UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

 

For the transition period from                    to                   

 

Commission File Number: 333-183659

 

CES Synergies, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Nevada		460839941
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
39646 Fig Street  P.O. Box 1299 Crystal Springs, FL		33524
(Address of Principal Executive Offices)		(Zip Code)

 

 

Registrant’s telephone number including area code: 813-788-1688

 

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 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 during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files.  Yes [X]  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.

 

Large accelerated filer [   ]		Accelerated filer [   ]
Non-accelerated filer [   ]  (Do not check if a smaller reporting company)		Smaller reporting company [X]

 

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

 

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:

Class		Outstanding as of November 9, 2013
Common Stock, $0.001 par value		46,525,000

 

 

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CES SYNERGIES, INC.

 

TABLE OF CONTENTS

  

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PART 1 – FINANCIAL INFORMATION

 

 

ITEM 1.  FINANCIAL STATEMENTS

 

 GREEN LIVING CONCEPTS INC.

(A Development Stage Company)

September 30, 2013

(Unaudited)

 

 

Index to

Consolidated Financial Statements

 

 

 

 

			GREEN LIVING CONCEPTS INC.
			(A DEVELOPMENT STAGE COMPANY)
			CONSOLIDATED BALANCE SHEETS (Unaudited)

 

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GREEN LIVING CONCEPTS INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

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GREEN LIVING CONCEPTS INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE PERIOD FROM INCEPTION (APRIL 26, 2010)

THROUGH SEPTEMBER 30, 2013 (Unaudited)

 

 

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GREEN LIVING CONCEPTS INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

7

 

GREEN LIVING CONCEPTS INC.

(A DEVELOPMENT STAGE COMPANY)

SEPTEMBER 30, 2013

(Unaudited)

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – organization and operations

 

Green Living Concepts Inc.

Green Living Concepts Inc. (the “Company” or “GLCI”), was incorporated under the laws of the State of Nevada on April 26, 2010 (“Inception”). The Company specializes in assisting commercial and residential clients build and/or remodel their projects with sustainable and energy efficient solutions. The Company also provides assessment services that include a physical inspection, analysis and recommendations on improving sustainability of a business or residence.

Formation of Green Living Concepts (Canada) Inc.

On May 26, 2010, the Company formed a wholly owned subsidiary, Green Living Concepts Inc., an Ontario, Canada Corporation (“GLCI Canada”). GLCI Canada uses the U.S. Dollar as its reporting currency as well as its functional currency, however from time to time, GLCI Canada, incurs certain expenses in Canadian Dollars.

Note 2 – summary of significant accounting policies

Basis of presentation – unaudited interim financial information

The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim consolidated financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.  Unaudited interim results are not necessarily indicative of the results for the full fiscal year.  These unaudited interim consolidated financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended March 31, 2013 and notes thereto contained in the information as part of the Company’s Annual Report on the Form 10-K which was filed with the Securities and Exchange Commission on June 10, 2013.

Principles of consolidation

The accompanying consolidated financial statements include the accounts of Green Living Concepts Inc. and its subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

 

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Development stage company

The Company is a development stage company as defined by section 915-10-20 of the FASB Accounting Standards Codification.  Although, the Company has generated revenues it has incurred operating expenses and expenses associated with implementation of its business plan resulting in net operating losses for the reported periods and accumulated deficit since inception. The Company is devoting substantially all of its efforts on generating revenues and implementation of its business plan.  All losses accumulated since inception have been considered as part of the Company’s development stage activities.

Use of estimates and assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

The Company’s significant estimates and assumptions include the fair value of financial instruments; the carrying value, recoverability and impairment, if any, of long-lived assets, including the values assigned to and the estimated useful lives of computer equipment; income tax rate, income tax provision and valuation allowance of deferred tax assets; its wholly-owned subsidiary’s functional currency and foreign currency exchange rate; and the assumption that the Company will continue as a going concern.  Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Management regularly reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly.  Actual results could differ from those estimates.

Fair value of financial instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements.  To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1		Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2		Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3		Pricing inputs that are generally observable inputs and not corroborated by market data.

 

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Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amount of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses, accounts payable, accrued expenses, and payroll taxes payable approximate their fair value because of the short maturity of those instruments.  

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

It is not however practical to determine the fair value of advances from stockholders due to their related party nature.

Carrying value, recoverability and impairment of long-lived assets

The Company has adopted paragraph 360-10-35-17 of the FASB Accounting Standards Codification for its long-lived assets. The Company’s long-lived assets, which include office equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets.  Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.  If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.

