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EXCEL - IDEA: XBRL DOCUMENT - CIRQUE ENERGY, INC. | Financial_Report.xls |
EX-31.2 - EXHIBIT 31.2 - CIRQUE ENERGY, INC. | v371349_ex31-2.htm |
EX-32.1 - EXHIBIT 32.1 - CIRQUE ENERGY, INC. | v371349_ex32-1.htm |
EX-31.1 - EXHIBIT 31.1 - CIRQUE ENERGY, INC. | v371349_ex31-1.htm |
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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 No.000-52438
Cirque Energy, Inc. (F/K/A Green Energy Renewable Solutions, Inc.)
(Exact name of small business issuer as specified in its charter)
Florida | 65-0855736 |
(State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) |
Penobscot Building, 645 Griswold, Suite 3274, Detroit, MI 48226
(Address of Principal Executive Offices)
888-963-2622
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock, $0.001 par value per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ 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 of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data 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 ¨ No x
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 the 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. ¨
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 ¨ | Accelerated Filer ¨ |
Non-Accelerated Filer ¨ | Smaller Reporting Company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
The aggregate market value of the voting stock held by non-affiliates of the issuer on June 30, 2013, based upon the $0.013 per share closing price of such stock on that date, was approximately $964,000.
There were 192,532,405 shares of common stock outstanding as of January 12, 2015.
Documents incorporated by reference: None
TABLE OF CONTENTS
FORWARD-LOOKING INFORMATION
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or our future financial performance. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predict,” “should” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions; uncertainties and other factors may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Our expectations are as of the date this Form 10-K is filed, and we do not intend to update any of the forward-looking statements after the date this Annual Report on Form 10-K is filed to confirm these statements to actual results, unless required by law.
ITEM 1. | BUSINESS |
Background
Cirque Energy, Inc. (“Cirque,” the “Company,” “we,” “us” or “our company”) was originally incorporated in Florida on July 16, 1998 under the name of Salty’s Warehouse, Inc. and was engaged in selling name brand consumer products over the Internet. The Company focused on selling consumer electronics and audio-video equipment such as speakers, amplifiers, and tuners, though the Company also sold assorted other goods such as watches, sunglasses and sports games. On December 11, 2006, owners of an aggregate of 22,450,000 shares of our common stock sold all of the shares held by them to a group of approximately 54 purchasers. As a result of this transaction, a change of control in the Company occurred resulting in a change in its name to E World Interactive, Inc. (“E World”). At that time, E World mainly engaged in sales of online game services and media production business in mainland China.
Having operated in this sector for some time, the Company then disposed of its subsidiaries Shanghai E World China Information Technologies Co., Ltd (“E World China”) and Mojo Media Works Limited in August 2008, and following this ceased all business in online game and media production business and became a dormant shell company.
In March of 2009, the Company entered into a stock purchase agreement with Blue Atelier, Inc. Blue Atelier acquired 25,000,000 newly issued common stock of E World after it had executed a forty-to-one reverse split of its issued and outstanding common stock and also entered into a series of agreements with various holders of convertible notes to convert its notes payable plus accumulated interest to E World common stock in the aggregate to 6,872,830 shares of common stock. As a result of this transaction, a change of control in E World occurred with Blue Atelier then owning 75% of the outstanding common stock of E World.
In May 2010, the Company acquired 100% of the outstanding common stock of Media and Technology Solutions, Inc., a Nevada corporation with a variety of media and related interests in rights and emerged from dormant shell status. The consideration for the purchase of Media and Technology was 10,000,000 shares of E World common stock. Blue Atelier Inc., the principal shareholder of Media and Technology, is also the largest shareholder in E World. Following this acquisition, E World moved its principal office to Las Vegas, Nevada. The acquisition of Media and Technology was accounted for in a manner similar to a pooling of interests in accordance with accounting principles generally accepted in the United States because the entities were under common control.
On September 17, 2011 E World entered into a letter of intent (the “LOI”) with Green Renewable Energy Solutions, Inc. (“GRES”), the purpose of which to acquire the assets of GRES which included certain contracts for the acceptance, processing and disposal of construction and demolition waste. On January 26, 2012 Green Energy Renewable Solutions, Inc. (“GERS”) completed a 5-for-1 reverse split and on February 4, 2012 E World, including its subsidiary company, Media and Technology Solutions, Inc., was spun out as a separate private company by way of share dividend with one E World share issued for every share held on the date of the reverse split approval. FINRA approved the name change and reverse split on January 26, 2012. On February 4, 2012 GRES executed the asset purchase agreement (the “Purchase Agreement”) with GERS. Under the terms of the Purchase Agreement, GERS acquired all of the assets of GRES for 6,209,334 shares of its common stock and a further 4,604,666 common shares of deferred consideration.
GERS’s is focused on the acquisition of waste streams and maximizing their value utilizing recycling, renewable energy production, and environmentally responsible disposal strategies. On June 27, 2012, the Company approved a 1-for-1 stock dividend for shares held on June 29, 2012 and the dividend shares were issued following FINRA approval on July 27, 2012.
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On May 15, 2013 the Company entered into a contribution agreement with Cirque Energy II, LLC (“Cirque LLC”) whereby Cirque LLC would contribute all of its assets in exchange for common stock in the Company. Included in Cirque LLC’s assets were three subsidiary limited liability companies; The Prototype Company LLC, Gaylord Power Station, LLC, and Midland Renewable Energy Station, LLC. This contribution agreement has not yet been consummated.
In July 2013, Green Energy Renewable Solutions, Inc. changed its name to Cirque Energy, Inc. FINRA approval of the name change and change in the Company’s trading symbol are pending.
General
Cirque’s core business components include proprietary deployable gasification unit (“DGU”) technology and the delivery of clean energy generation solutions as an energy services company (“ESCO”).
DGU Business
· | Under a contract with the Northrop Grumman Corporation, Cirque Energy investigated, obtained research and technical data on the ability to produce a mobile, deployable gasification unit capable of producing field electricity for use by the U.S. Military and other government users. |
· | The goal of this engagement was to determine the potential ability to develop, engineer and fabricate a DGU or system capable of converting the currently available byproducts or wastes generated by the U.S. Military in a typical forward operating base (FOB) into electricity. Specifically, waste volumes of between one and ten tons per day. |
· | Goal is to make systems simple to operate, highly transportable, reliable, and have minimal special training and maintenance requirements. |
· | Northrop Grumman and Cirque Energy are committed to continue technology development for the DGU towards commercialization. |
· | Northrop Grumman in partnership with Cirque Energy is producing the first working DGU prototypes for testing and demonstration for military, government, and commercial customers. |
· | We anticipate the deployment or the DGU prototypes. |
· | Under the agreement, Cirque Energy will lead development, manufacturing, and testing of the initial demonstration DGU’s, with input from Northrop Grumman. |
· | Upon successful demonstration, Northrop Grumman will manufacture DGU’s for exclusive sale by Northrop Grumman and Cirque Energy. |
Clean Energy Generation Solutions as Energy Services Company (“ESCO”)
Delivery of clean energy Combined Heat and Power (“CHP”) projects, to industrial, commercial, and municipalities, universities, schools, hospitals (“MUSH”) market customers as well as local, state, and federal governments.
· | Projects to be developed and owned by Cirque Energy. |
· | Energy sold to Customer using various structures which required little or no capital outlay by Customer: |
· | ESPC – Energy savings performance contract; customer pays Cirque money which otherwise would have gone to utility company in exchange for guaranteed savings. |
· | PPA – traditional power purchase agreement. |
· | Services contract – energy purchased as a service, thereby allowing customer to treat project as “off-credit.” |
· | Lease – Cirque to design, build, finance and lease system to customer. |
The Company anticipates acquiring Cirque LLC. Management expects that this acquisition will provide the new entity with several benefits:
· | Strengthen management team to execute our business plan, includes plant operations, project development, construction, start-up, commissioning, fuel procurement and transportation. |
· | Skill sets of the new team mitigate execution risk. |
· | New and expanded pipeline of projects and programs in various stages of development. |
· | Expanded client relationships, large industrial clients, universities, hospitals, and utilities resulting in more opportunities. |
· | Expanded network of project finance relationships and contacts. |
· | Our team has vast experience in development, design, financing, construction, and operations, which positions us to successfully take a potential energy project from a vision to completion. |
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Energy Services and Performance Contracting
Cirque is keenly aware of the impact of current U.S. shale gas developments on natural gas markets and gas consumers. Because of the relative low prices of natural gas, ($3.00-4.00 Henry Hub, 2013) and high electric utility prices, the opportunities for onsite combined heat and power projects (“CHP”) have never been greater. Cirque sees many opportunities at facilities in the municipal, university, schools and hospital market (also known as the MUSH market) and industry that burn natural gas. Typically, these facilities have natural gas boilers for heat and process. By replacing these facilities with CHP systems such as micro turbines, reciprocating engines, or gas turbines with heat recovery boilers these facilities can see dramatic energy cost savings.
Cirque plans to pursue projects as an Energy Services Company (“ESCO”) to design, build, own, operate, and finance CHP projects in the MUSH and industrial markets. Under this model, Cirque intends to provide an initial energy audit or feasibility study for the customer, to demonstrate the economic savings that can be realized by installing a CHP system. Further, using our strategic partners (Hannon Armstrong and Veolia Energy), Cirque can offer these customers an Energy Savings Performance Contract (“ESPC”), whereby Cirque will capitalize the project for the customer, with payments from the customer coming from their current utility bill budget. Therefore, the customer can realize the energy savings without having to incur the expense of the project. Typically the ESPC with the customer is expected to be over a term of 10-20 years.
Energy Technology Development - Small scale CHP Gasifier
Northrop Grumman retained us in 2012 to research the potential to develop a viable Deployable Gasification Unit (“DGU”) for the U.S. military. The objective of the unit design was to provide a cost effective, reliable and simple to operate system that would utilize garbage and other wastes generated by the military at its forward operating bases to generate energy. The system would further be capable of operating in the 100kW to 500kW output range utilizing existing inventory of diesel generators, while using a diverse range of waste fuels comparable to those generated in the field.
Further, the Company has determined that the potential for commercial deployment of the system in the private sector expands the system applications far beyond the original government/military market assumptions. The resulting conclusion that the concept design capabilities and market applications met and exceeded the established project parameters led to the Cirque Energy/Northrop Grumman partnership.
The concept of the DGU is to take waste materials of up to 10 tons per day and use the material as fuel in a small gasifier to provide up to 1.0 MW of electricity and thermal heat. The DGU as planned is small in size, taking up the space of approximately 2-3 standard 20’ shipping containers. Power generation is accomplished by gasifying the waste (garbage) to generate a combustible syngas that is co-fired in a standard diesel or natural gas internal combustion engine. The engine runs constantly on the syngas, but the primary fuel can be utilized when no waste fuels are available.
In the commercial areas, Cirque envisions using the system for customers who are generating a waste material and have a constant electric demand. This could be industrial customers, wastewater treatment plants, big box stores, distribution centers, universities, schools, and large hospitals. These facilities can see substantial cost savings by avoiding paying for waste disposal, as well as by offset utility costs. Cirque plans on delivering these systems to customers using the ESCO business model.
Northrop Grumman has exclusive marketing rights to the US military and government. Northrop Grumman is one of the leading contract suppliers for military and government. Their reputation and access insures rapid access and the highest probability of success for sales within this market sector.
Cirque will maintain patents rights on certain key components of the DGU systems and will be responsible for the manufacturing and supply of those components to Northrop Grumman for inclusion in the complete DGU system, both for military and commercial units. The development of the two prototypes (one military unit and one commercial unit) is underway with completion of testing to be completed in the 4th quarter 2014 and sales of both types to begin at that time.
Waste to Energy Opportunities
Our management has extensive experience in the waste to energy market. The Company maintains ongoing development opportunities for several projects in this business sector. These projects can take several years to develop; however, the long-term operational results from these projects are expected to be beneficial to the revenue and profits of the Company for many years. Management continues to look for acquisition candidates in this sector that will provide similar benefits with a shorter delivery term than green field development.
Cirque has its headquarters office at Penobscot Building, 645 Griswold Street, Suite 3274, Detroit, MI 48226.
Cirque has never declared bankruptcy and has never been in receivership. Our common stock is quoted on the OTC Pink under the symbol EWRL.PK.
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The Company has a December 31 fiscal year end.
Employees
The company has four employees. At January 12, 2015, the Company’s executive team performs as employees of Cirque. Mr. Joe DuRant functions as Company President and Chief Executive Officer, Mr. David Morgan functions as the Chief Financial Officer, Mr. Roger Silverthorn functions as the Executive Vice President of Business Development, and Mr. Richard Fosgitt functions as Executive Vice President of Technology and Engineering.
ITEM 1A. | RISK FACTORS |
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
Not applicable.
ITEM 2. | PROPERTIES |
Cirque has a parcel of real estate at Lincoln Ave. Highland Park, MI and had previously entered into a letter of intent to purchase a further parcel of real estate at Oakman Blvd. The Company is now exploring alternative locations to the Highland Park location which is now deemed unsuitable for environmental reasons. The property was sold on June 4, 2014.
The Company’s offices are located at the Penobscot Building, 645 Griswold Street, Suite 3274, Detroit, MI 48226 comprised of facilities for administrative offices.
ITEM 3. | LEGAL PROCEEDINGS |
No legal proceedings were initiated or served upon the Company in the fiscal year ending December 31, 2013. We are not currently involved in any material legal proceedings. We are not aware of any material legal proceedings pending against us.
ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
ITEM 5. | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS |
On December 31, 2013, there were approximately 75 shareholders of record and an undetermined number of holders in street name. The Company’s common stock is traded on the OTC Pink, trading symbol “EWRL.”
Cirque Energy, Inc. common stock is quoted on the OTC Pink Board under the symbol “EWRL.PK”. The first available quotations on the OTC markets appear at the end of January 2007. The quotations provided are for the over the counter market which reflect interdealer prices without retail mark-up, mark-down or commissions, and may not represent actual transactions.
Period ended | High | Low | ||||||
March 31, 2012 | $ | 0.0750 | $ | 0.0500 | ||||
June 30, 2012 | 0.3875 | 0.0130 | ||||||
September 30, 2012 | 0.3600 | 0.0960 | ||||||
December 31, 2012 | 0.1350 | 0.0253 |
Period ended | High | Low | ||||||
March 31, 2013 | 0.0300 | 0.0038 | ||||||
June 30, 2013 | 0.0190 | 0.0021 | ||||||
September 30, 2013 | 0.0250 | 0.0111 | ||||||
December 31, 2013 | 0.0436 | 0.0066 |
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Holders
Total shares outstanding as of January 5, 2015 were 192,532,405. As of January 12, 2015, there were 76 shareholders of record.
Dividend Policy
Cirque has never paid a cash dividend on its common stock. We intend to follow a policy of retaining earnings, if any, to finance the growth of the business and do not anticipate paying any cash dividends in the foreseeable future. The declaration and payment of future dividends on common stock will be at the sole discretion of the Board of Directors and will depend upon our profitability and financial condition, capital requirements, statutory and contractual restrictions, future prospects and other factors deemed relevant.
ITEM 6 | SELECTED FINANCIAL DATA |
Not applicable.
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Forward-looking Statements
We and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this Annual Report and other filings with the SEC, reports to our stockholders and news releases. All statements that express expectations, estimates, forecasts or projections are forward-looking statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “project,” “forecast,” “may,” “should,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. We undertake no obligation to update or revise any of the forward-looking statements after the date of this annual report to conform forward-looking statements to actual results. Important factors on which such statements are based are assumptions concerning uncertainties, including but not limited to, uncertainties associated with the following:
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires us to make judgments, assumptions and estimates that affect the amounts reported. Note 2 of the accompanying notes to the consolidated financial statements describe the significant accounting policies used in the preparation of the financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.
A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes:
¨ | We are required to make assumptions about matters that are highly uncertain at the time of the estimate; and |
¨ | Different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations. |
Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our financial statements are fairly stated in accordance with accounting principles generally accepted in the United States, and present a meaningful presentation of our financial condition and results of operations.
a) | Impairment of Long-Lived Assets and Intangible Assets |
Long-lived assets and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company assesses the recoverability of the long-lived assets and intangible assets (other than goodwill) by comparing the carrying amount to the estimated future undiscounted cash flow associated with the related assets. The Company recognizes impairment of long-lived assets and intangible assets in the event that the net book value of such assets exceeds the estimated future undiscounted cash flow attributed to such assets. The Company uses estimates and judgments in its impairment tests and if different estimates or judgments had been utilized, the timing or the amount of the impairment charges could be different.
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b) | Share-based Payments |
The Company records stock-based compensation issued to non-employees or other external entities for goods and services at either the fair market value of the shares issued or the value of the services received, whichever is more readily determinable, using the measurement date guidelines enumerated in FASB ASC 505-50-30.
Plan of Operations
Cirque’s core business components include proprietary deployable gasification unit (“DGU”) technology and the delivery of clean energy generation solutions as an energy services company (“ESCO”).
DGU Business
· | Under a contract with the Northrop Grumman Corporation, Cirque Energy investigated, obtained research and technical data on the ability to produce a mobile, deployable gasification unit capable of producing field electricity for use by the U.S. Military and other government users. |
· | The goal of this engagement was to determine the potential ability to develop, engineer and fabricate a DGU or system capable of converting the currently available byproducts or wastes generated by the U.S. Military in a typical forward operating base (FOB) into electricity. Specifically, waste volumes of between one and ten tons per day. |
· | Goal is to make systems simple to operate, highly transportable, reliable, and have minimal special training and maintenance requirements. |
· | Northrop Grumman and Cirque Energy are committed to continue technology development for the DGU towards commercialization. |
· | Northrop Grumman in partnership with Cirque Energy is producing the first working DGU prototypes for testing and demonstration for military, government, and commercial customers. |
· | We anticipate the deployment of the DGU prototypes. |
· | Under the agreement, Cirque Energy will lead development, manufacturing, and testing of the initial demonstration DGU’s, with input from Northrop Grumman. |
· | Upon successful demonstration, Northrop Grumman will manufacture DGU’s for exclusive sale by Northrop Grumman and Cirque Energy. |
Clean Energy Generation Solutions as an Energy Services Company (“ESCO”)
Delivery of clean energy Combined Heat and Power (“CHP”) projects, to industrial, commercial, and municipalities, universities, schools, hospitals (“MUSH”) market customers as well as local, state, and federal governments.
· | Projects to be developed and owned by Cirque Energy. |
· | Energy sold to Customer using various structures which required little or no capital outlay by Customer: |
· | ESPC – Energy savings performance contract; customer pays Cirque money which otherwise would have gone to utility company in exchange for guaranteed savings. |
· | PPA – traditional power purchase agreement. |
· | Services contract – energy purchased as a service, thereby allowing customer to treat project as “off-credit.” |
· | Lease – Cirque to design, build, finance and lease system to customer. |
The Company anticipates acquiring Cirque LLC. Management expects that this acquisition will provide the new entity with several benefits:
· | Strengthen management team to execute our business plan, includes plant operations, project development, construction, start-up, commissioning, fuel procurement and transportation. |
· | Skill sets of the new team mitigate execution risk. |
· | New and expanded pipeline of projects and programs in various stages of development. |
· | Expanded client relationships, large industrial clients, universities, hospitals, and utilities resulting in more opportunities. |
· | Expanded network of project finance relationships and contacts. |
· | Our team has vast experience in development, design, financing, construction, and operations, which positions us to successfully take a potential energy project from a vision to completion. |
6 |
Results of Operations
Below is a comparison of results of operations for the years ending December 31, 2013 and December 31, 2012.
The Company reported a net loss of $3,203,878 for the year ended December 31, 2013 versus a net loss of $3,296,408 for the year ended December 31, 2012.
For the year ended December 31, 2013, the primary contributors to the net loss of $3,203,878 were executive compensation for the management team of $769,636, professional fees of $338,731 and forfeiture of deposit on landfill of $150,000. Amortization of debt expense, derivative expense, loss on settlement of promissory convertible notes, gain on derivative liability, and interest expense for 2013 was $489,803, $1,373,813, $1,024,869, $1,148,991 and $112,880, respectively. For the year ended December 31, 2012, primary contributors to the net loss of $3,296,408 were stock issuances recorded as executive compensation for the management team of $1,912,906, impairment of intangible assets of $345,350, professional fees of $352,928, and waste project development fees of $165,222.
Prior period comparisons of results are impacted by developing operations during the periods covered.
Restatement of Financial Statements
We are restating our audited financial statements for the year ended December 31, 2012, to correct the accounting for convertible promissory notes (“Notes”) as described in Note 7. These Notes were originally accounted for in accordance with ASC 480, Liabilities — Distinguishing Liabilities from Equity. The Company determined that it is not appropriate to account for these Notes under ASC 480 as the monetary value is not predominately based on one of three factors in ASC 480-10-25-14 due to the underlying volatility of the Company stock and the conversion formula of the Notes. As such, the conversion features of the Notes are accounted for in accordance with ASC 815, Derivatives and Hedging. The application of ASC 815 results in the recognition of a derivative liability for the conversion feature embedded in the Notes. In addition, there were several liabilities that were paid by the issuance of common stock prior to June 27, 2012. On June 27, 2012 a stock dividend/forward split of one share for every existing share as of the date of record. These liabilities were recorded in error as being valued at the post dividend/forward split value rather than at the value as of the date of issuance. These changes in values are reflected in the following Notes.
These errors were detected during the course of the re-audit of our December 31, 2012 financial statements. Our independent auditors, KLJ & Associates, LLP, requested that we review our 10-Q filings for the quarterly periods ended March 31, 2012, June 30, 2012, September 30, 2012, March 31, 2013, June 30, 2013, and September 30, 2013 to determine if these errors were material to the previous financial statement presentation. Upon performance of this review, management determined that the financial statements previously reported were in error and needed to be restated for the same reasons.
The following six tables are a summary of the effects of these changes on the Company’s quarterly Consolidated Balance Sheet, Consolidated Statements of Operations, and Consolidated Statements of Cash Flows, respectively, for the quarterly periods ended from March 31, 2012 through the quarterly period ended September 30, 2013:
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CIRQUE ENERGY, INC.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Balance Sheet
(Unaudited)
As Previously Reported March 31, 2012 | Restatement Adjustments | As Restated March 31, 2012 | ||||||||||
Assets: | ||||||||||||
Current assets: | ||||||||||||
Cash | 50 | 50 | ||||||||||
Accounts receivable | 166 | 166 | ||||||||||
Other current assets | ||||||||||||
Prepaid expenses | 16,667 | 16,667 | ||||||||||
Total current assets | 16,883 | - | 16,883 | |||||||||
Land | 27,752 | 27,752 | ||||||||||
Lease deposits | ||||||||||||
Total Assets | 44,635 | - | 44,635 | |||||||||
Liabilities and Stockholders' Deficit: | ||||||||||||
Current liabilities: | ||||||||||||
Accounts and other payables | 180,121 | 180,121 | ||||||||||
Accounts payable - related party | 110,100 | 110,100 | ||||||||||
Due to related party | 175,638 | 175,638 | ||||||||||
Secured note - related party | 65,000 | 65,000 | ||||||||||
Convertible note - related party | ||||||||||||
Total current liabilities | 530,859 | - | 530,859 | |||||||||
Total Liabilities | 530,859 | - | 530,859 | |||||||||
Stockholders' Deficit | ||||||||||||
Preferred stock, no par value 5,000,000 shares authorized and no shares issued. | ||||||||||||
Common stock, par value $0.001, 150,000,000 shares authorized and 18,037,800 and 9,252,526 shares outstanding at March 31, 2012 | 18,038 | 18,038 | ||||||||||
Additional paid-in capital | 5,723,271 | (561,000 | ) | 5,162,271 | ||||||||
Accumulated deficit | (4,514,336 | ) | (4,514,336 | ) | ||||||||
Accumulated deficit during development stage | (1,713,197 | ) | 561,000 | (1,152,197 | ) | |||||||
Total Stockholder s Deficit | (486,224 | ) | - | (486,224 | ) | |||||||
Total Liabilities and Stockholder s Deficit | 44,635 | - | 44,635 |
The accompanying notes are an integral part of these consolidated financial statements.
8 |
CIRQUE ENERGY, INC.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Income Statement
March 31, 2012
(Unaudited)
3 months ended | Development Stage | |||||||||||||||||||||||
As
Previously Reported March 31, 2012 | Restatement
Adjustments | As
Restated March 31, 2012 | As
Previously Reported April 1, 2010 - March 31, 2012 | Restatement
Adjustments | As
Restated April 1, 2010 - March 31, 2012 | |||||||||||||||||||
Sales | 12 | - | 12 | 219 | - | 219 | ||||||||||||||||||
Cost of sales | ||||||||||||||||||||||||
Gross profit | 12 | - | 12 | 219 | - | 219 | ||||||||||||||||||
Bank service charges | 683 | - | 683 | 3,067 | - | 3,067 | ||||||||||||||||||
Office rental | 5,875 | - | 5,875 | |||||||||||||||||||||
New zoo revue | 257 | - | 257 | 17,811 | - | 17,811 | ||||||||||||||||||
Development projects | 14,125 | - | 14,125 | |||||||||||||||||||||
Office and related expense | (150 | ) | (150 | ) | 5,148 | - | 5,148 | |||||||||||||||||
Waste project expense | 63,568 | 2,450 | 66,018 | 102,411 | 2,450 | 104,861 | ||||||||||||||||||
Professional fees | 82,107 | 9,000 | 91,107 | 449,863 | 9,000 | 458,863 | ||||||||||||||||||
Investor relations | 19,000 | (14,000 | ) | 5,000 | 20,000 | (14,000 | ) | 6,000 | ||||||||||||||||
Financing cost | 365,582 | (182,791 | ) | 182,791 | 365,582 | (182,791 | ) | 182,791 | ||||||||||||||||
Travel expense | - | - | - | 15,272 | - | 15,272 | ||||||||||||||||||
Impairment of intangible assets | 690,700 | (345,350 | ) | 345,350 | 691,149 | (345,350 | ) | 345,799 | ||||||||||||||||
Total operating expense | 1,221,747 | (530,691 | ) | 691,056 | 1,690,303 | (530,691 | ) | 1,159,612 | ||||||||||||||||
Operating loss | (1,221,735 | ) | 530,691 | (691,044 | ) | (1,690,084 | ) | 530,691 | (1,159,393 | ) | ||||||||||||||
Gain/Loss on Stock Issuance | - | 30,309 | 30,309 | - | 30,309 | 30,309 | ||||||||||||||||||
Foreign exchange translation loss | (1,113 | ) | - | (1,113 | ) | |||||||||||||||||||
Interest expense | (1,000 | ) | (1,000 | ) | (22,000 | ) | - | (22,000 | ) | |||||||||||||||
Net loss | (1,222,735 | ) | 561,000 | (661,735 | ) | (1,713,197 | ) | 561,000 | (1,152,197 | ) | ||||||||||||||
Net loss per share | $ | (0.100 | ) | $ | 0.046 | $ | (0.054 | ) | ||||||||||||||||
Weighted average shares outstanding | 12,238,466 | 12,238,466 | 12,238,466 |
The accompanying notes are an integral part of these consolidated financial statements.
