11 GOOD ENERGY INC - FORM 10-Q

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EX-31.1 - 11 GOOD ENERGY INC	c67572_ex31-1.htm
EX-32.2 - 11 GOOD ENERGY INC	c67572_ex32-2.htm
EX-32.1 - 11 GOOD ENERGY INC	c67572_ex32-1.htm
EX-31.2 - 11 GOOD ENERGY INC	c67572_ex31-2.htm
EXCEL - IDEA: XBRL DOCUMENT - 11 GOOD ENERGY INC	Financial_Report.xls

UNITED STATES

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 SEPTEMBER 30, 2011

COMMISSION FILE NUMBER: 000-54132

11 GOOD ENERGY, INC.

(Exact name of registrant as specified in its charter)


DELAWARE	26-0299315
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4450 Belden Village Street N.W., Suite 800
Canton, OH 44718
(Address of principal executive offices)

(330) 492-3835
(Registrant’s telephone number, including area code)

NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)

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 x No o

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the 12 preceding months (or such shorter period that the registrant was required to submit and post such file). Yes x No o

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	o	Accelerated Filer	o
Accelerated Filer	o	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 o No x

As of November 21, 2011, the registrant had a total of 19,991,238 shares of Common Stock issued and outstanding.

11 GOOD ENERGY, INC. AND SUBSIDIARY

INDEX


		Page Number

PART I	Financial Information

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets – September 30, 2011 (Unaudited) and December 31, 2010	3

	Unaudited Condensed Consolidated Statements of Operations – Three and Nine Months Ended September 30, 2011 and September 30, 2010 and for the period May 23, 2007 (date of inception) to September 30, 2011	4

	Unaudited Condensed Consolidated Statement of Stockholders Equity – January 1, 2011 to September 30, 2011	5

	Unaudited Condensed Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2011 and September 30, 2010 and for the period May 23, 2007 (date of inception) to September 30, 2011	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19-29

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

PART II	Other Information	30

	Exhibits	32-34

SIGNATURES		34

Certifications

PART I.

FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
CONDENSED CONSOLIDATED BALANCE SHEETS


	September 30, 2011			December 31, 2010

	(unaudited)
ASSETS
Current assets:
Cash	$	14,294		$	29,879
Inventory		428,513			624,739
Accounts receivable, net		25,168			51,801
Available for sale securities		1,040			576,990
Other current assets		20,390			24,974

Total current assets		489,405			1,308,383


Property, plant and equipment, net		2,277,333			2,562,675


Other assets:
Patents		94,579			58,272
Goodwill		639,504			639,504
Investments		312,000			—
Deposits		2,163			2,163

Total other assets:		1,048,246			699,939


Total assets	$	3,814,984		$	4,570,997


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	1,007,710		$	423,952
Advances, related party		139,580			—
Notes payable, related party		286,000			—
Convertible notes payable, net of deferred debt discount of $326,501		223,499			—

Total current liabilities		1,656,789			423,952


Stockholders’ equity:
Series A Preferred stock, $0.0001 par value; 11,000,000 shares authorized, issued and outstanding at September 30, 2011 and December 31, 2010		1,100			1,100
Common stock, $0.0001 par value; 65,000,000 shares authorized; 20,856,561 and 20,811,561 shares issued as of September 30, 2011 and December 31, 2010; 19,901,238 and 19,856,239 shares outstanding as of September 30, 2011 and December 31, 2010		2,086			2,081
Additional paid in capital		25,368,357			22,533,011
Common stock subscription		20,000			—
Due from related party		(108,519	)		(53,519	)
Deficit accumulated during development stage		(21,538,669	)		(16,551,567	)
Accumulated other comprehensive income		(88,660	)		(286,561	)
Treasury stock, 955,322 shares as of September 30, 2011 and December 31, 2010		(1,497,500	)		(1,497,500	)

Total stockholders’ equity		2,158,195			4,147,045

Total liabilities and stockholders’ equity	$	3,814,984		$	4,570,997

See the accompanying notes to these unaudited condensed consolidated financial statements

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)


														From May 23, 2007 (date of inception) through September 30, 2011
	Three months ended September 30,							Nine months ended September 30,
		2011			2010			2011			2010

REVENUE:
Sales		$	71,853		$	118,947		$	169,366		$	197,454		$	639,366

Cost of sales			129,523			184,126			398,031			389,121			1,305,594


Gross (loss)			(57,670	)		(65,179	)		(228,665	)		(191,667	)		(666,228	)

OPERATING EXPENSES:

General, selling and administrative expenses			377,921			1,314,602			3,962,031			5,002,374			15,359,249
Research and development			19,708			145,445			143,421			371,768			955,403
Depreciation and amortization			27,047			43,251			85,418			126,671			325,630

Total operating expenses			424,676			1,503,298			4,190,870			5,500,813			16,640,282


NET (LOSS) FROM OPERATIONS			(482,346	)		(1,568,477	)		(4,419,535	)		(5,692,480	)		(17,306,510	)

Other income/(expense):
Interest income			—			—			—			—			55,384
Interest expense			(345,758	)		—			(354,484	)		(7,077	)		(4,204,466	)
Realized loss on sale of securities			—			—			(213,083	)		—			(84,277	)
Gain on sale of property, plant and equipment			—			—			—			—			1,200

Total other (expense)			(345,758	)		—			(567,567	)		(7,077	)		(4,232,159	)


Net loss before provision for income taxes			(828,104	)		(1,568,477	)		(4,987,102	)		(5,699,557	)		(21,538,669	)

Provision for income taxes			—			—			—			—			—


NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(828,104	)	$	(1,568,477	)	$	(4,987,102	)	$	(5,699,557	)	$	(21,538,669	)


Net loss per common share (basic and fully diluted)		$	(0.04	)	$	(0.08	)	$	(0.25	)	$	(0.32	)	$	(1.34	)


Weighted average number of shares outstanding (basic and fully diluted)			19,901,238			19,871,399			19,878,656			17,844,209			16,081,445


Comprehensive loss:
Net loss		$	(828,104	)	$	(1,568,477	)	$	(4,987,102	)	$	(5,699,557	)	$	(21,538,669	)
Unrealized (loss) gain on securities available for sale			(260	)		157,610			197,901			(369,565	)		(88,660	)


Comprehensive loss		$	(828,364	)	$	(1,410,867	)	$	(4,789,201	)	$	(6,069,122	)	$	(21,627,329	)

See accompanying notes to these unaudited condensed consolidated financial statements

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2011
(unaudited)


	Preferred				Common				Common stock Subscribed				Additional Paid in Capital		Due from Related party			Treasury Stock			Other Comprehensive Income			Accumulated Deficit during Development Stage			Total
	Stock		Amount		Stock		Amount		Stock		Amount		Additional Paid in Capital		Due from Related party			Treasury Stock			Other Comprehensive Income			Accumulated Deficit during Development Stage			Total

Balance, January 1, 2011		11,000,000	$	1,100		20,811,561	$	2,081		—	$	—	$	22,533,011	$	(53,519	)	$	(1,497,500	)	$	(286,561	)	$	(16,551,567	)	$	4,147,045
Advances to related party		—		—		—		—		—		—		—		(55,000	)		—			—			—			(55,000	)
Sale of common stock		—		—		45,000		5		—		—		224,995		—			—			—			—			225,000
Unrealized gain on securities available for sale		—		—		—		—		—		—		—		—			—			197,901			—			197,901
Common stock subscribed		—		—		—		—		—		20,000		—		—			—			—			—			20,000
Beneficial conversion feature and value of warrants in conjunction with debt		—		—		—		—		—		—		665,840		—			—			—			—			665,840
Fair value of vesting options		—		—		—		—		—		—		1,944,511		—			—			—			—			1,944,511
Net loss		—		—		—		—		—		—		—		—			—			—			(4,987,102	)		(4,987,102	)

Balance, September 30, 2011		11,000,000	$	1,100		20,856,561	$	2,086		—	$	20,000	$	25,368,357	$	(108,519	)	$	(1,497,500	)	$	(88,660	)	$	(21,538,669	)	$	2,158,195

See the accompanying notes to these unaudited condensed consolidated financial statements

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)


							From May 23, 2007 (date of inception) through September 30, 2011
	Nine months ended September 30,
	2011			2010

