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EXCEL - IDEA: XBRL DOCUMENT - Seals Entertainment Corp | Financial_Report.xls |
EX-32.1 - EXHIBIT 32.1 - Seals Entertainment Corp | v241023_ex32-1.htm |
EX-31.1 - EXHIBIT 31.1 - Seals Entertainment Corp | v241023_ex31-1.htm |
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
(Mark
One)
x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
FOR
THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2011
¨ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
COMMISSION
FILE NUMBER: 333-152376
GLOBAL SMART ENERGY,
INC.
(Exact
name of registrant as specified in its charter)
DELAWARE
|
|
26-2691611
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
|
3340
Peachtree Road, N.E.
|
||
Atlanta,
GA
|
30326
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
REGISTRANT'S TELEPHONE
NUMBER, INCLUDING AREA CODE (404) 230-9600
230 North
Park Blvd Suite 104
Grapevine, TX
76051
(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 ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act (Check
one):
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 x No ¨
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING
FIVE YEARS:
Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes o No
o
APPLICABLE
ONLY TO CORPORATE ISSUERS:
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date. As of November 17, 2011,
there were 5,184,410 shares of common stock, par value $0.005, issued and
outstanding.
GLOBAL
SMART ENERGY, INC.
TABLE
OF CONTENTS
PART
I - FINANCIAL INFORMATION
|
3
|
|
ITEM
1 Financial Statements
|
4
|
|
ITEM
2 Management's Discussion and Analysis of Financial Condition
and Results of Operations.
|
11
|
|
ITEM
3 Quantitative and Qualitative Disclosures About Market
Risk
|
13
|
|
ITEM
4 Controls and Procedures
|
13
|
|
PART
II - OTHER INFORMATION
|
15
|
|
ITEM
1 Legal Proceedings
|
15
|
|
ITEM
1A Risk Factors
|
15
|
|
ITEM
2 Unregistered Sales of Equity Securities and Use of
Proceeds
|
15
|
|
ITEM
3 Defaults Upon Senior Securities
|
15
|
|
ITEM
4 Submission of Matters to a Vote of Security
Holders
|
15
|
|
ITEM
5 Other Information
|
15
|
|
ITEM
6 Exhibits
|
15
|
|
Signatures | 16 |
2
PART
I - FINANCIAL INFORMATION
This
Quarterly Report includes forward-looking statements within the meaning of the
Securities Exchange Act of 1934 (the "Exchange Act"). These statements are based
on management's beliefs and assumptions, and on information currently available
to management. Forward-looking statements include the information concerning our
possible or assumed future results of operations set forth under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Forward-looking statements also include statements in which words
such as "expect," "anticipate," "intend," "plan," "believe," "estimate,"
"consider" or similar expressions are used.
Forward-looking
statements are not guarantees of future performance. They involve risks,
uncertainties and assumptions. Our future results and shareholder values may
differ materially from those expressed in these forward-looking statements.
Readers are cautioned not to put undue reliance on any forward-looking
statements.
3
ITEM
1 FINANCIAL STATEMENTS
GLOBAL
SMART ENERGY, INC.
|
||||||||
(A
Development Stage Company)
|
||||||||
Balance
Sheets
|
||||||||
ASSETS
|
||||||||
Sept
30,
|
December
|
|||||||
2011
|
2010
|
|||||||
(unaudited)
|
(audited)
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 2,334 | $ | 255 | ||||
Prepaid
Expenses
|
- | 3,000 | ||||||
Total
Current Assets
|
2,334 | 3,255 | ||||||
TOTAL
ASSETS
|
$ | 2,334 | $ | 3,255 | ||||
LIABILITIES AND STOCKHOLDERS'
DEFICIT
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable and accrued expenses
|
$ | 22,046 | $ | 20,409 | ||||
Related
party payable
|
4,450 | 75,427 | ||||||
Total
Current Liabilities
|
26,496 | 95,836 | ||||||
LONG-TERM
LIABILITIES
|
||||||||
Convertible
note payable
|
- | - | ||||||
Total
Long-Term Liabilities
|
- | - | ||||||
TOTAL
LIABILITIES
|
26,496 | 95,836 | ||||||
STOCKHOLDERS'
DEFICIT
|
||||||||
Common
stock; 50,000,000 shares authorized
|
||||||||
at
par value of $0.005, 5,184,410 and 3,208,250
|
||||||||
shares issued and outstanding
|
25,922 | 16,041 | ||||||
Additional
paid-in capital
|
203,806 | 63,209 | ||||||
Accumulated
deficit from development stage
|
(253,890 | ) | (171,831 | ) | ||||
Total
Stockholders' Deficit
|
(24,162 | ) | (92,581 | ) | ||||
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$ | 2,334 | $ | 3,255 | ||||
The
accompanying notes are an integral part of these financial
statements.