9 |
CIRQUE ENERGY, INC.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Statement of Cash Flows
March 31, 2012
(Unaudited)
3 months ended | Development Stage | |||||||||||||||||||||||
As
Previously Reported March 31, 2012 | Restatement
Adjustments | As
Restated March 31, 2012 | As
Previously Reported April 1, 2010 - March 31, 2012 | Restatement
Adjustments | As
Restated April 1, 2010 - March 31, 2012 | |||||||||||||||||||
Operating Activities: | ||||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||
Net loss | $ | (1,222,735 | ) | $ | 561,000 | $ | (661,735 | ) | $ | (1,713,197 | ) | $ | 561,000 | $ | (1,152,197 | ) | ||||||||
Adjustments to reconcile net loss to net | - | - | - | - | - | |||||||||||||||||||
cash provided by (used in) operating activities: | - | - | - | - | - | |||||||||||||||||||
Issuance of common stock for services | 65,718 | (2,550 | ) | 63,168 | 65,868 | (2,550 | ) | 63,318 | ||||||||||||||||
Issuance of subsidiary common stock for | - | - | - | 50 | - | 50 | ||||||||||||||||||
services prior to acquisition | - | - | - | - | - | |||||||||||||||||||
Issuance of common stock for asset purchase | 690,700 | (345,350 | ) | 345,350 | 690,700 | (345,350 | ) | 345,350 | ||||||||||||||||
Issuance of common stock for finance costs | 365,582 | (182,791 | ) | 182,791 | 365,582 | (182,791 | ) | 182,791 | ||||||||||||||||
Loss on foreign currency translations | - | - | - | 1,113 | - | 1,113 | ||||||||||||||||||
Lease deposits | - | - | - | (900 | ) | - | (900 | ) | ||||||||||||||||
Gain on stock issuance | - | (30,309 | ) | (30,309 | ) | (30,309 | ) | (30,309 | ) | |||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Accounts receivable | - | - | - | (166 | ) | - | (166 | ) | ||||||||||||||||
Prepaid expenses | (16,667 | ) | - | (16,667 | ) | (16,667 | ) | - | (16,667 | ) | ||||||||||||||
Accounts and other payables | 32,196 | - | 32,196 | 38,428 | - | 38,428 | ||||||||||||||||||
Due to shareholders and related parties | 55,000 | - | 55,000 | 291,222 | - | 291,222 | ||||||||||||||||||
Cash provided by (used in) operating activities | (30,206 | ) | - | (30,206 | ) | (277,967 | ) | - | (277,967 | ) | ||||||||||||||
Investing Activities: | ||||||||||||||||||||||||
Notes receivable | (5,000 | ) | (5,000 | ) | ||||||||||||||||||||
Issuance of subsidiary stock for cash prior to acquisition | 950 | 950 | ||||||||||||||||||||||
Purchase of land | (27,752 | ) | (27,752 | ) | ||||||||||||||||||||
Cash used in investing activities | - | - | - | (31,802 | ) | - | (31,802 | ) | ||||||||||||||||
Financing Activities: | ||||||||||||||||||||||||
Advances from related party | 29,940 | - | 29,940 | 159,742 | - | 159,742 | ||||||||||||||||||
Issuance of subsidiary stock for cash | 150,000 | - | 150,000 | |||||||||||||||||||||
Cash provided by investing activities | 29,940 | - | 29,940 | 309,742 | - | 309,742 | ||||||||||||||||||
Increase(Decrease) in Cash | (266 | ) | - | (266 | ) | (27 | ) | - | (27 | ) | ||||||||||||||
Cash, beginning of period | 316 | - | 316 | 77 | - | 77 | ||||||||||||||||||
Cash, end of period | $ | 50 | $ | - | $ | 50 | $ | 50 | $ | - | $ | 50 | ||||||||||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||||||||||||||||||
Shares issued for intangible assets | $ | 690,700 | (345,350 | ) | $ | 345,350 | $ | 690,700 | (345,350 | ) | $ | 345,350 | ||||||||||||
Spinoff of subsidiary | $ | 250,028 | - | $ | 250,028 | $ | 250,028 | - | $ | 250,028 | ||||||||||||||
Deemed distribution to majority shareholder | $ | 150,000 | - | $ | 150,000 |
The accompanying notes are an integral part of these consolidated financial statements.
10 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Balance Sheets
(Unaudited)
As Previously Reported June 30, 2012 | Restatement Adjustments | As Restated June 30, 2012 | ||||||||||
Assets: | ||||||||||||
Current assets: | ||||||||||||
Cash | 11 | 11 | ||||||||||
Accounts receivable | 166 | 166 | ||||||||||
Prepaid expenses | 6,667 | 6,667 | ||||||||||
Total current assets | 6,844 | - | 6,844 | |||||||||
Land | 27,752 | 27,752 | ||||||||||
Total Assets | 34,596 | - | 34,596 | |||||||||
Liabilities and Stockholders' Deficit: | ||||||||||||
Current liabilities: | ||||||||||||
Accounts and other payables | 70,876 | 70,876 | ||||||||||
Accounts payable-related party | 157,960 | 157,960 | ||||||||||
Due to related party | 208,664 | 208,664 | ||||||||||
Convertible notes-related party | - | - | ||||||||||
Secured notes-related party | 70,000 | 70,000 | ||||||||||
Total current liabilities | 507,500 | - | 507,500 | |||||||||
Total Liabilities | 507,500 | - | 507,500 | |||||||||
Stockholders' Deficit | ||||||||||||
Preferred stock, no par value 5,000,000 shares authorized and no shares issued. | ||||||||||||
Common stock, Par Value $0.001, 150,000,000 shares | ||||||||||||
Authorized and 62,475,600 and 18,505,052 shares outstanding at June 30, 2012 | 62,476 | - | 62,476 | |||||||||
Additional paid-in capital | 9,759,833 | (2,601,500 | ) | 7,158,333 | ||||||||
Accumulated deficit | (4,514,336 | ) | - | (4,514,336 | ) | |||||||
Accumulated deficit development stage | (5,780,877 | ) | 2,601,500 | (3,179,377 | ) | |||||||
Total Stockholders' Deficit | (472,904 | ) | - | (472,904 | ) | |||||||
Total Liabilities and Stockholders' Deficit | 34,596 | - | 34,596 |
The accompanying notes are an integral part of these consolidated financial statements.
11 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions , Inc.
(A Development Stage Company)
Restated Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | Development Stage | ||||||||||||||||||||||||||||||||||
2012 | 2012 | April 1, 2010 to June 30, 2012 | ||||||||||||||||||||||||||||||||||
As
Previously Reported | Restatement
Adjustments | As
Restated | As
Previously Reported | Restatement
Adjustments | As Restated | As
Previously Reported | Restatement
Adjustments | As Restated | ||||||||||||||||||||||||||||
Sales | - | - | - | 12 | - | 12 | 219 | - | 219 | |||||||||||||||||||||||||||
Cost of sales | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Gross profit | - | - | - | 12 | - | 12 | 219 | - | 219 | |||||||||||||||||||||||||||
Bank service charges | 545 | - | 545 | 1,228 | - | 1,228 | 3,612 | - | 3,612 | |||||||||||||||||||||||||||
New zoo revue | - | - | - | 257 | - | 257 | 17,811 | - | 17,811 | |||||||||||||||||||||||||||
Development projects | - | - | - | - | - | - | 14,125 | - | 14,125 | |||||||||||||||||||||||||||
Office and miscellaneous expenses | - | 358 | 358 | 208 | - | 208 | 11,381 | - | 11,381 | |||||||||||||||||||||||||||
Waste project expenses | 21,790 | - | 21,790 | 85,358 | 2,450 | 87,808 | 124,201 | 2,450 | 126,651 | |||||||||||||||||||||||||||
Executives and directors compensation | 3,375,000 | (1,597,500 | ) | 1,777,500 | 3,435,000 | (1,657,500 | ) | 1,777,500 | 3,715,000 | (1,657,500 | ) | 2,057,500 | ||||||||||||||||||||||||
Professional fees | 131,555 | (113,522 | ) | 18,033 | 163,918 | (54,778 | ) | 109,140 | 251,674 | (54,778 | ) | 196,896 | ||||||||||||||||||||||||
Investor relations | 10,000 | - | 10,000 | 29,000 | (14,000 | ) | 15,000 | 30,000 | (14,000 | ) | 16,000 | |||||||||||||||||||||||||
Travel expenses | - | - | - | - | - | 15,272 | - | 15,272 | ||||||||||||||||||||||||||||
Loss on settlement of accounts payable | 518,122 | (518,122 | ) | - | 518,122 | (518,122 | ) | - | 518,122 | (518,122 | ) | - | ||||||||||||||||||||||||
Other financing costs | - | - | - | 365,582 | (182,791 | ) | 182,791 | 365,582 | (182,791 | ) | 182,791 | |||||||||||||||||||||||||
Impairment of intangible assets | - | - | - | 690,700 | (345,350 | ) | 345,350 | 691,149 | (345,350 | ) | 345,799 | |||||||||||||||||||||||||
Total operating expense | 4,057,012 | (2,228,786 | ) | 1,828,226 | 5,289,373 | (2,770,091 | ) | 2,519,282 | 5,757,929 | (2,770,091 | ) | 2,987,838 | ||||||||||||||||||||||||
Operating loss | (4,057,012 | ) | 2,228,786 | (1,828,226 | ) | (5,289,361 | ) | 2,770,091 | (2,519,270 | ) | (5,757,710 | ) | 2,770,091 | (2,987,619 | ) | |||||||||||||||||||||
Other Expenses | ||||||||||||||||||||||||||||||||||||
Foreign exchange translation loss | - | - | - | - | - | - | (1,113 | ) | - | (1,113 | ) | |||||||||||||||||||||||||
Gain/Loss on stock issuance | - | (198,900 | ) | (198,900 | ) | - | (168,591 | ) | (168,591 | ) | - | (168,591 | ) | (168,591 | ) | |||||||||||||||||||||
Interest expense | (54 | ) | - | (54 | ) | (1,054 | ) | - | (1,054 | ) | (22,054 | ) | - | (22,054 | ) | |||||||||||||||||||||
Total other expenses | (54 | ) | (198,900 | ) | (198,954 | ) | (1,054 | ) | (168,591 | ) | (169,645 | ) | (23,167 | ) | (168,591 | ) | (191,758 | ) | ||||||||||||||||||
Net loss | (4,057,066 | ) | 2,029,886 | (2,027,180 | ) | (5,290,415 | ) | 2,601,500 | (2,688,915 | ) | (5,780,877 | ) | 2,601,500 | (3,179,377 | ) | |||||||||||||||||||||
Net loss per common share | $ | (0.070 | ) | $ | (0.035 | ) | $ | (0.13 | ) | $ | (0.065 | ) | ||||||||||||||||||||||||
Weighted average common shares outstanding | 58,115,160 | 58,115,160 | 41,296,046 | 41,296,046 |
The accompanying notes are an integral part of these consolidated financial statements.
12 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended June 30, | Development Stage | |||||||||||||||||||||||
2012 | April 1 2010 to June 30, 2012 | |||||||||||||||||||||||
As
Previously Reported | Restatement
Adjustments | As Restated | As
Previously Reported | Restatement
Adjustments | As Restated | |||||||||||||||||||
Operating Activities | ||||||||||||||||||||||||
Cash flows from operating activities : | ||||||||||||||||||||||||
Net loss | $ | (5,290,415 | ) | $ | 2,601,500 | $ | (2,688,915 | ) | $ | (5,780,877 | ) | $ | 2,601,500 | $ | (3,179,377 | ) | ||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | - | |||||||||||||||||||||||
Issuance of common stock for services | 181,719 | (66,328 | ) | 115,391 | 181,869 | (66,328 | ) | 115,541 | ||||||||||||||||
Issuance of common stock for executives and directors compensation | 3,315,000 | (1,657,500 | ) | 1,657,500 | 3,315,000 | (1,657,500 | ) | 1,657,500 | ||||||||||||||||
Issuance of subsidiary common stock for services prior to acquisition | - | - | - | 50 | - | 50 | ||||||||||||||||||
Impairment of intangible assets | 690,700 | (345,350 | ) | 345,350 | 690,700 | (345,350 | ) | 345,350 | ||||||||||||||||
Issuance of common stock for finance costs | 365,582 | (182,791 | ) | 182,791 | 365,582 | (182,791 | ) | 182,791 | ||||||||||||||||
Gain/loss on stock issuance | 168,591 | 168,591 | 168,591 | 168,591 | ||||||||||||||||||||
Loss on settlement of accounts payable | 518,122 | (518,122 | ) | - | 518,122 | (518,122 | ) | - | ||||||||||||||||
Loss on foreign currency translations | - | - | - | 1,113 | - | 1,113 | ||||||||||||||||||
Changes in operating assets and liabilities: | - | - | - | |||||||||||||||||||||
Accounts receivable | - | - | - | (166 | ) | - | (166 | ) | ||||||||||||||||
Deposits | - | - | - | (900 | ) | - | (900 | ) | ||||||||||||||||
Prepaid expenses | (6,667 | ) | - | (6,667 | ) | (6,667 | ) | - | (6,667 | ) | ||||||||||||||
Accounts payable and accrued liabilities | 54,829 | - | 54,829 | 61,061 | - | 61,061 | ||||||||||||||||||
Accounts payable-related parties | 102,860 | - | 102,860 | 339,082 | - | 339,082 | ||||||||||||||||||
Cash used in operating activities | (68,270 | ) | - | (68,270 | ) | (316,031 | ) | - | (316,031 | ) | ||||||||||||||
Investing Activities: | ||||||||||||||||||||||||
Notes receivable | - | - | - | (5,000 | ) | - | (5,000 | ) | ||||||||||||||||
Issuance of subsidiary stock for cash prior to acquisition | - | - | - | 950 | - | 950 | ||||||||||||||||||
Purchase of land | - | - | - | (27,752 | ) | - | (27,752 | ) | ||||||||||||||||
Spin out of Subsidiary | - | - | - | - | - | - | ||||||||||||||||||
Cash used in investing activities | - | - | - | (31,802 | ) | - | (31,802 | ) | ||||||||||||||||
Financing Activities: | ||||||||||||||||||||||||
Advances from related party | 62,965 | - | 62,965 | 192,767 | - | 192,767 | ||||||||||||||||||
Bank overdrafts | - | - | - | - | - | - | ||||||||||||||||||
Advances for secured note | 5,000 | - | 5,000 | 5,000 | - | 5,000 | ||||||||||||||||||
Issuance of subsidiary stock for cash | - | - | - | 150,000 | - | 150,000 | ||||||||||||||||||
Cash provided by financing activities | 67,965 | - | 67,965 | 347,767 | - | 347,767 | ||||||||||||||||||
Decrease in cash | $ | (305 | ) | $ | - | $ | (305 | ) | $ | (66 | ) | - | $ | (66 | ) | |||||||||
Cash, beginning of period | 316 | - | 316 | 77 | - | 77 | ||||||||||||||||||
Cash, end of period | $ | 11 | $ | - | $ | 11 | $ | 11 | $ | - | $ | 11 | ||||||||||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||||||||||||||||||
Shares issued for intangible assets | $ | 690,700 | (345,350 | ) | $ | 345,350 | $ | 690,700 | (345,350 | ) | $ | 345,350 | ||||||||||||
Spin-out of subsidiary | $ | 250,028 | - | $ | 250,028 | $ | 250,208 | - | $ | 250,208 | ||||||||||||||
Shares issued to settle accounts payable | $ | 65,939 | - | $ | 65,939 | $ | 65,939 | - | $ | 65,939 | ||||||||||||||
Deemed distribution to majority shareholder | $ | - | - | $ | - | $ | (150,000 | ) | - | $ | (150,000 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
13 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Balance Sheets
(Unaudited)
As Previously Reported September 30, 2012 | Restatement Adjustments | As Restated September 30, 2012 | ||||||||||
Assets: | ||||||||||||
Current assets: | ||||||||||||
Cash | 22,774 | 22,774 | ||||||||||
Accounts receivable | 166 | 166 | ||||||||||
Note receivable | - | - | ||||||||||
Prepaid assets | 3,021 | 3,021 | ||||||||||
Total current assets | 25,961 | - | 25,961 | |||||||||
Land | 27,752 | 27,752 | ||||||||||
Deposits | - | |||||||||||
Total Assets | 53,713 | - | 53,713 | |||||||||
Liabilities and Stockholders' Deficit: | ||||||||||||
Current liabilities: | ||||||||||||
Accounts and other payables | 80,476 | 80,476 | ||||||||||
Accounts and other payables-related party | 146,640 | 146,640 | ||||||||||
Due to related party | 206,660 | 206,660 | ||||||||||
Convertible notes- related party | 70,000 | 70,000 | ||||||||||
Convertible notes-(net of $51,444 unamortized discount) | 76,088 | (62,532 | ) | 13,556 | ||||||||
Derivative liability | 116,372 | 116,372 | ||||||||||
Total current liabilities | 579,864 | 53,840 | 633,704 | |||||||||
Total Liabilities | 579,864 | 53,840 | 633,704 | |||||||||
Stockholders' Deficit | ||||||||||||
Preferred stock, no par value 5,000,000 shares authorized and no shares issued. | - | - | ||||||||||
Common stock, Par Value $0.001, 150,000,000 shares | ||||||||||||
Authorized and 62,636,850 and 18,505,052 shares outstanding at September 30, 2012 | 62,637 | 62,637 | ||||||||||
Stock payable | 155,000 | 155,000 | ||||||||||
Additional paid-in capital | 9,784,372 | (2,601,500 | ) | 7,182,872 | ||||||||
Accumulated deficit | (4,514,336 | ) | (4,514,336 | ) | ||||||||
Accumulated deficit development stage | (6,013,824 | ) | 2,547,660 | (3,466,164 | ) | |||||||
Total Shareholders Deficit | (526,151 | ) | (53,840 | ) | (579,991 | ) | ||||||
Total Liabilities and Shareholders Deficit | 53,713 | - | 53,713 |
The accompanying notes are an integral part of these consolidated financial statements.
14 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | Development Stage | ||||||||||||||||||||||||||||||||||
2012 | 2012 | (April 1 2010 to September 30, 2012) | ||||||||||||||||||||||||||||||||||
As
Previously Reported | Restatement
Adjustment | As
Restated | As
Previously Reported | Restatement
Adjustment | As
Restated | As
Previously Reported | Restatement
Adjustment | As Restated | ||||||||||||||||||||||||||||
Sales | $ | - | $ | - | $ | 12 | $ | 12 | $ | 219 | $ | - | $ | 219 | ||||||||||||||||||||||
Cost of sales | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
Gross profit | - | - | 12 | 12 | 219 | - | 219 | |||||||||||||||||||||||||||||
Bank service charges | 1,816 | - | 1,816 | 3,044 | - | 3,044 | 5,428 | - | 5,428 | |||||||||||||||||||||||||||
New zoo revue | - | - | - | 257 | - | 257 | 17,811 | - | 17,811 | |||||||||||||||||||||||||||
Development projects | - | - | - | - | - | - | 14,125 | - | 14,125 | |||||||||||||||||||||||||||
Office and miscellaneous expenses | 2,783 | - | 2,783 | 2,991 | - | 2,991 | 14,164 | - | 14,164 | |||||||||||||||||||||||||||
Executive and directors compensation | 42,500 | - | 42,500 | 3,477,500 | (1,657,500 | ) | 1,820,000 | 3,757,500 | (1,657,500 | ) | 2,100,000 | |||||||||||||||||||||||||
Waste project expenses | 72,796 | - | 72,796 | 158,154 | 2,450 | 160,604 | 196,997 | 2,450 | 199,447 | |||||||||||||||||||||||||||
Professional fees | 96,516 | - | 96,516 | 260,433 | (54,778 | ) | 205,655 | 348,190 | (54,778 | ) | 293,412 | |||||||||||||||||||||||||
Investor relations | 3,000 | - | 3,000 | 32,000 | (14,000 | ) | 18,000 | 33,000 | (14,000 | ) | 19,000 | |||||||||||||||||||||||||
Travel expenses | 1,503 | - | 1,503 | 1,504 | - | 1,504 | 16,775 | 16,775 | ||||||||||||||||||||||||||||
Loss of settlement of account payable | - | - | - | 518,122 | (518,122 | ) | - | 518,122 | (518,122 | ) | - | |||||||||||||||||||||||||
Other financing costs | - | - | - | 365,582 | (182,791 | ) | 182,791 | 365,582 | (182,791 | ) | 182,791 | |||||||||||||||||||||||||
Impairment of intangible assets | - | - | - | 690,700 | (345,350 | ) | 345,350 | 691,149 | (345,350 | ) | 345,799 | |||||||||||||||||||||||||
Total operating expense | 220,914 | - | 220,914 | 5,510,287 | (2,770,091 | ) | 2,740,196 | 5,978,843 | (2,770,091 | ) | 3,208,752 | |||||||||||||||||||||||||
Operating loss | (220,914 | ) | - | (220,914 | ) | (5,510,275 | ) | 2,770,091 | (2,740,184 | ) | (5,978,624 | ) | 2,770,091 | (3,208,533 | ) | |||||||||||||||||||||
Debt discount | (10,460 | ) | 10,460 | - | (10,460 | ) | 10,460 | - | (10,460 | ) | 10,460 | - | ||||||||||||||||||||||||
Derivative expense | (34,100 | ) | (34,100 | ) | (34,100 | ) | (34,100 | ) | - | (34,100 | ) | (34,100 | ) | |||||||||||||||||||||||
Amortization of debt discount | (13,556 | ) | (13,556 | ) | (13,556 | ) | (13,556 | ) | - | (13,556 | ) | (13,556 | ) | |||||||||||||||||||||||
Loss (gain) on derivative | (17,272 | ) | (17,272 | ) | (17,272 | ) | (17,272 | ) | - | (17,272 | ) | (17,272 | ) | |||||||||||||||||||||||
Gain/Loss on stock issuance | - | - | - | - | (168,591 | ) | (168,591 | ) | (1,113 | ) | (168,591 | ) | (169,704 | ) | ||||||||||||||||||||||
Interest expense | (1,573 | ) | 628 | (945 | ) | (2,627 | ) | 628 | (1,999 | ) | (23,627 | ) | 628 | (22,999 | ) | |||||||||||||||||||||
Total other expense | (12,033 | ) | (53,840 | ) | (65,873 | ) | (13,087 | ) | (222,431 | ) | (235,518 | ) | (35,200 | ) | (222,431 | ) | (257,631 | ) | ||||||||||||||||||
Net loss | $ | (232,947 | ) | $ | (53,840 | ) | $ | (286,787 | ) | $ | (5,523,362 | ) | $ | 2,547,660 | $ | (2,975,702 | ) | $ | (6,013,824 | ) | $ | 2,547,660 | $ | (3,466,164 | ) | |||||||||||
Net loss per common share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.11 | ) | $ | (0.06 | ) | ||||||||||||||||||||||||
Weighted average common shares outstanding | 62,579,717 | 62,579,717 | 48,442,388 | 48,442,388 |
The accompanying notes are an integral part of these consolidated financial statements.