Cash flows from operating activities:
Net loss for the period	$	(4,987,102	)	$	(5,699,557	)		$	(21,538,669	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		285,342			299,757				830,680
Amortization of debt discount		168,154			—				3,475,931
Compensation of services by a related party		—			1,493,840				2,024,840
Compensation of services to consultant		—			—				59,000
Fair value of warrants issued in connection with related party debt		171,185			—				171,185
Fair value of options issued for services		1,944,511			—				2,144,716
Gain on sale of property and equipment		—			—				(1,200	)
Realized loss on sale of securities available for sale		213,083			—				84,277
Changes in operating assets and liabilities:
Inventory		196,226			(419,057	)			(402,277	)
Accounts receivable		26,633			(32,942	)			(25,168	)
Other current assets		4,584			100,554				137,620
Accounts payable and accrued liabilities		583,758			(15,214	)			1,081,833

Net cash (used in) operating activities		(1,393,626	)		(4,272,619	)			(11,957,232	)

Cash flows from investing activities:
Acquisition, net of cash acquired		—			—				(588,952	)
Proceeds from sale of property and equipment		—			—				3,200
Purchase of property, plant and equipment		—			(141,558	)			(3,039,723	)
Payment of investment in KAI Bioenergy		(312,000	)		—				(312,000	)
Payments for acquisition of patent		(36,307	)		(50,071	)			(94,579	)
Proceeds from sale of securities available for sale		560,768			—				1,108,515
Purchase of securities available for sale		—			(259,691	)			(1,282,492	)

Net cash provided by (used in) investing activities		212,461			(451,320	)			(4,206,031	)

Cash flows from financing activities:
Proceeds from sale of shares to founders		—			—				2,070
Due from related party		(55,000	)		—				(895,663	)
Proceeds from related party advance		139,580			—				139,580
Proceeds from common stock subscription		245,000			805,846				10,498,069
Proceeds from issuance of convertible notes		550,000			—				8,589,323
Proceeds from related party note payable		286,000			—				311,000
Purchase of treasury stock		—			(197,500	)			(647,500	)
Payments of related party note payable		—			(25,000	)			(25,000	)
Payments of notes payable		—			—				(84,322	)
Payments of convertible notes		—			(15,000	)			(1,710,000	)

Net cash provided by financing activities		1,165,580			568,346				16,177,557

Net increase (decrease) in cash and cash equivalents		(15,585	)		(4,155,593	)			14,294
Cash and cash equivalents at beginning of period		29,879			4,869,749				—

Cash and cash equivalents at end of period	$	14,294		$	714,156			$	14,294

Supplemental disclosures of cash flow information:
Taxes paid	$	—		$	—			$	—
Interest paid	$	—		$	—			$	—

Non cash investing and financing activities:
Common stock issued to acquire 11 Good’s Energy, LTD	$	—		$	—			$	429
Common stock issued in exchange for convertible note and accrued interest	$	—		$	—			$	20,970
Common stock subscribed for conversion of convertible notes	$	—		$	—			$	6,498,709
Treasury stock received in exchange for related party note receivable and accrued interest	$	—		$	20,970			$	787,144

See the accompanying notes to these unaudited condensed consolidated financial statements

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011 AND 2010
(UNAUDITED)

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

Basis and business presentation

The accompanying unaudited condensed consolidated financial statements of 11 Good Energy, Inc., (the “Company”), have been prepared in accordance with Regulation S-X of the Securities and Exchange Act, as amended, and instructions to Form 10-Q and should be read in conjunction with the audited financials for the year ended December 31, 2010 included in the Company’s SEC on Form 10-K filed on April 15, 2011. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results from operations for the three month and nine months periods ended September 30, 2011, are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

The consolidated financial statements as of December 31, 2010 have been derived from the audited consolidated financial statements at that date but do not include all disclosures required by the accounting principles generally accepted in the United States of America.

The consolidated financial statements include the accounts of the Company, and its wholly-owned subsidiaries 11 Good’s Energy, LTD (“11 Good’s”) and 11 Good Energy Sciences, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

Dependency on key management

The future success or failure of the Company is dependent primarily upon the continued services of its executive officers. The ability of the company to pursue its business strategy effectively will also depend upon, among other factors, the successful recruitment and retention of additional highly skilled and experienced managerial, marketing, engineering and technical personnel. There can be no assurance that the company will be able to retain or recruit such personnel.

New accounting pronouncements

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

NOTE 2 – GOING CONCERN MATTERS

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying unaudited condensed consolidated financial statements during the nine months ended September 30, 2011, the Company incurred net losses attributable to common shareholders of $4,987,102 and used $1,393,626 in cash for operating activities during the nine months ended September 30, 2011. The accumulated deficit during development stage amounted to $21,538,669. These factors among others may indicate that the Company will be unable to continue as a going concern.

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011 AND 2010
(UNAUDITED)

The Company’s existence is dependent upon management’s ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.

NOTE 3 – INTANGIBLE ASSETS

Patents

Patents are capitalized at incurred costs and are amortized ratably over the lesser of their economic or legal life. The patents are currently in development stage not subject to current period amortization.

Goodwill

The Company does not amortize goodwill. The Company recorded goodwill in the amount of $639,504 as a result of the acquisition of 11 Good’s Energy LTD during the year ended December 31, 2007.

The Company accounts for and reports acquired goodwill under Accounting Standards Codification subtopic 350-10, Intangibles-Goodwill and Other (“ASC 350-10”). In accordance with ASC 350-10, the Company tests its intangible assets for impairment on an annual basis or more often if events and circumstances warrant. Any write-downs will be included in results from operations.

During the year ended December 31, 2010, the Company management performed an evaluation of its goodwill for purposes of determining the implied fair value of the assets at the end of each respective year. The test indicated that the recorded remaining book value of its goodwill did not exceed its fair value for the year ended December 31, 2010. Considerable management judgment is necessary to estimate the fair value. Accordingly, actual results could vary significantly from management’s estimates.

NOTE 4 - INVENTORIES

Inventory is stated at the lower of cost or market. The cost is determined using the first-in first-out method. Costs of finished goods inventory include costs associated with the procurement and transportation of Soybean oil and other raw materials used in the manufacture of G2 Diesel.

As of September 30, 2011 and December 31, 2010, inventories are comprised of the following:


	September 30, 2011		December 31, 2010
	(unaudited)
Raw materials	$	351,874	$	351,874
Finished fuel		76,639		272,865

Total	$	428,513	$	624,739

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011 AND 2010
(UNAUDITED)

NOTE 5 – OTHER CURRENT ASSETS

Other assets as of September 30, 2011 and December 31, 2010 are comprised of the following:


	September 30, 2011		December 31, 2010
	(unaudited)
Prepaid fuel/product testing	$	—	$	19,637
Prepaid insurance		12,687		—
Prepaid other expenses		7,703		5,337

Total	$	20,390	$	24,974

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

The Company’s property, plant and equipment at September 30, 2011 and December 31, 2010 consist of the following:


	September 30, 2011		December 31, 2010
	(unaudited)

Leasehold improvements	$	345,381	$	345,381
Factory equipment		2,381,478		2,381,478
Furniture and fixtures		21,709		21,709
Office equipment		20,545		20,545
Vehicles		113,925		131,225
Computer equipment and software		125,300		148,300
Web design		51,505		51,505
Total		3,059,843		3,100,143
Less accumulated depreciation		782,510		537,468
Net	$	2,277,333	$	2,562,675

Property and equipment are recorded on the basis of cost. For financial statement purposes, property, plant and equipment are depreciated using the straight-line method over their estimated useful lives.

Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations. Management periodically reviews the carrying value of its property and equipment for impairment.

The Company disposed of and wrote off fully depreciated fixed assets in an aggregate of $40,300 during the quarter ended September 30, 2011.

Depreciation expense was $93,688 and $100,015 for the three months ended September 30, 2011 and 2010, respectively, of which $66,641 and $56,764 was included as part of cost of sales for the three months ended September 30, 2011 and 2010, respectively.

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011 AND 2010
(UNAUDITED)

Depreciation expense was $285,342 and $299,757 for the nine months ended September 30, 2011 and 2010, respectively, of which $199,924 and $173,086 was included as part of cost of sales for the nine months ended September 30, 2011 and 2010, respectively

NOTE 7 – AVAILABLE-FOR-SALE SECURITIES

Cost and fair value of marketable equity securities at September 30, 2011 and December 31, 2010 are as follows:


	September 30, 2011			December 31, 2010
	(unaudited)


Available for sale securities:
Equity securities:
Fair value	$	1,040		$	576,990
Total (losses) in accumulated other comprehensive income	$	(88,660	)	$	(286,561	)

During the three months ended September 30, 2011 and 2010, the Company did not realize a gain or loss with the sales of marketable securities. Unrealized gains (losses) are accounted for as other comprehensive income (loss).

