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EX-32.1 - SARBANES-OXLEY 906 CERTIFICATION - NGEN TECHNOLOGIES HOLDINGS CORP. | exh32-1.htm |
EX-31.1 - SARBANES-OXLEY 302 CERTIFICATION - NGEN TECHNOLOGIES HOLDINGS CORP. | exh31-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2015
Commission file number 000-55177
LIBERATED ENERGY, INC.
(Exact name of registrant as specified in its charter)
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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15 Elvis Boulevard
Chester, New York
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10918
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(Address of principal executive offices)
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(Zip Code)
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Issuer's telephone number: (845) 610-3817
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o 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 ☐ 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. ☐
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):
Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☒
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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.) Yeso No ☒
As of September 30, 2015, the last business day of the fiscal year, the aggregate market value of the Registrant's voting stock held by non-affiliates was approximately $201,265 (based on a closing price of $0.0001 per share).
As of February 12, 2016 the registrant had 2,344,260,757 shares of common stock outstanding.
REASON FOR AMENDMENT
The sole purpose of this Amendment to the Registrant's Annual Report on Form 10-K for the period ended September 30, 2015 is to furnish the audit and Interactive Data File exhibits pursuant to Rule 405 of Regulation S-T. No other changes have been made to this Form 10-K and this Amendment has not been updated to reflect events occurring subsequent to the filing of this Form 10-K.
Item #
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Description
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Page
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History
Liberated Energy, Inc. is a Nevada corporation formed on September 14, 2011. We were incorporated as Mega World Food Holding Company for the purpose of selling frozen vegetable products in all areas of the world except China.
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.
Our goal is to develop new products related to alternative energy and bring them to the marketplace. Our primary areas of focus are in the areas of (1) wind energy for home and commercial use, (2) wind and solar energy for outdoor illumination for home, commercial and municipal use, (3) electromagnetic energy applications, and (4) an additive to convert water into a high BTU energy source.
Services and Products
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."
On January 23, 2013 we acquired from Perpetual Wind Power Corporation the rights to their wind and solar powered turbine technology for which it has a patent pending with the United States Patent and Trademark office, U.S. Patent Application Serial No. 61/257,578 as submitted on November 3, 2009.
In November 2013, we built and successfully tested an alternative energy LED lighting and security system that is now available to the market. The Guard Lite™ security lighting system is designed to deter trespassers from homes and/or properties without electricity costs. The Company has moved towards patent protection of this new device. It is anticipated that the Guard Lite™ security lighting system will only require a portion of the energy it generates so the excess energy will be able to be used for other applications. We are currently testing adding a heat sensor to detect house fires to the system. Included in the Guard-Lite package:
·
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High Tech LED lighting - Utilizing the latest energy efficient technology with 6000 Kelvin lamps and 60,000hrs+ lifetime. This gives high visibility with fewer lumens (3 LED lights/900 lumens each).
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·
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HD WiFI Security Camera - Featuring two way streaming audio and HD video. The camera has infrared night vision and motion sensing technology. Alerts can be sent to the customer's Smart Phone, PC, Mac, or Tablet. Multiple cameras and users can be incorporated into the system.
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·
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Wind Turbine - High Efficiency Carbon Fiber Plastic. This unit produces 300watts at low wind speed. It's quiet, maintenance free with long lasting permanent magnet direct drive.
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·
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Electrical System - Safe, reliable and efficient DC power system with 24 hours of energy storage when there is no wind or solar.
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·
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Mounting Pole - Maintenance Free carbon steel with a vinyl sleeve or powder coated. The dimensions are 4" x 4" square and 14' 4" in height with a security base to prevent tampering.
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·
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Solar Panel - 100 watt output at 4.5 KWh/Day. This Unit produces excess energy of approximately 3.9 KWh per day. That energy can be sold back to the grid or used for other lights, additional cameras, battery charging ...etc.
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Additional Information
We are a public company and file annual, quarterly and special reports and other information with the SEC. We are not required to, and do not intend to, deliver an annual report to security holders. You may read and copy any document we file at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference room. Our filings are also available, at no charge, to the public at http://www.sec.gov.
We are a smaller reporting Company and are not required to include disclosures under this item.
We are a smaller reporting company and are not required to include disclosure under this item.
Our principal executive offices are located at 15 Elvis Boulevard, Chester, New York 10918. The office space is provided to us by our former Chief Executive Officer free of charge.
None
Not Applicable
ITEM 5. | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
(a) Market Information.
Our common stock is quoted on the OTC Markets- Pink Sheet. We obtained our trading symbol which is LIBE.OB on February 15, 2013. For the periods indicated, the following table sets forth the high and low bid prices per share of common stock. These prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.
HIGH
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LOW
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FISCAL YEAR ENDED SEPTEMBER 30, 2015
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First Quarter – October 1, 2014 – December 31, 2014
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$
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0.064
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$
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0.0061
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Second Quarter – January 1, 2015 – March 31, 2015
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$
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0.011
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$
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0.0013
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Third Quarter – April 1, 2015 – June 30, 2015
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$
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0.013
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$
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0.0005
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Fourth Quarter – July 1, 2015 – September 30, 2015
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$
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0.0006
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$
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0.0001
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HIGH
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LOW
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FISCAL YEAR ENDED SEPTEMBER 30, 2014
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First Quarter – October 1, 2013 – December 31, 2013
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$
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0.11
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$
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0.110
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Second Quarter – January 1, 2014 – March 31, 2014
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$
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0.25
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$
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0.21
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Third Quarter – April 1, 2014 – June 30, 2014
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$
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0.09
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$
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0.07
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Fourth Quarter – July 1, 2014 – September 30, 2014
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$
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0.03
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$
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0.02
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(b) Holders.
As of January 14, 2016 there were approximately 46 record holders of 2,344,260,757 shares of the Company's common stock.
(c) Dividend Policy.
We have not declared or paid any cash dividends on our common stock and we do not intend to declare or pay any cash dividend in the foreseeable future. The payment of dividends, if any, is within the discretion of our Board of Directors and will depend on our earnings, if any, our capital requirements and financial condition and such other factors as our Board of Directors may consider.
(d) Securities Authorized for Issuance Under Equity Compensation Plans.
We do not have equity compensation plans.
(e) Recent Sales of Unregistered Securities.
