Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 2
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2013
Commission file number 333-171046
LIBERATED ENERGY, INC.
(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 of incorporation or organization)
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I.R.S. Employer Identification No.
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109 Burtons Road
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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Issuer’s telephone number: (609) 707-1519
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
________________
| Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. | Yes | No | X | |||
| Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. | Yes | No | X |
| 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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit | ||||||
| and post such files). | Yes | X | No | |||
| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. | X |
| 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. (Check one): | ||||||
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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X |
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(Do not check if a smaller reporting company)
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| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) | Yes | No | X | |||
State issuer’s revenues for its most recent fiscal year. $0
As of September 30, 2013, the last business day of the fiscal year, the aggregate market value of the Registrant’s voting stock held by non-affiliates was approximately $2,597,397 (based on a closing price of $0.12 per share).
As of the period ended in this report, September 30, 2013, the registrant had 72,000,000 shares of common stock outstanding.
As of the date of filing, January 13, 2014 the registrant had 72,000,000 shares of common stock outstanding.
Explanatory Note
Liberated Energy, Inc. (the “Company”) is filing this Amendment No. 2 on Form 10-K/A (the “Amendment”) to the Company’s annual report on Form 10-K for the period ended September 30, 2013 (the “Form 10-K”), filed with the Securities and Exchange Commission on January 13, 2014 (the “Original Filing Date”), solely to incorporate the financial statements to the changed Independent Registered Public Accounting Firm's Auditor's Report that was filed om March 14, 2013 with Amendment No. 1 on Form 10-K/A and the related Amemded Patent Acquisition Agreement filed with this Form 10-K/A and the related Exhibit Index.
No other changes have been made to the Form 10-K. This Amendment speaks as of the Original Filing Date, does not reflect events that may have occurred subsequent to the Original Filing Date, and does not modify or update in any way disclosures made in the Form 10-K.
1
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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LIBERATED ENERGY, INC.
(A Development Stage Enterprise)
Audited Financial Statements
AS OF SEPTEMBER 30, 2013, 2012
AND FOR THE PERIOD FROM JUNE 24, 2010
(DATE OF INCEPTION) TO SEPTEMBER 30, 2013
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Table of Contents
F-1
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Board of Directors and Shareholders of Liberated Energy, Inc.
We have audited the accompanying balance sheets of Liberated Energy, Inc. (the “Company”), as of September 30, 2013, and 2012, and the related statements of operation, shareholders’ equity, and cash flows for year ended September 30, 2013, and 2012, and the cumulative period from January 19, 2013 (date of inception of development stage) through September 30, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to in the first paragraph above, present fairly, in all material respects, the financial position of Liberated Energy, Inc. as of September 30, 2013, 2012, and the results of its operations and their cash flows for year ended September 30, 2013, and 2012, and the cumulative period from January 19, 2013 (date of inception of development stage) through September 30, 2013 in conformity with accounting principles generally accepted in the United States of America.
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.
/s/ Enterprise CPAs, Ltd.
Enterprise CPAs, Ltd.
Chicago, IL
January 13, 2014
F-2
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LIBERATED ENERGY, INC.
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(A Development Stage Company)
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Sept. 30, 2013
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Sept. 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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$ | 44,684 | $ | - | ||||
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Prepaid expense
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10,000 | - | ||||||
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Assets of discontinued operations
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- | 41,904 | ||||||
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Total current assets
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54,684 | 41,904 | ||||||
| OTHER ASSETS: | ||||||||
| Patent | 2,500 | - | ||||||
| Total other assets | 2,500 | - | ||||||
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TOTAL ASSETS
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$ | 57,184 | $ | 41,904 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
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Accounts payable and accrued expenses
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$ | 141,945 | $ | - | ||||
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Convertible note payable, net
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45,417 | - | ||||||
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Liabilities of discontinued operations
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- | 44,250 | ||||||
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Total current liabilities
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187,362 | 44,250 | ||||||
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OTHER LIABILITIES
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Loans from stockholders
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30,616 | - | ||||||
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Other liabilities of discontinued operations
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- | 88,737 | ||||||
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Total other liabilities
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30,616 | 88,737 | ||||||
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TOTAL LIABILITIES
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217,978 | 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 $0.001 per share;
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96,500,000 shares issued, 72,000,000 shares outstanding, of
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which 24,500,000 shares are held in treasury at September 30, 2013
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and 25,000,000 shares issued and oustanding at September 30, 2012
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72,000 | 25,000 | ||||||
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Additional paid-in-capital
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9,125 | 73,125 | ||||||
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Deficit accumulated during the development stage
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(168,294 | ) | - | |||||
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Accumulated deficit from discontinued operations
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(73,625 | ) | (189,248 | ) | ||||
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Accumulated other comprehensive income
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- | 40 | ||||||
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TOTAL STOCKHOLDERS' DEFICIT
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(160,794 | ) | (91,083 | ) | ||||
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TOTAL LIABILITIES AND EQUITY
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$ | 57,184 | $ | 41,904 | ||||
The accompanying notes are an integral part of these statements.