4
GLOBAL
SMART ENERGY, INC.
|
||||||||||||||||||||
(A
Development Stage Company)
|
||||||||||||||||||||
Statements
of Operations
|
||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||
From
Inception
|
||||||||||||||||||||
|
on
May 23,
|
|||||||||||||||||||
For
the Three Months Ended
|
For
the Nine Months Ended
|
2007
Through
|
||||||||||||||||||
September
30,
|
September
30,
|
September
30,
|
||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2011
|
||||||||||||||||
REVENUES
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
OPERATING
EXPENSES
|
||||||||||||||||||||
General
and administrative
|
42,345 | 2,802 | 78,492 | 15,083 | 169,406 | |||||||||||||||
Total
Operating Expenses
|
42,345 | 2,802 | 78,492 | 15,083 | 169,406 | |||||||||||||||
LOSS
FROM OPERATIONS
|
42,345 | 2,802 | 78,492 | 15,083 | 169,406 | |||||||||||||||
OTHER
INCOME EXPENSES
|
||||||||||||||||||||
Interest
expense
|
(3,025 | ) | - | (3,566 | ) | - | (3,566 | ) | ||||||||||||
INCOME
(LOSS) BEFORE TAXES
|
(45,370 | ) | (2,802 | ) | (82,058 | ) | (15,083 | ) | (172,972 | ) | ||||||||||
Income
taxes
|
- | - | - | - | - | |||||||||||||||
LOSS
FROM CONTINUING OPERATIONS
|
(45,370 | ) | (2,802 | ) | (82,058 | ) | (15,083 | ) | (172,972 | ) | ||||||||||
DISCONTINUED
OPERATIONS
|
- | - | - | - | (80,918 | ) | ||||||||||||||
NET
INCOME (LOSS)
|
$ | (45,370 | ) | $ | (2,802 | ) | $ | (82,058 | ) | $ | (15,083 | ) | $ | (253,890 | ) | |||||
BASIC
INCOME (LOSS) PER COMMON SHARE
|
||||||||||||||||||||
CONTINUING
OPERATIONS
|
$ | - | $ | - | $ | - | $ | - | ||||||||||||
DISCONTINUED
OPERATIONS
|
$ | - | $ | - | $ | - | $ | - | ||||||||||||
WEIGHTED
AVERAGE NUMBER OF
|
||||||||||||||||||||
COMMON
SHARES OUTSTANDING
|
5,184,410 | 3,208,250 | 4,644,160 | 3,208,250 |
The
accompanying notes are an integral part of these financial
statements.
5
GLOBAL
SMART ENERGY, INC.