None
Not Applicable
FORWARD-LOOKING STATEMENTS
This annual report on Form 10-K contains forward-looking statements within the meaning of the federal securities laws. These forwarding-looking statements include without limitation statements regarding our expectations and beliefs about the market and industry, our goals, plans, and expectations regarding our results, our intentions and strategies regarding future operations and transactions, our beliefs regarding the future success of our business, our expectations and beliefs regarding competition, competitors, the basis of competition and our ability to compete, our beliefs and expectations regarding our ability to hire and retain personnel, our ability to expand into new geographic markets and music genres, our ability to acquire other operators and venues, our beliefs regarding period to period results of operations, our expectations regarding revenues, our expectations regarding future growth and financial performance, our beliefs and expectations regarding the adequacy of our facilities, and our beliefs and expectations regarding our financial position, ability to finance operations and growth and the amount of financing necessary to support operations. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially. See "Item 1A. Risk Factors" for a discussion of certain risks. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this annual report on Form 10-K.
As used in this annual report on Form 10-K, unless the context otherwise requires, the terms "we," "us," "the Company," and "Liberated" refer to Liberated Energy, a Nevada Corporation.
ORGANIZTION AND BASIS OF PRESENTATION
The following discussion and analysis is based on the audited financial statements for the years ended September 30, 2015 and 2014 of Liberated Energy, Inc., a Nevada corporation ("Liberated" the "Company," "our," or "we"). All significant inter-company amounts have been eliminated. In the opinion of management, the audited financial statements presented herein reflect all adjustments (consisting only of normal recurring adjustments) necessary for fair presentation. Interim results are not necessary indicative of results to be expected for the entire year.
We prepare our financial statements in accordance with generally accepted accounting principles (GAAP), which require that management make estimates and assumptions that affect reported amounts. Actual results could differ from these estimates.
Certain of the statements contained below are forward-looking statements (rather than historical facts) that are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
CRITICAL ACCOUNTING POLICIES & ESTIMATES
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. However, future events are subject to change, and the best estimates and judgments routinely require adjustment. The amounts of assets and liabilities reported in our balance sheet, and the amounts of revenues and expenses reported for each of our fiscal periods, are affected by estimates and assumptions which are used for, but not limited to, the accounting for allowance for doubtful accounts, goodwill and intangible asset impairments, restructurings, inventory and income taxes. Actual results could differ from these estimates. The following critical accounting policies are significantly affected by judgments, assumptions and estimates used in the preparation of our consolidated financial statements.
Use of Estimates
It is important to note that when preparing the financial statements in conformity with U.S. generally accepted accounting principles, management is required to make certain estimates and assumptions that affect the amounts reported and disclosed in the financial statements and related notes. Actual results could differ if those estimates and assumptions approve to be incorrect.
On an ongoing basis, we evaluate our estimates, including those related to estimated customer life, used to determine the appropriate amortization period for deferred revenue and deferred costs associated with licensing fees, the useful lives of property and equipment and our estimates of the value of common stock for the purpose of determining stock-based compensation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
Revenue Recognition Policies
The Company recognizes revenues in accordance with the Securities and Exchange Commission Staff Accounting Bulletin (SAB) number 104, "Revenue Recognition." SAB 104 clarifies application of U. S. generally accepted accounting principles to revenue transactions. As of the year ended September 30, 2014, there was no deferred revenue. The Company derives its primary revenue from the sources described below, which includes sale of alternative energy devices.
Off- Balance Sheet Arrangements
We did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of 90 days or less to be cash equivalents to the extent the funds are not being held for investment purposes.
Results of Operations
Year Ended September 30, 2015 Compared to Year Ended September 30, 2014
Revenue
Our revenues were $62,132 for the year ended September 30, 2015 compared to zero for September 30, 2014.
Direct Costs
Direct costs or cost of goods was $19,333 for the year ended September 30, 2015 compared to zero for September 30, 2014.
General and Administrative Expenses and Other
General and administrative costs for the year ended September 30, 2015 was $439,043 compared to $268,527 for the year ended September 30, 2014. Higher cost was attributable to high consulting fees in 2015 compared to 2014.
Other Income (Expense)
Other income and expense was $138,271 for the year ended September 30, 2015 compared to $38,291 for the year ended September30, 2014.The higher amount in 2015 is directly attributed to debt settlement of $35,502 and impairment of assets totaling $41,743 plus interest expense of $61,026
Net Loss
The Company incurred a net loss of $534,515 for the year ended September 30, 2015 compared to a net loss of $306,291 for the year ended September 30, 2014. Higher general and administrative expense plus increased other expenses attributed to the higher loss in 2015 over 2014.
Financial Condition
Cash, Cash Flows and Working Capital
The Company had a cash balance of $16,921 and a working capital deficit of $266,699 at September 30. 2015 as compared to a net cash balance of $162,354 and a working capital deficit of $303,861 at September 30, 2014. The decrease in working capital is primarily attributable loss in 2015 greater than the loss in 2014.
Operations used $441,895 of cash during 2015 as compared to $236,763 used during 2014. The change in operating cash flows during 2014 was principally attributable to increased losses in 2015 over 2014.
There was no investing activity during the years ended September 30, 2015 or in 2014.
Financing activities provided cash flows of $296,462 during 2015 as compared to $354,433 during 2014. Cash flows provided by financing activities during the 2015 period related to debt financing of $246,462 and sale of common stock of $50,000. Cash provided in financing activities in 2014 is attributed to borrowings on debt of $387,750 warrant conversion of $7,000 offset by loan repayment to a related party of $40,317.
Liquidity and Capital Resources
Our principal requirements for capital are to fund our day-to-day operations and to satisfy our contractual obligations, primarily for the repayment of debt.
We believe that we will be required to either improve profitability and operating cash flow or to borrow additional funds or otherwise secure additional financing, or both, to support our operations going forward. Except as described below regarding our line of credit, we do not presently have any commitments to provide financing, if needed, to support our operations.
Warrants
The Company issued an warrants to purchase 5,825,000 shares of common stock on February 21, 2013 and March 11, 2013. During the year ended September 30, 2014 34,000 warrants were converted to common stock. The balance of the warrants 5,791,000 expired as of March 11, 2015.
Convertible Notes
On September 4, 2013, the Company issued a Convertible 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. . On December 10, 2013, JMJ provided $25,000 to the Company; the net proceeds the Company received from this offering were $22,500. On April 18, 2014, JMJ
provided $40,000 to the Company; the net proceeds the Company received from this offering were $36,000. On June 23, 2014, JMJ provided $40,000 to the Company; the net proceeds the Company received from this offering were $36,000. As of September 30, 2015 the outstanding balance due was $22,835.
On November 27, 2013, the Company issued a Convertible Note (the "Note") to LG CAPITAL FUNDING, LLC ("LG Capital") providing LG Capital with the ability to invest $25,000 which contains $4,000 in financing cost (the LG Capital "Note"). The transaction closed on November 27, 2013. LG Capital provided $25,000 to the Company on the effective Date. The net proceeds the Company received from this offering were $21,000. As of September 30, 2015 the balance due on the note was zero.
