TREE TOP INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
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NEVADA
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83-0250943
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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511 Sixth Avenue, Suite 800,
New York, NY 10011
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(Address of principal executive offices) (Zip Code)
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(646) 240 4188
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Registrant's telephone number, including area code
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(Former name, former address and former fiscal year, if changed since last report)
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
(Do not check if a smaller reporting company)
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Smaller reporting company
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(An Exploration Stage Company)
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Condensed Consolidated Balance Sheets
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(Unaudited) |
June 30,
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December 31,
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2013
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2012
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ASSETS | |||||||||
CURRENT ASSETS
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Cash and cash equivalents
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$ | 3,057 | $ | - | |||||
Marketable securities
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24,882 | 54,624 | |||||||
Oil & Gas inventory
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15,159 | ||||||||
Total Current Assets
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43,098 | 54,624 | |||||||
PROPERTY AND EQUIPMENT (NET)
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9,688 | 8,824 | |||||||
TOTAL ASSETS
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$ | 52,786 | $ | 63,448 | |||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
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CURRENT LIABILITIES
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Accounts payable and accrued expenses
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$ | 866,131 | $ | 949,933 | |||||
Accrued interest
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82,151 | 166,982 | |||||||
Deferred revenue
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15,159 | - | |||||||
Due to officers and directors
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- | 3,853,391 | |||||||
Convertible Notes (Net of discount)
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- | 100,000 | |||||||
Notes Payable
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92,640 | 88,000 | |||||||
Notes payable- in default
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305,000 | 597,860 | |||||||
Current portion of long-term debt
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45,641 | - | |||||||
Total Current Liabilities
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1,406,722 | 5,756,166 | |||||||
LONG-TERM LIABILITIES
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Notes payable (less current portion)
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1,172,530 | - | |||||||
Total Liabilities
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2,579,252 | 5,756,166 | |||||||
STOCKHOLDERS' DEFICIT
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Common stock, par value $0.001 per share,
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10,000,000 shares authorized; 6,925,090 and 6,680,613
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issued, 6,125,090 and 5,880,613 outstanding, respectively
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6,925 | 6,680 | |||||||
Additional paid-in-capital
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149,056,550 | 145,843,081 | |||||||
Stock payable
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22,181 | - | |||||||
Unearned ESOP shares
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(2,176,000 | ) | (2,176,000 | ) | |||||
Accumulated other comprehensive income (loss)
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(1,739 | ) | - | ||||||
(Deficit) Accumulated During the Exploration Stage
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(149,434,383 | ) | (149,366,479 | ) | |||||
Total Stockholders' Deficit
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(2,526,466 | ) | (5,692,718 | ) | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
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$ | 52,786 | $ | 63,448 |
(An Exploration Stage Company)
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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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From Inception
on August 1, |
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June 30,
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June 30,
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June 30,
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2013
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2012
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2013
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2012
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2013
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REVENUES
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Crude oil sales
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$ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
OPERATING EXPENSES
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Oil & Gas operating costs
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6,943 | - | 6,943 | - | 6,943 | ||||||||||||||||
Depreciation
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2,423 | 8,190 | 5,720 | 16,382 | 163,290 | ||||||||||||||||
General and administrative
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18,685 | 37,828 | 43,596 | 76,416 | 6,126,616 | ||||||||||||||||
Compensation and professional fees
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64,589 | 264,988 | 149,743 | 752,204 | 139,731,743 | ||||||||||||||||
Impairment of assets
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- | - | - | - | 2,788,538 | ||||||||||||||||
Total Operating Expenses
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92,640 | 311,006 | 206,002 | 845,002 | 148,817,130 | ||||||||||||||||
LOSS FROM OPERATIONS
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(92,640 | ) | (311,006 | ) | (206,002 | ) | (845,002 | ) | (148,817,130 | ) | |||||||||||
OTHER INCOME (EXPENSE)
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Loss on disposal of assets
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- | - | - | - | (2,915 | ) | |||||||||||||||
Gain on debt forgiveness
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165,220 | - | 165,220 | - | 229,085 | ||||||||||||||||
Interest income & other income
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- | - | - | - | 2,976 | ||||||||||||||||
Gain/(loss) on investments
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557 | - | 557 | - | (40,075 | ) | |||||||||||||||
Financing expenses
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- | - | - | - | (400,000 | ) | |||||||||||||||
Interest expense
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(10,432 | ) | (48,278 | ) | (27,679 | ) | (63,754 | ) | (406,324 | ) | |||||||||||
Total Other Income (Expense)
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155,345 | (48,278 | ) | 138,098 | (63,754 | ) | (617,253 | ) | |||||||||||||
NET INCOME (LOSS) BEFORE INCOME
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TAXES
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62,705 | (359,284 | ) | (67,904 | ) | (908,756 | ) | (149,434,383 | ) | ||||||||||||
PROVISION FOR INCOME TAXES
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- | - | - | - | - | ||||||||||||||||
NET INCOME (LOSS)
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$ | 62,705 | $ | (359,284 | ) | $ | (67,904 | ) | $ | (908,756 | ) | $ | (149,434,383 | ) | |||||||
