UNITED STATES

SECURITIESAND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 

For the quarterly period ended June 30, 2015 

 

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

 

For the Transition Period From__________ to __________ 

 

333-179669

Commission file number

 

NEW GLOBAL ENERGY, INC.

(Exact name of small business issuer as specified in its charter)

 

Wyoming		45-4349842
(State of incorporation)		(IRS Employer Identification Number)

 

109 East 17th Street  Suite 4217  Cheyenne, WY 82001

(Address of principal executive office)

 

(307) 633-9192

(Issuer's telephone number)

 

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 the filing requirement for at least 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 x No ¨

 

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, par value $.0001 per share 13,097,365 outstanding shares as of August 3, 2015. 

 

 

 

NEW GLOBAL ENERGY, INC.

 

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements-unaudited	3
	Condensed Consolidated Balance Sheets as of June 30, 2015 (unaudited) and December 31, 2014	3
	Condensed Consolidated Statements of Operations for the Three and Six Month Periods Ended June 30, 2015 and June 30, 2014 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Six month Periods Ended June 30, 2015 and June 30, 2014 (unaudited)	5
	Condensed Consolidated Statement of Stockholders’ Equity for the period ended June 30, 2015 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	13
Item 4.	Controls and Procedures	13
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	14
Item 3.	Defaults Upon Senior Securities	14
Item 4.	Not Required
Item 5.	Other Information	14
Item 6.	Exhibits	15
Signatures		16

 

2

 

ITEM 1. FINANCIAL STATEMENTS

 

New Global Energy, Inc.

Condensed Consolidated Balance Sheets 

 

		June 30, 2015				December 31, 2014
		(unaudited)
Assets
Current assets:
Cash		$	6,511			$	25,008
Accounts receivable			0				3,661
Inventory			6,000				43,043
Total current assets			12,511				71,712
Property & equipment, net			5,304,568				5,400,251
Other assets:
Goodwill			16,182,601				16,182,601
Deposits			6,238				6,238
Total other assets			16,188,839				16,188,839
Total Assets		$	21,505,918			$	21,660,802
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable-trade		$	230,802			$	170,685
Accrued expenses			472,061				486,054
Due to related parties			293,558				295,558
Current portion of long-term debt			344,722				812,108
Derivative liability			331,307				560,110
Total current liabilities			1,672,452				2,324,513
Notes payable, net of current portion			495,039				182,157
Total liabilities			2,167,491				2,506,670
Stockholders' Equity:
Preferred stock-20,000,000 shares authorized $0001 par value
11,816 shares issued and outstanding (liquidation preference of $1,772,400)			1				0
Common stock-100,000,000 shares authorized $0.0001 par value
13,097,365 shares issued & outstanding			1,310				1,310
Additional paid-in capital			36,692,512				34,108,982
Common stock subscriptions receivable			(94,500	)			0
Accumulated deficit			(24,051,032	)			(21,972,927	)
Total New Global stockholders' equity			12,548,291				12,137,363
Non-controlling interest			6,790,136				7,016,769
Total stockholders' equity			19,338,425				19,154,132
Total Liabilities & Stockholders' Equity		$	21,505,918			$	21,660,802

 

See notes to unaudited condensed consolidated financial statements.

 

3

 

New Global Energy, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

 

		Three Months Ended June 30, 2015				Three Months Ended June 30, 2014				Six Months Ended June 30, 2015				Six Months Ended June 30, 2014
Revenue		$	9,391			$	0			$	29,638			$	0
Costs & Expenses:
Costs of goods sold			77,364				0				143,024				0
Depreciation & Amortization			62,356				0				95,684				0
General & administrative			80,970				95,589				261,936				186,337
Total Operating Costs & Expenses			220,691				95,589				500,645				186,337
Other (Income) Expense:
Derivative valuation (gain) charge			(83,699	)			(1,006,736	)			(228,803	)			5,265,744
Interest expense & amortization of debt discount			41,923				346,840				69,803				467,597
Interest income			0				(7,861	)			0				(12,780	)
Loss on settlement of debt			0				0				1,992,732				0
Net loss from equity method investment			0				59,822				0				93,626
Total Other (Income) Expense			(41,776	)			(607,935	)			1,833,732				5,814,187
Loss before income taxes			(169,523	)			512,346				(2,304,738	)			(6,000,524	)
Provision for income taxes			0				0				0				0
Net loss			(169,523	)			512,346				(2,304,738	)			(6,000,524	)
Net loss attributable to non-controlling interest			185,673				0				226,633				0
Net loss attributable to New Global		$	16,150			$	512,346			($2,078,105		)		$	(6,000,524	)
Basic and diluted per share amounts:
Basic and diluted net loss		Nil				$	0.16			($0.16		)		($2.00		)
Weighted average shares outstanding (basic & diluted)			13,097,365				3,300,720				13,097,365				3,006,845

 

See notes to unaudited condensed consolidated financial statements.