F-3
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LIBERATED ENERGY, INC.
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(A Development Stage Company)
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STATEMENT OF OPERATIONS
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Cumulative from
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January 19, 2013
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(Date of Inception
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For the Year Ended
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of Development
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September 30,
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Stage) to
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2013
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2012
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September 30, 2013
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Revenues
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$ | - | $ | - | $ | - | ||||||
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Cost of goods sold
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- | - | - | |||||||||
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Gross profit
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- | - | - | |||||||||
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General and administrative expenses
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167,877 | - | 167,877 | |||||||||
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Operating loss
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(167,877 | ) | - | (167,877 | ) | |||||||
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Other expense:
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Interest expense
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417 | - | 417 | |||||||||
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Total other expense
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417 | - | 417 | |||||||||
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Net loss from continuing operations before taxes
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(168,294 | ) | - | (168,294 | ) | |||||||
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Provision for income taxes
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- | - | - | |||||||||
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Net loss from continuing operations
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(168,294 | ) | - | (168,294 | ) | |||||||
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Income (loss) from discontinued operations, net of taxes
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91,123 | (100,496 | ) | |||||||||
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Net loss
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$ | (77,171 | ) | $ | (100,496 | ) | ||||||
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Income (loss) per common share - basic
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| Loss from continuing operations per common share * | $ | - | * | $ | - | |||||||
| Income (loss) from discontinued operations per common share * | $ | - | * | $ | - | |||||||
| Income (loss) per common share - basic * | $ | - | * | $ | - | |||||||
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Income (loss) per common share - diluted
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| Loss from continuing operations per common share * | $ | - | * | $ | - | |||||||
| Income (loss) from discontinued operations per common share * | $ | - | * | $ | - | |||||||
| Income (loss) per common share - diluted * | $ | - | * | $ | - | |||||||
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* = Amount less than $(0.01)
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Weighted Average Shares Outstanding
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72,000,000 | 25,000,000 | ||||||||||
The accompanying notes are an integral part of these statements.
F-4
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LIBERATED ENERGY, INC.
