,303 | 367,785 | ||||||||||||
Gross Profit
|
779,053 | 412,876 | 1,291,333 | 516,258 | ||||||||||||
Operating Expenses
|
1,363,005 | 905,759 | 2,659,253 | 776,019 | ||||||||||||
Loss from Operations
|
(583,952 | ) | (492,883 | ) | (1,367,920 | ) | (259,761 | ) | ||||||||
Other Income (Expense)
|
107,899 | 426,850 | 65,155 | (99,196 | ) | |||||||||||
Loss from Continuing Operations
|
||||||||||||||||
Before Income Taxes
|
(476,053 | ) | (66,033 | ) | (1,302,765 | ) | (358,957 | ) | ||||||||
Income Tax Expense
|
- | (800 | ) | - | (800 | ) | ||||||||||
Loss from Continuing Operations
|
(476,053 | ) | (66,833 | ) | (1,302,765 | ) | (359,757 | ) | ||||||||
Gain on Disposal of Discontinued
|
||||||||||||||||
Operations, net of income taxes of $0
|
- | - | - | - | ||||||||||||
Loss from Discontinued Operations
|
||||||||||||||||
net of Income Taxes of $0
|
- | (282,085 | ) | - | (860,329 | ) | ||||||||||
Net Loss from Discontinued Operations,
|
||||||||||||||||
Net of Income Tax
|
- | (282,085 | ) | - | (860,329 | ) | ||||||||||
Net Loss
|
$ | (476,053 | ) | $ | (348,918 | ) | $ | (1,302,765 | ) | $ | (1,220,086 | ) | ||||
Basic and Diluted Loss per Share
|
||||||||||||||||
Continuing Operations
|
$ | (0.04 | ) | $ | (0.00 | ) | $ | (0.10 | ) | $ | (0.02 | ) | ||||
Discontinued Operations
|
- | (0.02 | ) | - | (0.05 | ) | ||||||||||
Net Loss
|
$ | (0.04 | ) | $ | (0.02 | ) | $ | (0.10 | ) | $ | (0.07 | ) | ||||
Weighted Average Number of Common
|
||||||||||||||||
Share Outstanding Basic and Diluted
|
13,575,389 | 17,751,500 | 13,504,978 | 17,175,732 |
For the Three Months Ended For the Six Months Ended
|
||||||||
June 30,
|
June 30,
|
|||||||
2010
|
2010
|
|||||||
REVENUES
|
$ | 129,089 | $ | 129,089 | ||||
COST OF SALES
|
129,089 | 129,089 | ||||||
GROSS PROFIT
|
- | - | ||||||
OPERATNG EXPENSES
|
||||||||
General and administrative
|
208,953 | 720,757 | ||||||
Total Operating Expenses
|
208,953 | 720,757 | ||||||
LOSS FROM OPERATIONS
|
(208,953 | ) | (720,757 | ) | ||||
OTHER INCOME (EXPENSE)
|
||||||||
Loss on disposals of property and equipment
|
(65 | ) | (65 | ) | ||||
Liquidated damages expense
|
(68,250 | ) | (136,500 | ) | ||||
Interest income
|
- | 7,171 | ||||||
Interest expense
|
(4,790 | ) | (10,178 | ) | ||||
Total Other Income (Expense)
|
(73,105 | ) | (139,572 | ) | ||||
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
(282,058 | ) | (860,329 | ) | ||||
INCOME TAX EXPENSE
|
- | - | ||||||
NET LOSS
|
$ | (282,058 | ) | $ | (860,329 | ) | ||
BASIC AND DILUTED LOSS PER SHARE
|
$ | (0.02 | ) | $ | (0.07 | ) | ||
WEIGHTED AVERAGE NUMBER OF COMMON
|
||||||||
SHARES OUTSTANDING BASIC AND DILUTED
|
17,751,500 | 17,715,732 |
Exhibit
|
||||
Number
|
Description of Exhibit
|
|||
31.1
|
Section 302 Certification of Principal Executive Officer
|
|||
31.2
|
Section 302 Certification of Principal Financial Officer
|
|||
32.1
|
Section 906 Certification of Principal Executive Officer and Principal Financial Officer
|
|||
101.0* |
The following materials from the Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income Operations, (iii) the Condensed Consolidated Statement of Stockholders' Equity, (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Condensed Consolidated Financial Statements.