15 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Statements of Cash Flows
(Unaudited)
Nine Month Period Ended September 30 | Development Stage | |||||||||||||||||||||||
2012 | (April 1 2010 to September 30, 2012) | |||||||||||||||||||||||
As
Previously Reported | Restatement
Adjustments | As Restated | As
Previously Reported | Restatement
Adjustments | As Restated | |||||||||||||||||||
Operating Activities | ||||||||||||||||||||||||
Cash flows from operating activities : | ||||||||||||||||||||||||
Net loss | $ | (5,523,362 | ) | $ | 2,547,660 | $ | (2,975,702 | ) | $ | (6,013,824 | ) | $ | 2,547,660 | $ | (3,466,164 | ) | ||||||||
Adjustments to reconcile net loss to net cash provided by used in operating activities: | ||||||||||||||||||||||||
Amortization of convertible debt discount | 11,088 | 36,568 | 47,656 | 11,088 | 36,568 | 47,656 | ||||||||||||||||||
Issuance of common stock for services | 206,419 | (66,328 | ) | 140,091 | 206,569 | (66,328 | ) | 140,241 | ||||||||||||||||
Issuance of common stock for compensation | 3,315,000 | (1,657,500 | ) | 1,657,500 | 3,315,000 | (1,657,500 | ) | 1,657,500 | ||||||||||||||||
Issuance of common stock for asset purchase | 690,700 | (345,350 | ) | 345,350 | 690,700 | (345,350 | ) | 345,350 | ||||||||||||||||
Issuance of common stock for finance costs | 365,582 | (182,791 | ) | 182,791 | 365,582 | (182,791 | ) | 182,791 | ||||||||||||||||
Issuance of subsidiary common stock for services prior to acquisition | - | - | - | 50 | - | 50 | ||||||||||||||||||
Loss on settlement of accounts payable | 518,122 | (518,122 | ) | - | 518,122 | (518,122 | ) | - | ||||||||||||||||
Loss on foreign currency translations | - | - | - | 1,113 | - | 1,113 | ||||||||||||||||||
Gain/loss on issuance of stock | 168,591 | 168,591 | 168,591 | 168,591 | ||||||||||||||||||||
Gain on derivatives | - | 17,272 | 17,272 | - | 17,272 | 17,272 | ||||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Accounts receivables | - | - | - | (166 | ) | - | (166 | ) | ||||||||||||||||
Deposits | - | - | - | (900 | ) | - | (900 | ) | ||||||||||||||||
Prepaid expenses | (3,021 | ) | - | (3,021 | ) | (3,021 | ) | - | (3,021 | ) | ||||||||||||||
Accounts payable and accrued liabilities | 64,429 | - | 64,429 | 70,661 | - | 70,661 | ||||||||||||||||||
Accounts payable-related parties | 91,540 | - | 91,540 | 327,762 | - | 327,762 | ||||||||||||||||||
Cash used in operating activities | (263,503 | ) | - | (263,503 | ) | (511,264 | ) | - | (511,264 | ) | ||||||||||||||
Investing Activities: | ||||||||||||||||||||||||
Notes receivable | - | - | - | (5,000 | ) | - | (5,000 | ) | ||||||||||||||||
Issuance of subsidiary stock for cash prior to acquisition | - | - | - | 950 | - | 950 | ||||||||||||||||||
Purchase of land | - | - | - | (27,752 | ) | - | (27,752 | ) | ||||||||||||||||
Cash used in investing activities | - | - | - | (31,802 | ) | - | (31,802 | ) | ||||||||||||||||
Financing Activities: | ||||||||||||||||||||||||
Stock payable | 155,000 | - | 155,000 | 155,000 | - | 155,000 | ||||||||||||||||||
Advances from related party | 68,121 | - | 68,121 | 197,923 | - | 197,923 | ||||||||||||||||||
Payments on advances from related party | (7,160 | ) | - | (7,160 | ) | (7,160 | ) | - | (7,160 | ) | ||||||||||||||
Bank overdrafts | - | - | - | - | - | - | ||||||||||||||||||
Advances for convertible note | 65,000 | - | 65,000 | 65,000 | - | 65,000 | ||||||||||||||||||
Advances for secured note | 5,000 | - | 5,000 | 5,000 | - | 5,000 | ||||||||||||||||||
Issuance of subsidiary stock for cash | - | - | - | 150,000 | - | 150,000 | ||||||||||||||||||
Cash provided by financing activities | 285,961 | - | 285,961 | 565,763 | - | 565,763 | ||||||||||||||||||
Increase in cash | 22,458 | - | 22,458 | 22,697 | - | 22,697 | ||||||||||||||||||
Cash, beginning of period | 316 | 316 | 77 | - | 77 | |||||||||||||||||||
Cash, end of period | $ | 22,774 | $ | - | $ | 22,774 | $ | 22,774 | $ | - | $ | 22,774 | ||||||||||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||||||||||||||||||
Shares issued for intangible assets | $ | 690,700 | (345,350 | ) | $ | 345,350 | $ | 690,700 | (345,350 | ) | $ | 345,350 | ||||||||||||
Spin-out of subsidiary | $ | 250,028 | $ | 250,028 | $ | 250,208 | $ | 250,208 | ||||||||||||||||
Share issued to settle debt | $ | 65,939 | $ | 65,939 | $ | 65,939 | $ | 65,939 | ||||||||||||||||
Deemed distribution to majority shareholder | $ | - | $ | - | $ | 150,000 | $ | 150,000 |
The accompanying notes are an integral part of these consolidated financial statements.
16 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Balance Sheets
(Unaudited)
As Previously Reported March 31, 2013 | Restatement Adjustments | As Restated March 31, 2013 | As Restated December 31, 2012 | |||||||||||||
Assets: | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash | $ | 2,464 | $ | (2 | ) | $ | 2,462 | $ | 1,005 | |||||||
Accounts receivable | 166 | (166 | ) | - | - | |||||||||||
Total current assets | 2,630 | (168 | ) | 2,462 | 1,005 | |||||||||||
Land | 27,752 | - | 27,752 | 27,752 | ||||||||||||
Lease Deposits | - | - | - | - | ||||||||||||
Total Assets | $ | 30,382 | $ | (168 | ) | $ | 30,214 | $ | 28,757 | |||||||
Liabilities and Stockholders' Deficit: | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts and other payables | $ | 219,965 | $ | (46,661 | ) | $ | 173,304 | $ | 162,721 | |||||||
Accounts payable-related party | 109,526 | - | 109,526 | 139,326 | ||||||||||||
Accrued salaries and wages | 83,333 | - | 83,333 | - | ||||||||||||
Due to related party | 201,662 | 1,761 | 203,423 | 203,423 | ||||||||||||
Related party notes payable | 70,000 | 307 | 70,307 | 70,307 | ||||||||||||
Convertible notes-(net of $104,644 and $108,006 unamortized discount) | 219,891 | (157,380 | ) | 62,511 | 53,268 | |||||||||||
Accrued interest | - | 22,472 | 22,472 | 17,869 | ||||||||||||
Derivative liability | - | 245,900 | 245,900 | 193,933 | ||||||||||||
Total current liabilities | 904,377 | 66,399 | 970,776 | 840,847 | ||||||||||||
Total Liabilities | 904,377 | 66,399 | 970,776 | 840,847 | ||||||||||||
Stockholders' Deficit | ||||||||||||||||
Preferred stock, no par value 5,000,000 shares authorized and no shares issued. | - | - | - | |||||||||||||
Common stock, Par Value $0.001, 150,000,000 shares | ||||||||||||||||
Authorized and 72,173,880 and 62,636,850 shares outstanding at March 31, 2013 and December 31, 2012, respectively | 72,174 | - | 72,174 | 62,636 | ||||||||||||
Additional paid-in capital | 9,910,350 | (2,590,274 | ) | 7,320,076 | 7,192,873 | |||||||||||
Stock payable | 248,607 | 62,500 | 311,107 | 233,607 | ||||||||||||
Accumulated deficit | (4,514,336 | ) | - | (4,514,336 | ) | (4,514,336 | ) | |||||||||
Accumulated deficit development stage | (6,590,790 | ) | 2,461,207 | (4,129,583 | ) | (3,786,870 | ) | |||||||||
Total Shareholders Deficit | (873,995 | ) | (66,567 | ) | (940,562 | ) | (812,090 | ) | ||||||||
Total Liabilities and Shareholders Deficit | $ | 30,382 | $ | (168 | ) | $ | 30,214 | $ | 28,757 |
The accompanying notes are an integral part of these consolidated financial statements.
17 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31, | Development Stage | |||||||||||||||||||||||||||
2013 | 2012 | April 1 2010 to March 31, 2013 | ||||||||||||||||||||||||||
As
Previously Reported | Restatement
Adjustments | As
Restated | As
Previously Restated | As
Previously Reported | Restatement
Adjustments | As
Restated | ||||||||||||||||||||||
Sales | - | - | 12 | 219 | (12 | ) | 207 | |||||||||||||||||||||
Cost of sales | - | - | - | - | - | - | ||||||||||||||||||||||
Gross profit | - | - | - | 12 | 219 | (12 | ) | 207 | ||||||||||||||||||||
Bank service charges | 694 | 694 | 683 | 7,021 | (39 | ) | 6,982 | |||||||||||||||||||||
New zoo revue | - | - | 257 | 17,811 | (257 | ) | 17,554 | |||||||||||||||||||||
Development projects | - | - | - | 14,125 | - | 14,125 | ||||||||||||||||||||||
Office and miscellaneous expenses | 3,130 | 3,130 | (150 | ) | 21,099 | 6,008 | 27,107 | |||||||||||||||||||||
Executive and directors compensation | 83,333 | 62,500 | 145,833 | - | 3,890,303 | (1,831,564 | ) | 2,058,739 | ||||||||||||||||||||
Waste project expenses | - | - | 66,018 | 221,291 | (17,226 | ) | 204,065 | |||||||||||||||||||||
Professional fees | 78,230 | 78,230 | 91,107 | 659,630 | 139,284 | 798,914 | ||||||||||||||||||||||
Investor relations | 367 | 367 | 5,000 | 34,447 | (14,000 | ) | 20,447 | |||||||||||||||||||||
Travel expenses | 724 | 724 | - | 19,076 | 16,850 | 35,926 | ||||||||||||||||||||||
Loss of settlement of account payable | - | - | - | 518,122 | (518,122 | ) | - | |||||||||||||||||||||
Other financing costs | - | - | 182,791 | 365,582 | (182,791 | ) | 182,791 | |||||||||||||||||||||
Impairment of intangible assets | - | - | 345,350 | 691,149 | (345,350 | ) | 345,799 | |||||||||||||||||||||
Total operating expense | 166,478 | 62,500 | 228,978 | 691,056 | 6,459,656 | (2,747,207 | ) | 3,712,449 | ||||||||||||||||||||
Operating loss | (166,478 | ) | (62,500 | ) | (228,978 | ) | (691,044 | ) | (6,459,437 | ) | 2,747,195 | (3,712,242 | ) | |||||||||||||||
Other income | 317 | 317 | - | 317 | - | 317 | ||||||||||||||||||||||
Foreign exchange translation loss | - | - | - | (1,113 | ) | - | (1,113 | ) | ||||||||||||||||||||
Gain (loss) on stock issuance | 30,309 | (168,591 | ) | (168,591 | ) | |||||||||||||||||||||||
Loss on conversion of convertible notes | (48,339 | ) | (48,339 | ) | (48,339 | ) | (48,339 | ) | ||||||||||||||||||||
Derivative Expense | (40,041 | ) | (40,041 | ) | (162,406 | ) | (162,406 | ) | ||||||||||||||||||||
Amortization of debt discount | (60,343 | ) | (60,343 | ) | (113,610 | ) | (113,610 | ) | ||||||||||||||||||||
Gain (loss) on derivative | 40,574 | 40,574 | 124,006 | 124,006 | ||||||||||||||||||||||||
Interest expense | (57,304 | ) | 51,401 | (5,903 | ) | (1,000 | ) | (130,557 | ) | 82,952 | (47,605 | ) | ||||||||||||||||
Total other expense | (56,987 | ) | (56,748 | ) | (113,735 | ) | 29,309 | (131,353 | ) | (285,988 | ) | (417,341 | ) | |||||||||||||||
Net loss | (223,465 | ) | (119,248 | ) | (342,713 | ) | (661,735 | ) | (6,590,790 | ) | 2,461,207 | (4,129,583 | ) | |||||||||||||||
Net loss per common share | (0.00 | ) | (0.01 | ) | (0.054 | ) | ||||||||||||||||||||||
Weighted average common shares outstanding | 65,254,828 | 65,254,828 | 12,238,466 |
The accompanying notes are an integral part of these consolidated financial statements.
18 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Statements of Cash Flows
(Unaudited)
For the three months ended March 31, | Development Stage | |||||||||||||||||||||||||||
2013 | 2012 | April 1, 2010 to Mach 31, 2013 | ||||||||||||||||||||||||||
As Previously Reported | Restatement Adjustments | As Restated | As Previously Restated | As Previously Reported | Restatement Adjustments | As Restated | ||||||||||||||||||||||
Operating Activities | ||||||||||||||||||||||||||||
Cash flows from operating activities : | ||||||||||||||||||||||||||||
Net loss | $ | (223,465 | ) | $ | (119,248 | ) | $ | (342,713 | ) | $ | (661,735 | ) | $ | (6,590,790 | ) | $ | 2,461,207 | $ | (4,129,583 | ) | ||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||||||||||||||
Amortization of convertible debt discount | 55,599 | 4,744 | 60,343 | - | 91,321 | 22,289 | 113,610 | |||||||||||||||||||||
Beneficial conversion feature | - | - | - | - | 5,000 | - | 5,000 | |||||||||||||||||||||
Issuance of common stock for services | 15,000 | - | 15,000 | 63,168 | 305,177 | (390 | ) | 304,787 | ||||||||||||||||||||
Issuance of common stock for compensation | - | 62,500 | 62,500 | - | 3,315,000 | (1,595,000 | ) | 1,720,000 | ||||||||||||||||||||
Issuance of common stock for impaired asset purchase | - | - | - | 345,350 | 690,700 | (345,350 | ) | 345,350 | ||||||||||||||||||||
Issuance of common stock for finance costs | - | - | - | 182,791 | 365,582 | (182,791 | ) | 182,791 | ||||||||||||||||||||
Issuance of subsidiary common stock for services prior to acquisition | - | - | - | - | 50 | - | 50 | |||||||||||||||||||||
Gain on settlement of convertible bonds | (316 | ) | 316 | - | (316 | ) | 316 | - | ||||||||||||||||||||
Issuance of common stock for conversion of notes | - | - | - | - | - | |||||||||||||||||||||||
Loss on settlement of accounts payable | - | - | - | - | 518,122 | (518,122 | ) | - | ||||||||||||||||||||
Loss on foreign currency translations | - | - | - | - | 1,113 | - | 1,113 | |||||||||||||||||||||
Gain on stock issuance | - | - | (30,309 | ) | - | 168,591 | 168,591 | |||||||||||||||||||||
Loss on settlement of convertible promissory notes | 48,339 | 48,339 | - | - | 48,339 | 48,339 | ||||||||||||||||||||||
Gain (loss) on derivative | (40,574 | ) | (40,574 | ) | - | - | (124,006 | ) | (124,006 | ) | ||||||||||||||||||
Derivative expense | 40,041 | 40,041 | - | - | 162,406 | 162,406 | ||||||||||||||||||||||
Changes in operating assets and liabilities: | - | |||||||||||||||||||||||||||
Accounts receivables | - | - | - | - | (166 | ) | (1,939 | ) | (2,105 | ) | ||||||||||||||||||
Deposits | - | - | - | - | (900 | ) | (900 | ) | ||||||||||||||||||||
Prepaid Expenses | - | - | - | (16,667 | ) | (900 | ) | 900 | - | |||||||||||||||||||
Accounts payable and accrued liabilities | 8,806 | 1,779 | 10,585 | 32,196 | 210,150 | (97,655 | ) | 112,495 | ||||||||||||||||||||
Accrued interest | - | 5,903 | 5,903 | - | - | 5,903 | 5,903 | |||||||||||||||||||||
Accounts payable-related parties | (29,800 | ) | - | (29,800 | ) | 55,000 | 290,648 | - | 290,648 | |||||||||||||||||||
Accrued salaries and wages | 83,333 | - | 83,333 | - | 83,333 | - | 83,333 | |||||||||||||||||||||
Cash used in operating activities | (90,843 | ) | 3,800 | (87,043 | ) | (30,206 | ) | (715,976 | ) | 3,798 | (712,178 | ) | ||||||||||||||||
Investing Activities: | ||||||||||||||||||||||||||||
Notes receivable | - | - | (5,000 | ) | - | (5,000 | ) | |||||||||||||||||||||
Issuance of subsidiary stock for cash prior to acquisition | - | - | 950 | - | 950 | |||||||||||||||||||||||
Purchase of land | - | - | (27,752 | ) | - | (27,752 | ) | |||||||||||||||||||||
Cash used in investing activities | - | - | (31,802 | ) | - | (31,802 | ) | |||||||||||||||||||||
Financing Activities: | ||||||||||||||||||||||||||||
Stock Payable | 150,000 | 150,000 | ||||||||||||||||||||||||||
Proceeds from assignment of stock purchase acquisition | 36,000 | - | 36,000 | - | 186,000 | (150,000 | ) | 36,000 | ||||||||||||||||||||
Advances from related party | - | - | 29,940 | 197,925 | - | 197,925 | ||||||||||||||||||||||
Payments on advances from related party | - | - | - | (7,160 | ) | - | (7,160 | ) | ||||||||||||||||||||
Proceeds from convertible note | 56,300 | (3,800 | ) | 52,500 | - | 218,400 | (3,800 | ) | 214,600 | |||||||||||||||||||
Proceeds from convertible note-related party | - | - | - | 5,000 | - | 5,000 | ||||||||||||||||||||||
Issuance of subsidiary stock for cash | - | - | - | 150,000 | - | 150,000 | ||||||||||||||||||||||
Cash provided by financing activities | 92,300 | (3,800 | ) | 88,500 | 29,940 | 750,165 | (3,800 | ) | 746,365 | |||||||||||||||||||
Increase in cash | 1,457 | - | 1,457 | (266 | ) | 2,387 | (2 | ) | 2,385 | |||||||||||||||||||
Cash, beginning of period | 1,007 | (2 | ) | 1,005 | 316 | 77 | 77 | |||||||||||||||||||||
Cash, end of period | $ | 2,464 | $ | (2 | ) | $ | 2,462 | $ | 50 | $ | 2,464 | $ | (2 | ) | $ | 2,462 | ||||||||||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||||||||||||||||||||||
Shares issued to settle convertible notes payable | $ | 89,514 | (37,114 | ) | $ | 52,400 | $ | - | $ | 89,514 | (37,114 | ) | $ | 52,400 | ||||||||||||||
Spin-out of subsidiary | $ | - | $ | - | $ | 250,028 | $ | 250,208 | $ | 250,208 | ||||||||||||||||||
Shares issued for intangible assets | $ | - | $ | 345,350 | $ | 690,700 | (345,350 | ) | $ | 345,350 | ||||||||||||||||||
Shares issued to settle accounts payable | $ | - | $ | - | $ | - | $ | 65,939 | $ | 65,939 | ||||||||||||||||||
Deemed distribution to majority shareholder | $ | - | $ | - | $ | - | $ | 150,000 | $ | 150,000 |
The accompanying notes are an integral part of these consolidated financial statements.
19 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Balance Sheets
(Unaudited)
As Previously Reported June 30, 2013 | Restatement Adjustments | As Restated June 30, 2013 | As Previously Restated December 31, 2012 | |||||||||||||
Assets: | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash | 6,827 | (2 | ) | 6,825 | 1,005 | |||||||||||
Accounts receivable | 166 | (166 | ) | 0 | - | |||||||||||
Total current assets | 6,993 | (168 | ) | 6,825 | 1,005 | |||||||||||
Land | 27,752 | 27,752 | 27,752 | |||||||||||||
Total Assets | $ | 34,745 | $ | (168 | ) | $ | 34,577 | $ | 28,757 | |||||||
Liabilities and Stockholders' Deficit: | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts and other payables | 275,832 | (47,839 | ) | 227,993 | 162,721 | |||||||||||
Accounts payable - related party | 5,129 | 5,129 | 139,326 | |||||||||||||
Accrued salaries and wages | 108,772 | 108,772 | - | |||||||||||||
Due to related party | 181,662 | 1,761 | 183,423 | 203,423 | ||||||||||||
Related party note payable | 288,714 | 307 | 289,021 | 70,307 | ||||||||||||
Convertible notes - (net of $140,627 and $108,006 unamortized discount) | 251,796 | (205,862 | ) | 45,934 | 53,268 | |||||||||||
Derivative Liability | 472,200 | 472,200 | 193,933 | |||||||||||||
Accrued Interest | 27,171 | 27,171 | 17,869 | |||||||||||||
Total current liabilities | 1,111,905 | 247,738 | 1,359,643 | 840,847 | ||||||||||||
Total Liabilities | 1,111,905 | 247,738 | 1,359,643 | 840,847 | ||||||||||||
Stockholders' Deficit | ||||||||||||||||
Preferred stock, no par value 4,986,580 shares authorized and no shares issued. | - | - | ||||||||||||||
Class A Preferred stock , $10 par value 13,420 shares authorized and no shares issued. | - | 134,200 | 134,200 | - | ||||||||||||
Common stock, Par Value $0.001, 300,000,000 shares | ||||||||||||||||
Authorized and 115,095,316 and 62,636,850 shares outstanding at June 30, 2013 and December 31, 2012, respectively | 115,095 | - | 115,095 | 62,636 | ||||||||||||
Additional paid-in capital | 10,093,174 | (2,427,011 | ) | 7,666,163 | 7,192,873 | |||||||||||
Stock payable | 381,604 | (9,200 | ) | 372,404 | 233,607 | |||||||||||
Accumulated deficit | (4,514,336 | ) | (4,514,336 | ) | (4,514,336 | ) | ||||||||||
Accumulated deficit development stage | (7,152,697 | ) | 2,054,105 | (5,098,592 | ) | (3,786,870 | ) | |||||||||
Total Shareholders Deficit | (1,077,160 | ) | (247,906 | ) | (1,325,066 | ) | (812,090 | ) | ||||||||
Total Liabilities and Shareholders Deficit | 34,745 | (168 | ) | 34,577 | 28,757 |
The accompanying notes are an integral part of these consolidated financial statements.
20 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | Development Stage | ||||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | April 1 2010 to June 30, 2013 | ||||||||||||||||||||||||||||||||||||||||
As Previously Reported |
Re- statement Adjust- ment |
As Restated | As Previously Restated |
As Previously Reported |
Re- statement Adjust- ment |
As Restated |
As Previously Restated |
As Previously Reported |
Re- statement Adjust- ment |
As Restated |
||||||||||||||||||||||||||||||||||
Sales | - | - | - | - | - | 12 | 219 | (12 | ) | 207 | ||||||||||||||||||||||||||||||||||
Cost of sales | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Gross profit | - | - | - | - | - | - | - | 12 | 219 | (12 | ) | 207 | ||||||||||||||||||||||||||||||||
- | ||||||||||||||||||||||||||||||||||||||||||||
Bank service charges | 766 | - | 766 | 545 | 1,460 | 1,460 | 1,228 | 7,787 | (39 | ) | 7,748 | |||||||||||||||||||||||||||||||||
New zoo revue | - | - | - | - | - | - | 257 | 17,811 | (257 | ) | 17,554 | |||||||||||||||||||||||||||||||||
Development projects | - | - | - | - | - | - | - | 14,125 | - | 14,125 | ||||||||||||||||||||||||||||||||||
Office and miscellaneous expenses | 4,442 | - | 4,442 | 358 | 7,572 | 7,572 | 208 | 25,541 | 6,008 | 31,549 | ||||||||||||||||||||||||||||||||||
Executive and directors compensation | 99,794 | 62,500 | 162,294 | 1,777,500 | 183,127 | 125,000 | 308,127 | 1,777,500 | 3,990,097 | (1,769,064 | ) | 2,221,033 | ||||||||||||||||||||||||||||||||
Waste project expenses | - | - | - | 21,790 | - | - | 87,808 | 221,291 | (17,226 | ) | 204,065 | |||||||||||||||||||||||||||||||||
Professional fees | 105,026 | - | 105,026 | 18,033 | 183,256 | 183,256 | 109,140 | 764,656 | 139,284 | 903,940 | ||||||||||||||||||||||||||||||||||
Investor relations | 10,334 | - | 10,334 | 10,000 | 10,701 | 10,701 | 15,000 | 44,781 | (14,000 | ) | 30,781 | |||||||||||||||||||||||||||||||||
Travel expenses | 4,970 | - | 4,970 | - | 5,694 | 5,694 | - | 24,046 | 16,850 | 40,896 | ||||||||||||||||||||||||||||||||||
Forfeiture of deposit on landfill | 150,000 | - | 150,000 | - | 150,000 | 150,000 | - | 150,000 | - | 150,000 | ||||||||||||||||||||||||||||||||||
Loss of settlement of account payable | - | - | - | - | - | - | - | 518,122 | (518,122 | ) | - | |||||||||||||||||||||||||||||||||
Other financing costs | - | - | - | - | - | - | 182,791 | 365,582 | (182,791 | ) | 182,791 | |||||||||||||||||||||||||||||||||
Impairment of intangible assets | - | - | - | - | - | - | 345,350 | 691,149 | (345,350 | ) | 345,799 | |||||||||||||||||||||||||||||||||
Total operating expense | 375,332 | 62,500 | 437,832 | 1,828,226 | 541,810 | 125,000 | 666,810 | 2,519,282 | 6,834,988 | (2,684,707 | ) | 4,150,281 | ||||||||||||||||||||||||||||||||
Operating loss | (375,332 | ) | (62,500 | ) | (437,832 | ) | (1,828,226 | ) | (541,810 | ) | (125,000 | ) | (666,810 | ) | (2,519,270 | ) | (6,834,769 | ) | 2,684,695 | (4,150,074 | ) | |||||||||||||||||||||||
Other Expense | - | - | - | - | 317 | 317 | 317 | 317 | ||||||||||||||||||||||||||||||||||||
Foreign exchange translation loss | - | - | - | - | - | - | - | - | (1,113 | ) | - | (1,113 | ) | |||||||||||||||||||||||||||||||
Gain/Loss on stock issuance | (198,900 | ) | (168,591 | ) | - | (168,591 | ) | (168,591 | ) | |||||||||||||||||||||||||||||||||||
Loss on settlement of convertible promissory notes | - | (273,285 | ) | (273,285 | ) | - | (321,624 | ) | (321,624 | ) | - | (321,624 | ) | (321,624 | ) | |||||||||||||||||||||||||||||
Derivative Expense | - | (326,378 | ) | (326,378 | ) | - | (366,419 | ) | (366,419 | ) | - | (488,784 | ) | (488,784 | ) | |||||||||||||||||||||||||||||
Amortization debt discount | - | (142,998 | ) | (142,998 | ) | - | (203,341 | ) | (203,341 | ) | - | (256,608 | ) | (256,608 | ) | |||||||||||||||||||||||||||||
( Loss) Gain on derivative | - | 196,577 | 196,577 | - | 237,151 | 237,151 | - | 320,583 | 320,583 | |||||||||||||||||||||||||||||||||||
Interest expense | (186,575 | ) | 201,799 | 15,224 | (54 | ) | (243,562 | ) | 252,883 | 9,321 | (1,054 | ) | (316,815 | ) | 284,434 | (32,381 | ) | |||||||||||||||||||||||||||
Total other expense | (186,575 | ) | (344,285 | ) | (530,860 | ) | (198,954 | ) | (243,562 | ) | (401,033 | ) | (644,595 | ) | (169,645 | ) | (317,928 | ) | (630,273 | ) | (948,201 | ) | ||||||||||||||||||||||
Net loss | (561,907 | ) | (406,785 | ) | (968,692 | ) | (2,027,180 | ) | (785,372 | ) | (526,033 | ) | (1,311,405 | ) | (2,688,915 | ) | (7,152,697 | ) | 2,054,422 | (5,098,275 | ) | |||||||||||||||||||||||
Net loss per common share - Basic | (0.01 | ) | (0.01 | ) | (0.035 | ) | (0.01 | ) | (0.02 | ) | 0.065 | |||||||||||||||||||||||||||||||||
Weighted average common shares outstanding - Basic | 85,848,996 | 85,848,996 | 58,115,160 | 75,608,802 | 75,608,802 | 41,296,046 |
The accompanying notes are an integral part of these consolidated financial statements.
