Halex Energy Corp. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - Halex Energy Corp.	Financial_Report.xls
EX-32.1 - CERTIFICATION - Halex Energy Corp.	halex_ex321.htm
EX-31.1 - CERTIFICATION - Halex Energy Corp.	halex_ex311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 333-185996

Halex Energy Corp.

(Exact name of registrant as specified in its charter)

Nevada		27-4720497
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

9190 Double Diamond Parkway Reno, NV		89521
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number (916) 293-6337

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 x No

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 x No

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 a shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ 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 for such shorter period that the registrant was required to submit and post such files). x Yes ¨ 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”, “non-accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	¨	Smaller reporting company	x

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

There was no trading market for the voting and non-voting common equity held by non-affiliates on the last business day of the registrant’s most recently completed second fiscal quarter.

The number of shares outstanding of the registrant’s common stock as of May 20, 2014 is 24,570,000.

DOCUMENTS INCORPORATED BY REFERENCE — NONE

TABLE OF CONTENTS

FORM 10-Q


Part I – Financial Information		3

Item 1.	Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19

Item 4T.	Controls and Procedures	19

Part II – Other Information		20

Item 1.	Legal Proceedings	20

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20

Item 3.	Defaults Upon Senior Securities	20

Item 4.	Mine Safety Disclosures	20

Item 5.	Other Information	20

Item 6.	Exhibits	21

Signatures		22

PART I — FINANCIAL INFORMATION

Statements in this Form 10-Q Quarterly Report may be “forward-looking statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on our current expectations, estimates and projections about our business based, in part, on assumptions made by our management. These assumptions are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks discussed in this Form 10-Q Quarterly Report, under “Management’s Discussion and Analysis of Financial Condition or Plan of Operation” and in other documents which we file with the Securities and Exchange Commission.

In addition, such statements could be affected by risks and uncertainties related to our financial condition, factors that affect our industry, market and customer acceptance, changes in technology, fluctuations in our quarterly results, our ability to continue and manage our growth, liquidity and other capital resource issues, competition, fulfillment of contractual obligations by other parties and general economic conditions. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 10-Q Quarterly Report, except as required by law.

ITEM 1. Financial Statements

Halex Energy Corp.

(A Development Stage Company)

March 31, 2014 and 2013

Index to the Financial Statements

Balance Sheets			5
Statements of Operations			6
Statements of Changes in Stockholders’ Deficit			7
Statements of Cash Flows			8
Notes to Financial Statements			9

HALEX ENERGY CORP.

(A Development Stage Entity)

BALANCE SHEETS

	March 31,			December 31,
	2014			2013
	(unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	4,161		$	1,205
Interest receivable		11,124			9,357
Notes receivable		59,716			59,716
Total Current Assets		75,001			70,278

TOTAL ASSETS	$	75,001		$	70,278

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable	$	27,957		$	15,356
Accrued compensation		188,328			179,138
Accrued interest		6,953			6,784
Current portion of notes payable		114,363			130,763
Total Current Liabilities		337,601			332,041

Notes payable, net of current portion		87,934			52,600
		425,535			384,641
COMMITMENTS AND CONTINGENCIES (Note 8)

STOCKHOLDERS' DEFICIT
Common stock, $0.0001 par value; 75,000,000 shares authorized; 24,570,000 and 24,570,000
shares issued and outstandstanding, respectively		2,457			2,457
Common stock payable		17,000			-
Accumulated deficit during development stage		(369,991	)		(316,820	)
Total Stockholders' Deficit		(350,534	)		(314,363	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	75,001		$	70,278

* The accompanying notes are an integral part of these Financial Statements.

HALEX ENERGY CORP.

(A Development Stage Entity)

STATEMENTS OF OPERATIONS (UNAUDITED)

	For the Three Months Ended March 31,						For the Period January 20, 2011 (Date of Inception) Through March 31,
	2014			2013			2014

REVENUE:
Sales	$	-		$	-		$	-
		-			-			-
OPERATING EXPENSES
Selling, general and administrative expenses		52,819			26,530			369,250
TOTAL OPERATING EXPENSES		52,819			26,530			369,250

LOSS FROM OPERATIONS		(52,819	)		(26,530	)		(369,250	)

OTHER EXPENSE (INCOME)
Interest expense		2,119			1,368			11,866
Interest income		(1,767	)		(1,081	)		(11,125	)
TOTAL OTHER EXPENSE (INCOME)		352			287			741

NET INCOME (LOSS)	$	(53,171	)		(26,817	)	$	(369,991	)

NET INCOME (LOSS) PER COMMON SHARE, BASIC AND DILUTED	$	(0.00	)	$	(0.00	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED		24,570,000			24,570,000

* The accompanying notes are an integral part of these Financial Statements.