The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes.  The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

The impairment charges, if any, is included in operating expenses in the accompanying consolidated statements of income and comprehensive income (loss).

Fiscal year end

The Company elected March 31 as its fiscal year end date.

Cash and cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less to be cash and cash equivalents.

Accounts receivable and allowance for doubtful accounts

Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts.  The Company follows paragraph 310-10-50-9 of the FASB Accounting Standards Codification to estimate the allowance for doubtful accounts.  The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and economic conditions.

Outstanding account balances are reviewed individually for collectability.  The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. Bad debt expense is included in general and administrative expenses, if any.  Pursuant to paragraph 310-10-50-2 of the FASB Accounting Standards Codification account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.  The Company has adopted paragraph 310-10-50-6 of the FASB Accounting Standards Codification and determine when receivables are past due or delinquent based on how recently payments have been received.

At September 30, 2013 and 2012, there was no allowance for doubtful accounts. The Company does not have any off-balance-sheet credit exposure to its customers.

Office equipment

Office equipment is recorded at cost. Expenditures for major additions and betterments are capitalized.  Maintenance and repairs are charged to operations as incurred. Depreciation of office equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful life of five (5) years.  Upon sale or retirement of office equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.

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Related parties

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

Pursuant to Section 850-10-20 the Related parties include a. affiliates of the Company; b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d.principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include:  a. the nature of the relationship(s) involved; b. description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. mounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Commitments and contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur.  The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.  In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements.  If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.  Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

Revenue recognition

The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company recognizes revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

The Company derives its revenues from sales contracts with its customer with revenues being generated upon rendering of services.  Persuasive evidence of an arrangement is demonstrated via invoice; service is considered provided when the service is delivered to the customers; and the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive.

Foreign currency transactions

The Company applies the guidelines as set out in Section 830-20-35 of the FASB Accounting Standards Codification (“Section 830-20-35”) for foreign currency transactions.  Pursuant to Section 830-20-35 of the FASB Accounting Standards Codification, foreign currency transactions are transactions denominated in currencies other than the U.S. Dollar, which is the Company’s reporting currency and functional currency.  Foreign currency transactions may produce receivables or payables that are fixed in terms of the amount of foreign currency that will be received or paid.  

A change in exchange rates between the reporting currency and the currency in which a transaction is denominated increases or decreases the expected amount of reporting currency cash flows upon settlement of the transaction. That increase or decrease in expected reporting currency cash flows is a foreign currency transaction gain or loss that generally shall be included in determining net income for the period in which the exchange rate changes. Likewise, a transaction gain or loss (measured from the transaction date or the most recent intervening balance sheet date, whichever is later) realized upon settlement of a foreign currency transaction generally shall be included in determining net income for the period in which the transaction is settled. The exceptions to this requirement for inclusion in net income of transaction gains and losses pertain to certain intercompany transactions and to transactions that are designated as, and effective as, economic hedges of net investments and foreign currency commitments.  Pursuant to Section 830-20-25 of the FASB Accounting Standards Codification, the following shall apply to all foreign currency transactions of an enterprise and its investees: (a) at the date the transaction is recognized, each asset, liability, revenue, expense, gain, or loss arising from the transaction shall be measured and recorded in the functional currency of the recording entity by use of the exchange rate in effect at that date as defined in section 830-10-20 of the FASB Accounting Standards Codification; and (b) at each balance sheet date, recorded balances that are denominated in currencies other than the functional currency or reporting currency of the recording entity shall be adjusted to reflect the current exchange rate.

 

 

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GLCI Canada uses the U.S. Dollar as its reporting currency as well as its functional currency, however from time to time, GLCI Canada, incurs certain expenses in Canadian Dollars. The change in exchange rates between the U.S. Dollar and the Canadian Dollar, the currency in which a transaction is denominated increases or decreases the expected amount of reporting currency cash flows upon settlement of the transaction. That increase or decrease in expected reporting currency cash flows is a foreign currency transaction gain or loss that generally is included in determining net income (loss) for the period in which the exchange rate changes.

Income taxes

The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.

The Company adopted the provisions of paragraph 740-10-25-13 of the FASB Accounting Standards Codification. Paragraph 740-10-25-13 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement.  Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

The Company did not take any uncertain tax positions and had no unrecognized tax liabilities or benefits in accordance with the provisions of Section 740-10-25 at September 30, 2013 and 2012.

