Nevada
|
88-0490034
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification Number)
|
|
|
7960 E. Camelback Rd., #511
|
|
Scottsdale, AZ
|
85251
|
(Address of principal executive offices)
|
(Zip Code)
|
|
Yes
|
X
|
|
No
|
|
|
|
Yes
|
|
|
No
|
X
|
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
|
Non-accelerated filer ☐
|
Smaller reporting company ☒
|
|
|
Yes
|
|
|
No
|
X
|
|
PART I.
|
FINANCIAL INFORMATION
|
Page
|
|
|
|
4 | ||
|
|
|
|
4 | |
|
|
|
|
5 | |
|
|
|
|
6 | |
|
|
|
|
8 | |
|
|
|
22 | ||
|
|
|
24 | ||
|
|
|
24 |
PART II.
|
OTHER INFORMATION
|
|
|
|
|
25 | ||
|
|
|
26 | ||
|
|
|
26 | ||
|
|
|
26 | ||
|
|
|
26 | ||
|
|
|
27 |
ENERGYTEK CORP.
|
||||||||
(FORMERLY BROADLEAF CAPITAL PARTNERS, INC.)
|
||||||||
For the Three Months Ended
|
||||||||
30-Jun-16
|
31-Dec-15
|
|||||||
"Unaudited"
|
|
|||||||
CURRENT ASSETS
|
||||||||
Cash
|
$
|
9,703
|
$
|
6,647
|
||||
Accounts receivable (net)
|
624
|
624
|
||||||
TOTAL CURRENT ASSETS
|
10,327
|
7,271
|
||||||
Property, plant and equipment, net
|
11,469
|
21,769
|
||||||
Intangible assets
|
100,000
|
100,000
|
||||||
TOTAL ASSETS
|
121,796
|
129,040
|
||||||
CURRENT LIABILITIES
|
||||||||
Accounts payable and accrued expenses
|
83,309
|
59,245
|
||||||
Other current liabilities
|
0
|
0
|
||||||
Notes payable - current portion
|
172,942
|
110,942
|
||||||
Notes payable - related party
|
142,562
|
142,562
|
||||||
TOTAL OTHER CURRENT LIABILITIES
|
398,813
|
312,749
|
||||||
TOTAL LIABILITIES
|
398,813
|
312,749
|
||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||
Preferred Stock 10,000,000 authorized all series: Series B $0.01 par value 300,000 shares issued and outstanding at June 30, 2016 and December 31, 2015.
|
3,000
|
3,000
|
||||||
Series C $0.01 par value 890 shares issued and outstanding at June 30, 2016 and December 31, 2015.
|
9
|
9
|
||||||
Common Stock 500,000,000 authorized at $0.001 par value; and 22,787,964 shares issued and outstanding June 30, 2016 and December 31, 2015.
|
22,788
|
22,788
|
||||||
Additional paid-in capital
|
24,727,584
|
24,727,584
|
||||||
Accumulated deficit
|
(25,030,398
|
)
|
(24,937,090
|
)
|
||||
TOTAL EQUITY (DEFICIT)
|
(277,017
|
)
|
(183,709
|
)
|
||||
TOTAL LIABILITIES AND EQUITY (DEFICIT)
|
$
|
121,796
|
$
|
129,040
|
||||
"The accompanying notes are an integral part of these financial statements"
|
ENERGYTEK CORP.
|
||||||||||||||||
(FORMERLY BROADLEAF CAPITAL PARTNERS, INC.)
|
||||||||||||||||
For the Three Months Ended
|
For the Six Months Ended
|
|||||||||||||||
30-Jun-16
|
30-Jun-15
|
30-Jun-16
|
30-Jun-15
|
|||||||||||||
|
|
|
|
|||||||||||||
REVENUES
|
$
|
-
|
$
|
14,161
|
$
|
-
|
$
|
40,303
|
||||||||
COST OF SALES
|
0
|
1,943
|
0
|
26,628
|
||||||||||||
GROSS PROFIT
|
0
|
12,218
|
0
|
13,675
|
||||||||||||
OPERATING EXPENSES
|
48,583
|
54,137
|
93,249
|
91,770
|
||||||||||||
NET INCOME (LOSS) FROM OPERATIONS
|
(48,583
|
)
|
(41,919
|
)
|
(93,249
|
)
|
(78,095
|
)
|
||||||||
OTHER INCOME (EXPENSE)
|
||||||||||||||||
Gain on derivative liability
|
0
|
1,115
|
0
|
59,117
|
||||||||||||
Interest expense
|
0
|
(21,620
|
)
|
(59
|
)
|
(101,526
|
)
|
|||||||||
TOTAL OTHER INCOME (EXPENSE)
|
0
|
(20,505
|
)
|
(59
|
)
|
(42,409
|
)
|
|||||||||
INCOME (LOSS) FROM CONTINUING
|
||||||||||||||||
OPERATING BEFORE INCOME TAXES
|
(48,583
|
)
|
(62,424
|
)
|
(93,308
|
)
|
(120,504
|
)
|
||||||||
Income taxes
|
0
|
0
|
0
|
0
|
||||||||||||
NET INCOME (LOSS)
|
(48,583
|
)
|
(62,424
|
)
|
(93,308
|
)
|
(120,504
|
)
|
||||||||
INCOME (LOSS) PER SHARE
|
||||||||||||||||
Basic Income (Loss) Per Share basic
|
(0.00
|
)
|
(0.00
|
)
|
(0.00
|
)
|
(0.01
|
)
|
||||||||
Basic Income (Loss) Per Share diluted
|
(0.00
|
)
|
(0.00
|
)
|
(0.00
|
)
|
(0.00
|
)
|
||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING
|
||||||||||||||||
BASIC
|
22,787,964
|
22,787,964
|
22,787,964
|
21,014,664
|
||||||||||||
DILUTED
|
22,787,964
|
119,187,964
|
22,787,964
|
117,414,664
|
||||||||||||
"The accompanying notes are an integral part of these financial statements"
|
ENERGYTEK CORP.
|
||||||||
(FORMERLY BROADLEAF CAPITAL PARTNERS, INC.)
|
||||||||
For the Six Months Ended
|
||||||||
30-Jun-16
|
30-Jun-15
|
|||||||
"Unaudited"
|
"Unaudited"
|
|||||||
CASH FLOWS FROM OPERATING ACTIVIES
|
||||||||
Net income (loss) from continuing operations
|
$
|
(93,308
|
)
|
$
|
(120,504
|
)
|
||
Adjustments to reconcile net loss to net cash
|
||||||||
used by operating activities :
|
||||||||
Depreciation
|
10,300
|
10,300
|
||||||
Impairment expense
|
0
|
0
|
||||||
Loss on asset disposal
|
0
|
0
|
||||||
Gain on derivative liability
|
0
|
65,902
|
||||||
Accretion debt discount
|
0
|
40,507
|
||||||
(Increase) decrease in accounts receivable
|
0
|
580
|
||||||
Increase (decrease) in accounts payable/accrued expenses
|
24,064
|
(61,003
|
)
|
|||||
NET CASH USED IN OPERATING ACTIVITIES
|
(58,944
|
)
|
(64,218
|
)
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchase of equipment
|
0
|
0
|
||||||
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES
|
0
|
0
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Issuance of note receivable
|
0
|
0
|
||||||
Issuance of notes payable
|
62,000
|
64,000
|
||||||
Net additional funding by related party notes
|
0
|
1,837
|
||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
62,000
|
65,837
|
||||||
NET DECREASE IN CASH
|
3,056
|
1,619
|
||||||
CASH, BEGINNING OF PERIOD
|
6,647
|
923
|
||||||
CASH, END OF PERIOD
|
9,703
|
2,542
|
||||||
"The accompanying notes are an integral part of these financial statements"
|
ENERGY TEC CORP.