OTHER COMPREHENSIVE INCOME/(LOSS) NET OF TAXES
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Unrealized income (loss) on held for sale marketable securities
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394 | - | (2,133 | ) | - | (1,739 | ) | ||||||||||||||
COMPREHENSIVE INCOME/(LOSS)
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$ | 63,099 | $ | (359,284 | ) | $ | (70,037 | ) | $ | (908,756 | ) | $ | (149,436,122 | ) | |||||||
GAIN/(LOSS) BASIC AND DILUTED
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$ | 0.01 | $ | (0.10 | ) | $ | (0.01 | ) | $ | (0.26 | ) | ||||||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
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5,954,018 | 3,477,815 | 5,932,650 | 3,452,203 |
(An Exploration Stage Company)
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Condensed Consolidated Statements of Cash Flows
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(Unaudited)
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For the Six Months Ended
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From Inception
on August 1, |
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June 30,
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June 30,
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2013
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2012
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2013
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net loss
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$ | (67,904 | ) | $ | (908,756 | ) | (149,434,383 | ) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
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Bad debt expense
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- | - | 192,000 | |||||||||
Depreciation and amortization
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5,719 | 16,382 | 163,290 | |||||||||
Stock issued for option cancellation
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- | - | 115,201 | |||||||||
Stock issued for rent
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- | - | 137,500 | |||||||||
Gain on debt settlement
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(165,220 | ) | - | (229,085 | ) | |||||||
Loss on marketable securities
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- | - | 40,632 | |||||||||
Stock options granted for services rendered
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- | - | 44,870,540 | |||||||||
Impairment of long lived assets
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- | - | 513,538 | |||||||||
Impairment of intangible assets
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- | - | 2,275,000 | |||||||||
Common stock issued for services rendered
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82,181 | 398,058 | 93,788,529 | |||||||||
Gain on sale of investments
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(557 | ) | - | (557 | ) | |||||||
Imputed interest on loan
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6,720 | 6,720 | 46,047 | |||||||||
Loss on diposal of fixed assets
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- | - | 2,915 | |||||||||
Amortization of debt discount
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- | 32,917 | 175,000 | |||||||||
Change in operating assets and liabilities, net of acquisition:
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Increase (decrease) in accounts payable and accrued expenses
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140,818 | 365,085 | 4,008,050 | |||||||||
Net Cash Used in Operating Activities
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1,757 | (89,594 | ) | (3,335,783 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES
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Cash advanced on note receivable
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- | - | (192,000 | ) | ||||||||
Cash received in acquisition
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- | - | 44,303 | |||||||||
Cash paid for investments
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- | (95,256 | ) | (95,256 | ) | |||||||
Cash received from sale of investments
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28,561 | 28,561 | ||||||||||
Purchases of property and equipment
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(6,584 | ) | - | (175,894 | ) | |||||||
Net Cash provided by (used in) Investing Activities
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21,977 | (95,256 | ) | (390,286 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES
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Cash contribution from shareholders
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- | - | 50,375 | |||||||||
Cash received from issuance of common stock
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- | 25,000 | 1,712,700 | |||||||||
Cash received from notes payable
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50,640 | 100,000 | 798,500 | |||||||||
Cash paid on notes payable
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(12,000 | ) | (12,000 | ) | ||||||||
Cash paid to related party loans
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(66,285 | ) | (40,465 | ) | (642,718 | ) | ||||||
Cash received from related party loans
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6,968 | 99,891 | 1,822,269 | |||||||||
Net Cash Provided by (Used in) Financing Activities
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(20,677 | ) | 184,426 | 3,729,126 | ||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
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3,057 | (424 | ) | 3,057 | ||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
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- | 517 | - | |||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
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$ | 3,057 | $ | 93 | $ | 3,057 | ||||||
SUPPLEMENTAL DISCLOSURES:
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Cash paid for interest
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$ | - | $ | - | $ | - | ||||||
Cash paid for income taxes
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$ | - | $ | - | $ | - | ||||||
NON-CASH INVESTING AND FINANCING ACTIVITIES:
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Common stock issued for acquisition of sub
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$ | - | $ | - | $ | 2,275,000 | ||||||
Common stock issued to ESOP
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$ | - | $ | - | $ | 2,176,000 | ||||||
Conversion of Debentures
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$ | - | $ | 50,000 | $ | 75,000 | ||||||
Unrealized loss on marketable securities
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$ | 1,739 | $ | - | $ | 1,739 | ||||||
Conversion of Accrued interest
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$ | 97,321 | $ | - | $ | 97,321 | ||||||
Stock issued to settle accounts payable
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$ | 204,081 | $ | - | $ | 204,081 | ||||||
Contribution to capital from officers
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$ | 3,108,133 | $ | - | $ | 3,108,133 | ||||||
Non-cash recording of deferred revenue
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$ | 15,159 | $ | - | $ | 15,159 |
Investments are as follows: | ||||
Balance, December 31, 2012 | $ | 0 | ||
Realized gains and losses | 0 | |||
Unrealized gains and losses | 0 | |||
Balance, June 30, 2013 | $ | 0 |
Balance at December 31, 2012: | $ | 54,624 | ||
Sale of FB shares | (28,004 | ) | ||
Change in market value at June 30, 2013 | ( 1,739 | ) | ||
Balance at June 30, 2013: | $ | 24,881 |
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ο
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Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
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ο
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Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
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ο
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Level 3 inputs to the valuation methodology are unobservable and significant to the fair measurement.