|
||||||||||||||||||||
(A
Development Stage Company)
|
||||||||||||||||||||
Consolidated
Statements of Stockholders' Deficit
|
||||||||||||||||||||
Deficit
|
||||||||||||||||||||
Accumulated
|
||||||||||||||||||||
Additional
|
During
the
|
Total
|
||||||||||||||||||
Common
Stock
|
Paid-In
|
Development
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Stage
|
Deficit
|
||||||||||||||||
Balance,
May 23, 2007
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
Common
stock issued for services at $0.075 per
share
|
5,000,000 | 25,000 | 50,000 | - | 75,000 | |||||||||||||||
Net
loss for the year ended December 31,
2007
|
- | - | - | (85,762 | ) | (85,762 | ) | |||||||||||||
Balance,
December 31, 2007
|
5,000,000 | 25,000 | 50,000 | (85,762 | ) | (10,762 | ) | |||||||||||||
Common
stock cancelled
|
(2,216,750 | ) | (11,084 | ) | 11,084 | - | - | |||||||||||||
Common
stock issued for services at $0.01 per
share
|
200,000 | 1,000 | 1,000 | - | 2,000 | |||||||||||||||
Net
loss for the year ended December 31,
2008
|
- | - | - | (29,370 | ) | (29,370 | ) | |||||||||||||
Balance,
December 31, 2008
|
2,983,250 | 14,916 | 62,084 | (115,132 | ) | (38,132 | ) | |||||||||||||
Common
stock issued for services at $0.01 per
share
|
225,000 | 1,125 | 1,125 | - | 2,250 | |||||||||||||||
Net
loss for the year ended December 31,
2009
|
(37,487 | ) | (37,487 | ) | ||||||||||||||||
Balance,
December 31, 2009
|
3,208,250 | 16,041 | 63,209 | (152,619 | ) | (73,369 | ) | |||||||||||||
Net
loss for the year ended ended December 31,
2010
|
(19,212 | ) | (19,212 | ) | ||||||||||||||||
Balance,
December 31, 2010
|
3,208,250 | 16,041 | 63,209 | (171,831 | ) | (92,581 | ) | |||||||||||||
Common
Stock issued for services at $0.045 per share
|
300,000 | 1,500 | 12,000 | - | 13,500 | |||||||||||||||
Common
stock issued for settlement of related party payables at $0.045 per
share
|
1,676,160 | 8,381 | 67,046 | - | 75,427 | |||||||||||||||
Transfer
of debt to a Company owned by former officer
|
- | - | 61,551 | - | 61,551 | |||||||||||||||
Net
Loss for nine months ended September 30, 2011
|
(82,058 | ) | (82,058 | ) | ||||||||||||||||
Balance,
June 30, 2011
|
5,184,410 | $ | 25,922 | $ | 203,806 | $ | (253,890 | ) | $ | (24,162 | ) |
The
accompanying notes are an integral part of these financial
statements.
6
GLOBAL
SMART ENERGY, INC.
|
||||||||||||
(A
Development Stage Company)
|
||||||||||||
Statements
of Cash Flows
|
||||||||||||
(Unaudited)
|
||||||||||||
From
Inception
|
||||||||||||
on
May 23,
|
||||||||||||
For
the Nine Months Ended
|
2007
Through
|
|||||||||||
September
30,
|
September
30,
|
|||||||||||
2011
|
2010
|
2011
|
||||||||||
OPERATING
ACTIVITIES
|
||||||||||||
Net
income (loss)
|
$ | (82,058 | ) | $ | (15,083 | ) | $ | (253,889 | ) | |||
Adjustments
to Reconcile Net Income (Loss) to Net
|
||||||||||||
Cash
Used by Operating Activities:
|
||||||||||||
Discontinued
operations
|
- | |||||||||||
Common
stock issued for services
|
13,500 | 92,750 | ||||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Accrued
interest on promissory note
|
3,551 | - | 3,551 | |||||||||
Change
in Current Assets
|
3,000 | - | ||||||||||
Changes
in accounts payable & accrued expenses
|
1,637 | 507 | 22,046 | |||||||||
Net
Cash Used in Operating Activities
|
(60,371 | ) | (14,576 | ) | (135,543 | ) | ||||||
INVESTING
ACTIVITIES
|
||||||||||||
Discontinued
operations
|
- | - | (54,553 | ) | ||||||||
Net
Cash Used in Investing Activities
|
- | - | (54,553 | ) | ||||||||
FINANCING
ACTIVITIES
|
||||||||||||
Discontinued
operations
|
- | - | 6,304 | |||||||||
Contributed
Capital
|
75,427 | 75,427 | ||||||||||
Proceeds
from convertible note payable
|
200,000 | 200,000 | ||||||||||
Repayment
of loan
|
(142,000 | ) | (142,000 | ) | ||||||||
Related
party loans
|
(70,977 | ) | 16,500 | 4,450 | ||||||||
Net
Cash Provided by Financing Activities
|
62,450 | 16,500 | 144,181 | |||||||||
|
||||||||||||
NETINCREASE
(DECREASE) IN CASH
|
2,079 | 1,924 | (45,915 | ) | ||||||||
DISCONTINUED
OPERATIONS
|
48,249 | |||||||||||
CASH
AT BEGINNING OF PERIOD
|
255 | 118 | - | |||||||||
CASH
AT END OF PERIOD
|
$ | 2,334 | $ | 2,042 | $ | 2,334 | ||||||
SUPPLEMENTAL
DISCLOSURES OF
|
||||||||||||
CASH
FLOW INFORMATION
|
||||||||||||
CASH
PAID FOR:
|
||||||||||||
Interest
|
$ | - | $ | - | $ | 625 | ||||||
Income
Taxes
|
$ | - | $ | - | $ | - | ||||||
SUPPLEMENTAL
DISCLOSURE OF NON
|
||||||||||||
CASH
FLOW INFORMATION
|
||||||||||||
Transfer
of debt to a Company owned by former officer
|
$ | 61,551 | - | $ | 61,551 | |||||||
Shares
issued for settlement of related party loans
|
$ | 75,427 | $ | - | $ | 75,427 |
The
accompanying notes are an integral part of these financial
statements.