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(A Development Stage Company)
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Cumulative from
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January 19, 2013
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(Date of Inception
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For the Year Ended
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of Development
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September 30,
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Stage) to
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2013
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2012
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September 30, 2013
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss
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$ | (77,171 | ) | $ | (100,496 | ) | $ | (77,171 | ) | |||
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Plus (income) loss from discontinued operations, net of taxes
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(91,123 | ) | 100,496 | (91,123 | ) | |||||||
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Adjustments to reconcile net loss to net cash provided by (used in)
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operating activities:
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Amortization of debt discount
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417 | - | 417 | |||||||||
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(Increase) decrease in assets:
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Prepaid expenses
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(10,000 | ) | - | (10,000 | ) | |||||||
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Increase (decrease) in assets:
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Accounts payable
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141,945 | - | 141,945 | |||||||||
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Net cash used in operating activities - continuing operations
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(35,932 | ) | - | (35,932 | ) | |||||||
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Net cash provided by (used in) operating activities - discontinued operations
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84,873 | (54,134 | ) | 84,873 | ||||||||
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Net cash provided by (used in) operating activities
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48,941 | (54,134 | ) | 48,941 | ||||||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Proceeds from issuance of common stock warrants
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5,000 | - | 5,000 | |||||||||
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Proceeds from convertible note payable
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45,000 | - | 45,000 | |||||||||
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Proceeds from stockholder loan
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30,616 | - | 30,616 | |||||||||
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Net cash provided by financing activities - continuing operations
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80,616 | - | 80,616 | |||||||||
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Net cash provided by (used in) financing activities - discontinued operations
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(88,737 | ) | 54,082 | (88,737 | ) | |||||||
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Net cash provided by (used in) financing activities
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(8,121 | ) | 54,082 | (8,121 | ) | |||||||
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Effect of exchange rate
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(40 | ) | - | (40 | ) | |||||||
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Net increase (decrease) in cash and cash equivalents
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40,780 | (52 | ) | 40,780 | ||||||||
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Cash and cash equivalents at beginning of the period
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3,904 | 3,956 | 3,904 | |||||||||
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Cash and cash equivalents at end of the year
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$ | 44,684 | $ | 3,904 | $ | 44,684 | ||||||
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
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Cash paid for interest
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$ | - | $ | - | $ | - | ||||||
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Convertible note payable
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$ | 50,000 | $ | - | $ | 50,000 | ||||||
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Less original issue discount
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(5,000 | ) | - | (5,000 | ) | |||||||
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Proceeds from convertible note payable
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$ | 45,000 | $ | - | $ | 45,000 | ||||||
The accompanying notes are an integral part of these statements.
F-5
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LIBERATED ENERGY, INC.
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(A Development Stage Company)
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From formation (June 24, 2010) to September 30, 2013
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Deficit
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Common Stock
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Treasury Stock
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Accumulated
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Accumulated
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Additional
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During the
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Other
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Number of
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Paid-in
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Number of
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Accumulated
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Development
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Comprehensive
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Shares
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Amount
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Capital
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Shares
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Amount
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Deficit
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Stage
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Income (Loss)
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Total
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Balance on date of formation, June 24, 2010
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- | $ | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||||
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Issued common stocks to founder at $0.001 per share for organization expenses on 9/14/2010
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20,875,000 | 20,875 | - | - | - | - | - | - | 20,875 | |||||||||||||||||||||||||||
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Issued common stocks to Williams @$0.01 per share for services rendered on 9/20/2010
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250,000 | 250 | 2,250 | - | - | - | - | - | 2,500 | |||||||||||||||||||||||||||
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Issued common stocks to Jian Di @$0.01 per share for services rendered on 9/20/2010
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2,475,000 | 2,475 | 22,275 | - | - | - | - | - | 24,750 | |||||||||||||||||||||||||||
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Issued common stocks to Yuan Su and Guoyong Xu @$0.01 per share for cash on 9/20/2010
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1,000,000 | 1,000 | 9,000 | - | - | - | - | - | 10,000 | |||||||||||||||||||||||||||
