Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-Q
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x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2013
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission file number 333-171046
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LIBERATED ENERGY, INC.
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(Exact name of registrant as specified in its charter)
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Nevada
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27-4715504
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(State or other jurisdiction
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(I.R.S. Employer Identification No.)
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| of icorporation or organization) |
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109 Burtons Road
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Marlton, New Jersey
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08053
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(Address of principal executive offices)
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(Zip Code)
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Registrant's telephone number including area code (609) 707-1519
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(Former Name or Former Address, if changed since last report)
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Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.0001 par value
1
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 x Yes oNo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o (Do not check if a smaller reporting company)
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Smaller reporting company x
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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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after 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: 72,000,000 shares of common stock issued and outstanding as of August 16, 2013.
2
LIBERATED ENERGY, INC.
FORM 10-Q
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Item #
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Description
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Page Numbers
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| MINE SAFETY DISCLOSURES |
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INFORMATION REGARDING FORWARD-LOOKING DISCLOSURE
This quarterly report on Form 10-Q contains forward-looking statements. Statements in this report that are not historical facts, including statements about management’s beliefs and expectations, constitute forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined under Item 1A, Risk Factors, in our most recent annual report on Form 10-K, and any updated risk factors we include in our quarterly reports on Form 10-Q and other filings with the SEC. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:
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•
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risks arising from material weaknesses in our internal control over financial reporting, including material weaknesses in our control environment;
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•
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our ability to attract new clients and retain existing clients;
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•
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our ability to retain and attract key employees;
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•
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risks associated with assumptions we make in connection with our critical accounting estimates;
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•
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potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments;
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•
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potential downgrades in the credit ratings of our securities;
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•
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risks associated with the effects of global, national and regional economic and political conditions, including fluctuations in economic growth rates, interest rates and currency exchange rates; and
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•
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developments from changes in the regulatory and legal environment for advertising and marketing and communications services companies around the world.
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Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A, Risk Factors, in our September 30, 2012 Annual Report on Form 10-K and other filings with the SEC.
4
LIBERATED ENERGY, INC.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2013
CONTENTS
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Balance Sheets as of June 30, 2013 (Unaudited) and September 30, 2012(Audited)
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Page 6
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Statements of Operations for the three and nine months ended June 30, 2013 and June 30, 2012 (unaudited) and for the cumulative period from June 24, 2010 (Inception) to June 30, 2013 (Unaudited)
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7
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Statements of Cash Flows for the three and nine months ended June 30, 2013 and June 30, 2012 (unaudited) and for the cumulative period from June 24, 2010 (Inception) to June 30, 2013 (Unaudited)
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8
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Notes to Financial Statements (Unaudited)
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9
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5
| Table of Content | ||
| LIBERATED ENERGY, INC. | ||
| (A Development Stage Company) | ||
| (Unaudited) |
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June 30, 2013
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Sep. 30, 2012
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ASSETS
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CURRENT ASSETS:
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Cash and Cash Equivalents
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$ | 6,229 | $ | 3,904 | ||||
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Prepaid deposit to supplier
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$ | - | $ | 38,000 | ||||
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Total Current Assets
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$ | 6,229 | $ | 41,904 | ||||
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OTHER ASSESTS:
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Total Other Assets
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$ | - | $ | - | ||||
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TOTAL ASSETS
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$ | 6,229 | $ | 41,904 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
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Accounts Payable
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$ | - | $ | 44,250 | ||||
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Total Current Liabilities
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$ | - | $ | 44,250 | ||||
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OTHER CURRENT LIABILITIES
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Loans from Stockholders
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$ | 6,340 | $ | 88,737 | ||||
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Total Other Current Liabilities
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$ | 6,340 | $ | 88,737 | ||||
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TOTAL LIABILITIES
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$ | 6,340 | $ | 132,987 | ||||
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STOCKHOLDERS EQUITY
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Preferred Stock:
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10,000,000 shares authorized par value $0.001 per share; none
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issued and outstanding
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$ | - | $ | - | ||||
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Common Stock:
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100,000,000 shares authorized par value $0.001 per share;
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issued and outstanding, 72,000,000 shares at March 31, 2013 and
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25,000,000 at September 30, 2012
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$ | 72,000 | $ | 25,000 | ||||
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Additional paid-in-capital
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$ | 31,125 | $ | 73,125.00 | ||||
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Deficit accumulated during the development stage
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$ | (194,359 | ) | $ | (189,248 | ) | ||
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Accumulated other comprehensive income (deficit)
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$ | 91,123 | $ | 40 | ||||
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TOTAL STOCKHOLDERS' DEFICIT
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$ | (111 | ) | $ | (91,083 | ) | ||
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TOTAL LIABILITIES AND EQUITY
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$ | 6,229 | $ | 41,904 | ||||
The accompanying notes are an integral part of these financial statements.