Net income (loss) per common share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.   Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.  Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

There were no potentially dilutive shares outstanding for the six months ended September 30, 2013 and 2012 or for the period from April 26, 2010 (inception) through September 30, 2013.

 

 

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Cash flows reporting

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.  The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.

Subsequent events

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued.  Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

Recently issued accounting pronouncements

In January 2013, the FASB issued ASU No. 2013-01, "Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities". This ASU clarifies that the scope of ASU No. 2011-11, "Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities." applies only to derivatives, repurchase agreements and reverse purchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with specific criteria contained in FASB Accounting Standards Codification or subject to a master netting arrangement or similar agreement. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013.

In February 2013, the FASB issued ASU No. 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income." The ASU adds new disclosure requirements for items reclassified out of accumulated other comprehensive income by component and their corresponding effect on net income. The ASU is effective for public entities for fiscal years beginning after December 15, 2013.

In February 2013, the Financial Accounting Standards Board, or FASB, issued ASU No. 2013-04, "Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for which the Total Amount of the Obligation Is Fixed at the Reporting Date."  This ASU addresses the recognition, measurement, and disclosure of certain obligations resulting from joint and several arrangements including debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The ASU is effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2013.

In March 2013, the FASB issued ASU No. 2013-05, "Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity." This ASU addresses the accounting for the cumulative translation adjustment when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. The guidance outlines the events when cumulative translation adjustments should be released into net income and is intended by FASB to eliminate some disparity in current accounting practice. This ASU is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013.

In July 2013, the FASB issued ASU 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" ("ASU 2013-11"). The amendments in ASU 2013-11 require companies to present an unrecognized tax benefit, or a portion thereof, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward, unless the uncertain tax position is not available to reduce, or would not be used to reduce, the net operating loss or tax credit carryforward under the tax law in the same jurisdiction; otherwise, the unrecognized tax benefit should be presented as a gross liability and should not be combined with a deferred tax asset. ASU 2013-11 is effective for annual periods beginning after December 15, 2013 and should be applied to all unrecognized tax benefits that exist as of the effective date. Companies may choose to apply this guidance retrospectively to each prior reporting period presented. The Company is currently evaluating the potential impact of this update.

Note 3 – going concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As reflected in the accompanying consolidated financial statements, the Company had a deficit accumulated during the development stage at September 30, 2013 and 2012 a net loss and net cash used in operating activities for the fiscal periods then ended.

 

 

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

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

Note 4 – office equipment

Office equipment, stated at cost, less accumulated depreciation at September 30, 2013 and 2012 consisted of the following:

	Estimated Useful Lives (Years)			September 30, 2013		September 30, 2012
Office equipment	5	$		-		$	2,472
Less accumulated depreciation				-			(248	)
		$		-		$	2,224

 

On August 29, 2013, office equipment with net book value of $1,773 was disposed of pursuant to the terms of the settlement of amounts due to stockholders and officers of the Company.

Depreciation expense

Depreciation expense for the six months ended September 30, 2013 and 2012 was $204 and $248 respectively.

Note 5 – related party transactions

Consulting services from President and Chief Financial Officer

 

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Consulting services provided by the former President and Chief Financial Officer for the six months ended September 30, 2013 and 2012 were as follows:

		For the Six Months Ended September 30, 2013		For the Six Months Ended September 30, 2013
President	$	2,000	$	1,200
Chief Financial Officer		2,000		1,200
	$	4,000	$	2,400

* A portion of consulting services directly related to sales provided by the former President and Chief Financial Officer totaling $2,000 and $2,400 was reported  as cost of sales as of September 30, 2013 and 2012 respectively.

Advances from Former Stockholders

From time to time, the former President and Chief Executive Officer and stockholders of the Company provided advances to the Company for its working capital purposes. Those advances bore no interest and were due on demand.

The former President and stockholder of the Company advanced $45,561 to the Company for the period from April 1, 2013 through August 29, 2013, the date of change in control and the Company did not make any repayment toward these advances.

Forgiveness of Advances from Former Stockholders and Accrued Compensation – Former Officers

On August 29, 2013, pursuant to the terms of the Stock Purchase Agreements, the former President and stockholders, forgave advances of $45,561 and accrued compensation of $21,600, respectively or $67,161 in aggregate. This amount, net of book value of office equipment of $1,773 disposed of as part of the settlement, was recorded as contributions to capital.

