Attached files
file | filename |
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EX-31.2 - 11 GOOD ENERGY INC | c66669_ex31-2.htm |
EX-31.1 - 11 GOOD ENERGY INC | c66669_ex31-1.htm |
EX-32.1 - 11 GOOD ENERGY INC | c66669_ex32-1.htm |
EX-32.2 - 11 GOOD ENERGY INC | c66669_ex32-2.htm |
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UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
WASHINGTON, D.C. 20549 |
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FORM 10-Q |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE |
SECURITIES EXCHANGE ACT OF 1934 |
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FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2011 |
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COMMISSION FILE NUMBER: 000-54132 |
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11 GOOD ENERGY, INC. |
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(Exact name of registrant as specified in its charter) |
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DELAWARE |
26-0299315 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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4450 Belden Village Street N.W., Suite 800 |
Canton, OH 44718 |
(Address of principal executive offices) |
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(330) 492-3835 |
(Registrants telephone number, including area code) |
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NOT APPLICABLE |
(Former name, former address and former fiscal year, if changed since last report) |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the 12 preceding months (or such shorter period that the registrant was required to submit and post such file).
Yes o No o
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer |
o |
Accelerated Filer |
o |
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Accelerated Filer |
o |
Smaller Reporting Company |
x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
As of August 22, 2011, the registrant had a total of 19,901,239 shares of Common Stock outstanding
11 GOOD ENERGY, INC. AND SUBSIDIARY
INDEX
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Page |
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Condensed Consolidated Balance Sheets June 30, 2011 (Unaudited) and December 31, 2010 |
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3 |
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4 |
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5 |
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6-7 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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8 |
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Managements Discussion and Analysis of Financial Condition and Results of Operations |
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20-29 |
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30 |
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30 |
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31 |
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31-32 |
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33 |
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Certifications |
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2
FINANCIAL INFORMATION
11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
CONDENSED CONSOLIDATED BALANCE SHEETS
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June 30, |
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December 31, |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash |
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$ |
12,519 |
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$ |
29,879 |
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Inventory |
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469,949 |
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624,739 |
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Accounts receivable, net |
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38,372 |
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51,801 |
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Available for sale securities |
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1,299 |
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576,990 |
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Other current assets |
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47,357 |
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24,974 |
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Total current assets |
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569,496 |
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1,308,383 |
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Property, plant and equipment, net |
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2,371,022 |
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2,562,675 |
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Other assets: |
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Patents |
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65,479 |
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58,272 |
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Goodwill |
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639,504 |
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639,504 |
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Deposits |
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2,163 |
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2,163 |
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Total other assets: |
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707,146 |
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699,939 |
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Total assets |
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$ |
3,647,664 |
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$ |
4,570,997 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable and accrued liabilities |
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$ |
942,286 |
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$ |
458,043 |
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Note payable related party | 50,000 |
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Advances, related party |
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132,641 |
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Convertible notes payable, net of debt discount |
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49,306 |
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Total current liabilities |
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1,174,233 |
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458,043 |
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Stockholders equity: |
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Series A Preferred stock, $0.0001 par value; 11,000,000 shares authorized, issued and outstanding at June 30, 2011 and December 31, 2010. |
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1,100 |
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1,100 |
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Common stock, $0.0001 par value; 65,000,000 shares authorized; 20,856,561 and 20,811,561 issued as of June 30, 2011 and December 31, 2010, respectively; 19,901,239 and 19,856,239 outstanding as of June 30, 2011 and December 31, 2010, respectively. |
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2,086 |
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2,081 |
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Additional paid in capital |
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24,845,230 |
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22,498,920 |
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Due from related party |
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(78,519 |
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(53,519 |
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Deficit accumulated during development stage |
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(20,710,566 |
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(16,551,567 |
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Accumulated other comprehensive income |
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(88,400 |
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(286,561 |
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Treasury stock, 955,322 shares as of June 30, 2011 and December 31, 2010 |
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(1,497,500 |
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(1,497,500 |
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Total stockholders equity |
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2,473,431 |
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4,112,954 |
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Total liabilities and stockholders equity |
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$ |
3,647,664 |
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$ |
4,570,997 |
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See the accompanying notes to these unaudited condensed consolidated financial statements
3
11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
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Six months ended June 30, |
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From
May 23, 2007 |
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2011 |
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2010 |
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2011 |
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2010 |
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REVENUE: |
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Sales |
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$ |
68,291 |
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$ |
30,080 |
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$ |
97,513 |
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$ |
78,507 |
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$ |
567,513 |
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Cost of sales |
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154,112 |
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97,747 |
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268,508 |
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204,995 |
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1,176,071 |
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Gross loss |
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(85,821 |
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(67,667 |
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(170,996 |
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(126,488 |
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(608,559 |
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OPERATING EXPENSES: |
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General, selling and administrative expenses |
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2,622,851 |
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1,135,332 |
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3,584,110 |
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3,687,772 |
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14,981,330 |
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Research and development |
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23,162 |
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125,000 |
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123,713 |
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226,323 |
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935,695 |
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Depreciation and amortization |
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29,185 |
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42,373 |
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58,371 |
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83,420 |
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298,583 |
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Total operating expenses |
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2,675,198 |
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1,302,705 |
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3,776,194 |
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3,997,515 |
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16,215,606 |
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NET (LOSS) FROM OPERATIONS |
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(2,761,019 |
) |
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(1,370,372 |
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(3,937,190 |
) |
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(4,124,003 |
) |
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(16,824,165 |
) |
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Other income/(expense): |
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Interest income |
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55,384 |
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Interest expense |
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(8,726 |
) |
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(8,726 |
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(7,077 |
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(3,858,708 |
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Realized (loss) gain on sale of securities |
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(195,300 |
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(213,083 |
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(84,277 |
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Gain on sale of property, plant and equipment |
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1,200 |
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Net loss before provision for income taxes |
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(2,965,045 |
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(1,370,372 |
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(4,158,999 |
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(4,131,080 |
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(20,710,566 |
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Provision for income taxes |
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NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS |
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$ |
(2,965,045 |
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$ |
(1,370,372 |
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(4,158,999 |
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$ |
(4,131,080 |
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$ |
(20,710,566 |
) |
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Net loss per common share (basic and fully diluted) |
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$ |
(0.15 |
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$ |
(0.07 |
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$ |
(0.21 |
) |
$ |
(0.25 |
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$ |
(1.34 |
) |
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Weighted average number of shares outstanding (basic and fully diluted) |
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19,877,996 |
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19,443,803 |
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19,867,177 |
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16,813,814 |
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15,504,532 |
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Comprehensive loss: |
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Net loss |
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$ |
(2,965,045 |
) |
$ |
(1,370,372 |
) |
$ |
(4,158,999 |
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$ |
(4,131,080 |
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$ |
(20,710,566 |
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Unrealized (loss) gain on securities available for sale |
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(193,320 |
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(353,839 |
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198,161 |
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(527,175 |
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(88,400 |
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Comprehensive loss |
