UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

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FORM 10-K

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x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013

 

Commission File Number: 333-167853

 

ENERGY EDGE TECHNOLOGIES CORPORATION

(Exact name of registrant as specified in its charter)

 

New Jersey		52-2439239
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

 

7545 Brigham Drive
Sandy Springs, Georgia		30350
(Address of principal executive offices)		(Zip Code)

 

(855) 243-5291

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(g) of the Exchange Act:
Title of each class	Name of each exchange on which registered
Common Stock	OTCBB

 

Securities registered pursuant to Section 12(g) of the Exchange Act:

Common Stock, $0.00001 Par Value

(Title of each class)

 

 

Indicate by check mark if registrant is a well-known seasoned issuer, as defined under Rule 405 of the Securities Act. Yes o  No x

 

Indicate by check mark if registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

 

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 during the preceding 12 months (or for such shorter period that the issuer 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 check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x No o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  Yes o  No x

 

Indicate by check mark 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.

 

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o o	Smaller reporting company x

 

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o No x

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $2,199,208.

 

As of April 15, 2014, there were 191,391,221 shares of the issuer’s common stock, $0.00001 par value, outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE:  None.

 

ENERGY EDGE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

 

TABLE OF CONTENTS

 

 

	PART I	Page
Item 1	Business	5
Item 1A	Risk Factors	7
Item 1B	Unresolved Staff Comments	11
Item 2	Properties	11
Item 3	Legal Proceedings	11
Item 4	Mine Safety Disclosures	11
	PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	12
Item 6	Selected Financial Data	13
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 7A	Quantitative and Qualitative Disclosures about Market Risk	16
Item 8	Financial Statements and Supplementary Data	16
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	16
Item 9A	Controls and Procedures	16
Item 9B	Other Information	17
	PART III
Item 10	Directors, Executive Officers and Corporate Governance	18
Item 11	Executive Compensation	21
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	22
Item 13	Certain Relationships and Related Transactions, and Director Independence	22
Item 14	Principal Accounting Fees and Services	22
Item 15	Exhibits, Financial Statement Schedules	24
	Signatures	26

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, or the “Securities Act,” and Section 21E of the Securities Exchange Act of 1934 or the “Exchange Act.” These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or anticipated results.

 

In some cases, you can identify forward looking statements by terms such as “may,” “intend,” “might,” “will,” “should,” “could,” “would,” “expect,” “believe,” “anticipate,” “estimate,” “predict,” “potential,” or the negative of these terms. These terms and similar expressions are intended to identify forward-looking statements. The forward-looking statements in this report are based upon management’s current expectations and belief, which management believes are reasonable. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor or combination of factors, or factors we are aware of, may cause actual results to differ materially from those contained in any forward looking statements. You are cautioned not to place undue reliance on any forward-looking statements. These statements represent our estimates and assumptions only as of the date of this report. Except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 

You should be aware that our actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including:

 

·

new competitors are likely to emerge and new technologies may further increase competition

·

our operating costs may increase beyond our current expectations and we may be unable to fully implement our current business plan

·

our ability to obtain future financing or funds when needed

·

our ability to successfully obtain and maintain our diverse customer base

·

our ability to protect our intellectual property through patents, trademarks, copyrights and confidentiality agreements

·

our ability to attract and retain a qualified employee base;

·

our ability to respond to new developments in technology and new applications of existing technology before our competitors;

·

acquisitions, business combinations, strategic partnerships, divestures, and other significant transactions may involve additional uncertainties; and

·

our ability to maintain and execute a successful business strategy.

 

Other risks and uncertainties include such factors, among others, as market acceptance and market demand for our products and services, pricing, the changing regulatory environment, the effect of our accounting policies, potential seasonality, industry trends, adequacy of our financial resources to execute our business plan, our ability to attract, retain and motivate key technical, marketing and management personnel, and other risks described from time to time in periodic and current reports we file with the United States Securities and Exchange Commission, or the “SEC.” You should consider carefully the statements under “Item 1A. Risk Factors” and other sections of this report, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements and could materially and adversely affect our business, operating results and financial condition. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements.

 

PART I

 

ITEM 1. BUSINESS

 

Use of Certain Defined Terms

 

Except as otherwise indicated by the context, references in this report to:

 

•	“Energy Edge,” “EEDG,” “EES”, “The Gourmet Chicken Company, Inc.”, “The Gourmet Chicken Company”, “TGCC”, “we,” “us,” or “our,” “Successor” and the “Company” are references to the business of Energy Edge Technologies Corporation, a New Jersey Corporation, and its subsidiaries.
•	“Securities Act” refers to the Securities Act of 1933, as amended.
•	“Exchange Act” refers to the Securities Exchange Act of 1934, as amended.

 

Energy Edge Technologies Corporation

 

Energy Edge Technologies Corporation was incorporated in New Jersey in January, 2004. As of fiscal year end December 31, 2013, Energy Edge Technologies Corporation is comprised of two subsidiaries: Energy Edge Solutions Inc. and The Gourmet Chicken Company, Inc.

 

During the fiscal year ended December 31, 2012, the Company acquired 65% of the capital stock of The Dry Fried Wing Company. On March 31, 2013, the Company acquired the remaining 35% of such stock. On April 5, 2013, the Company officially changed the name of The Dry Fried Wing Company to The Gourmet Chicken Company, Inc. At the point of the merger with The Dry Fried Wing Company in the fourth quarter of 2012, the other subsidiary Energy Edge Solutions was created to conduct the energy efficiency business of the Company. On June 6, 2013, Robert Holdsworth, Energy Edge Solutions Inc.’s President, resigned his position partially due to the decision to focus on the restaurant/food strategy. The Company’s intent is to refocus on the Energy Edge Solutions Inc. business once the Company secured several restaurant leases and completed a restaurant acquisition.

 

Energy Edge Solutions, Inc.

 

Energy Edge Solutions Inc. (“EES”) applies different proven technologies and engineering approaches to positively affect the various energy consuming loads in a facility, and we work to improve the efficiency of equipment and systems to reduce energy consumption. We combine engineering experience with the expertise of our primary manufacturers. This allows us to develop turnkey projects with energy savings, reduction in greenhouse gas emissions and return on investment for our customers. All of the approaches and technologies we employ are proven, passive, DOE, USGBC and/or IEEE approved and recommended. Furthermore, many of our technologies are ENERGY STAR qualified and supplied by ENERGY STAR partners such as Phillips, GE, Telkonet and Intellidyne. All of the technologies we utilize are Underwriters Laboratory “UL” Listed, which means that they conduct the testing on electrical components and equipment, and Canada Standards Association “CSA” approved. The Canada Standards Association is similar to the Underwriters Laboratory but their testing is even more stringent and CSA approval is required by law in Canada. Many states and local utilities also offer incentives and rebates for our work and we help our customers to receive the incentives available as well as qualify them for applicable and available federal tax incentives.

 

Lastly, EES has developed a proprietary e-tool for developing unique, accurate, facility specific energy savings calculations and project designs called the Energy Edge Analyzer. The Energy Edge Analyzer and underlying formulas and algorithms were developed by analyzing hundreds of facilities of varying type, size, location, use, etc. The Energy Edge Analyzer allows team members to collect specific, pin point information on the various energy consuming loads and systems in a facility and input the data into the tool to produce fast, precise results including:

 

·

Overall project design

·

Guaranteed energy savings

·

Available utility rebates

·

Available federal, state and local incentives

·

Client project cost

·

Guaranteed client payback and ROI

·

Financing options to eliminate out of pocket expense for customers

·

Carbon footprint and greenhouse gas reductions

·

Energy consumption breakdowns and profiles across respective loads

·

Detailed engineering and design specifications down to the individual treated load

·

Corresponding additional benefits of the specific design (i.e. extended equipment life, less downtime, heat load reductions, gain in electrical system capacity, cooling capacity, etc)

 

The results from the Energy Edge Analyzer can then be quickly imported to a client ready, professional proposal. The proposal incorporates the relevant information from above and includes everything from the executive summary to the sales agreement to graphs and charts, equipment spec sheets and dozens of customer referral letters.

 

The Gourmet Chicken Company, Inc.

 

The Gourmet Chicken Company, Inc. (“TGCC”) is a newly formed fast casual restaurant concept in the “Better Chicken Category”. TGCC is primarily engaged in the business of licensing, developing and operating company restaurants and franchising a system of distinctive quick-service and fast casual restaurants serving high quality food. As of December 31, 2013, the one licensed TGCC restaurant in operation in the United States was terminated to focus on the development of our company restaurant opening, franchising strategy, acquisition strategy and a more stringent licensing contract that will allow more control over the quality, service and overall cleanliness of the licensed restaurant. The revenues from our restaurant business will be primarily derived from Company restaurant revenues; franchise fees and royalties received from TGCC franchised restaurants and license fees. TGCC will also sell food, equipment and supplies to its franchisees/licensees.

 

Each TGCC restaurant will offer an extensive menu specializing in seasoned and vacuum marinated chicken with our proprietary seasonings and spices. Our products are fresh, never frozen. They are marinated, battered and breaded chicken products that are fried in 100% peanut oil. Our menu has rotisserie chicken, grilled or fried chicken sandwiches and breast strips all prepared to order. Our gourmet sides include Mac & Cheese topped with smoked bacon bits, Corn Maque Choux- tender kernels of sweet corn cooked with bacon, red and green bell peppers, and a hint of garlic; Creole Green Beans with smoked turkey, White Bean Soup, Honey Butter Biscuits, Jambalaya, Gumbo, Carrot Soufflé and Sweet Potato Soufflé. Our desserts include our decadent Louisiana Fudge Cake, a sinfully, decadent Blonde Brownie with semi-sweet chocolate chunks and chopped pecans, topped with House-Made Frozen Custard and chocolate fudge sauce. In addition, the restaurants will sell a variety of promotional products on a limited time basis.

 

TGCC strives to maintain quality and uniformity throughout all restaurants by publishing detailed specifications for food products, preparation and service, continual in-service training of employees, restaurant operational audits and field visits from TGCC supervisors. In the case of licensees, field visits will be made by TGCC personnel who review operations, including quality, service and cleanliness and make recommendations to assist in compliance with TGCC specifications.