During the nine months ended September 30, 2011 and 2010, the Company realized an aggregate loss of $213,083 and $0 with the sales of marketable securities, respectively. Unrealized losses are accounted for as other comprehensive income (loss).

NOTE 8 – INVESTMENTS

On July 11, 2011, the Company and its subsidiary, 11 Good Energy Sciences, Inc. (hereafter referred to as “Sciences”) entered into a Stock Purchase Agreement (the “Agreement”) to acquire 100% of the outstanding capital stock of KAI BioEnergy Corp. from the stockholders of KAI (collectively hereinafter referred to as the “Sellers”). Sciences agreed to pay to the Sellers and the Placement Agent, Oracle Capital LLC, the following:


•	$300,000 in cash paid to Sellers and $330,000 paid in cash to Oracle;
•	a 36% interest in Sciences paid to Sellers and a 4% interest in Sciences paid to Oracle;
•	reimburse Seller’s legal fees up $53,000;
•	payment at closing of the liabilities of KAI based upon a closing balance sheet up to a maximum of $180,000, it being understood that any liabilities above $180,000 are at the sole and absolute discretion and written consent of Sciences; and
•	an Earn-Out of $3.3 million (the “Earn-Out”) in the event KAI on or before November 11, 2013, subject to possible extension in the event of financing delays, is able to prove the viability of producing the aerial productivity equivalent of 3,000 gallons per acre, per year of oil from microalgae.

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011 AND 2010
(UNAUDITED)

The original closing condition of the Agreement was the funding of Sciences with at least $1.1 million by the Company on or before August 3, 2011. These funds would be utilized to meet the Company’s obligations which are specified above and the balance will be allocated primarily for research and development of KAI. The Agreement has a post closing condition that the Company will raise and contribute to the capital of Sciences at least $2.2 million in accordance with a schedule over a period of approximately two years. Such funding must timely occur to avoid any dilution (up to a maximum of two-thirds) in ownership interest of Sciences. In connection with the Agreement, the Company will enter into employment agreements as well as a non-compete, non-solicitation and non-disclosure agreement with the two stockholders of KAI. These agreements will be for a period of two years, subject to possible extension as provided in the agreements

Extensions of Agreement

As of September 30, 2011, the Company has paid Kai an aggregate investment of $312,000 to extend the closing date. In October 2011, the Company agreed to pay Kai an additional $45,900, which payment has been made, and an additional $44,700, which payment is currently in arrears, to extend the closing date to November 30, 2011. The Company has been notified that it is in material breach of the extension agreement and demand has been made for said payment. All option payments are non-refundable, but shall be credited towards the $1.1 million closing condition referenced in the preceding paragraph.

Buy-Out Option

In the event that Sellers receive the Earn-Out, Sciences has the option to buy-out Seller’s and Oracle’s collective 40% Common Stock position at a cost of $13.2 million, payable in cash or under certain specified conditions in the Company’s Common Stock. Sellers and Oracle have the right to refuse the Buy-Out on up to one-half of their position.

NOTE 9 – CONVERTIBLE NOTES PAYABLE

A summary of convertible notes payable as of September 30, 2011 and December 31, 2010 are as follows:


	September 30, 2011 (unaudited)		December 31, 2010
Senior convertible note, 11% per annum, due December 31, 2011, net of deferred debt discount of $101,301	$	148,699	$	—
Senior convertible note, 11% per annum, due December 31, 2011, net of deferred debt discount of $48,404		51,596		—
Senior convertible note, 11% per annum, due March 8, 2012, net of deferred debt discount of $176,796		23,204		—

Total		223,499		—
Less current portion		223,499		—

Long term portion	$	—	$	—

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011 AND 2010
(UNAUDITED)

During the nine months ended September 30, 2011 the Company issued an aggregate of $550,000 in unsecured Convertible Promissory Notes that mature from December 31, 2011 to March 8, 2012. The Promissory Notes bear interest at a rate of 11% and will be convertible into 110,000 shares of the Company’s common stock, at a conversion rate of $5.00 per share. Interest can also be converted into common stock at the conversion rate of $5.00 per share. In connection with the issuance of the Convertible Promissory Notes, the Company issued 267,500 warrants to purchase the Company’s common stock from $3.00 to $7.50 per share over 2 to 3 years.

In accordance ASC 470-20, the Company recognized an embedded beneficial conversion feature present in the notes. The Company allocated a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. The Company recognized and measured an aggregate of $247,327 of the proceeds, which is equal to the intrinsic value of the embedded beneficial conversion feature, to additional paid-in capital and a discount against the note. The debt discount attributed to the beneficial conversion feature is amortized over the note’s maturity period as interest expense.

In connection with the issuance of the promissory notes, the Company issued detachable warrants granting the holder the right to acquire an aggregate of 267,500 shares of the Company’s common stock from $3.00 to $7.50 per share. The warrants expire two to three years from the issuance. In accordance with ASC 470-20, the Company recognized the value attributable to the warrants in the amount of $247,327 to additional paid in capital and a discount against the note. The Company valued the warrants in accordance with ASC 470-20 using the Black- Scholes pricing model and the following assumptions: contractual terms of 2 to 3 years, an average risk free interest rate of 0.31% to 0.50%, a dividend yield of 0%, and volatility of 108% to 129.65%. The debt discount attributed to the value of the warrants issued is amortized over the note’s maturity period as interest expense.

The Company amortized debt discount of $159,428 and $168,154 to current period operations as interest expense for the three and nine months ended September 30, 2011.

NOTE 10 – RELATED PARTY TRANSACTIONS

Facilities

Since April 1, 2008, the Company has occupied warehouse space provided by one of the Company’s founders. The Company agreed to pay a total of $1 per month for the space. The Company records this fee as rent expense when incurred. During this time period, the Company constructed a leasehold improvement to the leased warehouse space for the purpose of locating our bio-fuel manufacturing facility.

Due to related party

During the nine months ended September 30, 2011, the Company’s President and CEO advanced an aggregate of $139,580 for working capital purposes to the Company. The advances are short term, non-interesting bearing and are due upon demand.

Notes payable, related party

A summary of notes payable, related party as of September 30, 2011 and December 31, 2010 are as follows:

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011 AND 2010
(UNAUDITED)


	September 30, 2011 (unaudited)		December 31, 2010
Note payable, issued May 15, 2011 with interest at 9% per annum, due on demand, unsecured	$	50,000	$	—
Note payable, issued August 5, 2011 with interest at 6% per annum, due on demand, unsecured		100,000		—
Note payable, issued August 11, 2011 with interest at 6% per annum, due on demand, unsecured		68,000		—
Note payable, issued August 19, 2011 with interest at 6% per annum, due on demand, unsecured		68,000		—

Total		286,000		—
Less current portion		286,000		—

Long term portion	$	—	$	—

In connection with the issuance of the August promissory notes, the Company issued detachable warrants granting the holders the right to acquire an aggregate of 180,000 shares of the Company’s common stock at $3.00 per share. The warrants expire three years from the issuance. In accordance with ASC 470-20, the Company recognized the value attributable to the warrants in the amount of $171,186 to additional paid in capital and a charge to current period interest. The Company valued the warrants in accordance with ASC 470-20 using the Black-Scholes pricing model and the following assumptions: contractual terms of 3 years, an average risk free interest rate of 0.34% to 0.49%, a dividend yield of 0%, and volatility of 126.31% to 127.23%.

Receivable from purchase of treasury stock

During the nine months ended September 30, 2011, the Company advanced $55,000 to acquire the Company’s common stock (treasury stock). As of September 30, 2011, the common stock has not been received. This amount has been treated as a reduction of stockholder’s equity as a result of the obligation being settled in the Company’s own stock.