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$ |
(2,771,725 |
) |
$ |
(1,724,211 |
) |
$ |
(3,960,838 |
) |
$ |
(4,658,255 |
) |
$ |
(20,798,966 |
) |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
4
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11 GOOD ENERGY, INC. AND SUBSIDIARY |
(a development stage company) |
FROM MAY 23, 2007 (DATE OF INCEPTION) THROUGH JUNE 2011 |
(UNAUDITED) |
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Preferred |
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Common |
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Common stock |
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Common stock |
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Additional |
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Due from |
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Treasury |
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Other |
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Accumulated |
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Total |
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Stock |
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Amount |
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Stock |
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Amount |
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Stock |
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Amount |
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Stock |
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Amount |
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May 23, 2007, date of inception |
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11,000,000 |
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$ |
1,100 |
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9,700,000 |
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$ |
970 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
2,070 |
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Common stock issued for services to be rendered |
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300,000 |
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30 |
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155,970 |
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156,000 |
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Common stock issued to acquire 11 Goods Energy LTD |
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4,285,714 |
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429 |
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420 |
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Beneficial conversion feature relating to the issuance of convertible notes |
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639,719 |
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639,710 |
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Increase in due from related party |
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(211,034 |
) |
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(211,034 |
) |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(771,405 |
) |
|
(771,405 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2007 |
|
|
11,000,000 |
|
|
1,100 |
|
|
14,285,714 |
|
|
1,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
795,689 |
|
|
(211,034 |
) |
|
|
|
|
|
|
|
(771,405 |
) |
|
(184,221 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature relating to the issuance of convertible notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
613,254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
613,254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in due from related party |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(297,654 |
) |
|
|
|
|
|
|
|
|
|
|
(297,654 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,064,728 |
) |
|
(2,064,728 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2008 |
|
|
11,000,000 |
|
$ |
1,100 |
|
|
14,285,714 |
|
$ |
1,429 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
1,408,943 |
|
$ |
(508,688 |
) |
$ |
|
|
$ |
|
|
$ |
(2,836,133 |
) |
$ |
(1,933,349 |
) |
See the accompanying notes to these unaudited condensed consolidated financial statements
5
|
11 GOOD ENERGY, INC. AND SUBSIDIARY |
(a development stage company) |
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY |
FROM MAY 23, 2007 (DATE OF INCEPTION) THROUGH JUNE 2011 |
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred |
|
Common |
|
Common
stock |
|
Common
stock |
|
Additional |
|
Due
from |
|
Treasury |
|
Other |
|
Accumulated |
|
Total |
|
||||||||||||||||||||||
|
|
Stock |
|
Amount |
|
Stock |
|
Amount |
|
Stock |
|
Amount |
|
Stock |
|
Amount |
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance, January 1, 2009 |
|
|
11,000,000 |
|
$ |
1,100 |
|
|
14,285,714 |
|
$ |
1,429 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
1,408,943 |
|
$ |
(508,688 |
) |
$ |
|
|
$ |
|
|
$ |
(2,836,133 |
) |
$ |
(1,933,349 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature relating to the issuance of convertible notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,054,806 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,054,806 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock to be issued in exchange for convertible notes and accrued interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,540,290 |
|
|
6,477,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,477,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation of services by a related party |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
531,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
531,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation of services by a consultant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock |
|
|
|
|
|
|
|
|
770,000 |
|
|
77 |
|
|
|
|
|
|
|
|
2,931,333 |
|
|
7,137,223 |
|
|
2,309,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,447,223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of options granted to directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in due from related party |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(278,456 |
) |
|
|
|
|
|
|
|
|
|
|
(278,456 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock re-acquired for cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(450,000 |
) |
|
|
|
|
|
|
|
(450,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock re-acquired for receivable due from related party and issuance of related party note |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
787,144 |
|
|
(850,000 |
) |
|
|
|
|
|
|
|
(62,856 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on securities available for sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,504 |
|
|
|
|
|
49,504 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,549,809 |
) |
|
(6,549,809 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2009 (Restated) |
|
|
11,000,000 |
|
$ |
1,100 |
|
|
15,055,714 |
|
$ |
1,506 |
|
|
2,540,290 |
|
$ |
6,477,739 |
|
$ |
2,931,333 |
|
$ |
7,137,223 |
|
$ |
6,563,877 |
|
$ |
|
|
$ |
(1,300,000 |
) |
$ |
49,504 |
|
$ |
(9,385,942 |
) |
$ |
9,545,007 |
|
See the accompanying notes to these unaudited condensed consolidated financial statements
6
|
11 GOOD ENERGY, INC. AND SUBSIDIARY |
(a development stage company) |
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY |
FROM MAY 23, 2007 (DATE OF INCEPTION) THROUGH JUNE 2011 |
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred |
|
Common |
|
Common
stock |
|
Common
stock |
|
Additional |
|
Receivable |
|
Treasury |
|
Other |
|
Accumulated |
|
Total |
|
||||||||||||||||||||||
|
|
Stock |
|
Amount |
|
Stock |
|
Amount |
|
Stock |
|
Amount |
|
Stock |
|
Amount |
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance, January 1, 2010 |
|
|
11,000,000 |
|
$ |
1,100 |
|
|
15,055,714 |
|
$ |
1,506 |
|
|
2,540,290 |
|
$ |
6,477,739 |
|
|
2,931,333 |
|
$ |
7,137,223 |
|
$ |
6,563,877 |
|
$ |
|
|
$ |
(1,300,000 |
) |
$ |
49,504 |
|
$ |
(9,385,942 |
) |
$ |
9,545,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock to be issued in exchange for convertible notes and accrued interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,223 |
|
|
20,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
276,000 |
|
|
805,846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
805,846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution of services by a related party |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,493,840 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,493,840 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock reacquired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(197,500 |
) |
|
|
|
|
|
|
|
(197,500 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable from purchase of treasury stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(53,519 |
) |
|
|
|
|
|
|
|
|
|
|
(53,519 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on securities available for sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(336,065 |
) |
|
|
|
|
(336,065 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued in settlement of common stock subscriptions |
|
|
|
|
|
|
|
|
5,755,847 |
|
|
575 |
|
|
(2,548,513 |
) |
|
(6,498,709 |
) |
|
(3,207,333 |
) |
|
(7,943,069 |
) |
|
14,441,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,165,625 |
) |
|
(7,165,625 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2010 |
|
|
11,000,000 |
|
$ |
1,100 |
|
|
20,811,561 |
|
$ |
2,081 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
22,498,920 |
|
$ |
(53,519 |
) |
$ |
(1,497,500 |
) |
$ |
(286,561 |
) |
$ |
(16,551,567 |
) |
$ |
4,112,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to these unaudited condensed consolidated financial statements
7
11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
FROM JANUARY 1, 2011 TO JUNE 2011
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred |
|
Common |
|
Additional |
|
Receivable |
|
Treasury |
|
Other |
|
Accumulated |
|
Total |
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
Stock |
|
Amount |
|
Stock |
|
Amount |
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|||||||||||||||||||||||||||||||
Balance, January 1, 2011 |
|
|
11,000,000 |
|
$ |
1,100 |
|
|
20,811,561 |
|
$ |
2,081 |
|
$ |
22,498,920 |
|
$ |
(53,519 |
) |
$ |
(1,497,500 |
) |
$ |
(286,561 |
) |
$ |
(16,551,567 |
) |
$ |
4,112,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable from purchase of treasury stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25,000 |
) |
|
|
|
|
|
|
|
|
|
|
(25,000 |
) |
Sale of common stock |
|
|
|
|
|
|
|
|
45,000 |
|
|
5 |
|
|
224,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
225,000 |
|
Unrealized gain on securities available for sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
198,161 |
|
|
|
|
|
198,161 |
|
Fair value of stock options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,911,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,911,895 |
|
Beneficial conversion feature and value of warrants in conjunction with convertible debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
209,420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
209,420 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,158,999 |
) |
|
(4,158,999 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2011 |
|
|
11,000,000 |
|
$ |
1,100 |
|
|
20,856,561 |
|
$ |
2,086 |
|
$ |
24,845,230 |
|
$ |
(78,519 |
) |
$ |
(1,497,500 |
) |
$ |
(88,400 |
) |
$ |
(20,710,566 |
) |
$ |
2,473,431 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to these unaudited condensed consolidated financial statements
5
11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, |
|
From May 23, 2007 |
|
|||||
|
|
|
|
|||||||
|
|
2011 |
|
2010 |
|
|
||||
|
|
|
|
|
|
|
|
|||
|
||||||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
Net loss for the period |
|
$ |
(4,158,999 |
) |
$ |
(4,131,080 |
) |
$ |
(20,710,566 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
191,653 |
|
|
198,576 |
|
|
736,991 |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of debt discount |
|
|
8,726 |
|
|
|
|
|
3,316,503 |
|
Compensation of services by a related party |
|
|
|
|
|
1,493,840 |
|
|
2,024,840 |
|
Compensation of services to consultant |
|
|
|
|
|
|
|
|
59,000 |
|
|
||||||||||
Fair value of options issued for services |
|
|
1,911,895 |
|
|
|
|
|
2,112,100 |
|
Gain on sale of property and equipment |
|
|
|
|
|
|
|
|
(1,200 |
) |
Realized loss (gain) on sale of securities available for sale |
|
|
213,083 |
|
|
|
|
|
84,277 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
Inventory |
|
|
154,790 |
|
|
(552,290 |
) |
|
(443,713 |
) |
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
13,429 |
|
|
32,786 |
|
|
(38,372 |
) |
Other current assets |
|
|
(22,383 |
) |
|
114,703 |
|
|
110,653 |
|
Accounts payable and accrued liabilities |
|
|
484,243 |
|
|
(110,476 |
) |
|
1,086,126 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) operating activities |
|
|
(1,203,563 |
) |
|
(2,953,941 |
) |
|
(11,663,361 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
Acquisition, net of cash acquired |
|
|
|
|
|
|
|
|
(588,952 |
) |
Proceeds from sale of property and equipment |
|
|
|
|
|
|
|
|
3,200 |
|
Purchase of property, plant and equipment |
|
|
|
|
|
(138,623 |
) |
|
(3,034,208 |
) |
Payments for acquisition of patent |
|
|
(7,207 |
) |
|
|
|
|
(65,479 |
) |
Proceeds from sale of securities available for sale |
|
|
560,769 |
|
|
|
|
|
1,108,516 |
|
Purchase of securities available for sale |
|
|
|
|
|
(259,691 |
) |
|
(1,282,492 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) investing activities |
|
|
553,562 |
|
|
(398,314 |
) |
|
(3,859,415 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of shares to founders |
|
|
|
|
|
|
|
|
2,070 |
|
Due from related party |
|
|
(25,000 |
) |
|
|
|
|
(865,663 |
) |
Proceeds from note payable to related party |
|
|
50,000 |
|
|
|
|
|
|
|
Proceeds from related party advance |
|
|
132,641 |
|
|
|
|
|
180,097 |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from common stock |
|
|
225,000 |
|
|
805,846 |
|
|
10,478,069 |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of convertible notes |
|
|
250,000 |
|
|
|
|
|
8,130,000 |
|
Proceeds from related party note payable |
|
|
|
|
|
|
|
|
75,000 |
|
Purchase of treasury stock |
|
|
|
|
|
(122,500 |
) |
|
(647,500 |
) |
Payments of related party note payable |
|
|
|
|
|
(25,000 |
) |
|
(25,000 |
) |
Payments of notes payable |
|
|
|
|
|
|
|
|
(84,322 |
) |
Payments of convertible notes |
|
|
|
|
|
(15,000 |
) |
|
(1,710,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
632,641 |
|
|
643,346 |
|
|
15,535,295 |
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
(17,360 |
) |
|
(2,708,909 |
) |
|
12,519 |
|
Cash and cash equivalents at beginning of period |
|
|
29,879 |
|
|
4,869,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
12,519 |
|
$ |
2,160,840 |
|
$ |
12,519 |
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to these unaudited condensed consolidated financial statements
6
11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From May 23, 2007 |
|
|||||
|
|
Six months ended June 30, |
|
|
||||||
|
|
2011 |
|
2010 |
|
|
||||
|
|
|
|
|
|
|
|
|||
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
|
|
Taxes paid |
|
$ |
|
|
$ |
|
|
$ |
|
|
Interest paid |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non cash financing activities: |
|
|
|
|
|
|
|
|
|
|
Common stock issued to acquire 11 Goods Energy, LTD |
|
$ |
|
|
$ |
|
|
$ |
429 |
|
|
||||||||||
Common stock issued in exchange for convertible note and accrued interest |
|
$ |
|
|
$ |
|
|
$ |
20,970 |
|
Common stock subscribed for conversion of convertible notes |
|
$ |
|
|
$ |
|
|
$ |
6,498,709 |
|
|
||||||||||
Treasury stock received in exchange for related party note receivable and accrued interest |
|
$ |
|
|
$ |
|
|
$ |
787,144 |
|
See the accompanying notes to these unaudited condensed consolidated financial statements
7
11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2011 AND 2010
(UNAUDITED)
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
Basis and business presentation
The accompanying unaudited condensed consolidated financial statements of 11 Good Energy, Inc., (the Company), have been prepared in accordance with Regulation S-X of the Securities and Exchange Act, as amended, and instructions to Form 10-Q and should be read in conjunction with the audited financials for the year ended December 31, 2010 included in the Companys SEC on Form 10-K filed on April 15, 2011. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results from operations for the three month and six months periods ended June 30, 2011, are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.