 

TGCC anticipates no material shortages of food, equipment, fixtures or other products that are necessary to maintain restaurant operations and believes that sufficient alternate suppliers are available. Suppliers to TGCC system must comply with United States Department of Agriculture (“USDA”) and United States Food and Drug Administration (“FDA”) regulations governing the manufacture, packaging, storage, distribution and sale of all food and packaging products.

 

Trademarks and Service Marks

 

TGCC or its subsidiaries intend to register certain trademarks and service marks in the United States Patent and Trademark Office and in international jurisdictions. TGCC believes its registered marks are of material importance to its business. Domestic trademarks and service marks expire at various times and TGCC generally intends to renew trademarks and service marks that are scheduled to expire.

 

Seasonality

 

TGCC restaurant operations are moderately seasonal. TGCC average restaurant sales will normally be higher during the summer months than during the winter months. Because the business is moderately seasonal, results for any quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.

 

Competition

 

Each TGCC restaurant will be in competition with other food service operations within the same geographical area. The quick-service/fast casual restaurant segment is highly competitive and includes well-established competitors. TGCC will compete with other restaurant companies and food outlets, primarily through the quality, variety, convenience, price, and value perception of food products offered. The number and location of units, quality and speed of service, attractiveness of facilities, effectiveness of marketing and new product development by TGCC and its competitors are also important factors. The price charged for each menu item may vary from market to market (and within markets) depending on competitive pricing and the local cost structure. TGCC also competes within the food service industry and the quick service/fast casual restaurant sector not only for customers, but also for personnel, suitable real estate sites and qualified franchisees/licensees.

 

TGCC competitive position is differentiated by a focus on quality, its use of fresh, never frozen chicken and beef in the United States, its unique and diverse menu, its promotional products, its choice of condiments and the atmosphere and décor of its restaurants.

 

Many of the leading restaurant chains continue to focus on new unit development as one strategy to increase market share through increased consumer awareness and convenience. This results in increased competition for available development sites and higher development costs for those sites. Competitors also employ marketing strategies such as frequent use of price discounting, frequent promotions and heavy advertising expenditures. Continued price discounting including the use of coupons, in the quick service/fast casual restaurant industry and the emphasis on value menus could impact TGCC.

 

Other restaurant chains have also competed by offering high quality chicken and sandwiches made with fresh ingredients and artisan breads and there are several emerging restaurant chains featuring high quality food served at in-line locations. Several chains have also sought to compete by targeting certain consumer groups, such as capitalizing on trends toward certain types of diets (e.g., low carbohydrate or low trans fat) by offering menu items that are promoted as being consistent with such diets.

 

Additional competitive pressures for prepared food purchases come from operators outside the restaurant industry. A number of mall-based and major grocery chains offer fresh wings and other chicken-based offerings and fully prepared food and meals to go as part of their deli sections. Some of these chains also have in-store cafes with service counters and tables where consumers can order and consume a full menu of items prepared especially for that portion of the operation. Additionally, convenience stores and retail outlets at gas stations frequently offer chicken and other foods.

 

Quality Assurance

 

TGCC’s quality assurance program is designed to verify that the food products supplied to our restaurants are processed in a safe, sanitary environment and in compliance with our food safety and quality standards. TGCC has the right to terminate franchise and license agreements if franchisees/licensees fail to comply with quality standards.

 

Growth Strategy

 

As of December 31, 2013, TGCC was in final negotiations to secure three restaurant locations. It is anticipated that the first lease will be executed in the first or second quarter of 2014 and it is anticipated we will close on our first acquisition in the 3^rd quarter of 2014.

 

TGCC currently has plans to develop three prototype restaurants in locations selected based on specific demographic data.

TGCC plans to seed the market with Company units utilizing a “build and flip” strategy, selling the Company units to franchisees with additional development requirements while recouping the Company’s initial investments plus turnkey fees.

 

EES will be looking for additional revenue streams in 2014 such as energy efficiency consulting for new building design and potential acquisition targets to expand the size, revenue and profitability of the company.

 

ITEM 1A. RISK FACTORS

 

This report includes forward-looking statements about our business and results of operations that are subject to risks and uncertainties. See “Forward-Looking Statements,” above. Factors that could cause or contribute to such differences include those discussed below. In addition to the risk factors discussed below, we are also subject to additional risks and uncertainties not presently known to us or that we currently deem immaterial. If any of these known or unknown risks or uncertainties actually occur, our business could be harmed substantially.

 

(1) While we have had sustainable revenues in the past, there is no assurance our future operations will result in such revenues. Our revenues depend on continual new business development.

 

While a number of our customers have written about their satisfaction with our services, because of this success, they may not need us to provide additional services in the near future, unless they expand and have additional facilities for us to provide an energy audit. Accordingly we are continually dependent upon developing new clients for our continued revenue production and growth, and any inability to continue business development growth would materially impact our revenues and adversely impact a shareholder’s investment.

 

(2) Our existing and anticipated working capital needs, the acceleration or modification of our expansion plans, lower than anticipated revenues, or increased expenses or other events will all affect our ability to continue as a going concern.

 

Supporting the increased costs of infrastructure as well as expanding business development to attract new clients will significantly increase our costs of operations. If we cannot generate sufficient revenues to operate profitably, we may suspend or cease operations.

 

(3) We anticipate incurring operating losses and negative cash flows in the foreseeable future resulting in uncertainty of future profitability and limitation on our operations.

 

We anticipate that the Company will incur operating losses and negative cash flows in the foreseeable future, and will accumulate increasing deficits as we increase our expenditures for (i) infrastructure, (ii) sales and marketing, (iii) equipment, (iv) personnel, and (v) general operating expenses. Any increases in our operating expenses will require us to achieve significant revenue before we can attain profitability. In the event that we are unable to achieve profitability or raise sufficient funding to cover our losses, we may not be able to meet our obligations as they come due, raising substantial doubts as to our ability to continue as a going concern.

 

(4) We are dependent on outside financing for expansion of our operations.

 

For the near future, we are dependent on the continued availability of outside financing in order to continue the growth of our business. There can be no assurance that financing sufficient to enable us to continue our operations will be available to us in the future. Our failure to obtain future financing or to produce levels of revenue to meet our financial needs could result in our inability to continue as a going concern and, as a result, investors in the Company could lose their entire investment.

 

(5) We will need additional capital, which may not be available on acceptable terms, if at all, and any additional financing may be on terms adverse to your interests.

 

We will need additional cash to fund our operations. Our capital needs will depend on numerous factors, including market conditions and our profitability. We cannot be certain that we will be able to obtain additional financing on favorable terms, if at all. If additional financing is not available when required or is not available on acceptable terms, we may be unable to fund expansion, successfully promote our brand name, develop or enhance our services, take advantage of business opportunities, or respond to competitive pressures or unanticipated requirements, any of which could seriously harm our business and reduce the value of your investment.

 

If we are able to raise additional funds, if and when needed, by issuing additional equity securities, you may experience significant dilution of your ownership interest and holders of these new securities may have rights senior to yours as a holder of our Common Stock. In this case, the value of your investment could be reduced.

 

(6) Our Growth Plan is based upon Management’s projection of what may happen in the future, and such predictions may not occur. Actual results may differ materially.

 

Our growth plan is based upon Management’s projections of estimated available cash flow, expenses, revenue, revenue over profit, earnings before interest, taxes and depreciation, sales cycle time and other measures of projected economic performance. These projections are made in Management’s view of what may happen in the future, and are not based upon historical projections.

 

(7) We rely on strategic vendors to provide strategic contracting services integral to our service package.

 

We rely on strategic vendors, to provide strategic contracting services integral to our overall client service package. If we experience problems with any of our strategic vendors, the satisfaction of our customers could suffer and our business could be adversely affected. If we experience difficulties in maintaining these relationships or developing new relationships on a timely basis and on terms favorable to us, our business and financial condition could be adversely affected. Malfunctions of third party service providers could adversely affect our business which may impede our ability to attract and retain clients.

 

(8) Our success is tied to maintaining adequate understanding of and access to developing energy efficiency technology.

 

Our future revenues and profits, if any, substantially depend on our maintaining an adequate understanding of and access to new and developing energy efficiency technologies. We also must remain current on appropriate implementation methods of such technologies, and in certain instances, obtain licensing and other access agreements to use such technologies. Any loss of personnel or inability to gain access to such technologies could impair our ability to remain a going concern. Also, lack of capital to hire sufficiently experienced personnel could also adversely affect our operations and revenue.

 

(9) Our Competitors may have more resources and develop proprietary technologies that we do not have access to, and pursue similar business and acquisition strategies.

 

For the most part, the energy efficiency audit services market has been fragmented, regionally directed, and composed of many different segments of service providers. Part of our business plan and our past success has been our architecture of energy audits for clients that integrate the provision of energy savings service from multiple vendors and consultants, and we intend with sufficient future capital raises to pursue a strategy of acquiring or joint venturing with such vendors and consultants regionally, nationally and internationally. Any such strategy is dependent upon the success of such capital raises, and is not assured. Other competitors may be better funded, have access to more business expansion capital, have strategic business and local relationships longer developed, and may have stronger capability to develop or license proprietary technologies, all among other factors, that could adversely affect our ability to compete.

 

(10) Growth of internal operations and business may strain our financial resources.

 

We will be significantly expanding the scope of our operating and financial systems in order to build and expand our business. Our growth rate may place a significant strain on our financial resources for a number of reasons, including, but not limited to, the following:

 

	·	The need for continued development of the financial and information management systems
	·	The need to manage strategic relationships and agreements with subscribers; and
	·	Difficulties in hiring and retaining skilled management, technical, service and other personnel necessary to support and manage our business

 

We may not be able to adequately address these risks and, if we do not, our ability to successfully expand our business could be adversely affected.

 

(11) Failure to manage growth effectively could prevent us from achieving our goals.

 

Our strategy envisions a period of rapid growth that may impose a significant burden on our administrative and operational resources. Our ability to effectively manage growth will require us to substantially expand the capabilities of our administrative and operational resources and to attract, train, manage, and retain qualified management and other personnel. Our failure to successfully manage growth could result in our sales not increasing commensurately with capital investments. Our inability to successfully manage growth could materially adversely affect our business.