 

4

 

New Global Energy, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

		Six Months Ended June 30, 2015				Six Months Ended June 30, 2014
Cash flows from operating activities:
Net Loss		$	(2,304,738	)		$	(6,000,524	)
Adjustments required to reconcile net loss to cash used in operating activities:
Net loss from to equity method investment			0				93,626
Derivative valuation charge (gain)			(228,803	)			5,265,744
Loss realized upon conversion of debt			1,992,732				0
Amortization of debt discount			0				459,089
Depreciation and amortization			95,684				0
Changes in operating assets and liabilities:
Decrease in accounts receivable			3,661				0
Increase in interest receivable			0				(12,780	)
Decrease in inventory			37,043				0
Increase in accounts payable			59,957				0
Increase in accrued expenses			(13,829	)			8,508
Cash used in operating activities:			(358,293	)			(186,337	)
Cash flows from investing activities:
Advances to equity method investee			0				(315,000	)
Cash used in investing activities			0				(315,000	)
Cash flows from financing activities:
Proceeds from issuance of preferred/common stock			155,500				334,000
Proceeds from related party notes payable			259,800				0
Proceeds from convertible note advances			0				150,000
Payments on long-term debt			(73,504	)			0
Payments made on related party debt			(2,000	)			0
Cash provided by financing activities			339,796				484,000
Change in cash			(18,497	)			(17,337	)
Cash-beginning of period			25,008				19,076
Cash-end of period		$	6,511			$	1,739
Schedule of Non-cash financing and investing activity:
Cash paid during the period for:
Interest		$	0			$	0
Income taxes		$	0			$	0
Fair value of preferred/common stock issued upon settlement of debt		$	2,333,530			$	14,046,443
Derivative liability eliminated upon debt conversion		$	0			$	14,057,284
Note principal converted to common/preferred stock		$	340,800			$	500,000
Net gain on conversion of notes payable and derivative liability		$	0			$	510,841
Debt discount recorded at issuance of convertible debt and warrants		$	0			$	150,000
Fair value of common stock issued upon exercise of warrants		$	0			$	2,266,000
Derivative liability eliminated upon exercise of warrants		$	0			$	2,178,125
Net gain on exercise of warrants and derivative liability		$	0			$	246,125

 

See notes to unaudited condensed consolidated financial statements.

 

5

 

New Global Energy, Inc.

Condensed Consolidated Statement of Stockholders' Equity

(unaudited)

 

		Preferred Stock								Common Stock								Additional paid-in				Accumulated				Subscription				Non-Controlling Interest in Variable Interest				Total
		Shares				Amount				Shares				Amount				Capital				Deficit				Receivable				Entity				Equity
Balance at December 31, 2014											13,097,365			$	1,310			$	34,108,982			$	(21,972,927	)						$	7,016,769			$	19,154,132
Preferred stock issued to settle debt			6,816				1												2,333,530																2,333,531
Preferred stock issued for cash			5,000																250,000								(94,500	)							155,500
Net Loss																							(2,078,105	)							(226,633	)			(2,304,738	)
Balance at June 30, 2015			11,816			$	1				13,097,365			$	1,310			$	36,692,512			$	(24,051,032	)		$	(94,500	)		$	6,790,136			$	19,338,425

 

See notes to unaudited condensed consolidated financial statements.

 

6

 

NEW GLOBAL ENERGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

 

Note 1. Organization and Nature of Operations:

 

Background 

 

New Global Energy, Inc. (“NGE” or the “Company”) was organized on January 24, 2012. NGE’s executive offices are located in Brevard County, Florida. The Company is focused on the development of its Global Energy Plantation (“GEP”) Platform which combines alternative energy production, sustainable agriculture and aquaculture. It anticipates the use of non-centralized power plants, primarily concentrated solar power, Jatropha based biofuels and aquaculture operations to produce power for its own use and to feed into the power grid serving local power needs while producing farm grown fish and shrimp as food products. Management has begun to execute this plan through the purchase of a noncontrolling equity interest and rights to majority of profits of Aqua Farming Tech, Inc. (“AFT”). The Company is in the process of raising additional equity capital to support the completion of its acquisition and development activities. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to operationalize the Company. 