The condensed consolidated financial statements as of December 31, 2010 have been derived from the audited consolidated financial statements at that date but do not include all disclosures required by the accounting principles generally accepted in the United States of America.
The consolidated financial statements include the accounts of the Company, and its wholly-owned subsidiary 11 Goods Energy, LTD (11 Goods). All significant intercompany balances and transactions have been eliminated in consolidation.
Dependency on key management
The future success or failure of the Company is dependent primarily upon the continued services of its executive officers. The ability of the company to pursue its business strategy effectively will also depend upon, among other factors, the successful recruitment and retention of additional highly skilled and experienced managerial, marketing, engineering and technical personnel. There can be no assurance that the company will be able to retain or recruit such personnel.
New accounting pronouncements
There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Companys consolidated financial position, results of operations or cash flows.
NOTE 2 GOING CONCERN MATTERS
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying unaudited condensed consolidated financial statements during the six months ended June 30, 2011, the Company incurred net losses attributable to common shareholders of $4,158,999 and used $1,203,563 in cash for operating activities during the six months ended June 30, 2011. The accumulated deficit during development stage amounted to $20,710,566. These factors among others may indicate that the Company will be unable to continue as a going concern for a reasonable period of time.
8
NOTE 2 GOING CONCERN MATTERS (cont)
The Companys existence is dependent upon managements ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Companys financing efforts will result in profitable operations or the resolution of the Companys liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
NOTE 3 INTANGIBLE ASSETS
Patents
Patents are capitalized at incurred costs and are amortized ratably over the lesser of their economic or legal life. The patents are currently in development stage not subject to current period amortization.
Goodwill
The Company does not amortize goodwill. The Company recorded goodwill in the amount of $639,504 as a result of the acquisition of 11 Goods Energy LTD during the year ended December 31, 2007.
The Company accounts for and reports acquired goodwill under Accounting Standards Codification subtopic 350-10, Intangibles-Goodwill and Other (ASC 350-10). In accordance with ASC 350-10, the Company tests its intangible assets for impairment on an annual basis or more often if events and circumstances warrant. Any write-downs will be included in results from operations.
During the years ended December 31, 2010 and 2009, the Company management performed an evaluation of its goodwill for purposes of determining the implied fair value of the assets at the end of each respective year. The test indicated that the recorded remaining book value of its goodwill did not exceed its fair value for the years ended December 31, 2010 and 2009. Considerable management judgment is necessary to estimate the fair value. Accordingly, actual results could vary significantly from managements estimates.
9
NOTE 4 - INVENTORIES
Inventory is stated at the lower of cost or market. The cost is determined using the first-in first-out method. Costs of finished goods inventory include costs associated with the procurement and transportation of Soybean oil and other raw materials used in the manufacture of G2 Diesel.
As of June 30, 2011 and December 31, 2010, inventories are comprised of the following:
|
|
|
|
|
|
|
|
|
|
June
30, |
|
December 31, |
|
||
|
|
(unaudited) |
|
|
|
||
|
|
|
|
|
|
||
Raw materials |
|
$ |
351,874 |
|
$ |
351,874 |
|
Finished fuel |
|
|
118,075 |
|
|
272,865 |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
469,949 |
|
$ |
624,739 |
|
|
|
|
|
|
|
|
|
NOTE 5 OTHER CURRENT ASSETS
Other assets as of June 30, 2011 and December 31, 2010 are comprised of the following:
|
|
|
|
|
|
|
|
|
|
June
30, |
|
December 31, |
|
||
|
|
(unaudited) |
|
|
|
||
|
|
|
|
|
|
||
Prepaid fuel/product testing |
|
|
|
|
|
19,637 |
|
Prepaid insurance |
|
|
26,001 |
|
|
|
|
Prepaid Other |
|
|
21,356 |
|
|
5,337 |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
47,357 |
|
$ |
24,974 |
|
|
|
|
|
|
|
|
|
NOTE 6 PROPERTY, PLANT AND EQUIPMENT
The Companys property, plant and equipment at June 30, 2011 and December 31, 2010 consist of the following:
|
|
|
|
|
|
|
|
|
|
June
30, |
|
December |
|
||
|
|
(unaudited) |
|
|
|
||
|
|
|
|
|
|
||
Leasehold improvements |
|
$ |
345,381 |
|
$ |
345,381 |
|
Factory equipment |
|
|
2,381,478 |
|
|
2,381,478 |
|
Furniture and fixtures |
|
|
21,709 |
|
|
21,709 |
|
Office equipment |
|
|
20,545 |
|
|
20,545 |
|
Vehicles |
|
|
131,225 |
|
|
131,225 |
|
Computer equipment and software |
|
|
148,300 |
|
|
148,300 |
|
Web design |
|
|
51,505 |
|
|
51,505 |
|
|
|
|
|
|
|
|
|
Total |
|
|
3,100,143 |
|
|
3,100,143 |
|
Less accumulated depreciation |
|
|
729,121 |
|
|
537,468 |
|
|
|
|
|
|
|
|
|
Net |
|
$ |
2,371,022 |
|
$ |
2,562,675 |
|
|
|
|
|
|
|
|
|
10
NOTE 6 PROPERTY, PLANT AND EQUIPMENT (cont)
Property and equipment are recorded on the basis of cost. For financial statement purposes, property, plant and equipment are depreciated using the straight-line method over their estimated useful lives.
Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations. Management periodically reviews the carrying value of its property and equipment for impairment.
Depreciation expense was $95,826 and $100,015 for the three months ended June 30, 2011 and 2010, respectively, of which $66,641 and $57,642 was included as part of cost of sales for the three months ended June 30, 2011 and 2010, respectively.
Depreciation expense was $191,653 and $198,575 for the six months ended June 30, 2011 and 2010, respectively, of which $133,282 and $115,155 was included as part of cost of sales for the six months ended June 30, 2011 and 2010, respectively.
NOTE 7 AVAILABLE-FOR-SALE SECURITIES
Cost and fair value of marketable equity securities at June 30, 2011 and December 31, 2010 are as follows:
|
|
|
|
|
|
|
|
|
|
June
30, |
|
December 31, |
|
||
|
|
(unaudited) |
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
Available for sale securities: |
|
|
1,299 |
|
|
576,990 |
|
Equity securities: |
|
|
|
|
|
|
|
Fair value |
|
$ |
1,299 |
|
$ |
576,990 |
|
Total (losses) gains in accumulated other comprehensive income |
|
$ |
(88,400 |
) |
|
(286,561 |
) |
During the three months ended June 30, 2011 and 2010, the Company realized an aggregate loss of $195,300 and $0 with the sales of marketable securities, respectively. Unrealized gains (losses) are accounted for as other comprehensive income (loss).
During the six months ended June 30, 2011 and 2010, the Company realized an aggregate loss of $213,083 and $0 with the sales of marketable securities, respectively. Unrealized gains (losses) are accounted for as other comprehensive income (loss).
NOTE 8 COMMON STOCK
Between August 2009 and February 2010, the Company has received net proceeds of $10,253,069, through the subscription for common stock consisting of 3,977,333 shares of common stock and 1,988,667 warrants. All common shares subscribed were issued during the year ended December 31, 2010. In the six months ended June 30, 2011, the Company received additional gross proceeds of $225,000 from the sale of 22,500 shares of Common Stock and two year Warrants to purchase 45,000 shares, exercisable at $7.50 per share from date of issuance through June 30, 2013.