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Level 1
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Level 2
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Level 3
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Marketable Securities – 2013
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24,881 | -0- | -0- | |||||||||
Marketable Securities – 2012
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54,624 | -0- | -0- | |||||||||
Notes payable - 2013
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-0- | -0- | 1,615,811 | |||||||||
Notes payable - 2012
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-0- | -0- | 785,860 |
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Notes payable
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Balance, December 31, 2012
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$ | 785,860 | ||
Purchases, sales, issuances and settlements (net)
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829,952 | |||
Balance, June 30, 2013
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$ | 1,615,812 |
For the Six Months
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For the Six Months
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Ended June 30, |
Ended June 30,
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2013
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2012
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Income (Loss) (numerator)
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$ | (67,904 | ) | $ | (908,756 | ) | ||
Shares (denominator)
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5,932,650 | 3,452,203 | ||||||
Basic and diluted income (loss) per share
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$ | (0.01 | ) | $ | (0.26 | ) |
For the Three Months
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For the Three Months
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Ended June 30, |
Ended June 30,
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2013
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2012
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Income (Loss) (numerator)
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$ | 62,705 | $ | (359,284 | ) | |||
Shares (denominator)
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5,954,018 | 3,477,815 | ||||||
Basic and diluted income (loss) per share
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$ | 0.01 | $ | (0.10 | ) |
(a)
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NOTES PAYABLE
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Interest Expense | |||||||||||||||
Principal
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Interest Rate | 6/30/2013 | 6/30/2012 |
Maturity
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$ | 192,000 | 0 | % | 6,720 | 6,720 |
On Demand(1)
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18,000 | 6.00 | % | 540 | 540 |
9/1/2002
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30,000 | 6.00 | % | 900 | 900 |
9/12/2002
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25,000 | 5.00 | % | 626 | 626 |
8/31/2000
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40,000 | 7.00 | % | 1,400 | 1,400 |
7/10/2002
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19,000 | 6.00 | % | 570 | - |
8/13/2013
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5,000 | 6.00 | % | 100 | - |
10/28/2013
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10,000 | 6.00 | % | 191 | - |
11/16/2013
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7,000 | 6.00 | % | 63 | - |
1/15/2014
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16,640 | 5.00 | % | 105 | - |
1/15/2014
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388,376 | 5.00 | % | 232 | - |
12/31/2015
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100,000 | 5.00 | % | 68 | - |
12/31/2015
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32,960 | 5.00 | % | 23 | - |
12/31/2015
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32,746 | 5.00 | % | 22 | - |
12/31/2015
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5,099 | 5.00 | % | 3 | - |
12/31/2015
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458,991 | 5.00 | % | - | - |
12/31/2015
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200,000 | 5.00 | % | - | - |
12/31/2015
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25,000 | 5.00 | % | - | - |
06/30/2014
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10,000 | 5.00 | % | - | - |
06/30/2014
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1,615,812 | 11,563 | 10,186 |
(1)
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Imputed interest due to 0% interest rate
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(b)
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CONVERTIBLE NOTES PAYABLE:
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●
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75% working interest in the Ownbey Oil & Gas leases in Chautauqua County Kansas, with associated equipment and oil field assets
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A 1 to 2 mile shut down natural gas pipeline located in Montgomery County Kansas
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Common Stock interest representing 25% of the common stock of Brasil Asset Management, Inc.
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Common Stock interest representing 25% of the common stock of Thor Geotrac.
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Common Stock interest representing 25% of the common stock of Ameribras Oklahoma.
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Account receivable from skyberCorp do Brasil (Ameribras) due1/1/2011 in the amount of $3,600,000
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Account receivable from Brasil Asset Management Projectos Limitada (BAMB) due 1/1/2012 in the amount of $3,600,000
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Promissory Note Receivable from Ameribras Energy, Inc, due 5/13/2010, in the amount of $100,000
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Promissory Note Receivable from Ameribras Energy, Inc, due 6/15/2010, in the amount of $100,000
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Promissory Note Receivable from Brasil Asset Management, Inc, due 3/26/2011, in the amount of $350,000
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Contract for Revenue with Brasil Asset Mangement, Inc. (BAMO), in the amount of $1,000,000 due and payable on or before 1/30/11.
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Gun sight patent acquired from Century Technologies, Inc.
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75% working interest in Oil & Gas lease:
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$
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513,538
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Recorded value
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513,538
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●
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statements concerning the potential benefits that may be experienced from business activities and certain transactions contemplated or completed; and
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●
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statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts. These statements may be made expressly in this Form 10-Q. You can find many of these statements by looking for words such as “believes,” “expects,” “anticipates,” “estimates,” “opines,” or similar expressions used in this Form 10-Q. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied in those statements. The most important facts that could prevent us from achieving our stated goals include, but are not limited to, the following:
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a)
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volatility or decline of Tree Top’s stock price; potential fluctuation of quarterly results;
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b)
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Potential fluctuation of quarterly results;
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c)
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failure to earn revenues or profits;
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d)
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inadequate capital to continue or expand our business, and inability to raise additional capital or financing to implement our business plans;
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e)
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failure to commercialize our technology or to make sales;
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f)
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decline in demand for our products and services;
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g)
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Rapid adverse changes in markets;
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h)
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litigation with or legal claims and allegations by outside parties against TTI, including but not limited to challenges to intellectual property rights;
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i)
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insufficient revenues to cover operating costs; and
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♦
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pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;
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♦
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provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and
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♦
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provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant’s assets that could have a material effect on the financial statements.