|
BLUE EARTH, INC.
|
||
Date: August 15, 2011
|
By:
|
/s/ Dr. Johnny R. Thomas
|
Chief Executive Officer
(Principal Executive Officer and Principal Financial Officer)
|
(1)
|
I have reviewed this quarterly report on Form 10-Q of Blue Earth, Inc.;
|
||||
(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
||||
(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
||||
(4)
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
||||
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||||
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
||||
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
||||
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
(5)
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of 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.
|
/s/ Dr. Johnny R. Thomas | ||
Dr. Johnny R. Thomas
|
||
President and Chief Executive Officer (Principal Executive Officer)
|
(1)
|
I have reviewed this quarterly report on Form 10-Q of Blue Earth, Inc.;
|
||||
(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
||||
(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
||||
(4)
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
||||
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||||
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
||||
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
||||
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
(5)
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of 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.
|
/s/ Dr. Johnny R. Thomas | ||
Dr. Johnny R. Thomas
|
||
President and Chief Executive Officer (Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
||
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Johnny R. Thomas
|
||||||
Dr. Johnny R. Thomas
|
||||||
President and Chief Executive Officer (Principal Executive Officer and Principal Financial Officer)
|
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) (USD $)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 13,707,807 | 11,855,232 |
Common stock, shares outstanding | 13,707,807 | 11,855,232 |
Condensed Consolidated Statements of Operations (unaudited) (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
REVENUES | $ 1,136,614 | Â | $ 2,043,636 | Â |
COST OF SALES | 357,561 | Â | 752,303 | Â |
GROSS PROFIT | 779,053 | Â | 1,291,333 | Â |
OPERATING EXPENSES | Â | Â | Â | Â |
General and administrative | 1,363,005 | 210,412 | 2,659,253 | 326,855 |
Total Operating Expenses | 1,363,005 | 210,412 | 2,659,253 | 326,855 |
LOSS FROM OPERATIONS | (583,952) | (210,412) | (1,367,920) | (326,855) |
OTHER INCOME (EXPENSE) | Â | Â | Â | Â |
Change in fair value of warrant liability | 107,898 | 423,067 | 64,199 | (39,073) |
Liquidated damages expense | Â | Â | Â | (68,250) |
Interest income | 1 | 3,783 | 956 | 8,127 |
Total Other Income (Expense) | 107,899 | 426,850 | 65,155 | (99,196) |
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (476,053) | 216,438 | (1,302,765) | (426,051) |
INCOME TAX EXPENSE | Â | (800) | Â | (800) |
INCOME (LOSS) FROM CONTINUING OPERATIONS | (476,053) | 215,638 | (1,302,765) | (426,851) |
GAIN ON DISPOSAL OF DISCONTINUED OPERATIONS, net of income taxes of $0 | ||||
LOSS FROM DISCONTINUED OPERATIONS, net of income taxes of $0 | Â | (282,058) | Â | (860,329) |
Net loss from discontinued operations, net of income tax | Â | (282,058) | Â | (860,329) |
NET LOSS | $ (476,053) | $ (66,420) | $ (1,302,765) | $ (1,287,180) |
BASIC AND DILUTED INCOME (LOSS) PER SHARE | Â | Â | Â | Â |
Continuing Operations | $ (0.04) | $ 0.01 | $ (0.1) | $ (0.02) |
Discontinued Operations | Â | $ (0.02) | Â | $ (0.05) |
Net Loss | $ (0.04) | $ 0 | $ (0.1) | $ (0.07) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING BASIC AND DILUTED | 13,575,389 | 17,751,500 | 13,504,978 | 17,175,732 |
Document and Entity Information
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Jun. 30, 2011
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Document and Entity Information | Â |
Entity Registrant Name | Blue Earth, Inc. |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2011 |
Amendment Flag | false |
Entity Central Index Key | 0001422109 |
Current Fiscal Year End Date | --12-31 |
Entity Common Stock, Shares Outstanding | 13,707,807 |
Entity Filer Category | Smaller Reporting Company |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Well-known Seasoned Issuer | No |
Document Fiscal Year Focus | 2011 |
Document Fiscal Period Focus | Q2 |
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Subsequent Events
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Subsequent Events | Â |