 

Going Concern 

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of June 30, 2015, the company had a working capital deficit $1,659,939 and an accumulated deficit of $24,181,187. These matters, among others, raise substantial doubt about our ability to continue as a going concern. 

 

While the Company is attempting to commence operations and generate revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues. 

 

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern 

 

Basis of Presentation 

 

The accompanying condensed consolidated balance sheet as of December 31, 2014, which was derived from audited financial statements, and the unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. These financial statements should be read in conjunction with the audited financial statements and related notes for the fiscal year ended December 31, 2014, included in the Company’s Annual Report on Form 10-K covering that period. 

 

In the opinion of management, the information furnished in these interim financial statements reflect all adjustments necessary for a fair statement of the financial position and results of operations and cash flows as of and for the three and six-month periods ended June 30, 2015 and 2014. All such adjustments are of a normal recurring nature. The financial statements do not include some information and notes necessary to conform with annual reporting requirements. The results of operations for the periods presented are not necessarily indicative of the results for the full fiscal year or any future period. 

 

Note 2. Summary of Significant Accounting Policies:

 

Estimates: The preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related intangible assets, income taxes, insurance obligations and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates under different assumptions or conditions.  

 

7

 

Earnings per Common Share: We compute net (loss per share in accordance with FASB ASC 260, Earning per Share. FASB ASC 260 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 dilutive potential common shares outstanding during the period. For the interim periods ended June 30, 2015 and 2014, the following potentially dilutive securities have been excluded from the calculation of diluted loss per share (excluding the impact of the treasury stock method) because their impact was antidilutive. 

 

		June 30, 2015				June 30, 2014
Preferred Stock			1,701,504				0
Warrants			111,716				271,700
Total			1,813,220				271,700

 

Reclassifications: Certain amounts in prior years' financial statements have been reclassified to conform to the current presentation.  

 

Principles of Consolidation: The consolidated financial statements include the accounts of New Global and as of July 15, 2014, AFT of which the company is determined to be the primary beneficiary. All significant inter-company balances and transactions have been eliminated. 

 

Recent Accounting Pronouncements

 

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-03, "Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Currently, debt issuance costs are recognized as deferred charges and recorded as other assets. The guidance is effective for annual and interim periods beginning after December 15, 2015 with early adoption permitted and is to be implemented retrospectively. Adoption of the new guidance will only affect the presentation of the Company's consolidated balance sheets and will have no impact to our financial statements. 

 

The Company has implemented all new relevant accounting pronouncements that are in effect through the date of these financial statements. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

Note 3. Stockholders' Equity:

 

Current Authorization 

 

We are currently authorized to issue up to 100,000,000 shares of $ 0.0001 par value common stock and 20,000,000 shares of preferred stock. All issued shares of common stock are entitled to vote on a 1 share/1 vote basis.  

 

Recent Issuances 

 

Shares issued in settlement of debt: In February and March 2015 we issued a total of 6,816 shares of Series “A” Preferred stock in settlement of $340,800 of principal due on notes payable. The shares were valued at fair value using an Option Pricing model coupled with the Equity Allocation method. The resultant value of $2,333,532 was derived using the following significant assumptions:  

 

Risk free interest rate		.49% to .70		%
Expected volatility		82% to 90		%
Expected years to liquidity		2 years
Expected dividend yield			0	%

 

8

 

Each share of Series A Preferred Stock shall be convertible, at the option of the holder, at any time into such number of fully paid and non-assessable shares of Common Stock as is determined by multiplying the number of issued and outstanding shares of the Corporation’s Common Stock by .0000110. Provided however, that such number of common shares into which each share of Series A Stock may be converted shall not exceed 220. As of June 30, 2015 each share would convert into approximately 144 common shares. The shares are entitled to a liquidation preference of $150 per share and dividends on a pro-rata basis with the common if and when declared.

 

Shares issued for cash: In May we issued a total of 5,000 shares of Series “A” Preferred stock in exchange for $250,000 or $50.00 per share as stipulated in the Feb, 2015 stock purchase agreement. As of June 30, 2015 $155,500 has been received.  