7
GLOBAL
SMART ENERGY, INC.
(A
Development Stage Company)
Notes to
Unaudited Financial Statements
NOTE 1 -
CONDENSED FINANCIAL STATEMENTS
The
accompanying unaudited financial statements have been prepared by the Company in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions for Form
10-Q and Article 210 8-03 of Regulation S-X. In the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows at
September 30, 2011 and for all periods presented have been made.
Certain
information and footnote disclosures normally included in financial statements
prepared have been condensed or omitted. It is suggested that these financial
statements be read in conjunction with the most recent filing of the Form 10-K
which included the financial statements and notes thereto as of December 31,
2010. The operating results for the three and nine month periods ended September
30, 2011 is not necessarily indicative of the operating results that may be
expected for the fiscal year ending December 31, 2011.
NOTE 2 -
GOING CONCERN
The
Company’s financial statements are prepared in conformity with generally
accepted accounting principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. The Company has had no revenues and has generated losses
from operations. The Company has accumulated a deficit of ($253,889) and
currently has net working capital deficit of $24,162 as of September 30,
2011.
In order
to continue as a going concern and achieve a profitable level of operations, the
Company will need, among other things, additional capital resources and to
develop a consistent source of revenue. Management’s plans include
investing in and developing an operating business.
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plan described in the preceding paragraph
and eventually attain profitable operations.
These
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts, or amounts and
classification of liabilities that might result from this
uncertainty.
NOTE 3 -
SIGNIFICANT ACCOUNTING POLICIES
Use of
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
Cash and cash
equivalents
For
purposes of the statement of cash flows, the Company considers highly liquid
financial instruments purchased with a maturity of three months or less to be
cash equivalents.
8
GLOBAL
SMART ENERGY, INC.
(A
Development Stage Company)
Notes to
Financial Statements
Loss per common
share
Basic
loss per share is calculated using the weighted-average number of common shares
outstanding during each reporting period. Diluted loss per share includes
potentially dilutive securities such as outstanding options and warrants, using
various methods such as the treasury stock or modified treasury stock method in
the determination of dilutive shares outstanding during each reporting period.
The Company does not have any potentially dilutive instruments.
Development -Stage
Company
The
accompanying financial statements have been prepared in accordance with the FASB
ASC Topic 915 "Accounting and Reporting by Development-Stage Enterprises". A
development-stage enterprise is one in which planned principal operations have
not commenced or if its operations have commenced, there has been no significant
revenue therefrom. Development-stage companies report cumulative costs from the
enterprise's inception.
Recent Accounting
Pronouncements
The
Company evaluated all of the other recent accounting pronouncements and deemed
that they did not have a material impact on our financial
statements.
NOTE 4 –
RELATED PARTY TRANSACTIONS
As of
December 31, 2010 a major shareholder of the Company advanced $75,427 which was
converted to common stock at $0.045 per share for 1,676,160 shares in March of
2011. As of September 30, 2011 a company, of which the prior CEO is
also an officer, advanced $4,450 for the administration and other costs of
operations on an unsecured basis; bearing no interest and due on
demand.
The
Company approved the issue of 1,676,160 shares at $0.045 per share for the
cancellation of the unsecured advances owed by the Corporation to its majority
shareholder in the amount of $75,427.15.effective March 17, 2011.
NOTE 5 –
CONVERTIBLE PROMISSORY NOTE
On June
14, 2011 the Company issued three-year Convertible Promissory Note ( the ”Note”)
in the amount of $200,000 in a private transaction to an accredited investor for
working capital to assist in the development of a business plan and acquire
financing and/or assets in the energy related industry. The Note
accumulates interest to maturity at six percent (6%) per annum. At
the option of the Note holder, the principal and interest may be converted into
common shares at a price of $0.10 per share. However, on September
30, 2011 a privately owned Nevada Corporation, of which the prior CEO and CFO
are officers, agreed to assume the Note and all of the underlying obligations of
the Note in exchange for the existing cash in the Company bank account at Bank
of America and certain other obligations and prepaid expenses that had been
incurred and/or paid for by the then existing management. An amount totaling
$61,551 of the assumed Note has been treated as contributed
capital.