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The Company has the following note payable obligations in default:
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Note payable to Facts and Comparisons due September 1, 2002, with interest accrued at 6% per annum, unsecured, in settlement of a trade payable; unpaid to date and in default
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18,000 | |||
Note payable to Luckysurf.com due September 12, 2002 with interest accrued at 6% per annum, unsecured, in settlement of a trade payable; unpaid to date and in default
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30,000 | |||
Note payable to Michael Marks (a shareholder) due August 31, 2000 with interest accrued at 5% per annum, unsecured; unpaid to date and in default
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25,000 | |||
Note payable to Steven Goldberg (a former consultant) due July 10, 2002, unsecured with interest of 7% accrued if unpaid at due date, in settlement of liability; unpaid to date and in default
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40,000 | |||
Note payable to Highest Star Investment due on demand, unsecured with no stated interest rate, unpaid To date and in default
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192,000 | |||
Totals
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$ | 305,000 |
EXHIBIT NO.
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DESCRIPTION
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3.1
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Articles of incorporation of Tree Top Industries, as amended (1)
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3.2
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By-Laws (2)
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10.1
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Employment Agreement, dated October 1, 2007, by and between Tree Top Industries, Inc. and David Reichman (3)
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10.2
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Employment Agreement, dated April 1, 2009, by and between Tree Top Industries Inc. and Kathy Griffin (4)
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10.3
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Bridge Loan Term Sheet, dated January 11, 2010, by and between Tree Top Industries, Inc. and GeoGreen Biofuels, Inc.(5)
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10.4
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Business and Financial Consulting Agreement, dated February 22, 2010 by and between Tree Top Industries, Inc. and Asia Pacific Capital Corporation(6)
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10.5
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Distribution Agreement, by and between Tree Top Industries, Inc. and NetThruster, Inc., dated February 9, 2011(7)
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10.6
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Term Agreement by and between Tree Top Industries, Inc. and Sky Corporation, doo, dated April 18, 2011 (8)
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10.7
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Term Agreement by and between Tree Top Industries, Inc. and Adesso Biosciences, Ltd, dated October 12, 2011(9)
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10.8
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Term Agreement by and between Tree Top Industries, Inc. and Stemcom, LLC d/b/a Pipeline Nutrition, dated March 1, 2012(10)
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10.9
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Mutual disengagement agreement by and between Tree Top Industries, Inc. and Stemcom, LLC d/b/a Pipeline Nutrition, dated March 23, 2012(11)
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10.10
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Reserve Equity financing agreement by and between Tree Top Industries, Inc. and AGS Capital Group, dated August 15, 2012.(12)
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10.11
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Asset purchase Agreement by and between TTII Oil & Gas, Inc. a subsidiary of Tree Top Industries, Inc. and American Resource Technologies, Inc.(13)
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10.12
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Resignation of Mr. Robert Hantman, Esq. as a member of the board of directors(14)
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21.1
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Subsidiaries of the registrant
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31.1
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Section 302 Certification of Chief Executive Officer and Chief Financial Officer
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32.1
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Section 906 Certification of Chief Executive Officer
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(1)
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Filed November 13, 2009, as an exhibit to a Form 10-Q and incorporated herein by reference.
Filed January 3, 2012, as an exhibit to an 8 – K and incorporated herein by reference.
Filed April 12, 2013, as an exhibit to an 8 – K and incorporated herein by reference.
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(2)
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Filed July 19, 2010, as an exhibit to a Form 10-K/A and incorporated herein by reference.
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(3)
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Filed November 7, 2007, as an exhibit to a Form 8-K and incorporated herein by reference.
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(4)
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Filed March 25, 2010, as an exhibit to a Form 8-K and incorporated herein by reference.
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(5)
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Filed January 19, 2010, as an exhibit to a Form 8-K and incorporated herein by reference.
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(6)
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Filed July 19, 2010, as an exhibit to a Form 10-Q/A and incorporated herein by reference.
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(7)
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Filed February 9, 2011, as an exhibit to a Form 8-K and incorporated herein by reference.
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(8)
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Filed April 19, 2011, as an exhibit to a Form 8 - K and incorporated herein by reference.