6
| Table of Content | ||
| LIBERATED ENERGY, INC. | ||
| (A Development Stage Company) | ||
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(Unaudited)
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Cumulative
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For the three Months Ended
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For the Nine Months Ended
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from June 24, 2010
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June 30,
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June 30,
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(Date of Inception)
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2013
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2012
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2013
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2012
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to June 30, 2013
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Revenues
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$ | - | $ | - | $ | - | $ | - | $ | 20,000 | ||||||||||
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Cost of Goods Sold
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$ | - | $ | - | $ | - | $ | - | $ | (16,800 | ) | |||||||||
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Gross Profit
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$ | - | $ | - | $ | - | $ | - | $ | 3,200 | ||||||||||
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Operating Expenses
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General and Administrative Expenses
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$ | 4,259 | $ | 35,889 | $ | 5,111 | $ | 73,409 | $ | 197,559 | ||||||||||
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Total Operating Expenses
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$ | 4,259 | $ | 35,889 | $ | 5,111 | $ | 73,409 | $ | 197,559 | ||||||||||
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Operating Loss
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$ | (4,259 | ) | $ | (35,889 | ) | $ | (5,111 | ) | $ | (73,409 | ) | $ | (194,359 | ) | |||||
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Other Income (Expense)
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$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
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Interest Expense
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$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
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Net Loss Before Taxes
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$ | (4,259 | ) | $ | (35,889 | ) | $ | (5,111 | ) | $ | (73,409 | ) | $ | (194,359 | ) | |||||
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Net Loss
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$ | (4,259 | ) | $ | (35,889 | ) | $ | (5,111 | ) | $ | (73,409 | ) | $ | (194,359 | ) | |||||
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Loss per Share, Basic & Dilutive
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$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||||
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Other comprehensive income (loss), net of tax
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Foreign currency translation adjustments
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$ | - | $ | - | $ | - | $ | - | $ | 40 | ||||||||||
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Gain on sale of subsidiary
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$ | - | $ | - | $ | 91,083 | $ | 91,083 | ||||||||||||
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Total other comprehensive income(Loss)
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$ | - | $ | - | $ | 91,083 | $ | - | $ | 91,123 | ||||||||||
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Comprehensive Income (Loss)
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$ | (4,259 | ) | $ | (35,889 | ) | $ | 85,972 | $ | (73,409 | ) | $ | (103,236 | ) | ||||||
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Weighted Average Shares Outstanding
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72,000,000 | 25,000,000 | 72,000,000 | 25,000,000 | 72,000,000 | |||||||||||||||
The accompanying notes are an integral part of these financial statements.