11
NOTE 9 RELATED PARTY TRANSACTIONS
Facilities
Since April 1, 2008, the Company has occupied warehouse space provided by one of the Companys founders. The Company agreed to pay a total of $1 per month for the space. The Company records this fee as rent expense when incurred. During this time period, the Company constructed a leasehold improvement to the leased warehouse space for the purpose of locating our bio-fuel manufacturing facility.
Due to related party
During the six months ended June 30, 2011, the Companys President and CEO advanced an aggregate of $132,641 for working capital purposes to the Company. The advances are short term and are due upon demand.
During the quarter ended June 30, 2011, the Company borrowed $50,000 from a related party. In connection with this transaction, the Company issued Notes in the principal amount of $50,000. The Notes charge interest at 9% per annum and is callable on demand.
Receivable from purchase of treasury stock
During the six months ended June 30, 2011, the Company advanced $25,000 to acquire the Companys common stock (treasury stock). As of June 30, 2011, the common stock has not been received.
Consistent with ASC 505-10-45 (Equity-Other Presentation), the amount recorded on the balance sheet is presented as a deduction from stockholders equity (deficit). This is also consistent with Rule 5-02.30 of Regulation S-X of the Code of Federal Regulations.
12
NOTE 10 FAIR VALUE
ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement.
Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of June 30, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
Quoted |
|
Significant |
|
Significant |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale |
|
$ |
1,299 |
|
$ |
1,299 |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,299 |
|
$ |
1,299 |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company adopted the provisions of ASC 825-10 prospectively effective as of the beginning of Fiscal 2008. For financial assets and liabilities included within the scope of ASC 825-10, the Company will be required to adopt the provisions of ASC 825-10 prospectively as of the beginning of Fiscal 2009. The adoption of ASC 825-10 did not have a material impact on our consolidated financial position or results of operations.
The fair value of the assets, securities available for sale, at June 30, 2011 was grouped as Level 1 valuation as the market price was readily available.
13
NOTE 11 - LOAN TRANSACTION
Convertible Note
A summary of convertible debentures payable at June 30, 2011 and December 31, 2010 is as follows:
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
||
|
|
|
|
|
|
||
Senior Convertible Debentures, accrue interest at 11% per annum and mature on December 31, 2011 |
|
$ |
250,000 |
|
|
|
|
Debt Discount - beneficial conversion feature, net of accumulated amortization of $4,363 and $0 at June 30, 2011 and December 31, 2010, respectively. |
|
|
(100,347 |
) |
|
|
|
Debt Discount - value attributable to warrants attached to notes, net of accumulated amortization of $4,363 and $0 at June 30, 2011 and December 31, 2010, respectively. |
|
|
(100,347 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Portion |
|
$ |
49,306 |
|
|
|
|
|
|
|
|
|
|
|
|
On June 24, 2011 the Company issued $250,000 in Convertible Promissory Notes that matures December 31, 2011. The Promissory Notes bear interest at a rate of 11% and will be convertible into 50,000 shares of the Companys common stock, at a conversion rate of $5.00 per share. Interest can also be converted into common stock at the conversion rate of $5.00 per share. In connection with the issuance of the Convertible Promissory Notes, the Company issued 62,500 warrants to purchase the Companys common stock at $5.00 per share over 2 years.
In accordance ASC 470-20, the Company recognized an embedded beneficial conversion feature present in the note. The Company allocated a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. The Company recognized and measured an aggregate of $104,710 of the proceeds, which is equal to the intrinsic value of the embedded beneficial conversion feature, to additional paid-in capital and a discount against the note. The debt discount attributed to the beneficial conversion feature is amortized over the notes maturity period (192 days) as interest expense.
In connection with the issuance of the promissory notes, the Company issued detachable warrants granting the holder the right to acquire an aggregate of 62,500 shares of the Companys common stock at $5.00 per share. The warrants expire two years from the issuance. In accordance with ASC 470-20, the Company recognized the value attributable to the warrants in the amount of $104,710 to additional paid in capital and a discount against the note. The Company valued the warrants in accordance with ASC 470-20 using the Black-Scholes pricing model and the following assumptions: contractual terms of 2 years, an average risk free interest rate of 4.95%, a dividend yield of 0%, and volatility of 108%. The debt discount attributed to the value of the warrants issued is amortized over the notes maturity period (192 days) as interest expense.
The Company amortized debt discount of $8,726 to current period operations as interest expense for the three and six months ended June 30, 2011.
14
NOTE 12 OPTIONS AND WARRANTS
The following table summarizes options outstanding and the related prices for the shares of the Companys common stock issued to consultants and employees as of June 30, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding |
|
|
|
Options Exercisable |
|
||||||||||
Exercise |
|
Number |
|
Weighted Average |
|
Weighted |
|
Number |
|
Weighted |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
$ |
3.00 |
|
|
500,000 |
|
|
1.00 |
|
$ |
3.00 |
|
|
500,000 |
|
$ |
3.00 |
|
|
3.00 |
|
|
150,000 |
|
|
2.08 |
|
|
3.00 |
|
|
45,833 |
|
|
3.00 |
|
|
5.00 |
|
|
785,000 |
|
|
3.00 |
|
|
5.00 |
|
|
567,500 |
|
|
5.00 |
|
|
|
|
|
1,435,000 |
|
|
2.21 |
|
|
4.09 |
|
|
1,113,333 |
|
|
4.02 |
|
Transactions involving stock options issued are summarized as follows:
|
|
|
|
|
|
|
|
|
|
Number of |
|
Weighted |
|
||
|
|
|
|
|
|
||
|
|||||||
Outstanding at December 31, 2010: |
|
|
650,000 |
|
|
3.00 |
|
Granted |
|
|
785,000 |
|
|
5.00 |
|
Exercised |
|
|
|
|
|
|
|
Canceled or expired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2011: |
|
|
1,335,000 |
|
$ |
|
|
|
|
|
|
|
|
|
|
On June 24, 2011, the Company granted an aggregate of 567,500 fully vested stock options to consultants and employees in connection with services rendered at the exercise price of $5.00 over three years.
The fair values of the vested options were determined using the Black Scholes option pricing model with the following assumptions:
|
|
|
|
|
Dividend yield: |
|
|
-0- |
% |
Volatility |
|
|
108.00 |
% |
Risk free rate: |
|
|
4.95 |
% |
Expected option life |
|
|
3 years |
|
The fair value of vested options in the amount of $1,911,895 was charged to operations during the three and six months ended June 30, 2011.
15
NOTE 12 OPTIONS AND WARRANTS (continued)
The following table summarizes in warrants outstanding and the related prices for the shares of the Companys common stock issued as of June 30, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants Outstanding |
|
|
|
Warrants Exercisable |
|
||||||||||
Exercise |
|
Number |
|
Weighted Average |
|
Weighted |
|
Number |
|
Weighted |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
$ |
2.55 |
|
|
3,519,830 |
|
|
1.00 |
|
$ |
2.55 |
|
|
3,519,830 |
|
$ |
2.55 |
|
|
4.50 |
|
|
2,383,599 |
|
|
1.00 |
|
|
4.50 |
|
|
2,383,599 |
|
|
4.50 |
|
|
7.50 |
|
|
22,500 |
|
|
2.00 |
|
|
7.50 |
|
|
22,500 |
|
|
7.50 |
|
|
5.00 |
|
|
62,500 |
|
|
2.00 |
|
|
5.00 |
|
|
62,500 |
|
|
5.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,988,429 |
|
|
1.33 |
|
$ |
3.37 |
|
|
5,988,429 |
|
$ |
1.33 |
|
Transactions involving warrants issued are summarized as follows:
|
|
|
|
|
|
|
|
|
|
Number of |
|
Weighted |
|
||
|
|
|
|
|
|
||
Outstanding at December 31, 2010: |
|
|
5,903,429 |
|
$ |
3.34 |
|
|
|
|
|
|
|
|
|
Issued on May 17, 2011 |
|
|
22,500 |
|
|
7.50 |
|
|
|
|
|
|
|
|
|
Issued on June 24, 2011 |
|
|
62,500 |
|
|
5.00 |
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2011: |
|
|
5,988,429 |
|
|
|
|
In connection with the sale of the common stock, the Company issued an aggregate of 22,500 warrants to shareholders and placement agent to purchase the Companys common stock for $5.00 per share expiring in June 2013.
In connection with the issuance of convertible notes (see Note 11 above), the Company issued 62,500 detachable warrants during the three and six months ended June 30, 2011 granting the holder the right to acquire an aggregate of shares of the Companys common stock at $5.00 per share. The warrants expire on June 30, 2013. The Company valued the warrant commitment in accordance with ASC 470-20 using the Black-Scholes pricing model and the following assumptions: contractual terms of 2 years, an average risk free interest rate of 4.95%, a dividend yield of 0%, and volatility of 108%. The debt discount attributed to the value of the warrant commitment issued is amortized over the notes maturity period (till December 31, 2011) as interest expense.