On December 2, 2013, the Company issued a Convertible Note (the "Note") to GEL Properties, LLC ("GEL") providing GEL with the ability to invest $35,000 which contains $5,250 in financing cost (the GEL "Note"). The transaction closed on December 2, 2014. GEL provided $35,000 to the Company on the effective Date. The net proceeds the Company received from this offering were $29,750. As of September 30, 2015 the balance of the note was zero.
On March 14, 2014, the Company issued a Convertible Note (the "Note") to LG CAPITAL FUNDING, LLC ("LG Capital") providing LG Capital with the ability to invest $30,000 which contains $4,500 in financing costs (the LG Capital "Note"). The transaction closed on March 14, 2014. LG Capital provided $30,000 to the Company on the effective Date. The net proceeds the Company received from this offering were $25,500. As of September 30, 2015 the balance of the note was zero.
On March 17, 2014, the Company issued a Convertible Note (the "Note") to UNION CAPITAL, LLC ("Union Capital") providing Union Capital with the ability to invest $30,000 which contains $4,500 in financing costs. The transaction closed on March 17, 2014. Union Capital provided $30,000 to the Company on the Effective Date. The net proceeds the Company received from this offering were $25,500. As of September 30, 2015 the balance of the note was zero.
On March 19, 2014, the Company issued a Convertible Note (the "Note") to GEL Properties, LLC ("GEL") providing GEL with the ability to invest $35,000 which contains $5,250 in financing cost (the GEL "Note"). The transaction closed on March 19, 2014. GEL provided $35,000 to the Company on the effective Date. The net proceeds the Company received from this offering were $29,750. As of September 30, 2015 the balance of the note was zero.
On June 02, 2014, the Company issued a Convertible Note (the "Note") to LG CAPITAL FUNDING, LLC ("LG Capital") providing LG Capital with the ability to invest $25,000 which contains $4,000 in financing fees (the LG Capital "Note"). The transaction closed on June 02, 2014. LG Capital provided $25,000 to the Company on the effective Date. The net proceeds the Company received from this offering were $21,000. As of September 30, 2015 the balance of the note was zero.
On July 14, 2014, the Company issued two Convertible Notes (the "Notes") to LG CAPITAL FUNDING, LLC ("LG Capital") providing LG Capital with the ability to invest up to $53,000 in aggregate. The transaction closed on July 14, 2014. LG Capital provided $26,500 on effective day, containing $4,000 in financing cost. The net proceeds the Company received from this offering were $22,500. As of September 30, 2015 the balance due on the note was zero.
On July 17, 2014, the Company issued two Convertible Notes (the "Notes") to UNION CAPITAL, LLC ("Union Capital") providing Union Capital with the ability to invest up to $50,000. The transaction closed on July 17, 2014. Union Capital provided $25,000 to the Company on effective day, containing $4,000 in legal fees. The net proceeds the Company received from this offering were $21,000. As of September 30, 2015 the balance due on the note was zero.
On October 8, 2014, JSJ provided $60,000 to the Company; the net proceeds the Company received from this offering were $55,000. The note is convertible at 50% of the lowest trading price of the Company's stock for the 20 days prior to conversion and provides for 12% interest and matures on April 8, 2015. As of September 30, 2015 the balance due on the note was $9,795.
On December 10, 2014, the Company issued a Convertible Note to KMB Capital for $64,000. The note bears an interest rate of 8% and matures on September 12, 2015. The note is convertible to common stock at a discount of 39% of the lowest three trading price during the 10 days prior to conversion. As of September 30, 2015 the note was paid in full.
On March 12, 2015, the Company issued a Convertible Note to VIS VIRES Group Inc for $33,000 with an interest rate of 8% per annum. The notes mature on December 16, 2015. The note is convertible by the holder at a discount of 39% of the three lowest trading prices during the 10 days prior to conversion. As of June 30, 2015 the outstanding principal balance was $33,000. As of September 30, 2015 the balance due on the note was zero.
On April 20, 2015, the Company issued a Convertible Note (the "Note") to LG CAPITAL FUNDING, LLC ("LG Capital") for a principle amount of $31,500 with an interest rate of 8% per annum. The note matures on April 28, 2016. The note is convertible by the holder at a discount of 52% of the lowest trading price of the Company's stock for the 18 days prior to the conversion. AS of September 30, 2015 the outstanding balance due was $31,500.
On April 28, 2015, the Company issued a Convertible Note (the "Note") to LG CAPITAL FUNDING, LLC ("LG Capital") for a principle amount of $22,000 with an interest rate of 8% per annum. The note matures on April 28, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company's stock for the 18 days prior to the conversion. As of September 30, 2015 the outstanding balance of the note was zero.
On April 28, 2015, the Company issued a Convertible Note to Service Trading Company, LLC for $22,000. The note bears an interest rate of 8% and matures on April 28, 2016. The note is convertible by the holder at a discount of 52% of the lowest trading price during the 18 days previous to the conversion. As of September 30, 2015 the outstanding principal balances was $22,000.
On May 21, 2015 the Company issued a Convertible settlement note to GEL Properties for $50,000. The note was issued to settle claims by GEL pertaining to fees and interest they claimed as still due. The note Matures on May 21, 2016 bearing interest at 8% and is convertible to common stock of the company at a discount of 65% to the lowest closing bid price for the five days prior to conversion. As of September 30, 2015 the balance due on the note was $50,000.
On July 13, 2015, the Company issued a Convertible Note to LG CAPITAL FUNDING, LLC ("LG Capital"), to replace the $50,000 convertible note issued to Eastmore Capital The note matures on July 13, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company's stock for the 15 days prior to the conversion.
On July 13, 2015, the Company issued a Convertible Note to LG CAPITAL FUNDING, LLC ("LG Capital"), for a principle amount of $41,400 with an interest rate of 8% per annum. The note matures on July 13, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company's stock for the 15 days prior to the conversion.
On August 11, 2015, the Company issued a Convertible Note to LG CAPITAL FUNDING, LLC ("LG Capital") for a principle amount of $27,500 with an interest rate of 8% per annum. The note matures on August 11, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company's stock for the 15 days prior to the conversion.
On September 8, 2015, the Company issued a Convertible Note to LG CAPITAL FUNDING, LLC ("LG Capital") for a principle amount of $27,000 with an interest rate of 8% per annum. The note matures on September 8, 2016, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company's stock for the 15 days prior to the conversion.
As of September 30, 2015 the outstanding aggregate balance of all notes due to LG Capital Funding, LLC is $159,115.