7
| Table of Content | ||
| LIBERATED ENERGY, INC. | ||
| (A Development Stage Company) | ||
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(Unaudited)
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For the three Months Ended
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For the Nine Months Ended
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June 24, 2010
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June 30,
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June 30,
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(Date of Inception)
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2013
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2012
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2013
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2012
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to June 30, 2013
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net Loss
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$ | (4,259 | ) | $ | (35,889 | ) | $ | (5,111 | ) | $ | (73,409 | ) | $ | (194,359 | ) | |||||
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Adjustments to reconcile net income to net cash provided by operating activities:
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Non-cash portion of shares based legal fee expense
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$ | - | $ | - | $ | - | $ | - | $ | 2,500 | ||||||||||
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Non-cash portion of shares based consulting expense
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$ | - | $ | - | $ | - | $ | - | $ | 24,750 | ||||||||||
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Prepaid deposit to supplier
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$ | - | $ | - | $ | 38,000 | $ | - | $ | - | ||||||||||
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Prepaid rent deposit
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$ | - | $ | 2,509 | $ | - | $ | 7,526 | $ | - | ||||||||||
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Account Payable
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$ | - | $ | (6,000 | ) | $ | (44,250 | ) | $ | 15,250 | $ | - | ||||||||
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Loan from Shareholders
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$ | 6,140 | $ | 39,380 | $ | (82,397 | ) | $ | 50,581 | $ | 6,340 | |||||||||
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Net Cash Provided in Operating Activities
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$ | 1,881 | $ | - | $ | (93,758 | ) | $ | (52 | ) | $ | (160,769 | ) | |||||||
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Net cash provided by Investing Activities
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$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Proceeds from issuance of common stock
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$ | - | $ | - | $ | - | $ | - | $ | 70,875 | ||||||||||
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Proceeds from issuance of common stock warrant
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$ | - | $ | - | $ | 5,000 | $ | - | $ | 5,000 | ||||||||||
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Net Cash Provided by Financing Activities
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$ | - | $ | - | $ | 5,000 | $ | - | $ | 75,875 | ||||||||||
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Effect of Exchange Rate on Cash
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$ | - | $ | - | $ | - | $ | - | $ | 40 | ||||||||||
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Sales of chinese subsidiary
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$ | - | $ | - | $ | 91,083 | $ | - | $ | 91,083 | ||||||||||
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Net increase (decrease) in cash and cash equivalents
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$ | 1,881 | $ | - | $ | 2,325 | $ | (52 | ) | $ | 6,229 | |||||||||
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Cash and cash equivalents at Beginning of the Period
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$ | 4,348 | $ | 3,904 | $ | 3,904 | $ | 3,956 | $ | - | ||||||||||
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Cash and cash equivalents at End of Period
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$ | 6,229 | $ | 3,904 | $ | 6,229 | $ | 3,904 | $ | 6,229 | ||||||||||
| The accompanying notes are an integral part of these financial statements. |
8
| Table of Content | ||
| LIBERATED ENERGY, INC. AND SUBSIDIARY | ||
| (A Development Stage Company) | ||
| NOTES TO FINANCIAL STATEMENTS |
NOTE A- BUSINESS DESCRIPTION
Organization
Liberated Energy, Inc. formerly known as Mega World Food Holding Company (the Company) is a Nevada corporation formed on September 14, 2010. On January 19, 2013, Perpetual Wind Power Corporation acquired 24,500,000 non-registered shares of the Company from its shareholders, thereby owning 24,500,000 out of a total of 25,000,000 issued and outstanding shares of ther Company. Thereafter, Company the acquired from Perpetual Wind Power Corporation its pattented wind and solar powered turbine technology for 2,500,000 newly issued shares of the Company which were distributed in a dividend to its shareholders and Perpetual Wind returned to treasury its 24,500,000 shares itaacquired from the Company's shareholders. As a a result of this transaction, the Company had on January 19, 2013 3,000,000 shares issued and outstanding. On February 14, 2013, the Company changed its name from Mega World Food Holding Company to Liberated Energy, Inc. and underwent a 24 for 1 forward split, whereby the Company's outstanding shares increased from 3,000,000 to 72,000,000.
The principal executive office is located at 109 Burtons Road, Marlton, New Jersey 08053.
Business
The Company’s business is the sale of alterative energy products and services.