16
NOTE 13 SUBSEQUENT EVENTS
We are currently in the process of raising capital through a private placement sale of common stock dated July 27, 2011, which outlines the sale of up to 2,200,000 shares of common stock at $5 per share for an aggregate of up to $11,000,000. This placement has similar terms as the memorandum dated January 28, 2011 and updates the private placement memorandum with recent corporate developments occurring since January 2011. As of the date of this filing, we have raised and collected $20,000 as a result of this private placement sale of equity.
17
NOTE 14 SUBSEQUENT EVENTS (cont)
On July 11, 2011, the Company and its recently formed subsidiary, namely, 11 Good Energy Sciences, Inc. (hereinafter referred to as Sciences) entered into a Stock Purchase Agreement (the Agreement) to acquire 100% of the outstanding capital stock of KAI BioEnergy Corp. from the stockholders of KAI (collectively hereinafter referred to as the Sellers). Sciences agreed to pay to the Sellers and the Placement Agent, Oracle Capital LLC, the following:
|
|
|
$300,000 in cash paid to Sellers and $330,000 paid in cash to Oracle; |
|
a 36% interest in Sciences paid to Sellers and a 4% interest in Sciences paid to Oracle; |
|
reimburse Sellers legal fees up $53,000; |
|
payment at closing of the liabilities of KAI based upon a closing balance sheet up to a maximum of $180,000, it being understood that any liabilities above $180,000 are at the sole and absolute discretion and written consent of Sciences; and |
|
an Earn-Out of $3.3 million (the Earn-Out) in the event KAI on or before November 11, 2013, subject to possible extension in the event of financing delays, is able to prove the viability of producing the aerial productivity equivalent of 3,000 gallons per acre, per year of oil from microalgae. |
The closing condition of the Agreement is the funding of Sciences with at least $1.1 million by the Company on or before August 3, 2011. These funds would be utilized to meet Sciences obligations which are specified above and the balance will be allocated primarily for research and development of KAI. The Agreement has a post closing condition that the Company will raise and contribute to the capital of Sciences at least $2.2 million in accordance with a schedule over a period of approximately two years. Such funding must timely occur to avoid any dilution (up to a maximum of two-thirds) in ownership interest of Sciences. In connection with the Agreement, the Company will enter into employment agreements as well as a non-compete, non-solicitation and non-disclosure agreement with the two stockholders of KAI. These agreements will be for a period of two years, subject to possible extension as provided in the agreements.
Extension of Agreement
Sciences and Sellers agreed to extend the closing date up to a maximum of August 31, 2011. The Company paid Kai $68,000 to extend the closing date through August 12, 201, it paid Kai $68,000 to extend the closing date through August 19, 2011 and it paid $68,000 on August 14, 2011 to further extend the closing date to August 31, 2011. All option payments are non-refundable, but shall be credited towards the $1.1 million closing condition referenced in the preceding paragraph.
Buy-Out Option
In the event that Sellers receive the Earn-Out, Sciences has the option to buy-out Sellers and Oracles collective 40% Common Stock position at a cost of $13.2 million, payable in cash or under certain specified conditions in the Companys Common Stock. Sellers and Oracle have the right to refuse the Buy-Out on up to one-half of their position.
About KAI BioEnergy Corp.
Kai is a research and development company developing a platform series of technologies that enable efficient and integrated continuous microalgal processing. Focusing on the economics and development of an industrially scalable processing system, KAI has been working on developing a platform system that directly extracts oil from a water based algal-cultivation medium, ultimately separating the oil-rich lipids, biomass, and water medium. A biofuel company can then take these oil-rich lipids and use them to produce algal biofuels. KAIs integrated continuous high flow system is expected to offer low capital costs, ultra-low operating costs with no additives or hazardous chemicals required, ultimately developing industrial scalability.
18
NOTE 14 SUBSEQUENT EVENTS (cont)
On July 22, 2011, the Company borrowed $100,000. In connection with this transaction, a note payable in the principal amount of $100,000 was issued and is convertible to common stock at $5.00 per share. The Company also issued two-year Warrants to purchase 25,000 shares of Common Stock exercisable at $5.00 per share at any time from the date of issuance through June 30, 2013.
On August 5, 2011, the Company borrowed $100,000 from a director of the Company. In connection to this transaction, the Company issued a note payable in the principal amount of $100,000 and warrants to purchase 100,000 shares of common stock exercisable for $3.00 per share. In addition, the note carries the right for the holder to vote the common stock of 11 Good Energy Sciences, Inc until the note is paid in full.
On August 12, 2011, the Company borrowed $68,000 from a director of the Company. In connection to this transaction, the Company issued a note payable in the principal amount of $68,000 and warrants to purchase 40,000 shares of common stock exercisable for $3.00 per share. With the exception of the warrants issued, the note carries the same terms and conditions as the August 5, 2011 note payable.
On August 19, 2011, the Company borrowed $68,000 from a director of the Company. In connection to this transaction, the Company issued a note payable in the principal amount of $68,000 and warrants to purchase 40,000 shares of common stock exercisable for $3.00 per share. The note carries the same terms and conditions as the August 12, 2011 note payable.
22
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The information contained in this Form 10-Q and documents incorporated herein by reference are intended to update the information contained in the Companys Annual Report on Form 10-K for the year ended December 31, 2010 and such information presumes that readers have access to, and will have read, the Managements Discussion and Analysis of Financial Condition and Results of Operations, Risk Factors and other information contained in such Form 10-K and other Company filings with the Securities and Exchange Commission (SEC).
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, and actual results could be significantly different than those discussed in this Form 10-Q. Certain statements contained in Managements Discussion and Analysis, particularly in Liquidity and Capital Resources, and elsewhere in this Form 10-Q are forward-looking statements. These statements discuss, among other things, expected growth, future revenues and future performance. Although we believe the expectations expressed in such forward-looking statements are based on reasonable assumptions within the bounds of our knowledge of our business, a number of factors could cause actual results to differ materially from those expressed in any forward-looking statements, whether oral or written, made by us or on our behalf. The forward-looking statements are subject to risks and uncertainties identified under the Risk Factors section of the aforementioned Form 10-K for the fiscal year ended December 31, 2010. The risk factors of said Form 10-K should not be construed as an exhaustive list of all factors that could cause actual results to differ materially from those expressed in forward-looking statements made by us. All forward-looking statements included in this document are made as of the date hereof, based on information available to the Company on the date thereof, and the Company assumes no obligation to update any forward-looking statements.
Overview
11 Good Energy, Inc. is a Delaware corporation formed on May 23, 2007 for the purposes of developing, testing, manufacturing and distributing bio-fuel with energy related plans and pursuits relying on the commercialization of our proprietary fuel product, G2 Diesel, as discussed below.
On October 23, 2007, we completed the purchase of an existing biodiesel manufacturer, 11 Goods Energy, LTD, a limited liability company (becoming our wholly-owned subsidiary), formed in the State of Ohio in February 2006. Historically, our subsidiary has been a development stage company, which has primarily engaged in research activities to develop a proprietary manufacturing process to produce bio-fuel for diesel applications.
In early 2008, we began construction on our manufacturing facility at the location of our operating subsidiary in Magnolia, Ohio (Magnolia Plant). In June 2008, we began placing tanks and constructing the infrastructure of the Magnolia Plant. Unfortunately, the industry experienced changes in fire suppression regulations requiring us to invest over $1,500,000 in additional infrastructure not anticipated in the original capital expenditure budget. We had to cease plant construction and operations from November 2008 to October 2009 in order to secure the financing and make the necessary changes to the fire suppression system and design of the Magnolia Plant.
23
Acquisition of 11 Goods Energy, LTD
As a result of the purchase of 11 Goods Energy, LTD (11 Goods) all of the assets, liabilities and proprietary technology of 11 Goods were transferred to us by the former partners of 11 Goods in exchange for cash of $611,900, $111,230 in assumed liabilities and 4,285,714 shares of common stock of the company valued at $429. The assets and liabilities of 11 Goods were recorded at fair market value at the time of acquisition. 11 Goods is our sole subsidiary and operations and the management of 11 Goods and us are the same. The consolidated financial statements include the accounts of us and our wholly-owned subsidiary and all intercompany balances and transactions have been eliminated.
The Company accounts for acquisitions in accordance with the provisions of ASC 805-10. The Company assigns to all identifiable assets acquired a portion of the cost of the acquired company equal to the estimated fair value of such assets at the date of acquisition. The Company records the excess of the cost of the acquired company over the sum of the amounts assigned to identifiable assets acquired as goodwill. Management determined the fair values assigned to inventory based upon selling prices less cost of disposal and the Companys profit allowance and the case of work in process less cost to complete. The Fair value of plant and equipment are based on current replacement costs. The Company recorded goodwill in the amount of $639,504 as a result of the acquisition of 11 Goods Energy LTD during the year ended December 31, 2007. The Company accounts for and reports acquired goodwill under Accounting Standards Codification subtopic 350-10, Intangibles-Goodwill and Other (ASC 350-10). The Company does not amortize goodwill. In accordance with ASC 350-10, the Company tests its intangible assets for impairment on an annual basis or more often if events and circumstances warrant. Any write-downs will be included in results from operations.