 

Note 4. Derivative Warrant Liabilities:

 

The aggregate fair value of the derivative liability arising from the warrants was determined to be $331,307 at June 30, 2015. 

 

The Company values its warrant derivatives using the Black-Scholes option-pricing model. Assumptions used include:  

 

	·	risk-free interest rate- 0.15%-.0.36%
	·	warrant life is the remaining contractual life of the warrants,
	·	expected volatility-319% to 329%,
	·	expected dividends-none
	·	exercise prices as set forth in the agreements,
	·	common stock price of the underlying share on the valuation date, and
	·	number of shares to be issued if the instrument is exercised

 

The following table summarizes activities related to the derivative liabilities for the six months ended June 30, 2015: 

 

		Warrants
Fair value at December 31, 2014		$	560,110
Adjustments to fair value at June 30, 2015			(228,803	)
Fair value at June 30, 2015		$	331,307

 

Note 5. Current Loan Activity:

 

During the quarter ended March 31, 2015 the Company borrowed $259,800 from a related party through a series of three $100,000 unsecured promissory notes. The notes bear interest at 4% and are payable one year from the date of issuance. During the quarter ended March 31, 2015 $137,500 of previously issued notes and $203,300 of the new notes were settled by the issuance of 6,816 shares of preferred stock valued at $2,333,532.  

 

On March 10, 2015 the Company executed an extension and new loan agreement with First General Bank consolidating the existing principal balance of $466,312 and accrued interest and other fees of $39,866 for a total of $506,178. The note bears interest at 6.5% and requires monthly payments of $3,449. The entire amount is due on March 10, 2017 and is secured by the property and equipment of AFT.  

 

Note 6. Fair Value Measurements:

 

The following table summarizes assets and liabilities measured at fair value on a recurring basis as of June 30, 2015: 

 

		June 30, 2015
Description of assets:		Level 1				Level 2				Level 3				Total
None		$	-			$	-			$	-			$	-
Description of liabilities:
Derivatives		$	-			$	-			$	331,307			$	331,307

 

Note 7. Sales Concentration: 

 

For the three months ended June 30, 2015, one customer accounted for 82% of the Company’s revenue. For the six months ended June 30, 2015 two customers accounted for 64% and 17% of revenues. 

 

9

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

 

The following discussion and analysis is intended as a review of significant factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with our consolidated financial statements and the notes presented herein. In addition to historical information, the following Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those anticipated in these forward-looking statements as a result of certain factors discussed in this Form 10-Q.

 

Overview and Financial Condition 

 

New Global Energy, Inc. (“NGE” or the “Company”) is a sustainable agriculture and aquaculture company organized as a Wyoming corporation on January 24, 2012 with executive offices located in Brevard County, Florida. The Company focuses on the use of advanced technology and farming techniques with the goal of increasing production and decreasing costs. The Company is focused on internal growth and growth through the acquisition of high-growth firms, assets and properties in the Green market space; industry segments include sustainable agriculture, aquaculture, solar, biofuels and carbon credits. Management is targeting growth stage assets, operations and companies that possess proprietary market edge and demonstrate solid opportunity to scale their business. We expect to pursue special opportunities that are anticipated to accelerate shareholder value by consolidating certain tiers of the $5 Trillion per year fragmented Green and Renewable Energy industry. 

 

The first portion of the Company’s development included the development of its Global Energy Plantation (“GEP”) using its Global Cell concept which combines alternative energy (source of usable energy intended to replace fuel sources without the undesired consequences of the replaced fuels) production, sustainable agriculture (practice of farming using principles of ecology, the study of relationships between organisms and their environment) and aquaculture (the farming of aquatic organisms such as fish, crustaceans, molluscs and aquatic plants). It uses non centralized power plants, primarily solar power and aquaculture operations to produce power for its own use and to feed into the power grid serving local power needs while producing farm grown fish and shrimp as food products. 

 

The Company is focused on internal growth and growth through the acquisition of high-growth firms, assets and properties in the Green market space; industry segments include sustainable agriculture, aquaculture, solar, biofuels and carbon credits. Management is targeting growth stage assets, operations and companies that possess proprietary market edge and demonstrate solid opportunity to scale its business. The Company expects to scale its business through the development of the acquisition of existing farms and through the acquisition of additional farms. The Company believes that it can lower the costs of operations in anticipated acquisition through the construction of the solar generating systems and algae based feeding programs. The Company anticipates that if it is able to improve the metrics associated with the cost of production it will be able to attain a competitive advantage other farms in that market space. 