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Issued common stocks to 40 shareholders @$0.10 per share for cash on 9/30/2010
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400,000 | 400 | 39,600 | - | - | - | - | - | 40,000 | |||||||||||||||||||||||||||
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Adjustment for currency rate exchange
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- | - | - | - | - | - | - | 40 | 40 | |||||||||||||||||||||||||||
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Net loss for the year ended September 30, 2010
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- | - | - | - | - | (39,053 | ) | - | - | (39,053 | ) | |||||||||||||||||||||||||
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Balance, September 30, 2010
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25,000,000 | 25,000 | 73,125 | - | - | (39,053 | ) | - | 40 | 59,112 | ||||||||||||||||||||||||||
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Net loss for the year ended September 30, 2011
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- | - | - | - | - | (49,699 | ) | - | - | (49,699 | ) | |||||||||||||||||||||||||
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Balance, September 30, 2011
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25,000,000 | 25,000 | 73,125 | - | - | (88,752 | ) | - | 40 | 9,413 | ||||||||||||||||||||||||||
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Net loss for the year ended September 30, 2012
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- | - | - | - | - | (100,496 | ) | - | - | (100,496 | ) | |||||||||||||||||||||||||
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Balance, September 30, 2012
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25,000,000 | 25,000 | 73,125 | - | - | (189,248 | ) | - | 40 | (91,083 | ) | |||||||||||||||||||||||||
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Shares returned to treasury
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(24,500,000 | ) | (24,500 | ) | - | 24,500,000 | - | 24,500 | - | - | - | |||||||||||||||||||||||||
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Shares issued for patent
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2,500,000 | 2,500 | - | - | - | - | - | 2,500 | ||||||||||||||||||||||||||||
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Balance, January 19, 2013
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3,000,000 | 3,000 | $ | 73,125 | 24,500,000 | - | $ | (164,748 | ) | $ | - | 40 | (88,583 | ) | ||||||||||||||||||||||
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24 for 1 forward split
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69,000,000 | 69,000 | (69,000 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||
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Stock warrants issued
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- | - | 5,000 | - | - | - | - | - | 5,000 | |||||||||||||||||||||||||||
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Net loss for the year ended September 30, 2013
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- | - | - | - | - | 91,123 | (168,294 | ) | (40 | ) | (77,211 | ) | ||||||||||||||||||||||||
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Balance, September 30, 2013
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72,000,000 | $ | 72,000 | $ | 9,125 | 24,500,000 | $ | - | $ | (73,625 | ) | $ | (168,294 | ) | $ | - | $ | (160,794 | ) | |||||||||||||||||
The accompanying notes are an integral part of these statements.
F-6
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LIBERATED ENERGY, INC.
(A DEVELOPMENT STAGE COMPANY)
FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012
Note 1 - Nature of Operations
Organization
Liberated Energy, Inc. (the “Company”), formerly known as Mega World Food Holdings Company is a Nevada corporation formed on September 14, 2010.
On January 19, 2013, pursuant to a Common Stock Purchase Agreement, dated January 7, 2013, Perpetual Wind Power Corporation, a privately held corporation formed under the laws of the State of Delaware on July 1, 2010, 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 the Company. Thereafter, the Company acquired from Perpetual Wind Power Corporation its patented 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 Power Corporation returned to treasury its 24,500,000 shares it acquired from the Company's shareholders. As 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 stock 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
On January 19, 2013, the Company disposed of its wholly-owned subsidiary, Mega World Food Limited (HK). Mega World Food Limited (HK) was incorporated on June 24, 2010 and was in the business of selling frozen vegetables in all areas of the world except China. From inception, Mega World Food Limited (HK) only incurred setting up, formation or organization activities. Upon disposal, the Company ceased these operations and accordingly, the Company’s financial statements have been prepared with the net assets, results of operations, and cash flows of this business displayed separately as “discontinued operations.”
Effective January 19, 2013, the Company’s business is the sale of alternative energy products and services.
Note 2 - Summary of Significant Accounting Policies
Basis of Accounting
The Company maintains its books and records on the accrual basis of accounting. The accompanying financial statements have been prepared on that basis, in which revenues and gains are recognized when earned and expenses and losses are recognized when incurred.
9
LIBERATED ENERGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012
Note 2 - Summary of Significant Accounting Policies (continued)
Use of Estimates
The presentation 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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For the purpose of the statement of cash flows, cash and cash equivalents include all cash balances, which are not subject to withdrawal restrictions or penalties, and highly liquid investments and debt instruments with a maturity of three months or less from the date of purchase.
Fair Value of Financial Instruments
Our short-term financial instruments, including cash, other assets and accounts payable and accrued expenses consist primarily of instruments without extended maturities, the fair value of which, based on management’s estimates, reasonably approximate their book value. The fair value of our notes and advances payable is based on management estimates and reasonably approximates their book value based on their current maturity.
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 basic 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 September 30, 2013 and 2012, the Company only issued one type of shares, i.e., common shares only. There is no effect on the diluted loss per share for the stock warrants since the common stock equivalents are anti-dilutive. Dilutive average shares outstanding as of September 30, 2013 and 2012 are as follows:
10
LIBERATED ENERGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012
Note 2 - Summary of Significant Accounting Policies (continued)
Net Loss per Common Share (continued)
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2013
|
2012
|
|||||||
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Weighted Average Shares Outstanding
|
||||||||
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Common Stock
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72,000,000 | 25,000,000 | ||||||
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Convertible Note Payable
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2,564,102 | - | ||||||
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Dilutive Average Shares Outstanding
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74,564,102 | 25,000,000 | ||||||
Property and Equipment
Property and equipment are carried at cost. Depreciation of property and equipment for financialreporting purposes is provided using the straight-line method over their respective estimated useful
lives of the assets. As of September 30, 2013 and 2012, there was no property and equipment on the Company’s balance sheets.