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(9)
|
Filed October 18, 2011 as an exhibit to a Form 8 - K and incorporated herein by reference.
|
(10)
|
Filed March 6, 2012 as an exhibit to a Form 8 – K and incorporated herein by reference.
|
(11)
|
Filed March 23, 2012 as an exhibit to a Form 8 – K and incorporated herein by reference.
|
(12)
|
Filed August 21, 2012 as an exhibit to a Form 8 – K and incorporated herein by reference.
|
(13)
|
Filed January 8, 2013 as an exhibit to a Form 8 – K and incorporated herein by reference.
|
(14)
|
Filed January 8, 2013 as an exhibit to a Form 8 – K and incorporated herein by reference.
|
(a)
|
Exhibits
|
Dated: August 14, 2013
|
TREE TOP INDUSTRIES, INC.
|
||
By:
|
/s/ David Reichman
|
||
David Reichman, Chairman of the Board, Chief
Executive Officer, Chief Financial Officer and
Principal Accounting Officer
|
By:
|
/s/ David Reichman
|
Dated: August 14, 2013
|
|
David Reichman, Chairman of the Board, Chief
|
|||
Executive Officer, Chief Financial Officer
|
|||
and Principal Accounting Officer
|
|||
By:
|
/s/ Kathy M. Griffin
|
Dated: August 14, 2013
|
|
Kathy M. Griffin, Director, President
|
|||
By:
|
/s/ Frank Benintendo
|
Dated: August 14, 2013
|
|
Frank Benintendo, Director & Secretary
|
|||
By:
|
/s/ Donald Gilbert, Phd.
|
Dated: August 14, 2013
|
|
Donald Gilbert, Director & Treasurer
|
Subsidiaries of the Registrant:
|
||
1.
|
NetThruster, Inc.
|
|
Nevada Corporation
|
||
511 Sixth Avenue, Suite 800
|
||
New York, NY 10011
|
||
2.
|
MLN, Inc.
|
|
Delaware Corporation
|
||
511 Sixth Avenue, Suite 800
|
||
New York, NY 10011
|
||
3.
|
Gohealth.MD, Inc.
|
|
Delaware Corporation
|
||
511 Sixth Avenue, Suite 800
|
||
New York, NY 10011
|
||
4.
|
BioEnergy Applied Technologies, Inc.
|
|
Nevada Corporation
|
||
511 Sixth Avenue, Suite 800
|
||
New York, NY 10011
|
||
5.
|
Eye Care Centers International, Inc.
|
|
Delaware Corporation
|
||
511 Sixth Avenue, Suite 800
|
||
New York, NY 10011
|
||
6.
|
TTII Oil & Gas, Inc.
|
|
Delaware Corporation
|
||
511 Sixth Avenue, Suite 800
|
||
New York, NY 10011
|
||
7.
|
GoHealthMD, Inc. Nano Pharmaceuticals, Inc.
|
|
Delaware Corporation
|
||
511 Sixth Avenue, Suite 800
|
||
New York, NY 10011
|
||
8.
|
TTI Strategic Acquisitions & Equity Group, Inc.
|
|
Delaware Corporation
|
||
511 Sixth Avenue, Suite 800
|
||
New York, NY 10011
|
1.
|
I have reviewed this report on Form 10-Q of Tree Top Industries, 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 small business issuer’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.
|
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 (of 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 small business issuer’s internal control over financial reporting.
|
/s/ David Reichman
|
|
David Reichman, Chief Executive Officer
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this report on Form 10-Q of Tree Top Industries, 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 small business issuer’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.
|
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 (of 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 small business issuer’s internal control over financial reporting.
|
/s/ David Reichman
|
|
David Reichman, Chief Financial Officer
|
|
(Principal Financial/Accounting 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/ David Reichman
|
Date: August 14, 2013
|
(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/ David Reichman
|
Date: August 14, 2013
|
|
David Reichman,
Chief Financial Officer
|
2. SIGNIFICANT ACCOUNTING POLICIES (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments at Cost |
|
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Marketable securities |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities and Notes Payable within the fair value hierarchy |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Level 3 reconciliation of the beginning and ending balances |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share |
|
Consolidated Statements of Operations (USD $)
|
3 Months Ended | 6 Months Ended | 71 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
|
REVENUES | |||||
Crude oil sales | |||||
OPERATING EXPENSES | |||||
Oil & Gas operating costs | 6,943 | 6,943 | 6,943 | ||
Depreciation | 2,423 | 8,190 | 5,720 | 16,382 | 163,290 |
General and administrative | 18,685 | 37,828 | 43,596 | 76,416 | 6,126,616 |
Compensation and professional fees | 64,589 | 264,988 | 149,743 | 752,204 | 139,731,743 |
Impairment of assets | 2,788,538 | ||||
Total Operating Expenses | 92,640 | 311,006 | 206,002 | 845,002 | 148,817,130 |
LOSS FROM OPERATIONS | (92,640) | (311,006) | (206,002) | (845,002) | (148,817,130) |
OTHER INCOME (EXPENSE) | |||||
Loss on disposal of assets | (2,915) | ||||
Gain on debt forgiveness | 165,220 | 165,220 | 229,085 | ||
Interest income | 2,976 | ||||
Gain/(loss) on investments | 557 | 557 | (40,075) | ||
Financing expenses | (400,000) | ||||
Interest expense | (10,432) | (48,278) | (27,679) | (63,754) | (406,324) |
Total Other Income (Expense) | 155,345 | (48,278) | 138,098 | (63,754) | (617,253) |
NET INCOME (LOSS) BEFORE INCOME TAXES | 62,705 | (359,284) | (67,904) | (908,756) | (149,434,383) |
PROVISION FOR INCOME TAXES | |||||
NET INCOME (LOSS) | 62,705 | (359,284) | (67,904) | (908,756) | (149,434,383) |
OTHER COMPREHENSIVE INCOME/(LOSS) NET OF TAXES | |||||
Unrealized income (loss) on held for sale marketable securities | 394 | (2,133) | (1,739) | ||
COMPREHENSIVE INCOME/(LOSS) | $ 63,099 | $ (359,284) | $ (70,037) | $ (908,756) | $ (149,436,122) |
LOSS PER SHARE - BASIC & DILUTED | $ 0.01 | $ (0.10) | $ (0.01) | $ (0.26) | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | 5,954,018 | 3,477,815 | 5,932,650 | 3,452,203 |
5. NOTES PAYABLE
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTES PAYABLE |
Notes payable consist of various notes bearing interest at rates from 5% to 7%, which are unsecured, with original due dates between August 2000 and December 2015. Four notes with maturity dates that have passed are currently in default with the remaining note due on dates as specified below. At June 30, 2013 and 2012, notes payable amounted to $1,615,812 and $597,860, respectively. Below is a table summarizing the notes owed by the Company.