 

(12) Any failure to adequately expand a direct sales force will impede our growth.

 

We expect to be substantially dependent on a direct sales force to attract new clients and to manage customer relationships. We plan to expand our direct sales force and believe that there is significant competition for qualified, productive direct sales personnel with advanced sales skills and technical knowledge. Our ability to achieve significant growth in revenue in the future will depend, in large part, on our success in recruiting, training and retaining sufficient direct sales personnel and sustaining revenue to support such hires. Recent hires and planned hires may not become as productive as expected, and we may be unable to hire sufficient numbers of qualified individuals in the future in the markets where we do business. We expect to face competition in the recruitment of qualified personnel, and we can provide no assurance that we will attract or retain such personnel. If we are unable to hire and develop sufficient numbers of productive sales personnel our business prospects could suffer.

 

(13) If our services do not gain expanded market acceptance, we may not be able to fund future operations.

 

A number of factors may affect the market acceptance of our network, including, among others:

 

	·	The perception by users of the effectiveness of our services
	·	Our ability to fund our sales and marketing efforts; and
	·	The effectiveness of our sales and marketing efforts.

 

If our services do not gain acceptance by new clients, we may not be able to fund future operations, including the development of new products and services, and/or our sales and marketing efforts for our current products and services, which inability would have a material adverse effect on our business, financial condition and operating results.

 

(14) We have incurred increased costs as a result of being a public company.

 

Since we have become a public company, we have incurred significant legal, accounting and other expenses. The laws, rules and regulations governing public companies has increased our legal and financial compliance costs and has made some activities more time-consuming and costly.

 

(15) Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.

 

New or changed laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which may result in additional expenses. While there is limited regulation of our business at the state and federal level, any change to such regulation could adversely affect our business. Our clients are often regulated, and their ability to pay us or our ability to provide services may be impacted by changes in regulation. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, our business may be materially impacted and our reputation may be harmed.

 

Risks Related to our Common Stock

 

(16) Our stock is a penny stock. Trading of our stock may be restricted by the Securities and Exchange Commission’s penny stock regulations which may limit a stockholder’s ability to buy and sell our stock.

 

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities will be covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.

 

These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

 

(17) The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a stockholder’s ability to buy and sell our stock.

 

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

 

(18) The price of our common stock may be negatively impacted by factors which are unrelated to our operations.

 

The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of our competitors, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.

 

(19) We do not expect to pay dividends and investors should not buy our Common Stock expecting to receive dividends.

 

We do not anticipate that we will declare or pay any dividends on our Common Stock in the foreseeable future. Consequently, you will only realize an economic gain on your investment in our Common Stock if the price appreciates. You should not purchase our Common Stock expecting to receive cash dividends. Since we do not pay dividends, and if we are not successful in establishing an orderly public trading market for our shares, then you may not have any manner to liquidate or receive any payment on your investment. Therefore our failure to pay dividends may cause you to not see any return on your investment even if we are successful in our business operations. In addition, because we do not pay dividends we may have trouble raising additional funds which could affect our ability to expand our business operations.

 

(20) We may seek to raise additional funds, finance acquisitions or develop strategic relationships by issuing capital stock.

 

We have financed our operations, and we expect to continue to finance our operations, acquisitions and develop strategic relationships, by issuing equity or debt securities, which could significantly reduce the percentage ownership of our existing stockholders. Furthermore, any newly issued securities could have rights, preferences and privileges senior to those of our existing stock. Moreover, any issuances by us of equity securities may be at or below the prevailing market price of our stock and in any event may have a dilutive impact on your ownership interest, which could cause the market price of stock to decline.

 

(21) Our historical results are subject to fluctuations which may be material.

 

Since the Company was organized in 2004, the likelihood of the success of the Company must be considered in light of the problems, expenses, and difficulties, complications and delays frequently encountered in connection with the competitive environment in which the Company will operate and there can be no assurance that the Company will be able to operate profitably.

 

(22) Legal actions.

 

There are presently no legal actions pending against the Company or to which it or any of its property are subject, however the Company does have knowledge of a possible legal action regarding an account payable in the amount of $13,500 in dispute.. In the event there was any such legal action, there would be costs of defense that would be variable. The Company anticipates a general increase in legal counsel cost going forward due to the increased compliance costs of running a public company and the legal work that may be necessary for implementing the Company’s business plan of expansion.

 

(23) Investors may never receive cash distributions which could result in an investor receiving little or no return on his or her investment.

 

Distributions are payable at the sole discretion of our board of directors. We do not know the amount of cash that we will generate, if any, once we have more productive operations. Cash distributions are not assured, and we may never be in a position to make distributions.

 

(24) We anticipate the need to sell additional authorized shares in the future. This will result in a dilution to our existing shareholders and a corresponding reduction in their percentage ownership in EEDG.

 

We may seek additional funds through the sale of our common stock. This will result in a dilution effect to our shareholders whereby their percentage ownership interest in EEDG is reduced. The magnitude of this dilution effect will be determined by the number of shares we will have to issue in the future to obtain the funds required. The sale of additional stock to new shareholders will reduce the ownership position of the current shareholders. The price of each share outstanding common share may decrease in the event we sell additional shares.

 

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2. PROPERTIES

 

The Company does not own any real property. The Company’s office and place of business is located at 7545 Brigham Drive, Sandy Springs, Georgia 30350.

 

ITEM 3. LEGAL PROCEEDINGS

 

We know of no material, active legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. The Company does have knowledge of a possible legal action regarding an account payable in the amount of $13,500 in dispute.  There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

None.

 

PART II

 

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

The following table sets forth the quarterly high and low sales prices of our common stock for the last two fiscal years. Such prices are inter-dealer quotations without retail mark-ups, mark-downs or commissions, and may not represent actual transactions.

 

Fiscal Year Ending December 31, 2013
Quarter Ended				High ($)				Low ($)
	December 31, 2013				0.129				0.0055
	September 30, 2013				0.0168				0.007
	June 30, 2013				0.037				0.0079
	March 31, 2013				0.128				0.0235
	Fiscal Year Ending December 31, 2012
	Quarter Ended				High ($)				Low ($)
	December 31, 2012				0.1				0.0154
	September 30, 2012				0.145				0.0241
	June 30, 2012				0.19				0.0012
	March 31, 2012				0.016				0.003

 

The Company’s common stock is subject to Rule 15g-9 of the Securities and Exchange Commission, known as the Penny Stock Rule. This rule imposes requirements on broker/dealers who sell securities subject to the rule to persons other than established customers and accredited investors. For transactions covered by the rule, brokers/dealers must make a special suitability determination for purchasers of the securities and receive the purchaser’s written agreement to the transaction prior to sale. The Securities and Exchange Commission also has rules that regulate broker/dealer practices in connection with transactions in “penny stocks.” Penny stocks generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in that security is provided by the exchange or system. The Penny Stock Rules requires a broker/dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker/dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker/dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. These disclosure requirements have the effect of reducing the level of trading activity in the secondary market for our common stock. As a result of these rules, investors may find it difficult to sell their shares.

 

On December 31, 2013, the shareholders’ list of our common shares showed 34 registered shareholders and 190,873,829 shares outstanding.

 

Dividend Policy

 

No cash dividends have been paid by the Company on its common stock. It is anticipated that the Company’s future earnings will be retained to finance its continuing development. The payment of any future dividends will be at the discretion of the Company’s board of directors and will depend upon, among other things, future earnings, any contractual restrictions, success of business activities, regulatory and corporate law requirements and the general financial condition of the Company.

 

Recent Sales of Unregistered Securities

 

None.

 

Equity Compensation Plan Information

 

We currently do not have any stock option or equity compensation plans or arrangements.

 

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

 

During our fiscal year ended December 31, 2013, we did not purchase any of our shares of common stock or other securities.

 

ITEM 6. SELECTED FINANCIAL DATA

 

The following financial data is derived from, and should be read in conjunction with, the “Financial Statements” and notes thereto. Information concerning significant trends in the financial condition and results of operations is contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

		December 31,				December 31,
		2013				2012
STATEMENT OF OPERATIONS DATA
Revenues		$	2,040			$	452,304
Cost of revenues			2,471				423,717
Gross profit			(431	)			28,587
Selling, general & administrative expenses			1,659,606				811,439
Operating loss			(1,660,037	)			(782,852	)
Other expense – net			105,744				1,274
Loss before income taxes and non-controlling interests			(1,765,781	)			(784,126	)
Income tax provision (benefit)			—				—
Less: loss attributable to non-controlling interests			56,115				41,155
Net loss attributable to ENERGY EDGE TECHNOLOGIES Corporation stockholders		$	(1,709,666	)		$	(742,971	)
LOSS PER SHARE
Net loss attributable to ENERGY EDGE TECHNOLOGIES Corporation stockholders
Loss per common share: Basic and diluted		$	(0.01	)		$	(0.01	)
Weighted average number of common shares outstanding: basic and diluted			145,208,424				88,868,255

 

BALANCE SHEET DATA		2013				2012
Cash and cash equivalents		$	45,164			$	18,553
Accounts receivable		$	—			$	348
Working capital deficit		$	(525,710	)		$	(180,517	)
Total assets		$	317,567			$	324,388
Total liabilities		$	890,521			$	499,860
Equity		$	(572,954	)		$	(175,472	)

 

OTHER DATA		2013				2012
Cash flow provided by (used in)
Operating activities		$	(378,291	)		$	(130,248	)
Investing activities			(4,194	)		$	—
Financing activities			409,095			$	145,558
Depreciation and amortization		$	38,111			$	1,717

 

ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Plan of Operation

 

Our goal over the next twelve months is to direct maximum marketing efforts to develop greater markets and demand for our professional services and products.

 

We intend to focus on the following activities specific to EES:

 

	·	Recruit and retain more employees, focusing on increasing our experienced sales team and strategic alliances.
	·	Increase marketing initiatives that will further promote the business and its services.

·

Continue national expansion, becoming the premier service provider for full facility overhaul in the energy services industry.

