Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Dec. 31, 2013 | Feb. 19, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Universal Bioenergy, Inc. | ' |
Entity Central Index Key | '0001320729 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Dec-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--06-30 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 2,833,340,081 |
Document Fiscal Period Focus | 'Q2 | ' |
Document Fiscal Year Focus | '2013 | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2013 | Jun. 30, 2013 |
CURRENT ASSETS: | ' | ' |
Cash | $3,385 | $2,130 |
Accounts receivables | 6,035,719 | 9,173,462 |
Other loans | ' | 600 |
Total current assets | 6,039,104 | 9,176,192 |
PROPERTY AND EQUIPMENT - net | 3,687 | 6,335 |
OTHER ASSETS: | ' | ' |
Accounts receivables - other | -2,150 | 10,050 |
Investments | 2,929,550 | 2,919,500 |
Intangible assets | 250,000 | 250,000 |
Deposit | 6,516 | 7,452 |
Total other assets | 3,183,916 | 3,187,002 |
TOTAL ASSETS | 9,226,706 | 12,369,529 |
CURRENT LIABILITIES: | ' | ' |
Accounts payable | 6,255,276 | 9,333,980 |
Other accounts payable and accrued expenses | 185,540 | 363,922 |
Accrued interest | 166,126 | 124,949 |
Line of Credit | 7,272 | 6,618 |
Current portion of long term debt | 803,502 | 150,821 |
Derivative liability | 165,304 | 212,683 |
Advances from affiliates | 3,513 | 4,250 |
Total current liabilities | 7,586,534 | 10,197,223 |
Notes payable | 341,653 | 352,150 |
Notes payable - related parties | ' | 624,098 |
Total Long term debt | 341,653 | 976,248 |
TOTAL LIABILITIES | 7,928,187 | 11,173,471 |
Preferred stock, $.001 par value,10,000,000 shares authorized. Preferred stock Series A, 1,000,000 issued and outstanding shares December 31, 2013 and zero as of June 30, 2013 respectively | ' | ' |
Preferred stock Series B, 232,080 issued and outstanding shares December 31, 2013 and June 30, 2013 respectively | 232 | 232 |
Common stock, $.001 par value,3,000,000,000 shares authorized;2,833,340,081 and 2,660,594,986 issued and outstanding as of December 31, 2013 and June 30, 2013 respectively | 2,833,340 | 2,660,595 |
Additional paid-in capital | 21,287,362 | 20,884,031 |
Noncontrolling interest | -283,194 | -270,979 |
Accumulated deficit | -22,539,221 | -22,077,821 |
Total stockholders' deficit | 1,298,520 | 1,196,058 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $9,226,706 | $12,369,529 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2013 | Jun. 30, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred Stock , par value | $0.00 | $0.00 |
Preferred Stock, shares authorized | 10,000,000 | 0 |
Preferred Stock A, shares issued and outstanding | 1,000,000 | 0 |
Preferred Stock B, shares issued and outstanding | 232,080 | 232,080 |
Common Stock, par value | $0.00 | $0.00 |
Common Stock, shares authorized | 3,000,000,000 | 3,000,000,000 |
Common Stock, shares issued and outstanding | 2,833,340,081 | 2,660,594,986 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2013 | Jun. 30, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Statement [Abstract] | ' | ' | ' | ' |
REVENUES | $18,705,137 | $13,322,660 | $32,577,739 | $28,885,520 |
COST OF SALES | 18,685,525 | 13,303,088 | 32,545,312 | 28,841,943 |
GROSS PROFIT | 19,613 | 19,572 | 32,428 | 43,577 |
General and administrative | 204,396 | 394,760 | 360,281 | 740,217 |
Sales and marketing | ' | 12,942 | ' | 28,389 |
Depreciation and amortization expense | 654 | ' | 1,308 | 654 |
Total operating expenses | 205,050 | 407,702 | 361,589 | 769,261 |
LOSS FROM OPERATIONS | -185,437 | -388,130 | -329,161 | -725,683 |
Other income | 7,293 | 12,525 | 14,648 | 18,488 |
Initial (loss) on embedded derivatives issued | 0 | 159,447 | -92,168 | 131,858 |
Change in fair value of derivative liabilities | 151,039 | 1,131,139 | 303,836 | 700,481 |
Interest (expense), including amortization of beneficial conversion feature | -132,743 | -132,749 | -370,771 | -1,066,079 |
Total other expense | 25,589 | 1,170,362 | -144,455 | -215,252 |
(LOSS) FROM CONTINUING OPERATIONS | -159,848 | 782,232 | -473,616 | -940,935 |
(LOSS) FROM DISCONTINUED OPERATIONS - Loss on sale of bio-diesel plant equipment | ' | ' | ' | ' |
NET LOSS | -159,848 | 782,232 | -473,616 | -940,935 |
Net (Loss) attributable to noncontrolling interest | -4,084 | -36,073 | -12,215 | -66,165 |
Net (Loss) attributable to Universal | ($155,763) | $818,305 | ($461,400) | ($874,770) |
Basic and diluted loss per share | ' | ' | ' | ' |
Weighted average of shares outstanding | 2,701,496,674 | 615,689,097 | 2,606,396,706 | 554,593,028 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 6 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Statement of Cash Flows [Abstract] | ' | ' |
Net Loss | ($473,616) | ($940,935) |
Depreciation expense | 1,308 | 654 |
Common stock issued for services | ' | 3,800 |
Amortization of Beneficial conversion features | 266,229 | 310,700 |
Loss on embedded derivatives | 211,668 | -832,339 |
Accounts recievable | -545,644 | 689,108 |
Prepaid expenses and other assets | 14,936 | 1,200 |
Accrued expenses and other liabilities | -368,427 | -65,363 |
Accounts payable | 675,300 | -596,658 |
Net cash used in operating activities | -218,245 | -1,429,832 |
Investment in participation agreement-see note 10 | -40,050 | ' |
Net cash provided by (used in) investing activities | -40,050 | ' |
Advance from affiliate | ' | ' |
Principal payments on notes payable and line of credit | -153,500 | -1,977,134 |
Proceeds from notes payable issued and line of credit | 413,787 | 1,408,067 |