Patent Costs
Costs incurred in filing, prosecuting and maintaining patents (principally legal fees) are expensed as incurred and recorded within general and administrative expenses on the statement of operations. Such costs aggregated approximately $29,051 and $-0- for the years ended September 30, 2013 and 2012.
Stock-Based Compensation
The Company accounts for its stock based awards in accordance with Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”), which requires a fair value measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors, including restricted stock awards. We estimate the fair value of stock using the stock price on date of the approval of the award. The fair value is then expensed over the requisite service periods of the awards, which is generally the date at which the counterparty’s performance is complete and the related amount recognized in our statements of operations.
11
LIBERATED ENERGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012
Note 2 - Summary of Significant Accounting Policies (continued)
Revenue and Cost Recognition
The Company has generated no revenues to date. It is the Company’s policy that revenue from product sales or services will be recognized in accordance with ASC 605 “Revenue Recognition”. Four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product was not delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.
Income Taxes
The Company utilizes ASC 740 “Income Taxes” which requires the 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 income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes primarily relate to the recognition of debt costs and stock based compensation expense. The adoption of ASC 740-10 did not have a material impact on the Company's results of operations or financial condition.
Research and Development
In accordance with ASC 730, “Research and Development”, the Company expenses all research and development costs as incurred. The Company had incurred $3,523 research and development costs for the year ended September 30, 2013 and from January 19, 2013 (date of inception of the development stage) through September 30, 2013. The Company expects the research and development costs to increase in the future as it continues to invest in the infrastructure that is critical to achieve its business goals and objectives.
Reclassifications
Certain accounts in the prior-year financial statements have been reclassified for comparative purposes to conform with the presentation in the current-year financial statements.
12
LIBERATED ENERGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012
Note 2 - Summary of Significant Accounting Policies (continued)
Recently Issued Accounting Pronouncements
In July 2012 the FASB issued ASU 2012-02: Intangibles: Goodwill and Other: Testing Indefinite-Lived Intangible Assets for Impairment (Topic 350) which is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. This update is intended to reduce cost and complexity by providing an entity with the option to make a qualitative assessment about the likelihood that an indefinite-lived intangible asset is impaired to determine whether it should perform a quantitative impairment test. The Company does not expect the adoption of this guidance to have a significant impact on its financial statements.
Subsequent Events
The Company has evaluated subsequent events through January 13, 2014, the date the financial statements were available to be issued.
Note 3 – Going Concern Matters
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
LIBERATED ENERGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012
Note 4 – Advances from Shareholders / Officers
From the date of Company’s date of inception of the development stage on January 19, 2013 through the September 30, 2013, the officers and directors have advanced the amount of $30,616 to the Company for its operation. The outstanding balance is due on demand and no agreement was signed.
Note 5 - Debt Obligations
Convertible Notes Payable
The following is a summary of debt obligations at September 30:
|
2013
|
2012
|
|||||||
|
Convertible note payable, due September 4, 2014
|
$ | 50,000 | - | |||||
|
Less unamortized debt discount
|
4,583 | - | ||||||
| 45,417 | - | |||||||
|
Less: Current portion
|
45,417 | - | ||||||
|
Total
|
$ | - | $ | - | ||||
On September 4, 2013, the Company issued a Convertible Promissory Note (the “Note”) to JMJ Financial (“JMJ”) providing JMJ with the ability to invest up to $350,000 which contains a 10% original issue discount (the “JMJ Note”). The transaction closed on September 4, 2013. JMJ provided $50,000 to the Company on the Effective Date. The net proceeds the Company received from this offering were $45,000.