21 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Statements of Cash Flows
(Unaudited)
For the six months ended June 30, | Development Stage | |||||||||||||||||||||||||||
2013 | 2012 | April 1, 2010 to June 30, 2013) | ||||||||||||||||||||||||||
As Previously Reported | Restatement Adjustments | As Restated | As Previously Restated | As Previously Reported | Restatement Adjustments | As Restated | ||||||||||||||||||||||
Operating Activities: | ||||||||||||||||||||||||||||
Cash flows from operating activities : | ||||||||||||||||||||||||||||
Net loss | $ | (785,372 | ) | $ | (526,033 | ) | $ | (1,311,405 | ) | $ | (2,688,915 | ) | $ | (7,152,697 | ) | $ | 2,054,422 | $ | (5,098,275 | ) | ||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||||||||||||||
Amortization of convertible debt discount | 237,948 | (34,607 | ) | 203,341 | - | 273,670 | (17,062 | ) | 256,608 | |||||||||||||||||||
Beneficial conversion feature | - | - | - | 5,000 | - | 5,000 | ||||||||||||||||||||||
Issuance of common stock for services | 10,000 | - | 10,000 | 115,391 | 300,177 | (390 | ) | 299,787 | ||||||||||||||||||||
Issuance of common stock for compensation | - | 125,000 | 125,000 | 1,657,500 | 3,315,000 | (1,532,500 | ) | 1,782,500 | ||||||||||||||||||||
Issue of common stock for impaired asset purchase | - | - | 345,350 | 690,700 | (345,350 | ) | 345,350 | |||||||||||||||||||||
Issuance of common stock for finance costs | - | - | - | 182,791 | 365,582 | (182,791 | ) | 182,791 | ||||||||||||||||||||
Gain/loss on stock issuance | 168,591 | - | 168,591 | 168,591 | ||||||||||||||||||||||||
Issuance of subsidiary common stock for services prior to acquisition | - | - | - | 50 | - | 50 | ||||||||||||||||||||||
Forfeiture of deposit on landfill | 150,000 | 150,000 | 150,000 | - | 150,000 | |||||||||||||||||||||||
Loss on settlement of convertible promissory notes | 321,624 | 321,624 | 321,624 | 321,624 | ||||||||||||||||||||||||
Loss on settlement of accounts payable | - | - | - | 518,122 | (518,122 | ) | - | |||||||||||||||||||||
Loss on foreign currency translations | - | 1,113 | - | 1,113 | ||||||||||||||||||||||||
Gain (loss) derivative | (237,151 | ) | (237,151 | ) | (320,583 | ) | (320,583 | ) | ||||||||||||||||||||
Derivative expense | 366,419 | 366,419 | 488,784 | 488,784 | ||||||||||||||||||||||||
Changes in operating assets and liabilities: | - | - | - | - | ||||||||||||||||||||||||
Accounts receivables | - | - | - | - | (166 | ) | (1,939 | ) | (2,105 | ) | ||||||||||||||||||
Prepaid expenses | - | - | (6,667 | ) | (900 | ) | - | (900 | ) | |||||||||||||||||||
Accrued interest | - | 41,435 | 41,435 | 41,435 | 41,435 | |||||||||||||||||||||||
Accounts payable and accrued liabilities | 80,573 | (38,288 | ) | 42,285 | 54,829 | 281,917 | (137,722 | ) | 144,195 | |||||||||||||||||||
Accrued salaries and wages | 108,772 | - | 108,772 | 108,772 | - | 108,772 | ||||||||||||||||||||||
Accounts payable - related parties | 1,799 | (1,799 | ) | - | 102,860 | 322,247 | (1,799 | ) | 320,448 | |||||||||||||||||||
Cash used in operating activities | (196,280 | ) | 16,600 | (179,680 | ) | (68,270 | ) | (821,413 | ) | 16,598 | (804,815 | ) | ||||||||||||||||
Investing Activities: | ||||||||||||||||||||||||||||
Notes receivable | - | - | (5,000 | ) | - | (5,000 | ) | |||||||||||||||||||||
Issuance of subsidiary stock for cash prior to acquisition | - | - | 950 | - | 950 | |||||||||||||||||||||||
Deposit on purchase of Davison landfill | (150,000 | ) | (150,000 | ) | (150,000 | ) | - | (150,000 | ) | |||||||||||||||||||
Purchase of land | - | - | (27,752 | ) | - | (27,752 | ) | |||||||||||||||||||||
Cash used in investing activities | (150,000 | ) | (150,000 | ) | - | (181,802 | ) | - | (181,802 | ) | ||||||||||||||||||
Financing Activities: | ||||||||||||||||||||||||||||
Stock payable | - | - | - | 150,000 | - | 150,000 | ||||||||||||||||||||||
Proceeds from assignment of stock purchase agreement | 36,000 | 36,000 | - | 36,000 | - | 36,000 | ||||||||||||||||||||||
Advances from related party | - | - | 62,965 | 197,925 | - | 197,925 | ||||||||||||||||||||||
Payments on advances from related party | - | - | - | (7,160 | ) | - | (7,160 | ) | ||||||||||||||||||||
Proceeds from convertible notes | 165,600 | (16,600 | ) | 149,000 | - | 327,700 | (16,600 | ) | 311,100 | |||||||||||||||||||
Proceeds from convertible notes - related party | 150,500 | 150,500 | 5,000 | 155,500 | - | 155,500 | ||||||||||||||||||||||
Issuance of subsidiary stock for cash | - | - | - | 150,000 | - | 150,000 | ||||||||||||||||||||||
Cash provided by financing activities | 352,100 | (16,600 | ) | 335,500 | 67,965 | 1,009,965 | (16,600 | ) | 993,365 | |||||||||||||||||||
Increase (decrease) in cash | 5,820 | 5,820 | (305 | ) | 6,750 | (2 | ) | 6,748 | ||||||||||||||||||||
Cash, beginning of period | 1,007 | (2 | ) | 1,005 | 316 | 77 | - | 77 | ||||||||||||||||||||
Cash, end of period | $ | 6,827 | $ | (2 | ) | $ | 6,825 | $ | 11 | $ | 6,827 | $ | (2 | ) | $ | 6,825 | ||||||||||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||||||||||||||||||||||
Shares issued for settlement of convertible notes payable | $ | 286,412 | $ | (118,287 | ) | $ | 168,125 | $ | - | $ | 286,412 | $ | (118,287 | ) | $ | 168,125 | ||||||||||||
Shares issued for intangible assets | $ | - | $ | - | $ | 345,350 | $ | - | $ | - | $ | - | ||||||||||||||||
Spin-out of subsidiary | $ | - | $ | - | $ | 250,028 | $ | 250,208 | $ | - | $ | 250,208 | ||||||||||||||||
Shares issued to settle accounts payable | $ | - | $ | - | $ | 65,939 | $ | 65,939 | $ | - | $ | 65,939 | ||||||||||||||||
Deemed distribution to majority shareholder | $ | - | $ | - | $ | - | $ | 150,000 | $ | - | $ | 150,000 | ||||||||||||||||
Convertible notes issued to settle accounts payable | $ | 15,900 | $ | (15,900 | ) | $ | - | $ | - | $ | 15,900 | $ | (15,900 | ) | $ | - | ||||||||||||
Stock payable issued to settle accounts payable - related party | $ | 135,996 | $ | 2,001 | $ | 137,997 | $ | - | $ | 135,996 | $ | 2,001 | $ | 137,997 | ||||||||||||||
Stock payable issued to settle due to related party | $ | 20,000 | $ | (20,000 | ) | $ | - | $ | - | $ | 20,000 | $ | (20,000 | ) | $ | - | ||||||||||||
Stock payable issued to settle convertible notes payable - related party | $ | 5,000 | $ | (5,000 | ) | $ | - | $ | - | $ | 5,000 | $ | (5,000 | ) | $ | - |
The accompanying notes are an integral part of these consolidated financial statements.
22 |
CIRQUE ENERGY, INC.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Balance Sheets
(Unaudited)
As Previously Reported September 30, 2013 | Restatement Adjustments | As Restated September 30, 2013 | As Previously Restated December 31, 2012 | |||||||||||||
Assets: | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash | $ | 15,931 | $ | (2 | ) | $ | 15,929 | $ | 1,005 | |||||||
Accounts receivable | 166 | (166 | ) | - | - | |||||||||||
Total current assets | 16,097 | (168 | ) | 15,929 | 1,005 | |||||||||||
Equipment (net of depreciation) | 4,895 | 4,895 | ||||||||||||||
Land | 27,752 | 27,752 | 27,752 | |||||||||||||
Total Assets | $ | 48,744 | $ | (168 | ) | $ | 48,576 | $ | 28,757 | |||||||
Liabilities and Stockholders' Deficit: | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts and other payables | $ | 318,319 | $ | (47,839 | ) | $ | 270,480 | $ | 162,721 | |||||||
Accounts payable - related party | 5,129 | 5,129 | 139,326 | |||||||||||||
Accrued salaries and wages | 125,000 | 125,000 | - | |||||||||||||
Due to related party | 192,662 | 1,761 | 194,423 | 203,423 | ||||||||||||
Convertible notes - related party | 233,095 | (7,595 | ) | 225,500 | 70,307 | |||||||||||
Convertible notes - (net of $271,357 and $108,006 unamortized discount, respectively) | 362,743 | (335,261 | ) | 27,482 | 53,268 | |||||||||||
Derivative liability | 480,851 | 480,851 | 193,933 | |||||||||||||
Accrued interest | 32,322 | 32,322 | 17,869 | |||||||||||||
Total current liabilities | 1,236,948 | 124,239 | 1,361,187 | 840,847 | ||||||||||||
Total Liabilities | 1,236,948 | 124,239 | 1,361,187 | 840,847 | ||||||||||||
Stockholders' Deficit | ||||||||||||||||
Preferred stock, no par value 4,986,580 shares authorized and no shares issued. | - | - | - | |||||||||||||
Class A Preferred stock , $10 par value 13,420 shares authorized and no shares issued. | - | 134,200 | 134,200 | - | ||||||||||||
Common stock, Par Value $0.001, Authorized 300,000,000 shares Issued 145,285,887 and 62,636,850 shares outstanding at June 30, 2013 and December 31, 2012, respectively | 145,289 | 145,289 | 62,636 | |||||||||||||
Additional paid-in capital | 10,377,436 | (2,067,442 | ) | 8,309,994 | 7,192,873 | |||||||||||
Stock payable | 381,604 | (65,450 | ) | 316,154 | 233,607 | |||||||||||
Accumulated deficit | (4,514,336 | ) | (4,514,336 | ) | (4,514,336 | ) | ||||||||||
Accumulated deficit development stage | (7,578,197 | ) | 1,874,285 | (5,703,912 | ) | (3,786,870 | ) | |||||||||
Total Shareholders Deficit | (1,188,204 | ) | (124,407 | ) | (1,312,611 | ) | (812,090 | ) | ||||||||
Total Liabilities and Shareholders Deficit | $ | 48,744 | $ | (168 | ) | $ | 48,576 | $ | 28,757 |
The accompanying notes are an integral part of these consolidated financial statements.
23 |
CIRQUE ENERGY, INC.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | Development Stage | ||||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | April 1 2010 to September 30, 2013 | ||||||||||||||||||||||||||||||||||||||||
As Previously Reported | Re- statement Adjust- ments | As Restated | As Previously Restated | As Previously Reported | Re- statement Adjust- ments | As Restated | As Previously Restated | As Previously Reported | Re- statement Adjust- ments | As Restated | ||||||||||||||||||||||||||||||||||
Sales | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 12 | $ | 219 | $ | (12 | ) | $ | 207 | |||||||||||||||||||||
Cost of sales | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Gross profit | - | - | - | - | - | - | - | 12 | 219 | (12 | ) | 207 | ||||||||||||||||||||||||||||||||
Bank service charges | 1,307 | - | 1,307 | 1,816 | 2,767 | - | 2,767 | 3,044 | 9,094 | (39 | ) | 9,055 | ||||||||||||||||||||||||||||||||
New zoo revue | - | - | - | - | - | - | - | 257 | 17,811 | (257 | ) | 17,554 | ||||||||||||||||||||||||||||||||
Development projects | - | - | - | - | - | - | - | - | 14,125 | - | 14,125 | |||||||||||||||||||||||||||||||||
Office and miscellaneous expenses | 8,966 | - | 8,966 | 2,783 | 16,538 | - | 16,538 | 2,991 | 34,507 | 6,008 | 40,515 | |||||||||||||||||||||||||||||||||
Executive and directors compensation | 131,335 | 93,750 | 225,085 | 42,500 | 314,462 | 218,750 | 533,212 | 1,820,000 | 4,121,432 | (1,675,314 | ) | 2,446,118 | ||||||||||||||||||||||||||||||||
Waste project expenses | - | - | - | 72,796 | - | - | - | 160,604 | 221,291 | (17,226 | ) | 204,065 | ||||||||||||||||||||||||||||||||
Professional fees | 86,600 | - | 86,600 | 96,516 | 269,856 | - | 269,856 | 205,655 | 851,256 | 139,284 | 990,540 | |||||||||||||||||||||||||||||||||
Investor relations | 11,782 | - | 11,782 | 3,000 | 22,483 | - | 22,483 | 18,000 | 56,563 | (14,000 | ) | 42,563 | ||||||||||||||||||||||||||||||||
Travel expenses | 11,962 | - | 11,962 | 1,503 | 17,656 | - | 17,656 | 1,504 | 36,008 | 16,850 | 52,858 | |||||||||||||||||||||||||||||||||
Forfeiture of deposit on landfill | - | - | - | - | 150,000 | - | 150,000 | - | 150,000 | - | 150,000 | |||||||||||||||||||||||||||||||||
Loss of settlement of account payable | - | - | - | - | - | - | - | - | 518,122 | (518,122 | ) | - | ||||||||||||||||||||||||||||||||
Other financing costs | - | - | - | - | - | - | - | 182,791 | 365,582 | (182,791 | ) | 182,791 | ||||||||||||||||||||||||||||||||
Impairment of intangible assets | - | - | - | - | - | - | - | 345,350 | 691,149 | (345,350 | ) | 345,799 | ||||||||||||||||||||||||||||||||
Total operating expense | 251,952 | 93,750 | 345,702 | 220,914 | 793,762 | 218,750 | 1,012,512 | 2,740,196 | 7,086,940 | (2,590,957 | ) | 4,495,983 | ||||||||||||||||||||||||||||||||
Operating loss | (251,952 | ) | (93,750 | ) | (345,702 | ) | (220,914 | ) | (793,762 | ) | (218,750 | ) | (1,012,512 | ) | (2,740,184 | ) | (7,086,721 | ) | 2,590,945 | (4,495,776 | ) | |||||||||||||||||||||||
Other Expense | (317 | ) | (317 | ) | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
Debt Discount | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Foreign exchange translation loss | - | - | - | - | - | - | - | - | (1,113 | ) | - | (1,113 | ) | |||||||||||||||||||||||||||||||
Gain/loss on stock issuance | - | - | - | - | - | - | - | - | - | (168,591 | ) | (168,591 | ) | |||||||||||||||||||||||||||||||
Derivative expense | - | (339,051 | ) | (339,051 | ) | (34,100 | ) | - | (705,470 | ) | (705,470 | ) | (34,100 | ) | - | (827,835 | ) | (827,835 | ) | |||||||||||||||||||||||||
Amortization of debt discount | - | (41,628 | ) | (41,628 | ) | (13,556 | ) | - | (244,969 | ) | (244,969 | ) | (13,556 | ) | - | (298,236 | ) | (298,236 | ) | |||||||||||||||||||||||||
Loss on issuance of convertible promissory notes | - | (331,556 | ) | (331,556 | ) | - | - | (653,180 | ) | (653,180 | ) | (17,272 | ) | - | (653,180 | ) | (653,180 | ) | ||||||||||||||||||||||||||
( Loss) gain on derivative | - | 492,900 | 492,900 | (17,272 | ) | - | 730,051 | 730,051 | (168,591 | ) | - | 813,483 | 813,483 | |||||||||||||||||||||||||||||||
Interest expense | (173,548 | ) | 133,265 | (40,283 | ) | (945 | ) | (417,110 | ) | 386,148 | (30,962 | ) | (1,999 | ) | (490,363 | ) | 417,699 | (72,664 | ) | |||||||||||||||||||||||||
Total other expense | (173,548 | ) | (86,387 | ) | (259,935 | ) | (65,873 | ) | (417,110 | ) | (487,420 | ) | (904,530 | ) | (235,518 | ) | (491,476 | ) | (716,660 | ) | (1,208,136 | ) | ||||||||||||||||||||||
Net loss | (425,500 | ) | (180,137 | ) | (605,637 | ) | (286,787 | ) | (1,210,872 | ) | (706,170 | ) | (1,917,042 | ) | (2,975,702 | ) | (7,578,197 | ) | 1,874,285 | (5,703,912 | ) | |||||||||||||||||||||||
Net loss per common share - Basic | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.01 | ) | (0.02 | ) | (0.06 | ) | ||||||||||||||||||||||||||||||||
Weighted average common shares outstanding - Basic | 128,278,930 | 128,278,930 | 62,579,717 | 88,915,613 | 88,915,613 | 48,442,388 |
The accompanying notes are an integral part of these consolidated financial statements.
24 |
CIRQUE ENERGY, INC.
f/k/a Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Restated Consolidated Statements of Cash Flows
(Unaudited)
For the nine months ended September 30, | Development Stage | |||||||||||||||||||||||||||
2013 | 2012 | April 1, 2010 to September 30, 2013 | ||||||||||||||||||||||||||
As Previously Reported | Restatement Adjustments | As Restated | As Previously Restated | As Previously Reported | Restatement Adjustments | As Restated | ||||||||||||||||||||||
Operating Activities: | ||||||||||||||||||||||||||||
Cash flows from operating activities : | ||||||||||||||||||||||||||||
Net loss | $ | (1,210,872 | ) | $ | (706,170 | ) | $ | (1,917,042 | ) | $ | (2,975,702 | ) | $ | (7,578,197 | ) | $ | 1,874,285 | $ | (5,703,912 | ) | ||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||||||||||||||
Amortization of convertible debt discount | 407,846 | (162,877 | ) | 244,969 | 47,656 | 443,568 | (145,332 | ) | 298,236 | |||||||||||||||||||
Depreciation | 258 | - | 258 | 258 | - | 258 | ||||||||||||||||||||||
Beneficial conversion feature | - | - | - | 5,000 | - | 5,000 | ||||||||||||||||||||||
Issuance of common stock for services | 10,000 | 10,000 | 140,091 | 300,177 | (390 | ) | 299,787 | |||||||||||||||||||||
Issuance of common stock for compensation | - | 218,750 | 218,750 | 1,657,500 | 3,315,000 | (1,438,750 | ) | 1,876,250 | ||||||||||||||||||||
Issue of common stock for impaired asset purchase | - | - | 345,350 | 690,700 | (345,350 | ) | 345,350 | |||||||||||||||||||||
Issuance of common stock for finance costs | - | - | 182,791 | 365,582 | (182,791 | ) | 182,791 | |||||||||||||||||||||
Issuance of subsidiary common stock for services prior to acquisition | - | - | - | 50 | - | 50 | ||||||||||||||||||||||
Forfeiture of deposit on landfill | 150,000 | 150,000 | 150,000 | - | 150,000 | |||||||||||||||||||||||
Loss on settlement of accounts payable | - | - | - | 518,122 | (518,122 | ) | - | |||||||||||||||||||||
Loss on foreign currency translations | - | - | - | 1,113 | - | 1,113 | ||||||||||||||||||||||
Gain/loss on issuance of stock | - | 168,591 | 168,591 | 168,591 | ||||||||||||||||||||||||
Derivative Expense | 705,470 | 705,470 | 17,272 | 827,835 | 827,835 | |||||||||||||||||||||||
Gain on derivative liability | (730,051 | ) | (730,051 | ) | (813,483 | ) | (813,483 | ) | ||||||||||||||||||||
Loss on settlement of convertible promissory notes | 653,180 | 653,180 | 653,180 | 653,180 | ||||||||||||||||||||||||
Non-cash conversion of notes | - | - | - | - | ||||||||||||||||||||||||
Non-cash Accounts payable | - | - | - | - | ||||||||||||||||||||||||
Changes in operating assets and liabilities: | - | - | - | - | ||||||||||||||||||||||||
Accounts receivables | - | - | - | (166 | ) | (1,939 | ) | (2,105 | ) | |||||||||||||||||||
Deposits | - | - | - | (900 | ) | - | (900 | ) | ||||||||||||||||||||
Prepaid Expenses | - | (3,021 | ) | - | - | |||||||||||||||||||||||
Accounts payable and accrued liabilities | 134,446 | (48,194 | ) | 86,252 | 64,429 | 335,790 | (147,628 | ) | 188,162 | |||||||||||||||||||
Accrued salaries and wages | 125,000 | - | 125,000 | 125,000 | - | 125,000 | ||||||||||||||||||||||
Accrued Interest | 65,291 | 65,291 | 65,291 | 65,291 | ||||||||||||||||||||||||
Accounts payable - related parties | 1,799 | (1,799 | ) | - | 91,540 | 322,247 | (1,799 | ) | 320,448 | |||||||||||||||||||
Cash used in operating activities | (381,523 | ) | (6,400 | ) | (387,923 | ) | (263,503 | ) | (1,006,656 | ) | (6,402 | ) | (1,013,058 | ) | ||||||||||||||
Investing Activities: | ||||||||||||||||||||||||||||
Notes receivable | - | - | (5,000 | ) | - | (5,000 | ) | |||||||||||||||||||||
Issuance of subsidiary stock for cash prior to acquisition | - | - | 950 | - | 950 | |||||||||||||||||||||||
Deposit on purchase of Davison landfill | (150,000 | ) | (150,000 | ) | (150,000 | ) | - | (150,000 | ) | |||||||||||||||||||
Purchase of Equipment | (5,153 | ) | (5,153 | ) | (5,153 | ) | - | (5,153 | ) | |||||||||||||||||||
Purchase of land | - | - | - | (27,752 | ) | - | (27,752 | ) | ||||||||||||||||||||
Cash used in investing activities | (155,153 | ) | - | (155,153 | ) | - | (186,955 | ) | - | (186,955 | ) | |||||||||||||||||
Financing Activities: | ||||||||||||||||||||||||||||
Stock payable | - | - | 155,000 | 150,000 | - | 150,000 | ||||||||||||||||||||||
Proceeds from assignment of stock purchase agreement | 75,000 | 11,000 | 86,000 | - | 75,000 | 11,000 | 86,000 | |||||||||||||||||||||
Advances from related party | 11,000 | (11,000 | ) | - | 68,121 | 208,925 | (11,000 | ) | 197,925 | |||||||||||||||||||
Payments on advances from related party | - | - | (7,160 | ) | (7,160 | ) | - | (7,160 | ) | |||||||||||||||||||
Proceeds from convertible notes | 315,100 | 6,400 | 321,500 | 65,000 | 477,200 | 6,400 | 483,600 | |||||||||||||||||||||
Proceeds from convertible notes - related party | 150,500 | 150,500 | 5,000 | 155,500 | - | 155,500 | ||||||||||||||||||||||
Issuance of subsidiary stock for cash | - | - | - | 150,000 | - | 150,000 | ||||||||||||||||||||||
Cash provided by financing activities | 551,600 | 6,400 | 558,000 | 285,961 | 1,209,465 | 6,400 | 1,215,865 | |||||||||||||||||||||
Increase (decrease) in cash | 14,924 | 14,924 | 22,458 | 15,854 | (2 | ) | 15,852 | |||||||||||||||||||||
Cash, beginning of period | 1,007 | (2 | ) | 1,005 | 316 | 77 | 77 | |||||||||||||||||||||
Cash, end of period | $ | 15,931 | $ | (2 | ) | $ | 15,929 | $ | 22,774 | $ | 15,931 | $ | (2 | ) | $ | 15,929 | ||||||||||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||||||||||||||||||||||
Shares issued for settlement of convertible notes payable | $ | 553,744 | $ | (232,151 | ) | $ | 321,593 | $ | - | $ | 553,744 | $ | (232,151 | ) | $ | 321,593 | ||||||||||||
Shares issued for intangible assets | $ | - | $ | - | $ | - | $ | 345,350 | $ | - | $ | - | $ | - | ||||||||||||||
Spin-out of subsidiary | $ | - | $ | - | $ | - | $ | 250,028 | $ | 250,208 | $ | - | $ | 250,208 | ||||||||||||||
Shares issued to settle accounts payable | $ | - | $ | - | $ | - | $ | 65,939 | $ | 65,939 | $ | - | $ | 65,939 | ||||||||||||||
Deemed distribution to majority shareholder | $ | - | $ | - | $ | - | $ | - | $ | 150,000 | $ | - | $ | 150,000 | ||||||||||||||
Convertible notes issued to settle accounts payable | $ | 15,900 | $ | (15,900 | ) | $ | - | $ | - | $ | 15,900 | $ | (15,900 | ) | $ | - | ||||||||||||
Stock payable issued to settle accounts payable - related party | $ | 135,996 | $ | 2,001 | $ | 137,997 | $ | - | $ | 135,996 | $ | 2,001 | $ | 137,997 | ||||||||||||||
Stock payable issued to settle due to related party | $ | 20,000 | $ | (20,000 | ) | $ | - | $ | - | $ | 20,000 | $ | (20,000 | ) | $ | - | ||||||||||||
Stock payable issued to settle notes payable - related party | $ | 5,000 | $ | (5,000 | ) | $ | - | $ | - | $ | 5,000 | $ | (5,000 | ) | $ | - | ||||||||||||
Convertible note issued to settle convertible notes payable-related party | $ | 65,000 | $ | (65,000 | ) | $ | - | $ | - | $ | 65,000 | $ | (65,000 | ) | $ | - |
The accompanying notes are an integral part of these consolidated financial statements.
