CIRQUE ENERGY, INC. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - CIRQUE ENERGY, INC.	Financial_Report.xls
EX-31.1 - EXHIBIT 31.1 - CIRQUE ENERGY, INC.	v396116_ex31-1.htm
EX-32.1 - EXHIBIT 32.1 - CIRQUE ENERGY, INC.	v396116_ex32-1.htm
EX-31.2 - EXHIBIT 31.2 - CIRQUE ENERGY, INC.	v396116_ex31-2.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

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 Street, 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 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 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

There were 192,532,405 shares of common stock outstanding as of January 23, 2015.

Documents incorporated by reference: None

TABLE OF CONTENTS

		Page

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.	2

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	26

Item 4.	Controls and Procedures.	26

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults upon Senior Securities.	27

Item 4.	Mine Safety Disclosures.	27

Item 5.	Other Information.	27

Item 6.	Exhibits	27

SIGNATURES		29

FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q 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-Q is filed, and we do not intend to update any of the forward-looking statements after the date this Quarterly Report on Form 10-Q is filed to confirm these statements to actual results, unless required by law.

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

Cirque Energy, Inc.

Consolidated Balance Sheets

(Unaudited)

	March 31			December 31
	2014			2013

Assets:
Current assets:
Cash	$	2,605		$	8,841
Total current assets		2,605			8,841

Land		27,752			27,752
Equipment, net		5,621			4,637
Total Assets	$	35,978		$	41,230

Liabilities and Stockholders' Deficit:
Current liabilities:
Accounts and other payables	$	371,455		$	287,292
Accounts and other payables - related party		5,129			5,129
Accrued salaries and wages - related party		88,642			224,758
Accrued interest		29,062			22,013
Notes payable		330,423			358,923
Convertible notes - (net of $354,577 and $360,986 unamortized discount)		253,215			116,918
Derivative liability		672,602			1,055,755
Total current liabilities		1,750,528			2,070,788

Total Liabilities		1,750,528			2,070,788

Stockholders' Deficit
Preferred stock, .001 par value; 19,948,387 shares authorized		-			-
Class A Convertible Preferred stock, $10 stated value 13,420 shares authorized, issued, and outstanding		134,200			134,200
Class B Convertible Preferred stock, $10 stated value, 100,000 authorized; 38,193 shares issued and outstanding		381,930
Common stock, Par Value $0.001, 300,000,000 shares
authorized, 184,413,572 and 163,934,049 shares
outstanding at March 31, 2014 and December 31 2013, respectively		184,411			163,931
Additional paid-in capital		9,291,862			8,748,320
Stock payable		428,450			429,075
Accumulated deficit		(12,135,401	)		(11,505,084	)
Total Stockholders' Deficit		(1,714,550	)		(2,029,558	)
Total Liabilities and Stockholders' Deficit	$	35,978		$	41,230

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

Cirque Energy, Inc.

Consolidated Statements of Operations

(Unaudited)

	For the quarter ended March 31,
	2014			2013
Sales	$	-		$	-
Cost of sales		-			-
Gross profit		-			-

Bank service charges		1,326			694
Development projects		38,082			-
Office and miscellaneous		9,565			3,130
Executive and directors compensation		225,837			145,833
Professional fees		72,306			78,230
Investor relations		92,134			367
Travel		17,104			724
Other financing costs		92,750			-
Total operating expense		549,104			228,978

Operating loss		(549,104	)		(228,978	)

Other Income					317
Amortization of debt discount		(317,582	)		(60,343	)
Derivative expense		(80,949	)		(40,041	)
Gain on settlement of debt		(192,564	)		-
Loss on settlement of promissory convertible notes		(240,706	)		(48,339	)
Gain on derivative liability		760,274			40,574
Interest expense		(9,686	)		(5,903	)
Total other (income) expense		(81,213	)		(113,735	)
Net loss	$	(630,317	)	$	(342,713	)

Net loss per common share	$	(0.004	)	$	(0.005	)
Weighted average common shares outstanding		173,810,911			65,254,830

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

Cirque Energy, Inc.