|
||||||||
(FORMERLY BROADLEAF CAPITAL PARTNERS, INC.)
|
||||||||
|
For the Six Months Ended
|
|||||||
|
30-Jun-16
|
30-Jun-15
|
||||||
|
"Unaudited"
|
"Unaudited"
|
||||||
|
||||||||
SUPPLEMENTAL DISCLOSURE OF CASH
|
||||||||
FLOW INFORMATION
|
||||||||
|
||||||||
Interest paid
|
$
|
0
|
$
|
0
|
||||
Income taxes paid
|
$
|
0
|
$
|
0
|
||||
|
||||||||
SUPPLEMENTAL DISCLOSURE OF
|
||||||||
NON-CASH ACTIVITIES
|
||||||||
|
||||||||
Common stock issued for investment
|
$
|
0
|
$
|
2,200,000
|
||||
Common stock exchanged for debt
|
$
|
0
|
$
|
33,400
|
||||
"The accompanying notes are an integral part of these consolidated financial statements."
|
Buildings
|
40 years
|
Equipment
|
5-15 years
|
6/30/2016
|
6/30/2015
|
|||||||
|
||||||||
Net Income (Loss)
|
$
|
(93,308
|
)
|
$
|
(120,504
|
)
|
||
|
||||||||
Weighted-average common shares outstanding basic:
|
||||||||
Weighted-average common stock - Basic
|
22,787,964
|
21,014,664
|
||||||
Equivalents
|
||||||||
Stock options
|
-
|
-
|
||||||
Warrants
|
-
|
-
|
||||||
Convertible notes, Preferred stock
|
-
|
-
|
||||||
Weighted-average common stock - Basic and Diluted
|
22,787,964
|
19,241,365
|
For the Periods Ended:
|
6/30/2016
|
12/31/2015
|
||||||
|
||||||||
Property, plant and equipment consist of the following:
|
||||||||
|
||||||||
Equipment
|
$
|
21,074
|
$
|
247,750
|
||||
Computers and software
|
7,400
|
7,400
|
||||||
Other equipment
|
400
|
400
|
||||||
Less: disposal
|
0
|
(226,676
|
)
|
|||||
Total property, plant and equipment
|
28,874
|
28,874
|
||||||
Less:
|
||||||||
Accumulated depreciation
|
7,105
|
36,800
|
||||||
Current depreciation expense
|
10,300
|
5,105
|
||||||
Less: disposal
|
0
|
(34,800
|
)
|
|||||
Total accumulated depreciation
|
17,405
|
7,105
|
||||||
|
||||||||
Net property, plant and equipment
|
$
|
11,469
|
$
|
21,769
|
||||
|
||||||||
Intangible assets consist of:
|
||||||||
|
||||||||
Goodwill
|
$
|
256,000
|
$
|
256,000
|
||||
Intangible assets
|
7,751,031
|
7,751,031
|
||||||
Less:
|
||||||||
Impairment
|
7,907,031
|
7,907,031
|
||||||
|
||||||||
Net intangible assets
|
$
|
100,000
|
$
|
100,000
|
||||
|
||||||||
Depreciation expense was $10,300 at June 30, 2016.
|
Notes payable consist of the following for the periods ended;
|
6/30/2016
|
12/31/2015
|
||||||
Conventional convertible note issued as working capital advances during 2014 with an interest rate stated at 5%. This note is due May 10, 2016 and can be converted at $0.30 per share.
|
||||||||
16,000
|
0
|
|||||||
Conventinal convertible note with an interest rate stated at 5%. This note was due May 12, 2016
|
||||||||
25,000
|
0
|
|||||||
Conventinal convertible note with an interest rate stated at 5%. This note was due June 17, 2016
|
||||||||
12,500
|
0
|
|||||||
Conventional convertible note issued as working capital advances during 2014 with an interest rate stated at 5%. This note is due September 30, 2015 and can be converted at $0.30 per share.
|
||||||||
7,500
|
7,500
|
|||||||
Conventional convertible note issued as working capital advances during 2014 with an interest rate stated at 5%. This note is due September 30, 2015 and can be converted at $0.30 per share.
|
||||||||
16,000
|
7,500
|
|||||||
Promissory note from a related party issued as working capital advances during 2014 with an interest rate stated at 0%. This note is due on demand.
|
||||||||
95,942
|
95,942
|
|||||||
Funds advanced from a related party issued for working capital during 2015 with an interest rate stated at 0%. This note is due on demand.
|
||||||||
52,493
|
52,493
|
|||||||
Promissory note from a related party issued as working capital advances during 2014 with an interest rate stated at 0%. This note is due on demand.
|
||||||||
90,069
|
90,069
|
|||||||
Total Notes Payable
|
315,504
|
253,504
|
||||||
Less Current Portion
|
315,504
|
253,504
|
||||||
Long Term Notes Payable
|
$
|
0
|
$
|
0
|
||||
All are classified as short term by the Company. Accrued interest on these notes totaled.
|
$
|
0
|
$
|
0
|
6/30/2016
|
12/31/2015
|
|||||||
Deferred tax assets:
|
||||||||
Beginning NOL Carryover
|
$
|
24,085,162
|
$
|
20,537,568
|
||||
Adjusted Taxable Income(loss)
|
(93,249
|
)
|
(3,547,594
|
)
|
||||
Valuation allowance
|
0
|
0
|
||||||
Ending NOL Carryover
|
24,178,411
|
24,085,162
|
||||||
Tax Benefit Carryforward
|
8,220,660
|
8,188,955
|
||||||
Valuation allowance
|
(8,220,660
|
)
|
(8,188,955
|
)
|
||||
Net deferred tax asset
|
$
|
0
|
$
|
0
|
||||
Net Valuation Allowance
|
$
|
(8,220,660
|
)
|
$
|
(8,188,955
|
)
|
|
||||||||||||||||||||
|
Fair Value Measurement Using
|
|||||||||||||||||||
|
Carrying Value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||||
Derivative liabilities on conversion feature
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total derivative liabilities
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
Derivative Liability
|
|||
Fair value, January 1, 2016
|
$
|
-
|
||
Additions
|
-
|
|||
Change in fair value
|
-
|
|||
Transfers in and/or out of Level 3
|
-
|
|||
Fair value, June 30, 2016
|
$
|
-
|
●
|
Going concern. Our recurring losses from operations and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern and as a result, our independent registered public accounting firm included an explanatory paragraph in their report on our consolidated financial statements for the year ended December 31, 2015 with respect to this uncertainty. We have prepared our financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should we be unable to continue in existence.