Note payable activity in the six months ended June 30, 2013:
On February 28, 2013, and March 6, 2013, the Company received proceeds from notes payable lenders. The note amounts were $5,000 and $10,000 respectively, and both bear interest at 6%. The notes mature on 10/28/13 and 11/16/13, respectively, and are unsecured.
During the 2nd Quarter, a director and shareholder advanced $7,000 and received a note payable, bearing interest at 6%, unsecured and due in 8 months. Also during the quarter an individual advanced $28,640 and received a note bearing interest at 5%, unsecured and due in 8 months.
We also negotiated $3,843,133 in officer debt into long-term notes payable of $700,000 and short term notes of $35,000. and the remaining difference of $3,108,133 was a contribution to capital, due to the related party nature of the transaction. We also renegotiated $509,294 in notes payable and accrued interest into long term notes due December 31, 2015. Our current portion of this long-term debt is $45,641. There was no gain or loss on the conversion of these notes with accrued interest, because the old note balances with the associated accrued interest was combined and reclassified to long term debt.
On April 12, 2012, the Company engaged in a note agreement with a Company for $100,000. The note is convertible into common shares of the Company at a rate of $.005, to include all fees and interest. The Company recorded a $100,000 discount on the Convertible Note due to this beneficial conversion feature. The discount was accreted over the term of the note, and the net note balance at June 30, 2013 and December 31, 2012 was $0 and $100,000, respectively.
On June 26, 2013 this convertible note was renegotiated, and a non-convertible note was signed, bearing interest at 5%, with monthly payments beginning 1/1/2014, due on December 31, 2015.
|
2. SIGNIFICANT ACCOUNTING POLICIES (Details 4) (USD $)
|
3 Months Ended | 6 Months Ended | 71 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
|
Significant Accounting Policies Details 4 | |||||
Loss (numerator) | $ 62,705 | $ (359,284) | $ (67,904) | $ (908,756) | $ (149,434,383) |
Shares (denominator) | 5,954,018 | 3,477,815 | 5,932,650 | 3,452,203 | |
Basic and diluted loss per share | $ 0.01 | $ (0.10) | $ (0.01) | $ (0.26) |
5. NOTES PAYABLE (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note outstanding |
|
6. STOCKHOLDERS' DEFICIT (Details Narrative) (USD $)
|
6 Months Ended | 71 Months Ended | |
---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
|
Stockholders Deficit Details Narrative | |||
Imputed interest recorded on a non-interest bearing note | $ 6,720 | $ 6,720 | $ 46,047 |
8. ASSET PURCHASES AND OIL & GAS PROPERTIES (Details) (USD $)
|
Jun. 30, 2013
|
---|---|
Asset Purchases And Oil Gas Properties Details | |
75% working interest in Oil & Gas lease | $ 513,538 |
Recorded value | $ 513,538 |
1. CONDENSED FINANCIAL STATEMENTS
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
CONDENSED FINANCIAL STATEMENTS | The accompanying financial statements have been prepared by Tree Top Industries, Inc. (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, 2013, 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. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2012 audited financial statements. The results of operations for the period ended June 30, 2013 are not necessarily indicative of the operating results for the full year.
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as disclosed in Item 2 below. All significant inter-company balances and transactions have been eliminated.
|
3. SIGNIFICANT ACCOUNTING POLICIES
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | 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.
Beneficial Conversion Feature of Debentures and Convertible Notes Payable In accordance with FASB ASC 470-20, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, we recognize the advantageous value of conversion rights attached to convertible debt. Such rights give the debt holder the ability to convert his debt into common stock at a price per share that is less than the trading price to the public on the day the loan is made to us. The beneficial value is calculated as the intrinsic value (the market price of the stock at the commitment date in excess of the conversion rate) of the beneficial conversion feature of the debentures and related accruing interest, and is recorded as a discount to the related debt and an addition to additional paid in capital. The discount is amortized over the remaining outstanding period of related debt using the straight line method.