25 |
Liquidity and Capital Resources
During the year ended December 31, 2013 net cash used in operating activities totaled $584,509. Cash generated by financing activities was $747,500, resulting primarily from the issuance of convertible notes, and cash used in investing activities totaled $155,155. Increase in cash for the period was $7,836.
During the year ended December 31, 2012 net cash used in operating activities totaled $377,374. Cash generated by financing activities was $378,063, resulting primarily from the sale of common stock for cash and the issuance of convertible notes, and cash used in investing activities totaled $-0-. Increase in cash for the period was $689.
Cash Flow Requirements for Operations
As of December 31, 2013 we had available cash of $8,841. Based on our historical cash needs and our business plan, we require approximately $1,200,000 for operations for the coming year. We currently have legal and accounting expenses with no revenue generating operations. We rely on sale of our common shares and advances from our majority shareholders and various convertible debt facilities to fund our operating needs.
Going Concern
Our continuation as a going concern is dependent upon obtaining the additional working capital necessary to sustain our current status. As shown in the accompanying financial statements, the Company has incurred an accumulated deficit of $11,505,084 at December 31, 2013. Management plans to seek additional financing through the issuance of debt securities or the sale of the Company’s common stock through private placements. There is no assurance that the Company will raise sufficient funds to continue. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements or financing activities with special purpose entities.
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
Not applicable because our company is a Smaller Reporting Company.
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA |
26 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
Detroit, Michigan
We have audited the accompanying consolidated balance sheets of Cirque Energy, Inc. f/k/a Green Energy Renewable Solutions, Inc., as of December 31, 2013 and 2012, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated 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 has determined that it 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 includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 Cirque Energy, Inc. f/k/a Green Energy Renewable Solutions, Inc., as of December 31, 2013 and 2012 and the results of their operations and cash flows for the years 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 Cirque Energy, Inc. f/k/a Green Energy Renewable Solutions, Inc. will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has incurred losses from operations, has negative working capital and is in need of additional capital to grow its operations so that it can become profitable. 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 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ KLJ & Associates, LLP | |
KLJ & Associates, LLP |
St. Louis Park, MN
January 12, 2015
27 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
Consolidated Balance Sheets
(Restated) | ||||||||
December 31, | December 31, | |||||||
2013 | 2012 | |||||||
Assets: | ||||||||
Current assets: | ||||||||
Cash | $ | 8,841 | $ | 1,005 | ||||
Total current assets | 8,841 | 1,005 | ||||||
Land | 27,752 | 27,752 | ||||||
Equipment, net | 4,637 | - | ||||||
Total Assets | $ | 41,230 | $ | 28,757 | ||||
Liabilities and Stockholders' Deficit: | ||||||||
Current liabilities: | ||||||||
Accounts and other payables | $ | 287,292 | $ | 162,721 | ||||
Accounts and other payables - related party | 5,129 | 139,326 | ||||||
Accrued salaries and wages - related party | 224,758 | - | ||||||
Accrued interest | 22,013 | 17,869 | ||||||
Due to related party | - | 203,423 | ||||||
Notes payable | 358,923 | - | ||||||
Notes payable - related party | - | 70,307 | ||||||
Convertible notes - (net of $360,986 and $108,006 unamortized discount) | 116,918 | 53,268 | ||||||
Derivative liability | 1,055,755 | 193,933 | ||||||
Total current liabilities | 2,070,788 | 840,847 | ||||||
Total Liabilities | 2,070,788 | 840,847 | ||||||
Stockholders' Deficit | ||||||||
Preferred stock, $0.001 par value 19,986,580 shares authorized and no shares issued | - | - | ||||||
Class A Preferred stock, $10 par value 13,420 and -0- shares authorized and issued as of December 31, 2013 and 2012, respectively | 134,200 | - | ||||||
Common stock, Par Value $0.001, 300,000,000 shares authorized, 163,934,049 and 62,636,850 shares outstanding at December 31, 2013 and 2012, respectively | 163,931 | 62,636 | ||||||
Additional paid-in capital | 8,748,320 | 7,192,873 | ||||||
Stock payable | 429,075 | 233,607 | ||||||
Accumulated deficit development stage | (11,505,084 | ) | (8,301,206 | ) | ||||
Total Stockholders' Deficit | (2,029,558 | ) | (812,090 | ) | ||||
Total Liabilities and Stockholders' Deficit | $ | 41,230 | $ | 28,757 |
The accompanying notes are an integral part of these consolidated financial statements.
28 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
Consolidated Statements of Operations
For the years ended December 31, | ||||||||
2013 | 2012 (Restated) | |||||||
Sales | $ | - | $ | - | ||||
Cost of sales | - | - | ||||||
Gross profit | - | - | ||||||
Bank service charges | 4,018 | 3,904 | ||||||
Development projects | 5,800 | - | ||||||
Office and miscellaneous | 26,870 | 12,804 | ||||||
Executive and directors compensation | 769,636 | 1,912,906 | ||||||
Waste project | - | 165,222 | ||||||
Professional fees | 338,731 | 352,928 | ||||||
Investor relations | 37,957 | 19,080 | ||||||
Travel | 39,185 | 19,930 | ||||||
Forfeiture of deposit on landfill | 150,000 | |||||||
Other financing costs | - | 182,791 | ||||||
Impairment of intangible assets | - | 345,350 | ||||||
Total operating expense | 1,372,197 | 3,014,915 | ||||||
Operating loss | (1,372,197 | ) | (3,014,915 | ) | ||||
Amortization of debt discount | (489,803 | ) | (53,267 | ) | ||||
Derivative expense | (1,373,813 | ) | (122,365 | ) | ||||
Gain on settlement of debt | 20,693 | - | ||||||
Loss on stock issuance | - | (168,591 | ) | |||||
Loss on settlement of promissory convertible notes | (1,024,869 | ) | - | |||||
Gain on derivative liability | 1,148,991 | 83,432 | ||||||
Interest expense | (112,880 | ) | (20,702 | ) | ||||
Total other (income) expense | (1,831,681 | ) | (281,493 | ) | ||||
Net loss | $ | (3,203,878 | ) | $ | (3,296,408 | ) | ||
Net loss per common share | $ | (0.03 | ) | $ | (0.07 | ) | ||
Weighted average common shares outstanding | 95,514,332 | 48,442,388 |
The accompanying notes are an integral part of these consolidated financial statements.
29 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
Consolidated Statements of Stockholders’ Deficit
Preferred Stock A | Common Stock | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Additional Paid-In Capital | Stock Payable | Accumulated Deficit | Total Equity | |||||||||||||||||||||||||
Balance at December 31, 2011 | - | $ | - | 18,505,052 | $ | 9,252 | $ | 4,356,027 | $ | - | $ | (5,004,798 | ) | $ | (639,519 | ) | ||||||||||||||||
Shares issued for services | - | - | 1,610,824 | 886 | 114,675 | - | - | 115,561 | ||||||||||||||||||||||||
Shares issued for asset purchase | - | - | 9,209,334 | 4,605 | 340,745 | - | - | 345,350 | ||||||||||||||||||||||||
Shares issued for secured note default penalty | - | - | 7,311,640 | 3,656 | 179,135 | - | - | 182,791 | ||||||||||||||||||||||||
Subsidiary spin-out share distribution | - | - | - | - | 259,028 | - | - | 259,028 | ||||||||||||||||||||||||
Shares issued for compensation | - | - | 13,000,000 | 6,500 | 1,651,000 | - | - | 1,657,500 | ||||||||||||||||||||||||
Shares issued to settle debt | - | - | 13,000,000 | 6,500 | 318,500 | - | - | 325,000 | ||||||||||||||||||||||||
Stock dividend/split | - | - | - | 31,237 | (31,237 | ) | - | - | - | |||||||||||||||||||||||
Shares to be issued for cash | - | - | - | - | - | 150,000 | - | 150,000 | ||||||||||||||||||||||||
Shares to be issued for services | - | - | - | - | - | 83,607 | - | 83,607 | ||||||||||||||||||||||||
Beneficial conversion feature for convertible note | - | - | - | - | 5,000 | - | - | 5,000 | ||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (3,296,408 | ) | (3,296,408 | ) | ||||||||||||||||||||||
Balance at December 31, 2012 (Restated) | - | - | 62,636,850 | 62,636 | 7,192,873 | 233,607 | (8,301,206 | ) | (812,090 | ) | ||||||||||||||||||||||
Shares issued for debt conversion | - | - | 101,297,199 | 101,295 | 1,326,619 | - | - | 1,427,914 | ||||||||||||||||||||||||
Forfeiture and purchase of subscription agreement deposit and receivable | - | - | - | - | 225,000 | (150,000 | ) | - | 75,000 | |||||||||||||||||||||||
Shares to be issued for services | - | - | - | - | - | 10,000 | - | 10,000 | ||||||||||||||||||||||||
Forgiveness of related party debt related to issuance of stock for payables | - | - | - | - | 3,828 | - | - | 3,828 | ||||||||||||||||||||||||
Shares issued for related party payable conversions | 13,420 | 134,200 | - | - | - | 22,968 | - | 157,168 | ||||||||||||||||||||||||
Shares to be issued for officer and directors liabilities | - | - | - | - | - | 312,500 | - | 312,500 | ||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (3,203,878 | ) | (3,203,878 | ) | ||||||||||||||||||||||
Balance at December 31, 2013 | 13,420 | $ | 134,200 | 163,934,049 | $ | 163,931 | $ | 8,748,320 | $ | 429,075 | $ | (11,505,084 | ) | $ | (2,029,558 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
30 |
Cirque Energy, Inc.
f/k/a Green Energy Renewable Solutions, Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, | ||||||||
2013 | 2012 (Restated) | |||||||
Operating Activities | ||||||||
Cash flows from operating activities : | ||||||||
Net loss | $ | (3,203,878 | ) | $ | (3,296,408 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Amortization of debt discount | 489,803 | 53,267 | ||||||
Depreciation | 518 | - | ||||||
Beneficial conversion feature | - | 5,000 | ||||||
Issuance of common stock for services | 10,000 | 289,637 | ||||||
Issuance of common stock for executive and director compensation | 312,500 | 1,657,500 | ||||||
Issuance of common stock for impaired asset purchase | - | 345,350 | ||||||
Issuance of common stock for finance costs | - | 182,791 | ||||||
Forfeiture of deposit on landfill | 150,000 | - | ||||||
Gain on settlement of debt | (20,694 | ) | - | |||||
Loss on settlement of accounts payable | - | - | ||||||
Loss on settlement of convertible promissory notes | 1,024,869 | - | ||||||
Derivative expense | 1,373,813 | 122,365 | ||||||
Gain on derivatives | (1,148,991 | ) | (83,432 | ) | ||||
Gain on stock issuance | 168,591 | |||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivables | - | (1,939 | ) | |||||
Accounts payable and accrued liabilities | 126,057 | 95,678 | ||||||
Accrued salaries and wages | 224,758 | - | ||||||
Accounts payable-related parties | - | 84,226 | ||||||
Accrued interest | 76,736 | - | ||||||
Cash used in operating activities | (584,509 | ) | (377,374 | ) | ||||
Investing Activities: | ||||||||
Deposit on purchase of Davison landfill | (150,000 | ) | - | |||||
Purchase of equipment | (5,155 | ) | - | |||||
Cash used in investing activities | (155,155 | ) | - | |||||
Financing Activities: | ||||||||
Proceeds from stock purchase agreement | - | 150,000 | ||||||
Proceeds from assignment of stock purchase agreement | 75,000 | - | ||||||
Advances from related party | - | 68,123 | ||||||
Payments on advances from related party | - | (7,160 | ) | |||||
Proceeds from convertible note | 522,000 | 162,100 | ||||||
Proceeds from convertible note-related party | 150,500 | 5,000 | ||||||
Issuance of subsidiary stock for cash | - | - | ||||||
Cash provided by financing activities | 747,500 | 378,063 | ||||||
Increase in cash | 7,836 | 689 | ||||||
Cash, beginning of period | 1,005 | 316 | ||||||
Cash, end of period | $ | 8,841 | $ | 1,005 | ||||
Supplemental Disclosures of Cash Flow Information: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | - | $ | - | ||||
Income tax | $ | - | $ | - | ||||
Non-cash investing and financing activities: | ||||||||
Shares issued for settlement of convertible notes payable | $ | 403,051 | $ | - | ||||
Spin-out of subsidiary | $ | - | $ | 250,028 | ||||
Shares issued to settle stock payable | $ | - | $ | 65,939 | ||||
Convertible note issued to settle convertible notes payable - related party | $ | 115,000 | $ | - | ||||
Stock payable issued to settle accounts payable - related party | $ | 134,200 | $ | - |
The accompanying notes are an integral part of these consolidated financial statements.
31 |
Notes to Financial Statements
Note 1 – Nature of Operations
The Company was incorporated in Florida on July 16, 1998 under the name of Salty’s Warehouse, Inc. and was engaged in selling name brand consumer products over the Internet. The Company focused on selling consumer electronics and audio-video equipment such as speakers, amplifiers, and tuners, although the Company also sold assorted other goods such as watches, sunglasses and sports games. On December 11, 2006, owners of an aggregate of 22,450,000 shares of common stock, of Salty’s Warehouse, Inc. sold in a private transaction all of the shares held by them to a group of approximately 54 purchasers. As a result of this transaction, a change of control in the Company occurred resulting in a change in the name of the Company to E World Interactive, Inc. (the “Company” or “E World”). At that time, E World mainly engaged in selling of online game services and media production business in Mainland China.
Having operated in this sector for some time, the Company then disposed of its subsidiaries Shanghai E World China Information Technologies Co., Ltd (“E World China”) and Mojo Media Works Limited in August 2008, and following this ceased all business in online game and media production business and became a dormant shell company.
In March of 2009, the Company entered into a stock purchase agreement with Blue Atelier, Inc. Blue Atelier acquired 25,000,000 newly authorized and issued common stock of E World Interactive Inc. (“EWRL”) after E World executed a forty to one reverse split of the issued and outstanding common stock and also entered into a series of agreements with various holders of Convertible Notes to convert its notes payable plus accumulated interest to E World Common Stock in the aggregate to 6,872,830 shares of common stock. As a result of this transaction, a change of control in the Company occurred in E World Interactive, Inc. with Blue Atelier then owning 75% of the outstanding common stock of E World.
In May 2010, the Company acquired 100% of the outstanding common stock of Media and Technology Solutions, Inc., a Nevada corporation with a variety of media and related interests in rights and emerged from dormant shell status. The consideration for the purchase of Media and Technology was 10,000,000 shares of E World Common Stock and Blue Atelier Inc., the principle shareholder of Media and Technology is also the largest shareholder in E World. Following this acquisition, E World moved its principal office to Las Vegas, Nevada. The acquisition of Media and Technology has been accounted for similar to a pooling in accordance with GAAP because the entities were under common control.
On September 17, 2011, E World entered into a letter of intent (the “LOI”) with Green Renewable Energy Solutions, Inc. (“GRES”) the purpose of which is to acquire the assets of GRES which included certain contracts for the acceptance, processing and disposal of construction and demolition waste and as part of this agreement, E World changed its name to Green Energy Renewable Solutions (“Green Energy Renewable Solutions” or “GERS”), effective December 12, 2011. As part of this LOI, Green Energy Renewable Solutions (F/K/A E World Interactive, Inc.) would complete a 5 to 1 reverse split, spin-out its subsidiary company E World Corp and Media and Technology Solutions, Inc. and complete the transaction with the issuance of stock for the purchase of the assets of Green Renewable Energy Solutions, Inc.
On January 26, 2012, Green Energy Renewable Solutions, Inc. (F/K/A E World Interactive, Inc.) completed the 5 to 1 reverse split and on February 1, 2012 E World Corp. including its subsidiary company, Media and Technology Solutions, Inc. was spun-out as a separate private company by way of share dividend with one E World Corp. share issued for every share held on the date of the reverse split approval. FINRA approved the name change and reverse split on January 26, 2012.
On February 4, 2012, Green Renewable Energy Solutions, Inc. executed the Asset Purchase Agreement with Green Energy Renewable Solutions, Inc. (F/K/A E World Interactive, Inc.), the issuer herein. Under the terms of the Asset Purchase Agreement Green Energy Renewable Solutions (F/K/A E World Interactive, Inc.), purchased all of the assets of Green Renewable Energy Solutions, Inc. for 4,604,667 common shares of Green Energy Renewable Solutions, Inc. (F/K/A E World Interactive, Inc.) and a further 2,302,333 common shares of deferred consideration.
On April 29, 2013, the Company formed Green Harvest Landfill, LLC as a Delaware limited liability company to be a solely owned subsidiary for the sole purpose of acquiring the Davison Landfill. An offer was made and accepted by the bankruptcy trustee who was in possession of the Davison landfill. Subsequently, the transaction did not close and the Green Harvest Landfill, LLC lays dormant.
On May 15, 2013, the Company entered into a contribution agreement with Cirque Energy II, LLC whereby Cirque Energy II, LLC would contribute all of its assets in exchange for stock in the Company. Included in Cirque Energy II, LLC assets were three subsidiary limited liability companies; The Prototype Company LLC, Gaylord Power Station, LLC, and Midland Renewable Energy Station, LLC. The transaction awaits regulatory approval of language to be included in a proxy statement for approval of 300,000,000 additional authorized shares of common stock and is currently not reflected in the financial statements.
In July 2013, Green Energy Renewable Solutions, Inc. requested a name change to Cirque Energy Inc. (the “Company”) by amending its articles of incorporation with the State of Florida, which was granted. FINRA approval of the name change and change in trading symbol continues to be pending.
Cirque Energy, Inc.’s key area of business is focused on the securing of waste streams, including but not limited to: construction, demolition, and municipal solid waste streams and maximizing their values by recycling and waste to energy opportunities.
On November 14, 2013, Cirque Energy, Inc. and Northrop Grumman Systems Corporation entered into a Joint Development Agreement to continue the technology development of a Deployable Gasification Unit (DGU) and towards this end, to develop a DGU prototype for testing and demonstration. In consideration for Cirque Energy, Inc. to fund and develop a test unit, Northrop Grumman wishes to permit its intellectual Property to be used by Cirque Energy and, provided a prototype is a success and the device is deemed viable, a division of responsibilities, obligations and customer sales privileges will be outlined in a mutually drafted and agreed to Business and Marketing Plan that will further define the intent of this Joint development agreement.
On February 1, 2014, Cirque Energy, Inc. changed its head office to 645 Griswold, Suite 3274, Detroit, MI 48226 from 243 W. Congress, Suite 350, Detroit, MI 48226.
Restatement
During the year ended December 31, 2012, the Company issued convertible promissory notes (“Notes”) as described in Note 7. These Notes were originally accounted for in accordance with ASC 480, Liabilities — Distinguishing Liabilities from Equity. The Company determined that it is not appropriate to account for these Notes under ASC 480 as the monetary value is not predominately based on one of three factors in ASC 480-10-25-14 due to the underlying volatility of the Company stock and the conversion formula of the Notes. As such, the conversion feature of the Notes is accounted for in accordance with ASC 815, Derivatives and Hedging. The application of ASC 815 results in the recognition of a derivative liability for the conversion feature embedded in the Notes. In addition, there were several liabilities that were paid by the issuance of common stock prior to June 27, 2012. On June 27, 2012 a stock dividend/forward split of one share for every existing share as of the date of record. These liabilities were recorded in error as being valued at the post dividend/forward split value rather than at the value as of the date of issuance. These changes in values are reflected in the following Notes.
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A summary of the effect of the restatement is as follows:
As Previously Reported | Restatement Adjustments | As Restated | ||||||||||
Consolidated Balance Sheet - December 31, 2012 | ||||||||||||
Cash | $ | 1,007 | $ | (2 | ) | $ | 1,005 | |||||
Accounts receivable | $ | 166 | $ | (166 | ) | $ | - | |||||
Total current assets | $ | 1,173 | $ | (168 | ) | $ | 1,005 | |||||
Total assets | $ | 28,925 | $ | (168 | ) | $ | 28,757 | |||||
Accounts and other payable | $ | 211,159 | $ | (48,438 | ) | $ | 162,721 | |||||
Due to Related Party | $ | 201,662 | $ | 1,761 | $ | 203,423 | ||||||
Convertible notes - related party | $ | 70,000 | $ | 307 | $ | 70,307 | ||||||
Convertible notes | $ | 197,822 | $ | (144,554 | ) | $ | 53,268 | |||||
Derivative liability | $ | - | $ | 193,333 | $ | 193,333 | ||||||
Total liabilities | $ | 819,969 | $ | 20,878 | $ | 840,847 | ||||||
Common stock | $ | 62,637 | $ | (1 | ) | $ | 62,636 | |||||
Additional paid in capital | $ | 9,794,373 | $ | (2,601,500 | ) | $ | 7,192,873 | |||||
Accumulated deficit during development stage | $ | (6,367,325 | ) | $ | 2,580,455 | $ | (3,786,870 | ) | ||||
Total Stockholders’ Deficit | $ | (791,044 | ) | $ | (21,046 | ) | $ | (812,090 | ) | |||
Total liabilities and stockholders’ deficit | $ | 28,925 | $ | (168 | ) | $ | 28,757 | |||||
Consolidated Statement of Operations- For the Year Ended December 31, 2012 | ||||||||||||
Sales | $ | 12 | $ | (12 | ) | $ | - | |||||
Bank service charges | $ | 3,943 | $ | (39 | ) | $ | 3,904 | |||||
New zoo revue | $ | 257 | $ | (257 | ) | $ | - | |||||
Office and miscellaneous expenses | $ | 6,796 | $ | 6,008 | $ | 12,804 | ||||||
Executive and directors compensation | $ | 3,526,970 | $ | (1,614,064 | ) | $ | 1,912,906 | |||||
Waste project expenses | $ | 182,448 | $ | (17,226 | ) | $ | 165,222 | |||||
Professional fees | $ | 493,643 | $ | (140,715 | ) | $ | 352,928 | |||||
Investor relations | $ | 33,080 | $ | (14,000 | ) | $ | 19,080 | |||||
Travel Expenses | $ | 3,081 | $ | 16,849 | $ | 19,930 | ||||||
Loss on settlement of accounts payable | $ | 518,122 | $ | (518,122 | ) | $ | - | |||||
Other financing costs | $ | 365,582 | $ | (182,791 | ) | $ | 182,791 | |||||
Impairment of assets | $ | 690,700 | $ | (345,350 | ) | $ | 345,350 | |||||
Total operating expense | $ | 5,824,622 | $ | (2,809,707 | ) | $ | 3,014,915 | |||||
Operating loss | $ | (5,824,610 | ) | $ | 2,809,695 | $ | (3,014,915 | ) | ||||
Amortization of debt discount | $ | - | $ | (53,267 | ) | $ | (53,267 | ) | ||||
Derivative Expense | $ | - | $ | (122,365 | ) | $ | (122,365 | ) | ||||
Gain/loss on issuance of stock | $ | - | $ | 168,591 | $ | 168,591 | ||||||
Loss on derivative | $ | - | $ | 83,432 | $ | 83,432 | ||||||
Interest expense | $ | (52,253 | ) | $ | 31,551 | $ | (20,702 | ) | ||||
Total other (income) expense | $ | (52,253 | ) | $ | (229,240 | ) | $ | (281,493 | ) | |||
Net loss | $ | (5,876,863 | ) | $ | 2,580,455 | $ | (3,296,408 | ) | ||||
Net loss per common share | $ | 0.12 | $ | (0.05 | ) | $ | 0.07 | |||||
Consolidated Statement of Cash Flows - For the Year Ended December 31, 2012 | ||||||||||||
Net loss | $ | (5,876,863 | ) | $ | 2,580,455 | $ | (3,296,408 | ) | ||||
Amortization of convertible debt discount | $ | 35,722 | $ | 17,545 | $ | 53,267 | ||||||
Issuance of common stock for services | $ | 290,027 | $ | (390 | ) | $ | 289,637 | |||||
Issuance of common stock for compensation | $ | 3,315,000 | $ | (1,657,500 | ) | $ | 1,657,500 | |||||
Issuance of common stock for impaired asset purchase | $ | 690,700 | $ | (345,350 | ) | $ | 345,350 | |||||
Issuance of common stock for finance costs | $ | 365,582 | $ | (182,791 | ) | $ | 182,791 | |||||
Loss on settlement of accounts payable | $ | 518,122 | $ | (518,122 | ) | $ | - | |||||
Derivative expense | $ | - | $ | 122,365 | $ | 122,365 | ||||||
Gain on derivatives | $ | - | $ | (83,432 | ) | $ | (83,432 | ) | ||||
Gain/loss on stock issuance | $ | - | $ | 168,591 | $ | 168,591 | ||||||
Accounts receivables | $ | - | $ | (1,939 | ) | $ | (1,939 | ) | ||||
Accounts payable and accrued liabilities | $ | 195,112 | $ | (99,434 | ) | $ | 95,678 | |||||
Cash used in operating activities | $ | 377,372 | $ | 2 | $ | 377,374 | ||||||
Increase of cash | $ | 691 | $ | (2 | ) | $ | 689 | |||||
Cash, end of period | $ | 1,007 | $ | (2 | ) | $ | 1,005 |
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Note 2 - Summary of Significant Accounting Policies
a) | Basis of Presentation |
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
Significant accounting policies followed by the Company in the preparation of the accompanying consolidated financial statements are summarized below.
b) | Principles of Consolidation |
The consolidated financial statements include the accounts of Cirque Energy Inc. and its wholly owned subsidiaries. On July 27, 2011 the Company incorporated a new wholly owned subsidiary E World Corp. and on May 24, 2010, the company had acquired 100% of the outstanding stock of Media and Technology Solutions, Inc. On the date of acquisition, Media and Technology was 95% owned by Blue Atelier, Inc., the majority shareholder of the Company and the acquisition was accounted by means of a pooling of the entities from the date of inception of Media and Technology on February 1, 2010 because the entities were under common control. All significant inter-company transactions and balances have been eliminated. Ownership of Media and Technology Solutions, Inc. was transferred to E World Corp., a transaction which had no effect on the consolidated financial statements at December 31, 2011. On February 4, 2012, E World Corp. was spun-out of the Company. On April 29, 2013, the Company formed Green Harvest Landfill, LLC as a Delaware limited liability company to be a solely owned subsidiary for the sole purpose of acquiring the Davison Landfill. All significant inter-company transactions and balances have been eliminated.
c) | Cash and Cash Equivalents |
The Company considers all highly liquid instruments with maturities of three months or less at the time of issuance to be cash equivalents.
d) | Use of Estimates |
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and footnotes thereto. Actual results could differ from those estimates.
e) | Significant Risks and Uncertainties |
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The Company's management believes that changes in any of the following areas could have a material adverse effect on the Company's future financial position, results of operations or cash flows: the Company's limited operating history; the Company’s ability to acquire new companies with profitable operations; the company’s ability to generate revenue and positive cash flow; advances and trends in new technologies and industry standards; competition from other competitors; regulatory related factors; risks associated with the Company's ability to attract and retain employees necessary to support its growth; and risks associated with the Company's growth strategies.
f) | Impairment of Long-Lived Assets and Intangible Assets |
Long-lived assets and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company assesses the recoverability of the long-lived assets and intangible assets (other than goodwill) by comparing the carrying amount to the estimated future undiscounted cash flow associated with the related assets. The Company recognizes impairment of long-lived assets and intangible assets in the event that the net book value of such assets exceeds the estimated future undiscounted cash flow attributed to such assets. The Company uses estimates and judgments in its impairment tests and if different estimates or judgments had been utilized, the timing or the amount of the impairment charges could be different.
g) | Leases |
Leases for which substantially all of the risks and rewards of ownership of assets remain with the leasing company are accounted for as operating leases.
h) | Taxation |
The Company accounts for income taxes under the provisions of Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 740, “Income Taxes”. Under ASC 740, income taxes are accounted for under the asset and liability method. Deferred taxes are determined based upon differences between the financial reporting and tax bases of assets and liabilities at currently enacted statutory tax rates for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period of change. A valuation allowance is provided on deferred tax assets to the extent that it is more likely than not that such deferred tax assets will not be realized. The total income tax provision includes current tax expenses under applicable tax regulations and the change in the balance of deferred tax assets and liabilities. The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on technical merits. Income tax provisions must meet a more likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods.
i) | Basic and Diluted Net Earnings (Loss) Per Share |
The Company computes net income (loss) per share in accordance with ASC 205-10, which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive and is not presented in the accompanying statements.
j) | Fair value of Financial Instruments |
The carrying value of the Company’s financial instruments, including cash, amounts due to shareholders/related parties and accounts and other payables approximate their respective fair values due to the immediate or short-term maturity of these instruments.