Development Stage Company - Product Development
We are currently in an early stage of our current business plan. We have limited operating history with respect to the construction and operation of biodiesel refineries for our own use. In this respect, from May 23, 2007 (date of inception) through June 30, 2011, our revenues have totaled $567,513 and our deficit accumulated during our development stage was $20,710,566. Further, our operating subsidiary incurred from February 2006 through October 2007, costs of approximately $100,000 in the development of our subsidiarys proprietary manufacturing process and G2 Diesel product which are not reflected in our accumulated deficit since their costs were incurred prior to the acquisition date of our subsidiary. These costs were primarily comprised of feedstock materials, labor and facilities costs. Since the acquisition, we have further developed our process and product through testing and trials and have expended money on labor, consulting, facilities and media productions in order to further our product development. Currently, the development of the fuels functionality is complete, although we continue to incur research and development costs to develop new feedstock alternatives and to improve materials procurement and fuel manufacturing techniques.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements requires management to make estimates and disclosures on the date of the financial statements. On an on-going basis, we evaluate our estimates including, but not limited to, those related to revenue recognition. We use authoritative pronouncements, historical experience and other assumptions as the basis for making judgments. Actual results could differ from those estimates. We believe that the following critical accounting policies affect our more significant judgments and estimates in the preparation of our financial statements.
24
Revenue Recognition. We recognize revenue from product sales in accordance with ASC 605 Revenue Recognition. Four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists (through written sales documentation); (2) delivery has occurred (through delivery into customers tanks and acceptance); (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. For criteria (1) we generate a sales order and a shipping document defining number of gallons of fuel ordered, delivery and payment terms based on standing customer data and the customers purchase order. For criteria (2) we ensure delivery has occurred by documented delivery terms defining where the customer accepts the fuel delivery. Fuel stored off-site by the company remains as inventory until the customer receives the fuel from the offsite storage facility. For criteria (3) management determines the selling price based on feedstock costs and our desired margin level. Our selling price fluctuates as feedstock prices increase or decrease, primary the cost of soybean oil. Currently, management determines our selling price on a weekly basis. For criteria (4) we establish creditworthiness of the customer based on a review of established credit limits and current financial health of the entity placing the fuel order. Provisions for estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded, although we have not experienced any such items to date and do not expect any significant provisions in the future. We have no discount, rebate or warranty programs. Payments received in advance are deferred until revenue recognition is appropriate. We have no post-delivery obligations related to our products.
Inventory Valuation. We are required to make judgments based on historical experience and future expectations, as to the realizability of our inventory. We make these assessments based on the following factors: (a) existing orders and usage, (b) age of the inventory, and (c) historical experience.
Property and Equipment. We are required to make judgments based on historical experience and future expectations, as to the realizability of our property and equipment. We made these assessments based on the following factors: (a) the estimated useful lives of such assets, (b) technological changes in our industry, and (c) the changing needs of our customers.
Fair Value of Intangible Assets. We have adopted Statement of Accounting Standards Codification subtopic 805-10 (ASC 805-10). ASC 805-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period.
We evaluate the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 805-10 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell.
Stock-Based Compensation
We account for our stock based compensation under ASC 718 Compensation Stock Compensation using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entitys equity instruments or that may be settled by the issuance of those equity instruments.
There were no employee stock options and employee stock purchases granted to employees and directors during the period from May 23, 2007 (date of inception) through December 31, 2008. On July 22, 2009, the company granted 500,000 stock options to outside directors at an exercise price of $3.00 per share. We recorded the fair value of $200,205 as current period compensation expense as a result of this transaction. These options are for a period of three years and are fully vested. There were no unvested options outstanding as of the date of adoption of FASB ASC Topic 718.
25
On July 21, 2010, the company granted 150,000 stock options to consultants and employees at an exercise price of $5.00 per share vesting over a period of three years. We recorded the fair value of $51,379 as current period consulting expense as a result of the vesting of these options. These options are for a period of three years and approximately one year vested.
On June 22, 2011, the company granted 567,500 stock options to consultants and employees at an exercise price of $5.00 per share. We recorded the fair value of $1,860,516 as current period consulting expense as a result of this transaction. These options are for a period of three years and are fully vested.
We use the fair value method for equity instruments granted to non-employees (if any) and will use the Black-Scholes model for measuring the fair value of options, if issued. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
Recent Developments
On July 11, 2011, the Company and its recently formed subsidiary, namely, 11 Good Energy Sciences, Inc. (hereinafter referred to as Sciences) entered into a Stock Purchase Agreement (the Agreement) to acquire 100% of the outstanding capital stock of KAI BioEnergy Corp. from the stockholders of KAI (collectively hereinafter referred to as the Sellers). Sciences agreed to pay to the Sellers and the Placement Agent, Oracle Capital LLC, the following:
|
|
|
$300,000 in cash paid to Sellers and $330,000 paid in cash to Oracle; |
|
a 36% interest in Sciences paid to Sellers and a 4% interest in Sciences paid to Oracle; |
|
reimburse Sellers legal fees up $53,000; |
|
payment at closing of the liabilities of KAI based upon a closing balance sheet up to a maximum of $180,000, it being understood that any liabilities above $180,000 are at the sole and absolute discretion and written consent of Sciences; and |
|
an Earn-Out of $3.3 million (the Earn-Out) in the event KAI on or before November 11, 2013, subject to possible extension in the event of financing delays, is able to prove the viability of producing the aerial productivity equivalent of 3,000 gallons per acre, per year of oil from microalgae. |
The closing condition of the Agreement is the funding of Sciences with at least $1.1 million by the Company on or before August 3, 2011. These funds would be utilized to meet Sciences obligations which are specified above and the balance will be allocated primarily for research and development of KAI. The Agreement has a post closing condition that the Company will raise and contribute to the capital of Sciences at least $2.2 million in accordance with a schedule over a period of approximately two years. Such funding must timely occur to avoid any dilution (up to a maximum of two-thirds) in ownership interest of Sciences. In connection with the Agreement, the Company will enter into employment agreements as well as a non-compete, non-solicitation and non-disclosure agreement with the two stockholders of KAI. These agreements will be for a period of two years, subject to possible extension as provided in the agreements.
Extension of Agreement
Sciences and Sellers agreed to extend the closing date up to a maximum of August 31, 2011. The Company paid Kai $68,000 to extend the closing date through August 12, 201, it paid Kai $68,000 to extend the closing date through August 19, 2011 and it has a further option at a cost of an additional $68,000 to further extend the closing date to August 31, 2011. All option payments are non-refundable, but shall be credited towards the $1.1 million closing condition referenced in the preceding paragraph.
Buy-Out Option
In the event that Sellers receive the Earn-Out, Sciences has the option to buy-out Sellers and Oracles collective 40% Common Stock position at a cost of $13.2 million, payable in cash or under certain specified conditions in the Companys Common Stock. Sellers and Oracle have the right to refuse the Buy-Out on up to one-half of their position.
26
About KAI BioEnergy Corp.
Kai is a research and development company developing a platform series of technologies that enable efficient and integrated continuous microalgal processing. Focusing on the economics and development of an industrially scalable processing system, KAI has been working on developing a platform system that directly extracts oil from a water based algal-cultivation medium, ultimately separating the oil-rich lipids, biomass, and water medium. A biofuel company can then take these oil-rich lipids and use them to produce algal biofuels. KAIs integrated continuous high flow system is expected to offer low capital costs, ultra-low operating costs with no additives or hazardous chemicals required, ultimately developing industrial scalability.
Results of Operations
By virtue of our purchase of 11 Goods, which became our sole operations, the company is considered to be in the development stage in accordance with the FASB ASC Topic 915 Development Stage Enterprises. Since its inception, the company has devoted substantially all of its time to raising capital, obtaining financing, research and development activities and obtaining many governmental organizations, municipalities and corporations to test our G2 Diesel and its performance as a blend with traditional #2 diesel fuel.
Three months Ended June 30, 2011 Compared to the Three months Ended June 30, 2010
The following table sets forth certain selected condensed consolidated statement of operations data for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
||||||||||
|
|
|
|
||||||||||
|
|
2011 |
|
% |
|
2010 |
|
% |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
$ |
68,291 |
|
|
100 |
% |
$ |
30,080 |
|
|
100 |
|
Cost of goods sold |
|
|
154,112 |
|
|
>100 |
% |
|
97,111 |
|
|
>100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross loss |
|
|
(85,821 |
) |
|
|
|
|
(67,031 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
2,622,851 |
|
|
>100 |
% |
|
1,135,332 |
|
|
>100 |
% |
Research and development |
|
|
23,162 |
|
|
>100 |
% |
|
125,000 |
|
|
>100 |
% |
Depreciation and amortization |
|
|
29,185 |
|
|
<100 |
% |
|
42,373 |
|
|
<100 |
% |
Total operating expenses: |
|
|
2,675,198 |
|
|
|
|
|
1,302,705 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from operations |
|
|
(2,761,019 |
) |
|
|
|
|
(1,369,736 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income/expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized (loss) on sale of securities |
|
|
(195,300 |
) |
|
|
|
|
|
|
|
|
|
Interest Expense |
|
|
(8,726 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,965,045 |
) |
|
|
|
$ |
(1,369,736 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The increase in revenues for the three months ended June 30, 2011 of $38,211 compared to the three months ended June 30, 2010 is the result of a customer placing fuel orders in the second quarter of 2011 for one of their terminals that completed a successful test program with G2 Diesel. This customer has agreed to continue to place orders to supply this location and continue to order G2 Diesel for several more terminals.