Consolidated Statements of Stockholders’ Deficit

	Preferred Stock A				Preferred Stock B				Common Stock						Additional Paid-
	Shares		Amount		Shares		Amount		Shares			Amount			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		-		-		-		-		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			1,326,620			-			-			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		13,420.00	$	134,200	$	-	$	-		163,934,049		$	163,931		$	8,748,321		$	429,075		$	(11,505,084	)	$	(2,029,558	)

Shares issued for debt conversion										24,979,523		$	24,979		$	402,976									427,955
Shares to be issued for services										5,000,000		$	5,000		$	81,000		$	-						86,000
Forgiveness of related party debt related to issuance of stock for payables																									-
Loan of stock to company at market value										(9,500,000	)	$	(9,500	)	$	(133,000	)	$	213,750						71,250
Shares issued for related party payable conversions						38,193		381,930							$	192,565		$	(312,500	)					261,995
Shares to be issued for officer and directors liabilities																		$	98,125						98,125
Net loss																					$	(630,317	)		(630,317	)

Balance at March 31, 2014 (unaudited)		13,420	$	134,200		38,193	$	381,930		184,413,572		$	184,410		$	9,291,862		$	428,450		$	(12,135,401	)	$	(1,714,550	)

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

Cirque Energy, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	For the years ended March 31,
	2014			2013
Operating Activities
Cash flows from operating activities :
Net loss	$	(630,317	)	$	(342,713	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		216			-
Amortization of debt discount		302,581			60,343
Issuance of common stock for services		86,000			15,000
Issuance of common stock for executive and director compensation		-			62,500
Loss on settlement of accounts payable		192,564			-
Loss on settlement of convertible promissory notes		240,706			48,339
Derivative expense		80,949			40,041
Gain on derivatives		(760,274	)		(40,574	)
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities		102,713			10,585
Accrued Interest					5,903
Accrued salaries and wages		(75,549	)		83,333
Accounts payable-related parties		-			(29,800	)
Cash used in operating activities		(460,411	)		(87,043	)

Investing Activities:
Purchase of equipment		(1,200	)		-
Cash used in investing activities		(1,200	)		-

Financing Activities:
Stock payable		169,375			36,000
Proceeds from convertible note		286,000			52,500
Cash provided by financing activities		455,375			88,500

Increase in cash		(6,236	)		1,457

Cash, beginning of period		8,841			1,005
Cash, end of period	$	2,605		$	2,462

Supplemental Disclosures of Cash Flow Information:
Cash paid during the peirod for:
Interest	$	-		$	-
Income tax	$	-		$	-

Non-cash investing and financing activities:
Shares issued for settlement of convertible notes payable	$	427,958		$	52,400
Preferred Shares issued to settle stock payable	$	381,930		$	-
Convertible notes issued to settle notes payable	$	28,500		$	-

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

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 eWorld 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.

Note 2 - Summary of Significant Accounting Policies

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.

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 eWorld Corp. and on May24, 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.

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.

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.

Significant Risks and Uncertainties

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.

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.

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.

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.

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.

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.

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.

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.

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.

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 $12,135,401. 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 March 31, 2014 and December 31, 2013:

	March 31,		December 31,
	2014		2013
Accounts and other payable, due to related parties		5,129		5,129
Accrued salaries and wages - related party		88,642		224,758
	$	93,771	$	229,887

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 and was converted into a note in February 2014 as described in Note 7 below.

Related party transactions during the period include salary and consultancy fees for the quarter ended March 31, 2014 and 2013 as follows:

	For the Quarter Ended March 31,
	2014		2013
Joe DuRant: CEO, Director	$	83,094	$	62,500
Frank O Donnell: Executive VP Business Development, Director		-		31,250
Roger Silverthorn: CFO, Director (effective February 1, 2013)		77,886		52,083
Richard Fosgitt, Director		59,858		-
Thomas Cote': Director		5,000		-
Total	$	225,837	$	145,833

The Company has recorded $8461 in payroll tax liabilities during the quarter ended March 31, 2014 related to payments made to its executives.

	Accrued Compensation to be issued in Class B Preferred Shares		Class B Convertible Preferred Issued ($10 Par)		Common Stock after 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.

E World Corp. Promissory Note February 2, 2014

On February 2, 2014, the Company entered into a Convertible Promissory Note (“ Note”) with E World Corp. in the principal amount of $181,662 bearing an 6% annual interest rate, unsecured and maturing February 2, 2016. The Note was in exchange for an accounts payable of the same amount. 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 60% 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

Note 5– 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 6 – 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

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 7. 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

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.