The maturity date is one year from the effective date of each payment by JMJ to the Company (the “Maturity Date”). The conversion price (the “Conversion Price”) for each portion of consideration paid by JMJ to the Company is lesser of: (1) $0.49, or (2) 65% of the lowest trade price in the 25 trading days previous to the conversion.
The JMJ Note bears interest at 0% for the first 90 days and a one-time interest charge of 12% will be applied to the Principal Sum thereafter.
The Lender, JMJ, has the right, at any time after the Effective Date, at their election, to convert all or part of the outstanding and unpaid principal sum and accrued interest (and any other fees) into shares of fully paid and non-assessable shares of common stock.
The charge of the amortization of debt discounts and costs for the year ended September 30, 2013 was $417, which was accounted for as interest expense.
14
LIBERATED ENERGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012
Note 6 – Commitments and Contingencies
Legal Services Agreements
The Company has a legal services agreement with attorney to provide legal services. The Agreement is for a term of 12 months from inception and renewable automatically from year to year unless either the Company or attorney terminates such engagement by written notice.
Note 6 – Commitments and Contingencies (continued)
Consulting Agreements
The Company has consulting agreements with outside contractors to provide marketing and financial advisory services. The Agreements are generally for a term of 12 months from inception and renewable automatically from year to year unless either the Company or Consultant terminates such engagement by written notice.
Note 7 – Discontinued Operations
On January 19, 2013, the Company disposed of its wholly-owned subsidiary, Mega World Food Limited (HK). Mega World Food Limited (HK) was incorporated on June 24, 2010 and was in the business of selling frozen vegetables in all areas of the world except China. From its inception, Mega World Food Limited (HK) only incurred setting up, formation or organization activities. Upon disposal, the Company ceased these operations and accordingly, the Company’s financial statements have been prepared with the net assets, results of operations, and cash flows of this business displayed separately as “discontinued operations.”
The Company realized the following gain from discontinued operations:
| Accounts payable | $ | 44,250 | ||
| Loan from shareholders | 88,737 | |||
| Cash and cash equivalents | (3,904 | ) | ||
| Prepaid deposit to supplier | (38,000 | ) | ||
| Other comprehensive income | 40 | |||
| Gain on disposition of subsidiary | $ | 91,123 |
The operating results of the discontinued operations for the years ended September 30, 2013 and 2012 and cumulative from June 24, 2010 (Original Date of Inception) to September 30, 2013 are summarized below:
|
2013
|
2012
|
Cumulative
|
||||||||||
|
Revenues
|
$ | - | $ | - | $ | 20,000 | ||||||
|
Cost of Goods Sold
|
- | - | 16,800 | |||||||||
|
Gross Profit
|
- | - | 3,200 | |||||||||
|
General and Administrative Expenses
|
- | 100,496 | 192,448 | |||||||||
|
Operating Loss before Taxes
|
- | (100,496 | ) | (189,248 | ) | |||||||
|
Provision for Income Taxes
|
- | - | - | |||||||||
|
Loss from Operations of Discontinued Operations
|
- | (100,496 | ) | (189,248 | ) | |||||||
|
Gain on Disposition of Business
|
91,123 | - | 91,123 | |||||||||
|
Gain (Loss) from Discontinued Operations
|
$ | 91,123 | $ | (100,496 | ) | $ | (98,125 | ) | ||||
15
LIBERATED ENERGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012
Note 8 – stockholders’ Equity
Preferred Stock
Under the Company’s Articles of Incorporation of the Company, the Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.001.
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.
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 the Company. Thereafter, Company the acquired from Perpetual Wind Power Corporation its patented 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 it acquired from the Company's shareholders. As 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 stock split, whereby the Company's outstanding shares increased from 3,000,000 to 72,000,000. The stock split resulted in a reclassification of additional paid in capital to common stock in the amount of $69,000.
Treasury Stock
As of September 30, 2013, there are 24,500,000 shares of common stock included in treasury.