Recent Accounting Pronouncements No accounting pronouncements were issued during the first quarter 2013 that would have a material effect on the accounting policies of the Company when adopted.
Oil and Gas Interests The Company utilizes the full cost method of accounting for oil and gas activities. Under this method, subject to a limitation based on estimated value, all costs associated with property acquisition, exploration and development, including costs of unsuccessful exploration; are capitalized within a cost center. No gain or loss is recognized upon the sale or abandonment of undeveloped or producing oil and gas interests unless the sale represents a significant portion of oil and gas interests and the gain significantly alters the relationship between capitalized costs and proved oil and gas reserves of the cost center. Depreciation, depletion and amortization of oil and gas interests is computed on the units of production method based on proved reserves. Amortizable costs include estimates of future development costs of proved undeveloped reserves.
Capitalized costs of oil and gas interests may not exceed an amount equal to the present value, discounted at 10%, of the estimated future net cash flows from proved oil and gas reserves plus the cost, or estimated fair market value, if lower, of unproved interests. Should capitalized costs exceed this ceiling, an impairment is recognized. The present value of estimated future net cash flows is computed by applying average prices, in the preceding twelve months, of oil and gas to estimated future production of proved oil and gas reserves as of year-end, less estimated future expenditures to be incurred in developing and producing the proved reserves and assuming continuation of existing economic conditions.
Asset Retirement Obligation The Company follows FASB ASC 410-20 "Accounting for Asset Retirement Obligations," which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs.
FASB ASC 410-20 requires recognition of the present value of obligations associated with the retirement of tangible long-lived assets in the period in which it is incurred. The liability is capitalized as part of the related long-lived asset's carrying amount.
Over time, accretion of the liability is recognized as an operating expense and the capitalized cost is depreciated over the expected useful life of the related asset. The Company's asset retirement obligations are related to the plugging, dismantlement, removal, site reclamation and similar activities of its oil and gas exploration activities.
Investments at Cost The Company accounts for its investment in private entities using the equity method for investments where the Companys shares held are in excess of 20% of the outstanding shares of the investee. The Company acquired a 25% equity investment in three entities from Brazil as part of the assets of the ARUR acquisition in December 2012. Due to the inactivity of the entities, the Company did not allocate any purchase price to these investments. The Company evaluates its cost in investments for impairment of value annually. If cost investments become marketable they are reclassified to Marketable Securities-Available for Sale.
Marketable Securities-Available for Sale The Company purchased marketable securities during 2012. The Company's marketable securities are classified as "available for sale". Accordingly, the Company originally recognizes the shares at the market value purchased. The shares are evaluated quarterly using the specific identification method. Any unrealized holding gains or losses are reported as Other Comprehensive Income and as a separate component of stockholder's equity. Realized gains and losses are included in earnings. Also other than temporary impairments are recorded as a loss on marketable securities in the statements of operations.
Marketable securities are as follows at June 30, 2013:
The Company realized cash in the amount of $28,561 from the sale of marketable securities during the 2nd quarter 2013, and recognized a gain on the sale of $557.
Fair Value of Financial Instruments On January 1, 2008, the Company adopted ASC 820, Fair Value Measurements ASC 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
The carrying amounts reported in the balance sheets for cash and cash equivalents, and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The carrying value of notes payable approximates fair value because negotiated terms and conditions are consistent with current market rates as of June 30, 2013 and December 31, 2012. Marketable securities are reported at the quoted and listed market rates of the securities held at the period end.
The following table presents the Companys Marketable securities and Notes Payable within the fair value hierarchy utilized to measure fair value on a recurring basis as of June 30, 2013 and December 31, 2012:
The following table presents a Level 3 reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs as of June 30, 2013 and December 31, 2012:
Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Ludicrous, Inc., BioEnergy Applied Technologies Inc., GoHealthMD, Inc., MLN, Inc., Universal Energy and Services Group, Inc. Sky Entertainment, Inc., Eye Care Centers International, Inc., GoHealthMD Nano Pharmaceuticals, Inc., TTI Strategic Acquisitions and Equity Group, Inc. and TTII Oil & Gas, Inc.. All subsidiaries of the Company currently have no financial activity. All significant inter-company balances and transactions have been eliminated.
Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are maintained with major financial institutions in the U S. Deposits held with these banks at times exceed $250,000 of insurance provided on such deposits. The Company has not experienced any losses in such accounts and believes that it is not exposed to any significant credit risk on cash and cash equivalents. There were no cash equivalents at June 30, 2013 and December 31, 2012.
Stock Based Compensation The Company accounts for stock-based compensation in accordance with the provisions of ASC 718. ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant-date fair value of the award. That cost will be recognized over the period during which an employee is required to provide service in exchange for the reward- known as the requisite service period. No compensation cost is 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 are estimated using the Black Scholes option-pricing model adjusted for the unique characteristics of those instruments.
Equity instruments issued to non-employees are recorded at their fair values as determined in accordance with ASC 718 and ASC 595, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods and Services, and are periodically revalued as the stock options vest and are recognized as expense over the related service period.