HALEX ENERGY CORP.

(A Development Stage Entity)

FOR THE YEAR ENDED DECEMBER 31, 2013 AND THE THREE MONTHS ENDED MARCH 31, 2014

STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

					Stock			Capital in		Common					Total
	Common Stock				Subscription			Excess of		Stock		Accumulated			Stockholders'
	Shares		Amount		Receivable			Par Value		Payable		Deficit			Deficit

Balance, January 20, 2011, Date of Inception		-	$	-	$	-		$	-	$	-	$	-		$	-

Issuance of common stock for cash and receivable, $0.0001		24,570,000		2,457		(2,037	)		-		-		-			420

Net loss		-		-		-			-		-		(81,551	)		(81,551	)

Balance, December 31, 2011		24,570,000		2,457		(2,037	)		-		-		(81,551	)		(81,131	)

Cash received for stock subscription receivable		-		-		2,037			-		-		-			2,037

Net loss		-		-		-			-		-		(117,095	)		(117,095	)

Balance, December 31, 2012		24,570,000	$	2,457	$	-		$	-	$	-	$	(198,646	)	$	(196,189	)

Net loss		-		-		-			-		-		(118,174	)		(118,174	)

Balance, December 31, 2013		24,570,000	$	2,457	$	-		$	-	$	-	$	(316,820	)	$	(314,363	)

Cash received for issuance of common stock (unaudited)		-		-		-			-		17,000		-			17,000

Net loss (unaudited)		-		-		-			-		-		(53,171	)		(53,171	)

Balance, March 31, 2014		24,570,000	$	2,457	$	-		$	-	$	17,000	$	(369,991	)	$	(350,534	)

* The accompanying notes are an integral part of these Financial Statements.

HALEX ENERGY CORP.

(A Development Stage Entity)

STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Three Months Ended March 31,						For the Period January 20, 2011 (Date of Inception) Through March 31,
	2014			2013			2014

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(53,171	)	$	(26,817	)	$	(369,991	)
Adjustments to reconcile net loss to net cash and cash equivalents
(Increase) in:
Increase in interest receivable		(1,767	)		(1,080	)		(11,124	)
Increase in:
Accounts payable and accrued expenses		12,770			418			34,910
Accrued compensation and related benefits		9,190			10,886			188,328
Net cash used by operating activities		(32,978	)		(16,593	)		(157,877	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in notes receivable		-			(30,191	)		(59,716	)
Net cash used by investing activities		-			(30,191	)		(59,716	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in stock subscription receivable		-			668			-
Proceeds from issuance of notes payable		18,934			45,450			202,297
Proceeds from sale of common stock		-			-			2,457
Increase in common stock payable		17,000			-			17,000
Net cash provided by financing activities		35,934			46,118			221,754

Net increase (decrease) in cash and cash equivalents		2,956			(666	)		4,161

Cash and cash equivalents, beginning of period		1,205			750			-

Cash and cash equivalents, end of period	$	4,161		$	84		$	4,161

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	-		$	-		$	-

* The accompanying notes are an integral part of these Financial Statements.

Halex Energy Corp.

Notes to Financial Statements

For the Three Months Ended March 31, 2014 and 2013

1. Background Information

Halex Energy Corp. (the “Company”), a Nevada corporation, is a development stage company incorporated on January 20, 2011. Our fiscal year end is December 31 with our principal office located at 3941 Park Dr. #20-196, El Dorado Hills, California 95762.

Since becoming incorporated, the Company has not made any significant purchases or sale of assets, nor have we been involved in any mergers, acquisitions or consolidations. The Company owns exclusive licenses in the state of California for operation of a new type of renewable energy. The Company is currently developing a prototype of this generator known as HRES - Hybrid Renewable Energy System.

2. Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the three months ended March 31, 2014 and the year ended December 31, 2013, the Company incurred net losses of $53,171 and $118,174, respectively. As of March 31, 2014, the Company has an accumulated deficit of $369,991 and negative working capital of $262,600. The Company used $32,978 of cash from operations during the three months ended March 31, 2014, which was funded by proceeds from debt financings and proceeds from the sale of common stock. There is no assurance that such financing will be available in the future, or if available, at terms acceptable to management. In view of these matters, there is substantial doubt that the Company will continue as a going concern. The Company has an effective registration statement on Form S-1 with the SEC to register 6 million shares of the Company’s common stock at a price of $0.50 per share.