Going Concern and Plan of Operation
The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is in the development stage and has not earned any revenues from operations to date. These conditions raise substantial doubt about its ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE B – SIGNIFICANT ACCOUNTING POLICIES
Development Stage Company
The Company is considered to be in the development stage as defined in Statement of Financial Accounting Standards (SFAS) ASC 915, “Development Stage Entities”. The Company has devoted substantially all of its efforts to establishing a new business and for which either of the following conditions exists: planned principal operations have not commenced; or the planned principal operations have commenced, but there has been no significant revenue there from. Due to the Company’s primary efforts was on the formation of new company, and there were no sales activities incurred, accordingly, the Company is considered as development stage entity.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect certain amounts reported in the financial statements and disclosures. Accordingly, actual results could differ from those estimates.
9
| Table of Content | ||
| LIBERATED ENERGY, INC. AND SUBSIDIARY | ||
| (A Development Stage Company) | ||
| NOTES TO FINANCIAL STATEMENTS |
NOTE B – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of accounting
The financial statements reflect the assets, revenues and expenditures of the Company on the accrued basis of accounting. The Company’s fiscal year end is the last day of September 30.
Cash and Cash Equivalents
The Company considers all highly-liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of June 30, 2013, the company had cash and cash equivalents of $6,229.
Stock-Based Compensation
The Company accounts for stock issued for services using the fair value method. In accordance with FASB ASC 718, Stock-Based Compensation, the measurement date of shares issued for services is the date at which the counterparty’s performance is complete.
Basics and Diluted Net Loss Per Common Share
The Company computes per share amounts in accordance with Statement of Financial Accounting Standards (SFAS) ASC 260, Earnings per Share (EPS). ASC 260 requires presentation of basis and diluted EPS. Basic EPS is computed by dividing the income (loss) available to Common Shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock and common stock equivalents outstanding during the periods.
As of June 30, 2013, the Company only issued one type of shares, i.e., common shares only. There are no other types securities were issued. Accordingly, the diluted and basics net loss per common share are the same.
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| Table of Content | ||
| LIBERATED ENERGY, INC. AND SUBSIDIARY | ||
| (A Development Stage Company) | ||
| NOTES TO FINANCIAL STATEMENTS |
NOTE B – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property, Plant, and Equipment Depreciation
Property, plant, and equipment are stated at cost. Depreciation is being provided principally by straight line methods over the estimated useful lives of the assets. As of June 30, 2013, there were no fixed assets in the Company’s balance sheets.
Operating Expense
For the fiscal quarter ended June 30, 2013 and 2012, there was a total of $5,111 and $73,409 operating expenses respectively.
Comprehensive Income
The company’s comprehensive income is comprised of net income, unrealized gains and losses on marketable securities classified foreign currency translation adjustments, and unrealized gains and losses on derivative financial instruments related to foreign currency hedging.
Recent Accounting Pronouncements
The following pronouncements have become effective during the period covered by these financial statements or will become effective after the end of the period covered by these financial statements:
Recent Accounting Pronouncements ( Continue)
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Pronouncement
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Issued
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Title
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ASC 605
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October 2009
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Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements – a consensus of the FASB Emerging Issues Task Force
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ASC 860
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December 2009
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Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets
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ASC 505
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January 2010
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Accounting for Distributions to Shareholders with Components of Stock and Cash – a consensus of the FASB Emerging Issues Task Force
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ASC 810
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January 2010
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Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification
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ASC 718
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January 2010
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Compensation – Stock Compensation (Topic 718): Escrowed Share Arrangements and the Presumption of Compensation
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ASC 820
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January 2010
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Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements
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ASC 810
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February 2010
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Consolidation (Topic 810): Amendments for Certain Investment Funds
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ASC 815
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March 2010
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Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives
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ASC-310 Receivables
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July 2010
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For public entities, the disclosure as of the end of a reporting period are effective for interim and annual reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. For nonpublic entities, the disclosures are effective for annual reporting period ending on or after December 15, 2011.
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Management does not anticipate that the adoption of these standards will have a material impact on the financial statements.