9
GLOBAL
SMART ENERGY, INC.
(A
Development Stage Company)
Notes to
Financial Statements
NOTE 6 –
EMPLOYMENT AGREEMENTS
As of
June 1, 2011 the Company entered into an employment agreement with Frank
O’Donnell, to serve as President and Director, and Lyle Mortensen to serve as
the Secretary/Treasurer and Director of the Company. Each agreement
calls for monthly cash compensation of $5,000 per month and an accrual of 10,000
shares of common stock per month for the first full year of
employment. The stock award is to be vested 100% upon completion of
one year of service. In the event the Employee is terminated, for
other than misconduct, the Stock Awards will become 100% vested. Upon
the resignations of Frank O’Donnell and Lyle J. Mortensen, effective October 21,
2011, the employment agreements were cancelled and transferred to Global Smart
Energy, Inc (NEVADA). The prior officers have agreed to no longer look to the
Company for compensation and accrual of stock benefits under the Employment
Agreements.
Note 7 –
SUBSEQUENT EVENTS
On
October 21, 2011 the Company issued a promissory note to Bridgeport Enterprises,
Inc. (“Bridgeport”) in the amount of $30,000.00 in exchange for deposits
totaling $30,000.00 into bank accounts. The proceeds are to be used
for expenses paid to the prior officers and for expenses incurred with $20,000
to be retained by the Company for working Capital. The terms of the
Bridgeport note is interest to accrue at 6% and is due on October 21,
2012. At the option of the payee, the note may be converted into
Common Stock of the Company at $0.002 per share for a total of 15,000,000 shares
of the Company.
10
ITEM
2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Our
Management's Discussion and Analysis contains not only statements that are
historical facts, but also statements that are forward-looking (within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934). Forward-looking statements are, by their very
nature, uncertain and risky. These risks and uncertainties include
international, national and local general economic and market conditions;
demographic changes; our ability to sustain, manage, or forecast growth; our
ability to successfully make and integrate acquisitions; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; fluctuations and difficulty in
forecasting operating results; changes in business strategy or development
plans; business disruptions; the ability to attract and retain qualified
personnel; the ability to protect technology; and other risks that might be
detailed from time to time in our filings with the Securities and Exchange
Commission.
Although
the forward-looking statements in this Quarterly Report reflect the good faith
judgment of our management, such statements can only be based on facts and
factors currently known by them. Consequently, and because forward-looking
statements are inherently subject to risks and uncertainties, the actual results
and outcomes may differ materially from the results and outcomes discussed in
the forward-looking statements. You are urged to carefully review and consider
the various disclosures made by us in this report and in our other reports as we
attempt to advise interested parties of the risks and factors that may affect
our business, financial condition, and results of operations and
prospects.
OVERVIEW
Global
Smart Energy, Inc. (formerly Triangle Alternative Network Incorporated) (“GSEI”)
is a development stage company that was incorporated in the state of Delaware on
April 1, 2008 and was the holding company for Triangle Alternative Network, LLC
(“TAN, LLC” and, together with GSEI., "GSEI", the "Company", "we", "us" or
"our"). We are a start-up company that was originally organized to
develop a television network to provide programming to the Gay, Lesbian,
Bi-Sexual and Trans-gender (“GLBT”) Community.
After
attempting to develop programming, it was determined that the company did not
want to develop this particular programming and had not entered into a
definitive contract to sell the programming. The film and
production costs were transferred to related parties in exchange for the debt
owed to them for advances to the Company.
OUR
CORPORATE INFORMATION
GSEI was
incorporated in the State of Delaware on April 1, 2008 under the name of
Triangle Alternative Network, Inc. The Company officially changed its name to
Global Smart Energy, Inc. on February 8, 2011. GSE has no full time employees.
Our principal executive offices are located at 3340 Peachtree Road, N.E.,
Atlanta, GA and our telephone number is (404)
230-9600.