The Company’s ability to continue as a going concern is highly dependent on our ability to obtain additional sources of cash flow sufficient to fund our working capital requirements. However, there can be no assurance that the Company will be successful in its efforts to secure such cash flow. Any failure by us to timely procure additional financing or investment adequate to fund our ongoing operations, including planned product development initiatives and commercialization efforts, will have material adverse consequences on our financial condition, results of operations and cash flows.

The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

3. Significant Accounting Policies

The significant accounting policies followed are:

Unaudited Interim Financial Statements

The accompanying unaudited interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year.

Basis of Presentation

The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the SEC. The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States (See Note 2 regarding the assumption that the Company is a “going concern”).

Development Stage Entity - The Company is a development stage company as defined by section ASC 915, Development Stage Entities. The Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced. All losses accumulated since inception have been considered as part of the Company's development stage activities.

Use of estimates - 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. Actual results could differ from those estimates.

Cash and cash equivalents - For the purpose of the financial statements cash equivalents include all highly liquid investments with maturity of three months or less. Cash and cash equivalents were $4,161 and $1,205 at March 31, 2014 and December 31, 2013, respectively.

Cash Flows Reporting - The Company follows ASC 230, Statement of Cash Flows, 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 ASC 230, Statement of Cash Flows, 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.

Common stock - The Company records common stock issuances when all of the legal requirements for the issuance of such common stock have been satisfied.

Financial instruments -

The Company’s balance sheet includes certain financial instruments, including cash, notes and interest receivable, accounts payable, accrued expenses and notes payable. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

▪	Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

▪	Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

▪	Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2014.

The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.

Commitments and Contingencies - The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no commitments or contingencies as of March 31, 2014 and December 31, 2013.

Income taxes - Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes resulting from temporary differences. Such temporary differences result from differences in the carrying value of assets and liabilities for tax and financial reporting purposes. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

Loss per share - The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, Earnings per Share. Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company.

Related Parties - The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. See Note 6 for related party transactions for the periods ending March 31, 2014 and December 31, 2013.

Recent Accounting Pronouncements

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company.

We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

4. Notes Receivable

During the three months ended March 31, 2014 and the year ended December 31, 2013, the Company loaned an unrelated party money to assist with their development projects. The note is due December 31, 2014, unsecured and bears interest of 12% annually. Interest is payable annually on the anniversary of the note date. The balance of notes receivable at March 31, 2014 and December 31, 2013 was $59,716 and $59,716, respectively. Related accrued interest receivable totaled $11,124 and $9,357 at March 31, 2014 and December 31, 2013, respectively.

5. Notes Payable

Notes payable consist of the following:

	2014		2013
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due February 1, 2014	$	-	$	5,375
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due May 16, 2014		2,150		2,150
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due May 19, 2014		2,150		2,150
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due June 1, 2014		1,075		1,075
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due June 7, 2014		1,075		1,075
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due June 20, 2014		1,075		1,075
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due July 25, 2014		6,450		6,450
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due October 6, 2014		1,075		1,075
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due October 28, 2014		1,613		1,613
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due November 16, 2014		3,225		3,225
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due November 21, 2014		1,075		1,075
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due February 1, 2015		1,075		1,075
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due March 30, 2015		4,300		4,300
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due June 11, 2015		10,750		10,750
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due January 26, 2014		-		2,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due January 31, 2014		-		16,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due February 8, 2014		-		2,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due March 1, 2014		-		1,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due March 4, 2014		-		5,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due April 16, 2014		3,000		3,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due April 23, 2014		12,500		12,500
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due April 11, 2014		2,500		2,500
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due June 4, 2014		2,000		2,000