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.

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.

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.

In accordance with the terms of the Note, the holder fully converted the Note on March 31, 2014 for 4,500,000 shares of common stock for principal of $32,500 as disclosed in Note 7. During the quarter ended March 31, 2014, a gain in the change of the fair value of derivative of $60,064, amortization of debt discount of $10,119 and loss on settlement of promissory convertible notes of $35,000.

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 $60,064 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.

As of March 31, 2014, $31,314 of the debt discount has been amortized. The fair value of the derivative liability at March 31, 2014 is $21,956 resulting in a gain on the change in fair value of the derivative of $38,108. The Note is shown net of a debt discount of $1,186 at March 31, 2014.

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.

As of March 31, 2014, $16,989 of the debt discount has been amortized. The fair value of the derivative liability at March 31, 2014 is $50,765 resulting in a gain on the change in fair value of the derivative of $57,517. The Note is shown net of a debt discount of $30,511 at March 31, 2014.

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.

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 $34,476 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.

As of March 31, 2014, $27,142 of the debt discount has been amortized. The fair value of the derivative liability at March 31, 2014 is $4,047 resulting in a gain on the change in fair value of the derivative of $2,575. The Note is shown net of a debt discount of $5,339 at March 31, 2014.

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.

As of March 31, 2014, $21,808 of the debt discount has been amortized. The fair value of the derivative liability at March 31, 2014 is $28,434 resulting in a loss on the change in fair value of the derivative of $45,856. The Note is shown net of a debt discount of $13,569 at March 31, 2014.

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.

As of March 31, 2014, $15,104 of the debt discount has been amortized. The fair value of the derivative liability at March 31, 2014 is $40,188 resulting in a loss on the change in fair value of the derivative of $25,373. The Note is shown net of a debt discount of $14,377 at March 31, 2014.

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.

As of March 31, 2014, $18,093 of the debt discount has been amortized. The fair value of the derivative liability at March 31, 2014 is $83,589 resulting in a loss on the change in fair value of the derivative of $51,285. The Note is shown net of a debt discount of $40,870 at March 31, 2014.

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.

In accordance with the terms of the Note, the holder fully converted the Note on January 30, 2014 for 3,566,996 shares of common stock for principal of 26,500 and interest of $1,144 as disclosed in Note 8. During the three months ended March 31, 2014, a gain in the change in the fair value of derivative of $60,192, amortization of debt discount of $10,445and loss on settlement of promissory convertible notes of $19,440 for this Note was recorded.

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.

In accordance with the terms of the Note, the holder fully converted the Note on March 31, 2014 for 5,536,088 shares of common stock for principal of 32,000 and interest of $1,493 as disclosed in Note 8. During the three months ended March 31, 2014, a gain in the change in the fair value of derivative of $74,338, amortization of debt discount of $17,582 and loss on settlement of promissory convertible notes of $91,069 for this Note was recorded.

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.

As of March 31, 2014, $18,831 of the debt discount has been amortized. The fair value of the derivative liability at March 31, 2014 is $30,933 resulting in a loss on the change in fair value of the derivative of $31,774. The Note is shown net of a debt discount of $7,668 at March 31, 2014.

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.

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 eWorld 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.

As of March 31, 2014, $14,615of the debt discount has been amortized. The fair value of the derivative liability at March 31, 2014 is $40,347 resulting in a loss on the change in fair value of the derivative of $40,899. The Note is shown net of a debt discount of $15,385 at March 31, 2014.

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.

As of March 31, 2014, $12036 of the debt discount has been amortized. The fair value of the derivative liability at March 31, 2014 is $36,159 resulting in a loss on the change in fair value of the derivative of $35,431. The Note is shown net of a debt discount of $14,463 at March 31, 2014.

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.

In accordance with the terms of the Note, the holder fully converted the Note on January 9, 2014 and January 16, 2014 for 5,124,544 shares of common stock for principal and interest of $50,000 as disclosed in Note 8. During the three months ended March 31, 2014, a gain in the change in the fair value of derivative of $135,553, amortization of debt discount of $49,818 and loss on settlement of promissory convertible notes of $54,585 for this Note was recorded.