Subsequent Events [Text Block] | NOTE 6 - SUBSEQUENT EVENTS In accordance with ASC 855-10, the Companys management has reviewed all material events there are no material subsequent events to report. |
Significant Accounting Policies
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Accounting Policies | Â |
Significant Accounting Policies [Text Block] | NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES Inventory Inventory is recorded at the lower of cost or market (net realizable value) using the average cost method. The inventory on hand as of June 30, 2011 consists of motors, controllers, miscellaneous refrigeration parts and raw gasket material at costs of $386,453. An allowance for obsolete inventory has been recorded for $25,000, resulting in net inventory of $361,453. The Company does not have any work in progress. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Recent Accounting Pronouncements The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Companys financial position, or statements. |
Significant Events
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Jun. 30, 2011
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Extraordinary and Unusual Items | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Extraordinary Items Disclosure [Text Block] | NOTE 3 - SIGNIFICANT EVENTS Acquisition of Subsidiary On December 30, 2010, Castrovilla Energy, Inc., a recently formed California subsidiary of Blue Earth, Inc. entered into agreements, subject to final Board approval, to acquire substantially all of the assets of Humitech of Northern California, LLC (Humitech), a California limited liability company and its related company, Castrovilla, Inc. Founded in 2004, Castrovilla based in Mountain View, California, had approximately $3.4 million in audited revenues in 2010, which is more than twice its 2008. Castrovilla serves approximately 5,400 small commercial businesses in Northern California with its 25 employees. Castrovilla manufactures, sells and installs commercial refrigerator and freezer gaskets and sells and installs motors and controls. Castrovillas strategy is to sell lighting and HVAC bundled retrofits to its customer base. Castrovilla participates in several ratepayer funded utility energy efficiency rebate programs, both through third-party programs and through its own small commercial business program, Keep Your Cool. In 2008, Castrovilla acquired the assets of Bay Area Refrigeration, a fully licensed commercial refrigeration contractor that has serviced the San Francisco Bay Area for nearly 30 years. Since 2009, Castrovilla has operated an online store to sell a variety of refrigeration products on both a wholesale and retail basis. The purchase price for Humitech, under the Asset Purchase Agreement (APA) was $600,000. This consisted of the payment of $150,000 of affiliated debt and the issuance of 267,857 shares of restricted Common Stock of Blue Earth, Inc. with an agreed upon value of $450,000, or $1.68 per share, the average closing price of the Companys Common Stock from September 1-23, 2010 when the terms of the transaction were agreed to. The Company also assumed trade debt of approximately $121,000. Humitech will remain an unaffiliated non-operating entity in order to pay its other liabilities with the proceeds of the shares received from the Company, as well as from an inter-company note in the amount of $331,579 from Castrovilla, Inc. On December 30, 2010, Castrovilla Energy, Inc. (CEI), a wholly-owned subsidiary of the Companys subsidiary, Blue Earth Energy Management Services, Inc. (BEEMS) entered into an Agreement and Plan of Merger (the Plan) with Castrovilla, Inc. and the Stockholders of Castrovilla, Inc. with an Effective Date of January 1, 2011, subject to final Board approval which was obtained on January 18, 2011. CEI merged with and into Castrovilla, Inc. which is continuing its existence as a wholly-owned California subsidiary of BEEMS. The APA and the Plan have been filed as Exhibits 2.1 and 2.2, respectively, to the Current Report on Form 8-K for December 31, 2010, as amended. Under the Plan, the Company issued an aggregate of 1,011,905 shares of its Common Stock valued at $1.68 per share or $1,700,000 to the stockholders of Castrovilla, Inc. in exchange for all of the outstanding capital stock of Castrovilla, Inc. All of the 1,279,762 shares issued in the Castrovilla Acquisition (collectively, the Company Shares) are subject to Lock-up/Leak-out and Guaranty Agreements, as amended. The two Castrovilla, Inc. stockholders, John Pink, who continues as President of Castrovilla, Inc. and Adam Sweeney, together with Humitech (the