 

Note 6 – stockholders’ equity (deficit)

Shares authorized

The total number of shares of all classes of stock which the Company is authorized to issue is seventy-five million (75,000,000) shares of common stock, par value $.001 per share.

Common stock

On June 1, 2011, the Company sold 3,500,000 shares of its common stock at par to one of the directors for $3,500 in cash. On June 14, 2011, the Company sold 3,500,000 shares of its common stock at par to the other director for $3,500 in cash.

During the year ended March 31, 2013, the Company’s Registration Statement on the Form S-1/A filed with the Securities and Exchange Commission was declared effective. As at March 31, 2013 the Company has received $26,800 in share subscription funds. This offering was closed during the six months ended September 30, 2013.  The Company has sold 4,525,000 common shares at $0.008 per share for total proceeds of $36,200.

 

 

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Note 7 – subsequent events

On November 1, 2013 (the “Closing Date”), the Company entered into and closed an Agreement and Plan of Merger (the “Merger Agreement”), with CES Acquisitions, Inc., a Florida corporation and wholly-owned subsidiary of the Company (the “Subsidiary”) and Cross Environmental Services, Inc. (“CES”). Pursuant to the Merger Agreement, the Subsidiary merged into CES, such that CES became a wholly-owned subsidiary of the Company (the “Merger”), and the Company issued 35,000,000 shares of the Company’s common stock to the shareholders of CES (the “Acquisition Shares”), representing approximately 75.2% of the Company’s aggregate issued and outstanding common stock following the closing of the Merger Agreement.

 

The chief executive officer and majority stockholder (prior to the Merger) of CES is Clyde A. Biston, who has been the Company’s chief executive officer since September 10, 2013 and majority stockholder since August 29, 2013.

 

In connection with the Merger Agreement, the Company relied upon the exemption from securities registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), for transactions not involving a public offering.

 

In connection with the Merger Agreement, in addition to the foregoing:

  

(i)  Effective on the Closing Date (except as otherwise indicated), the following individuals were appointed as executive officers and directors of the Company:

	Name	Position
	Clyde A. Biston*	Chief Executive Officer, Chairman
	Sharon Rosenbauer	Chief Financial Officer, Treasurer, Vice President, Director
	John Tostanoski	President, Director
	James Everett	Chief Operating Officer, Secretary, Director
	James Smith	Vice President
	Jeff Chartier	Director

 

 

 

 

 

 

 

* Clyde A. Biston was appointed Chief Executive Officer and Chairman on September 10, 2013.

ii) The Company filed articles of merger with the Secretary of State of Nevada, pursuant to which, effective November 8, 2013, the Company’s wholly-owned subsidiary, CES Synergies, Inc. (formed solely for the purpose of effecting a change in the Company’s name) merged with and into the Company, and the Company’s name  changed to CES Synergies, Inc.

 

(iii) Effective November 1, 2013, the Company sold all of the capital stock of Green Living Concepts Inc., an Ontario, Canada corporation, to Strategic Universal Group Inc. for $1.

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

 

Forward-Looking Statements and Associated Risks.

 

The following discussion should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains certain statements that are forward-looking. Certain statements contained in the MD&A are forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in other sections of this Quarterly Report on Form 10-Q.

 

Our Business

 

CES Synergies, Inc. (formerly known as Green Living Concepts Inc.) was, during the period covered by this report, a consulting firm specializing in construction and renovation with an eco-conscious focus.

 

On November 1, 2013 (the “Closing Date”), the Company entered into and closed an Agreement and Plan of Merger (the “Merger Agreement”), with CES Acquisitions, Inc., a Florida corporation and wholly-owned subsidiary of the Company (the “Subsidiary”) and Cross Environmental Services, Inc. (“CES”). Pursuant to the Merger Agreement, the Subsidiary merged into CES, such that CES became a wholly-owned subsidiary of the Company (the “Merger”), and the Company issued 35,000,000 shares of the Company’s common stock to the shareholders of CES (the “Acquisition Shares”), representing approximately 75.2% of the Company’s aggregate issued and outstanding common stock following the closing of the Merger Agreement.

The chief executive officer and majority stockholder (prior to the Merger) of CES is Clyde A. Biston, who has been the Company’s chief executive officer since September 10, 2013 and majority stockholder since August 29, 2013.