We are a smaller reporting Company and are not required to include disclosures under this item
Our financial statements are audited and appear immediately after the signature page of this report. See "Index to Financial Statements" on page F-1 of this report.
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F-2
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F-6
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Board of Directors and Shareholders
Liberated Energy, Inc.
We have audited the accompanying balance sheets of Liberated Energy, Inc. (the "Company"), as of September 30, 2015, and 2014, and the related statements of operation, shareholders' equity, and cash flows for year ended September 30, 2015 and 2014. 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, 2015, 2014, and the results of its operations and their cash flows for years ended September 30, 2015 and 2014, 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
February 12, 2016
LIBERTY ENERGY, INC
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September 30,
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2015
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30, 2014
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ASSETS
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||||||||
CURRENT ASSETS:
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Cash and Cash Equivalents
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$
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16,921
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$
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162,354
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||||
Prepaid expenses
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--
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5,000
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||||||
Inventory
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23,880
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40,861
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Total Current Assets
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40,801
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208,215
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OTHER ASSESTS:
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||||||||
Deferred financing cost
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25,042
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|||||||
Loans to Stockholders
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--
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9,701
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||||||
Patent
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2,000
|
|||||||
Total Other Assets
|
--
|
36,743
|
||||||
TOTAL ASSETS
|
$
|
40,801
|
$
|
244,958
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
CURRENT LIABILITIES
|
||||||||
Accounts payable and accrued expenses
|
$
|
35,754
|
$
|
152,445
|
||||
Unearned income
|
--
|
43,565
|
||||||
Convertible note payable
|
271,746
|
316,066
|
||||||
Note payable
|
50,000
|
--
|
||||||
Stock payable
|
50,000
|
--
|
||||||
Total Current Liabilities
|
407,500
|
512,076
|
||||||
TOTAL LIABILITIES
|
$
|
407,500
|
$
|
512,076
|
||||
|
||||||||
STOCKHOLDERS EQUITY
|
||||||||
Preferred Stock:
10,000,000 shares authorized par value $0.001 per share;
10,000,000 and none issued and outstanding, respectively
|
10,000
|
--
|
||||||
Common Stock:
10,000,000,000 shares authorized par value $0.001 per share;
issued and outstanding, 2,029,651,437 at September 30, 2015 and
93,422,721 at September 30, 2014
|
2,029,651
|
93,423
|
||||||
Additional paid-in-capital
|
(1,323,118
|
)
|
188,176
|
|||||
Accumulated deficit
|
(1,083,232
|
)
|
(548,717
|
)
|
||||
TOTAL STOCKHOLDERS' DEFICIT
|
$
|
(366,698
|
)
|
$
|
(267,118
|
)
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
40,801
|
$
|
244,958
|
The accompanying notes are an integral part of these statements.
F-2
LIBERATED ENERGY, INC
|
2015
|
2014
|
||||||
Revenues
|
$
|
62,132
|
$
|
-
|
||||
Cost of Goods Sold
|
19,333
|
-
|
||||||
Gross Profit
|
42,799
|
-
|
||||||
Operating Expenses
|
||||||||
General and Administrative Expenses
|
439,043
|
268,527
|
||||||
Operating loss
|
(396,244
|
)
|
(268,527
|
)
|
||||
Other Income (Expense):
|
||||||||
Interest income
|
--
|
20
|
||||||
Interest expenses
|
61,026
|
38,291
|
||||||
Debt settlement
|
35,502
|
--
|
||||||
Impairment of assets
|
41,743
|
--
|
||||||
Total other expense
|
(138,271
|
)
|
(38,291
|
)
|
||||
Net loss
|
$
|
(534,515
|
)
|
$
|
(306,798
|
)
|
||
Loss per Share, Basic & Dilutive
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
||
Weighted Average Shares Outstanding
|
566,681,940
|
93,422,721
|
The accompanying notes are an integral part of these statements.
F-3
LIBERTY ENERGY, INC
FOR YEARS ENDED SEPTEMBER 30, 2015 AND 2014
Additional
|
Total
|
|||||||||||||||||||||||||||
Common Stock
|
Preferred Stock
|
Paid-In
|
Accumulated
|
Stockholders'
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Deficit
|
||||||||||||||||||||||
Balance at September 30, 2013
|
72,000,000
|
$
|
72,000
|
$
|
9,125
|
$
|
(241,919
|
)
|
(160,794
|
)
|
||||||||||||||||||
Common stock issued for debt conversion
|
16,388,721
|
16,389
|
172,085
|
188,474
|
||||||||||||||||||||||||
Common stock issued for warrants
|
34,000
|
34
|
6,966
|
7,000
|
||||||||||||||||||||||||
Common stock issued for service
|
5,000,000
|
5,000
|
--
|
5,000
|
||||||||||||||||||||||||
Net loss
|
(306,798
|
)
|
(306,798
|
)
|
||||||||||||||||||||||||
Balance at September 30, 2014
|
93,422,721
|
93,423
|
188,176
|
(548,717
|
)
|
(267,118
|
)
|
|||||||||||||||||||||
Common stock issued for accrued liabilities
|
30,000,000
|
30,000
|
97,968
|
127,968
|
||||||||||||||||||||||||
Common stock issued for debt
|
1,890,988,716
|
1,890,989
|
(1,662,672
|
)
|
338,317
|
|||||||||||||||||||||||
Common stock issued for service- related party
|
5,000,000
|
5,000
|
45,000
|
50,000
|
||||||||||||||||||||||||
Common stock issued for service
|
10,240,000
|
10,240
|
88,410
|
98,650
|
||||||||||||||||||||||||
Preferred shares issued for service
|
10,000,000
|
10,000
|
10,000
|
|||||||||||||||||||||||||
Debt not recorded in previous year
|
(80,000
|
)
|
(80,000
|
)
|
||||||||||||||||||||||||
Net loss
|
(534,515
|
)
|
(5,34,515
|
)
|
||||||||||||||||||||||||
Balance at September 30, 2015
|
2,029,651,437
|
$
|
2,029,652
|
10,000,000
|
$
|
10,000
|
$
|
(1,323,118
|
)
|
$
|
(1,083,232
|
)
|
$
|
(366,698
|
)
|
The accompanying notes are an integral part of these statements.