NOTE 11 – COMMON STOCK

Between August 2009 and February 2010, the Company has received net proceeds of $10,253,069, through the subscription for common stock consisting of 3,977,333 shares of common stock and 1,988,667 warrants. All common shares subscribed were issued during the year ended December 31, 2010. Between April and May 2011, the Company received additional gross proceeds of $225,000 from the sale of 45,000 shares of Common Stock at $5.00 per share and two year Warrants to purchase 22,500 shares, exercisable at $7.50 per share from date of issuance through June 30, 2013. In July 2011, the Company received $20,000 from the sale of 6,667 shares of common stock at $3.00 per share and Warrants to purchase 3,333 shares, exercisable at $5.00 per share from date of issuance through July 31, 2013. The 6,667 shares of common stock have not been issued as of September 30, 2011 and were accounted for as common stock subscription payable.

NOTE 12 – OPTIONS AND WARRANTS

Non Employee Stock Options

The following table summarizes in options outstanding and the related prices for the shares of the Company’s common stock issued to non employees at September 30, 2011:

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011 AND 2010
(UNAUDITED)


		Options Outstanding					Options Exercisable

Exercise Prices			Number Outstanding	Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price

$	3.00		150,000	1.75	$	3.00		58,333	$	3.00
	5.00		750,000	2.72		5.00		550,000		5.00

	Total		900,000	2.23	$	4.67		608,333	$	4.81

Transactions involving stock options issued to non employees are summarized as follows:


	Number of Shares		Weighted Average Price Per Share

Outstanding December 31, 2010		—	$	—
Granted		900,000		4.67
Exercised		—		—
Expired		—		—

Outstanding, September 30, 2011		900,000	$	4.67

During the nine months ended September 30, 2011, the Company granted an aggregate of 900,000 non employee stock options in connection services rendered at the exercise price of $5.00 per share.

The fair values of the vesting non employee options for the nine months ended September 30, 2011 were determined using the Black Scholes option pricing model with the following assumptions: Dividend yield: 0%; Volatility: 108.0% to 160.0%; and Risk free rate: 0.25% to 1.02%.

The fair value of all non employee options vesting during the three and nine months ended September 30, 2011 of $18,273 and $1,878,789, respectively, was charged to current period operations.

Employee Stock Options

The following table summarizes in options outstanding and the related prices for the shares of the Company’s common stock issued to employees at September 30, 2011:


		Options Outstanding						Options Exercisable

Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price

$	3.00		500,000		0.80	$	3.00		500,000	$	3.00
	5.00		35,000		2.72		5.00		17,500		5.00

	Total		535,000		0.93	$	3.13		517,500	$	3.07

Transactions involving stock options issued to employees are summarized as follows:

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011 AND 2010
(UNAUDITED)


	Number of Shares		Weighted Average Price Per Share

Outstanding December 31, 2010		500,000	$	3.00
Granted		35,000		5.00
Exercised		—		—
Expired		—		—

Outstanding, September 30, 2011		535,000	$	3.13

During the nine months ended September 30, 2011, the Company granted 35,000 employee stock options in connection services rendered at the exercise price of $5.00 per share.

The fair values of the employee options for the nine months ended September 30, 2011 were determined using the Black Scholes option pricing model with the following assumptions: Dividend yield: 0%; Volatility: 108.0% and Risk free rate: 1.02%.

The fair value of all employee options vesting during the three and nine months ended September 30, 2011 of $14,343 and $65,722 was charged to current period operations, respectively.

Warrants

The following table summarizes in warrants outstanding and related prices for the shares of the Company’s common stock issued to shareholders at September 30, 2011:


Warrants Outstanding								Warrants Exercisable
Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price

$	2.55		3,519,830		0.98	$	2.55		3,519,830	$	2.55
	3.00		360,000		2.24		3.00		360,000		3.00
	4.50		2,383,599		1.21		4.50		2,383,599		4.50
	5.00		62,500		1.75		5.00		62,500		5.00
	7.50		47,500		1.89		7.50		47,500		7.50

			6,373,429		1.50		3.30		6,373,429	$	3.30

Transactions involving warrants issued are summarized as follows:

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011 AND 2010
(UNAUDITED)


	Number of Shares		Weighted Average Price Per Share

Outstanding at December 31, 2010:		5,903,429	$	3.34
Issued		470,000		3.15
Exercised		—		—
Canceled or expired		—		—

Outstanding at September 30, 2011:		6,373,429	$	3.30

In connection with the sale of the common stock, the Company issued an aggregate of 22,500 warrants to shareholders and placement agent to purchase the Company’s common stock for $5.00 per share expiring in June 2013 (See Note 11).

In connection with the issuance of convertible notes (see Note 9 above), the Company issued detachable warrants during the nine months ended September 30, 2011 granting the holders the right to acquire an aggregate of 267,500 shares of the Company’s common stock at $5.00 per share. The warrants have expiration dates between two to three years from the date of issuance. The Company valued the warrant commitments in accordance with ASC 470-20 using the Black-Scholes pricing model and the following assumptions: contractual terms of 2 to 3 years, an average risk free interest rate of 0.31% to 0.50%, a dividend yield of 0%, and volatility of 108% to 129.65%. The debt discount attributed to the value of the warrant commitment issued is amortized over the notes’ maturity period as interest expense.

In connection with the issuance of related party notes (see Note 10 above), the Company issued 180,000 detachable warrants during the nine months ended September 30, 2011 granting the holder the right to acquire an aggregate of shares of the Company’s common stock at $3.00 per share. The warrants expire three years from the date of issuance. The Company valued the warrant commitments in accordance with ASC 470-20 using the Black-Scholes pricing model and the following assumptions: contractual terms of 2 to 3 years, an average risk free interest rate of 0.34% to 0.49%, a dividend yield of 0%, and volatility of 126.31% to 127.23%. The value of the warrant commitment issued was charged to current period operations as interest expense.

NOTE 13 – FAIR VALUE

ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011 AND 2010
(UNAUDITED)

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement.

Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of September 30, 2011:


	Total		Quoted Prices in Active Markets for Identical Instruments Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3

Assets:
Securities available for sale	$	1,040	$	1,040	$	—	$	—

Total	$	1,040	$	1,040	$	—	$	—

The following table provides a summary of changes in fair value of the Company’s Level 1 financial assets as of September 30, 2011:



Balance, December 31, 2010:	$	576,990
Securities sold		(554,191	)
Unrealized loss		(21,759	)


Balance, September 30, 2011	$	1,040

The Company adopted the provisions of ASC 825-10 prospectively effective as of the beginning of Fiscal 2008. For financial assets and liabilities included within the scope of ASC 825-10, the Company will be required to adopt the provisions of ASC 825-10 prospectively as of the beginning of Fiscal 2009. The adoption of ASC 825-10 did not have a material impact on our consolidated financial position or results of operations.

The fair value of the assets, securities available for sale, at September 30, 2011 was grouped as Level 1 valuation as the market price was readily available.

11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011 AND 2010
(UNAUDITED)

NOTE 14 – PROPOSED OPERATIONS IN MEXICO

The Company reported that on September 1, 2011, the Company entered into a Letter of Intent (“LOI”) for a joint venture to sell G2 Diesel in Mexico, subject to regulatory approval in Mexico and entering into definitive joint venture agreements to supply the biofuel component of the fuel blend (which blend is expected to be 5% biofuel) required for 500 buses in Mexico for at least 30 days of projected operation and then to gradually increase the order to supply the biofuel component for up to 3,000 buses. In conjunction with the LOI, the Company’s Chief Executive Officer, Frederick C. Berndt, entered into two private agreements to purchase an aggregate of 100,000 shares from two stockholders at a total purchase price of $300,000. Separately, the Company had agreed to purchase the same 100,000 shares from the investors in the event that the Company raised at least $1,500,000 (the “Financing Condition”) on or before September 30, 2011 and in the event that Mr. Berndt did not completed the purchases before the Financing Condition has been completed. The Company is now reporting that the Financing Condition was not met and the Company has no obligation to make payment pursuant to its agreement with these investors, as the obligation to purchase said 100,000 shares from two stockholders belongs with Mr. Berndt. The LOI has been terminated by the parties, although the parties remain interested in entering into a mutually satisfactory joint venture agreement. We can provide no assurance that a definitive agreement for the proposed joint venture project will be entered into on terms satisfactory to us, if at all.