Stockholders) could not sell any of the Company Shares for a six-month period beginning on the Effective Date of the Plan of January 1, 2011 and ending on June 30, 2011. Thereafter and ending June 30, 2013, the three stockholders may sell up to 2,461 Company Shares per trading day in the aggregate until all Company Shares are sold (the Lock-up Period). The Company contingently guaranteed (the Guaranty) to the Stockholders the net sales price of $1.68 per share, provided the Stockholders are in compliance with the terms and conditions of the Lock-up Agreement and the hereinafter described performance criteria was are met. A number of shares equal in value to fifty percent (50%) of the profits, if any, from the sale of shares above $3.36 per share during the Lock-up Period will be returned to the Company. Any deficit from sales below $1.68 per share shall be paid (i) 50% in cash, and (ii) the remaining 50% in either cash or shares of Common Stock of the Company provided certain Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) performance criteria are achieved as discussed in the next paragraph (at their then current fair market value, or any combination thereof, at the sole discretion of the party making the payment). In the event that Castrovilla Inc.'s EBITDA during the Lock-up Period is less than the budgeted amount of $361,000 for the first six months after the Effective Date and $722,000 of EBITDA per year for each of the fiscal years ending December 31, 2012 and 2013, the $1.68 per share guaranteed price shall be decreased by the same percentage decrease that EBITDA is below the projected $722,000 of EBITDA. All of such calculations will be in accordance with GAAP and derived from the Companys reviewed financial statements for the first three fiscal quarters of the year and the audited financials for the fourth quarter of the year. If EBITDA is zero or negative, then no Guaranty is in effect for the next quarter and the number of the Companys Shares which could have been sold during such three-month period will not be covered by a Guaranty in the future. Accordingly, for the six months ended June 30, 2011, the Companys EBITDA was approximately $35,373 and therefore there is no guarantee in effect for the quarter ended September 30, 2011 unless the Selling Shareholders sell shares at less than $0.16 per share. The share price Guaranteed is determined by multiplying the percentage of actual EBITDA in this case 9.8%, by the Guaranteed Price/Share of $1.68 or $0.16 per share as the adjusted Guaranteed Price/Share in effect for the quarter ending September 30, 2011. The targeted EBITDA for the 12-month period from July 1, 2011 to June 30, 2012 is $722,000, or $180,500 per quarter (the quarterly rate of $180,500 is a constant for each quarter through to the end of the Lock-up/Guarantee period). Therefore, for the nine-months ended September 30, 2011, the Targeted EBITDA will be $361,000 plus $180,500 or $541,000; and for the 12-months ended December 31, 2011, would be $722,000. The targeted EBITDA for each subsequent 12 month period shall be $722,000, which shall be compared to the actual performance for the most recent 12 month reporting period as illustrated above and multiplied times $1.68 to arrive at the guaranteed share price, if any. These targeted amounts may be reduced if a majority of the Board of Directors agree on budget changes which require an acceleration of expenses thereby affecting a current years budgeted EBITDA. No adjustment in the targeted amounts for guarantee purposes has been made and none is contemplated at this time. The Company does not anticipate any guaranty prior to April of 2012, due to the decision to expand Castrovilla's operations into several new states. In addition, under the Plan, the Company paid $50,000 to an unaffiliated third party for an existing obligation of Castrovilla, Inc. The above described Castrovilla Acquisition was completed on January 19, 2011, with an effective date of January 1, 2011. Pursuant to the terms and conditions of the Plan described above, Castrovilla Energy, Inc., a wholly-owned subsidiary of the Company, was merged with and into Castrovilla, Inc., the Surviving Corporation, on January 21, 2011 The table below presents, on a retroactive basis the condensed consolidated statements of operations for the periods presented. In the above referenced acquisition Castrovilla was not considered the predecessor for accounting purposes. The proforma condensed consolidated statements of operations are presented below for comparative purposes and to provide additional information and disclosure to the reader.