LG Capital Funding, LLC Promissory Note IX January 6, 2014

On January 6, 2014, the Company entered into a Convertible Promissory Note (“Note”) with LG Capital Funding, LLC (“Holder”) in the original principle amount of $52,000 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 $52,000 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 $98,265 and derivative expense of $46,265 based on the Black Scholes Merton pricing model.

As of March 31, 2014, $16,360 of the debt discount has been amortized. The fair value of the derivative liability at March 31, 2014 is $73,383 resulting in a loss on the change in fair value of the derivative of $24,882. The Note is shown net of a debt discount of $35,640 at March 31, 2014.

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.

As of March 31, 2014, $24,357 of the debt discount has been amortized. The fair value of the derivative liability at March 31, 2014 is $41,919 resulting in a loss on the change in fair value of the derivative of $18,453. The Note is shown net of a debt discount of $22,143 at March 31, 2014.

GEL Properties, LLC Promissory Note I January 20, 2014

On January 20, 2014, 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 6% annual interest rate, unsecured and maturing January 21, 2015. 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 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 $43,649 and derivative expense of $13,649 based on the Black Scholes Merton pricing model.

In accordance with the terms of the Note, the holder fully converted the Note on January 30, 2014, February 27, 2014, and March 11, 2014 for 3,751,895 shares of common stock for principal and interest of $30,000 as disclosed in Note 8. During the three months ended March 31, 2014, a gain in the change in the fair value of derivative of $43,649, amortization of debt discount of $30,000 and gain on settlement of promissory convertible notes of $3,600 for this Note was recorded.

GEL Properties, LLC Promissory Note II January 21, 2014

On January 21, 2014, 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 6% annual interest rate, unsecured and maturing January 21, 2015. 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 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 $86,035 and derivative expense of $21,035 based on the Black Scholes Merton pricing model.

As of March 31, 2014, $12,288 of the debt discount has been amortized. The fair value of the derivative liability at March 31, 2014 is $78,077 resulting in a loss on the change in fair value of the derivative of $7,958. The Note is shown net of a debt discount of $52,712 at March 31, 2014.

Typenex Co-Investment, LLC Promissory Note I February 13, 2014

On February 13, 2014, the Company entered into a Convertible Promissory Note (“Note”) with Typenex Co-Investment, LLC (“Holder”) in the initial principle amount of $150,000 bearing an 10% annual interest rate, unsecured and maturing May 13, 2015. Typenex Co-Investment is committed to issue additional Convertible Promissory Notes in $50,000 traunche’ up to a total investment of $550,000. 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 fixed conversion price of $0.025 per share subject to a reduction if the Company share price falls below the conversion price. The Investor will receive a warrant to purchase shares of the Company exercisable for a period of 5 years from the closing. The number of warrants will be calculated at 30% of the maturity amount of the traunche’s exercised by the Company. The exercise price of the warrant we be $0.025 per share. The Company recorded a debt discount in the amount of $112,688 and a debt discount of $51,484 for the warrants in connection with the initial valuation of the derivative liability of the note and warrants to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $51,484 for the warrants at inception, a derivative liability of $112,688 for the conversion at inception, and derivative expense of $23,770 based on the Black Scholes Merton pricing model.

As of March 31, 2014, $58,243 and $5,216 of the debt discount for the Note and warrants, respectively, has been amortized. The fair value of the derivative liability of the Note and the warrants at March 31, 2014 is $81,967 and $60,839, respectively, resulting in a loss on the change in fair value of the derivative of $15,503 on the Note and a gain on the change in fair value of the derivative of $9,355 on the warrants. The Note is shown net of a debt discount of $54,445 at March 31, 2014. The warrants are shown net of a debt discount of $46,268 at March 31, 2014.

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 7 – 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 par value $0.001 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 have been designated and authorized..

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 13,000,000 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 $518,122 during the year ended December 31, 2012.

On April 17, 2012, the Board of Directors of the Company approved the issuance of 13,000,000 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 eWorld 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 eWorld 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.

On January 20, 2014, the Board of Directors approved the issue of 38,194 of Class B Preferred Shares at $10 par value as described in Note 4.

On February 13, 2014, pursuant to an agreement, Carmel Advisors LLC was issued 5,000,000 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.

Stock issued during the quarter to date ending March 31, 2014 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.