NOTE 15 – SUBSEQUENT EVENTS

Subsequent to the date of the financial statements, the Company issued 6,667 shares of common stock for the shares subscribed in July 2011. In October 2011, the Company commenced a private placement offering in an attempt to raise funds at an offering price of $3.00 per share. Each share is accompanied by a Warrant to purchase one share of Common Stock at an exercise price of $5.00 per share, exercisable for a period of five years from the offering closing date set by the Company. As of the filing date of this Form 10-Q, the Company raised $250,000 and has issued 83,333 shares of Common Stock and an equivalent number of Warrants.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The information contained in this Form 10-Q and documents incorporated herein by reference are intended to update the information contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and such information presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors” and other information contained in such Form 10-K and other Company filings with the Securities and Exchange Commission (“SEC”).

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, and actual results could be significantly different than those discussed in this Form 10-Q. Certain statements contained in Management’s Discussion and Analysis, particularly in “Liquidity and Capital Resources,” and elsewhere in this Form 10-Q are forward-looking statements. These statements discuss, among other things, expected growth, future revenues and future performance. Although we believe the expectations expressed in such forward-looking statements are based on reasonable assumptions within the bounds of our knowledge of our business, a number of factors could cause actual results to differ materially from those expressed in any forward-looking statements, whether oral or written, made by us or on our behalf. The forward-looking statements are subject to risks and uncertainties identified under the “Risk Factors” section of the aforementioned Form 10-K for the fiscal year ended December 31, 2010. The risk factors of said Form 10-K should not be construed as an exhaustive list of all factors that could cause actual results to differ materially from those expressed in forward-looking statements made by us. All forward-looking statements included in this document are made as of the date hereof, based on information available to the Company on the date thereof, and the Company assumes no obligation to update any forward-looking statements.

Overview

11 Good Energy, Inc. is a Delaware corporation formed on May 23, 2007 for the purposes of developing, testing, manufacturing and distributing bio-fuel with energy related plans and pursuits relying on the commercialization of our proprietary fuel product, G2 Diesel, as discussed below.

On October 23, 2007, we completed the purchase of an existing biodiesel manufacturer, 11 Good’s Energy, LTD, a limited liability company (becoming our wholly-owned subsidiary), formed in the State of Ohio in February 2006. Historically, our subsidiary has been a development stage company, which has primarily engaged in research activities to develop a proprietary manufacturing process to produce bio-fuel for diesel applications.

In early 2008, we began construction on our manufacturing facility at the location of our operating subsidiary in Magnolia, Ohio (Magnolia Plant). In June 2008, we began placing tanks and constructing the infrastructure of the Magnolia Plant. Unfortunately, the industry experienced changes in fire suppression regulations requiring us to invest over $1,500,000 in additional infrastructure not anticipated in the original capital expenditure budget. We had to cease plant construction and operations from November 2008 to October 2009 in order to secure the financing and make the necessary changes to the fire suppression system and design of the Magnolia Plant.

Acquisition of 11 Good’s Energy, LTD

As a result of the purchase of 11 Good’s Energy, LTD (“11 Good’s”) all of the assets, liabilities and proprietary technology of 11 Good’s were transferred to us by the former partners of 11 Good’s in exchange for cash of $611,900, $111,230 in assumed liabilities and 4,285,714 shares of common stock of the company valued at $429. The assets and liabilities of 11 Good’s were recorded at fair market value at the time of acquisition. 11 Good’s is our sole subsidiary and operations and the management of 11 Good’s and us are the same. The consolidated financial statements include the accounts of us and our wholly-owned subsidiary and all intercompany balances and transactions have been eliminated.

The Company accounts for acquisitions in accordance with the provisions of ASC 805-10. The Company assigns to all identifiable assets acquired a portion of the cost of the acquired company equal to the estimated fair value of such assets at the date of acquisition. The Company records the excess of the cost of the acquired company over the sum of the amounts assigned to identifiable assets acquired as goodwill. Management determined the fair values assigned to inventory based upon selling prices less cost of disposal and the Company’s profit allowance and the case of work in process less cost to complete. The Fair value of plant and equipment are based on current replacement costs. The Company recorded goodwill in the amount of $639,504 as a result of the acquisition of 11 Good’s Energy LTD during the year ended December 31, 2007. The Company accounts for and reports acquired goodwill under Accounting Standards Codification subtopic 350-10, Intangibles-Goodwill and Other (“ASC 350-10”). The Company does not amortize goodwill. In accordance with ASC 350-10, the Company tests its intangible assets for impairment on an annual basis or more often if events and circumstances warrant. Any write-downs will be included in results from operations.

Development Stage Company - Product Development

We are currently in an early stage of our current business plan. We have limited operating history with respect to the construction and operation of biodiesel refineries for our own use. In this respect, from May 23, 2007 (date of inception) through September 30, 2011, our revenues have totaled $639,366 and our deficit accumulated during our development stage was $21,538,669. Further, our operating subsidiary incurred from February 2006 through October 2007, costs of approximately $100,000 in the development of our subsidiary’s proprietary manufacturing process and G2 Diesel product which are not reflected in our accumulated deficit since their costs were incurred prior to the acquisition date of our subsidiary. These costs were primarily comprised of feedstock materials, labor and facilities costs. Since the acquisition, we have further developed our process and product through testing and trials and have expended money on labor, consulting, facilities and media productions in order to further our product development. Currently, the development of the fuel’s functionality is complete, although we continue to incur research and development costs to develop new feedstock alternatives and to improve materials procurement and fuel manufacturing techniques.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements requires management to make estimates and disclosures on the date of the financial statements. On an on-going basis, we evaluate our estimates including, but not limited to, those related to revenue recognition. We use authoritative pronouncements, historical experience and other assumptions as the basis for making judgments. Actual results could differ from those estimates. We believe that the following critical accounting policies affect our more significant judgments and estimates in the preparation of our financial statements.

Revenue Recognition. We recognize revenue from product sales in accordance with ASC 605 “Revenue Recognition”. Four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists (through written sales documentation); (2) delivery has occurred (through delivery into customer’s tanks and acceptance); (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. For criteria (1) we generate a sales order and a shipping document defining number of gallons of fuel ordered, delivery and payment terms based on standing customer data and the customers purchase order. For criteria (2) we ensure delivery has occurred by documented delivery terms defining where the customer accepts the fuel delivery. Fuel stored off-site by the company remains as inventory until the customer receives the fuel from the offsite storage facility. For criteria (3) management determines the selling price based on feedstock costs and our desired margin level. Our selling price fluctuates as feedstock prices increase or decrease, primary the cost of soybean oil. Currently, management determines our selling price on a weekly basis. For criteria (4) we establish creditworthiness of the customer based on a review of established credit limits and current financial health of the entity placing the fuel order. Provisions for estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded, although we have not experienced any such items to date and do not expect any significant provisions in the future. We have no discount, rebate or warranty programs. Payments received in advance are deferred until revenue recognition is appropriate. We have no post-delivery obligations related to our products.

Inventory Valuation. We are required to make judgments based on historical experience and future expectations, as to the realizability of our inventory. We make these assessments based on the following factors: (a) existing orders and usage, (b) age of the inventory, and (c) historical experience.

Property and Equipment. We are required to make judgments based on historical experience and future expectations, as to the realizability of our property and equipment. We made these assessments based on the following factors: (a) the estimated useful lives of such assets, (b) technological changes in our industry, and (c) the changing needs of our customers.

Fair Value of Intangible Assets. We have adopted Statement of Accounting Standards Codification subtopic 805-10 (“ASC 805-10”). ASC 805-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period.

We evaluate the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 805-10 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell.

Stock-Based Compensation

We account for our stock based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.

We use the fair value method for equity instruments granted to non-employees (if any) and will use the Black- Scholes model for measuring the fair value of options, if issued. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.

Recent Developments

Acquisition of KAI BioEnergy Corporation

On July 11, 2011, the Company and its subsidiary, namely, 11 Good Energy Sciences, Inc. (hereinafter referred to as “Sciences”) entered into a Stock Purchase Agreement (the “Agreement”) to acquire 100% of the outstanding capital stock of KAI BioEnergy Corp. from the stockholders of KAI (collectively hereinafter referred to as the “Sellers”). Sciences agreed to pay to the Sellers and the Placement Agent, Oracle Capital LLC, the following:


•	$300,000 in cash paid to Sellers and $330,000 paid in cash to Oracle;
•	a 36% interest in Sciences paid to Sellers and a 4% interest in Sciences paid to Oracle;
•	reimburse Seller’s legal fees up $53,000;
•	payment at closing of the liabilities of KAI based upon a closing balance sheet up to a maximum of $180,000, it being understood that any liabilities above $180,000 are at the sole and absolute discretion and written consent of Sciences; and
•	an Earn-Out of $3.3 million (the “Earn-Out”) in the event KAI on or before November 11, 2013, subject to possible extension in the event of financing delays, is able to prove the viability of producing the aerial productivity equivalent of 3,000 gallons per acre, per year of oil from microalgae.