 

By the end of 2013, the Company had completed incremental acquisitions of Aqua Farming Tech, Inc. (“AFT”) bringing its total ownership to 36.69%. AFT is a California corporation with aquaculture and agriculture operations in the Coachella Valley in Southern California that operates a large aquaculture operation on two parcels of land totaling 118.9 acres. On July 15, 2014 the Company acquired a 43.66% Net Revenue Interest in and to the net revenues from the operations of AFT’s aquaculture operations in Southern California. Cash allocable to the Net Revenue Interest is calculated and distributed on a quarterly basis within forty five (45) days after the end of each calendar quarter. The Company has determined that the acquisition of this 43.6% Net Revenue Interest, considering its previously held equity interest (PHEI), The outstanding debt owed by AFT to the Company, and implicit variable interest resulting from the acquisition of Net Revenue Interest resulted in the Company being the Primary Beneficiary of AFT and consolidating AFT as of July 15, 2014. 

 

Forward-looking statements such as this are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by a forward-looking statement. These risks and uncertainties include, without limitation: (1) the potential acquisitions or mergers may not be consummated in a timely manner, if at all; (2) any merger agreement may be terminated in circumstances that require the Company to pay a termination fee or reimburse certain expenses; (3) the diversion of management's attention from the Company's ongoing business operations; (4) the ability of the Company to retain and hire key personnel; (5) the effect of the announcement of any acquisition or Merger on the Company's business relationships, operating results and business generally; (6) competitive responses to any proposed Merger; and (7) the failure to obtain any requisite approvals to any Merger, such as stockholder approval. The Company expressly disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.  

 

10

 

Results of Operations for the Three Months ended June 30, 2015 compared to June 30, 2014

 

The Company had revenues for the three month period ended June 30, 2015 of $9,391 up from revenues of $0 for the same period the prior year. Selling, general and administrative expenses for the same three months ended June 30, 2015 were $220,691, up from $95,589 for the same period the prior year. The increases were significantly associated with the consolidation of the Company’s financial statements with Aqua Farming Tech, Inc.  

 

Results of Operations for the Six Months ended June 30, 2015 compared to June 30, 2014

 

The Company had revenues for the six month period ended June 30, 2015 of $29,638 up from revenues of $0 for the same period the prior year. Selling, general and administrative expenses for the same six months ended June 30, 2015 were $500,645, up from $186,337 for the same period the prior year. The increases were significantly associated with the consolidation of the Company’s financial statements with Aqua Farming Tech, Inc.  

 

We charge the initial valuation of the conversion feature and warrants by offsetting the carrying value of the note up to the principal. Initial derivative values in excess of note principal are immediately charged to interest expense. Derivative valuation charged to interest expense was ($83,699) for the three months ended June 30, 2015 down from $1,006,736 for the same period the prior year with the decrease substantially due to the conversion and payment of notes prior to the reported period 

 

 Emerging Growth Company:

 

We qualify as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.

 

The Company has implemented all new relevant accounting pronouncements that are in effect through the date of these financial statements. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

		Cash Flows Six Months Ended
		June 30, 2015				June 30, 2014
Net Cash Used by Operating Activities		$	(358,293	)		$	(186,337	)
Net Cash Used by Investing Activities		$	(0	)		$	(315,000	)
Net Cash Produced by Financing Activities		$	339,796			$	484,000
Cash Ending Balance		$	6,511			$	1,739

 

Although consolidated financials with Aqua Farming Tech, Inc. show revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues. 

 

11

 

Liquidity and Capital Resources

 

Financing Activities

 

During the six months ended June 30, 2015, The Board of Directors of the Company approved the designation of 25,000 shares of the Company’s Preferred Stock as “Series A Redeemable Convertible Preferred Stock” providing for redemption, conversion and preferences a set out in the Certificate of Designation of Rights, Privileges, Preferences and Restrictions of Series A Redeemable Convertible Preferred Stock of New Global Energy, Inc. file as Exhibit 4.1 with this Form 8-K filed January 22, 2015.  

 

In February and March 2015, the Company settled $340,800 of debt for 4,160 shares of the Company’s Series A Redeemable Convertible Preferred stock. The Company has designated a total of 25,000 shares of Series A Preferred Stock. The Company showed a loss upon the settlement of this debt of $1,992,732 based on the fair value of the preferred stock. 