Note payable; interest at 5% per annum; collateralized by the Company’s assets; due July 9, 2014		3,000		3,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due July 29, 2014		1,000		1,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due August 5, 2014		3,000		3,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due August 6, 2014		3,000		3,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due August 12, 2014		35,000		35,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due October 5, 2014		6,400		6,400
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due October 12, 2014		1,400		1,400
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due November 9, 2014		5,000		5,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due November 16, 2014		2,000		2,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due December 7, 2014		2,000		2,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due December 11, 2014		2,000		2,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due January 9, 2015		4,000		4,000
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due March 6, 2015		5,600		5,375
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due March 30, 2015		5,375		5,375
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due April 4, 2015		1,000		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due April 15, 2015		2,000		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due April 23, 2015		5,000		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due April 28, 2015		1,000		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due May 27, 2015		4,500		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due May 29, 2015		5,000		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due June 23, 2015		2,000		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due June 30, 2015		1,000		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due July 26, 2015		2,150		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due July 31, 2015		17,200		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due July 6, 2015		2,000		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due August 8, 2015		2,150		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due September 1, 2015		1,075		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due September 4, 2015		5,375		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due July 14, 2015		1,984		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due July 24, 2015		2,000		-
Note payable; interest at 5% per annum; collateralized by the Company’s assets; due July 27, 2015		11,000		-
		202,297		183,363
Less amounts currently due		(114,363)		(130,763)
Long-term portion	$	87,934	$	52,600

The long-term portion of notes payable will mature in 2015.

6. Related Party Transactions

Accrued compensation

The Company has accrued compensation due to the Chief Executive Officer for deferred salaries earned and unpaid as of March 31, 2014 and December 31, 2013 of $188,328 and $179,138, respectively.

The above terms and amounts are not necessarily indicative of the terms and amounts that would have been incurred had comparable transactions been entered into with independent parties.

7. Income Taxes

There were no current or deferred income tax expense or benefit for the periods ended March 31, 2014 and 2013.

The provision for income taxes is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The items causing this difference are as follows:

	2014			2013
Tax benefit at U.S. statutory rate	$	(44,900	)	$	(38,400	)
State income tax benefit, net of federal benefit		(6,500	)		(5,600	)
Change in valuation allowance		51,400			44,000
	$	—		$	—

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

	2014			2013
Deferred tax assets (liabilities), current:
Accrued deferred compensation payable		45,800			43,600
Valuation allowance		(45,800	)		(43,600	)
	$	—		$	—
Deferred tax assets (liabilities), noncurrent:
Net operating loss carryforwards		77,300			66,200
Valuation allowance		(77,300	)		(66,200	)
	$	—		$	—

As of March 31, 2014, the Company had federal and state net operating loss carry-forwards totaling approximately $77,300, which begin expiring in 2031. The Company has established a valuation allowance to fully reserve all deferred tax assets at March 31, 2014 because it is more likely than not that the Company will not be able to utilize these assets. The change in the valuation allowance for the three months ended March 31, 2014 was an increase of $7,400.

As of March 31, 2014, the Company has not performed an IRC Section 382 study to determine the amount, if any, of its net operating losses that may be limited as a result of the ownership change percentages during 2014. However, the Company will complete the study prior to the utilization of any of its recorded net operating losses.

8. Commitments and Contingencies

License Agreement

On November 30, 2012 the Company entered into a license agreement with K’Air Energy, Inc. as a distributor of Pressure Power Units, limited to territory defined. License agreement defines license payments due as follows:

Initial payment due January 31, 2013	$	75,000
December 31, 2013		500,000
December 31, 2014		1,000,000
December 31, 2015		2,000,000
December 31, 2016		3,000,000
December 31, 2017		4,000,000
December 31, 2018 and thereafter		5,000,000

Royalty payments are due at a rate equal to the greater of: (a) one cent per kilowatt hour of electricity; or (b) 10% of the gross revenue received for the provision of electricity produced directly or indirectly from K’Air Pressure Power Systems.

9. Subsequent Events

Management has evaluated subsequent events through the date the financial statements were issued. Based on our evaluation no events have occurred requiring adjustment or disclosure.

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

THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS “ANTICIPATED,” “BELIEVE,” “EXPECT,” “PLAN,” “INTEND,” “SEEK,” “ESTIMATE,” “PROJECT,” “WILL,” “COULD,” “MAY,” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT THE COMPANY’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY’S CONTROL. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS.

The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our financial statements and related notes appearing elsewhere herein. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial conditions, operations, plans, objectives and performance that involve risk, uncertainties and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements.

OVERVIEW OF THE COMPANY

Halex Energy Corp. ("Halex") is a development stage company incorporated on January 20, 2011 under the laws of the State of Nevada. Our fiscal year end is December 31. Our principal office is located at 9190 Double Diamond Parkway, Reno, NV 89521. Our telephone number is 916.293.6337 and our e-mail is info@halexenergy.com.