The closing condition of the Agreement is the funding of Sciences with at least $1.1 million by the Company on or before August 3, 2011. These funds would be utilized to meet Sciences’ obligations which are specified above and the balance will be allocated primarily for research and development of KAI. The Agreement has a post closing condition that the Company will raise and contribute to the capital of Sciences at least $2.2 million in accordance with a schedule over a period of approximately two years. Such funding must timely occur to avoid any dilution (up to a maximum of two-thirds) in ownership interest of Sciences. In connection with the Agreement, the Company will enter into employment agreements as well as a non-compete, non-solicitation and non-disclosure agreement with the two stockholders of KAI. These agreements will be for a period of two years, subject to possible extension as provided in the agreements.

Extension of Agreement

Buy-Out Option

About KAI BioEnergy Corp.

Kai is a research and development company developing a platform series of technologies that enable efficient and integrated continuous microalgal processing. Focusing on the economics and development of an industrially scalable processing system, KAI has been working on developing a platform system that directly extracts oil from a water based algal-cultivation medium, ultimately separating the “oil-rich” lipids, biomass, and water medium. A biofuel company can then take these oil-rich lipids and use them to produce algal biofuels. KAI’s integrated continuous high flow system is expected to offer low capital costs, ultra-low operating costs with no additives or hazardous chemicals required, ultimately developing industrial scalability.

Results of Operations

By virtue of our purchase of 11 Good’s, which became our sole operations, the company is considered to be in the development stage in accordance with the FASB ASC Topic 915 – Development Stage Enterprises. Since its inception, the company has devoted substantially all of its time to raising capital, obtaining financing, research and development activities and obtaining many governmental organizations, municipalities and corporations to test our G2 Diesel and its performance as a blend with traditional #2 diesel fuel.

Three months Ended September 30, 2011 Compared to the Three months Ended September 30, 2010

The following table sets forth certain selected condensed consolidated statement of operations data for the periods indicated:


	Three Months Ended September 30,
	2011			%			2010			%
Revenue	$	71,853			100	%	$	118,947			100
Cost of goods sold		129,523			>100	%		184,126			>100	%

Gross loss		(57,670	)		—			(65,179	)		—
Operating expenses:
Selling, general and administrative		377,921			>100	%		1,314,602			>100	%
Research and development		19,708			<100	%		145,445			>100	%
Depreciation and amortization		27,047			<100	%		43,251			<100	%

Total operating expenses:		424,676						1,503,298
Net loss from operations		(482,346	)					(1,568,477	)
Other income/expense:
Interest, net		(345,758	)		<100	%
Net loss	$	(828,104	)		<100	%	$	(1,568,477	)		<100	%

The decrease in revenues for the three months ended September 30, 2011 of $47,094 compared to the three months ended September 30, 2010 is the result of many of our testing programs ended in 2010. For the three months ended in September 30, 2010 we had more testing programs underway that generated more revenues when compared to the same period this year. In 2011, as a result of a successful test with our fuel, a customer began to order our fuel at retail prices and has agreed to continue to place orders to supply this location and continue to order G2 Diesel for several more terminals. In general, the testing and pilot programs have continued beyond our original time estimates, which has also led to a longer sales order cycle than originally anticipated. For our testing programs that completed in early 2011, results continue to show both efficiency and emissions improvements that remain of great interest to metropolitan bus systems and the rail and trucking industries. We are currently cultivating these pilot programs and relationships to generate sales orders. We expect to complete more pilot programs and regulatory approvals in 2012. The programs continue to show great promise to generate demand to purchase our fuel.

Our most significant efforts have continued to be on the approval of our fuel variance in the state of California. The fuel variance is required for our fuel to meet California regulations to sell bio-diesel fuel, which is the result of G2 Diesel’s flash point being less than traditional Biodiesel. This is the result of the small amount of ethanol in our finished fuel, which creates a lower flashpoint. We have spent considerable resources to meet California’s requirements to meet this regulation and have received positive feedback from our representatives that a fuel variance can be obtained. Subject to receipt of this fuel variance, we are licensed to sell fuel in California. In the event that we successfully obtain the fuel variance, it will allow many of our customers in California, which have tested and approved the use of our fuel, to purchase G2 Diesel.

Cost of goods sold was $129,523 for the three months ended September 30, 2011 and $184,126 for the three months ending September 30, 2010. The decrease in cost of sales correlates to the decrease in sales as described in the preceding paragraph. Cost of goods sold exceeded revenues for both periods as a result of applying fixed factory depreciation and overhead cost of goods sold, even though only a small volume of sales were generated.

Our testing programs resulted in gross losses of $57,670 for the three months ended September 30, 2011 and $65,179 for the three months ended September 30, 2010. We expect sales margins to become positive and improve once we have sales contracts in place at our scheduled premium retail prices after the testing programs are concluded.

Currently, our G2 Diesel is being sold to companies and governmental organizations and municipalities to test our G2 Diesel as a blended product for:


•	power performance, maintenance and engine noise;
•	emissions and exhaust smell; and
•	fuel economy.

Research and development costs were $19,708 for the three months ended September 30, 2011 and $145,445 for the three months ending September 30, 2010. Our Research and Development activities have decreased when compared to the three months ended September 30, 2010 as a result of limited capital available for such projects. Also, many of our targeted research and development projects have ended.

Depreciation and amortization included in operating expenses decreased by $16,204.

Selling, general, and administrative expenses for the three months ended September 30, 2011 of $377,921. Such costs include, among others, payroll and related expenses, insurance costs and occupancy costs. The decrease in selling, general and administrative expenses of $936,681 in 2011 over the comparable period of the prior year is primarily related to a decrease in consulting, legal and audit costs of $512,815. Other overhead costs such as travel, marketing and promotional cost also decreased $157,500 and a decrease in salary and bonus expenses of $123,000 in comparison to the three months ended September 30, 2010.

Net loss was $828,104 in the three months ended September 30, 2011 as compared to $1,568,477 for the comparable period in 2010. Basic and fully diluted net loss per share for the three months ended September 30, 2011 and September 30, 2010 was $(0.04) and $(0.08), respectively. Basic and fully diluted weighted average shares outstanding for the fiscal three months ended September 30, 2011 and September 30, 2010 was 19,901,238 and 19,871,399, respectively.

Nine months Ended September 30, 2011 Compared to the Nine months Ended September 30, 2010

The following table sets forth certain selected condensed consolidated statement of operations data for the periods indicated:


	Nine Months Ended September 30,

	2011			%			2010			%

Revenue	$	169,366			100	%	$	197,454		100
Cost of goods sold		398,031			>100	%		389,121		>100	%

Gross loss		(228,665	)		—			(191,667	)	—

Operating expenses:
Selling, general and administrative		3,962,031			>100	%		5,002,374		>100	%
Research and development		143,421			<100	%		371,768		>100	%
Depreciation and amortization		85,418			<100	%		126,671		<100	%

Total operating expenses:		4,190,870						5,500,813

Net loss from operations		(4,419,535	)					(5,692,480	)

Other income/expense:
Interest, net		(354,484	)		<100	%		(7,077	)	>100	%
Other expense, net		(213,083	)		<100	%		—
Net loss	$	(4,987,102	)		<100	%	$	(5,699,557	)	<100	%

The decrease in revenues for the nine months ended September 30, 2011 of $28,088 compared to the nine months ended September 30, 2010 is the result of many of our testing programs ended in 2010. For the nine months ended in September 30, 2010 we had more testing programs underway that generated more revenues when compared to the same period this year. In 2011, as a result of a successful test with our fuel, a customer began to order our fuel at retail prices and has agreed to continue to place orders to supply this location and continue to order G2 Diesel for several more terminals.

In general, the testing and pilot programs have continued beyond our original time estimates, which has also led to a longer sales order cycle than originally anticipated. For our testing programs that completed in early 2011, results continue to show both efficiency and emissions improvements that remain of great interest to metropolitan bus systems and the rail and trucking industries. We are currently cultivating these pilot programs and relationships to generate sales orders. We expect to complete more pilot programs and regulatory approvals in 2012. The programs continue to show great promise to generate demand.