Outstanding Warrants
At September 30, 2013, the Company had the following warrants outstanding:
|
Grant Date
|
Expiration Date
|
Warrants Granted
|
Exercise Price
|
|||||||||
|
Issued to non-employees
|
2/21/13
|
2/21/15
|
4,995,000 | $ | 0.25 - $2.50 | |||||||
|
Issued to non-employees
|
3/11/13
|
3/21/15
|
830,000 | $ | 1.00 | |||||||
| 5,825,000 | ||||||||||||
16
LIBERATED ENERGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012
Note 8 – stockholders’ Equity (continued)
Outstanding Warrants (continued)
The following table summarizes warrant activity for the year ending September 30, 2013:
|
Number
|
Weighted Average Exercise Price
|
Weighted Average Life (years)
|
||||||||||
|
Outstanding, October 1, 2012
|
- | - | ||||||||||
|
Granted
|
5,825,000 | $ | 1.27 | |||||||||
|
Forfeited
|
- | - | ||||||||||
|
Exercised
|
- | - | ||||||||||
|
Outstanding, September 30, 2013
|
5,825,000 | $ | 1.27 | 1.74 | ||||||||
|
Warrants exercisable at
|
||||||||||||
|
September 30, 2013
|
5,825,000 | $ | 1.27 | 1.74 | ||||||||
Note 9 - 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
|
- | % | |||
17
LIBERATED ENERGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012
Note 9 - Income Taxes (continued)
The tax effect of temporary differences that give rise to significant portions of the deferred tax assets as of September 30, 2013 is presented below:
Deferred Tax Assets:
|
2013
|
||||
|
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.
Note 10 – Patent acquisition
Pursuant to Patent Acquisition Agreement signed on January 19, 2013 between the Company and Perpetual Wind Power Corporation (the “Seller”), a privately held company organized in the State of Delaware, Seller agrees to sell to the Company and the Company agrees to purchase from the Seller the perpetual wind patent for an aggregate purchase price of 2,500,000 newly issued common stock of the Company with par value of $0.001 to be issued to the Seller’s shareholders. Seller also agrees as additional consideration at the closing date to return the Company’s treasury the 24,500,000 shares of common stock with the par value of $0.001.
The Company used the par value method to record the patent acquisition transaction. The management estimated that the patent acquisition transaction is in good faith and with mutually agreed price which represents the fair value of the patent. Due to there were no active stock trading activities, the trading price for the Company may not represent the fair value of the patent. Accordingly, the Company recorded the total patent of $2500, and returned treasury stocks of $24,500. Due to the limited stock market activities and limited access of a pending patent application, there might be uncertainty about the patent valuation. The financial statements do not include adjustments that might result from the outcome of this uncertainty.
18
|
Item 15. EXHIBITS
|
|
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
|
12/08/2010
|
|||
|
3.2
|
Amended Articles of Incorporation as filed with the Nevada Secretary of State dated February 6, 2013
|
8-K
|
2/07/2013
|
|||
|
3.3
|
Certificate of Change as filed with the Nevada Secretary of State dated February 6, 2013
|
8-K
|
2/07/2013
|
|||
|
3.4
|
By-laws
|
S-1
|
12/08/2010
|
|||
|
10.1
|
Patent Acquisition Agreement dated January 23, 2013
|
8-K
|
1/24/2013
|
|||
| 10.2* | Amended Patent Acquisition Agreement dated February 20, 2014 | |||||
|
31.1*
|
||||||
|
31.2*
|
||||||
|
32.1*
|
||||||
|
|
||||||
|
32.2*
|
||||||
|
101.INS
|
XBRL Instance Document
|
10-K | 1/13/2014 | |||
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
10-K | 1/13/2014 | |||
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
10-K | 1/13/2014 | |||
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
10-K | 1/13/2014 | |||
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
10-K | 1/13/2014 | |||
|
101.PRE
|
Taxonomy Extension Presentation Linkbase
|
10-K | 1/13/2014 | |||
* Filed with this Form 10-K
19
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.
|
LIBERATED ENERGY, INC.
|
||
| Date: March 18, 2014 | ||
|
By:
|
/s/ FRANK PRINGLE
|
|
| Frank Pringle | ||
| President, Director, Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: March 18, 2014 | By: | /s/ ELYSE THOMPSON |
| Elyse Thompson | ||
| Chief Financial Officer | ||
| (Principal Financial Officer | ||
| and Principal Accounting Officer) | ||
20