11
| Table of Content | ||
| LIBERATED ENERGY, INC. AND SUBSIDIARY | ||
| (A Development Stage Company) | ||
| NOTES TO FINANCIAL STATEMENTS |
NOTE C – SHAREHOLDERS’ EQUITY
Common Stock
Under the Company’s Articles of Incorporation of the Company, the Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.001; and 10,000,000 shares of preferred stocks with par value of $0.001.
Liberated Energy, Inc. formerly known as Mega World Food Holding Company (the Company) is a Nevada corporation formed on September 14, 2010. On January 19, 2013, Perpetual Wind Power Corporation acquired 24,500,000 non-registered shares of the Company from its shareholders, thereby owning 24,500,000 out of a total of 25,000,000 issued and outstanding shares of ther Company. Thereafter, Company the acquired from Perpetual Wind Power Corporation its pattented wind and solar powered turbine technology for 2,500,000 newly issued shares of the Company which were distributed in a dividend to its shareholders and Perpetual Wind returned to treasury its 24,500,000 shares itaacquired from the Company's shareholders. As a a result of this transaction, the Company had on January 19, 2013 3,000,000 shares issued and outstanding. On February 14, 2013, the Company changed its name from Mega World Food Holding Company to Liberated Energy, Inc. and underwent a 24 for 1 forward split, whereby the Company's outstanding shares increased from 3,000,000 to 72,000,000.
The restricted common shares after the 24 for 1 forward split were issued as follows:
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Total Shares
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%
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Frank Pringle, Chairman & CEO
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30,000,000
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41.67
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%
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Lois Pringle*
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18,235,032
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25.33
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%
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Elyse Thompson, Secretary & CFO
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1,999,992
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2.78
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%
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| Shawn Pringle | 1,000,008 | 1.39 | % | |||||
| George Birch | 1,000,008 | 1.39 | % | |||||
| Jerry Gruenbaum | 6,979,992 | 9.69 | % | |||||
| Ryan Thompson | 135,000 | 0.00 | % | |||||
| Jen Thmpson | 135,000 | 0.00 | % | |||||
| Bailey Pringle | 135,000 | 0.00 | % | |||||
| Ashlee Pringle | 135,000 | 0.00 | % | |||||
| Nikolaos Giannakeas | 4,992 | 0.00 | % | |||||
| Yasuao Hayashi | 19,992 | 0.00 | % | |||||
| Donna Wert | 19,992 | 0.00 | % | |||||
| Robert & Magdalene Walesyn | 4,992 | 0.00 | % | |||||
| Charles Beebe | 30,000 | 0.00 | % | |||||
| Larry Etherton | 4,992 | 0.00 | % | |||||
| Libby Neuman | 100,008 | 0.00 | % | |||||
| Graham West | 60,000 | 0.00 | % | |||||
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Total
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60,000,000
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83.33
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%
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_______
* Lois Pringle is the wife of Frank Pringle.
The percentage calculation is based on the total outstanding 72,000, 000 shares
12
| Table of Content | ||
| LIBERATED ENERGY, INC. AND SUBSIDIARY | ||
| (A Development Stage Company) | ||
| NOTES TO FINANCIAL STATEMENTS |
NOTE D – Disposition of Mega World Food Limited (HK)
On January 19, 2013, Liberated Energy, Inc. then known as Mega World Food Holding Company (the Company) disposed the 100% ownership of a Hong Kong company, Mega World Food Limited (HK) to Mr. Xiaozhong Wu. Mega World Food Limited (HK) was incorporated on June 24, 2010, and incurred setting up, formation or organization activities since June 24, 2010. Mega World Food Limited (HK) was a wholly-owned subsidiary of the Company.
The Company incurred the following gain on the disposition:
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Mega World Food Limited (HK) Expense Prior 9/14/2012
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Accounts Payable
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44,250
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Loan from Stockholders
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88,737
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Cash and Cash Equivalents
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(3,904
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) | ||
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Prepaid deposit to supplier
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(38,000
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) | ||
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Gain on sale of subsidiary
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$ |
91,083
|
||
The following table summarizes the amounts recognized for assets and liabilities assumed as of the acquisition date, September 14, 2012.