·

Engage in mergers and acquisitions to grow the company

 

We intend to focus on the following activities specific to TGCC:

 

·

Develop three prototype restaurants in locations selected based on specific demographic data including:

 

a. competitor concepts and sales volumes

 

b. trade area profiles, including customer demographics, day-part occasions, concept density

 

c. emerging trade areas and developments

 

d. consumer foodservice DMA spending levels (comparative analysis)

 

e. local labor costs, unemployment levels and skill pools

 

·

Seed the market with Company units utilizing a “build and flip” strategy, selling the Company units to franchisees with additional development requirements while recouping the Company’s initial investments plus turnkey fees.

 

Results of Operations

 

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

 

		2013				2012
CONTRACT REVENUES		$	2,040			$	452,304
CONTRACT COSTS			2,471				423,717
GROSS PROFIT			(431	)			28,587
OPERATING EXPENSES
Compensation			1,078,255				26,089
Consulting services			298,393				449,826
Professional fees			74,253				45,791
Director fees			2,400				—
General & administrative expenses			206,305				289,733
TOTAL OPERATING EXPENSES			1,659,606				811,439
LOSS FROM OPERATIONS			(1,660,037	)			(782,852	)
OTHER EXPENSE
Interest expense			(35,527	)			—
Other expense			—				(1,274	)
Change in fair value of derivative liability			(70,217	)			—
TOTAL OTHER EXPENSE			(105,744	)			(1,274	)
LOSS FROM OPERATIONS BEFORE NON-CONTROLLING INTERESTS			(1,765,781	)			(784,126	)
LESS: LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS			56,155				41,155
LOSS BEFORE PROVISION FOR INCOME TAXES			(1,709,666	)			(742,971	)
PROVISION FOR INCOME TAXES			—				—
NET LOSS		$	(1,709,666	)		$	(742,971	)
LOSS PER COMMON SHARE: BASIC AND DILUTED		$	(0.01	)		$	(0.01	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: BASIC AND DILUTED			145,208,424				88,868,255
DIVIDENDS PER COMMON SHARE		$	0.00			$	0.00

 

Revenues:

 

Contract revenues for the twelve months ended December 31, 2013 was $2,040 compared to $452,304 for the twelve months ended December 31, 2012. The decline in sales revenue of $450,265 was mainly attributable to the comparable sales between periods and the delay of significant projects expected to close during 2013.

 

Contract Costs and Gross Profit:

 

Contract costs decreased from $423,717 for the twelve months ended December 31, 2012 to $2,471 for the same period in 2013. The decrease in contract cost was mainly attributable to reduced profits and increased utilization of independent contractors on an as needed basis.

 

Gross profit decreased from $28,587 for the twelve months ended December 31, 2012 to a loss of $431 for the same period in 2013. Gross profit as a percentage of revenue was negative 21% for the twelve months ended December 31, 2013, compared to 6.3% for the same period in 2012. The decrease in gross profit was attributable to the increased contract costs.

 

Operating Expenses:

 

Operating expenses increased significantly from $811,439 for the twelve months ended December 31, 2012 to $1,659,606 for the same period in 2013. The increase in expenses was mainly due to higher compensation expense.

 

General and Administrative Expenses:

 

General and administrative expenses decreased from $289,733 for the twelve months ended December 31, 2012 to $206,305 for the twelve months ended December 31, 2013. The decrease was due primarily to non-recurring write off of an account receivable that was charged to bad debt expense.

 

Net Loss:

 

We recorded a net loss of 1,706,666 for the twelve months ended December 31, 2013, as compared to a net loss of $742,971 for the same period in 2012. The increase was due mainly to the increased operating and general and administrative expenses.

 

Liquidity and Capital Resources

 

For the year ended December 31, 2013, we used $378,291 in cash flow from operating activities compared to cash used of $130,248 for the year ended December 31, 2012.

 

The Company has outstanding debt, net of discount of $112,208 and derivative liability on convertible notes of $240,609 at December 31, 2013 as compared to zero debt as of December 31, 2012.

 

Cash and cash equivalents were $45,164 as of December 31, 2013 compared to $18,553 as of December 31, 2012.

 

We have no material commitments for capital expenditures and know of no trends, demands, commitments, or events that will result in our liquidity changing in a material way for the foreseeable future.

 

Critical Accounting Policies

 

Please refer to “Note 2 – Summary of Significant Accounting Policies in Part IV, Item 15” in the attached financial statements.

 

Off Balance Sheet Arrangements

 

The Company has no off balance sheet arrangements.

 

Recently Adopted Accounting Pronouncements

 

Please refer to “Note 2 – Summary of Significant Accounting Policies in Part IV, Item 15” in the attached financial statements for a complete description of recent accounting standards which we have not yet been required to implement and may be applicable to our operation, as well as those significant accounting standards that have been adopted in 2013 and 2012.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company, as defined by Rule 229.10(f)(1) and are not required to provide the information required by this Item.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

The Company’s financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

 

It is the opinion of management that the audited financial statements for the calendar year ended December 31, 2013, include all adjustments necessary in order to ensure that the audited financial statements are not misleading.

 

The following financial statements are filed as part of this annual report:

 

Please refer to “Part IV, Item 15” for the Company’s audited financial statements for the years ended December 31, 2013 and 2012.

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures.

 

Our management, with the participation of our principal executive and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (“Exchange Act”) as of the end of the period covered by this report. Based on that evaluation, our principal executive and principal financial officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

Internal Control over Financial Reporting.

 

a) Management’s Annual Report on Internal Control over Financial Reporting.

 

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

 

The Company’s internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on our financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment and those criteria, management concluded that as of December 31, 2013, the Company’s internal control over financial reporting was not effective and that the remediation plan set forth for this material weakness was still in process.

 

The matters involving internal controls that the Company’s management considered to be material weaknesses under COSO were: (1) insufficient written policies and procedures for accounting and financial reporting and (2) ineffective controls over period end financial disclosure and reporting processes.  Management believes that the material weakness set forth above did not have an effect on the Company’s financial results reported herein. We are committed to improving our financial organization. Management believes that by preparing and implementing sufficient written policies and checklists will remedy the material weaknesses identified above.

 

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

 

b) Changes in Internal Control over Financial Reporting.

 

There has been no change in our internal control over financial reporting that occurred in our fiscal year ended December 31, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

 

None.

 

PART III

 

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Directors and Executive Officers, Promoters and Control Persons

 

Name	Age	Position
James E. Boyd, Jr.	58	President and Chief Executive Officer and Director
Benjamin Chavis	66	Director

 

All directors of our company hold office until the next annual meeting of our shareholders and until such director’s successor is elected and has been qualified, or until such director’s earlier death, resignation or removal. The following table sets forth the names, positions and ages of our executive officers and directors. Our board of directors elects officers and their terms of office are at the discretion of our board of directors.

 

Business Experience

 

The following is a brief account of the education and business experience during at least the past five years of our directors and executive officers, indicating their principal occupations during that period, and the name and principal business of the organizations in which such occupation and employment were carried out.

 

James Boyd, President and CEO, age 58.  James E. Boyd, Jr. is a seasoned leader with extensive and diverse experience in enterprise strategic planning, leadership development, concept reengineering, restructuring alternatives, operations, franchise development, marketing strategy & tactics, acquisitions, “Buy-side” financial & operational due diligence, and systems implementation. He is recognized in the industry for his innovative approaches, financial and organizational results, the ability to build sustainable talent, and a commitment to impacting his industry and community.

 

In August 2007, James entered into an exclusive alliance with Goldman Sachs UIG/Merchant Banking Group to identify, perform due diligence and assist in negotiating terms for the purchase of food service companies.

 

James was previously:

 

	·	Backyard Burgers – Chief Executive Officer
	·	President of Quizno’s Canada (600 units)
	·	Quizno’s Vice President of Area Director Development, United States (2000 units)
	·	Kmart, SVP, Restaurant Operations/U.S. , Puerto Rico and Guam (1700 units)
	·	Popeye’s Franchisee, Atlanta, Georgia
	·	Popeye’s Corporate – Chief Operating Officer, U.S.
	·	Popeye’s Corporate – Vice President of Company & Franchise Operations (1400)
	·	Popeye’s Corporate – Vice President of Franchise Operations (1200 units)
	·	Brand Project Leader for Popeye’s Reengineering Project/Redesigned all Brand support functions. James has “hands-on” experience at designing and structuring organizations to improve quality, create powerful long-range strategies, tighten operations, and inspire team performance.
	·	Developer of Popeye’s Business Support Center and Training Center
	·	Popeye’s Corporate – Regional Director of Franchise Operations (All restaurants west of the Mississippi, 640 restaurants)
	·	Popeye’s/AFC Corporate – Regional Director South Central Region, Alabama to Southern California. Responsible for Popeye’s and Church’s restaurants.
	·	Popeye’s Corporate – Franchise District Consultant, Texas, Louisiana, Mississippi

 

James has hands-on experience and a successful track record of effectively implementing new strategic initiatives while balancing immediate financial results, with long term goals to deliver superior shareholder value.

 

Dr. Benjamin F. Chavis, Jr, age 66, Director, Dr. Benjamin F. Chavis Jr., educator, civil rights leader, author, entrepreneur and global business leader is the President of Education Online Services Corporation (EOServe Corp.), the world’s leading provider of online higher education for Historically Black Colleges and Universities (HBCUs) across America, as well as other academic institutions of higher learning throughout the world.  Dr. Chavis is also the President, CEO and Co-Founder with Russell Simmons, of the Hip-Hop Summit Action Network (HSAN), the world’s largest coalition of hip-hop artists and recording industry executives.  In addition, Dr. Chavis is a Co-founder, Senior Advisor and former President of the Diamond Empowerment Fund (DEF) that supports higher education academic scholarship programs in Africa.  Dr. Chavis writes a syndicated column for the National Newspaper Publishers Association (NNPA) that reaches 20 million readers weekly throughout the United States and the Caribbean.  Today, Dr. Chavis is also Chairman of Energy Edge Technologies Corporation (EEDG).

 

A native of Oxford, North Carolina, Dr. Chavis received the Bachelor of Arts, BA, in Chemistry from University of North Carolina; the Master of Divinity, M.Div., magna cum laude, from Duke University; and the Doctor of Ministry, D.Min, from Howard University. Dr. Chavis has also completed course requirements for the Doctor of Philosophy, Ph.D., in systematic theology, from Union Theological Seminary.