Net cash provided by financing activities | 259,550 | -569,067 |
INCREASE (DECREASE) IN CASH | 1,255 | 1,101 |
CASH and CASH EQUIVILANT BALANCE AT BEGINNING OF YEAR | 2,130 | ' |
CASH AND CASH EQUIVILANT BALANCE AT END OF YEAR | 3,385 | -3,447 |
Interest paid | ' | ' |
Taxes paid | ' | ' |
Investment in membership acquistion by issuing notes payable | ' | ' |
Issuance of common stock for the conversion of debt | 155,200 | 228,944 |
Common stock issued for intangible assets in acquisition | ' | ' |
Convertible notes issued for accrued liabilities | 388,250 | 4,000 |
Beneficial conversion feature of convertible notes payable | $448,662 | ($671,045) |
NOTE_1_DESCRIPTION_OF_BUSINESS
NOTE 1 - DESCRIPTION OF BUSINESS | 6 Months Ended |
Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' |
NOTE 1 - DESCRIPTION OF BUSINESS | ' |
NOTE 1 - DESCRIPTION OF BUSINESS | |
Overview of the Company | |
Universal Bioenergy Inc. (the “Company”) is an independent diversified energy company, headquartered in Irvine, California. Our common stock is presently listed on the OTC Markets Group trading systems under the trading symbol “UBRG”. Universal Bioenergy Inc. was incorporated on August 13, 2004, in the State of Nevada, under the name of Palomine Mining Inc. On October 24, 2007, the Company changed its name from Palomine Mining Inc. to Universal Bioenergy Inc. to better reflect its new business plan and strategic direction. | |
The Company’s primary business focus is the production, marketing, and sales of natural gas, petroleum, coal, liquefied natural gas (LNG), propane, refined petroleum products, electricity, and alternative energy. Through its 49% owned subsidiary, NDR Energy Group LLC, the Company has contracts to sells natural gas to 31 of the largest public utilities, electric power producers, and local gas distribution companies that serve millions of commercial, industrial, and residential customers throughout the United States. The Company is also engaged in the acquisition of oil and gas fields, lease acquisitions, development of newly discovered or recently discovered oil and gas fields, re-entering existing wells, and transmission and marketing of the products to our customer base. The Company intends to continue its growth through an ongoing series of acquisitions. | |
Our principal and administrative offices are located at 18100 Von Karman Avenue, Suite 850, Irvine, California, 92612. Our telephone number is 949-559-5017. | |
Universal Bioenergy files or furnishes various reports with the Securities and Exchange Commission (“SEC”). These reports, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (“1934 Act”), are available free of charge on Universal Bioenergy’s corporate website, www.universalbioenergy.com, as promptly as practicable after they are filed with, or furnished to, the SEC. The information contained on this website is not incorporated by reference into this Quarterly Report on Form 10-Q and should not be considered part of this report. Reports filed with the SEC are also made available on its website at www.sec.gov. | |
Global Energy Group LLC | |
With offices in both the United States and United Kingdom, GEG is positioned to take advantage of strategic relationships with investor partners and commodities traders in North America, Europe, and world emerging markets. | |
Global Energy Group, LLC “GEG”, our primary shareholder, is a holding company whose primary business is the acquisition of strategic business assets, companies, and investment or joint ventures in both private and public companies creating a mandated diversity in GEG’s portfolio. With offices in both the United States and United Kingdom, GEG is positioned to take advantage of strategic relationships with investor partners and commodities traders in North America, Europe, and world emerging markets. On April 10, 2013, Global Energy Group LLC, (“GEG”), converted its portfolio of Convertible Promissory Notes into common shares of UBRG stock; and was issued 1,568,630,000 common shares for that conversion. The 1,568,630,000 shares was the equivalent of 61.78% of UBRG’s 2,538,903,268 outstanding shares of common stock that were issued and outstanding on May 20, 201. As of June 30, 2013, GEG’s holdings were the equivalent of 55.36% of the issued and outstanding shares of UBRG. | |
Company History | |
Universal Bioenergy, Inc. (UBRG) was incorporated on August 13, 2004, under the laws of the State of Nevada. | |
On October 24, 2007, the Company changed its name from Palomine Mining Inc., to Universal Bioenergy, Inc. to better reflect its business plan. | |
On July 15, 2013, the Board of Directors approved a change in the Company’s fiscal year end from December 31 to June 30. |
NOTE_2_BASIS_OF_PRESENTATION
NOTE 2 - BASIS OF PRESENTATION | 6 Months Ended |
Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' |
NOTE 2 - BASIS OF PRESENTATION | ' |
NOTE 2 - BASIS OF PRESENTATION | |
Interim Financial Statements | |
The accompanying interim, unaudited, condensed, consolidated, financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information, and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months period ended December 31, 2013, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2014. | |
While management of the Company believes that the disclosures presented herein and adequate and not misleading, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, and the footnotes thereto for the fiscal year ended June 30, 2013, as filed with the Securities and Exchange Commission. |