F-4
LIBERATED ENERGY, INC
FOR YEARS ENDED SEPTEMBER 30,
|
2015
|
2014
|
||||||
OPERATING ACTIVITIES:
|
||||||||
Net Loss
|
$
|
(534,515
|
)
|
$
|
(306,798
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities
|
||||||||
Depreciation and amortization
|
--
|
500
|
||||||
Stock issued for service expense
|
158,650
|
13,040
|
||||||
Debt settlement
|
35,502
|
|||||||
Impairment of assets
|
41,743
|
--
|
||||||
Amortization of debt discount and finance charges
|
--
|
38,291
|
||||||
Changes in operating assets and liabilities
|
||||||||
Inventory
|
16,981
|
(40,861
|
)
|
|||||
Prepaid expenses
|
--
|
5,000
|
||||||
Deferred revenue
|
(43,565
|
)
|
43,565
|
|||||
Accounts payable and accrued expense
|
(116,691
|
)
|
10,500
|
|||||
Net cash used in operating activities
|
(441,895
|
)
|
(236,763
|
)
|
||||
|
||||||||
FINANCING ACTIVITIES:
|
||||||||
Sale of common stock
|
50,000
|
--
|
||||||
Proceeds from issuance of common stock warrants
|
--
|
7,000
|
||||||
Proceeds from issuance of convertible note
|
246,462
|
387,750
|
||||||
Loan – related party
|
--
|
(40,317
|
)
|
|||||
Net cash provided by financing activities
|
296,462
|
354,433
|
||||||
|
||||||||
Net increase (decrease) in cash and cash equivalents
|
(145,433
|
)
|
117,670
|
|||||
Cash and cash equivalents at Beginning of the Period
|
162,354
|
44,684
|
||||||
Cash and cash equivalents at End of Period
|
$
|
16,921
|
$
|
162,354
|
||||
|
||||||||
|
||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
|
||||||||
Stock issued for convertible debt
|
$
|
356,284
|
$
|
446,500
|
||||
Less original issue discount
|
$
|
--
|
$
|
(58,750
|
)
|
|||
Proceeds from convertible note payable
|
$
|
--
|
$
|
387,750
|
The accompanying notes are an integral part of these statements.
F-5
LIBERATED ENERGY, INC.
FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014
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.
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.
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.
F-6
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.
Property, Equipment and Intangible Assets
Property and equipment are carried at cost, less accumulated depreciation. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Intangible assets consist of acquired customer and vendor databases and are carried at cost, less accumulated amortization.
Depreciation and amortization is provided principally on the straight-line basis method over the estimated useful lives of the assets.
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 zero and $ 5,000 for the years ended September 30, 2015 and 2014.
Stock-Based Compensation
The Company accounts for stock-based compensation to employees and non-employees in accordance with ASC 718 requiring employee equity awards to be accounted for under the fair value method. Accordingly, share-based compensation is measured at grant date, based on the fair value of the award and is recognized as expense over the requisite employee service period. The Company accounts for stock-based compensation to other than employees in accordance with FASB ASC 505-50. Equity instruments issued to other than employees are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments and is recognized as expense over the service period. The Company estimates the fair value of share-based payments using the Black-Scholes option-pricing model for common stock options and the closing price of the company's common stock for common share issuances.
Inventory
Inventories are stated at the cost of goods. There are $23,880 and $40,861 inventory in stock in September 30, 2015 and 2014 respectively.
F-7
Revenue and Cost Recognition
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.
Note 3 – Going Concern Matters
As shown in the accompanying financial statements, the Company has a net loss of $534,515 for the year ended September 30, 2015. As of September 30, 2015, the Company reported an accumulated deficit of $1,083,232, The Company's ability to generate continued positive cash flows is dependent on the ability to grow its operating entity as well as the ability to raise additional capital. Management is following strategic plans to accomplish these objectives, but success is not guaranteed. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
Note 4 - Convertible Notes
On September 4, 2013, the Company issued a Convertible 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. . On December 10, 2013, JMJ provided $25,000 to the Company; the net proceeds the Company received from this offering were $22,500. On April 18, 2014, JMJ provided $40,000 to the Company; the net proceeds the Company received from this offering were $36,000. On June 23, 2014, JMJ provided $40,000 to the Company; the net proceeds the Company received from this offering were $36,000. As of September 30, 2015 the outstanding balance due was $22,835
On November 27, 2013, the Company issued a Convertible Note (the "Note") to LG CAPITAL FUNDING, LLC ("LG Capital") providing LG Capital with the ability to invest $25,000 which contains $4,000 in financing cost (the LG Capital "Note"). The transaction closed on November 27, 2013. LG Capital provided $25,000 to the Company on the effective Date. The net proceeds the Company received from this offering were $21,000. As of September 30, 2015 the balance due on the note was zero
F-8
On December 2, 2013, the Company issued a Convertible Note (the "Note") to GEL Properties, LLC ("GEL") providing GEL with the ability to invest $35,000 which contains $5,250 in financing cost (the GEL "Note"). The transaction closed on December 2, 2014. GEL provided $35,000 to the Company on the effective Date. The net proceeds the Company received from this offering were $29,750. As of September 30, 2015 the balance of the note was zero.
On March 14, 2014, the Company issued a Convertible Note (the "Note") to LG CAPITAL FUNDING, LLC ("LG Capital") providing LG Capital with the ability to invest $30,000 which contains $4,500 in financing costs (the LG Capital "Note"). The transaction closed on March 14, 2014. LG Capital provided $30,000 to the Company on the effective Date. The net proceeds the Company received from this offering were $25,500. As of September 30, 2015 the balance of the note was zero.
On March 17, 2014, the Company issued a Convertible Note (the "Note") to UNION CAPITAL, LLC ("Union Capital") providing Union Capital with the ability to invest $30,000 which contains $4,500 in financing costs. The transaction closed on March 17, 2014. Union Capital provided $30,000 to the Company on the Effective Date. The net proceeds the Company received from this offering were $25,500. As of September 30, 2015 the balance of the note was zero.
On March 19, 2014, the Company issued a Convertible Note (the "Note") to GEL Properties, LLC ("GEL") providing GEL with the ability to invest $35,000 which contains $5,250 in financing cost (the GEL "Note"). The transaction closed on March 19, 2014. GEL provided $35,000 to the Company on the effective Date. The net proceeds the Company received from this offering were $29,750. As of September 30, 2015 the balance of the note was zero.
On June 02, 2014, the Company issued a Convertible Note (the "Note") to LG CAPITAL FUNDING, LLC ("LG Capital") providing LG Capital with the ability to invest $25,000 which contains $4,000 in financing fees (the LG Capital "Note"). The transaction closed on June 02, 2014. LG Capital provided $25,000 to the Company on the effective Date. The net proceeds the Company received from this offering were $21,000. As of September 30, 2015 the balance of the note was zero.