Issuance of Common Stock On May 16, 2011, the Company issued 150,000 shares for a license to certain light switching technology and paid $100,000 cash. The shares were valued at $1.18 per share. On May 24, 2011 the Company issued 100,000 shares for services valued at $1.24 per share. On March 21, 2011 the Company issued 72,813 shares, valued at $95,784, for the cancellation of 238,500 previously issued options. On February 13, 2011 the Company issued 100,000 shares, valued at $1.25, for directors fees. One-half of the shares vested immediately, the remainder vest one year from issuance. Also, on February 13, 2011 the Company issued 150,000 shares valued at $1.18 for consulting services compensation. On January 1, 2011 the Company issued 1,279,762 shares for the acquisition of its subsidiary, as described above. |
Commitment and Contingencies
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3 Months Ended |
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Jun. 30, 2011
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Commitment and Contingencies | Â |
Commitments and Contingencies Disclosure [Text Block] | NOTE 4 - COMMITMENTS AND CONTINGENCIES On March 1, 2011, the Board of Directors of Blue Earth, Inc. (the Company) amended the employment agreements of Dr. Johnny R. Thomas, Chief Executive Officer and John C. Francis, Vice President of Corporate Development and Investor Relations. Each of their employment agreements dated September 1, 2010 were amended effective February 1, 2011, to increase their annual salaries by $75,000. Johnny R. Thomass salary increased from $99,000 to $174,000 and John Franciss salary from $75,000 to $150,000. Johnny R. Thomas and John C. Francis were each awarded five-year performance warrants to purchase 1,000,000 shares each at an exercise price of $1.25 per share. The warrants will only vest if and when the Company achieves certain revenues, net income and/or EBITDA milestones for four trailing quarters. For each executive officer, a total of 412,500 warrants vest upon four different milestones when annual revenues exceed revenue milestones increasing from $50 to $200 million. Achieving net income levels in excess of $0.20/share to more than $0.50/share will vest 262,500 warrants upon four different milestones. The remaining 325,000 warrants will vest upon four different milestones when the Companys EBITDA performance exceeds $0.40/share to more than $1.00 per share. Any warrants not vested for one milestone are added on a cumulative basis to the following increment for potential vesting at the next milestone. In the event that an officer is terminated without cause: (i) he shall receive a cash settlement of $75,000, and (ii) 50% of all unvested warrants issued under his employment agreement, as amended, shall vest immediately. |
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Jun. 30, 2011
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Discontinued Operations and Disposal Groups | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | NOTE 5 - DISCONTINUED OPERATIONS On August 27, 2010, the Company entered into a Stock Purchase Agreement (the SPA). Pursuant to the SPA, the Buyers who signed the SPA, including Michael Hodges, the former Chairman and Interim Chief Executive Officer of the Company, purchased from the Company on or before August 31, 2010, all of the issued and outstanding common stock of Genesis Fluid Solutions, Ltd. (GFS), its wholly-owned subsidiary. The Purchase Price for GFS was (a) an aggregate of 6,331,050 shares of Common Stock of the Company to be cancelled including, an aggregate of 1,300,000 shares of Common Stock of the Company held under an Escrow Agreement dated October 30, 2009 among the Company, GFS, Michael Hodges, and Sichenzia Ross Friedman Ference LLP, as escrow agent; (b) an aggregate of approximately 3,011,000 options and warrants of the Company to be cancelled; and (c) GFSs payment to the Company of a six (6%) percent royalty beginning August 8, 2010, on all gross revenues derived from (i) dewatering operations (exclusive of payments to subcontractors) and (ii) the sale, lease or licensing arrangements of the Rapid Dewatering System and/or any of the dewatering boxes of GFS and its affiliates until the Company receives $4,000,000 and a royalty of three (3%) percent of gross revenues thereafter not to exceed a cumulative royalty of $15,000,000 (the Royalty). The closing of the Stock Purchase Agreement occurred on August 31, 2010, at which time the Company: (i) received of all of the certificates representing the Company Shares, Options, Warrants, and Escrowed Shares (each, as defined in the Stock Purchase Agreement) issued to the Buyers, (ii) entered into an agreement regarding the assignment of the Royalty by GFS and its successors and assigns to the Company, and all other closing conditions were satisfied. Following the closing, GFS ceased to be a wholly-owned subsidiary of the Company and the Buyers, collectively, became the owners of one hundred percent (100%) of the issued and outstanding capital stock of GFS. Accordingly, the Companys financial statements have been retroactively restated for all periods presented to reflect the assets, liabilities and operations of GFS as discontinued. The condensed statements of operations for the discontinued operations are as follows:
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Condensed Financial Statements
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Jun. 30, 2011
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Organization, Consolidation and Presentation of Financial Statements | Â |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | NOTE 1 - CONDENSED FINANCIAL STATEMENTS The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2011, and for all periods presented herein, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The results of operations for the periods ended June 30, 2011 and 2010 are not necessarily indicative of the operating results for the full year. |