NOTE E– GOING CONCERN
The Company is currently in the development stage and their activities consist solely of corporate formation, raising capital, and attempting to sell products to generate revenues.
There is no guarantee that the Company will be able to raise enough capital or generate revenues to sustain its operations and carry out its business plan. These conditions raise substantial doubt about the Company’s ability to continue as a going concern
The financial statements do not include any adjustments relating to the carrying amounts of recorded assets or the carrying amounts and classification of recorded liabilities that may be required should the Company be unable to continue as a going concern.
The Company’s lack of operating history and financial resources raise substantial doubt about its ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty and if the Company is unable to generate significant revenue or secure financing, then the Company may be required to cease or curtail its operations.
13
| Table of Content | ||
| LIBERATED ENERGY, INC. AND SUBSIDIARY | ||
| (A Development Stage Company) | ||
| NOTES TO FINANCIAL STATEMENTS |
NOTE F – INCOME TAXES
The Company has incurred net losses since inception. The Company has not reflected any benefit of such net operating loss carry forward in the accompanying financial statements. The net operating loss can be carried forward for 15 years.
The income tax benefit differed from the amount computed by applying the estimated US federal income tax rate of 15% to net loss as a result of the following:
|
2013
|
||||
|
Computed expected tax benefit
|
(15.00
|
) %
|
||
|
State income tax, net of federal benefit
|
(7.30
|
)
|
||
|
Valuation allowance
|
22.30
|
|||
|
Income tax benefit
|
-
|
%
|
||
The tax effect of temporary differences that give rise to significant portions of the deferred tax assets as of September 30, 2012 is presented below:
Deferred Tax Assets:
|
2012
|
||||
|
Valuation allowance
|
$
|
-
|
||
|
Registration Fee for start-up costs
|
-
|
|
||
|
Net deferred tax assets
|
$
|
-
|
||
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible.
14
FORWARD LOOKING INFORMATION
This section and other parts of this Form 10-Q quarterly report includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, that involves risks and uncertainties. All statements other than statements of historical facts, included in this Form 10-Q that address activities, events, or developments that we expect or anticipate will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strength, goals, expansion and growth of our business and operations, plans, references to future success, reference to intentions as to future matters, and other such matters are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors that we believe are appropriate in the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks, uncertainties, and other factors, many of which are beyond our control.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, we do not assume responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this report to conform such statements to actual results.
BASIS OF PRESENTATION
The unaudited financial statements of Liberated Energy, Inc. formerly Mega World Food Holding Company, a Nevada corporation (“Liberated”, “Mega World.”, “the Company”, “our”, or “we”) for the period ended December 31, 2012, should be read in conjunction with the notes thereto. In the opinion of management, the unaudited financial statements presented herein reflect all adjustments (consisting only of normal recurring adjustments) necessary for fair presentation. Interim results are not necessarily indicative of results to be expected for the entire year.
We prepare our financial statements in accordance with U.S. generally accepted accounting principals, which require that management make estimates and assumptions that affect reported amounts. Actual results could differ from these estimates.
Certain statements contained below are forward-looking statements (rather than historical facts) that are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.
Results of Operations
For the three months ended June 30, 2013 vs. June 30, 2012:
Revenue
Revenues are recognized from product sales upon shipment, which is the point in time when risk of loss is transferred to the customer, net of estimated returns and allowances.
For the three months ended June 30, 2013 and June 30, 2012, the Company had no revenues, respectively.
Cost of Revenue
For the three months period ended June 30, 2013 and June 30, 2012, the total cost of goods sold was $0, respectively.
15
Expense
Our operating expenses consist of selling, general and administrative expenses.
For three month period ending June 30, 2013, we incurred a total of $4,259 general and administrative expenses.
For three month period ending June 30, 2012, there was a total of $35,889 operating expenses, which include rent expense, legal fee, and the Company’s registration fees.
We expect selling, general, and administrative expenses to increase as we begin making sales.