Stock Issued for Settlement of Convertible Notes Payable

Date of Issue	Stock Issues for year ended December 31, 2014	Number of Shares issued		Purpose of Issue	Conversion Price based on the Conversion Formula in the Notes		Principal and Interest Converted
January 9, 2014	LG Capital Funding, LLC		2,094,241	Debt Conversion	$	0.010	$	20,000
January 16, 2014	LG Capital Funding, LLC		3,030,303	Debt Conversion	$	0.010	$	30,000
January 30, 2014	LG Capital Funding, LLC		3,566,996	Debt Conversion	$	0.007	$	26,500
January 30, 2014	GEL Properties, LLC		2,000,000	Debt Conversion	$	0.008	$	16,796
February 27, 2014	GEL Properties, LLC		1,500,000	Debt Conversion	$	0.008	$	11,301
March 6, 2014	JMJ Financial		2,500,000	Debt Conversion	$	0.005	$	13,613
March 11, 2014	GEL Properties, LLC		251,895	Debt Conversion	$	0.008	$	1,903
March 21, 2014	LG Capital Funding, LLC		5,536,088	Debt Conversion	$	0.006	$	33,493
March 31, 2014	Matthew Morris		4,500,000	Debt Conversion	$	0.007	$	32,500

Date of Issue

Stock Issues for year ended
December 31, 2014

Number of
Shares issued

Purpose of Issue

Price on
date of
issue

Market
value of
shares
issued

March 31, 2014

Carmel Advisors, LLC

5,000,000

Services

0.017

86,000

During the 3 months ended March 31, 2014, the Company issued at total of 24,979,253 shares of common stock for debt conversion for an aggregate fair value of $427,956 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 $427,956 and the principal and interest converted of $186,105 is recorded as a loss on settlement of promissory notes and interest of $240,706 in the consolidated statements of operations.

As of March 31, 2014 and December 31, 2013, the Company had 184,413,572 and 163,934,049 shares of common stock outstanding respectively..

Stock Payable

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 March 31, 2014 and December 31, 2013, 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 March 31, 2014 and December 31, 2013, 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 March 31, 2014 and December 31, 2013, 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 March 21, 2014 and December 31, 2013, 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 March 31, 2014 and December 31, 2013, no shares were issued and the $22,968 for this obligation was recorded as stock payable.

At 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 and were issued. The fair value of the shares to be issued is $574,495 based on the quoted market price of the shares on the date of approval. The excess of the accrued wages over the fair value of the shares issued of $192,565 is recorded as additional paid-in capital due to the related party relationship. As of December 31, 2013, no shares were issued and the $312,500 for this obligation was recorded as stock payable. As of March 31, 2014 the preferred shares had been issued and removed from stock payable.

On January 10, 2014, the Board of Directors approved the issue of capital stock as additional compensation for the officers and Board of Director members. The amount of dollars authorized, to whom they are authorized, and the dollar amount of shares each represent is shown in the chart below. As of March 31, 2014 this amount of $98,125 was recorded as stock payable.

	Accrued Compensation to be issued in Capital Stock		Accrued Board of Director Fee to be issued in Capital Stock		Total		Shares of Common Stock to be issued at March 31, 2014 Market Price
Joe DuRant: CEO, Director	$	31,250	$	5,000	$	36,250		2,416,667
Roger Silverthorn: CFO, Director		31,250		5,000		36,250		2,416,667
Richard Fosgitt, Director		15,625		5,000		20,625		1,375,000
Thomas Cote': Director		-		5,000		5,000		333,333
	$	78,125	$	20,000	$	98,125		6,541,667

On March 12, 2014 two shareholders loaned their shares to the company in exchange for note. The note is payable when shares are available and will be paid at a 50% premium. The total shares returned to treasury were 9,500,000 shares and will be repaid with 14,250,000 shares when available and are recorded as stock payable for $213,750. The premium has been expensed as other financing costs. The shares were valued at the fair value on the day of the transaction.

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 $3,029,991 ($1,928,768in 2012) which is calculated by multiplying a 35% estimated tax rate by the cumulative NOL of $5,186,163. The total valuation allowance is $3,029,991 ($1,928,768 in 2012). Details for the last two periods follow:

	As of December 31,
	2013			2012
Deferred tax asset	$	3,029,991		$	1,928,768
Valuation allowance		(3,029,991	)		(1,928,768	)
	$	0		$	0

As of December 31, 2013, the Company had available unused operating loss carry forwards of approximately $10,072,185 ($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.