Our most significant efforts have continued to be on the approval of our fuel variance in the state of California. The fuel variance is required for our fuel to meet California regulations to sell bio-diesel fuel, which is the result of G2 Diesel’s flash point being less than traditional Biodiesel. this is the result of the small amount of ethanol in our finished fuel, which creates a lower flashpoint. We have spent considerable resources to meet California’s requirements to meet this regulation and have received positive feedback from our representatives that a fuel variance can be obtained. Subject to receipt of this fuel variance, we are licensed to sell fuel in California. In the event that we successfully obtain the fuel variance, it will allow many of our customers in California, which have tested and approved the use of our fuel, to purchase G2 Diesel.

Cost of goods sold was $398,031 for the nine months ended September 30, 2011 and $389,121 for the nine months ended September 30, 2010. Cost of goods sold exceeded revenues for both periods as a result of applying fixed factory depreciation and overhead to cost of goods sold, even though only a small volume of sales were generated. For the nine months ended September 30, 2011, there was an increase in factory costs associated with operating the plant and selling fuel applied to cost of goods sold when compared to the nine months ended September 30, 2010.

Our testing programs resulted in gross losses of $228,665 for the nine months ended September 30, 2011 and $191,667 for the nine months ended September 30, 2010. We expect sales margins to become positive and improve once we have sales contracts in place at our scheduled premium prices after the testing programs are concluded.

Currently, our G2 Diesel is being sold to companies and governmental organizations and municipalities to test our G2 Diesel as a blended product for:


	•	power performance, maintenance and engine noise;
	•	emissions and exhaust smell; and
	•	fuel economy.

Research and development costs were $143,421 for the nine months ended September 30, 2011 and $371,768 for the nine months ended September 30, 2010. Our Research and Development activities have decreased when compared to the nine months ended September 30, 2010 as a result of limited capital available for such projects. Also, many of our targeted research and development projects have ended.

Depreciation and amortization included in operating expenses decreased by $41,253.

Selling, general, and administrative expenses for the nine months ended September 30, 2011 of $3,962,031. Such costs include, among others, payroll and related expenses, insurance costs and occupancy costs. The decrease in selling, general and administrative expenses of $1,040,343 in 2011 over the comparable period of the prior year is primarily related to the decrease in costs associated with consulting, legal, audit and bonus costs.

Net loss was $4,987,102 in the nine months ended September 30, 2011 as compared to $5,699,557 for the comparable period in 2010. Basic and fully diluted net loss per share for the nine months ended September 30, 2011 and September 30, 2010 was $(0.25) and $(0.32), respectively. Basic and fully diluted weighted average shares outstanding for the fiscal nine months ended September 30, 2011 and September 30, 2010 was 19,878,656 and 17,844,209, respectively.

Liquidity and Capital Resources

The company had cash and cash equivalents of $14,294 at September 30, 2011. Net cash was used in operating activities of $1,393,626 for the nine months ended September 30, 2011. Cash used in operations was a result of a net loss for the period of $4,987,102; a decrease in inventory of $196,226; a decrease in accounts receivable of $26,633; an increase in payables of $583,758, fair value of options granted of $1,944,511, allocated fair value of warrants issued in connection with related party debt of $171,185, depreciation and amortization of $453,496, realized loss on sale of securities of $213,083 and a decrease in other assets of $4,584. Net cash provided by investing activities of $212,461 for the nine months ended September 30, 2011, included patent costs of $36,307, investment in KAI BioEnergy of $312,000 and proceeds from the sale of securities available for sale of $560,768. Net cash provided by financing activities of $1,165,580 for the nine months ended September 30, 2011, included proceeds from common stock of $245,000, proceeds from issuing convertible debt of $550,000, proceeds from issuing notes payable to related party of $286,000 and proceeds from a related party advance of $139,580, partially offset by $55,000 due from a related party.

The company had cash and cash equivalents of $714,156 at September 30, 2010. Net cash was used in operating activities of $4,272,619 for the nine months ended September 30, 2010. Cash used in operations was a result of a net loss for the period of $5,699,557; an increase in inventory of $419,057; an increase in accounts receivable of $32,942 and a decrease in payables of $15,214 partially offset by non cash compensation of services by a related party of $1,493,840, depreciation and amortization of $299,757 and reduction in other assets of $100,554. Net cash used in investing activities of $451,320 for the nine months ended September 30, 2010, included purchase of property, plant and equipment and patent costs of $191,629 and purchase of securities available for sale of $259,691. Net cash provided by financing activities of $568,346 for the nine months ended September 30, 2010, included proceeds from the sale of Common Stock of $805,846, partially offset by the purchase of treasury stock of $197,500, payments of related party note payable of $25,000 and payments of convertible notes of $15,000.

From May 23, 2007 (date of inception) through August 12, 2009, the company raised $7,930,000 by issuing notes payable convertible into Common Stock, bearing 8% interest per annum. These Notes (including principal and accrued interest thereon) in an aggregate of $8,039,323 became convertible at a price of $2.55 per share (the “Conversion Price”) based upon a 15% discount to the company’s equity raise which was completed at an offering price of $3.00 per share between August 2009 and March 2010. In addition to the number of conversion shares to be delivered to each Holder of this Note, upon conversion of the Principal Amount and accrued interest thereon, the company also delivered Unclassified Warrants expiring June 30, 2012 to purchase a number of shares of Common Stock equal to the number of Conversion Shares.

Between August 2009 and February 2010, the Company received gross proceeds of $11,932,000 (net proceeds of $10,253,069) through the sale of its Common Stock at a price of $3.00 per share, for a total of 3,977,333 shares.

Between April and May 2011, the Company received proceeds of $225,000 from the sale of 45,000 shares of Common Stock at $5.00 per share and Warrants to purchase 22,500 shares, exercisable at $7.50 per share from date of issuance through June 30, 2013. In July 2011, the Company received $20,000 from the sale of 6,667 shares of common stock at $3.00 per share and two year Warrants to purchase 3,333 shares, exercisable at $5.00 per share from date of issuance through July 31, 2013. The 6,667 shares of common stock have not been issued as of September 30, 2011 and were accounted for as stock subscription payable. On June 24, 2011, the Company borrowed $250,000 with interest accruing at 11% and due on December 31, 2011. In connection with this transaction, Notes in the principal amount of $250,000 were issued and are convertible at $5.00 per share. The Company also issued Warrants to purchase 62,500 shares of Common Stock exercisable at $5 per share at any time from the date of issuance through June 30, 2013.

On July 22, 2011, the Company borrowed $100,000 with interest accruing at 11% per annum and due on December 31, 2011. In connection with this transaction, a note payable in the principal amount of $100,000 was issued and is convertible to common stock at $5.00 per share. The Company also issued two-year Warrants to purchase 25,000 shares of Common Stock exercisable at $5.00 per share at any time from the date of issuance through June 30, 2013.

On August 5, 2011, the Company borrowed $100,000, with interest accruing at 6% per annum, from a director of the Company. In connection to this transaction, the Company issued a note payable in the principal amount of $100,000 and three year warrants to purchase 100,000 shares of common stock exercisable for $3.00 per share. In addition, the note carries the right for the holder to vote the common stock of 11 Good Energy Sciences, Inc until the note is paid in full.

On August 12, 2011, the Company borrowed $68,000, with interest accruing at 6% per annum, from a director of the Company. In connection to this transaction, the Company issued a note payable in the principal amount of $68,000 and three year warrants to purchase 40,000 shares of common stock exercisable for $3.00 per share. With the exception of the warrants issued, the note carries the same terms and conditions as the August 5, 2011 note payable.

On August 19, 2011, the Company borrowed $68,000, with interest accruing at 6% per annum, from a director of the Company. In connection to this transaction, the Company issued a note payable in the principal amount of $68,000 and three year warrants to purchase 40,000 shares of common stock exercisable for $3.00 per share. The note carries the same terms and conditions as the August 12th, 2011 note payable.

On September 8, 2011, the Company entered into an agreement with a non-affiliated investor to loan $200,000 to the Company, which is convertible to common stock at $5.00 per share and repayable to the investor on a maturity date of March 8, 2012. Interest at the rate of 11% per annum is payable on December 8, 2011 and the balance at maturity. The lender also received three year warrants to purchase 180,000 shares, exercisable at $3.00 per share at any time over the life of the warrants.