It is management’s opinion that the Company is not exposed to significant interest, price or credit risks arising from these financial instruments.
k) | Concentration of Credit Risk |
Financial instruments that potentially expose the Company to significant concentrations of credit risk consist principally of cash. The Company places its cash with financial institutions with high-credit ratings.
l) | Stock-Based Compensation |
The Company has adopted FASB Accounting Standards Codification Topic 718-10, “Compensation- Stock Compensation” (“ASC 718-10”) which requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees and directors. Under the fair value recognition provisions of ASC 718-10, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the vesting period.
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.
m) | Recent Accounting Pronouncements |
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-10, “Development Stage Entities”. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the ASC thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments in this update are applied retrospectively. The adoption of ASU 2014-10 removed the development stage entity financial reporting requirements from the Company.
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Note 3 – Going Concern
The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. The Company has reported no sales during the periods presented and has an accumulated deficit of $11,505,084. Our ability to continue as a going concern is dependent upon the creation of profitable operations. The Company has operated principally with the assistance of interest free loan advances and convertible debt from its major shareholders. We also intend to use other borrowings and security sales to mitigate the effects of our cash position, however, no assurance can be given that debt or equity financing, if and when required, will be available. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Note 4 – Related Party Transactions
The Company records transactions of commercial substance with related parties at fair value as determined with management. Amounts due to shareholders/related parties are non-interest bearing, unsecured, and due upon demand.
The following is a list of related party balances as of December 31, 2013 and December 31, 2012:
December 31, | December 31, | |||||||
2013 | 2012 | |||||||
Accounts and other payable, due to related parties | 5,129 | 139,326 | ||||||
Accrued salaries and wages | 224,758 | - | ||||||
Due to E World Corp., a related party | - | 203,423 | ||||||
Secured note due to E World Corp., a related party | - | 65,000 | ||||||
Secured note due to Blue Atelier Inc., a related party | - | 5,307 | ||||||
$ | 229,887 | $ | 413,056 |
During the calendar year of 2013, E World Corp. and Blue Atelier Inc. ceased to be a related party and the disclosures above reflect that change. The secured note due to E World Corp. was paid during 2013 as described in Note 7 below. The “due to E World” was reduced by $20,000 during 2013.
Related party transactions during the period include salary and consultancy fees for the year ending December 31, 2013 as follows:
For the Year Ended December 31, | ||||||||
2013 | 2012 | |||||||
Joe DuRant: CEO, Director | $ | 270,641 | $ | 738,000 | ||||
Gerry Shirren: CFO, Director (through December 31, 2012) | - | 395,970 | ||||||
Frank O Donnell: Executive VP Business Development, Director | 96,887 | 778,936 | ||||||
Roger Silverthorn: CFO, Director (effective February 1, 2013) | 250,383 | - | ||||||
Richard Fosgitt, Director | 141,308 | - | ||||||
Thomas Cote', Director | 10,417 | - | ||||||
Total | $ | 769,636 | $ | 1,912,906 |
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The Company has recorded $21,340 and $0 in payroll tax liabilities during the year ended December 31, 2013 and 2012, respectively, related to payments made to its executives.
Accrued Compensation to | ||||||||||||
be issued in Class B | Class B Convertible | Common Stock after | ||||||||||
Preferred Shares | Preferred Issued ($10 Par) | Conversion | ||||||||||
Joe DuRant: CEO, Director | $ | 139,068 | 13,907 | 9,595,710 | ||||||||
Roger Silverthorn: CFO, Director | 159,525 | 15,953 | 11,007,225 | |||||||||
Richard Fosgitt, Director | 72,917 | 7,292 | 5,031,250 | |||||||||
Thomas Cote': Director | 10,417 | 1,042 | 718,750 | |||||||||
$ | 381,927 | 38,194 | 26,352,935 |
The accrued compensation obligation of $381,927 is recorded as accrued salaries and wages for $69,427 and stock payable for $312,500 at December 31, 2013 on the consolidated balance sheet. On January 20, 2014, the Board of Directors approved the issue of 38,194 shares of Class B preferred stock in satisfaction of the $381,927 obligation due to the above officers and directors.
Blue Atelier Inc. Promissory Note May 20, 2013
On May 20, 2013, the Company received funding pursuant to a promissory note in the amount of $150,000. The promissory note is secured by the break-up fee in the Asset purchase Agreement and Bid Procedures agreement in relation to the purchase of the Davison landfill, preferential payment from funding on any lending agreements related to the purchase of the Davison landfill, and 10,000,000 shares of Company stock. The promissory note bears interest at 6% interest, has a loan premium of $75,000 and matures on July 1, 2013. As of December 31, 2013, $75,000 of discount has been amortized and included in the consolidated statement of operations.
On December 30, 2013, the $50,000 of cash proceeds received from the issuance of LG Capital Funding, LLC Promissory Note VIII (See Note 7) was used to pay Blue Atelier Inc. outstanding principal and interest. At December 31, 2013, $175,500 principal plus accrued interest of $8,332 is outstanding.
On January 21, 2014, the $30,000 of cash proceeds received from the issuance of GEL Properties, LLC Promissory Note was used to pay Blue Atelier Inc. outstanding principal and interest.
On April 2, 2014, the $105,000 of cash proceeds received from the issuance of Union Capital, LLC Promissory Note was used to pay Blue Atelier Inc. outstanding principal and interest.
On June 27, 2014, the $53,771 of cash proceeds received from the issuance of Union Capital, LLC Promissory Note was used to pay Blue Atelier Inc. outstanding principal upon which the Blue Atelier, Inc. Promissory Note of May 20, 2013 was paid in full.
Note 5– Waste Project Expense
Highland Park, Michigan: The initial construction and demolition waste processing was planned for a 15 acre site at Highland Park, Michigan where the company acquired a parcel of real estate at Lincoln Ave. Highland Park, MI in November 2011 and leased further real estate with an option to purchase. The Company is now exploring alternative locations for the Highland Park location which is now deemed unsuitable for environmental reasons following a fire in a derelict building on the real estate parcel which the Company had leased.
Yabucoa Landfill, Puerto Rico: Together with its partner Landfill Solutions Corporation, the Company was planning to remediate and manage the Yabucoa municipal landfill that had been closed since 2011. The remediation plan was designed to bring the landfill up to current operating standards and reopen the landfill for operations while developing recycling and waste conversion facilities. The parties had jointly commenced detailed environmental studies and preparation of development plans for full permitting of the landfill remediation works and the waste diversion program. The Officers and Directors of Green Energy have made the decision to step back from the proposed landfill and renewable energy project in Puerto Rico due to lack of funding. The Company had received commitments for funding that were expected to close in 2012 for this project, but due to failure of sources to meet the funding commitments and lack of success in obtaining alternative funding in a timely manner, it would table pursuit of this venture for the time being.
For the years ended December 31, 2013 and 2012, the Company's waste project expenses were $0 and $165,222, respectively.
Note 6– Operating Lease Commitments
On February 1, 2014, the Company entered into a twelve month lease for office space for its head office at 645 Griswold, Suite 3274, Detroit, Michigan 48226. The monthly lease payment is $1,200.
Note 7 – Convertible Notes
Asher Enterprises Promissory Note I July 10, 2012
On July 10, 2012, the Company entered into a Convertible Promissory Note (“Note”) with Asher Enterprises, Inc. (“Holder”) in the original principle amount of $32,500 bearing an 8% annual interest rate, unsecured and maturing April 12, 2013. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $32,500 in connection with the initial valuation of the derivative liability of the Note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $43,255 and derivative expense of $10,755 based on the Black Scholes Merton pricing model. As of December 31, 2012, $20,489 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2012 is $29,655 resulting in a gain on the change in fair value of the derivative of $13,601. The Note is shown net of a debt discount of $12,011 at December 31, 2012.
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In accordance with the terms of the Note, the holder fully converted the Note on January 22, 2013, February 11, 2013, and February 25, 2013 for 3,341,965 shares of common stock for principal, interest and default interest of $33,800 as disclosed in Note 8. During the year ended December 31, 2013, a gain in the change in the fair value of derivative of $29,655, amortization of debt discount of $12,011 and loss on settlement of promissory convertible notes of $25,004 for this Note was recorded.
Asher Enterprises Promissory Note II August 28, 2012
On August 28, 2012, the Company entered into a Convertible Promissory Note (“Note”) with Asher Enterprises, Inc. (“Holder”) in the original principle amount of $32,500 bearing an 8% annual interest rate, unsecured and maturing May 30, 2013. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $32,500 in connection with the initial valuation of the derivative liability of the Note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $55,845 and derivative expense of $23,345 based on the Black Scholes Merton pricing model. As of December 31, 2012, $14,773 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2012 is $30,496 resulting in a gain on the change in fair value of the derivative of $25,348. The Note is shown net of a debt discount of $17,727 at December 31, 2012.
In accordance with the terms of the Note, the holder fully converted the Note on March 12, 2013, March 27, 2013, April 17, 2013, May 3, 2013, and May 30, 2013 for 13,815,255 shares of common stock for principal, interest and default interest of $33,950 as disclosed in Note 8. During the year ended December 31, 2013, a gain in the change in the fair value of derivative of $30,496, amortization of debt discount of $17,727 and loss on settlement of promissory convertible notes of $35,352 for this Note was recorded.
Asher Enterprises Promissory Note III October 12, 2012
On October 12, 2012, the Company entered into a Convertible Promissory Note (“Note”) with Asher Enterprises, Inc. (“Holder”) in the original principle amount of $27,500 bearing an 8% annual interest rate, unsecured and maturing July 16, 2013. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $27,500 in connection with the initial valuation of the derivative liability of the Note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $58,316 and derivative expense of $30,816 based on the Black Scholes Merton pricing model. As of December 31, 2012, $7,942 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2012 is $27,371 resulting in a gain on the change in fair value of the derivative of $30,945. The Note is shown net of a debt discount of $19,558 at December 31, 2012.
In accordance with the terms of the note, the holder fully converted the note for shares of common stock on May 30, 2013, June 7, 2013, and June 13, 2013 for 10,963,973 shares of common stock for principal, interest and default interest of $42,350 as disclosed in Note 8. During the year ended December 31, 2013, a gain in the change in the fair value of derivative of $27,371, amortization of debt discount of $19,558 and loss on settlement of promissory convertible notes of $42,073 for this Note was recorded.
Asher Enterprises Promissory Note IV November 29, 2012
On November 29, 2012, the Company entered into a Convertible Promissory Note (“Note”) with Asher Enterprises, Inc. (“Holder”) in the original principle amount of $27,500 bearing an 8% annual interest rate, unsecured and maturing September 3, 2013. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $27,500 in connection with the initial valuation of the derivative liability of the Note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $45,906 and derivative expense of $18,406 based on the Black Scholes Merton pricing model. As of December 31, 2012, $3,165 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2012 is $39,475 resulting in a gain on the change in fair value of the derivative of $6,431. The Note is shown net of a debt discount of $23,335 at December 31, 2012.
In accordance with the terms of the Note, the holder fully converted the Note on June 17, 2013, June 19, 2013, June 20, 2013, June 25, 2013, and June 28, 2013 for 11,837,273 shares of common stock for principal, interest and default interest of $42,350 as disclosed in Note 8. During the year ended December 31, 2013, a gain in the change in the fair value of derivative of $39,475, amortization of debt discount of $24,335 and loss on settlement of promissory convertible notes of $88,619 for this Note was recorded.
Asher Enterprises Promissory Note V February 11, 2013
On February 11, 2013, the Company entered into a Convertible Promissory Note (“Note”) with Asher Enterprises, Inc. (“Holder”) in the original principle amount of $27,500 bearing an 8% annual interest rate, unsecured and maturing November 11, 2013. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $27,500 in connection with the initial valuation of the derivative liability of the Note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $43,080 and derivative expense of $15,580 based on the Black Scholes Merton pricing model.
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In accordance with the terms of the Note, the holder fully converted the Note on August 12, 2013, August 20, 2013, and August 26, 2013 for 5,343,203 shares of common stock for principal, interest and default interest of $42,350 as disclosed in Note 8. During the year ended December 31, 2013, a gain in the change in the fair value of derivative of $43,080, amortization of debt discount of $27,500 and loss on settlement of promissory convertible notes of $26,255 for this Note was recorded.
Asher Enterprises Promissory Note VI May 8, 2013
On May 8, 2013, the Company entered into a Convertible Promissory Note (“Note”) with Asher Enterprises, Inc. (“Holder”) in the original principle amount of $12,500 bearing an 8% annual interest rate, unsecured and maturing February 8, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $12,500 in connection with the initial valuation of the derivative liability of the Note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $22,229 and derivative expense of $9,729 based on the Black Scholes Merton pricing model.
On November 7, 2013, this Note was assigned to Matthew Morris by the Holder.
In accordance with the terms of the Note, the holder fully converted the Note on November 13, 2013 for 4,844,961 shares of common stock for principal of $12,500 as disclosed in Note 8. During the year ended December 31, 2013, a gain in the change in the fair value of derivative of $22,229, amortization of debt discount of $12,500 and loss on settlement of promissory convertible notes of $30,136 for this Note was recorded.
Asher Enterprises Promissory Note VII June 26, 2013
On June 26, 2013, the Company entered into a Convertible Promissory Note (“Note”) with Asher Enterprises, Inc. (“Holder”) in the original principle amount of $32,500 bearing an 8% annual interest rate, unsecured and maturing March 26, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $32,500 in connection with the initial valuation of the derivative liability of the Note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $75,198 and derivative expense of $42,498 based on the Black Scholes Merton pricing model.
On November 7, 2013, this Note was assigned to Matthew Morris by the Holder.
As of December 31, 2013, $22,381 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2013 is $59,642 resulting in a gain on the change in fair value of the derivative of $15,135. The Note is shown net of a debt discount of $10,119 at December 31, 2013.
Asher Enterprises Promissory Note VIII July 10, 2013
On July 10, 2013, the Company entered into a Convertible Promissory Note (“Note”) with Asher Enterprises, Inc. (“Holder”) in the original principle amount of $32,500 bearing an 8% annual interest rate, unsecured and maturing April 8, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $32,500 in connection with the initial valuation of the derivative liability of the Note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $68,097 and derivative expense of $35,597 based on the Black Scholes Merton pricing model.
On November 7, 2013, this Note was assigned to Matthew Morris by the Holder.
As of December 31, 2013, $20,639 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2013 is $60,487 resulting in a gain on the change in fair value of the derivative of $8,033. The Note is shown net of a debt discount of $11,861 at December 31, 2013.
Asher Enterprises Promissory Note IX December 23, 2013
On December 23, 2013, the Company entered into a Convertible Promissory Note (“Note”) with Asher Enterprises, Inc. (“Holder”) in the original principle amount of $47,500 bearing an 8% annual interest rate, unsecured and maturing September 23, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $47,500 in connection with the initial valuation of the derivative liability of the Note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $69,489 and derivative expense of $21,989 based on the Black Scholes Merton pricing model.
As of December 31, 2013, $1,387 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2013 is $108,282 resulting in a loss on the change in fair value of the derivative of $38,793. The Note is shown net of a debt discount of $46,113 at December 31, 2013.
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JMJ Financial Promissory Note I October 31, 2012
On October 31, 2012, the Company issued a Convertible Note (“Note”) to JMJ Financial in the original principle amount of $250,000 and maturing in one year from the date of issue of each tranche for $212,000 of consideration paid in cash and a $35,000 original issue discount. The Company may repay the convertible note any time and if repaid within 90 days of date of issue with an interest rate is 0%. Otherwise interest is a one-time charge of 5% of the principal and allocated original issue discount. This Note together with any unpaid accrued interest is convertible into shares of common stock at JMJ Financials option at a variable conversion price calculated as lessor of (a) $0.095 or (b) 60% of the lowest trade occurring during the 25 consecutive trading days immediately preceding the conversion date. On October 31, 2012, the Company received cash proceeds of $35,000 with an original issue discount of $6,274 on the first tranche of the Note. The Company recorded a debt discount in the amount of $41,274 in connection with the initial valuation of the derivative liability of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. Further, the Company recognized a derivative liability of $74,043 and derivative expense of $39,043 based on the Black Scholes Merton pricing model.
As of December 31, 2012, $3,165 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2012 is $66,936 resulting in a gain on the change in fair value of the derivative of $7,107. The Note is shown net of a debt discount of $38,109 at December 31, 2012.
In accordance with the terms of the Note, the JMJ Financial fully converted the Note on May 9, 2013, May 17, 2013, June 18, 2013, July 12, 2013, and August 1, 2013 for 21,269,721 shares of common stock for principal and interest of $43,337 as disclosed in Note 8. During the year ended December 31, 2013, a gain in the change in the fair value of derivative of $66,936, amortization of debt discount of $38,109 and loss on settlement of $238,401 for this Note was recorded.
JMJ Financial Promissory Note II January 30, 2013
On January 30, 2013, the Company received cash proceeds of $25,000 with an original issue discount of $4,481 on the second tranche of the Convertible Note (“Note”) with JMJ Financial. The Company recorded a debt discount in the amount of $29,481 in connection with the initial valuation of the derivative liability of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. Further, the Company recognized a derivative liability of $49,461and derivative expense of $24,461 based on the Black Scholes Merton pricing model.
In accordance with the terms of the Note, the JMJ Financial fully converted the Note on August 30, 2013 and September 27, 2013 for 6,948,416 shares of common stock for principal and interest of $30,955 as disclosed in Note 8. During the year ended December 31, 2013, a gain in the change in the fair value of derivative of $49,461, amortization of debt discount of $29,481 and loss on settlement of promissory convertible notes of $59,241 for this Note was recorded.
JMJ Financial Promissory Note III May 30, 2013
On May 30, 2013, the Company received cash proceeds of $25,000 with an original issue discount of $7,481 on the third tranche of the Convertible Note (“Note”) with JMJ Financial. The Company recorded a debt discount in the amount of $32,481 in connection with the initial valuation of the derivative liability of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. Further, the Company recognized a derivative liability of $280,960 and derivative expense of $255,960 based on the Black Scholes Merton pricing model.
In accordance with the terms of the Note, the JMJ Financial partially converted the Note on December 2, 2013 for 7,400,000 shares of common stock for principal and interest of $28,897 as disclosed in Note 8 resulting in a loss on settlement of promissory convertible notes of $252,303.
As of December 31, 2013, $19,133 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2013 is $6,622 resulting in a gain on the change in fair value of the derivative of $274,338. The Note is shown net of a debt discount of $13,348 at December 31, 2013.
JMJ Financial Promissory Note IV August 18, 2013
On August 18, 2013, the Company received cash proceeds of $30,000 with an original issue discount of $5,377 on the fourth tranche of the Convertible Note (“Note”) with JMJ Financial. The Company recorded a debt discount in the amount of $35,377 in connection with the initial valuation of the derivative liability of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. Further, the Company recognized a derivative liability of $51,643 and derivative expense of $21,643 based on the Black Scholes Merton pricing model.
As of December 31, 2013, $13,085 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2013 is $74,290 resulting in a loss on the change in fair value of the derivative of $22,647. The Note is shown net of a debt discount of $22,292 at December 31, 2013.
JMJ Financial Promissory Note V September 25, 2013
On September 25, 2013, the Company received cash proceeds of $25,000 with and original issue discount of $4,481 on the fifth tranche of the Convertible Note (“Note”) with JMJ Financial. The Company recorded a debt discount in the amount of $29,481 in connection with the initial valuation of the derivative liability of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. Further, the Company recognized a derivative liability of $47,618 and derivative expense of $22,618 based on the Black Scholes Merton pricing model.
As of December 31, 2013, $7,835 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2013 is $65,561 resulting in a loss on the change in fair value of the derivative of $17,943. The Note is shown net of a debt discount of $21,646 at December 31, 2013.
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JMJ Financial Promissory Note VI December 9, 2013
On December 9, 2013, the Company received cash proceeds of $50,000 with an original issue discount of $8,962 on the sixth tranche of the Convertible Note (“Note”) with JMJ Financial. The Company recorded a debt discount in the amount of $58,962 in connection with the initial valuation of the derivative liability of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. Further, the Company recognized a derivative liability of $434,130 and derivative expense of $384,130 based on the Black Scholes Merton pricing model.
As of December 31, 2013, $3,554 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2013 is $134,874 resulting in a gain on the change in fair value of the derivative of $299,256. The Note is shown net of a debt discount of $55,408 at December 31, 2013.
LG Capital Funding, LLC Promissory Note I June 4, 2013
On June 4, 2013, the Company entered into a Convertible Promissory Note (“Note”) with LG Capital Funding, LLC (“Holder”) in the original principle amount of $26,500 bearing an 8% annual interest rate, unsecured and maturing March 4, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 50% of the market price which means the lowest trading price during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $26,500 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $44,490 and derivative expense of $17,990 based on the Black Scholes Merton pricing model.
In accordance with the terms of the Note, the holder fully converted the Note on December 9, 2013 for 2,612,322 shares of common stock for principal and interest of $27,560 as disclosed in Note 8. During the year ended December 31, 2013, a gain in the change in the fair value of derivative of $44,490, amortization of debt discount of $26,500 and loss on settlement of promissory convertible notes of $62,811 for this Note was recorded.
LG Capital Funding, LLC Promissory Note II July 18, 2013
On July 18, 2013, the Company entered into a Convertible Promissory Note (“Note”) with LG Capital Funding, LLC (“Holder”) in the original principle amount of $26,500 bearing an 8% annual interest rate, unsecured and maturing April 16, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 50% of the market price which means the lowest trading price during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $26,500 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $84,191 and derivative expense of $57,691 based on the Black Scholes Merton pricing model.
As of December 31, 2013, $16,055 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2013 is $60,192 resulting in a gain on the change in fair value of the derivative of $23,999. The Note is shown net of a debt discount of $10,445 at December 31, 2013.
LG Capital Funding, LLC Promissory Note III August 30, 2013
On August 30, 2013, the Company entered into a Convertible Promissory Note (“Note”) with LG Capital Funding, LLC (“Holder”) in the original principle amount of $32,000 bearing an 8% annual interest rate, unsecured and maturing May 27, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 50% of the market price which means the lowest trading price during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $32,000 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $66,705 and derivative expense of $34,705 based on the Black Scholes Merton pricing model.