 

Dr. Benjamin F. Chavis, Jr. began his career in 1963, as a statewide youth coordinator in NC for the Reverend Dr. Martin Luther King, Jr., and the Southern Christian Leadership Conference (SCLC).  In 1970, Chavis was appointed Southern Regional Program Director of the 1.7 million member United Church of Christ Commission for Racial Justice (UCC-CRJ) and by 1985 was named the Executive Director and CEO of the UCC-CRJ.  In 1988, Dr. Chavis was elected Vice President of the National Council of Churches of the USA.  From 1985 to 1993, Dr. Chavis wrote and produced the national syndicated newspaper column and radio program, “Civil Rights Journal.”   In 1993 and 1994 Dr. Chavis served as the Executive Director and CEO of the National Association for the Advancement of Colored People (NAACP) and remains a life-member of the NAACP.  In 1995, Dr. Chavis was the National Director and organizer of the Million Man March.  From 1995 to 1997 Chavis was the Executive Director and CEO of the National African American Leadership Summit (NAALS).  In 2001, Dr. Chavis and Russell Simmons Co-founded the Hip-Hop Summit Action Network.  In 2009, Dr. Chavis joined with Ezell Brown to establish the Education Online Services Corporation.  The 2010 theatrical release of the full length movie “Blood Done Sign My Name” distributed by Paladin, directed by Jeb Stuart, starring Ricky Schroder, Nate Parker, and Lela Rochon depicts a true story from Dr. Chavis’ early days in the Civil Rights Movement during the 1960’s and 1970’s in his hometown of Oxford, NC.

 

Dr. Chavis has authored books and other publications including:  An American Political Prisoner Appeals for Human Rights, Psalms from Prison, Toxic Waste and Race in the United States of America:  A National Report on the Racial and Socioeconomic Characteristics of Communities with Hazardous Waste Sites, Report of Fact Finding Mission of African American Church and Community Leaders to the Republic of Angola, Pastoral Letter on Contemporary Racism and the Role of the Church, and The National Agenda: Public Policy Issues, Analyses, And Programmatic Plans of Action (2000-2008).

 

Family Relationships

 

None.

 

Involvement in Certain Legal Proceedings

 

Our directors, executive officers and control persons have not been involved in any of the following events during the past five years:

 

	1.	any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
	2.	any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
	3.	being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
	4.	being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

 

 

Code of Ethics

 

Our company’s board of directors established a written code of ethics that applies to the Company’s Chief Executive Officer and Chief Financial Officer. As adopted, our code of ethics sets forth written standards that are designed to deter wrongdoing and to promote:

 

	1.	honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
	2.	full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us;
	3.	compliance with applicable governmental laws, rules and regulations;
	4.	the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the Code of Business Conduct and Ethics; and
	5.	accountability for adherence to the Code of Business Conduct and Ethics

 

Our code of ethics was filed as an exhibit with our Registration Statement on Form S-1 filed with the Securities and Exchange Commission on June 29, 2010. We will provide a copy of the code of ethics to any person without charge, upon request. Requests can be sent to the Company address listed above.

 

Nomination Process

 

As of December 31, 2013, the Company did not affect any material changes to the procedures by which shareholders may recommend nominees to the board of directors. The board does not have any defined policy or procedure requirements for shareholders to submit recommendations or nominations for directors. The board of directors believes that, given the early stages of the Company’s development, a specific nominating policy would be premature and of little assistance until the Company’s operations develop to a more advanced level. The board does not currently have any specific or minimum criteria for the election of nominees to the board of directors and there is no specific process or procedure for evaluating such nominees. The board of directors assesses all candidates, whether submitted by management or shareholders, and makes recommendations for election or appointment.

 

A shareholder who wishes to communicate with the board of directors may do so by directing a written request addressed to our Chief Executive Officer or the Chief Financial Officer at the address appearing on the face page of this Annual Report.

 

Committees of the Board

 

All proceedings of the board of directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the corporate laws of the State of New Jersey and the bylaws of our company, as valid and effective as if they had been passed at a meeting of the directors duly called and held.

 

The Company currently does not have nominating, compensation or committees performing similar functions nor does the Company have a written nominating, compensation charter. The board of directors does not believe that it is necessary to have such committees because it believes that the functions of such committees can be adequately performed by the board of directors.

 

The Company does not have any defined policy or procedure requirements for shareholders to submit recommendations or nominations for directors. The board of directors believes that, given the early stage of the Company’s development, a specific nominating policy would be premature and of little assistance until the Company’s operations develop to a more advanced level. The Company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and the board does not have any specific process or procedure for evaluating such nominees. The board of directors assesses all candidates, whether submitted by management or shareholders, and makes recommendations for election or appointment.

 

Audit Committee Financial Expert

 

Our board of directors has determined that we do not need a board member that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-B.

 

The Company’s Board of Director believes that the current board members are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The board also believes that it is necessary to have an audit committee because by performing these functions the board will gain a better understanding of all financial reporting requirements of a publicly traded company. In addition, the board believes that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of the Company’s development.

 

ITEM 11. EXECUTIVE COMPENSATION

 

Executive Compensation

 

Summary Table. The following table sets forth information concerning the annual and long-term compensation awarded to, earned by, or paid to the named executive officer for all services rendered in all capacities to our company, or any of its subsidiaries, for the years ended December 31, 2012 and December 31, 2013:

 

Compensation Table for Executives

 

Name & Principal Position		Year				Salary ($)				Total ($)
Joseph Ragosta, CEO (resigned)			2012			$	6,850			$	6,850
James E. Boyd, Jr., CEO			2012				—				—
			2013			$	183,333			$	183,333

 

Employment Agreements

 

The Company has a formal employment agreement with CEO, James E. Boyd, Jr.

 

Equity Compensation Plan Information and Stock Options

 

The Company does not currently have any equity compensation plans or any outstanding stock options.

 

Compensation of Directors

 

Summary Table. The following table sets forth information concerning the annual and long-term compensation awarded to, earned by, or paid to the named Director for all services rendered in all capacities to our company, or any of its subsidiaries, for the years ended December 31, 2011, 2012, and December 31, 2013:

 

Compensation Table for Directors

 

Name & Principal Position		Year				Salary ($)				Total ($)
Robert Holdsworth			2012			$	20,000			$	20,000
			2013			$	—			$	—
Joseph Ragosta			2012			$	—			$	—
			2013			$	—			$	—
James E. Boyd, Jr.			2012			$	—			$	—
			2013			$	—			$	—
Benjamin Chavis			2012			$	—			$	—
			2013			$	—			$	400

 

Directors receive fixed fees and other compensation for their services as directors. The Board of Directors are compensated for attending five board meetings per year, and for assisting in raising funds for the company,  joint ventures and strategic alliance facilitation, advisory with respect to services relating to the Company, road shows and corporate equity/debt issuance and follow on financing in addition to other responsibilities. The Board of Directors has the authority to fix the compensation of directors. The table below represents the standard compensation for members of the Board of Directors:

 

Fees Earned or Paid in Cash ($)

Stock Awards ($)

Option Awards ($)

Non-Equity Incentive Plan Compensation ($)

Non-qualified Deferred Compensation Earnings

All Other Compensation ($)

Total ($)

James E. Boyd, Jr.

$

—

$

—

$

—

Benjamin Chavis

$

—

$

—

$

—

 

Pension, Retirement or Similar Benefit Plans

 

There are no arrangements or plans in which the Company provides pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth information with respect to the beneficial ownership of our Common Stock as of December 31, 2012, for:

 

	·	each of our executive officers and directors;
	·	all of our executive officers and directors as a group; and

·

any other beneficial owner of more than 5% of our outstanding Common Stock.

 

Title of Class		Name and Address of Beneficial Owner		Amount and Nature of Beneficial Owner				Percent of Class Based on Current Number of Shares Outstanding
Common Stock		James E. Boyd, Jr. 7545 Brigham Drive Dunwoody, GA 30350			72,000,000				37.927	%
Common Stock		Benjamin Chavis 48 Union Street Montclair, NJ 07042			13,000,000				6.847	%

 

(1)	Based on 190,873,829 shares as of December 31, 2013.

 

Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and include ordinary shares issuable upon the exercise of stock options that are immediately exercisable or exercisable within 60 days. Except as otherwise indicated, all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. The information is not necessarily indicative of beneficial ownership for any other purpose.

 

Change in Control

 

The Company’s management is not aware of any arrangement that might result in a change in control of our company in the future.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

The shares of the Company’s common stock held by Messrs. Boyd and Chavis were acquired through a vote by the EEDG Board of Directors.

 

Corporate Governance

 

We currently act with two directors consisting of James E. Boyd, Jr. and Benjamin Chavis.

 

The Company’s Board of Directors do not have a standing, compensation or nominating committee, as the entire board of directors acts in such capacities and as mentioned above, the board adopted a resolution that it would act as the audit committee. The board believes that its members are capable of analyzing and evaluating the Company’s financial statements and understanding internal controls and procedures for financial reporting. The board of directors believes it is not necessary to have a standing audit, compensation, or nominating committee, and they believe that the functions of such committees can be adequately performed by the board, consisting of James Boyd and Benjamin Chavis. In addition, the board believes that retaining one or more additional directors who would qualify as independent as defined in Rule 4200(a)(15) of the Rules of Nasdaq Marketplace Rules would be overly costly and burdensome and is not warranted in the circumstances given the early stages of the Company’s development.

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

The following table represents a summary of fees billed to the Company from its principal independent accountants for professional services rendered for the years ended December 31, 2013 and 2012.

 

		December 31, 2013				December 31, 2012
Audit fee		$	20,500			$	26,000
Audit related fees			—				—
Tax fees			—				—
All other fees			—				—
TOTAL		$	20,500			$	26,000

 

Audit Fees

 

Audit fees expensed for GBH CPAs, PC and Silberstein Ungar, PLLC, for professional services rendered for the audit of our annual financial statements included in our annual report on Form 10-K for the years ended December 31, 2013 and 2012 and the quarterly 10-Q reviews during those years, was $20,500 and $26,000, respectively. The Company retained GBH CPAs, PC to review 10-Q during 2013 and the annual report Form 10-K for the year ended December 31, 2013.