  

In connection with the Merger Agreement, in addition to the foregoing:

  

(i)  Effective on the Closing Date (except as otherwise indicated), the following individuals were appointed as executive officers and directors of the Company:

 

 

 

 

 

 

 

* Clyde A. Biston was appointed Chief Executive Officer and Chairman on September 10, 2013.

 

(ii) The Company filed articles of merger with the Secretary of State of Nevada, pursuant to which, effective November 8, 2013, the Company’s wholly-owned subsidiary, CES Synergies, Inc. (formed solely for the purpose of effecting a change in the Company’s name) will merge with and into the Company, and the Company’s name will change to CES Synergies, Inc.

 

(iii) Effective November 1, 2013, the Company sold all of the capital stock of Green Living Concepts Inc., an Ontario, Canada corporation, to Strategic Universal Group Inc. for $1.

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CES is a full-service environmental, asbestos abatement, demolition, and mold remediation services company. On November 1, 2013, CES became a wholly owned subsidiary of the Company pursuant to the Merger. Effective upon the Closing Date, the business of CES became the business of the Company.

 

This Management’s Discussion and Analysis relates to the operations of the Company prior to the closing of the Merger Agreement.

 

Results of operations for the three months ended September 30, 2013 compared to the three months ended September 30, 2012.

 

Revenue

 

We generate revenue from consulting services. Our gross revenue for the three months ended September 30, 2013, was $6,480, compared to $10,380 for the same period in our fiscal 2012. 

 

During the three months ended September 30, 2013 and 2012 our revenue derived from consulting assessment services on sustainability and energy efficiency of business premises. Our cost of revenues for the three-month period ended September 30, 2013, was $800 (September 30, 2012: $9,681) resulting in a gross profit of $5,680 (September 30, 2012: $699).

 

Operating Costs and Expenses

 

The major components of our expenses for the three months ended September 30, 2013 and 2012 are outlined in the table below:

 

 

 

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The decrease in our operating costs for the three months ended September 30, 2013, compared to the same period in our fiscal 2012, was due to primarily to a decrease in salary expenses arising from reduction in staffing in anticipation of the Agreement and Plan of Merger with CES Acquisitions, Inc.  There were minor reductions in depreciation ($45), professional fees ($753) and officer compensation ($400), offset by a $672 increase other general and administrative expenses.

 

The President of the Company provides management consulting services to the Company. During the three months ended September 30, 2013, management consulting services of $800 (September 30, 2012: $1,200) were charged to operations. The Chief Financial Officer of the Company provides consulting services to the Company. During the three months ended September 30, 2013, consulting services of $800 (September 30, 2012: $600) were charged to operations. A portion of consulting services directly related to sales provided by the President and Chief Financial Officer totaling $800 was reported as cost of sales as of September 30, 2013, and $600 in 2012.

 

Other expenses of $2,026 (September 30, 2012: $1,354) represent bank charges of $86, filing fees of $1,380 and office rent of $560. The increase in these costs was attributable to implementation of our business plan and general corporate activities. In addition to operating expenses, the company incurred $43 in foreign currency transaction losses in the three months ended September 30, 2013, compared to a loss of $134 in the corresponding period in 2012.

 

Results of operations for the six months ended September 30, 2013 compared to the six months ended September 30, 2012.

 

Revenue

 

We generate revenue from consulting services. Our gross revenue for the six months ended September 30, 2013, was $12,120, compared to $17,640 for the same period in our fiscal 2012. 

During the six months ended September 30, 2013 and 2012 our revenue derived from consulting assessment services on sustainability and energy efficiency of business premises. Our cost of revenues for the six-month period ended September 30, 2013, was $2,000 (September 30, 2012: $10,881) resulting in a gross profit of $10,120 (September 30, 2012: $6,759).

 

Operating Costs and Expenses

 

The major components of our expenses for the six months ended September 30, 2013 and 2012 are outlined in the table below:

 

The increase in our operating costs for the six months ended September 30, 2013, compared to the same period in our fiscal 2012, was due to primarily to an increase in professional fees related to the Agreement and Plan of Merger with CES Acquisitions, Inc.  We incurred $22,051 (September 30, 2012: $8,050) in professional fees during the six months ended September 30, 2013.  These fees consisted of accounting and audit fees of $8,250, legal fees of $1,330 and transfer agent fees of $12,471.  Other General and administrative expenses decreased in anticipation of the merger with CES.