We have a history of losses from operations and an accumulated deficit of $21,538,669 at September 30, 2011 and negative working capital (total current liabilities in excess of total current liabilities) of $1,167,384. As of September 30, 2011, we are operating one production facility; currently have a total of 9 employees, with a burn rate of approximately $150,000 per month.

The Company currently requires significant additional financing estimated at $2,988,000 to complete its acquisition of Kai, to fund combined operations of the Company and Kai for at least the next 24 months and to repay its outstanding notes as they become due and payable. We anticipate that our future liquidity requirements will arise from the need to finance our accounts receivable and inventories, and from the need to fund our current obligations and capital expenditures. The primary sources of funding for our current operations will be cash generated from operations and raising additional capital from the sale of equity and/or debt securities. While the company anticipates more than nominal revenues will result in the next 12 months and beyond, our ability to achieve profitable operations will depend to continue as a going concern and to ultimately achieve profitable operations will depend on our immediate ability to raise additional financing, on terms satisfactory to us, if at all. Further, there is no guarantee that we will ever be able to operate profitably or derive any significant revenues from our operations.

We are currently in the process of attempting to raise capital through a private placement sale of common stock. The current private placement memorandum dated October 14, 2011outlines the sale of up to 3,666,667 shares of common stock at $3.00 per share for an aggregate of up to $11,000,000. As of the date of this filing, we have raised and collected $250,000 as a result of a private placement sale of equity. Exemption is claimed under Section 4(2) and/or Rule 506 of Regulation D of the Securities Act of 1933, as amended. Our future plans include purchasing and/or leasing a site for the purpose of constructing a second production facility with an estimated annual output capacity of 30,000,000 gallons of G2 Diesel. To date, we have completed engineering and construction plans for such a facility and have made inquiries into potential sites in the State of Ohio for such a facility. However, detailed milestones of these plans and the specific steps needed to accomplish each milestone do not currently exist. Management estimates that once a site is secured, that construction permitting and all the other steps necessary to have such a site constructed and operational would take approximately one year to complete. The actual costs of this new facility will depend upon many factors, including, without limitation, the location and cost of the land, demolition costs of existing facilities (if any) on the site, environmental concerns (if any) and the size of the new plant. We can provide no assurances that the company will be able to obtain adequate financing for our operations and second production facility on terms satisfactory to us, if at all.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposure to market risk is interest rate risk associated with our short term money market investments. The Company does not have any financial instruments held for hedging or other speculative purposes and does not invest in derivative financial instruments, interest rate swaps or other investments that alter interest rate exposure.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements

Item 4. Controls and Procedures

We maintain disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our CEO and CFO, an evaluation was performed on the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.

There were no changes in the Company’s internal controls over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

As of the filing date of this Form 10-Q, we are not a party to any pending legal proceedings.

Item 1A. Risk Factors

As a Smaller Reporting Company as defined Rule 12b-2 of the Exchange Act and in item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item 1A.

Item 2. Changes in Securities

From January 1, 2011 through September 30, 2011, we had limited private sales of our securities, summarized as follows:


Date of Sale	Title of Security	Number Sold	Consideration Received and Description of Underwriting or Other Discounts to Market Price or Convertible Security, Afforded to Purchasers	Exemption from Registration Claimed (3)	If Option, Warrant or Convertible Security, terms of exercise or conversion

April, 2011	Common stock and warrants	45,000 Shares and 22,500 warrants	$225,000: 22,500 commissions paid.	Rule 506	Warrants exercisable at $7.50 per share through June 30, 2013

June -July 2011	Notes and warrants	$350,000 principal amount of notes; 87,500 warrants	$350,000: $35,000 commissions paid.	Rule 506	Notes are convertible at $5.00 per share. Warrants are exercisable at $5.00 per share through June 30, 2013.

June 2011	Options	935,000	Services rendered: No commissions paid	Section 4 (2)	Exercisable through June 22, 2014 at $3.00 to $5.00 per share.

July 2011	Common stock and Warrants	6,667 shares and 3,333 Warrants	$20,000: No commissions paid	Rule 506	Exercisable at $5.00 per share through July 2013

August 2011	Notes and warrants	$236,000 principal amount of notes; 180,000 warrants	$236,000: No commissions paid.	Section 4 (2)	Warrants exercisable at $3.00 per share through August 2014.

September 2011	Notes and warrants	$200,000 principal amount of notes; 180,000 warrants	$200,000: $20,000 commissions paid.	Rule 506	Notes are convertible at $5.00 per share. Warrants exercisable at $3.00 per share through September 2014.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Reserved

Item 5. Other Information

In our amended Form 10-Q for the quarter ended June 30, 2011, the Company reported that on September 1, 2011, the Company entered into a Letter of Intent (“LOI”) for a joint venture to sell G2 Diesel in Mexico, subject to regulatory approval in Mexico and entering into definitive joint venture agreements to supply the biofuel component of the fuel blend (which blend is expected to be 5% biofuel) required for 500 buses in Mexico for at least 30 days of projected operation and then to gradually increase the order to supply the biofuel component for up to 3,000 buses. In conjunction with the LOI, the Company’s Chief Executive Officer, Frederick C. Berndt, entered into two private agreements to purchase an aggregate of 100,000 shares from two stockholders at a total purchase price of $300,000. Separately, the Company had agreed to purchase the same 100,000 shares from the investors in the event that the Company raised at least $1,500,000 (the “Financing Condition”) on or before September 30, 2011 and in the event that Mr. Berndt did not completed the purchases before the Financing Condition has been completed. The Company is now reporting that the Financing Condition was not met and the Company has no obligation to make payment pursuant to its agreement with these investors, as the obligation to purchase said 100,000 shares from two stockholders belongs with Mr. Berndt. As of the filing date of this Form 10-Q, the LOI has been terminated by the parties, although the parties remain interested in entering into a mutually satisfactory joint venture agreement. We can provide no assurance that a definitive agreement for the proposed joint venture project will be entered into on terms satisfactory to us, if at all.

Item 6. Exhibits

Except for the exhibits listed below, other required exhibits have been previously filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

The following exhibits were previously filed under a Form S-1 Registration Statement, file No. 333-166149 unless otherwise noted:


Exhibit No.		Description of Exhibit


2.1		Agreement and Plan of Organization between Registrant and 11 Good’s Energy, LTD.

2.2		Corrections to Exhibit 2.1

3.1		Certification of Incorporation

3.2		By-Laws

3.3		Certificate of Amendment to Certificate of Incorporation

3.4		Certificate of Designation

10.1		Employment Contract - Frederick C. Berndt

10.2		Employment Contract - Daniel Lapp

10.3		Employment Contract - Aaron Harnar

10.4		Consulting Agreement with Clayton R. Livengood

10.5		Employment Agreement - Gary R. Smith

10.6		Finder’s Agreement - Jesup Lamont

10.7		Consulting Agreement with Capital Keys

10.8		Consulting Agreement with California Strategies

10.9		Office Lease dated April 25, 2007 between the Registrant and Triad Realty, LLC, including a First Lease Amendment dated June 21, 2007 and a Second Amendment dated July 15, 2009.

21.1		Subsidiary of Registrant

31.1		Principal Executive Officer Rule 13a-14(a)/15d-14(a) Certification (*)

31.2		Principal Financial Officer Rule 13a-14(a)/15d-14(a) Certification (*)

32.1		Principal Executive Officer Section 1350 Certification (*)

32.2		Principal Financial Officer Section 1350 Certification (*)

101.INS XBRL		Instance Document (*)

101.SCH XBRL		Taxonomy Extension Schema Document (*)

101.CAL XBRL		Taxonomy Extension Calculation Linkbase Document (*)

101.DEF XBRL		Taxonomy Extension Definition Linkbase Document (*)

101.LAB XBRL		Taxonomy Extension Labels Linkbase Document (*)

101.PRE XBRL		Taxonomy Extension Presentation Linkbase Document (*)

* Filed herewith.

Note: The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

SIGNATURES

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


	11 GOOD ENERGY, INC.

Date: November 21, 2011	By: /s/ Frederick C. Berndt

	Frederick C. Berndt, President (principal executive officer)

Date: November 21, 2011	By: /s/ Daniel T. Lapp

	Daniel T. Lapp,
	Chief Financial Officer (principal financial officer)

Attached files

11 GOOD ENERGY INC Reports

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