 

Audit Related Fees

 

For the years ended December 31, 2013 and 2012, the aggregate fees expenses for assurance and related services relating to the performance of the audit of our financial statements which are not reported under the caption “Audit Fees” above, was$0 and $0, respectively.

 

Tax Fees

 

For the years ended December 31, 2013 and 2012, the aggregate fees expensed for tax fees was $0 and $0, respectively.

 

All Other Fees

 

For the years ended December 31, 2013 and 2012, all other fees were $0 and $0, respectively.

 

Our board of directors, who acts as our audit committee, has adopted a policy governing the pre-approval by the board of directors of all services, audit and non-audit, to be provided to our company by our independent auditors. Under the policy, the board of directors has pre-approved the provision by our independent auditors of specific audit, audit related, tax and other non-audit services as being consistent with auditor independence. Requests or applications to provide services that require the specific pre-approval of the board of directors must be submitted to the board of directors by the independent auditors, and the independent auditors must advise the board of directors as to whether, in the independent auditor’s view, the request or application is consistent with the Securities and Exchange Commission’s rules on auditor independence.

 

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULE

 

Exhibit Number		Description
23.1		Consent of Independent Registered Public Accounting Firm
31.1		Certification of Chief Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

ENERGY EDGE TECHNOLOGIES CORPORATION

 

TABLE OF CONTENTS

 

AS OF AND FOR THE YEARS DECEMBER 31, 2013 AND 2012

 

Reports of Independent Registered Public Accounting Firms	F-1
Consolidated Balance Sheets as of December 31, 2013 and 2012	F-3
Consolidated Statements of Operations for the years ended
December 31, 2013 and 2012	F-4
Consolidated Statement of Changes in Deficit
as of December 31, 2013 and 2012	F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 2013 and 2012	F-6
Notes to the Consolidated Financial Statements	F-7 – F-14

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders of
Energy Edge Technologies Corporation
Sandy Springs, GA

 

We have audited the accompanying consolidated balance sheet of Energy Edge Technologies Corporation (the “Company”) as of December 31, 2013 and the related consolidated statements of operations, deficit, and cash flows for the year then ended. Energy Edge Technologies Corp.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Energy Edge Technologies Corporation as of December 31, 2013, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming that Energy Edge Technologies Corporation will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, Energy Edge Technologies Corporation has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ GBH CPAs, PC

GBH CPAs, PC
www.gbhcpas.com
Houston, Texas
April 15, 2014

 

 

Report of Independent Registered Public Accounting Firm

 

 

 

To the Board of Directors of

Energy Edge Technologies Corporation

Boca Raton, Florida

 

We have audited the accompanying balance sheet of Energy Edge Technologies Corporation (the “Company”) as of December 31, 2012, and the related statement of operations, stockholders’ equity (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Energy Edge Technologies Corporation as of December 31, 2012 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has limited working capital, and has incurred a significant loss from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regard to these matters are described in Note 3. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

/s/ Silberstein Ungar, PLLC

 

Bingham Farms, Michigan

April 14, 2013

 

ENERGY EDGE TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2013 AND 2012

 

ASSETS		2013				2012
Current Assets
Cash and cash equivalents		$	45,164			$	18,553
Accounts receivable, net			—				348
Prepaid expenses			254,983				300,442
Total Current Assets			300,147				319,343
Property and equipment, net			3,329				5,045
Other assets			14,091				—
TOTAL ASSETS		$	317,567			$	324,388
LIABILITIES AND DEFICIT
Current Liabilities
Accounts payable		$	172,581			$	343,334
Accrued expenses and other current liabilities			115,290				125,830
Common stock payable			7,400				—
Due to related parties			354,641				30,696
Convertible note payable, net of discount of $77,833 and $0, respectively			17,667				—
Derivative liability			158,278				—
Total Current Liabilities			825,857				499,860
Convertible note payable, net of discount of $34,375 and $0, respectively			7,225				—
Derivative liability, net of current portion			57,439				—
Total Liabilities			890,521				499,860
Deficit
Common stock, $0.00001 par value, 250,000,000 shares authorized, 190,873,829 and 78,167,822 shares issued and outstanding, respectively			1,910				782
Additional paid-in capital			3,983,530				2,616,359
Subscription receivable			(1,000	)			(1,000	)
Treasury stock			(5,000	)			(5,000	)
Accumulated deficit			(4,456,314	)			(2,746,648	)
Total Energy Edge Deficit			(476,874	)			(135,507	)
Non-controlling interests			(96,080	)			(39,965	)
Total Deficit			(572,954	)			(175,472	)
TOTAL LIABILITIES AND DEFICIT		$	317,567			$	324,388

 

The accompanying notes are an integral part of these consolidated financial statements.

 

ENERGY EDGE TECHNOLOGIES CORPORATION

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

 

		2013				2012
CONTRACT REVENUES		$	2,040			$	452,304
CONTRACT COSTS			2,471				423,717
GROSS PROFIT (LOSS)			(431	)			28,587
OPERATING EXPENSES
Compensation			1,078,255				26,089
Consulting services			298,393				449,826
Professional fees			74,253				45,791
Director fees			2,400				—
General & administrative expenses			206,305				289,733
TOTAL OPERATING EXPENSES			1,659,606				811,439
LOSS FROM OPERATIONS			(1,660,037	)			(782,852	)
OTHER EXPENSE
Interest expense			(35,527	)			—
Other expense			—				(1,274	)
Change in fair value of derivative liability			(70,217	)			—
TOTAL OTHER EXPENSE			(105,744	)			(1,274	)
LOSS BEFORE INCOME TAXES AND NON-CONTROLLING INTERESTS			(1,765,781	)			(784,126	)
PROVISION FOR INCOME TAXES			—				—
NET LOSS			(1,765,781	)			(784,126	)
LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS			56,115				41,155
NET LOSS ATTRIBUTABLE TO ENERGY EDGE TECHNOLOGIES CORPORATION		$	(1,709,666	)		$	(742,971	)
LOSS PER COMMON SHARE: BASIC AND DILUTED		$	(0.01	)		$	(0.01	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: BASIC AND DILUTED			145,208,424				88,868,255

 

The accompanying notes are an integral part of these consolidated financial statements.

 

ENERGY EDGE TECHNOLOGIES CORPORATION

STATEMENT OF DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

 

		Common Stock								Additional Paid in				Subscription				Treasury				Non- Controlling				Accumulated				Total Stockholders’
		Shares				Amount				Capital				Receivable				Stock				Interests				Deficit				Deficit
Balance, December 31, 2011 as restated			81,261,205			$	813			$	1,828,953			$	—			$	—			$	—			$	(2,003,677	)		$	(173,911	)
Issuance of shares for cash			10,916,667				109				122,891				—				—				—				—				123,000
Issuance of shares for services			16,000,000				160				668,215				—				—				—				—				668,375
Shares retired per merger agreement			(28,000,000	)			(280	)			280				—				—				—				—				—
Shares returned by consultants			(2,010,000	)			(20	)			(3,980	)			—				—				—				—				(4,000	)
Purchase of treasury stock			—				—				—				—				(5,000	)			—				—				(5,000	)
Acquisition of stock in subsidiaries			—				—				—				(1,000	)			—				1,190				—				190
Net loss for the year ended December 31, 2012			—				—				—				—				—				(41,155	)			(742,971	)			(784,126	)
Balance, December 31, 2012			78,167,872				782				2,616,359				(1,000	)			(5,000	)			(39,965	)			(2,746,648	)			(175,472	)
Issuance of shares for cash			18,533,334				186				288,928				—				—				—				—				289,114
Issuance of shares for services			88,200,000				882				920,493				—				—				—				—				921,375
Issuance of shares for cancellation of debts			2,972,623				30				156,780				—				—				—				—				156,810
Issuance of shares for conversion of debt			5,000,000				50				950				—				—				—				—				1,000
Shares retired			(2,000,000	)			(20	)			20				—				—				—				—				—
Net loss for the year ended December 31, 2013			—				—				—				—				—				(56,115	)			(1,709,666	)			(1,765,781	)
Balance, December 31, 2013			190,873,829			$	1,910			$	3,983,530			$	(1,000	)		$	(5,000	)		$	(96,080	)		$	(4,456,314	)		$	(569,954	)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

ENERGY EDGE TECHNOLOGIES CORPORATION

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

 

		2013				2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(1,709,666	)		$	(742,971	)
Non-controlling interests			(56,115	)			(41,155	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			38,111				1,717
Shares issued for services			921,375				668,375
Share returned to Company by consultants			—				(4,000	)
Change in fair value of derivative liability			70,217				—
Changes in operating assets and liabilities:
Accounts receivable			—				64,412
Costs and estimated earnings in excess of billings on uncompleted contracts			—				19,321
Accounts receivable - other			348				8,913
Prepaid expenses			45,459				(271,547	)
Accounts payable			(21,343	)			190,697
Billings in excess of costs and estimated earnings on uncompleted contracts			—				(43,399	)
Accrued expenses and other current liabilities			333,323				19,389
Cash used in operating activities			(378,291	)			(130,248	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of assets			(4,194	)			—
Cash used in investing activities			(4,194	)			—
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in shareholder loans			(12,518	)			27,558
Proceeds from issuance of debt			132,500				—
Proceeds from the sale of common stock			289,114				123,000
Purchase of treasury shares			—				(5,000	)
Cash provided by financing activities			409,096				145,558
Net increase in cash and cash equivalents			26,611				15,310
Cash, beginning of the year			18,553				3,243
Cash and cash equivalents, end of the year		$	45,164			$	18,553
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid		$	35,527			$	1,274
Income taxes paid		$	—			$	—
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of stock for cancellation of debt		$	156,810			$	—
Issuance of stock for conversion of debt		$	8,400			$	—
Shares retired		$	20			$	280
Sale of subsidiary stock for subscription receivable		$				$	1,000

 

The accompanying notes are an integral part of these consolidated financial statements

 

ENERGY EDGE TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

 

 

NOTE 1 – NATURE OF OPERATIONS

 

Energy Edge Technologies Corporation (“EEDG”) was incorporated in New Jersey in January, 2004. Energy Edge Technologies Corporation is comprised of two subsidiaries: Energy Edge Solutions (“EES”) and The Gourmet Chicken Company, Inc.(“TGCC”)

 

The Company acquired a 51% interest in Energy Edge Solutions in 2012. Energy Edge Solutions provides energy engineering and services specializing in the development and implementation of advanced turnkey projects to reduce energy losses and increase the efficiency of new and existing buildings.  The Company is comprised of professional and industrial engineers, Leadership in Energy and Environmental Design (“LEED”) Accredited Professionals, and Green Building Coalition Certifying Agents.  Energy Edge is a Clean Energy Pay for Performance Partner and a Smart Start Building Trade Ally.  EES’ custom designed projects are developed using proprietary methods and maximize energy savings by treating an entire facility based on its unique features and electricity and gas usage. 