|
|
·
|
On July 27, 2016, the Company filed a Current Report on Form 8-K, dated July 21, 2016, to disclose, pursuant to Items 1.01, 3.02 and 5.02, the entering into of several agreements including issuance of convertible promissory notes, repayment of certain debt, cancellation of 1,000,000 shares of common stock, assumption of debt of the Company by the Company's subsidiary, Texas Gulf Exploration and Production, Inc., ("TGEP") in the approximate amount of $178,000, redemption of 300,000 shares of the Company's Series B Preferred Stock from Litigation Capital, Inc. ("LCI") in exchange for issuance to LCI of 300,000 shares of the Company's common stock and the resignation of Craig Crawford as Chief Financial Officer and a director. In addition, the Company agreed to certain other restructuring of the Company, including the transfer of all equity interests in the Company's subsidiaries, TGEP and Legal Capital Corp. to LCI upon the earlier of October 19, 2016 or a merger of similar transaction by the Company, as well as the dissolution of the Wagley-EnergyTEK Joint Venture (the "Wagley JV") and for disposition of 20,000,000 shares of the Company's common stock held by the Wagley JV.
|
|
Incorporated by Reference
|
Filed or Furnished
|
||||||||||
Exhibit #
|
Exhibit Description
|
Form
|
Date
|
Number
|
Herewith
|
|||||||
3(i)
|
Articles of Incorporation as amended
|
10-K
|
3-31-15
|
3.1
|
||||||||
3(vi)
|
Bylaws
|
10-K
|
3-31-15
|
3.2
|
||||||||
10.1 |
Form of Convertible Promissory Note
|
8-K | 7-27-16 | 10.1 | ||||||||
31.1
|
Certification of Principal Executive Officer (302)
|
Filed
|
||||||||||
31.2
|
Certification of Principal Financial Officer 302
|
Filed
|
||||||||||
32.1
|
Certification of Principal Executive Officer (906)
|
Furnished**
|
||||||||||
32.2
|
Certification of Principal Financial Officer (906)
|
Furnished**
|
** | This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K. |
EnergyTek Corp.
|
|
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
/s/ Jonathan R. Read
|
|
President and Chief Executive Officer
|
------------------------
|
|
|
Jonathan R. Read
|
|
|
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Aug. 09, 2016 |
|
Document and Entity Information: | ||
Entity Registrant Name | EnergyTEK Corp. | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Entity Central Index Key | 0000748268 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 27,071,295 | |
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 | 2016 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | entk |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Common Stock, par or stated value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 500,000,000 | 500,000,000 |
Common Stock, shares issued | 22,787,964 | 22,787,964 |
Common Stock, shares outstanding | 22,787,964 | 22,787,964 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Par Value | $ 0.01 | |
Series B Preferred Stock | ||
Preferred Stock, Par Value | $ 0.01 | $ 0.01 |
Preferred Stock, shares issued | 300,000 | 300,000 |
Preferred Stock, shares outstanding | 300,000 | 300,000 |
Series C Preferred Stock | ||
Preferred Stock, Par Value | $ 0.01 | $ 0.01 |
Preferred Stock, shares issued | 890 | 890 |
Preferred Stock, shares outstanding | 890 | 890 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Statement | ||||
REVENUES | $ 14,161 | $ 40,303 | ||
COST OF SALES | $ 0 | 1,943 | $ 0 | 26,628 |
GROSS PROFIT | 0 | 12,218 | 0 | 13,675 |
OPERATING EXPENSES | 48,583 | 54,137 | 93,249 | 91,770 |
NET INCOME (LOSS) FROM OPERATIONS | (48,583) | (41,919) | (93,249) | (78,095) |
OTHER INCOME (EXPENSE) | ||||
Gain on derivative liability | 0 | 1,115 | 0 | 59,117 |
Interest expense | 0 | (21,620) | (59) | (101,526) |
TOTAL OTHER INCOME (EXPENSE) | 0 | (20,505) | (59) | (42,409) |
INCOME (LOSS) FROM CONTINUING OPERATING BEFORE INCOME TAXES | (48,583) | (62,424) | (93,308) | (120,504) |
Income taxes | 0 | 0 | 0 | 0 |
NET INCOME (LOSS) | $ (48,583) | $ (62,424) | $ (93,308) | $ (120,504) |
INCOME (LOSS) PER SHARE | ||||
Basic Income (Loss) Per Share basic | $ (0.00) | $ (0.00) | $ (0.00) | $ (0.01) |
Basic Income (Loss) Per Share diluted | $ (0.00) | $ (0.00) | $ (0.00) | $ (0.00) |
WEIGHTED AVERAGE SHARES OUTSTANDING | ||||
BASIC | 22,787,964 | 22,787,964 | 22,787,964 | 21,014,664 |
DILUTED | 22,787,964 | 119,187,964 | 22,787,964 | 117,414,664 |
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
CASH FLOWS FROM OPERATING ACTIVIES | ||
Net income (loss) from continuing operations | $ (93,308) | $ (120,504) |
Adjustments to reconcile net loss to net cash used by operating activities : | ||
Depreciation | 10,300 | 10,300 |
Impairment expense | 0 | 0 |
Loss on asset disposal | 0 | 0 |
Gain on derivative liability | 0 | 65,902 |
Accretion debt discount | 0 | 40,507 |
(Increase) decrease in accounts receivable | 0 | 580 |
Increase (decrease) in accounts payable/accrued expenses | 24,064 | (61,003) |
NET CASH USED IN OPERATING ACTIVITIES | (58,944) | (64,218) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of equipment | 0 | 0 |
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES | 0 | 0 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Issuance of note receivable | 0 | 0 |
Issuance of notes payable | 62,000 | 64,000 |
Net additional funding by related party notes | 0 | 1,837 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 62,000 | 65,837 |
NET DECREASE IN CASH | 3,056 | 1,619 |
CASH, BEGINNING OF PERIOD | 6,647 | 923 |
CASH, END OF PERIOD | 9,703 | 2,542 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest paid | 0 | 0 |
Income taxes paid | 0 | 0 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES | ||
Common stock issued for investment | 0 | 2,200,000 |
Common stock exchanged for debt | $ 0 | $ 33,400 |
Note 1 - Recent Company Background |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Notes | |
Note 1 - Recent Company Background | NOTE 1 - RECENT COMPANY BACKGROUND
EnergyTek Corp. formerly Broadleaf Capital Partners, Inc. (the Company), is a Nevada corporation. In January 2015 we entered into a Joint Venture with Wagley Offshore-Onshore, Inc. to acquire distressed energy assets. In July 2016, the Company entered into an agreement to terminate this Joint Venture. See Note 15. |
Note 2 - Significant Accounting Policies |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2016 | |||||
Notes | |||||
Note 2 - Significant Accounting Policies | NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
This summary of significant account policies of the Company is presented to assist in understanding the Company's financial statements. The financial statements and the notes are the representation of the Company's management, who are responsible for their integrity and objectivity. These accounting policies conform to U.S. generally accepted accounting principles ("US GAAP") and have been consistently applied in the preparation of the financial statements.