In general, the testing and pilot programs have continued beyond our original time estimates, which has also led to a longer sales order cycle than originally anticipated. For our testing programs that completed in 2011, results continue to show both efficiency and emissions improvements that remain of great interest to metropolitan bus systems and the rail and trucking industries. We are currently cultivating these pilot programs and relationships to generate sales orders. We expect to complete more pilot programs and regulatory approvals in 2011. The programs continue to show great promise to generate significant demand over the next quarter leading to more significant sales orders and contracts to purchase our fuel.
27
Our most significant efforts have continued to be on the approval of our fuel variance in the state of California. The fuel variance is required for our fuel to meet California regulations to sell bio-diesel fuel, which is the result of G2 Diesels flash point being less than traditional Biodiesel. This is the result of the small amount of ethanol in our finished fuel, which creates a lower flashpoint. We have spent considerable resources to meet Californias requirements to meet this regulation and have received positive feedback from our representatives that it should pass in 2011. We currently are licensed to sell fuel in California; however, we must meet this regulation to sell G2 Diesel. The variance requirement has delayed our ability to expand our market presence in California and has delayed our ability to sell our fuel in California. Its passage will allow many of our customers in California, which have tested and approved the use of our fuel, to purchase G2 Diesel.
Cost of goods sold was $154,112 for the three months ended June 30, 2011 and $97,111 for the three months ending June 30, 2010. The first quarter of 2011 experienced more sales activity as described in the preceding paragraph. For the three months ended June 30, 2011, we allocated more factory costs associated with operating the plant and selling fuel to cost of goods sold.
Current margins for our testing programs resulted in gross losses of $85,821 for the three months ended June 30, 2011 and $67,031 for the three months ending June 30, 2010. We expect sales margins to improve once we have sales contracts in place at our scheduled premium prices after the testing programs are concluded. Currently, our G2 Diesel is being sold to companies and governmental organizations and municipalities to test our G2 Diesel as a blended product for:
|
|
|
|
|
power performance, maintenance and engine noise; |
|
|
emissions and exhaust smell; and |
|
|
fuel economy. |
Research and development costs were $23,162 for the three months ended June 30, 2011 and $125,000 for the three months ending June 30, 2010. Our Research and Development activities have decreased when compared to the three months ended June 30, 2010.
Depreciation and amortization decreased by $13,188. We allocated more Depreciation expense to cost of goods sold during the three months ended June 30, 2011 when compared to the three months ended June 30, 2010.
Selling, general, and administrative expenses for the three months ended June 30, 2011 of $2,622,851 exceeded revenues by $2,554,560. Such costs include, among others, payroll and related expenses, insurance costs and occupancy costs. The increase in selling, general and administrative expenses of $1,487,519 in 2011 over the comparable period of the prior year is primarily related to consulting and salaries expense, in the amount of $1,911,875, recorded in relation to the stock options granted by the company to consultants and employees. The company also experienced a decrease in consulting, legal and audit costs of $272,379. Other overhead costs such as travel, marketing and promotional cost also decreased $185,026 in comparison to the three months ended June 30, 2010.
Net loss was $2,956,319 in the three months ended June 30, 2011 as compared to $1,369,736 for the comparable period in 2010. Basic and fully diluted net loss per share for the three months ended June 30, 2011 and June 30, 2010 was $(0.15) and $(0.07), respectively. Basic and fully diluted weighted average shares outstanding for the fiscal three months ended June 30, 2011 and June 30, 2010 was 19,877,996 and 19,443,803, respectively.
28
Six months Ended June 30, 2011 Compared to the Six months Ended June 30, 2010
The following table sets forth certain selected condensed consolidated statement of operations data for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
|
||||||||||
|
|
2011 |
|
% |
|
2010 |
|
% |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
$ |
97,513 |
|
|
100 |
% |
$ |
78,507 |
|
|
100 |
|
Cost of goods sold |
|
|
268,508 |
|
|
>100 |
% |
|
204,995 |
|
|
>100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross loss |
|
|
(170,996 |
) |
|
|
|
|
(126,488 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
3,584,110 |
|
|
>100 |
% |
|
3,687,772 |
|
|
>100 |
% |
Research and development |
|
|
123,713 |
|
|
>100 |
% |
|
226,323 |
|
|
>100 |
% |
Depreciation and amortization |
|
|
58,371 |
|
|
<100 |
% |
|
83,420 |
|
|
>100 |
% |
Total operating expenses: |
|
|
3,776,194 |
|
|
|
|
|
3,997,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from operations |
|
|
(3,937,190 |
) |
|
|
|
|
(4,124,003 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income/expense: |
|
|
|
|
|
<100 |
% |
|
|
|
|
|
|
Interest, net |
|
|
(8,726 |
) |
|
|
|
|
(7,077 |
) |
|
<100 |
% |
Realized (loss) on sale of securities |
|
|
(213,083 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(4,158,999 |
) |
|
<100 |
% |
$ |
(4,131,080 |
) |
|
<100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The increase in revenues for the six months ended June 30, 2011 of $19,006 compared to the three months ended June 30, 2010 is the result of a customer placing fuel orders in the second quarter of 2011 for one of their terminals that completed a successful test program with G2 Diesel. This customer has agreed to continue to place orders to supply this location and continue to order G2 Diesel for several more terminals.
In general, the testing and pilot programs have continued beyond our original time estimates, which has also led to a longer sales order cycle than originally anticipated. For our testing programs that completed in 2011, results continue to show both efficiency and emissions improvements that remain of great interest to metropolitan bus systems and the rail and trucking industries. We are currently cultivating these pilot programs and relationships to generate sales orders. We expect to complete more pilot programs and regulatory approvals in 2011. The programs continue to show great promise to generate significant demand over the next quarter leading to more significant sales orders and contracts to purchase our fuel.
Our most significant efforts have been focused on approval of our fuel variance in the state of California. The fuel variance is required for our fuel to meet California regulations to sell bio-diesel fuel, which is the result of G2 Diesels flash point being less than traditional Biodiesel. This is the result of the small amount of ethanol in our finished fuel, which creates a lower flashpoint. We have spent considerable resources to meet Californias requirements to meet this regulation and have received positive feedback from our representatives that it should pass in 2011. We currently are licensed to sell fuel in California; however, we must meet this regulation to sell G2 Diesel. The variance requirement has certainly delayed our ability to expand our market presence in California and has delayed our ability to sell our fuel in California. Its passage will allow many of our customers in California, which have tested and approved the use of G2 Diesel, to go to order and purchase G2 Diesel.
Cost of goods sold was $268,508 for the six months ended June 30, 2011 and $204,995 for the six months ending June 30, 2010. Cost of goods sold exceeded revenues for both periods as a result of applying fixed factory depreciation and overhead to cost of goods sold, even though only a small volume of sales were generated. For the six months ended June 30, 2011, there was an increase in factory costs associated with operating the plant and selling fuel applied to cost of goods sold when compared to the six months ended June 30, 2010.
29
Current margins for our testing programs resulted in gross losses of $170,966 for the six months ended June 30, 2011 and $126,488 for the six months ending June 30, 2010. We expect sales margins to improve once we have sales contracts in place at our scheduled premium prices after the testing programs are concluded. Currently, our G2 Diesel is being sold to companies and governmental organizations and municipalities to test our G2 Diesel as a blended product for:
|
|
|
|
|
power performance, maintenance and engine noise; |
|
|
emissions and exhaust smell; and |
|
|
fuel economy. |
Research and development costs were $123,713 for the six months ended June 30, 2011 and $226,323 for the six months ending June 30, 2010. Our Research and Development activities have decreased when compared to the three months ended June 30, 2010.
Depreciation and amortization included in operating expenses decreased by $25,049. We have allocated more depreciation to cost of goods sold during the six months ended June 30, 2011 when compared to the six months ended June 30, 2010.
Selling, general, and administrative expenses for the six months ended June 30, 2011 of $3,584,110 exceeded revenues by $3,486,597. Such costs include, among others, payroll and related expenses, insurance costs and occupancy costs. The decrease in selling, general and administrative expenses of $103,662 in 2011 over the comparable period of the prior year is primarily related to the following: Common stock options to consultants, which was treated for accounting purposes as operating expense, in the amount of $1,911,875. In comparison, during the six months ended June 30, 2010, the company recorded payments of common stock to consultants and employees from the Companys CEO and a founding shareholder, which was treated for accounting purposes as operating expenses and donated capital, in the amount of $1,493,850, contributing to a period to period decrease of $477,408. The remaining decrease in Selling, general, and administrating expenses is the result of a decrease in costs associated with consulting, legal, audit and bonus costs of approximately $377,833. Other overhead costs such as travel, marketing and promotional cost decreased approximately $277,024 and salaries and payroll costs decreased by approximately $14,150 in comparison to the first six months of 2010.
Net loss was $4,158,999 in the six months ended June 30, 2011 as compared to $4,131,080 for the comparable period in 2010. Basic and fully diluted net loss per share for the six months ended June 30, 2011 and June 30, 2010 was $(0.21) and $(0.25), respectively. Basic and fully diluted weighted average shares outstanding for the fiscal six months ended June 30, 2011 and June 30, 2010 was 19,867,177 and 16,813,814, respectively.