 

EES applies a whole facility approach to energy cost reduction by applying different technologies and engineering approaches to treat most of the various electrical and gas consuming loads across facility such as lighting, HVAC, refrigeration, and production equipment.  The energy projects developed and implemented by EES are ideal for virtually any type of facility and have successfully resulted in tremendous savings in manufacturing plants, hospitals, entertainment venues, office buildings, restaurants, warehouses, etc.   

 

EES’ revenues come primarily from engineering survey work and turnkey energy projects where EES takes responsibility for equipment procurement, installation labor, utility rebates, tax incentives, pre and post survey work, waste removal, certifications, and ongoing measurement and verification of results. 

 

During 2012, the Company acquired sixty-five percent (65%) of the capital stock of The Dry Fried Wing Company. On March 31, 2013, the Company acquired the remaining thirty-five percent (35%) of such stock. On April 5, 2013 the Company officially changed the name of The Dry Fried Wing Company to The Gourmet Chicken Company, Inc.

 

TGCC is a newly formed combined fast casual restaurant company in the gourmet chicken segment and restaurant management company. TGCC is primarily engaged in the business of managing, licensing, operating, developing and franchising a system of distinctive quick-service and fast casual restaurants in the gourmet chicken segment.

 

TGCC revenues will primarily be derived from management fees, royalty fees, licensing fees and franchise fees.  TGCC will also sell food, sauces, mixes and other supplies to its franchisees/licensees.

 

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States. This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. The consolidated financial statements are expressed in U.S. dollars.

 

Principles of consolidation

 

The consolidated statements include the accounts of the Company and its two subsidiaries TGCC and EES. All inter-company transactions and balances were eliminated.

 

Use of Estimates

 

The preparation of consolidated 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 and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expense during the period. Actual results could differ from those estimates.

 

Cash and cash equivalents

 

The Company includes in cash and cash equivalents all short-term, highly liquid investments that mature within three months or less of their acquisition date. Cash equivalents consist principally of investments in interest-bearing demand deposit accounts and liquidity funds with financial institutions and are stated at cost, which approximates fair value. As of December 31, 2013 and 2012, the Company has no cash equivalents.

 

ENERGY EDGE TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

 

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable are stated at the amount the Company expects to collect. Accounts receivable represents receivables, net of allowances for doubtful accounts. The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on historical experience and other currently available information. When a specific account is deemed uncollectible, the account is written off against the allowance. As of December 31, 2013 and 2012, the allowance for doubtful accounts was $0 and $0, respectively.

 

Property and Equipment

 

Property and equipment are stated at cost. Depreciation is computed over the estimated useful lives of the related assets using the straight-line method for financial reporting purposes.

 

Expenditures for normal repairs and maintenance are charged to expense as incurred. Significant renewals and improvements are capitalized. The costs and related accumulated depreciation of assets retired or otherwise disposed of are eliminated from the accounts, and any resulting gain or loss is recognized in the year of disposal.

 

Derivatives

 

All derivatives are recorded at fair value on the balance sheet. Fair values for securities traded in the open market and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market based pricing models incorporating readily observable market data and requiring judgment and estimates.

 

Fair Value of Financial Instruments

 

Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

 

•

Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

 

•

Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.

 

•

Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

 

Income taxes

 

Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, the Company recognizes future tax benefits, such as carryforwards, to the extent that realization of such benefits is more likely than not and that a valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Company’s net operating losses carryforwards are subject to Section 382 limitation.

 

Revenue recognition

 

The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable, and collectability is reasonably assured.

 

Stock-Based Compensation

 

The cost of employee services received in exchange for stock is measured based on the grant-date fair value (with limited exceptions). That cost is to be recognized over the period during which an employee is required to provide service in exchange for the award (usually the vesting period). The fair value of immediately vested shares is determined by reference to quoted prices for similar shares, and the fair value of shares issued subject to a service period is estimated using an option-pricing model. Excess tax benefits, for which no valuation allowance is required, are recognized as additions to paid-in-capital.

 

ENERGY EDGE TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

 

 

The Company also makes stock awards to non-employees for goods and services acquired by the Company. These awards are generally recorded at the market price of the shares issued on the date the shares are issued.

 

Loss per common share

 

Basic loss per common share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. EPS excludes all potential dilutive shares of common stock if their effect is anti-dilutive. There were no dilutive securities at December 31, 2013 and 2012.

 

Subsequent Events

 

The Company’s management reviewed all material events from December 31, 2013 through the issuance date of this report for disclosure consideration.

 

Recent Accounting Pronouncements

 

Energy Edge does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position, or cash flows.

 

NOTE 3 –GOING CONCERN

 

The Company has limited working capital, had a working capital deficit at December 31, 2013 and has suffered significant losses from operations. These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.

 

The ability of Energy Edge Technologies Corporation to continue as a going concern is dependent on the Company generating cash from the sale of its common stock, obtaining debt financing, attaining future profitable operations, acquiring or merging with a profitable company, and/or developing successful business operations in other industries through investment in related party ventures. Management’s plans include selling its equity securities and obtaining debt financing to fund its capital requirements; however, there can be no assurance the Company will be successful in these efforts.

 

NOTE 4 –PREPAID EXPENSES

 

Prepaid expenses consisted of the following at December 31, 2013 and 2012:

 

		December 31, 2013				December 31, 2012
Prepaid project expenses		$	29,950			$	29,950
Prepaid consulting expense			225,033				270,492
Total prepaid expenses		$	254,983			$	300,442

 

Prepaid Project Expenses

 

Prepaid project expenses consist of monies expended for project equipment for a project temporarily put on hold.

 

Prepaid Consulting Expenses

 

The Company has retained a number of consultants. These consultants are paid in cash and/or issuance of Company stock. Consultants were issued 2,500,000 shares and 16,000,000 shares of common stock valued at $37,676 and $668,375 during the years ended December 31, 2013 and 2012, respectively. The consulting fees are being amortized over the terms of the contracts.

 

NOTE 5 – PROPERTY AND EQUIPMENT

 

The office equipment presently owned by the Company is being depreciated over an estimated useful life of five years. Depreciation expense for years ended December 31, 2013 and 2012 was $1,716 and $1,717, respectively.

 

ENERGY EDGE TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

 

 

NOTE 6 – RELATED PARTY TRANSACTIONS

 

Related party payables and loans totaling $354,641 and $30,696 at December 31, 2013 and 2012, respectively, are owed to various related parties of the Company for compensation and reimbursement of expenses incurred on behalf of the Company.

 

Related party loans are unsecured, non-interest bearing and have no specific terms of repayment.

 

NOTE 7 – CONVERTIBLE NOTE PAYABLE AND DERIVATIVE LIABILITY

 

On May 13, 2013, the Company issued a convertible promissory note to a third party, with a principal amount of $50,000.  This note is due and payable in full on May 14, 2015, and bears interest at 6% per annum.  At any time prior to the payment in full of the entire balance of the note, the creditor has the option of converting all or any portion of the unpaid balance of the note into shares of common stock at a conversion price equal to seventy percent of the lowest closing bid price of the common stock for any of the five trading days prior to and including the conversion date.

 

The Company evaluated the terms of the note and concluded that since the conversion price was not fixed, and the number of shares of the Company’s common stock that are issuable upon the conversion of the convertible promissory note is indeterminable until such time as the Creditor elects to convert to common stock, the Company concluded that the embedded conversion option created a derivative liability. The Company measured the derivative liability using the input attributes disclosed below and recorded a derivative liability of $53,348 as of May 13, 2013.

 

During 2013, the Creditor elected to convert $8,400 of the outstanding balance into 6,369,314 shares of the Company’s common stock, of which 5,000,000 shares were issued as of December 31, 2013, and the remaining shares were accrued as a common stock payable of $7,400.

 

On December 31, 2013, the Company re-measured the derivative liability using the input attributes below and determined the derivative liability value to be $57,439. Change in FV of derivative of $4,091 was recorded as of December 31, 2013 and included in the statement of operations in order to adjust the derivative liability to the re-measured value.

 

		May 13, 2013				December 31, 2013
Stock price		$	.0099			$	.0077
Exercise price		$	.009044			$	.005530
Shares issuable upon conversion			5,528,527				7,522,604
Expected dividend yield			0.00	%			0.00	%
Expected life (years)			2.00				1.37
Risk-free interest rate			0.24	%			0.38	%
Expected volatility			313.50	%			441.00	%

 

A debt discount of $50,000 related to the embedded conversion option was recorded at date of note issuance, and is being expensed over the life of the loan. For the year ended December 31, 2013, amortization of $15,625 has been recorded, resulting in a remaining unamortized discount of $34,375 at December 31, 2013.

 

ENERGY EDGE TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

 

 

On September 30, 2013, the Company issued a convertible promissory note to a third party, with a principal amount of $53,000.  This note is due and payable in full on June 24, 2014, and bears interest at 8% per annum.  At any time beginning on the date that is 180 days after the note date and until the maturity date, the creditor has the option of converting all or any portion of the unpaid balance of the note into shares of common stock at a conversion price equal to fifty eight percent of the average of the three lowest closing bid price of the common stock for any of the ten trading days prior to the conversion date.

 

The Company evaluated the terms of the note and concluded that since the conversion price was not fixed, and the number of shares of the Company’s common stock that are issuable upon the conversion of the convertible promissory note is indeterminable until such time as the Creditor elects to convert to common stock, the Company concluded that the embedded conversion option created a derivative liability. The Company measured the derivative liability using the input attributes disclosed below and recorded a derivative liability of $88,930 as of September 30, 2013.