Basis of Presentation
The Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, Texas Gulf Exploration & Production, Inc., and Legal Capital Corp. All significant intercompany account balances, transactions, profits and losses have been eliminated.
Interim Financial Statements
The interim consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). In the opinion of the Company's management, all adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) necessary to present fairly our results of operations for the three and six months ended June 30, 2016 and 2015, our cash flows for the six months ended June 30, 2016 and 2015, and our financial position as of June 30, 2016 have been made. The results of operations for such interim periods are not necessarily indicative of the operating results to be expected for the full year.
Certain information and disclosures normally included in the notes to the annual consolidated financial statements have been condensed or omitted from these interim consolidated financial statements. Accordingly, these interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Report on Form 10-K for the period ended December 31, 2015 as filed with the SEC on April 13, 2016. The December 31, 2015 balance sheet is derived from those statements.
Principles of Consolidation
The financial statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances have been eliminated. Equity investments through which we exercise significant influence over but do not control the investee and are not the primary beneficiary of the investee's activities are accounted for using the equity method where applicable.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company uses ASC No. 605 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the sales price is fixed or determinable, and (iii) collectability is reasonably assured.
Cash and Cash Equivalents
Cash comprises cash in hand and cash held on demand with banks. The Company considers all highly liquid investments with original maturities of 90 days or less to be cash equivalents. Cash equivalents are carried at cost, which approximates market value. Cash and cash equivalents comprise of the non-interest bearing checking accounts in US Dollars.
Accounts Receivable, Net
Accounts receivable represent amounts due from customers on product and other sales. These accounts receivable, which are reduced by an allowance for doubtful accounts, are recorded at the invoiced amount and do not bear interest. The Company evaluates the collectability of its accounts receivable based on a combination of factors, including whether sales were made pursuant to letters of credit. In cases where management is aware of circumstances that may impair a specific customer's ability to meet its financial obligations, management records a specific allowance against amounts due, and reduces the net recognized receivable to the amount the Company believes will be collected. For all other customers, the Company maintains an allowance that considers the total receivables outstanding, historical collection rates and economic trends. Accounts are written off when all efforts to collect have been exhausted.
Stock Based Compensation
When applicable, the Company will account for stock-based payments to employees in accordance with ASC 718, "Stock Compensation" ("ASC 718"). Stock-based payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the consolidated statement of operations based on their fair values at the date of grant.
The Company accounts for stock-based payments to non-employees in accordance with ASC 505-50, "Equity-Based Payments to Non-Employees " Stock-based payments to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the consolidated statement of operations based on the value of the vested portion of the award over the requisite service period as measured at its then-current fair value as of each financial reporting date.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost less accumulated depreciation. Expenditures for major additions and improvements are capitalized. As property and equipment are sold or retired, the applicable cost and accumulated depreciation are removed from the accounts and any resulting gain or loss thereon is recognized as operating expenses.
Depreciation is calculated using the straight-line method over the estimated useful lives or, in the case of leasehold improvements, the term of the related lease, including renewal periods, if shorter. Estimated useful lives are as follows:
The Company reviews property, plant and equipment and all amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability is based on estimated undiscounted cash flows. Measurement of the impairment loss, if any, is based on the difference between the carrying value and fair value.
Impairment of Long-Lived Assets and Amortizable Intangible Assets
The Company follows ASC 360-10, "Property, Plant, and Equipment," which established a "primary asset" approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
Intangible Assets - Goodwill
The excess of the purchase price over net tangible and identifiable intangible assets of business acquired is carried as Goodwill on the balance sheet. Goodwill is not amortized, but instead is assessed for impairment at least annually and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired. Measurement of the impairment loss, if any, is based on the difference between the carrying value and fair value of reporting unit. The goodwill impairment test follows a two-step process. In the first step, the fair value of a reporting unit is compared to its carrying value. If the carrying value of a reporting unit exceeds its fair value, the second step of the impairment test is performed for purposes of measuring the impairment. In the second step, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of goodwill, an impairment loss will be recognized in an amount equal to that excess. During the quarter ended the company did not recognized any impairment charges.
Business segments
ASC 280, "Segment Reporting" requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the Company for making operating decisions and assessing performance. The Company determined it has one operating segments as of June 30, 2016.
Acquisitions
The Company recognizes the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date. Contingent purchase consideration is recorded at fair value at the date of acquisition. Any excess purchase price over the fair value of the net assets acquired is recorded as goodwill. Within one year from the date of acquisition, the Company may update the value allocated to the assets acquired and liabilities assumed and the resulting goodwill balances as a result of information received regarding the valuation of such assets and liabilities that was not available at the time of purchase. Measuring assets and liabilities at fair value requires the Company to determine the price that would be paid by a third party market participant based on the highest and best use of the assets or interests acquired. Acquisition costs are expensed as incurred.
Fair Value Measurements
For certain financial instruments, including accounts receivable, accounts payable, interest payable, advances payable and notes payable, the carrying amounts approximate fair value due to their relatively short maturities.
Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
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.
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The Company did not identify any non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value in accordance with ASC 815.
Income Taxes
Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.
When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
Applicable interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statements of operations.
Borrowings
Borrowings are recognized initially at cost which is the fair value of the proceeds received, net of transaction costs incurred. In subsequent periods, borrowings are stated at amortized cost using the effective yield method; any difference between fair value of the proceeds (net of transaction costs) and the redemption amount is recognized as interest expense over the period of the borrowings.
Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.
The Company recognizes the estimated liability to repair or replace products sold still under warranty at the balance sheet date. This provision is calculated based on past history of the level of repairs and replacements
Net per Share
The Company computes net loss per share in accordance with ASC 260-10, "Earnings Per Share." The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per share gives effect to all dilutive potential common shares outstanding during the period using the "as if converted" basis. The Company has currently authorized a Series C Preferred stock which is convertible at a rate of one share of preferred stock into one percent of the fully diluted common stock outstanding at the close of business on the last day prior to the date of notice of conversion.
Common Stock
There is currently only one class of common stock. Each share common stock is entitled to one vote. The authorized number of common stock of the Company at December 31, 2015 was 500,000,000 shares with a par value per share of $0.001. Authorized shares that have been issued and fully paid amounted to 22,787,964 as of June 30, 2016.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of Preferred stock of par value of $0.01 per share, with rights, preferences and limitations as may be decided from time-to-time by the Board of Directors.