 

For the six months ended June 30, 2015, net cash provided from financing activities was $339,796. 

 

The Company has historically met its cash needs through a combination of cash flows from operating activities along with long and short term borrowings and through the sale of its stock. 

 

During the six months ending June 30, 2015, the Company borrowed an additional $259,800 from Bio-Global Resources, a private unrelated company, for operating capital under three Promissory Notes carrying interest at the rate of 4% and due and payable one year from the date of the notes. These notes carried no conversion or warrant provisions. 

 

Contractual Obligations

 

The company has acquired Net Revenue interests and crop leases (see Overview of Financial Condition above). In addition, the Company has been reviewing various real property to utilize in its business plan and has been exploring the use of project finance structures to fund such acquisition and development of business activities. The Company expects to enter into such transaction or transactions during the next 12 months. There are currently no transactions under contract and there is no assurance that the company will be able to complete such transactions. 

 

Subsequent to the end of the reported period, on May 11, 2015, the Company’s Board of Directors approved the acquisition of certain technologies through three agreements including an exclusive license to VIP Patient Management Software System (Electronic Medical Records (EMR) and Electronic Health Records (EHR) Platforms) an exclusive license to Canacard Patient Management Systems Software, a HIPAA compliant platform that manages end-to-end transactions involved in providing safe access to controlled substances. The exclusive license from ALTERNATE HEALTH, INC., and is for a period of 20 years for the United States and Puerto Rico. This software is included under the International Patent Application PCT/CA2014/050890. The Company agreed to issue 1,500,000 commons shares for these licenses as well as warrants to purchase an additional 1,100,000 at a price equal to 50% of the market price on the day of issue. There is additional consideration of $1,500,000 due when as and if funding of operations under these licenses is closed. 

 

Subsequent to the end of the reported period, the Company entered into a mutual rescission agreement with these two companies rescinding and terminating this transaction which had remained an executory agreement with no shares being transferred, money paid or services rendered. 

 

Commitments and Capital Expenditures

 

The Company had no material commitments for capital expenditures as of June 30, 2015.  

 

Off-Balance Sheet Arrangements

 

The Company does not have any relationships with entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet financial arrangements. 

 

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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 

 

Not required for smaller reporting companies. 

 

ITEM 4. Controls and Procedures

 

We maintain "disclosure controls and procedures," as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our Disclosure Controls were not effective as of the end of the period covered by this report. 

 

The limited size of the company including a limited staff makes it extremely difficult to segregate duties in a way that will allow disclosure controls and procedures to be implemented in an effective way. To the extent that the Company is able to add other executives and professional staff with increased business, it will continue its efforts to create an effective system of disclosure controls and procedures.  

 

	a)	The Company lacks the financial infrastructure to account for complex transactions which may result in a greater than normal risk that material errors may occur in the financial statements and not be detected timely.
	b)	The Company currently relies upon independent financial reporting consultants for review of critical accounting areas and disclosures and material non-standard transactions.
	c)	Lack of sufficient segregation of duties. Specifically, this material weakness is such that management must rely primarily on detective controls and controls could be strengthened by adding preventative controls to properly safeguard company assets.

 

Changes in Internal Controls

 

We have also evaluated our internal control for financial reporting and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of their last evaluation. 

 

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PART II - OTHER INFORMATION

 

ITEM 1. Legal Proceedings

 

There are no pending legal proceedings. The Company may subject to other legal proceedings that arise in the ordinary course of its business and from prior management activities. Other than as previously disclosed, in the opinion of present management, the aggregate liability, if any, with respect to these other actions will not materially adversely affect our financial position, results of operations or cash flows. 

 

ITEM 1A. Risk Factors 

 

Not required for smaller reporting companies. 

 

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

The Company issued no shares of its common stock during the reported period. 

 

ITEM 3. Defaults Upon Senior Securities

 

None 

 

ITEM 4. Other Information

 

None 

 

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ITEM 5. Exhibits

 

a) Exhibits

 

31.1		Section 302 Certification By Chief Executive Officer and Principal Financial Officer
32.1		Section 906 Certification of Principal Executive Officer and Principal Financial Officer

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 

 

	NEW GLOBAL ENERGY, INC.
August 14, 2015	By	/s/ Perry West
		Perry West
		CEO an Director

 

 

 

 

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