Basic and Diluted Loss per Share The Company calculates earnings per share in accordance with ASC 260, Computation of Earnings Per Share. Basic loss per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share gives effect to dilutive convertible securities, options, warrants and other potential common stock outstanding during the period; only in periods in which such effect is dilutive. For 2013 and 2012, no common equivalent shares were excluded from the calculation and as of June 30, 2013, there are not stock equivalents existing. The ESOP shares issued during 2012 and 2011 have also been excluded from the calculation as they were issued but not outstanding.
Revenue Recognition We recognize service revenues in accordance with ASC 605 Revenue Recognition and Revenue Arrangements with Multiple Deliverables. Revenue is recognized when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. At the inception of a customer contract for service, we make an assessment as to that customers ability to pay for the services provided. If we subsequently determine that collection from that customer is not reasonably assured, we record an allowance for doubtful accounts and bad debt expense for all of that customers unpaid invoices and cease recognizing revenue for continued services provided until cash is received.
Intangible Assets and Business Combinations The Company adopted ASC 805, Business Combinations, and ASC 350, Goodwill and Other Intangible Assets, effective June 2001 and revised in December 2007. ASC 805 requires the use of the purchase method of accounting for any business combinations initiated after June 30, 2002, and further clarifies the criteria to recognize intangible assets separately from goodwill. Under ASC 350, goodwill and indefinite−life intangible assets are no longer amortized, but are reviewed for impairment annually.
Oil & Gas Inventory The Company accounts for the oil & gas extracted from the ground and held in holding tanks prior to pickup and sale as oil & gas inventory. It is computed using the measurement of barrels and is multiplied with the published oil purchase price from the customer that picks up and purchases our oil.
Revenue Recognition and Deferred Revenue Revenue form sales of crude oil are recorded when deliveries have occurred and legal ownership of the commodity transfers to the customer. Title transfers for crude oil generally occur when a tanker lifting has occurred. Oil inventory in holding tanks at the period end are recorded as deferred revenue prior to tanker lifting. |
6. STOCKHOLDERS’ DEFICIT
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6 Months Ended |
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Jun. 30, 2013
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Equity [Abstract] | |
STOCKHOLDERS’ DEFICIT | ISSUANCES OF COMMON STOCK
On January 28, 2013, the Board of Directors authorized the issuance of 50,000 shares of common stock to an attorney for services performed. The shares were valued at the market price on the day of issuance, in the amount of $60,000.
Also on January 28, 2013, the Board of Directors authorized the issuance of 18,484 shares to our corporate council, however the shares were not issued at June 30, 2013 and have been recorded as a stock payable contra-equity account on the financial statements. The share were valued at the market price on the day of grant of $22,181.
During the three months ended March 31, 2013 and June 30, 2013, the Company recorded imputed interest on a non-interest bearing note in the amount of $3,360 per quarter, with an increase in paid in capital.
On June 20, 2013, the Board of Directors, authorized the issuance of 194,304 shares of common stock for the conversion of accounts payable in the amount of $204,081. The transaction was recorded at the market price of the stock on the day of issuance of $.20 per share. A gain on the settlement of this debt was recorded in the amount of $165,220.
On June 30, 2013, in connection with the settlement of the officer debt as described in the notes payable disclosure above, a contribution to paid in capital was recorded in the amount of $3,108,133.
During the six months ended June 30, 2013, the Company did not issue any stock options or warrants.
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4. RELATED PARTY TRANSACTIONS
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6 Months Ended |
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Jun. 30, 2013
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Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS |
The balance due to related parties as of June 30, 2013 of $693,991 consisted of current and long term notes payable to David Reichman, the Companys Chief Executive Officer of $483,991 and current and long term notes payable to Kathy Griffin, the Companys President of $210,000. As of December 31, 2012, the related party balance was $3,853,391, consisting of a balance due David Reichman of $3,304,634, and a balance due Kathy Griffin of $548,757. During the six month period ended June 30, 2013, Mr. Reichman advanced the company $6,968 and was repaid $66,285. The amounts due to the officers are due on June 30, 2014 in the amount of $35,000, and $658,991 due on December 31, 2015. The notes bear interest at 5%, monthly installments on the long-term notes in the amount of $4,000 on each note, begins January 1, 2015. Interest on various credit cards of Mr. Reichman, are being accrued at the applicable rates on the credit card accounts. The difference between the new note balances and the old liabilities of $3,108,133 was recorded to additional paid in capital due to the related party nature of the transaction.
On June 30, 2013, The Company negotiated the previous accrued wages, adavances and expenses of David Reichman, CEO and Kathy Griffin, President, into long-term notes and short-term notes. Mr. Reichman and Mrs. Griffin, have negotiated down their liabilities in an attempt to make the Company more attractive to future investors and to make the Company more financially fit going forward. With the Companys new direction as an oil and gas entity, it was necessary to clear away the old obligations and start anew. Because David and Kathy are major shareholders and officers/directors, accounting regulations require that these debt settlements not be recognized as income, or gains from debt settlement, but rather are recorded as shareholder contributions to capital. Mr. Reichmans settlement included all liabilities being converted into a long-term note of $500,000 and a short-term note of $25,000. Mrs. Griffins liabilities were converted into a long-term note of $200,000 and a short-term note of $10,000. The difference between the new note balances and the old liabilities of $3,108,133 was recorded to additional paid in capital due to the related party nature of the transaction.
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