NOTE_3_SUMMARY_OF_SIGNIFICANT_
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended | ||
Dec. 31, 2013 | |||
Accounting Policies [Abstract] | ' | ||
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows: | |||
Principle of Consolidation | |||
The consolidated financial statements include the accounts of Universal Bioenergy, Inc., and NDR Energy Group, LLC. Intercompany accounts and transactions have been eliminated in the consolidated financial statements. | |||
On April 12, 2010, the Company acquired a direct 49% financial interest in NDR Energy Group LLC (“NDR”). Additionally, through Varlos Energy Holdings LLC, an entity owned by officers of the Company, it acquired an additional control of 2% financial interest in NDR for a total direct and indirect financial interest and control of 51% of NDR. The operating agreement of NDR provides for voting in proportion to ownership. The Company directly has 51% voting control of NDR through its 49% member interest, and through a Voting Trust which the Company has the 2% voting interest of Varlos Energy Holdings LLC, and has accordingly consolidated its financial position, results of operations, and cash flows into these financial statements. | |||
Use of Estimates and Assumptions | |||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net sales and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates. | |||
Revenue and Cost Recognition | |||
Revenue includes product sales. The Company recognizes the majority of its consolidated revenue and cash flow from the sale of natural gas and related energy products at the time title to the product transfers, the amount is fixed and determinable, evidence of an agreement exists, and the customer bears the risk of loss, net of provision for rebates, and sales allowances in accordance with ASC Topic 605 “Revenue Recognition in Financial Statements”. | |||
Management has considered the various factors discussed in ASC 605-45-14-4-c and ASC 605-45-45 and believe that our natural gas purchase and sale transactions are appropriately reported gross rather than net. Generally the Company is the primary obligor in the arrangement, and the Company has latitude in establishing price, discretion in supplier selection, and credit risk in the event our customer defaults on the transaction. Additionally, the Company’s supplier is not the primary obligor in the arrangement, and the amount the Company earns is not fixed. Those transactions where the Company operates as an agent or broker for either the supplier or the customer at a fixed fee are reported net. | |||
Cash and Cash Equivalents | |||
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At December 31, 2013 and June 30, 2013 the Company had no cash equivalents. | |||
Property and Equipment | |||
Property and equipment is recorded at cost, and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired, or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized. | |||
The range of estimated useful lives used to calculated depreciation for principal items of property and equipment are as follows: | |||
Asset Category | Depreciation/Amortization Period | ||
Building | 40 Years | ||
Plant Equipment | 15 Years | ||
Furniture and Fixture | 3 Years | ||
Office Equipment | 3 Years | ||
Leasehold improvements | 5 Years | ||
Goodwill and Other Intangible Assets | |||
The Company adopted Statement of Financial Accounting Standard (“FASB”) Accounting Standards Codification (“ASC”) Topic 350 Goodwill and Other Intangible Assets, effective July 1, 2002. In accordance with (“ASC Topic 350”) "Goodwill and Other Intangible Assets", goodwill represents the excess of the purchase price and related costs over the value assigned to net tangible and identifiable intangible assets of businesses acquired, and accounted for, under the purchase method acquired in business combinations is assigned to reporting units that are expected to benefit from the synergies of the combination as of the acquisition date. Under this standard, goodwill and intangibles with indefinite useful lives are no longer amortized. The Company assesses goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter; or more frequently if events and circumstances indicate impairment may have occurred in accordance with ASC Topic 350. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, the Company records an impairment loss equal to the difference. ASC Topic 350 also requires that the fair value of indefinite-lived purchased intangible assets be estimated and compared to the carrying value. The Company recognizes an impairment loss when the estimated fair value of the indefinite-lived purchased intangible assets is less than the carrying value. | |||
Impairment of Long-Lived Assets | |||
In accordance with ASC Topic 365, long-lived assets, such as property, plant, equipment, and purchased intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Goodwill and other intangible assets are tested for impairment. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. There were no events or changes in circumstances that necessitated an impairment of long-lived assets. | |||
Income Taxes | |||
Deferred income taxes are provided based on the provisions of ASC Topic 740, "Accounting for Income Taxes", to reflect the tax consequences in future years of differences between the tax bases of assets and liabilities, and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. | |||