Since becoming incorporated, Halex has not made any significant purchases or sale of assets, nor have we been involved in any mergers, acquisitions or consolidations. Halex has never declared bankruptcy, never been in receivership, and never been involved in any legal actions or proceedings.

Halex is a development stage enterprise owning exclusive licenses from K’Air Energy (“K’Air”) for distribution, installation and operation of a renewable energy system in the state of California. K’Air is currently developing a prototype of this renewable energy system known as a Hybrid Renewable Energy System ("HRES"). We do not own any interest in any property. We have no rights, title, interest or other intellectual property rights in the HRES system. Currently, we have no further business planned if K’Air is unable to develop the proposed HRES and commercialize its use.

As of March 31, 2014, the date of company's last financial statements, Halex has raised $2,457 through the sale of common stock and has received $17,000 in cash to purchase of 34,000 shares common stock that were not yet issued. The sale was a purchase of 24,570,000 shares by the Company’s officer and director Jeff Lamberson and by the other founding shareholders. Halex also has raised $202,297 through the issuance of promissory notes to some of the founding shareholders.

As of March 31, 2013, we had $4,161 of cash on hand and had general and administrative expenses from inception to March 31, 2014 of $369,250, which was related to corporate start-up fees and cost of public filings. As of the date of this annual report, we have not yet generated or realized any revenues from our business operations. The Company believes that we will need a minimum $20,000 to maintain the corporate entity, accounting and filings over the next 12 months and a minimum of $300,000 to carry out our operations and marketing preparation for the next 12 months. For our audited financial information please see “Financial Statement” within this document below.

For the three months ended March 31, 2014 compared to the three months ended March 31, 2013

We have not earned any revenues from our incorporation on January 20, 2011 to March 31, 2014. We do not anticipate earning revenues until we have completed Phase 3, where we have established a fixed site, and are in the process of scaling to a 3MW facility. We have not completed development of a commercially-viable HRES unit, and can provide no assurance that we will be successful in developing it in the future.

We incurred operating expenses in the amount of $369,250 for the period from our inception on January 20, 2011 to March 31, 2014. These operating expenses were comprised of start-up, administrative and legal costs.

As of March 31, 2014, the Company has issued promissory notes for funds received from its founding shareholders of $202,297 with $114,363 coming due within a year. The Company plans to use a portion of the proceeds from this offering to repay the notes but we cannot be certain if the offering will be successful. If we are not successful, the company may face a default on the notes and could put any assets of the company at risk.

We have significant licensing payments due in the near future and we will need to secure more funding if we are to pursue our business model. Our agreement with K’Air is exclusive until December 31, 2014 (extended from December 31, 2013) the Company will pay an initial license fee of $50,000 by March 31, 2014. As of March 31, 2014, we had loaned K’Air a total of $59,716 which we may convert at our discretion to a payment for the initial distributor agreement. If we choose to, the Company may execute an extension of our exclusive License agreement until December 31, 2015 for a payment of $500,000 due on June 30, 2014. We believe the Company would need to raise at least $2,000,000 from this offering to maintain our exclusive status in our license agreement.

We are dependent upon obtaining financing to begin the development of our proposed business. For these reasons our auditors believe that there is substantial doubt that we will be able to continue as a going concern in the very near future.

Liquidity and Capital Resources

Limited Operating History; Need for Additional Capital

There is no historical financial information about us upon which to base an evaluation of our performance. Halex was incorporated in the State of Nevada on January 20, 2011; we are development stage enterprise and have not generated any revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, and implementation of our business strategies. (See "Risk Factors" beginning on page 8).

We are seeking equity financing through this offering to provide for the capital required to fully realize our business plan. Equity financing could result in additional dilution to existing shareholders. There is no assurance that we will receive the required financing to completely realize our business plan.

Even if we are successful in raising proceeds from this offering we have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations.

At the present time, Halex has sufficient funds to address the administrative costs of this offering only. This assumption is based on the fact that, as of March 31, 2014, we had cash on hand of $4,161 with $425,535 in liabilities. If we are unable to raise additional capital we would likely have to cease operations. Our current available cash is insufficient, under limited activities, to sustain operations beyond one month. We are dependent on our majority shareholder to fund our current obligations; however there is no guarantee of continued funding.