Shares of Series A Preferred Stock were exchanged for 900 Shares of Series C Preferred Stock (Series C) in 2014. Each share of Series C shall be convertible at the option of the holder at any time, into 100,000 shares of Common Stock. Each holder of Series C shall be entitled to one vote for each share of Series C held. On January 9, 2015, 10 Series C shares were exchanged for 1,000,000 shares of our Common Stock. On May 24, 2016 and June 8, 2016, two holders of 13 and 12 shares of Series C, respectively, converted them into common stock. |
Note 3 - Recent Accounting Pronouncements |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Notes | |
Note 3 - Recent Accounting Pronouncements | NOTE 3 RECENT ACCOUNTING PRONOUNCEMENTS
The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
Note 4 - Going Concern |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Notes | |
Note 4 - Going Concern | NOTE 4 - GOING CONCERN
As reported in the consolidated financial statements, the Company has an accumulated deficit and has had cash flow constraints with its current revenue stream based upon the decline in oil and gas prices. These trends have been consistent for the past few periods, respectively.
These factors create uncertainty about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital it could be forced to cease operations. In order to continue as a going concern, develop and generate revenues and achieve a profitable level of operations, the Company will need, among other things, additional capital resources. Management's plans to obtain such resources for the Company include raising additional capital through sales of common stock and entering into acquisition agreements and related financings. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Note 5 - Loss Per Share |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||
Notes | ||||||||||||||||||||||||||||||||||||||||
Note 5 - Loss Per Share | NOTE 5 - LOSS PER SHARE
The following table sets forth the information used to compute basic and diluted net loss per share attributable to the Company for the six months ended June 30, 2016:
|
Note 6 - Property, Plant and Equipment and Intangible Assets |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 6 - Property, Plant and Equipment and Intangible Assets | NOTE 6 - PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
|
Note 7 - Related Party Transactions |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Notes | |
Note 7 - Related Party Transactions | NOTE 7 - RELATED PARTY TRANSACTIONS
The Company pays $2,500 per month to a related party for office space and administrative services on a month-to-month basis. There are no long-term commitments pertaining to this arrangement.
Our subsidiary, Texas Gulf Exploration & Production, Inc., has entered into a five year agreement whereby we have the right of first refusal to provide all wellhead services for all of Texas Gulf Oil & Gas, Inc. oil and or gas wells at cost plus 10% for such services. However, the value for such contract, as reported herein is only a potential future value and differ significantly as it is dependent on upon the future price of oil and the Company's ability to raise capital for the cost of providing services under the contract. Texas Gulf Oil & Gas, Inc. has a 60-day right of first refusal to invest funds in any new oil or gas leases that Texas Gulf Exploration & Production, Inc. locates and signs leases for.
During the course of 2014 a related party has advanced $80,894 to Texas Gulf Exploration & Production, Inc. in the form of working capital advances. These loans are due on demand and carry no interest rate. This was increased to $128,116 during the first quarter of 2015.
The Company paid off additional related party accrued liabilities through the issuance of 120,000 shares of our common stock valued at $33,400. |
Note 8 - Acquisitions |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Notes | |
Note 8 - Acquisitions | NOTE 8 ACQUISITIONS
In 2015, we incurred an additional impairment charge of $1,241,144 due to industry economic conditions reducing our carrying value of our 2014 acquisitions to $100,000. |
Note 9 - Notes Receivable |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Notes | |
Note 9 - Notes Receivable | NOTE 9 - NOTES RECEIVABLE
During December 2013 the Company sold its subsidiary, Pipeline Nutrition, U.S.A. Inc., to a related party and extended the date of a note receivable from December 31, 2013 until December 31, 2014 in exchange for a $300,000 note. A $5,000 payment was received in February 2014. After notification from Pipeline Nutrition, U.S.A. that they were ceasing operations we have impaired this note for the full receivable of $295,000 for the three months ended March 31, 2016. |
Note 10 - Notes Payable |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 10 - Notes Payable | NOTE 10 NOTES PAYABLE
|
Note 11 - Commitments and Contingencies |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Notes | |
Note 11 - Commitments and Contingencies | NOTE 11 - COMMITMENTS AND CONTINGENCIES
The Company current has no commitments or contingencies that require reporting. |
Note 12 - Income Taxes |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 12 - Income Taxes | NOTE 12 INCOME TAXES
The Company, a C-corporation, accounts for income taxes under ASC Topic 740 (SFAS No. 109) Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company adopted the provisions of FASB ASC 740-10 "Uncertainty in Income Taxes" (ASC 740-10), on January 1, 2007. The Company has not recognized a liability as a result of the implementation of ASC 740-10. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there is no unrecognized benefit since the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.
Currently the Company has projected $24,178,411 as of June 30, 2016 in Net Loss Operating Loss carry-forwards available. The benefits of the potential tax savings will be recognized in the financial statements upon the acquisition or development of revenue source to apply against these losses. The company recognizes that the Internal Revenue Service has the final determination of the NOL available going forward and that amount may be significantly different from that recorded to date.
The net operating loss carry forwards for federal income tax purposes will expire between 2016 and 2033. Generally, these can be carried forward and applied against future taxable income at the tax rate applicable at that time. We are currently using a 35% effective tax rate for our projected available net operating loss carry-forward. However, as a result of potential stock offerings and stock issuance in connection with potential acquisitions, as well as the possibility of the Company not realizing its business plan objectives and having future taxable income to offset, the Company's use of these NOLs may be limited under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended. The Company is in the process of evaluating the implications of Section 382 on its ability to utilize some or all of its NOLs.
Components of Net Operating Loss and Valuation allowance are as follows:
In accordance with FASB ASC 740 "Income Taxes", valuation allowances are provided against deferred tax assets, if based on the weight of available evidence, some or all of the deferred tax assets may or will not be realized. The Company has evaluated its ability to realize some or all of the deferred tax assets on its balance sheet and has established a valuation allowance in the amount of $8,220,660 at June 30, 2016 and 8,188,955 at December 31, 2015. |
Note 13 - Investments |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Notes | |
Note 13 - Investments | NOTE 13 - INVESTMENTS
On January 6, 2015, the Company entered into a Joint Venture Agreement with Wagley Offshore-Onshore, Inc. (the "JV Agreement" and "Wagley", respectively). The purpose of the JV Agreement is to pursue a distressed energy asset acquisition program to take advantage of the reduction in value of these assets due to the historically low price of crude oil. The Joint Venture, to be known as Wagley-EnergyTEK J.V. LLC, a Texas limited liability company (the "LLC"), will utilize the extensive relationships of Wagley to acquire energy related assets such as equipment leases and production in exchange for a combination of cash and/or equity securities of the Company. As a term and condition of the JV Agreement, the Company issued 20,000,000 restricted shares of its common stock to the Joint Venture as its capital contribution to the Joint Venture. The Company is valuing this investment at the fair market value of the stock issued on the date of the transaction. This investment was fully impaired charge due to industry economic conditions. See Note 15. |
Note 14 - Derivative Liability |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||||||||||||||||||||
Note 14 - Derivative Liability | NOTE 14 DERIVATIVE LIABILITY
The Company accounts for derivative financial instruments in accordance with ASC 815, which requires that all derivative financial instruments be recorded in the balance sheets either as assets or liabilities at fair value.