 

 

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The President of the Company provides management consulting services to the Company. During the six months ended September 30, 2013, management consulting services of $2,000 (September 30, 2012: $1,200) were charged to operations. The Chief Financial Officer of the Company provides consulting services to the Company. During the six months ended September 30, 2013, consulting services of $2,000 (September 30, 2012: $1,200) were charged to operations. A portion of consulting services directly related to sales provided by the President and Chief Financial Officer totaling $2,000 was reported as cost of sales as of September 30, 2013, and $2,400 in2012.

Other expenses of $5,374 (September 30, 2012: $1,780) represent bank charges of $334, filing fees of $3,370 and office rent of $1,670. The increase in these costs was attributable to implementation of our business plan and general corporate activities. In addition to operating expenses, the company incurred $554 in foreign currency transaction losses as of September 30, 2013.

 

Liquidity and Capital Resources

 

 

Cash Flows

 

The table below, for the periods indicated, provides selected cash flow information:

  

 

We generated revenues of $12,120 during the six months ended September 30, 2013 and $17,640 during the same period in our fiscal 2012. We received $36,200 from the issuance of common stock, offset by a reduction of $26,800 in share subscription funds during the six months ended September 30, 2013. No shares were sold during the six months ended September 30, 2012.  Our stockholders also advanced us $45,561 during the six months ended September 30, 2013.  No shareholder advances were made during the six months ended September 30, 2012.  We had no other sources of cash inflow during the reporting periods. 

 

 

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Cash Flows from Operating Activities

 

Our cash flows from operating activities represent the most significant source and use of funding for our operations. The major uses of our operating cash include funding payroll (salaries, bonuses and benefits), general operating expenses (marketing, travel, computer, legal and professional expenses, and office rent) and cost of revenues. Our cash provided by operating activities generally follows the trend in our net revenues and operating results.

 

Our net cash used in operating activities of $81,853 for the six months ended September 30, 2013 was primarily the result of our net loss of $36,395 plus a reduction of accounts payable and accrued liabilities totaling $48,768.  Non-cash charges such as depreciation and amortization, changes in prepaid expenses, and an increase in payables owed by a related party generated $3,310 in operating cash for the six months ended September 30, 2013.  These increases were offset by a $1,014 decrease in payroll taxes.

 

Cash Flows from Investing Activities

 

We did not generate any cash from investing activities during the six months ended September 30, 2013. The only cash used in investing activities in 2012 was $2,472 in cash that we paid for the purchase of the computer equipment during the six months ended September 30, 2012.  

 

Cash Flows from Financing Activities

 

During the year ended March 31, 2013, the Company’s Registration Statement on the Form S-1/A filed with the Securities and Exchange Commission was declared effective.  As at March 31, 2013 the Company received $26,800 in share subscription funds. This offering was closed during the six months ended September 30, 2013.  The Company has sold 4,525,000 common shares at $0.008 per share for total proceeds of $36,200 pursuant to this Registration Statement.

No cash was generated or used by financing activities during the six months ended September 30, 2012.

Recent Accounting Pronouncements 

 

See Note 2 to the Financial Statements.

 

Off Balance Sheet Arrangements

 

As of September 30, 2013, we did not have any significant off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

 

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ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report.  Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared.

 

Changes in Internal Control over Financial Reporting

 

During the quarter ended September 30, 2013, there has been no change in our internal control over financial reporting (as defined in Rule  13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected,  or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

ITEM 1.  LEGAL PROCEEDINGS.

 

We are not party to any material legal proceedings.

 

ITEM 1A. RISK FACTORS.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item. 

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

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ITEM 5. OTHER INFORMATION.

 

None.

 

ITEM 6. EXHIBITS
 

The following documents are filed as a part of this report or are incorporated by reference to previous filings, if so indicated:

 

EXHIBIT

NUMBER                   DESCRIPTION

31.1		Certification of the Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a)
31.2		Certification of the Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a)
32.1		Certification of the Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
32.2		Certification of the Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

EX-101.INS	XBRL INSTANCE DOCUMENT
EX-101.SCH	XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
EX-101.CAL	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
EX-101.DEF	XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
EX-101.LAB	XBRL TAXONOMY EXTENSION LABELS LINKBASE
EX-101.PRE	XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

 

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.

	CES Synergies, Inc.
Date: November 12, 2013	By:	/s/ Clyde A. Biston
		Clyde A. Biston
		Chief Executive Officer (Principal Executive Officer)

 

 

Date: November 12, 2013	By:	/s/ Sharon Rosenbauer
		Sharon Rosenbauer
		Chief Financial Officer (Principal Financial Officer)

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