Management estimates that if the Company is successful in selling 10% or more of the common stock it will be able to conduct operations for up to 12 months and continue the development of the HRES prototype, however the likelihood of beginning revenue generating operations if less than 50% of the shares are sold would be very minimal. Management believes if 50% or more of the common stock is sold through this offering, we will be able to develop the commercial HRES system and begin to deploy distributed power generation stations and start revenue flow. Investors must be aware that this is a best efforts offering and we may not be successful in selling even 10% of the common stock.

Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission.

We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly.

Critical Accounting Policies

See “Footnotes” section to the financial statements for a complete summary of the significant accounting policies used in the presentation of our financial statements. The summary is presented to assist the reader in understanding the financial statements. The accounting policies used conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. Because of our election to not opt out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, our financial statements may not be comparable to companies that comply with public company effective dates.

Concentrations, Risks, and Uncertainties

The Company did not have a concentration of business with suppliers or customers constituting greater than 10% of the Company’s gross sales during the reporting period.

Stock Based Compensation

For purposes of determining the variables used in the calculation of stock compensation expense under the provisions of FASB ASC Topic 505, “Equity” and FASB ASC Topic 718, “Compensation — Stock Compensation,” management would perform an analysis of current market data and historical company data to calculate an estimate of implied volatility, the expected term of the option and the expected forfeiture rate. With the exception of the expected forfeiture rate, which is not an input, management uses these estimates as variables in the Black-Scholes option pricing model. Depending upon the number of stock options granted, any fluctuations in these calculations could have a material effect on the results presented in the Company’s statement of operations and other comprehensive income. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on the Company’s financial statements.

Recently Issued Accounting Standards:

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4T. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

We carried out an evaluation as required by paragraph (b) of Rule 13a-15 and 15d-15 of the Exchange Act, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of March 31, 2014. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2014.

Report of Management on Internal Controls over Financial Reporting.

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of March 31, 2014, utilizing the framework established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined that the Company’s internal control over financial reporting as of March 31, 2014, was not effective, primarily as a result of the fact that the Company has only two employees, only one of whom has a background in accounting, and lacks segregation of duties.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Management necessarily applied its judgment in assessing the benefits of controls relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and may not be detected.

Changes in Internal Control over Financial Reporting.

There have been no changes in our internal controls over financial reporting that occurred during the first fiscal quarter of 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

As of the date of this Quarterly Report, neither we nor any of our officers or directors is involved in any litigation either as plaintiffs or defendants. As of this date, there is not any threatened or pending litigation against us or any of our officers or directors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three month period ended March 31, 2014, there was no modification of any instruments defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof.

Item 3. Defaults upon Senior Securities

There have been no defaults in any material payments during the covered period.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

The Company does not have any other material information to report with respect to the three month period ended March 31, 2014.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits included herewith are:

Exhibit Number		Description
3.1(i)		Articles of Incorporation (1)
3.1(ii)		Amendment to Articles of Incorporation (1)
3.2		By-Laws (1)
10.1		Employment Agreement with Alexander Bafer (1)
10.2		Production Services Agreement (2)
10.3		Operating Agreement to York Productions, LLC (2)
10.4		Stock Purchase Agreement dated December 24, 2013 (3)
10.5		Executive Employment Agreement with Martin Fischer (3)
21.1		List of Subsidiaries (1)
31.1		Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of CEO and CFO pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS**		XBRL Instance
101.SCH**		XBRL Taxonomy Extension Schema
101.CAL**		XBRL Taxonomy Extension Calculation
101.DEF**		XBRL Taxonomy Extension Definition
101.LAB**		XBRL Taxonomy Extension Labels
101.PRE**		XBRL Taxonomy Extension Presentation

_________

(1)	Previously filed as an exhibit to the Company’s S-1 Registration Statement filed with the SEC on August 5, 2011.
(2)	Previously filed as an exhibit to the Company’s Pre Effective Amendment to S-1 Registration Statement filed with the SEC on December 29, 2011.
(2)	Previously filed as an exhibit to the Company’s Form 8K filed with the SEC on December 27, 2013.
**	XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) 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.

	HALEX ENERGY CORP., a Nevada Corporation

Dated: May 20, 2014	By:	/s/ Jeffrey Lamberson
		Jeffrey Lamberson
		President, Director, Principal Executive Officer, Principal Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Dated: May 20, 2014	By:	/s/ Jeffrey Lamberson
		Jeffrey Lamberson
		President, Director, Principal Executive Officer, Principal Accounting Officer

Attached files

Halex Energy Corp. Reports

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