The Company's derivative liability is an embedded derivative associated with the Company's convertible promissory note. The convertible promissory note was issued on January 14, 2015, (the "Note"), is a hybrid instruments which contain an embedded derivative feature which would individually warrant separate accounting as a derivative instrument under Paragraph 815-10-05-4. The embedded derivative feature includes the conversion feature to the Note. Pursuant to Paragraph 815-10-05-4, the value of the embedded derivative liability have been bifurcated from the debt host contract and recorded as a derivative liability resulting in a reduction of the initial carrying amount (as unamortized discount) of the notes, which are amortized as debt discount to be presented in other (income) expenses in the statements of operations using the effective interest method over the life of the notes.
The embedded derivative within the note have been valued using the Black Scholes approach, recorded at fair value at the date of issuance; and marked-to-market at each reporting period end date with changes in fair value recorded in the Company's statements of operations as "change in the fair value of derivative instrument".
As of June 30, 2016 and December 31, 2015, the estimated fair value of derivative liability was determined to be $0 and $0, respectively. On July 14, 2014, the derivative liability was recognized with a debt discount of $64,000. During the year ended December 31, 2015, amortization of $40,507 was recorded against the discount. The change in the fair value of derivative liabilities for the three months ended June 30, 2016 was $0 resulting in an aggregate gain on derivative liabilities of $0.
Summary of Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis
Financial assets and liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheets:
Summary of the Changes in Fair Value of Level 3 Financial Liabilities
The table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended June 30, 2016:
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Note 15 - Subsequent Events |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Notes | |
Note 15 - Subsequent Events | Note 15 Subsequent Events
On each of July 15, 2016 and July 18, 2016, the Company borrowed $30,000 from two shareholders and issued each a convertible note due in November 2016 together with 5% interest per annum.
Effective July 21, 2016, the Company entered into a series of agreements with certain parties, including Texas Gulf Exploration & Production, Inc., a Nevada corporation and wholly-owned subsidiary of the Company ("TGEP"), Litigation Capital, Inc., a Nevada corporation ("LCI"), Texas Gulf Oil & Gas, Inc., a Nevada corporation ("TGOG"), Wagley-EnergyTEK J.V. LLC, a Texas limited liability company ("Wagley J.V."), and two institutional investors (the "Investors") (collectively, the "Parties").
The Company redeemed all shares of its Series B Preferred Stock held by LCI in exchange for 300,000 shares of common stock. The Company further agreed to transfer to LCI all the equity interests of its subsidiaries TGEP and Legal Capital Corp. by the earlier of a merger or similar transaction by the Company or October 19, 2016.
Further, the Company and Wagley J.V. agreed that upon the closing of a merger or similar transaction by the Company, Wagley J.V. would be dissolved and the Company would have an option, exercisable for six months from such merger, to cancel 20,000,000 shares of the Companys common stock held by Wagley J.V. Pending the exercise of the option, Mr. Jonathan Read, the Company's Chief Executive Officer and a director, was granted a proxy to vote the 20,000,000 shares of common stock.
On August 9, 2016, the Company borrowed $12,000 and issued the lender a $12,000 convertible note due in November 2016 together with 5% per annum interest. |
Note 2 - Significant Accounting Policies (Policies) |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2016 | |||||
Policies | |||||
Basis of Presentation | Basis of Presentation
The Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, Texas Gulf Exploration & Production, Inc., and Legal Capital Corp. All significant intercompany account balances, transactions, profits and losses have been eliminated. |
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Interim Financial Statements | Interim Financial Statements
The interim consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). In the opinion of the Company's management, all adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) necessary to present fairly our results of operations for the three and six months ended June 30, 2016 and 2015, our cash flows for the six months ended June 30, 2016 and 2015, and our financial position as of June 30, 2016 have been made. The results of operations for such interim periods are not necessarily indicative of the operating results to be expected for the full year.
Certain information and disclosures normally included in the notes to the annual consolidated financial statements have been condensed or omitted from these interim consolidated financial statements. Accordingly, these interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Report on Form 10-K for the period ended December 31, 2015 as filed with the SEC on April 13, 2016. The December 31, 2015 balance sheet is derived from those statements. |
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Principles of Consolidation | Principles of Consolidation
The financial statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances have been eliminated. Equity investments through which we exercise significant influence over but do not control the investee and are not the primary beneficiary of the investee's activities are accounted for using the equity method where applicable. |
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Use of Estimates | Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
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Revenue Recognition | Revenue Recognition
The Company uses ASC No. 605 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the sales price is fixed or determinable, and (iii) collectability is reasonably assured. |
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Cash and Cash Equivalents | Cash and Cash Equivalents
Cash comprises cash in hand and cash held on demand with banks. The Company considers all highly liquid investments with original maturities of 90 days or less to be cash equivalents. Cash equivalents are carried at cost, which approximates market value. Cash and cash equivalents comprise of the non-interest bearing checking accounts in US Dollars. |
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Accounts Receivable, Net | Accounts Receivable, Net
Accounts receivable represent amounts due from customers on product and other sales. These accounts receivable, which are reduced by an allowance for doubtful accounts, are recorded at the invoiced amount and do not bear interest. The Company evaluates the collectability of its accounts receivable based on a combination of factors, including whether sales were made pursuant to letters of credit. In cases where management is aware of circumstances that may impair a specific customer's ability to meet its financial obligations, management records a specific allowance against amounts due, and reduces the net recognized receivable to the amount the Company believes will be collected. For all other customers, the Company maintains an allowance that considers the total receivables outstanding, historical collection rates and economic trends. Accounts are written off when all efforts to collect have been exhausted. |
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Stock Based Compensation | Stock Based Compensation
When applicable, the Company will account for stock-based payments to employees in accordance with ASC 718, "Stock Compensation" ("ASC 718"). Stock-based payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the consolidated statement of operations based on their fair values at the date of grant.
The Company accounts for stock-based payments to non-employees in accordance with ASC 505-50, "Equity-Based Payments to Non-Employees " Stock-based payments to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the consolidated statement of operations based on the value of the vested portion of the award over the requisite service period as measured at its then-current fair value as of each financial reporting date. |
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Property, Plant and Equipment | Property, Plant and Equipment
Property, plant and equipment are recorded at cost less accumulated depreciation. Expenditures for major additions and improvements are capitalized. As property and equipment are sold or retired, the applicable cost and accumulated depreciation are removed from the accounts and any resulting gain or loss thereon is recognized as operating expenses.