 

On December 31, 2013, the Company re-measured the derivative liability using the input attributes below and determined the derivative liability value to be $85,816. Change in fair value of derivative of $3,114 was recorded as of December 31, 2013 and included in the statement of operations in order to adjust the derivative liability to the re-measured value.

 

		September 30, 2013				December 31, 2013
Stock price		$	.0124			$	.0077
Exercise price		$	.007057			$	.004331
Shares issuable upon conversion			7,510,628				12,237,754
Expected dividend yield			0.00	%			0.00	%
Expected life (years)			0.75				0.50
Risk-free interest rate			0.07	%			0.10	%
Expected volatility			434.42	%			441.00	%

 

A debt discount of $53,000 related to the embedded conversion option was recorded at date of note issuance, and is being expensed over the life of the loan. For the year ended December 31, 2013, amortization of $17,667 has been recorded, resulting in a remaining unamortized discount of $35,333 at December 31, 2013.

 

On December 31, 2013, the Company issued a convertible promissory note to a third party, with a principal amount of $42,500. This note is due and payable in full on October 3, 2014, and bears interest at 8% per annum. At any time beginning on the date that is 180 days after the note date and until the maturity date, the creditor has the option of converting all or any portion of the unpaid balance of the note into shares of common stock at a conversion price equal to fifty eight percent of the average of the three lowest closing bid price of the common stock for any of the ten trading days prior to the conversion date.

 

The Company evaluated the term of the note and concluded that since the conversion price was not fixed, and the number of share of the Company’s common stock that are issuable upon the conversion of the convertible promissory note is indeterminable until such time as the Creditor elects to convert to common stock, the Company concluded that the embedded conversion option created a derivative liability. The Company measured the derivative liability using the input attributes disclosed below and recorded a derivative liability of $72,462 as of December 31, 2013.

 

		December 31, 2013
Stock price		$	.0077
Exercise price		$	.004331
Shares issuable upon conversion			9,813,293
Expected dividend yield			0.00	%
Expected life (years)			0.76
Risk-free interest rate			0.10	%
Expected volatility			441.00	%

 

ENERGY EDGE TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

 

 

A debt discount of $42,500 related to the embedded conversion option was recorded at date of note issuance, and is being expensed over the life of the loan. For the year ended December 31, 2013, amortization of $0 has been recorded, resulting in a remaining unamortized discount of $42,500 at December 31, 2013.

 

NOTE 8 – COMMITMENTS AND CONTINGENCIES

 

The Company neither owns nor leases any real property as of December 31, 2013 and 2012. An officer has provided office services without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein.

 

NOTE 9 – INCOME TAXES

 

For the years ended December 31, 2013 and 2012, the Company has incurred a net loss and, therefore, has no tax liability.

 

As of December 31, 2013, the Company had net operating loss carry forwards of approximately $4,446,580 that may be available to reduce future years’ taxable income through 2033. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.

 

The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:

 

		2013				2012
Deferred tax asset attributable to:
Net operating loss carryover		$	1,511,837			$	940,600
Less: valuation allowance			(1,511,837	)			(940,600	)
Net deferred tax asset		$	—			$	—

 

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of $4,446,580 for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.

 

ENERGY EDGE TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

 

 

NOTE 10 – EQUITY TRANSACTIONS

 

During the year ended December 31, 2013, the Company:

 

-

sold 18,533,334 shares of common stock for cash of $289,114;

-

issued 88,200,000 shares of common stock for services with a fair value of $921,375;

-

issued 2,972,623 shares of common stock for settlement of payables of $156,810;

-

retired 2,000,000 shares of common stock;

-

issued 5,000,000 shares of common stock for conversion of debt of $1,000.

 

Following are the Company’s capital stock transactions for the year ended December 31, 2012:

 

-

On January 23, 2012, the Company issued 1,500,000 shares of stock valued at $15,000 for business consulting services.

-

On May 3, 2012, the Company issued 2,500,000 shares of stock valued at $39,375 for legal services.

-

On May 7, 2012, the Company issued 3,000,000 shares of stock valued at $105,000 for business consulting services.

-

On May 14, 2012, the Company issued 2,000,000 shares of stock valued at $52,500 for business consulting services.

-

On May 17, 2012, the Company sold 1,000,000 shares of common stock at $.01 per share under a private placement to an unrelated third party for total proceeds of $10,000.

-

On May 25, 2012, 10,000 shares of stock issued for consulting services in 2011 were returned to the Company.

-

On June 5, 2012, the Company sold 500,000 shares of common stock at $.01 per share under a private placement to an unrelated third party for total proceeds of $5,000.

-

On June 6, 2012, the Company sold 1,666,667 shares of common stock at $.0075 per share under a private placement to an unrelated third party for total proceeds of $12,500.

-

On June 6, 2012, the Company issued 500,000 shares of stock valued at $50,000 for business consulting services.

-

On June 6, 2012, the Company sold 2,000,000 shares of common stock at $.015 per share under a private placement to an unrelated third party for total proceeds of $30,000.

-

On June 17, 2012, the Company issued 200,000 shares of stock valued at $9,000 for business consulting services.

-

On July 20, 2012, the Company issued 500,000 shares of stock valued at $65,000 for business consulting services.

-

On August 8, 2012, the Company issued 500,000 shares of stock valued at $50,000 for business consulting services.

-

On August 9, 2012, the Company issued 1,000,000 shares of stock valued at $90,000 for business consulting services.

-

On August 14, 2012, the Company issued 1,000,000 shares of stock valued at $67,500 for legal services.

-

On August 28, 2012, 2,000,000 shares of stock issued for consulting services in 2011 were returned to the Company.

-

On October 26, 2012, the Company sold 750,000 shares of common stock at $.0073 per share under a private placement to an unrelated third party for total proceeds of $5,500.

-

On November 21, 2012, 28,000,000 shares of stock previously held by former officers of the Company were surrendered.

-

On November 29, 2012, the Company sold 1,500,000 shares of common stock at $.0167 per share under a private placement to an unrelated third party for total proceeds of $25,000.

-

On November 29, 2012, the Company issued 2,000,000 shares of stock valued at $80,000 for business consulting services.

-

On December 10, 2012, the Company issued 300,000 shares of stock valued at $15,000 for business consulting services.

-

On December 12, 2012, the Company issued 1,000,000 shares of stock valued at $30,000 for business consulting services.

-

On December 21, 2012, the Company sold 2,000,000 shares of common stock at $.005 per share under a private placement to an unrelated third party for total proceeds of $10,000.

-

On December 27, 2012, the Company sold 1,500,000 shares of common stock at $.0167 per share under a private placement to an unrelated third party for total proceeds of $25,000.

 

As of December 31, 2013 and 2012, the Company had no stock warrants or stock options outstanding.

 

ENERGY EDGE TECHNOLOGIES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

 

 

NOTE 11– BUSINESS SEGMENTS

 

The Company is made up of three entities in which Energy Edge Technologies Corporation is the Parent Entity. The Company owned a sixty-five percent interest in The Gourmet Chicken Company during the first quarter, but acquired the remaining thirty-five percent of the stock of The Gourmet Chicken Company as of March 31, 2013. Fifty-one percent of the outstanding stock of Energy Edge Solutions, Inc. is owned by the Company. Energy Edge Solutions, Inc. had no operating activity during the current year.

 

The balance sheet as of December 31, 2013 and 2012 and the statement of operations information for the years ended December 31, 2013 and 2012 of each entity is presented in US Dollars as follows:

 

		As of December 31, 2013																As of December 31, 2012
		EEDG				TGCC				EES				Total				EEDG				TGCC				EES				Total
Current Assets		$	300,147			$	—			$	—			$	300,147			$	295,442			$	23,984			$	(84	)		$	319,342
Fixed Assets			3,329				—				—				3,329				5,046				—				—				5,046
Other Assets			9,897				4,194				—				14,091				—				—				—				—
Total Assets		$	313,373			$	4,194			$	—			$	317,567			$	300,488			$	23,984			$	(84	)		$	324,388
Current Liabilities		$	824,143			$	1,600			$	114			$	825,857			$	449,652			$	50,094			$	114			$	499,860
Long Term Liabilities			64,664				—				—				64,664				—				—				—				—
Intercompany			(379,770	)			379,675				95				—				(89,710	)			89,200				510				—
Stockholders’ Equity			(195,664	)			(377,081	)			(209	)			(572,954	)			(59,455	)			(115,310	)			(708	)			(175,472	)
Total Liabilities and    Stockholder’s Equity		$	313,373			$	4,194			$	—			$	317,567			$	300,487			$	23,984			$	(84	)		$	324,388

 

		For the Year Ended December 31, 2013																For the Year Ended December 31, 2012
		EEDG				TGCC				EES				Total				EEDG				TGCC				EES				Total
Revenues		$	2,040			$	—			$	—			$	2,040			$	451,956			$	348			$	—			$	452,304
Costs of Revenues			(2,471	)			—				—				(2,471	)			(423,718	)			—				—				(423,718	)
Gross Profit (Loss)			(431	)			—				—				(431	)			28,238				348				—				28,586
Operating Expenses			(1,397,824	)			(261,771	)			(11	)			(1,659,606	)			(682,237	)			(117,658	)			(198	)			(800,093	)
Other Expenses			(105,744	)			—				—				(105,744	)			(12,619	)			—				—				(12,619	)
Net Loss before    Non-controlling Interest			(1,503,999	)			(261,771	)			(11	)			(1,765,781	)			(666,618	)			(117,310	)			(198	)			(784,126	)
Non-controlling Interest			56,115				—				—				56,115												—				—
Net Loss		$	(1,447,884	)		$	(261,771	)		$	(11	)		$	(1,709,666	)		$	(666,618	)		$	(117,310	)		$	(198	)		$	(784,126	)

 

NOTE 12–SUBSEQUENT EVENTS

 

During 2014, one of the Company’s creditors elected to convert $15,224 of the outstanding balance into 23,917,392 shares of the Company’s common stock. 

 

SIGNATURES

 

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.

 

ENERGY EDGE TECHNOLOGIES CORPORATION

(Registrant)

 

By:	/s/ James Boyd
	James Boyd
	Chief Executive Officer, President, and Director

 

Date: April 15, 2014