On July 14, 2014, the Company issued two Convertible Notes (the "Notes") to LG CAPITAL FUNDING, LLC ("LG Capital") providing LG Capital with the ability to invest up to $53,000 in aggregate. The transaction closed on July 14, 2014. LG Capital provided $26,500 on effective day, containing $4,000 in financing cost. The net proceeds the Company received from this offering were $22,500. As of September 30, 2015 the balance due on the note was zero.
On July 17, 2014, the Company issued two Convertible Notes (the "Notes") to UNION CAPITAL, LLC ("Union Capital") providing Union Capital with the ability to invest up to $50,000. The transaction closed on July 17, 2014. Union Capital provided $25,000 to the Company on effective day, containing $4,000 in legal fees. The net proceeds the Company received from this offering were $21,000. As of September 30, 2015 the balance due on the note was zero.
On October 8, 2014, JSJ provided $60,000 to the Company; the net proceeds the Company received from this offering were $55,000. The note is convertible at 50% of the lowest trading price of the Company's stock for the 20 days prior to conversion and provides for 12% interest and matures on April 8, 2015. As of September 30, 2015 the balance due on the note was $9,795.
On December 10, 2014, the Company issued a Convertible Note to KMB Capital for $64,000. The note bears an interest rate of 8% and matures on September 12, 2015. The note is convertible to common stock at a discount of 39% of the lowest three trading price during the 10 days prior to conversion. As of September 30, 2015 the note was paid in full
On March 12, 2015, the Company issued a Convertible Note to VIS VIRES Group Inc for $33,000 with an interest rate of 8% per annum. The notes mature on December 16, 2015. The note is convertible by the holder at a discount of 39% of the three lowest trading prices during the 10 days prior to conversion. As of June 30, 2015 the outstanding principal balance was $33,000. As of September 30, 2015 the balance due on the note was zero.
F-9
On April 20, 2015, the Company issued a Convertible Note (the "Note") to LG CAPITAL FUNDING, LLC ("LG Capital") for a principle amount of $31,500 with an interest rate of 8% per annum. The note matures on April 28, 2016. The note is convertible by the holder at a discount of 52% of the lowest trading price of the Company's stock for the 18 days prior to the conversion. AS of September 30, 2015 the outstanding balance due was $31,500.
On April 28, 2015, the Company issued a Convertible Note (the "Note") to LG CAPITAL FUNDING, LLC ("LG Capital") for a principle amount of $22,000 with an interest rate of 8% per annum. The note matures on April 28, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company's stock for the 18 days prior to the conversion. As of September 30, 2015 the outstanding balance of the note was zero.
On April 28, 2015, the Company issued a Convertible Note to Service Trading Company, LLC for $22,000. The note bears an interest rate of 8% and matures on April 28, 2016. The note is convertible by the holder at a discount of 52% of the lowest trading price during the 18 days previous to the conversion. As of September 30, 2015 the outstanding principal balances was $22,000.
On May 21, 2015 the Company issued a Convertible settlement note to GEL Properties for $50,000. The note was issued to settle claims by GEL pertaining to fees and interest they claimed as still due. The note Matures on May 21, 2016 bearing interest at 8% and is convertible to common stock of the company at a discount of 65% to the lowest closing bid price for the five days prior to conversion. As of September 30, 2015 the balance due on the note was $50,000.
On July 13, 2015, the Company issued a Convertible Note to LG CAPITAL FUNDING, LLC ("LG Capital"), to replace the $50,000 convertible note issued to Eastmore Capital The note matures on July 13, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company's stock for the 15 days prior to the conversion.
On July 13, 2015, the Company issued a Convertible Note to LG CAPITAL FUNDING, LLC ("LG Capital"), for a principle amount of $41,400 with an interest rate of 8% per annum. The note matures on July 13, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company's stock for the 15 days prior to the conversion.
On August 11, 2015, the Company issued a Convertible Note to LG CAPITAL FUNDING, LLC ("LG Capital") for a principle amount of $27,500 with an interest rate of 8% per annum. The note matures on August 11, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company's stock for the 15 days prior to the conversion.
On September 8, 2015, the Company issued a Convertible Note to LG CAPITAL FUNDING, LLC ("LG Capital") for a principle amount of $27,000 with an interest rate of 8% per annum. The note matures on September 8, 2016, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company's stock for the 15 days prior to the conversion.
As of September 30, 2015 the outstanding aggregate balance of all notes due to LG Capital Funding, LLC is $159,115.
Note 5 - Related Party
On February 2, 2015 the Company issued to an officer and director of the Company 10,000,000 shares with a value of $10,000 of series A preferred stock for service. Each share has 10,000 votes on all matters of the Company in which the shareholders can vote.
On July 7, 2014 the Company issued, 5,000,000 shares to Brian Conway at par for officer compensation value of $ 5,000.
F-10
Note 6 - Equity
During the year ended September 30, 2014 the Company issued 16,388,721 shares of common stock for debt with a value of $ 188,474.
During the year ended September 30, 2014 the Company issued 34,000 shares of common stock for the conversion of warrants with a value of $ 7,000.
During the year ended September 30, 2014 the Company issued 5,000,000 shares of common stock for service with a value of $ 5,000.
During the year ended September 30, 2015 the Company issued 1,890,988,716 shares of common stock for debt with a value of $ 228,317.
During the year ended September 30, 2015 the Company issued 30,000,000 shares of common stock for accrued liabilities with a value of $ 127,968.
During the year ended September 30, 2015 the Company issued 5,000,000 shares of common stock to a related party for service with a value of $ 50,000.
During the year ended September 30, 2015 the Company issued 10,240,000 shares of common stock to a related party for service with a value of $ 98,650.
During the year ended September 30, 2014 the Company issued 10,000,000 shares of common stock to a related party for service with a value of $ 10,000.
Note 7 - Warrants
During February 20 and March 11, 2013 issued warrants to various non related parties. The following table summarizes warrant activity for the year ending September 30, 2015:
|
Number
|
Weighted Average Exercise Price
|
Weighted Average
Life (years)
|
|||||||||
Outstanding, October 1, 2013
|
-
|
-
|
||||||||||
Granted
|
5,825,000
|
$
|
1.27
|
|||||||||
Forfeited
|
-
|
-
|
||||||||||
Exercised
|
34,000
|
-
|
||||||||||
Outstanding, September 30, 2014
|
5,791,000
|
$
|
1.27
|
1.74
|
||||||||
|
||||||||||||
Expired
|
5,791,000
|
|||||||||||
Outstanding as of September 30, 2014
|
--
|
$
|
--
|
--
|
Note 8 - Income Taxes
The Company follows Accounting Standards Codification 740, Accounting for Income Taxes.