30
Liquidity and Capital Resources
The company had cash and cash equivalents of $12,519 at June 30, 2011. Net cash was used in operating activities of $1,203,563 for the six months ended June 30, 2011. Cash used in operations was a result of a net loss for the period of $4,158,999; a decrease in inventory of $154,790; a decrease in accounts receivable of $13,429; an increase in payables of $486,808, fair value of options granted of $1,911,895, depreciation and amortization of $191,693, realized loss on sale of securities of $213,083 and an increase in other assets of $22,383. Net cash from investing activities of $553,562 for the six months ended June 30, 2011, included patent costs of $7,027 and proceeds from the sale of securities available for sale of $560,769. Net cash provided by financing activities of $630,097 for the six months ended June 30, 2011, included proceeds from common stock of $225,000, proceeds from issuing convertible debt of $250,000, proceeds from issuing notes payable to related party of $50,000 and proceeds from a related party advance of $130,097, partially offset by $25,000 due from a related party.
The company had cash and cash equivalents of $2,160,840 at June 30, 2010. Net cash was used in operating activities of $2,953,941 for the six months ended June 30, 2010. Cash used in operations was a result of a net loss for the period of $4,131,080; an increase in inventory of $ 552,290 and a decrease in payables of $110,476 partially offset by compensation of services by a related party of $1,493,840. Net cash used in investing activities of $ 398,314 for the quarter ended June 30, 2010, included purchase of property, plant and equipment of $138,623 and purchase of securities available for sale of $259,691. Net cash provided by financing activities of $643,346, for the quarter ended June 30, 2010, included proceeds from the sale of Common Stock of $805,846, partially offset by the purchase of treasure stock of $122,500, payments of related party note payable of $25,000 and payments of convertible notes of $15,000.
From May 23, 2007 (date of inception) through December 31, 2009, the company raised $7,930,000 by issuing notes payable convertible into Common Stock, bearing 8% interest per annum. These Notes (including principal and accrued interest thereon) became convertible at a price of $2.55 per share (the Conversion Price) based upon a 15% discount to the companys equity raise which was completed at an offering price of $3.00 per share between August 2009 and March 2010. In addition to the number of conversion shares to be delivered to each Holder of this Note, upon conversion of the Principal Amount and accrued interest thereon, the company also delivered Unclassified Warrants expiring June 30, 2012 to purchase a number of shares of Common Stock equal to the number of Conversion Shares. As June 30, 2011and December 31, 2010, the company had outstanding $0 of these convertible notes.
Between August 2009 and February 2010, the company received gross proceeds of $11,932,000 (net proceeds of $10,253,069) through the sale of its Common Stock at a price of $3.00 per share, for a total of 3,977,333 shares.
In the six months ended June 30, 2011, the Company received gross proceeds of $225,000 from the sale of 45,000 shares of Common Stock and Warrants to purchase 45,000 shares, exercisable at $7.50 per share from date of issuance through June 30, 2013.
During the quarter ended June 30, 2011, the Company borrowed $250,000. In connection with this transaction, Notes in the principal amount of $250,000 were issued and are convertible at $5.00 per share. The Company also issued Warrants to purchase 62,500 shares of Common Stock exercisable at $5 per share at any time from the date of issuance through June 30, 2013.
During the quarter ended June 30, 2011, the Company borrowed $50,000 from a related party. In connection with this transaction, the Company issued Notes in the principal amount of $50,000. The Notes charge interest at 9% per annum and is callable on demand.
We have a history of losses from operations and an accumulated deficit of $20,710,566 at June 30, 2011 and negative working capital (total current liabilities in excess of total current liabilities) of $604,737. As of June 30, 2011, we are operating one production facility; currently have a total of 9 employees, with a burn rate of approximately $230,000 per month.
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In the absence of significant revenues, management believes that we will require capital funding and liquidity needs for our current corporate and plant operations. While the company anticipates more than nominal revenues will result during 2011, our ability to achieve profitable operations will depend on our ability to raise additional financing in 2011, on terms satisfactory to us, particularly if cash flow from operations continues at its current level. Further, there is no guarantee that we will ever be able to operate profitably or derive any significant revenues from our operations.
We anticipate that our future liquidity requirements will arise from the need to finance our accounts receivable and inventories, and from the need to fund our current obligations and capital expenditures. The primary sources of funding for our current operations will be cash generated from operations and the sale of current inventory and raising additional capital from the sale of equity securities.
We are currently in the process of raising capital through a private placement sale of common stock. The current private placement memorandum outlines the sale of up to 2,200,000 shares of common stock at $5 per share for an aggregate of up to $11,000,000. As of the date of this filing, we have raised and collected $20,000 as a result of a private placement sale of equity. Exemption is claimed under Section 4(2) and/or Rule 506 of Regulation D of the Securities Act of 1933, as amended.
Our future plans include purchasing and/or leasing a site for the purpose of constructing a second production facility with an estimated annual output capacity of 30,000,000 gallons of G2 Diesel. To date, we have completed engineering and construction plans for such a facility and have made inquiries into potential sites in the State of Ohio for such a facility. However, detailed milestones of these plans and the specific steps needed to accomplish each milestone do not currently exist. Management estimates that once a site is secured, that construction permitting and all the other steps necessary to have such a site constructed and operational would take approximately one year to complete. The actual costs of this new facility will depend upon many factors, including, without limitation, the location and cost of the land, demolition costs of existing facilities (if any) on the site, environmental concerns (if any) and the size of the new plant. We can provide no assurances that the company will be able to obtain adequate financing for its second production facility on terms satisfactory to us, if at all.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposure to market risk is interest rate risk associated with our short term money market investments. The Company does not have any financial instruments held for hedging or other speculative purposes and does not invest in derivative financial instruments, interest rate swaps or other investments that alter interest rate exposure.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements
Item 4. Controls and Procedures
We maintain disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our CEO and CFO, an evaluation was performed on the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report.
There were no changes in the Companys internal controls over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect the Companys internal control over financial reporting.
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Item 1. Legal Proceedings
As of the filing date of this Form 10-Q, we are not a party to any pending legal proceedings.
Item 1A. Risk Factors
As a Smaller Reporting Company as defined Rule 12b-2 of the Exchange Act and in item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item 1A.
Item 2. Changes in Securities
From January1, 2011 through July 31, 2011, we had limited private sales of our securities, summarized as follows:
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Date of |
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Title of |
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Number Sold |
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Consideration |
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Exemption |
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If Option, |
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April, 2011 |
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Common stock and warrants |
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45,000 Shares and 22,500 warrants |
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$225,000; 22,500 commissions paid. |
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Rule 506 |
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Warrants exercisable at $7.50 per share through June 30, 2013 |
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June -July |
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Notes and warrants |
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$350,000 principal amount of notes;87,500 warrants |
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$350,000:$35,000 commissions paid. |
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Rule 506 |
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Notes are convertible at $5.00 per share. Warrants are exercisable at $5.00 per share through June 30, 2013.. |
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June 2011 |
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Options |
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567,500 |
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Services rendered; no commissions paid |
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Section 4 (2) |
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Exercisable through June 24, 2014 at $5.00 per share. |
Item 3. Defaults Upon Senior Securities
None.
Item 4. Reserved
Item 5. Other Information
None
Except for the exhibits listed below, other required exhibits have been previously filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.
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The following exhibits were previously filed under a Form S-1 Registration Statement, file No. 333-166149 unless otherwise noted:
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Exhibit |
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Description of Exhibit |
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2.1 |
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Agreement and Plan of Organization between Registrant and 11 Goods Energy, LTD. |
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2.2 |
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Corrections to Exhibit 2.1 |
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3.1 |
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Certification of Incorporation |
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3.2 |
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By-Laws |
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3.3 |
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Certificate of Amendment to Certificate of Incorporation |
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3.4 |
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Certificate of Designation |
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10.1 |
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Employment Contract - Frederick C. Berndt |
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10.2 |
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Employment Contract - Daniel Lapp |
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10.3 |
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Employment Contract - Aaron Harnar |
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10.4 |
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Consulting Agreement with Clayton R. Livengood |
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10.5 |
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Employment Agreement - Gary R. Smith |
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10.6 |
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Finders Agreement - Jesup Lamont |
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10.7 |
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Consulting Agreement with Capital Keys |
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10.8 |
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Consulting Agreement with California Strategies |
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10.9 |
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Office Lease dated April 25, 2007 between the Registrant and Triad Realty, LLC, including a First Lease Amendment dated June 21, 2007 and a Second Amendment dated July 15, 2009. |
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21.1 |
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Subsidiary of Registrant |
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31.1 |
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Principal Executive Officer Rule 13a-14(a)/15d-14(a) Certification (*) |
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31.2 |
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Principal Financial Officer Rule 13a-14(a)/15d-14(a) Certification (*) |
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32.1 |
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Principal Executive Officer Section 1350 Certification (*) |
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32.2 |
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Principal Financial Officer Section 1350 Certification (*) |
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* Filed herewith. |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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11 GOOD ENERGY, INC. |
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Date: August 22, 2011 |
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By: /s/ Frederick C. Berndt |
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Frederick C. Berndt, President (principal executive officer) |
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Date: August 22, 2011 |
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By: /s/ Daniel T. Lapp |
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Daniel T. Lapp, |
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Chief Financial Officer (principal financial officer) |
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