As of December 31, 2013, $14,418 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2013 is $74,338 resulting in a loss on the change in fair value of the derivative of $7,633. The Note is shown net of a debt discount of $17,582 at December 31, 2013.
LG Capital Funding, LLC Promissory Note IV September 18, 2013
On September 18, 2013, the Company entered into a Convertible Promissory Note (“Note”) with LG Capital Funding, LLC (“Holder”) in the original principle amount of $26,500 bearing an 8% annual interest rate, unsecured and maturing June 27, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 50% of the market price which means the lowest trading price during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $26,500 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $45,285 and derivative expense of $18,785 based on the Black Scholes Merton pricing model.
As of December 31, 2013, $10,095 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2013 is $62,707 resulting in a loss on the change in fair value of the derivative of $17,422. The Note is shown net of a debt discount of $16,405 at December 31, 2013.
LG Capital Funding, LLC Promissory Note V August 5, 2013
On August 5, 2013, the Company entered into a Convertible Promissory Note (“Note”) with LG Capital Funding, LLC (“Holder”) in the original principle amount of $65,000 bearing an 8% annual interest rate, unsecured and maturing May 5, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 50% of the market price which means the lowest trading price during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $65,000 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $138,011 and derivative expense of $73,011 based on the Black Scholes Merton pricing model.
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In accordance with the terms of the Note, the holder fully converted the Note on August 22, 2013, September 20, 2013 and October 22, 2013 for 12,920,110 shares of common stock for principal of $65,000 as disclosed in Note 8. During the year ended December 31, 2013, a gain in the change in the fair value of derivative of $138,011, amortization of debt discount of $65,000 and loss on settlement of promissory convertible notes of $112,771 for this Note was recorded.
Proceeds from this Promissory Note V of $65,000 were used to pay E World Corp for the assignment of the secured Note Payable. No interest was paid resulting in a gain on settlement of $20,693.
LG Capital Funding, LLC Promissory Note VI November 18, 2013
On November 18, 2013, the Company entered into a Convertible Promissory Note (“Note”) with LG Capital Funding, LLC (“Holder”) in the original principle amount of $30,000 bearing an 8% annual interest rate, unsecured and maturing August 18, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 50% of the market price which means the lowest trading price during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $30,000 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $77,099 and derivative expense of $47,099 based on the Black Scholes Merton pricing model.
As of December 31, 2013, $4,725 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2013 is $81,246 resulting in a loss on the change in fair value of the derivative of $4,147. The Note is shown net of a debt discount of $25,275 at December 31, 2013.
LG Capital Funding, LLC Promissory Note VII November 27, 2013
On November 27, 2013, the Company entered into a Convertible Promissory Note (“Note”) with LG Capital Funding, LLC (“Holder”) in the original principle amount of $26,500 bearing an 8% annual interest rate, unsecured and maturing August 27, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 50% of the market price which means the lowest trading price during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $26,500 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $214,287 and derivative expense of $187,787 based on the Black Scholes Merton pricing model.
As of December 31, 2013, $3,300 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2013 is $71,590 resulting in a gain on the change in fair value of the derivative of $142,696. The Note is shown net of a debt discount of $23,200 at December 31, 2013.
LG Capital Funding, LLC Promissory Note VIII December 30, 2013
On December 30, 2013, the Company entered into a Convertible Promissory Note (“Note”) with LG Capital Funding, LLC (“Holder”) in the original principle amount of $50,000 bearing an 8% annual interest rate, unsecured and maturing September 30, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 50% of the market price which means the lowest trading price during the ten trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $50,000 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $136,117 and derivative expense of $86,117 based on the Black Scholes Merton pricing model.
On December 30, 2013, the $50,000 of cash proceeds received from the issuance of LG Capital Funding, LLC Promissory Note VIII was used to pay Blue Atelier Inc. outstanding principal and interest.
As of December 31, 2013, $182 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2013 is $135,552 resulting in a gain on the change in fair value of the derivative of $565. The Note is shown net of a debt discount of $49,818 at December 31, 2013.
Matthew Morris Promissory Note I November 8, 2013
On November 8, 2013, the Company entered into a Convertible Promissory Note (“Note”) with Matthew Morris (“Holder”) in the original principle amount of $46,500 bearing an 8% annual interest rate, unsecured and maturing August 8, 2014. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price which means average trading price during the three trading day period ending on the latest complete trading day prior to the conversion date. The Company recorded a debt discount in the amount of $46,500 in connection with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $62,721 and derivative expense of $16,221 based on the Black Scholes Merton pricing model.
As of December 31, 2013, $9,027 of the debt discount has been amortized. The fair value of the derivative liability at December 31, 2013 is $60,372 resulting in a gain on the change in fair value of the derivative of $2,349. The Note is shown net of a debt discount of $37,473 at December 31, 2013.
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The derivative liability of the Notes was measured using the Black-Scholes model based on the following assumptions:
Stock price – closing price of the Company stock on the valuation date ($0.0038-$0.145)
Exercise price – based on conversion formula on the valuation date ($0.0013-$0.1073)
Volatility – expected standard deviation based on historical volatility of the stock (213% - 546%)
Expected life – remaining life to the maturity date (0.23 years – 1.0 years)
Discount rate – Treasury bill rates based for the expected life on the valuation date (0.09%-0.15%)
Note 8 – Stockholders' Equity
The Company is authorized to issue an aggregate of 300,000,000 shares of common stock with a par value of $0.001. The Company is also authorized to issue 20,000,000 shares of undesignated $0.001 par value preferred stock, of which 13,420 shares of Class A preferred stock (“Class A”) with a par value of $10, 100,000 shares of Class B (“Class B”) preferred stock with a par value of $10, and 100,000 shares of Class C (“Class C”) preferred stock with a par value of $10.
The preference term of the Class A and Class B is five years with conversion rights to common shares at any time after six months. Each Class A, Class B, and Class C is convertible into 2,857.14, 690 shares, and 592 shares of common stock, respectively. Each Class A, each Class B, and each Class C share is entitled to 2,857.14 votes, 3,450 votes, and 592 votes, respectively, on any matter that is brought to a vote of the common stock holders.
Other Stock Issuances
On January 26, 2012, FINRA approved the 5 to 1 reverse stock split of our issued and outstanding common stock. The stock split has been retroactively applied to these financial statements resulting in a decrease in the number of shares of common stock outstanding with a corresponding increase in additional paid-in capital. All shares amounts have been retroactively restated to reflect this reverse stock split.
On April 3, 2012, the Company settled accounts payable totalling $131,878 of amounts outstanding since 2009. On April 19, 2012, the accounts payable totalling $121,878 were settled through the issuance of 6,500,000 shares of common stock. On the date of settlement the closing price of the Company’s common stock was $0.10 per share, resulting in a loss on settlement of $259,061 during the year ended December 31, 2012.
On April 17, 2012, the Board of Directors of the Company approved the issuance of 6,500,000 shares of restricted common stock to key executives and directors of the Company as a bonus incentive.
On June 27, 2012 the Company announced that its Board of Directors approved a one share for one share stock dividend of the Company’s common stock, regarding this as an effective forward split. Each shareholder of record at the close of business on June 29, 2012 received one additional share for every outstanding share held on the record date. The Articles were amended to reflect this on July 16, 2012 and this received FINRA approval on July 27, 2012.
On June 27, 2012, the Company entered into a stock purchase agreement with Diamond Transport Ltd. under which the company will sell one million shares of common stock at $0.50 per share with a closing of the sale on or before July 15, 2012 with $100,000 to be received as an advance payment on July 05, 2012. The advance payment of $100,000 was received on July 20, 2012 and a further $50,000 received on August 20, 2012 and the closing date of the transaction will be upon receipt of the outstanding balance of $350,000. As of December 31, 2012, the shares have not been issued, and as such the Company has recorded $150,000 as stock payable.
On January 22, 2013, the Company entered into an assignment agreement with E World Corp., an entity under common control, whereby E World Corp. agreed to purchase the outstanding subscription agreement from Diamond Transport Ltd. for $75,000 payable in three monthly cash installments of $25,000, with the last payment due on March 22, 2013. As of December 31, 2013, the Company has received $75,000 cash from E World Corp. The Company recorded the cash receipt of $75,000 as additional paid-in capital as of December 31, 2013, due to the related party relationship. The $150,000 stock payable to Diamond Transport was reversed and any further liability to Diamond Transport Ltd. was assumed by E World Corp.
On April 22, 2013, the Board of Directors approved the issue of 6,880 Class A Preferred Shares at $10 par value to Frank A. O’Donnell and 6,540 Class A Preferred Shares at $10 par value to Joseph L. DuRant for the conversion of debt totaling $134,200. The fair value of the shares issued was $134,200 based on the quoted market price of the shares on the date of approval on an as converted basis.
All share amounts in the financial statements have been retroactively restated to reflect the share dividends and forward stock splits.
Stock issued during the year to date ended December 31, 2013 was valued at the closing market price of the shares on either the date approved by the Board of Directors, the date of settlement, or the date the services have been deemed rendered.
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Stock Issued for Settlement of Convertible Notes Payable
Conversion | ||||||||||||||||
Price based on | ||||||||||||||||
the Conversion | Principal and | |||||||||||||||
Stock Issues for year ended | Number of Shares | Formula in the | Interest | |||||||||||||
Date of Issue | December 31, 2013 | issued | Purpose of Issue | Notes | Converted | |||||||||||
January 22, 2013 | Asher Enterprises, Inc | 1,153,846 | Debt Conversion | $ | 0.013 | $ | 15,000.00 | |||||||||
February 11, 2013 | Asher Enterprises, Inc | 1,188,119 | Debt Conversion | $ | 0.010 | $ | 12,000.00 | |||||||||
February 25, 2013 | Asher Enterprises, Inc | 1,000,000 | Debt Conversion | $ | 0.007 | $ | 6,800.00 | |||||||||
March 12, 2013 | Asher Enterprises, Inc | 3,108,108 | Debt Conversion | $ | 0.004 | $ | 11,500.00 | |||||||||
March 27, 2013 | Asher Enterprises, Inc | 3,086,957 | Debt Conversion | $ | 0.002 | $ | 7,100.00 | |||||||||
April 17, 2013 | Asher Enterprises, Inc | 3,571,429 | Debt Conversion | $ | 0.002 | $ | 7,500.00 | |||||||||
May 3, 2013 | Asher Enterprises, Inc | 3,588,235 | Debt Conversion | $ | 0.002 | $ | 6,100.00 | |||||||||
May 9, 2013 | JMJ Financial | 3,500,000 | Debt Conversion | $ | 0.002 | $ | 5,775.00 | |||||||||
May 17, 2013 | JMJ Financial | 4,100,000 | Debt Conversion | $ | 0.001 | $ | 4,510.00 | |||||||||
May 30, 2013 | Asher Enterprises, Inc | 460,526 | Debt Conversion | $ | 0.004 | $ | 1,750.00 | |||||||||
May 31, 2013 | Asher Enterprises, Inc | 3,684,211 | Debt Conversion | $ | 0.004 | $ | 14,000.00 | |||||||||
June 7, 2013 | Asher Enterprises, Inc | 3,571,429 | Debt Conversion | $ | 0.004 | $ | 15,000.00 | |||||||||
June 14, 2013 | Asher Enterprises, Inc | 3,708,333 | Debt Conversion | $ | 0.004 | $ | 13,350.00 | |||||||||
June 18, 2013 | JMJ Financial | 4,900,000 | Debt Conversion | $ | 0.001 | $ | 5,390.00 | |||||||||
June 18, 2013 | Asher Enterprises, Inc | 1,196,970 | Debt Conversion | $ | 0.003 | $ | 3,950.00 | |||||||||
June 20, 2013 | Asher Enterprises, Inc | 1,194,444 | Debt Conversion | $ | 0.004 | $ | 4,300.00 | |||||||||
June 20, 2013 | Asher Enterprises, Inc | 3,696,970 | Debt Conversion | $ | 0.003 | $ | 12,200.00 | |||||||||
June 26, 2013 | Asher Enterprises, Inc | 4,888,889 | Debt Conversion | $ | 0.004 | $ | 17,600.00 | |||||||||
June 28, 2013 | Asher Enterprises, Inc | 860,000 | Debt Conversion | $ | 0.005 | $ | 4,300.00 | |||||||||
July 12, 2013 | JMJ Financial | 5,700,000 | Debt Conversion | $ | 0.003 | $ | 15,675.00 | |||||||||
August 1, 2013 | JMJ Financial | 3,069,721 | Debt Conversion | $ | 0.004 | $ | 11,987.00 | |||||||||
August 12, 2013 | Asher Enterprises, Inc | 1,500,000 | Debt Conversion | $ | 0.010 | $ | 15,000.00 | |||||||||
August 20, 2013 | Asher Enterprises, Inc | 2,027,027 | Debt Conversion | $ | 0.007 | $ | 15,000.00 | |||||||||
August 22, 2013 | LG Capital Funding LLC | 5,000,000 | Debt Conversion | $ | 0.006 | $ | 27,500.00 | |||||||||
August 27, 2013 | Asher Enterprises, Inc | 1,816,176 | Debt Conversion | $ | 0.007 | $ | 12,350.00 | |||||||||
August 30, 2013 | JMJ Financial | 3,000,000 | Debt Conversion | $ | 0.004 | $ | 13,365.00 | |||||||||
September 20, 2013 | LG Capital Funding LLC | 4,132,231 | Debt Conversion | $ | 0.006 | $ | 25,000.00 | |||||||||
September 27, 2013 | JMJ Financial | 3,948,416 | Debt Conversion | $ | 0.004 | $ | 17,590.00 | |||||||||
October 22, 2013 | LG Capital Funding LLC | 3,787,879 | Debt Conversion | $ | 0.003 | $ | 12,500.00 | |||||||||
November 13, 2013 | Matthew Morris | 4,844,961 | Debt Conversion | $ | 0.003 | $ | 12,500.00 | |||||||||
December 2, 2013 | JMJ Financial | 7,400,000 | Debt Conversion | $ | 0.004 | $ | 28,897.00 | |||||||||
December 26, 2013 | LG Capital Funding LLC | 2,612,322 | Debt Conversion | $ | 0.011 | $ | 27,560.00 | |||||||||
Totals | 101,297,199 | $ | 403,049.00 |
During the year ended December 31, 2013, the Company issued at total of 101,297,199 shares of common stock for an aggregate fair value of $1,427,914 based on the closing price the date the stock was issued. The difference between the fair value of the shares of common stock issued of $1,427,914 and the principal and interest converted of $403,049 is recorded as a loss on settlement of promissory notes of $1,024,869 in the consolidated statements of operations.
As of December 31, 2013 and December 31, 2012, the Company had 163,934,049 and 62,636,850 shares of common stock outstanding, respectively.
Stock Payable
On June 27, 2012, the Company entered into a Stock Purchase Agreement (“Agreement”) with Diamond Transport Ltd. under which the Company would issue 1,000,000 shares of common stock at $0.50 per share with a closing of the sale on or before July 15, 2012 with $100,000 to be received as an advance payment on July 5, 2012. The advance payment of $100,000 was received on July 20, 2012 and $50,000 was received on August 20, 2012. According to the Agreement, the closing date of the transaction is upon receipt of the total outstanding balance of $350,000. As of December 31, 2012, the Company has not issued any shares, and as such the Company has recorded $150,000 as stock payable. On January 22, 2013, the Company entered into an assignment agreement with E World Corp., an entity under common control, whereby E World Corp. agreed to purchase the outstanding balance due subscription agreement from Diamond Transport Ltd. for the subscription agreement noted above of $350,000 for $75,000 payable in three monthly cash installments of $25,000, with the last payment due on March 22, 2013. As of December 31, 2013, the Company has received $75,000 cash from E World Corp. The Company recorded the cash receipt of $75,000 as additional paid-in capital as of December 31, 2013, due to the related party relationship. The $150,000 stock payable to Diamond Transport was reversed and any further liability to Diamond Transport Ltd. was assumed by E World Corp.
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On August 14, 2012, the Company entered into 6 month professional services agreement, whereby the Company pays the consultant $5,000 cash and $5,000 worth of common stock each month. As of December 31, 2013 and 2012, the Company has recorded $30,000 and $20,000, respectively, in stock payable related to this contract.
On July 1, 2012, the Company entered into a nine month professional services agreement, whereby the Company pays the consultant 250,000 share of common stock. As of December 31, 2013 and 2012, the Company has an obligation for 120,000 shares of common stock valued at $6,612.
On November 1, 2012, the Company entered into a professional services agreement, whereby the Company agreed to pay the consultant $50,000 for services for the Company's common stock. As of December 31, 2013 and 2012, the no shares have been issued and the obligation has been recorded as stock payable.
On September 20, 2012, the Company entered into an employment agreement whereby the Company agreed to issue 50,000 shares of common stock valued at $6,995 as a commencement bonus. As of December 31, 2013 and 2012, no shares have been issued and the obligation has been recorded as stock payable.
On April 22, 2013, the Board of Directors approved the issue of 5,714,286 shares of common stock to E World Corp. and 1,941,714 shares of common stock to Blue Atelier, Inc. for settlement of accounts payable totaling $26,796. The fair value of the shares to be issued is $22,968 based on the quoted market price of the shares on the date of approval. The excess of the accounts payable settled over the fair value of the shares issue of $3,828 is recorded as additional paid-in capital due to the related party relationship. As of December 31, 2013, no shares were issued and the $22,968 for this obligation was recorded as stock payable.
On January 31, 2013, the Company agreed to issue $10,000 of the Company’s stock in exchange for services. As of December 31, 2013, no shares have been issued and the obligation has been recorded as stock payable.
On January 20, 2014, the Board of Directors approved the issue of 38,193 shares of Class B preferred stock for officer compensation for services provided in 2013. As of December 31, 2013, no shares were issued and the $312,500 for this obligation was recorded as stock payable.
Note 9 – Income Taxes
The Company provides for income taxes under FASB ASC 740, Income Taxes. FASB ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently.
FASB ASC 740 requires reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to full utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The total deferred asset is $3,048,155 ($1,928,768 in 2012) which is calculated by multiplying a 35% estimated tax rate by the cumulative NOL of $10,124,081. The total valuation allowance is $3,048,155 ($1,928,768 in 2012). Details for the last two periods follow:
As of December 31, | ||||||||
2013 | 2012 | |||||||
Deferred tax asset | $ | 3,048,155 | $ | 1,928,768 | ||||
Valuation allowance | (3,048,155 | ) | (1,928,768 | ) | ||||
$ | 0 | $ | 0 |
As of December 31, 2013, the Company had available unused operating loss carry forwards of approximately $10,124,081 ($6,925,834 in 2012) for federal taxes that may provide future tax benefits, expiring between 2021 and 2033.
Note 10 - Subsequent Events
On May 16, 2013, the Company and Cirque Energy II, LLC announced a commitment to a merger. The Members of the Cirque Energy II, LLC will receive 43,359,487 shares of the Company’s common stock at closing and another 43,359,487 shares of common stock at such time as the stock price reaches $0.50 per share. As of September 30, 2014, the merger has not closed.
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On January 6, 2014, the Company received funding pursuant to a convertible promissory note with LG Capital Funding, LLC in the amount of $52,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on September 30, 2014.
On January 7, 2014, pursuant to the LG Capital Funding LLC Promissory Note VIII December 30, 2013 (as described in Note 7) $20,000 in principal was converted to 2,094,241 shares of common stock.
On January 15, 2014, pursuant to the LG Capital Funding LLC Promissory Note VIII December 30, 2013 (as described in Note 7) $30,000 in principal was converted to 3,030,303 shares of common stock.
On January 20, 2014, the Board of Directors approved the issuance of 38,193 shares of Class B preferred stock in full satisfaction of accrued wages and stock payable of $381,927 as detailed in Note 4.
On January 21, 2014, the Company reassigned $30,000 of the Blue Atelier Promissory Note dated May 7, 2013 (as described in Note 4) to GEL Properties, LLC. The promissory note is unsecured, bears interest at 6% per annum, and matures on January 21, 2015.
On January 21, 2014, the Company received funding pursuant to a convertible promissory note with GEL Properties, LLC in the amount of $65,000. The promissory note is unsecured, bears interest at 6% per annum, and matures on January 21, 2015.
On January 29, 2014, pursuant to the LG Capital Funding LLC Promissory Note II July 18, 2013 (as described in Note 7) $26,500 in principal and $1,144.22 in interest was converted to 3,566,996 shares of common stock.
On January 28, 2014, pursuant to the GEL Properties, LLC Promissory Note I January 20, 2014 (as described in Note 10) $16,796 in principal was converted to 2,000,000 shares of common stock.
On February 13, 2014, pursuant to an agreement, Carmel Advisors LLC was issued 3,000,000 shares of common stock as payment for consulting services to be provided by Carmel Advisors LLC. The services shall include, but are not limited to, the development, implementation and maintenance of an ongoing program to increase the investment community’s awareness of the Company’s activities and to stimulate the investment community’s interest in the Company.
On February 14, 2014, the Company received funding pursuant to a convertible promissory note with Typenex Co-Investment LLC in the amount of $150,000, which consisted of $115,000 in cash proceeds, $15,000 financing fees, and $20,000 legal fees. The promissory note bears interest at 10% per annum, and matures at 15 months from the Issuance date. The Company issued to Typenex warrants exercisable commencing 6 months from the issuance date.
On February 26, 2014, pursuant to the GEL Properties, LLC Promissory Note I January 21, 2014 (as described in Note 10) $11,301 in principal was converted to 1,500,000 shares of common stock.
On February 27, 2014, pursuant to an agreement, Frank O’Donnell returned to Treasury 4,500,000 shares of common stock. The agreement calls for the reissue of the shares upon the addition of authorized shares proposed by the Company at 7,000,000 shares.
On March 6, 2014, pursuant to the JMJ Financial Promissory Note IV August 14, 2013 (as described in Note 7) $13,612.50 in principal was converted to 2,500,000 shares of common stock.
On March 10, 2014, pursuant to the GEL Properties, LLC Promissory Note I January 20, 2014 (as described in Note 10) $1,903 in principal was converted to 251,895 shares of common stock.
On March 21, 2014, pursuant to the LG Capital Funding LLC Promissory Note III August 30, 2013 (as described in Note 7) $32,000 in principal and $1,493 in interest was converted to 5,536,088 shares of common stock.
On March 27, 2014, the board of directors of the Company (the “Board”) authorized the designation of 100,000 shares of the Class C Preferred Stock out of its available preferred stock. On March 28, 2014, the Company filed the Certificate of Designation of the Class C Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Florida. Each such share of Class C Preferred Stock is convertible into 592 shares of Common Stock at any time at the Holder’s option. The shares of Class C Preferred Stock entitles the holder thereof to vote such shares on an “as-converted” basis at the record date for the determination of shareholders entitled to vote on any matter coming before the common shareholders or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is solicited. The Class C Preferred Stock has a stated value $10.00 per share.
On March 31, 2014, pursuant to the Matthew Morris restatement of the Asher Promissory Note 8 dated July 10, 2013 (as described in Note 7 above) $32,500 of principal was converted to 4,062,500 shares of common stock.
On March 27, 2014, Joseph DuRant, CEO of Cirque Energy, Inc. returned to Treasury 5,200,000 share of common stock in exchange for 8,784 Class C Preferred Shares.
On March 27, 2014, Green Renewable Energy Solutions, Inc. of which Joseph DuRant is the sole shareholder, returned to Treasury 9,209,334 shares of common stock in exchange for 15,556 Class C Preferred Shares.
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On April 2, 2014, the Company received funding pursuant to a convertible promissory note with Union Capital, LLC in the amount of $100,000. The promissory note is unsecured, bears interest at 9% per annum, and matures on April 2, 2015.
On April 2, 2014, the Company reassigned $100,000 of principal and $5,000 of interest of the Blue Atelier Promissory Note dated May 7, 2013 (as described in Note 4) to Union Capital, LLC. The promissory note is unsecured, bears interest at 6% per annum, and matures on April 2, 2015.
On April 4, 2014, pursuant to the Union Capital, LLC Promissory Note of April 2, 2014, (as described above in Note 10) $15,000.00 in principal was converted to 1,930,005 shares of common stock.
On April 13, 2014, pursuant to the JMJ Financial Promissory Note IV August 14, 2013 (as described in Note 7) $28,591.92 in principal was converted to 5,198,531 shares of common stock.
On April 25, 2014, pursuant to an agreement, Kodiak Capital Group was issued 15,000,000 shares of common stock as part of a commitment fee for the purchase of $5,000,000 of the Company’s securities after a registration statement has been declared effective by the Securities and Exchange Commission. The shares may be repurchased by the Company at $0.02 per share until October 31, 2014. The transaction is in the documentation stage and expected to close in the fourth quarter.
On June 27, 2014, the Company received funding pursuant to a convertible promissory note with Union Capital, LLC in the amount of $34,188. The promissory note is unsecured, bears interest at 9% per annum, and matures on June 27, 2015.
On August 5, 2014, the Company received funding pursuant to a convertible promissory note with Blue Atelier, Inc. in the amount of $35,000. The promissory note is unsecured, bears interest at 9% per annum, and matures on September 30, 2014.
On September 9, 2014, pursuant to an agreement, Blue Atelier returned to Treasury 6,900,000 shares of common stock. The agreement calls for the reissue of the shares upon the addition of authorized shares proposed by the Company at a 50% premium.
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
There have been no disagreements between the Company and its independent accountants on any matter of accounting principles or practices or financial statement disclosure. On August 9, 2010 the Board of Directors approved the engagement of De Joya Griffith and De Joya Griffith continued as its independent registered public accounting firm until January 9, 2014 at which time they resigned from the engagement. On January 27, 2014 the Board of Directors approved the engagement of Silberstein Ungar, PLL as the Company’s independent registered public accounting firm.
On August 7, 2014, Silberstein Ungar, PLLC notified the Company that its client base had been acquired by KLJ & Associates, LLP. As a result of the transaction, Silberstein Ungar, PLLC effectively resigned as the Company’s independent registered public accounting firm and as the successor following the transaction, KLJ & Associates, LLP became the Company’s independent registered public accounting firm. The engagement of the KLJ & Associates, LLP was approved by the Company’s Board of Directors on August 7, 2014.