The Company did not have taxable income for the years ended September 30, 2015 or 2014. The Company's deferred tax assets consisted of the following as of September 30, 2015 and 2014:
F-11
|
2015
|
2014
|
||||||
Total deferred tax asset
|
384,205
|
192,050
|
||||||
Valuation allowance
|
(384,205
|
)
|
(192,050
|
)
|
||||
Net deferred tax asset
|
$
|
-
|
$
|
-
|
The Company had a net loss of $534,515 for the year ended September 30, 2015 and $306,798 for the same period in 2014. As of September 30, 2015, the Company's net operating loss carry forward was $1,097,730 that will begin to expire in the year 2033.
Note 9 - Impairment of Asset
During the year ended September 30, 2015, the Company reserved of $41,743 of assets. The Company deemed the assets as not usable and thus impaired them.
Note 10 - Subsequent Events
On December 31, 2015 the Company amended the preferred shares voting rights increasing the voting of each preferred share from 100 to 10,000 votes on any action voted on by the common stock holders.
None
Evaluation of Disclosure Controls and Procedures
Under the supervision and the participation of our management, including our principal executive officer who also serves as our principal financial officer, we conducted an evaluation as of December 31, 2014 of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective as of December 31, 2014.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as that term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with generally accepted accounting principles ("GAAP"). Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
In order to evaluate the effectiveness of our internal control over financial reporting as of December 31, 2014, as required by Section 404 of the Sarbanes-Oxley Act of 2002, our management conducted an assessment, including testing, based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the "COSO Framework"). A material weakness is a control deficiency, or a combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of our annual or interim financial statements will not be prevented or detected.
Based on the evaluation performed, management concluded that our internal control over financial reporting was not effective as of September 30, 2015. In arriving at that conclusion, management identified as materials weaknesses in our internal control over financial reporting: (1) the lack of accounting proficiency of our chief executive officer who is our sole officer and our principal accounting officer which has resulted in a reliance on part-time outside consultants
to perform substantially all of our accounting functions, (2) a lack of adequate segregation of duties and necessary corporate accounting resources in our financial reporting process and accounting function, and (3) lack of control procedures that include multiple levels of review, also arising from our chief executive officer's lack of accounting training and service in multiple roles as well as our limited financial resources to support hiring of personnel and implementation of accounting systems.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit smaller reporting companies to provide only management's report in this annual report.
Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the fourth quarter of fiscal 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
The following table sets forth the names and ages of our current directors, executive officers and key consultants as well as the principal offices and positions held by each person. We are managed by our Board of Directors. Currently, the Board has two members. Our executive officers serve at the discretion of the Board of Directors. There are no family relationships between any of the directors and executive officers. In addition, there was no arrangement or understanding between any executive officer and any other person pursuant to which any person was selected an executive officer.
Name
|
Age
|
Position with
Liberated
|
Year First Became
a Director
|
|||
Brian Conway (1)
|
45
|
Chief Executive Officer, Chief Financial
Officer and Director
|
2014
|
|||
Jay Silverstein (2)
|
63
|
Director
|
2014
|
|||
Kim O'Brien (3)
|
58
|
Director
|
2014
|
(1) | Chief Executive Officer, Chief Financial Officer and Director effective October 1, 2014, Mr. Conway was paid $6,000 per month as a consultant and received 5,000,000 shares of common stock. |
(2) | Director as of October 1, 2014 |
(3) | Director as of October 1, 2014 |
Biographies
Brian P. Conway, the Chief Executive Officer, Chief Financial Officer and Chairman of the Board brings 20 years of proven success in marketing and business development for both private and publically traded companies. Starting off in database management and sales for Venture Direct on Madison Avenue, he crossed over to Wall Street first as a co-founder of Waypoint Capital Partners. During this time he has overseen national sales, marketing, business and product development, national account customers, and new business relations with international and US companies while creating awareness for public companies with many of the nation's top public relations firms. Mr. Conway has been involved with Liberated Energy for the past year and is responsible for its current joint ventures and for bringing its flagship product the Guard Lite to the marketplace. His relationships with investment bankers, non-dilutive financing, and public relations will be instrumental in moving Liberated Energy forward in the upcoming months.
Jay Silverman, our Director, has more than 35 years of experience in the professional services industry. The positions that he has held included Mid-Continent Operations Manager of a worldwide seismic service company, Vice President of Operations for a privately held environmental drilling service company, then Vice President of Field Operations for a NYSE listed oil service firm where he founded a new wholly owned subsidiary, the first onshore 3D seismic data acquisition company in the world, which he eventually took public in a successful IPO as its President, CEO and Director. Mr. Silverman also co-founded iSafe Imaging in 2002, a paper to digital knowledge preservation and information management company for which he was CEO until it was sold in 2010.
Kim Thorne O'Brien, our Director, graduated from Ursinis College in 1980 with a B.S. in Health and Physical Education, minor in Biology, graduated from Temple University with an M.S.Ed in Exercise Physiology in 1981 and completed all Ph.D. work except dissertation in Cardiovascular Physiology, a University Fellow. From 1986 to 1995, Ms. O'Brien was Division Manager at Genentech, Inc. From October 1995 to 2001, she was Regional Business Director, Northeast Region of MedImmune, Inc. From 2001 to 2004, she was Vice President, Business Development & Marketing of AdvancedTraces, a company engaged in the development of supersensitive detection of biowarfare agents. Since 2004, Ms. O'Brien has been President of Independence, Inc., a firm engaged in providing consulting services to start-up biotechnology companies (Diasome, Get Better Health, LifeCell Dx).
Code of Ethics
We do not currently have a Code of.
Compliance with Section 16(a) of the Exchange Act
None of the officers, directors or owners own 10% or more of our common stock have filed reports required by section 16(a) of the Securities and Exchange Act of 1934, as amended.
EXECUTIVE COMPENSATION
The following table provides summary information for the years ended September 30, 2013, 2014, and 2015 concerning cash and non-cash compensation paid or accrued by us to or on behalf of our officers and directors.
