Nature of Business
Harmonic Energy, Inc. (the Company), formerly
known as Aviation Surveillance Systems, Inc. and Fairytale Ventures, Inc., was incorporated in the State of Nevada on May 1, 2007.
The Company is currently developing a new business focused on the disposition and recycling of scrap tires through tire re-manufacturing
and carbonization of scrap tire components. The Company has not realized significant revenues to date and therefore is classified
as a development stage company.
Development Stage Company
The accompanying financial statements have
been prepared in accordance with generally accepted accounting principles related to development-stage companies. A development-stage
company is one in which planned principal operations have not commenced or if its operations have commenced, there has been no
significant revenues there from.
Basis of Presentation
The financial statements of the Company
have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented
in US dollars. The Company has adopted a July 31 fiscal year end.
Fair Value of Financial Instruments
The Companys financial instruments
consist of cash and cash equivalents, prepaid expenses, accrued expenses, and a license fees payable. The carrying amount of these
financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market
rates unless otherwise disclosed in these financial statements.
Use of Estimates
The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Basic (Loss) per Common Share
Basic (loss) per share is calculated by
dividing the Companys net loss applicable to common shareholders by the weighted average number of common shares during
the period. Diluted earnings per share is calculated by dividing the Companys net income available to common shareholders
by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding
is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are 666,667 common stock warrants
outstanding as of July 31, 2012.
The Company recognizes revenue when products
are fully delivered or services have been provided and collection is reasonably assured.
The Companys policy regarding advertising is to expense
advertising when incurred. The Company has not incurred any advertising expense as of July 31, 2012 and 2011.
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows,
the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to
the extent the funds are not being held for investment purposes.
Certain accounts and financial statement
captions in the prior periods have been reclassified to conform to the current period financial statements.
Income taxes are computed using the asset
and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on
the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted
tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence,
are not expected to be realized.
Stock-based compensation is accounted for
at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any
stock options. As of July 31, 2012, the Company has not issued any stock-based payments to its employees.
Recent Accounting Pronouncements
Harmonic Energy does not expect the adoption
of recently issued accounting pronouncements to have a significant impact on the Companys results of operations, financial
position or cash flow.