Income Taxes
We are subject to income taxes in the U.S. Due to the accumulative net loss, we are not subject to any income taxes yet.
Net Income(Loss)
As a result of the foregoing, we incurred a net loss of $4,259 for the three month period ended June 30, 2013, and net loss of $35,889 or the three month period ended June 30, 2012, respectively.
We expect selling, general, and administrative expenses to increase in future periods as we initiate a number of marketing and promotional activities.
For the nine months ended June 30, 2013 vs. June 30, 2012:
Revenue
Revenues are recognized from product sales upon shipment, which is the point in time when risk of loss is transferred to the customer, net of estimated returns and allowances.
For the nine months ended June 30, 2013 and June 30, 2012, the Company incurred no revenue, respectively.
Cost of Revenue
For the nine months period ended June 30 , 2013 and June 30, 2012, the total cost of goods sold was $0, respectively.
16
Expense
Our operating expenses consist of selling, general and administrative expenses.
For nine month period ending June 30, 2013, we incurred a total of $5,111 general and administrative expenses.
For nine month period ending June 30, 2012, there was a total of $73,409 operating expenses, which include rent expense, legal fee, and the Company’s registration fees.
We expect selling, general, and administrative expenses to increase as we begin making sales.
Income Taxes
We are subject to income taxes in the U.S. Due to the accumulative net loss, we are not subject to any income taxes yet.
Net Income(Loss)
As a result of the foregoing, we incurred a net loss of $5,111 for the nine month period ended June 30, 2013, and net loss of $73,409 or the nine month period ended June 30, 2012, respectively.
We expect selling, general, and administrative expenses to increase in future periods as we initiate a number of marketing and promotional activities.
|
Item 3. Quantitative and Qualitative Disclosure about Market Risk
|
Not applicable.
|
Item 4. Controls and Procedures.
|
Evaluation of Disclosure Controls and Procedures
The Company has established disclosure controls and procedures to ensure that information required to be disclosed in this quarterly report on Form 10-Q was properly recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. The Company’s controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers to allow timely decisions regarding required disclosure. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) at March 31, 2013 based on the evaluation of these controls and procedures required by paragraph (b) of Rule 13a-15 or Rule 15d-15 under the Exchange Act. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, at March 31 , 2013, our disclosure controls and procedures are not effective.
17
Changes in Internal Control over Financial Reporting
There have been no changes in the Company's internal control over financial reporting that occurred during the Company's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
Trading market
Our common stock is quoted on the OTC Electronic Bulletin Board (OTCBB) under the symbol LIBE.
Dividend Policy
We have never paid dividends. We do not intend to declare any dividends in the foreseeable future. We presently intend to retain earnings, if any, for the development and expansion of our business.
CRITICAL ACCOUNTING POLICIES & ESTIMATES
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. However, future events are subject to change, and the best estimates and judgments routinely require adjustment. The amounts of assets and liabilities reported in our balance sheet, and the amounts of revenues and expenses reported for each of our fiscal periods, are affected by estimates and assumptions which are used for, but not limited to, the accounting for allowance for doubtful accounts, goodwill and intangible asset impairments, restructurings, inventory and income taxes. Actual results could differ from these estimates. The following critical accounting policies are significantly affected by judgments, assumptions and estimates used in the preparation of our consolidated financial statements.
Use of Estimates
It is important to note that when preparing the financial statements in conformity with U.S. generally accepted accounting principles, management is required to make certain estimates and assumptions that affect the amounts reported and disclosed in the financial statements and related notes. Actual results could differ if those estimates and assumptions approve to be incorrect.
On an ongoing basis, we evaluate our estimates, including those related to estimated customer life, used to determine the appropriate amortization period for deferred revenue and deferred costs associated with licensing fees, the useful lives of property and equipment and our estimates of the value of common stock for the purpose of determining stock-based compensation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
Off- Balance Sheet Arrangements
We did not have any off-balance sheet arrangements that have or 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 material to investors.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of 90 days or less to be cash equivalents to the extent the funds are not being held for investment purposes.