DIRECTORS AND OFFICERS COMPENSATION
Name and
Principal Position
|
Annual compensation
|
Long-term compensation
|
|||||||
Salary
($)
|
Bonus
($) |
Other annual
compensation
($)
|
Awards
|
Payouts
|
All other
compen-
sation
($) (1)
|
||||
Year
|
Restricted
stock
award(s)
($)
|
Securities
underlying
options/
SARs
(#)
|
LTIP
payouts ($) |
Total
Compens-
ation
|
|||||
Brian Conway Executive Officer
|
2015
2014
2013
|
129,700
84,000
--
|
--
--
--
|
--
--
--
|
60,000
100,000
--
|
--
--
--
|
--
--
--
|
--
--
--
|
189,700
184,000
--
|
Jay Silverman, Director
|
2015
2014
2013
|
--
--
--
|
--
--
--
|
--
--
--
|
25,000
--
--
|
--
--
--
|
--
--
--
|
--
--
--
|
25,000
--
--
|
Kim O'Brien, Director
|
2014
2013
2012
|
--
--
--
|
--
--
--
|
--
--
--
|
21,250
--
--
|
--
--
--
|
--
--
--
|
--
--
--
|
21,250
--
--
|
Frank Pringle
|
2015
2014
2013
|
--
--
--
|
--
--
--
|
--
--
--
|
--
--
--
|
--
--
--
|
--
--
--
|
--
--
--
|
--
|
Elyse Thompson
|
2015
2014
2013
|
8,000
48,000
--
|
--
--
--
|
--
--
--
|
--
--
--
|
--
--
--
|
--
--
--
|
--
--
--
|
8,000
48,000
--
|
(1) | Chief Executive Officer, Chief Financial Officer and Director effective October 1, 2014, Mr. Conway was paid $12,000 per month as a consultant and received 12,000,000 shares of common stock and 10,000,000 preferred shares. |
(2) | Director as of October 1, 2014 |
(3) | Director as of October 1, 2014 |
(4) | Chief Executive Officer and Director until October 1, 2014 |
(5) | Chief Financial Officer and Director until October 1, 2014 |
COMPENSATION AGREEMENTS
We have no compensation arrangements (such as fees for retainer, committee service, service as chairman of the board or a committee, and meeting attendance) with directors.
DIRECTOR COMPENSATION
Members of our Board of Directors do not normally receive cash compensation for their services as Directors, although some Directors are reimbursed for reasonable expenses incurred in attending Board or committee meetings. All corporate actions are conducted by unanimous written consent of the Board of Directors.
STOCK OPTION PLAN
The Company has no outstanding stock option.
WARRANTS
On March 11, 2013, the Company entered into a Common Warrant Agreement with Mr. Frank Pringle granting him the right to acquire 300,000 common shares of the Company on or before March 11, 2015 at $1.00 per share, and with Ms. Elyse Thompson granting her the right to acquire 200,000 common shares of the Company on or before March 11, 2015 at $1.00 per share. The warrants were not exercised and have expired.
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The following table sets forth, as of February 6, 2015 certain information concerning the beneficial ownership of our common stock, by (i) each person known by us to own beneficially five per cent (5%) or more of the outstanding shares of each class, (ii) each of our directors and executive officers, and (iii) all of our executive officers and directors as a group.
The number of shares beneficially owned by each 5% stockholder, director or executive officer is determined under the rules of the Securities and Exchange Commission, or SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under those rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power and also any shares that the individual or entity has the right to acquire within 60 days after September 30, 2015 through the exercise of any stock option, warrant or other right, or the conversion of any security. Unless otherwise indicated, each person or entity has sole voting and investment power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion in the table below of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.
Name and Address (1)
|
Shares of Common Stock
Beneficially Owned
|
Percent of
Common Stock
|
Brian Conway
|
12,000,000
|
0.01
|
Jay Silverman
|
2,500,000
|
0.00
|
Kim O' Brien
|
2,500,000
|
0.00
|
All directors and officers as a group
|
0.01
|
(1) Denotes officer or director.
PREFERRED STOCK
Our board of directors is authorized to issue 10,000,000 shares of Common stock, with a par value of $0.001. On February 2, 2015 the Company issued 10,000,000 shares of preferred stock to an officer and director of the Company.
RELATED PARTY TRANACTIONS
On February 2, 2015 the Company issued to an officer and director of the Company 10,000,000 shares with a value of $10,000 of series A preferred stock for service. Each share has 10,000 votes on all matters of the Company in which the shareholders can vote.
In March, 2015 an officer and director of the Company advanced the Company $4,000 for payment of accounts payable. The advance is non-interest bearing and is due on demand.
On July 7, 2014 the Company issued, 5,000,000 shares to Brian Conway at par for officer compensation value of $ 5,000.
Director Independence
Our board of directors has determined that we do not have a board member that qualifies as "independent" as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.
Aggregate fees billed by the Company's principal accountants, Enterprise CPA, for audit services related to the most recent two fiscal years, and for other professional services billed in the most recent two fiscal years, were as follows:
|
FISCAL YEAR 2015
|
FISCAL YEAR 2014
|
||
Audit Fees (1)
|
$
|
5,000
|
$
|
5,250
|
Tax Fees (2)
|
$
|
None
|
$
|
None
|
All Other Fees
|
None
|
None
|
EXHIBIT INDEX
|
||||||
Incorporated by
|
||||||
Reference
|
||||||
Filing
Date/
|
||||||
Exhibit
|
Period
End
|
|||||
Number
|
Exhibit Description
|
Form
|
Date
|
|||
101.INS*
|
XBRL Instance Document
|
|||||
101.SCH*
|
XBRL Taxonomy Extension Schema
|
|||||
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase
|
|||||
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase
|
|||||
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase
|
|||||
101.PRE*
|
Taxonomy Extension Presentation Linkbase
|
* Filed with this Form 10-K
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized.
LIBERATED ENERGY, INC.
|
||
Date: February 12, 2016
|
||
By:
|
/s/ BRIAN CONWAY
|
|
Brian Conway
|
||
President, Director, Chief Financial Officer & Chief Executive Officer
(Principal Executive Officer)
(Principal Financial Officer and Principal Accounting Officer)
|
Pursuant to the requirements of the Securities Act of 1934, this amended report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
|
Title
|
Date
|
||
/s/ BRIAN CONWAY
|
President, Director, Secretary, Chief Financial Officer and
|
Date: February 12, 2016
|
||
Brian Conway
|
Chief Executive Officer
(Principal Executive Officer)
(Principal Financial Officer and Principal Accounting Officer)
|
|||
/s/ JAY SILVERMAN
|
Director
|
Date: February 12, 2016
|
||
Jay Silverman
|
||||
/s/ KIM O'BRIEN
|
Director
|
Date: February 10, 2016
|
||
Kim O'Brien
|
EXHIBIT INDEX
|
||||||
Incorporated by
|
||||||
Reference
|
||||||
Filing
Date/
|
||||||
Exhibit
|
Period
End
|
|||||
Number
|
Exhibit Description
|
Form
|
Date
|
|||
101.INS*
|
XBRL Instance Document
|
|||||
101.SCH*
|
XBRL Taxonomy Extension Schema
|
|||||
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase
|
|||||
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase
|
|||||
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase
|
|||||
101.PRE*
|
Taxonomy Extension Presentation Linkbase
|
* Filed with this Form 10-K
- 31 -