Depreciation is calculated using the straight-line method over the estimated useful lives or, in the case of leasehold improvements, the term of the related lease, including renewal periods, if shorter. Estimated useful lives are as follows:
The Company reviews property, plant and equipment and all amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability is based on estimated undiscounted cash flows. Measurement of the impairment loss, if any, is based on the difference between the carrying value and fair value. |
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Impairment of Long-lived Assets and Amortizable Intangible Assets | Impairment of Long-Lived Assets and Amortizable Intangible Assets
The Company follows ASC 360-10, "Property, Plant, and Equipment," which established a "primary asset" approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. |
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Intangible Assets - Goodwill | Intangible Assets - Goodwill
The excess of the purchase price over net tangible and identifiable intangible assets of business acquired is carried as Goodwill on the balance sheet. Goodwill is not amortized, but instead is assessed for impairment at least annually and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired. Measurement of the impairment loss, if any, is based on the difference between the carrying value and fair value of reporting unit. The goodwill impairment test follows a two-step process. In the first step, the fair value of a reporting unit is compared to its carrying value. If the carrying value of a reporting unit exceeds its fair value, the second step of the impairment test is performed for purposes of measuring the impairment. In the second step, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of goodwill, an impairment loss will be recognized in an amount equal to that excess. During the quarter ended the company did not recognized any impairment charges. |
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Business Segments | Business segments
ASC 280, "Segment Reporting" requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the Company for making operating decisions and assessing performance. The Company determined it has one operating segments as of June 30, 2016. |
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Acquisitions | Acquisitions
The Company recognizes the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date. Contingent purchase consideration is recorded at fair value at the date of acquisition. Any excess purchase price over the fair value of the net assets acquired is recorded as goodwill. Within one year from the date of acquisition, the Company may update the value allocated to the assets acquired and liabilities assumed and the resulting goodwill balances as a result of information received regarding the valuation of such assets and liabilities that was not available at the time of purchase. Measuring assets and liabilities at fair value requires the Company to determine the price that would be paid by a third party market participant based on the highest and best use of the assets or interests acquired. Acquisition costs are expensed as incurred. |
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Fair Value Measurements | Fair Value Measurements
For certain financial instruments, including accounts receivable, accounts payable, interest payable, advances payable and notes payable, the carrying amounts approximate fair value due to their relatively short maturities.
Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
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.
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The Company did not identify any non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value in accordance with ASC 815. |
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Income Taxes | Income Taxes
Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.
When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
Applicable interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statements of operations. |
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Borrowings | Borrowings
Borrowings are recognized initially at cost which is the fair value of the proceeds received, net of transaction costs incurred. In subsequent periods, borrowings are stated at amortized cost using the effective yield method; any difference between fair value of the proceeds (net of transaction costs) and the redemption amount is recognized as interest expense over the period of the borrowings. |
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Provisions | Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.
The Company recognizes the estimated liability to repair or replace products sold still under warranty at the balance sheet date. This provision is calculated based on past history of the level of repairs and replacements |
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Net Per Share | Net per Share
The Company computes net loss per share in accordance with ASC 260-10, "Earnings Per Share." The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per share gives effect to all dilutive potential common shares outstanding during the period using the "as if converted" basis. The Company has currently authorized a Series C Preferred stock which is convertible at a rate of one share of preferred stock into one percent of the fully diluted common stock outstanding at the close of business on the last day prior to the date of notice of conversion. |
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Common Stock | Common Stock
There is currently only one class of common stock. Each share common stock is entitled to one vote. The authorized number of common stock of the Company at December 31, 2015 was 500,000,000 shares with a par value per share of $0.001. Authorized shares that have been issued and fully paid amounted to 22,787,964 as of June 30, 2016. |
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Preferred Stock | Preferred Stock
The Company is authorized to issue 10,000,000 shares of Preferred stock of par value of $0.01 per share, with rights, preferences and limitations as may be decided from time-to-time by the Board of Directors.
Shares of Series A Preferred Stock were exchanged for 900 Shares of Series C Preferred Stock (Series C) in 2014. Each share of Series C shall be convertible at the option of the holder at any time, into 100,000 shares of Common Stock. Each holder of Series C shall be entitled to one vote for each share of Series C held. On January 9, 2015, 10 Series C shares were exchanged for 1,000,000 shares of our Common Stock. On May 24, 2016 and June 8, 2016, two holders of 13 and 12 shares of Series C, respectively, converted them into common stock. |
Note 5 - Loss Per Share (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | ||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the information used to compute basic and diluted net loss per share attributable to the Company for the six months ended June 30, 2016:
|
Note 6 - Property, Plant and Equipment and Intangible Assets (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment and Intangible Assets |
|
Note 10 - Notes Payable (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notes Payable |
|
Note 12 - Income Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Valuation Allowance | Components of Net Operating Loss and Valuation allowance are as follows:
|
Note 14 - Derivative Liability (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | |||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Financial assets and liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheets:
|
||||||||||||||||||||||||||||||
Schedule of Derivative Liabilities at Fair Value | The table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended June 30, 2016:
|
Note 2 - Significant Accounting Policies: Property, Plant and Equipment (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Building | |
Property, Plant and Equipment, Useful Life | 40 years |
Equipment | Minimum | |
Property, Plant and Equipment, Useful Life | 5 years |
Equipment | Maximum | |
Property, Plant and Equipment, Useful Life | 15 years |
Note 2 - Significant Accounting Policies: Intangible Assets - Goodwill (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Details | |