Effective
October 2, 2011 in a special meeting of the Board of Directors, E. Lamar “Lou”
Seals, III was elected as Chairman of the Board of Directors and CEO of the
Company to be effective October 22, 2001. Frank O’Donnell, CEO and
Director, Lyle Mortensen CFO and Director and Gerry Shirren, Director resigned
for personal reasons and had no disagreements with the Company. Prior
to resignation the Board of Directors elected E. Lamar Seals, III and John
W. Bonner, Jr. as directors to replace them until further action by a majority
of the shareholders.
Liquidity
and Capital Resources
Cash
Requirements
At
September 30, 2011, we had cash on hand of $2,334.45 compared to $255 at
December 31, 2010. Management feels that the cash on hand is not sufficient for
the next twelve months. We anticipate that our cash requirements will increase
substantially as a result of the fact that we are now a public, reporting
company and are beginning to develop a business plan. We anticipate that we will
require approximately $2,500,000 to meet our minimal operating requirements
for the next twelve months. We have not established our revenues and have not
established any other source for the required operating funds.
11
THREE
MONTHS ENDED SEPTEMBER 30, 2011 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30,
2010
REVENUES,
EXPENSES AND LOSS FROM OPERATIONS
Our
revenues, selling, general and administrative expenses and net loss for the
three months ended September 30, 2011 and September 30, 2010 are as
follows:
Three
Months
Ended Sept. 30,
2011
|
Three
Months
Ended Sept.
30,
2010
|
|||||||
Revenue | $ | - | $ | - | ||||
Selling, general and administrative | 45,370 | 2,802 | ||||||
Net Loss | $ | (45,370 | ) | $ | (2,802 | ) |
For the
three months ended September 30, 2011, operating expenses totaled $45,370 as
compared to $2,802 for the three months ended September 30, 2010. The increase
was primarily due to payments of monthly compensation to current officers and
directors of the Company, accrual of interest and increased professional fees
for filing and other professional expenses.
NINE
MONTHS ENDED SEPTEMBER 30, 2011 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30,
2010
REVENUES,
EXPENSES AND LOSS FROM OPERATIONS
Our
revenues, selling, general and administrative expenses and net loss for the nine
months ended September 30, 2011 and September 30, 2010 are as
follows:
Nine Months
Ended Sept. 30,
2011
|
Nine
Months
Ended Sept.
30,
2010
|
|||||||
Revenue | $ | - | $ | - | ||||
Selling, general and administrative | 82,058 | 15,083 | ||||||
Net Loss | $ | (82,058 | ) | $ | (15,083 | ) |
For the
nine months ended September 30, 2011, operating expenses totaled $82,058 as
compared to $15,083 for the nine months ended September 30, 2010. The increase
was primarily due to payments of monthly compensation to current officers and
directors of the Company, accrual of interest and increased professional fees
for filing and other professional expenses.
Sources
and Uses of Cash
Operations
For the
nine months ended September 30, 2011, we used cash in our operation of $60,370
compared to $14,576 for the nine months ended September 30, 2010. These changes
were primarily the result of the loss from operations of $82,058
made up of stock issued for payments to officers and directors, professional and
accounting fees paid to maintain corporate requirements, a decrease in prepaid
assets of $3,000 and an increase in accounts payable of $1,637
for the nine
months ended September 30, 2011; compared to a loss of $15,083
with an increase in accounts payable of $507
for the nine months ended September 30, 2010 and change noted for issuance of
shares for services $ 13,500 for the nine months ended September 30,
2011.
Financing
We had
net cash flows of $62,450 from financing activities for the nine months ended
September 30, 2011 compared to $ 16,500 for the Nine months ended September 30,
2010. Cash in the amount of $62,450 came from related party
advances.
12
CRITICAL
ACCOUNTING POLICIES
The
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 of America. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses. In consultation with our Board of Directors, we have identified the
following accounting policies that we believe are key to an understanding of our
financial statements. These are important accounting policies that require
management's most difficult, subjective judgments.
Our
critical accounting policies, including the assumptions and judgments underlying
them, are disclosed in our Calendar Year 2010 Form 10-K in Note 1- Summary of
Significant Accounting Policies included in our Financial Statements.
There were no significant changes to our critical accounting policies
during the nine months ended September 30, 2011. On an ongoing basis, we
evaluate our estimates based on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the
result of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Results
may differ from these estimates due to actual outcomes being different from
those on which we based our assumptions.