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 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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.

In March 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 United States generally accepted accounting principles (“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 to acquire the assets of GRES which included certain contracts for the acceptance, processing and disposal of construction and demolition waste. FINRA approved the name change to Green Energy Renewable Solutions, Inc. (“GERS”) and reverse split on January 26, 2012. On January 26, 2012 GERS completed a five-for-one 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. 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’ key area of business 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 one-for-one stock dividend for shares held on June 29, 2012 and the dividend shares were issued following FINRA approval on July 27, 2012.

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 is pending.

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 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 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.

Results of Operations

Below is a comparison of results of operations for the three months ended March 31, 2014 and March 31, 2013.

The Company reported a net loss of $630,317 for the three months ended March 31, 2014 versus a net loss of $342,713 for the three months ended March 31, 2013.

For the three months ended March 31, 2014, the primary contributors to the net loss of $630,317 were executive compensation for the management team of $225,837, professional fees of $72,306, investor relations costs of $92,134, other financing costs of $92,750, and project development costs of $38,082. For the three months ended March 31, 2014, primary contributors to the net loss of $630,317 amortization of debt expense of $317,582, derivative expense of $80,949, loss on settlement of debt of $192,564, loss on settlement of promissory convertible notes of $240,706, gain on derivative liability of $760,274, and interest expense of $9,686. For the three months ended March 31, 2013, primary contributors to the net loss of $342,713 were executive compensation for the management team of $145,833, professional fees of $78,230, amortization of debt discount of $60,343, derivative expense of $40,041, loss on settlement of promissory convertible notes of $48,339, gain on derivative liability of $40,574, and interest expense of $5,903.

Prior period comparisons of results are impacted by developing operations during the periods covered.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with GAAP 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.

Impairment of Long-Lived Assets and Intangible Assets

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.

Liquidity and Capital Resources

During the three months ended March 31, 2014, net cash used in operating activities totaled $(460,411). Cash generated by financing activities was $455,375, resulting primarily from the issuance of convertible promissory notes and the addition to stock payable, and cash used in investing activities totaled $1,200. Decrease in cash for the period was $6,236.

During the three months ended March 31, 2013, net cash used in operating activities totaled $(87,043). Cash generated by financing activities was $88,500, resulting primarily from the issuance of convertible promissory notes, and the addition to stock payable and cash used in investing activities totaled $-0-. Increase in cash for the period was $1,457.

Cash Flow Requirements for Operations

As of March 31, 2014 the Company had available cash of $2,605. Based on our historical cash needs and our business plan, we require approximately $1,200,000 for operations for the 2014. We currently have legal and accounting expenses with no revenue generating operations. We rely primarily on the issuance of convertible debt and the sale of our common shares 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 an accumulated deficit of $12,135,401 at March 31, 2014. The future of the Company is dependent upon its ability to obtain additional financing. Management plans to seek additional financing through debt 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 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4.

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 March 31, 2014. This evaluation was carried out under the supervision of the Company’s Principal Executive Officer and its Principal Financial Officer. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of March 31, 2014, 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.

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.

Inherent Limitations on the Effectiveness of Controls

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 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 Controls

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, performed an evaluation to determine whether any change in our internal controls over financial reporting occurred during the three month period ended March 31, 2014. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that no change occurred in the Company's internal control over financial reporting during the three months ended March 31, 2014 that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

No legal proceedings were initiated or served upon the Company in the quarterly period ended March 31, 2014. We are not currently involved in any material legal proceedings. We are not aware of any material legal proceedings pending against us.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

[TO COME – NOT NEEDED IF ALREADY REPORTED ON A FORM 8-K]

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

None

ITEM 6.

EXHIBITS

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*

* Filed herewith

** Furnished herewith

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 23, 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 23, 2015	By:	/ s/ Joseph DuRant
		Joseph DuRant
		Chief Executive Officer, President and Director
		(Principal Executive Officer)

January 23, 2015	By:	/s/ David Morgan
		David Morgan
		Chief Financial Officer
		(Principal Financial Officer)

CIRQUE ENERGY, INC. - FORM 10-Q - January 26, 2015

Attached files

CIRQUE ENERGY, INC. Reports