ITEM 9A. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2013. This evaluation was carried out under the supervision of Joseph DuRant, our Chief Executive Officer, and Roger Silverthorn, our former Chief Financial Officer. Based upon that evaluation, Messrs. DuRant and Silverthorn concluded that, as of December 31, 2013, our disclosure controls and procedures were not effective.
We performed analysis and other post-closing procedures to ensure that our financial statements are prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations, changes in stockholders’ deficit and cash flows for the periods presented.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure. Such disclosure controls and procedures are limited in their effect by the limitation of the numbers of staff available to allow for the desirable level of division of responsibilities and oversight of the controls and procedures.
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A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for our company. Our control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
1. | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of our assets; |
2. | Provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles; that receipts and expenditures are being made only with proper authorizations of management and directors; and |
3. | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of company assets that could have a material effect on the financial statements. |
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. 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.
A material weakness is a control deficiency (within the meaning of Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 5) or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. The effectiveness of these safeguards, procedures and controls are limited in their effectiveness by the limitation of division of responsibility and oversight in these procedures.
Management, including our principal executive officer and our principal financial officer, assessed the effectiveness of our 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 Over Financial Reporting – Guidance for Smaller Public Companies published in June of 2006 and the PCAOB preliminary staff views published October 17, 2007. Based on our assessment and those criteria, management concluded that during the period covered by this report, our internal control and procedures over financial reporting were not effective as of December 31, 2013.
Material Weaknesses
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013. In making this assessment, the Company’s management used the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in “Internal Control – Integrated Framework.” Based on this assessment, management concluded that, as of December 31, 2013, the Company’s internal control over financial reporting was not effective based on this framework.
Management evaluated the impact of ineffective control over financial reporting and concluded that the control deficiency represented a material weakness.
Management hired a full-time Chief Financial Officer as of February 1, 2013. His duties included correcting the areas of deficiency in financial controls. His past experience as a CPA, auditor, and CEO of a renewable energy company with multiple locations both domestic and foreign, provides a valuable reference for implementing practical financial controls and building a financial framework for the Company. Consolidating financial operations to a central location has provided a first step in that process. Management hired a subsequent Chief Financial Officer as of July 1, 2014. His past experience as a CFO of both public and private companies, start-up companies, and mature companies will provide valuable experience in correcting the areas of deficiency in financial controls.
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Attestation Report of the Registered Public Accounting Firm
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this annual report.
Inherent Limitations on the Effectiveness of Controls
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.
These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Not applicable
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE GOVERNANCE
The directors and officers are as follows:
Name | Age | Position |
Joe DuRant | 54 | President, CEO and Director |
David Morgan | 56 | CFO |
Roger Silverthorn | 64 | Secretary, Executive Vice President of Business Development, and Director |
Thomas Coté | 53 | Director |
Richard Fosgitt | 44 | Executive Vice President of Engineering. & Technology., Director |
Mr. DuRant has been an entrepreneur and business consultant for the past 26 years. He has considerable experience in structuring, developing, operating and financing start-up and early stage development companies. He has successfully launched three start-up companies including one that went public on NASDAQ. Mr. DuRant has secured start up and operating capital through the issuance of private and public equity and debt instruments. He is currently working with strategic technology developers and manufacturers to achieve the commercial deployment of new biomass gasification technology systems to produce waste to energy electricity and fuel production. Strategic alliances with technology manufacturers representing widely deployed technologies and new cutting edge waste to energy technologies are expected to provide a significant advantage to Cirque in selecting the most efficient operating systems specific to each location. The Board of Directors believes that Mr. DuRant is qualified to serve as a director because of his experience in structuring, developing, operating and financing start-up and early stage development companies in the public sector.
Mr. Morgan began his career with AT&T Corp., holding a variety of positions in operations, sales, and marketing. In 1995 he was appointed Controller of a $3 billion business unit of the telecommunications company and then was promoted to Chief Financial Officer of one of their subsidiary companies. Dave has over 15 years’ experience serving as the CFO of several companies in the technology and services industries, from start-up through mature, including both public and private companies. In addition, he has successfully partnered and engaged with venture capital and private equity firms, hedge funds and mutual funds, led a private placement, and managed a public offering.
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Mr. Silverthorn has over 30 years of experience in the renewable energy business and has served as the owner and operator of eight solid fuel biomass power plants in two countries and several states. He led the development of a vertically integrated fuel system in appropriate jurisdictions. Mr. Silverthorn also developed a renewable energy marketing company, among the first in the United States. He was an early entrant to the renewable energy business when renewable power generation was in its infancy. His background as a CPA in public accounting has been invaluable to his success. The Board of Directors believes that Mr. Silverthorn is qualified to serve as a director because of his experience in senior management and his operations experience in the renewable energy field.
Mr. Coté is a construction and real estate professional with 28 years of experience. Most recently he has been involved in the development of several energy projects including wind, ethanol, biomass, and waste to energy and agricultural products to energy. Mr. Coté brings to the team an experienced hands-on approach to project development and implementation. In his career, Mr. Coté has been responsible for delivering complex construction projects in the United States, Europe, and Asia. Mr. Cote’ focus includes establishing the overall business strategy, providing the vision and purpose to advance the Company’s mission and objectives as well as project planning, go/no-go decision making, pre-construction, customer relations, business development, and program management support. The Board of Directors believes that Mr. Coté is qualified to serve as a director because of his extensive construction management and project development experience.
Mr. Fosgitt is a professional engineer with over 20 years of experience in engineering projects in a diverse array of size in the industrial, energy and development sectors. He has recently been involved in the development of several energy projects including biomass, waste to energy, agricultural products to energy, and wind energy. His design experience with a number of energy systems allows him to assess customer desires and develop the optimum system to meet those needs within the required economic parameters. In addition, he is experienced with site assessment, due diligence, environmental permitting, and engineering approvals. The Board of Directors believes that Mr. Fosgitt is qualified to serve as a director because of his project development, engineering, and management experience.
The directors shall be elected at an annual meeting of the stockholders and except as otherwise provided within the Bylaws of Cirque Energy, Inc., as pertaining to vacancies, shall hold office until his successor is elected and qualified.
No non-compete or non-disclosure agreements exist between the management of Cirque and any prior or current employer.
There are no employees under contract with Cirque as of December 31, 2013.
Board of Director Meetings and Committees
The Board of Directors held several formal meetings both in person and by teleconference during the year ended December 31, 2013. The board has conducted board activities through unanimous consent board resolutions in lieu of meetings. The directors received no compensation for their role as directors for the year ended December 31, 2013.
The board has not formed any committees and performs all functions that would be delegated.
Code of Ethics
The board of directors of Cirque Energy, Inc. has adopted a written Code of Ethics, which has been filed as an exhibit to this Annual Report.
Family Relationships
There are no family relationships among our officers or directors.
Involvement in Certain Legal Proceedings
None of the director(s) or executive officers of the Company: (i) has been involved as a general partner or executive officer of any business which has filed a bankruptcy petition; (ii) has been convicted in any criminal proceeding nor is subject to any pending criminal proceeding; (iii) has been subjected to any order, judgment or decree of any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (iv) has been found by a court, the United States Securities and Exchange Commission or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
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Non-Equity | Deferred | |||||||||||||||||||||||||||||||||||
Stock | Option | Incentive Plan | Compensation | |||||||||||||||||||||||||||||||||
Name and | Salary | Bonus | Awards | Awards | Compensation | Earnings | Benefits | Total | ||||||||||||||||||||||||||||
Principal Position | Year | ($ ) | ($ ) | ($ ) | ($ ) | ($ ) | ($ ) | ($ ) | ($) | |||||||||||||||||||||||||||
2012 | $ | 75,000 | - | $ | 663,000 | - | - | - | - | $ | 738,000 | |||||||||||||||||||||||||
Joe DuRant | - | - | - | - | ||||||||||||||||||||||||||||||||
2013 | $ | 125,000 | - | $ | 133,860 | - | - | - | $ | 11,782 | $ | 270,641 | ||||||||||||||||||||||||
President and CEO | ||||||||||||||||||||||||||||||||||||
2012 | $ | 115,936 | $ | - | $ | 663,000 | $ | - | $ | - | $ | - | $ | - | $ | 778,936 | ||||||||||||||||||||
Frank O 'Donnell | ||||||||||||||||||||||||||||||||||||
2013 | $ | 88,542 | * | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 8,345 | $ | 96,887 | |||||||||||||||||||
Exec VP Business Development (through August 2013) | ||||||||||||||||||||||||||||||||||||
2012 | $ | 64,470 | $ | - | $ | 331,500 | $ | - | $ | - | $ | - | $ | - | $ | 395,970 | ||||||||||||||||||||
Gerry Shirren | ||||||||||||||||||||||||||||||||||||
2013 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||||
CFO / COO (through December 2012) | ||||||||||||||||||||||||||||||||||||
Roger Silverthorn | 2013 | $ | 114,583 | $ | - | $ | 125,000 | $ | - | $ | - | $ | - | $ | 10,800 | $ | 250,383 | |||||||||||||||||||
CFO (beginning February 1, 2013) | ||||||||||||||||||||||||||||||||||||
Richard Fosgitt | 2013 | $ | 62,500 | $ | - | $ | 72,917 | $ | - | $ | - | $ | - | $ | 5,891 | $ | 141,308 | |||||||||||||||||||
Exec VP Engineering and Technology | ||||||||||||||||||||||||||||||||||||
Thomas Cote' | 2013 | $ | - | $ | - | $ | 10,417 | $ | - | $ | - | $ | - | $ | - | $ | 10,417 | |||||||||||||||||||
Board Member | $ | - |
*accrued and unpaid
Notes:
We had no pension plans or plans or agreements which provide compensation on the event of termination of employment or change in control of us and have therefore eliminated a column specified by Item 402 (c) (2) titled “Change in Pension Value and Nonqualified Deferred Compensation Earnings (h)” in the above Summary Compensation Table No family relationships exist among any directors, executive officers, or persons nominated or chosen to become directors or executive officers. As of December 31, 2013, Cirque had health, hospitalization and medical plans available for its employees. Further, Cirque had no pension plans or plans or agreements which provide compensation in the event of termination of employment or change in control of our company
Employment Agreements
As of the year ended December 31, 2013, Cirque has not entered into formal employment agreements with any of our executive officers or directors. Mr. DuRant’ annual compensation was increased to $125,000 annually effective January 1, 2013. Mr. Silverthorn’ salary is $125,000 annually effective February 1, 2013. Cash payments are made based on the Company’s ability to pay. On January 10, 2014 the Board of Directors increased Mr. DuRant’ and Mr. Silverthorn’ salary to $250,000 annually payable as $125,000 in cash and $125,000 in stock effective January 1, 2014. Mr. Fosgitt’ annual salary is $187,500 payable as $125,000 in cash and $62,500 in stock effective January 1, 2014.
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Compensation of Directors
Cirque paid no compensation to any directors as director’s fees, nor any fees for attendance or similar remuneration or reimbursement for any out-of-pocket business expenses incurred, for the year ended December 31, 2013.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the number of shares of our Common Stock beneficially owned based on 192,532,405 issued and outstanding shares of Common Stock as of November 26, 2014 by: (i) each of our directors; (ii) each of our named executive officers; and (iii) each person or group known by us to beneficially own more than 5% of our outstanding shares of Common Stock.
Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. Other than as described in the notes to the table, we believe that all persons named in the table have sole voting and investment power with respect to shares beneficially owned by them. All share ownership figures include shares issuable upon exercise of options or warrants exercisable within 60 days of the date of this Annual Report, which are deemed outstanding and beneficially owned by such person for purposes of computing his or her percentage ownership, but not for purposes of computing the percentage ownership of any other person. Unless otherwise indicated below, beneficial ownership is calculated based on the 192,532,405 shares of Common Stock issued and outstanding as of the date of this Annual Report.
Cirque has three classes of Preferred Stock. The preferential rights and benefits of each of these classes are summarized as follows:
Class “A” Preferred: 13,420 shares of Class A Preferred Stock are convertible into 2,857.14 shares of Common Stock at any time beginning six months after issue at the Holder’s option. The shares of Class A Preferred Stock entitles the holder thereof to vote such shares on an “as-converted” basis at the record date for the determination of shareholders entitled to vote on any matter coming before the common shareholders or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is solicited. The Class A Preferred Stock has a stated value $10.00 per share.
Class “B” Preferred: 100,000 shares of Class B Preferred Stock are convertible into 690 shares of Common Stock at any time beginning six months after issue at the Holder’s option. The shares of Class B Preferred Stock entitles the holder thereof to vote such shares on an five votes for each common share that would be received on conversion. Each share of Class B of Convertible Preferred Share will be entitled to 3,450 votes and may vote on any matter that is brought to a vote of the common stock holders. The Class B Preferred Stock has a stated value $10.00 per share.
Class “C” Preferred: 100,000 shares of Class C Preferred Stock are convertible into 592 shares of Common Stock at any time at the Holder’s option. The shares of Class C Preferred Stock entitles the holder thereof to vote such shares on an “as-converted” basis at the record date for the determination of shareholders entitled to vote on any matter coming before the common shareholders or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is solicited. The Class C Preferred Stock has a stated value $10.00 per share.
Name of Beneficial Owner | Shares Beneficially Owned | Percentage Beneficially Owned | ||||||
Officers and Directors (1) | ||||||||
Joseph DuRant (2) | 81,066,631 | 21.5 | % | |||||
Roger Silverthorn (3) | 55,036,125 | 14.6 | % | |||||
Thomas Coté (4) | 3,593,751 | 1.0 | % | |||||
Richard Fosgitt (5) | 25,156,251 | 6.7 | % | |||||
All executive officers and directors as a group (4 persons) | 164,852,758 | 43.8 | % | |||||
5% or Greater Beneficial Owners | ||||||||
Frank O’Donnell (6) | 22,257,123 | 5.9 | % |
(1) The address for each of the officers and directors is c/o Cirque Energy, Inc., at 645 Griswold Street, Penobscot Building, Suite 3274, Detroit, MI 48226
(2) Consists of: (i) an aggregate of 14,409,334 shares of common stock, 9,209,334 of which are held by Green Renewable Energy Solutions, Inc., an entity of which Mr. DuRant is the control person, (ii) 6,880 shares of Class A Preferred Stock which carry the voting power of 18,685,714 shares of common stock, and (iii) 13,907 shares of Class B Preferred Stock which carry the voting power of 47,978,550 shares of common stock, and 24,328 shares of Class C Preferred Stock, 15,556 of which are held by Green Renewable Energy Solutions, Inc., an entity of which Mr. DuRant is the control person; which carry the voting power of 14,402,367 shares of common stock.
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(3) Consists of 15,953 shares of Class B Preferred Stock which carry the voting power of 55,036,125 shares of common stock. The shares are owned jointly by Mr. Silverthorn and his spouse Suzanne Silverthorn.
(4) Consists of 1,042 shares of Class B Preferred Stock which carry the voting power of 3,593,751 shares of common stock.
(5) Consists of 7,292 shares of Class B Preferred Stock which carry the voting power of 25,156,251 shares of common stock.
(6) Consists of: (i) an aggregate of 2,600,000 shares of common stock, (ii) 6,880 shares of Class A Preferred Stock which carry the voting power of 19,657,123 shares of common stock.
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Related Party Transactions
The Company records transactions of commercial substance with related parties at fair value as determined with management. Amounts due to shareholders/related parties are non-interest bearing, unsecured, and due upon demand.
The following is a list of related party balances as of December 31, 2013 and December 31, 2012:
December 31, | December 31, | |||||||
2013 | 2012 | |||||||
Accounts and other payable, due to related parties | 5,129 | 139,326 | ||||||
Accrued salaries and wages - related party | 224,758 | - | ||||||
Due to E World Corp. a related party | - | 203,423 | ||||||
Secured note due to E World Corp., a related party | - | 65,000 | ||||||
Secured note due to Blue Atelier Inc., a related party | - | 5,307 | ||||||
$ | 229,887 | $ | 413,056 |
The accounts payable related-party balance included for December 31, 2012 amounts to the officers and directors of the Company Joe DuRant, Gerry Shirren and Frank O' Donnell and the balance for December 31, 2013 is for amounts owed to former officer Gerry Shirren. Accrued salaries and wages-related party includes amounts owed to officers and directors of the Company; Joe DuRant, Roger Silverthorn, Richard Fosgitt, and former director Frank O’Donnell.
E World Corp Promissory Note
On November 2, 2011, the Company received funding pursuant to a convertible promissory note in the amount of $65,500. The promissory note is unsecured, bears interest at 20% per annum, and was due on November 21, 2011 and is currently in default. On June 21, 2012, the note holder waived all interest related to the note. This note was paid in full from the proceeds of the LG Capital Convertible Note V issued August 5, 2013 detailed in the Convertible Note section of this report.
Blue Atelier Convertible Note
On May 21, 2012, the Company received funding pursuant to a convertible promissory note in the amount of $5,000. The promissory note is unsecured, bears interest at 10% per annum, and was due on June 30, 2012 and is currently in default. The note holder may convert the entire note and any accrued interest at $0.001 per share.
The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $5,000. The aggregate beneficial conversion feature has been accreted and charged to financing expense in the amount of $5,000 as of December 31, 2012.
On April 22, 2013, the Board of Directors approved the issue 1,941,714 shares of common stock to Blue Atelier, Inc. for settlement of this promissory note. The fair value of the shares to be issued is $5,825 based on the quoted market price of the shares on the date of approval. The excess of the accounts payable settled over the fair value of the shares issue of $971 is recorded as additional paid-in capital due to the related party relationship. As of December 31, 2013, no shares were issued and the $5,825 for this obligation was recorded as stock payable.
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During the calendar year of 2013, E World Corp. and Blue Atelier Inc. ceased to be a related party and the disclosures above reflect that change. The secured note due to E World Corp. was paid during 2013 as described in Note 7 below. The “due to E World” was reduced by $20,000 during 2013.
Related party transactions include executive and directors compensation for the years ending December 31, 2013 and December 31, 2012.
For the Year Ended December 31, | ||||||||
2013 | 2012 | |||||||
Joe DuRant: CEO, Director | $ | 270,641 | $ | 738,000 | ||||
Gerry Shirren: CFO, Director (through December 31, 2012) | - | 395,970 | ||||||
Frank O Donnell: Executive VP Business Development, Director | 96,887 | 778,936 | ||||||
Roger Silverthorn: CFO, Director (effective February 1, 2013) | 250,383 | - | ||||||
Richard Fosgitt, Director | 141,308 | - | ||||||
Thomas Cote': Director | 10,417 | - | ||||||
Total | $ | 769,636 | $ | 1,912,906 |
On April 17, 2012, the Board approved the issue of common stock as a bonus incentive to company management with the issue of 5,200,000 shares of common stock to each of CEO Joe DuRant and Executive Vice President of Business Development Frank O Donnell and 2,600,000 shares of common stock to CFO Gerry Shirren totaling $1,657,500 in value which is included in executive and directors compensation totaling $1,912,906. The stock issued reflects the effect of the stock dividend/forward split.
Shares | Value | |||||||
Joe DuRant: CEO, Director | 2,600,000 | $ | 663,000 | |||||
Gerry Shirren: CFO, Director | 1,300,000 | $ | 331,500 | |||||
Frank O Donnell: Executive VP Business Development, Director | 2,600,000 | $ | 663,000 | |||||
Total | 6,500,000 | $ | 1,657,500 |
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
(1) Audit Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements and review of financial statements included in the registrant's Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal years ended December 31, 2013 and 2012 were: $21,137 and $39,412 respectively.
(2) Audit-Related Fees
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the registrant's financial statements and are not reported under item (1) for the fiscal years ended December 31, 2013 and 2012 were: $0 and $0, respectively.
(3) Tax Fees
No fees were billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning for the fiscal years ending December 31, 2013 and 2012.
(4) All Other Fees
No fees were billed for professional services provided by the principal accountant, other than the services reported in items (1) through (3) for the fiscal years ending December 31, 2013 and 2012.
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(5) Audit Committee
The registrant's Audit Committee, or officers performing such functions of the Audit Committee, have approved the principal accountant's performance of services for the audit of the registrant's annual financial statements and review of financial statements included in the registrant's Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal year ending December 31, 2013. Audit-related fees, tax fees, and all other fees, if any, were approved by the Audit Committee or officers performing such functions of the Audit Committee.
(6) Work Performance by Others
The percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was less than -0- percent.
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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Green Energy Renewable Solutions, Inc. includes by reference the following exhibits:
2.1 | Plan of Reorganization By Which Salty’s Warehouse Shall Be Acquired from Nucotec, Inc. (1) |
2.2 | Definitive Stock Purchase Agreement dated May 21, 2007 by and between Mojo Media Works and the registrant (5) |
2.3 | Definitive Stock Purchase Agreement dated August 1, 2008 by and between Blue Atelier, Inc. and the registrant (6) |
2.4 | Stock Purchase Agreement dated March 30, 2009 by and between Blue Atelier, Inc. and the registrant (7) |
2.5 | Contribution Agreement dated May 16, 2013 by and between Cirque Energy II, LLC and the registrant (16) |
2.6 | Order Authorizing and Approving Sale of Assets Free and Clear of all Liens, Liabilities, Rights, Interests, and Encumbrances In re Richfield Equities, LLC (16) |
3.1 | Articles of Incorporation (1) |
3.2 | Amendment to Articles of Incorporation (1) |
3.3 | Amendment to Articles of Incorporation (1) |
3.4 | Bylaws (1) |
3.5 | Amendment to Articles of Incorporation (4) |
3.6 | Amendment to Articles of Incorporation (10) |
3.7 | Amendment to Articles of Incorporation (14) |
3.8 | Amendment to Articles of Incorporation (15) |
3.9 | Amendment to Articles of Incorporation (17) |
3.10 | Certificate of Designation of Class A Convertible Preferred Shares (19) |
3.11 | Certificate of Designation of Class Convertible Preferred Shares (19) |
4.1 | Convertible Debentures dated February 12, 2007 (3) |
4.2 | Form of Warrant dated February 12, 2007 (3) |
4.3 | Form of Convertible Note Payable (8) |
4.4 | Secured Convertible Note (20) |
4.5 | Form of Buyer Note (20) |
4.6 | Form of Warrant (20) |
10.1 | Form of Legacy Yahoo! Store Management Service Agreement (1) |
10.2 | Form of Stock Purchase Agreement between Salty’s Warehouse and the purchaser named therein (1) |
10.3 | Form of 2004 Incentive and Nonstatutory Stock Option Plan (1) |
10.4 | Form of Stock Purchase Agreement between Salty’s Warehouse and Earl T. Shannon, Steven Hudson and Scott W. Bodenweber (2) |
10.5 | Game License Agreement dated January 19, 2007 (3) |
10.6 | Agreement for the Purchase and Sale of 100% of the Stock of Media And Technology Solutions, Inc. dated May 26, 2010 (9) |
10.7 | 2011 Consultant Stock Plan (11) |
10.8 | Distribution Agreement dated June 13, 2011 between Felix Power Machinery Co, Ltd. and the registrant (12) |
10.9 | Revised Letter of Intent dated July 27, 2011 between Green Renewable Energy Solutions, Inc. and the registrant (13) |
10.10 | Joint Development Agreement dated November 19, 2013 by and between Northrop Grumman Corporation and the registrant (18) |
10.11 | Securities Purchase Agreement dated February 13, 2014 by and between Typenex Co-Investment, LLC and the registrant (2) |
31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act* |
31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act * |
32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* |
101.INS | XBRL Instance Document* |
101.SCH | XBRL Taxonomy Extension Schema Document* |
101.CAL | XBRL Taxonomy Calculation Linkbase Document* |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document* |
101.LAB | XBRL Taxonomy Label Linkbase Document* |
101.PRE | XBRL Taxonomy Presentation Linkbase Document* |
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(1) Filed as an exhibit to the Registration Statement on Form SB-2 filed with the SEC on December 27, 2005.
(2) Filed as an exhibit to the Registration Statement on Form SB-2/A filed with the SEC on June 19, 2006.
(3) Filed as an exhibit to the Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006 filed with the SEC on April 2, 2007.
(4) Filed as an exhibit to the Registration Statement on Form 8-A filed with the SEC on December 14, 2006.
(5) Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on May 25, 2007.
(6) Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on August 26, 2008.
(7) Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on April 3, 2009.
(8) Filed as an exhibit to the Annual Report on Form 10-KSB for the fiscal year ended December 31, 2008 filed with the SEC on April 14, 2009.
(9) Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on June 8, 2010.
(10) Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on April 5, 2011.
(11) Filed as an exhibit to the Registration Statement on Form S-82 filed with the SEC on May 26, 2011.
(12) Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on June 20, 2011.
(13) Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on September 22, 2011.
(14) Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on February 28, 2012.
(15) Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on August 2, 2012.
(16) Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on June 18, 2013.
(17) Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on August 26, 2013.
(18) Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on November 20, 2013.
(19) Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on February 3, 2014.
(19) Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on February 3, 2014.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CIRQUE ENERGY, INC. | ||
January 12, 2015 |
By: | /s/ Joseph DuRant |
Joseph DuRant Chief Executive Officer (Principal Executive Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
January 12, 2015 | By: | /s/ Joseph DuRant |
Joseph DuRant Chief Executive Officer, President and Director (Principal Executive Officer) | ||
January 12, 2015 | By: | /s/ David Morgan |
David Morgan Chief Financial Officer (Principal Financial Officer) | ||
January 12, 2015 | By: | /s/ Roger Silverthorn |
Roger Silverthorn Executive Vice President of Business Development, Secretary, and Director | ||
January 12, 2015 | By: | /s/ Richard Fosgitt |
Richard Fosgitt Executive Vice President of Engineering & Technology and Director | ||
January 12, 2015 | By: | /s/ Thomas Coté |
Thomas Coté Director |