Impairment charges | $ 0 |
Note 2 - Significant Accounting Policies: Common Stock (Details) - $ / shares |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Details | ||
Common Stock, shares authorized | 500,000,000 | 500,000,000 |
Common Stock, par or stated value | $ 0.001 | $ 0.001 |
Common Stock, shares issued | 22,787,964 | 22,787,964 |
Note 2 - Significant Accounting Policies: Preferred Stock (Details) - $ / shares |
1 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 08, 2016 |
May 24, 2016 |
Jan. 31, 2015 |
Dec. 31, 2014 |
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 | ||||
Preferred Stock, Par Value | $ 0.01 | |||||
Series C Preferred Stock | ||||||
Preferred Stock, Par Value | $ 0.01 | $ 0.01 | ||||
Preferred Stock | Series A Preferred Stock | ||||||
Conversion of Stock, Shares Issued | 900 | |||||
Common Stock shares issued upon conversion of Preferred Shares | 100,000 | |||||
Preferred Stock | Series C Preferred Stock | ||||||
Conversion of Stock, Shares Converted | 12 | 13 | 10 | |||
Common Stock | ||||||
Conversion of Stock, Shares Issued | 1,000,000 |
Note 5 - Loss Per Share: Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Details | ||||
Net Income (Loss) | $ (48,583) | $ (62,424) | $ (93,308) | $ (120,504) |
Weighted-average common shares outstanding basic: | ||||
Weighted-average common stock - Basic | 22,787,964 | 22,787,964 | 22,787,964 | 21,014,664 |
Equivalents | ||||
Stock Options | 0 | 0 | ||
Warrants | 0 | 0 | ||
Convertible notes, Preferred stock | 0 | 0 | ||
Weighted-average common stock - Basic and Diluted | 22,787,964 | 19,241,365 |
Note 6 - Property, Plant and Equipment and Intangible Assets: Property, Plant and Equipment and Intangible Assets (Details) - USD ($) |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Property, plant and equipment consist of the following: | |||
Total property, plant and equipment | $ 28,874 | $ 28,874 | |
Less: disposal | 0 | (226,676) | |
Less: | |||
Accumulated depreciation | 7,105 | $ 36,800 | 36,800 |
Current depreciation expense | 10,300 | $ 10,300 | 5,105 |
Less: disposal | 0 | (34,800) | |
Total accumulated depreciation | 17,405 | 7,105 | |
Net property, plant and equipment | 11,469 | 21,769 | |
Intangible assets consist of: | |||
Goodwill | 256,000 | 256,000 | |
Intangible assets | 7,751,031 | 7,751,031 | |
Less: | |||
Impairment | 7,907,031 | 7,907,031 | |
Net intangible assets | 100,000 | 100,000 | |
Equipment | |||
Property, plant and equipment consist of the following: | |||
Total property, plant and equipment | 21,074 | 247,750 | |
Computers and software | |||
Property, plant and equipment consist of the following: | |||
Total property, plant and equipment | 7,400 | 7,400 | |
Other equipment | |||
Property, plant and equipment consist of the following: | |||
Total property, plant and equipment | $ 400 | $ 400 |
Note 7 - Related Party Transactions (Details) - USD ($) |
6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2014 |
Mar. 31, 2015 |
|
Net additional funding by related party notes | $ 0 | $ 1,837 | ||
Debt Conversion, Original Debt, Amount | $ 33,400 | |||
Common Stock | ||||
Debt Conversion, Converted Instrument, Shares Issued | 120,000 | |||
Texas Gulf Exploration & Production Inc. | ||||
Service Fee | 10.00% | |||
Director | ||||
Net additional funding by related party notes | $ 80,894 | |||
Office Space and Administrative Services | ||||
Monthly payment amount | $ 2,500 | |||
Working Capital Advance Loan | Director | ||||
Long-term Debt, Gross | $ 128,116 |
Note 8 - Acquisitions (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Jun. 30, 2016 |
|
Details | ||
Impairment charge | $ 1,241,144 | |
Intangible assets | $ 100,000 | $ 100,000 |
Note 9 - Notes Receivable (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|---|
Feb. 28, 2014 |
Mar. 31, 2016 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2013 |
|
Details | |||||
Note receivable | $ 300,000 | ||||
Payments received on notes receivable | $ 5,000 | $ 0 | $ 0 | ||
Impairment of Note Receivable | $ 295,000 |
Note 10 - Notes Payable: Schedule of Notes Payable (Details) - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Total Notes Payable | $ 315,504 | $ 253,504 |
Long Term Notes Payable | 0 | 0 |
Accrued interest on these notes totaled | 0 | 0 |
5% Convertible Note 1 | ||
Convertible Notes Payable | 16,000 | 0 |
5% Convertible Note 2 | ||
Convertible Notes Payable | 25,000 | 0 |
5% Convertible Note 3 | ||
Convertible Notes Payable | 12,500 | 0 |
Working Capital Advances From Related Party | ||
Convertible Notes Payable | 7,500 | 7,500 |
Working Capital Advances From Related Party 2 | ||
Convertible Notes Payable | 16,000 | 7,500 |
Working Capital Advances From Related Party 3 | ||
Convertible Notes Payable | 95,942 | 95,942 |
Working Capital Advances From Related Party 4 | ||
Convertible Notes Payable | 52,493 | 52,493 |
Working Capital Advances From Related Party 5 | ||
Convertible Notes Payable | $ 90,069 | $ 90,069 |
Note 12 - Income Taxes (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Effective Income Tax Rate | 35.00% |
Minimum | |
Operating Loss Carryforwards, Expiration Date | Dec. 31, 2016 |
Maximum | |
Operating Loss Carryforwards, Expiration Date | Dec. 31, 2033 |
Note 12 - Income Taxes: Summary of Valuation Allowance (Details) - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Deferred tax assets: | ||
Beginning NOL Carryover | $ 24,085,162 | $ 20,537,568 |
Adjusted Taxable Income (loss) | (93,249) | (3,547,594) |
Operating Loss Carryforwards, Valuation Allowance | 0 | 0 |
Ending NOL Carryover | 24,178,411 | 24,085,162 |
Tax Benefit Carryforward | 8,220,660 | 8,188,955 |
Valuation Allowance | (8,220,660) | (8,188,955) |
Net deferred tax asset | $ 0 | $ 0 |
Note 13 - Investments (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016
shares
| |
Common Stock | Wagley-EnergyTEK J.V. LLC | |
Series B Preferred Stock issued | 20,000,000 |
Note 14 - Derivative Liability (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
Jul. 14, 2014 |
|
Total derivative liabilities | $ 0 | $ 0 | $ 0 | |||
Accretion debt discount | 0 | $ 40,507 | ||||
Gain on derivative liability | $ 0 | $ 1,115 | 0 | $ 59,117 | ||
Embedded Derivative Financial Instruments | ||||||
Debt Instrument, Unamortized Discount | $ 64,000 | |||||
Accretion debt discount | $ 40,507 | |||||
Change in fair value of derivative liabilities | 0 | |||||
Gain on derivative liability | $ 0 |
Note 14 - Derivative Liability: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Total derivative liabilities | $ 0 | $ 0 |
Fair Value, Inputs, Level 1 | ||
Total derivative liabilities | 0 | |
Fair Value, Inputs, Level 2 | ||
Total derivative liabilities | 0 | |
Fair Value, Inputs, Level 3 | ||
Total derivative liabilities | $ 0 |
Note 14 - Derivative Liability: Schedule of Derivative Liabilities at Fair Value (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Details | |
Derivative liability, beginning balance | $ 0 |
Additions | 0 |
Change in fair value | 0 |
Transfers in and/or out of Level 3 | 0 |
Derivative liability, ending balance | $ 0 |
Note 15 - Subsequent Events (Details) - Subsequent Event - USD ($) |
1 Months Ended | |||
---|---|---|---|---|
Aug. 09, 2016 |
Jul. 21, 2016 |
Jul. 18, 2016 |
Jul. 15, 2016 |
|
Proceeds from Convertible Debt | $ 12,000 | $ 30,000 | ||
Related Party Transaction, Terms and Manner of Settlement | Wagley J.V. agreed that upon the closing of a merger or similar transaction by the Company, Wagley J.V. would be dissolved and the Company would have an option, exercisable for six months from such merger, to cancel 20,000,000 shares of the Companys common stock held by Wagley J.V. Pending the exercise of the option, Mr. Jonathan Read, the Company's Chief Executive Officer and a director, was granted a proxy to vote the 20,000,000 shares of common stock. | |||
Common Stock | ||||
Stock issued in exchange for redemption of Series B Preferred | 300,000 | |||
5% Convertible Note 4 | ||||
Stated Interest Rate | 5.00% | |||
5% Convertible Note 5 | ||||
Stated Interest Rate | 5.00% | |||
5% Convertible Note 6 | ||||
Stated Interest Rate | 5.00% | |||
Debt Instrument, Face Amount | $ 12,000 | |||
Debt Instrument, Maturity Date | Nov. 01, 2016 |
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