GOING CONCERN QUALIFICATION
In their Independent Auditor's Report for the fiscal years ending September 30 , 2012 and 2011 Enterprise CPAs, Ltd. stated that several conditions and events cast substantial doubt about our ability to continue as a “going concern.”
18
Market risk is the risk of loss from adverse changes in market prices and rates. The Company’s market risk arises primarily from the fact that the area in which we do business is highly competitive and constantly evolving. The market in which we do business is highly competitive and constantly evolving. We face competition from the larger and more established companies, from companies that have greater resources, including but not limited to, more money, and greater ability to expand their markets also cut into our potential customers. Many of our competitors have longer operating histories, significantly greater financial strength, nationwide advertising coverage and other resources that we do not have.
Options, Warranties and Other Equity Items
There are no outstanding options or warrants to purchase, nor any securities convertible into, the our common shares. Additionally, there are no shares that could be sold pursuant to Rule 144 under the Securities Act or that we had agreed to register under the Securities Act for sale by security holders. Further, there are no common shares of the Company being, or proposed to be, publicly offered by the Company.
Market Information
Our common stock is quoted on the OTC Electronic Bulletin Board under the symbol LIBE.
Evaluation of disclosure controls and procedures.
Management is responsible for establishing and maintaining adequate controls over financial reporting. The Company’s disclosure controls and procedures are designed to ensure (i) that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act of 1934, as amended (the “Exchange Act”), are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms; and (ii) that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and may find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the company’s operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.
19
Pursuant to rules adopted by the SEC as directed by Section 302 of the Sarbanes-Oxley Act of 2002, the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e)) as of June 30, 2013. In making this assessment, our Chief Executive Officer and Chief Financial Officer used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework.
Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of that date, the Company’s disclosure controls and procedures required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15, were not effective at a reasonable assurance level. Management’s assessment identified the following material weaknesses:
|
·
|
As of June 30, 2013, there was a lack of segregation of duties, in that we had only one person performing all accounting-related duties.
|
|
·
|
As of June 30, 2013, there were no independent directors and no independent audit committee.
|
Notwithstanding the existence of these material weaknesses in our internal control over financial reporting, our management believes that the financial statements included in its reports fairly present in all material respects the Company’s financial condition, results of operations and cash flows for the periods presented. We continue to evaluate the effectiveness of internal controls and procedures on an on-going basis. We plan to further address these issues once we commence operations and are able to hire additional personnel in financial reporting.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the quarter ended June 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
None
The Company is not required to provide the information required by this item as it is a smaller reporting company.
None.
None
None
|
EXHIBIT INDEX
|
||||||
|
Incorporated by
|
||||||
|
Reference
|
||||||
|
Filing Date/
|
||||||
|
Exhibit
|
Period End
|
|||||
|
Number
|
Exhibit Description
|
Form
|
Date
|
|||
| 3.1 | Articles of Incorporation as filed with the Nevada Secretary of State dated September 14, 2010 | S-1 | 12/8/2010 | |||
| 3.2 | Amended Articles of Incorporation as filed with the Nevada Secretary of State dated January 25, 2015 | 8-K | 2/7/2013 | |||
| 3.3 | Certificate of Change as filed with the Nevada Secretary of State dated January 26, 2013 | 8-K | 2/7/2013 | |||
| 3.4 | By-laws | S-1 | 12/8/2010 | |||
| 10.1 | Patent Acquisition Agreement dated January 19, 2013 | 8-K | 1/24/2013 | |||
Reports on Form 8-K
|
Description
|
Form
|
Filing Date
|
||
| None |
21
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.
|
PEGASUS TEL, INC.
|
||
| Date: August 16, 2013 | ||
|
By:
|
/s/ FRANK PRINGLE
|
|
| Frank Pringle | ||
| President, Director, Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: August 16, 2013 | By: | /s/ ELYSE THOMPSON |
| Elyse Thompson | ||
| Chief Financial Officer | ||
| (Principal Financial Officer | ||
| and Principal Accounting Officer) | ||
22