Off-balance-Sheet
Arrangements
We have
no off-balance-sheet arrangements that are reasonably likely to have a current
or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that is deemed by our management to be material to
investors.
ITEM
3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a
smaller reporting company we are not required to provide the information
required by this Item.
ITEM
4 CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Our
management is responsible for establishing and maintaining a system of
disclosure controls and procedures (as defined in Rule 13a-15(e)) under the
Exchange Act) that is designed to ensure that information required to be
disclosed by the Company in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
specified in the Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the issuer's management, including its principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure.
Pursuant
to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation
with the participation of the Company's management, the Company's Chief
Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the
effectiveness of the Company's disclosure controls and procedures (as defined
under Rule 13a-15(e) under the Exchange Act) as of the nine months ended
September 30, 2011. Based on that evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that as of September 30, 2011, our
disclosure controls and procedures were not effective at the reasonable
assurance level due to the material weaknesses described below.
In light
of the material weaknesses described below, we performed additional analysis and
other post-closing procedures to ensure our financial statements were prepared
in accordance with generally accepted accounting principles. Accordingly, we
believe that the financial statements included in this report fairly present, in
all material respects, our financial condition, results of operations and cash
flows for the periods presented.
A
material weakness is a control deficiency (within the meaning of the Public
Company Accounting Oversight Board (PCAOB)) or combination of control
deficiencies, such that there is a reasonable possibility that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. Management has identified the following two material weaknesses
which have caused management to conclude that, as of September 30, 2011, our
disclosure controls and procedures were not effective at the reasonable
assurance level:
1. We do
not have written documentation of our internal control policies and procedures.
Written documentation of key internal controls over financial reporting is a
requirement of Section 404 of the Sarbanes-Oxley Act. Management evaluated the
impact of our failure to have written documentation of our internal controls and
procedures on our assessment of our disclosure controls and procedures and has
concluded that the control deficiency that resulted represented a material
weakness.
2. We do
not have sufficient segregation of duties within accounting functions, which is
a basic internal control. Due to our size and nature, segregation of all
conflicting duties may not always be possible and may not be economically
feasible. However, to the extent possible, the initiation of transactions, the
custody of assets and the recording of transactions should be performed by
separate individuals. Management evaluated the impact of our failure to have
segregation of duties on our assessment of our disclosure controls and
procedures and has concluded that the control deficiency that resulted
represented a material weakness.
13
To
address these material weaknesses, management performed additional analyses and
other procedures to ensure that the financial statements included herein fairly
present, in all material respects, our financial position, results of operations
and cash flows for the periods presented.
Remediation
of Material Weaknesses
To
remediate the material weaknesses in our disclosure controls and procedures
identified above, we have continued to refine our internal procedures to begin
to implement segregation of duties and to reduce the number of audit
adjustments.
Changes
in Internal Control over Financial Reporting. Except as noted above, there were
no changes in our internal control over financial reporting, as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently
completed fiscal quarter that have materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.
CHANGES
IN INTERNAL CONTROLS
Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, performed an evaluation to determine whether any change in
our internal controls over financial reporting occurred during the nine-month
period ended September 30, 2011. Based on that evaluation, our Chief Executive
Officer and our Chief Financial Officer concluded that no change occurred in the
Company's internal controls over financial reporting during the nine months
ended September 30, 2011 that has materially affected, or is
reasonably likely to materially affect, the Company's internal controls over
financial reporting.
14
ITEM
1 LEGAL PROCEEDINGS
ITEM
1A RISK FACTORS
There
have been no changes to our risk factors as described in our Annual Report on
Form 10-K filed with the Securities and Exchange Commission on March 31, 2011.
ITEM
2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
There
have been no events that are required to be reported under this
Item.
ITEM 3 DEFAULTS UPON SENIOR
SECURITIES
ITEM
4 SUBMUSSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
None
ITEM
6 EXHIBITS
31.1 Rule
13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2 Rule
13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1
Chief Executive Officer Certification Pursuant to 18 USC, Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Chief Financial Officer Certification Pursuant to 18 USC, Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15
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.
Global
Smart Energy, Inc.
|
||
Dated:
November 21, 2011
|
/s/
E. Lamar Seals, III
|
|
By:
E. Lamar Seals, III
|
||
Chief
Executive Officer, Chief Financial Officer and
Chairman
|
16