The Company adopted the provisions of ASC Topic 740; "Accounting For Uncertainty In Income Taxes-An Interpretation Of ASC Topic 740 ("ASC Topic 740"). ASC Topic 740 contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit; including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount; which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits; which may require periodic adjustments. At December 31, 2013, the Company did not record any liabilities for uncertain tax positions. | |||
Share-Based Compensation | |||
The Company applies Topic 718 “Share-Based Payments” (“Topic 718”) to share-based compensation; which requires the measurement of the cost of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Compensation cost is recognized when the event occurs. The Black-Scholes option-pricing model is used to estimate the fair value of options granted. | |||
Concentration of Credit Risk | |||
The Company maintains its operating cash balances in banks located in Irvine, California, and Charlotte, North Carolina. The Federal Depository Insurance Corporation (FDIC) insures accounts at each institution up to $250,000. | |||
Earnings Per Share | |||
Basic income (loss) 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, warrants, 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. Diluted loss per share is the same as basic loss per share because the effects of the additional securities, a result of the net loss would be anti-dilutive. | |||
The Company's financial instruments consist primarily of cash, and accounts payable. | |||
Fair Value of Financial Instruments | |||
The Company's financial instruments consist primarily of cash, accounts payable and accrued expenses, and debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market exchange, or from future earnings or cash flows. | |||
The Company adopted ASC Topic 820, Fair Value Measurements (“ASC Topic 820”); which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value; which focuses on an exit price that would be received upon sale of an asset, or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information; and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. | |||
The three-level hierarchy for fair value measurements is defined as follows: | |||
Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | |||
Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable or the asset or liability other than quoted prices, either directly or indirectly including inputs in markets that are not considered to be active. | |||
Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value | |||
Reclassification | |||
Certain prior period amounts have been reclassified to conform to current year presentations. | |||
Recently Issued Accounting Standards | |||
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its consolidated financial condition, or the consolidated results of its operations. | |||
In July 2012, the FASB issued ASU No. 2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment”. The guidance allows companies to perform a “qualitative” assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary, similar in approach to the goodwill impairment test. | |||
ASU 2012-02 allows companies the option to first assess qualitatively whether it is more likely than not that an indefinite-lived intangible asset is impaired before determining whether it is necessary to perform the quantitative impairment test. An entity is not required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative impairment test unless the entity determines that it is more likely than not that the asset is impaired. Companies can choose to perform the qualitative assessment on none, some, or all, of its indefinite-lived intangible assets; or choose to only perform the quantitative impairment test for any indefinite-lived intangible in any period. | |||
In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114. , Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations. | |||
In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. | |||
These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations. | |||
In April 2013, the FASB issued ASU No. 2013-07, Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting (“ASU 2013-07"). With ASU 2013-07, the FASB amends the guidance in the FASB Accounting Standards Codification [FASB ASC] Topic 205, entitled Presentation of Financial Statements. The amendments serve to clarify when and how reporting entities should apply the liquidation basis of accounting. The guidance is applicable to all reporting entities, whether they are public or private companies or not-for-profit entities. The guidance also provides principles for the recognition of assets and liabilities and disclosures, as well as related financial statement presentation requirements. With the new guidance, reporting entities in liquidation are required to prepare financial statements using a basis of accounting that communicates information to users of the financial statements to enable those users to develop expectations about how much the reporting entities will have available for distribution to investors after disposing of its assets and settling its obligations. The requirements in ASU 2013-07 are effective for annual reporting periods beginning after December 15, 2013, and interim reporting periods within those annual periods. Reporting entities are required to apply the requirements in ASU 2013-07 prospectively from the day that liquidation becomes imminent. Early adoption is permitted. | |||
No other accounting standards or interpretations issued recently are expected to a have a material impact on the Company’s consolidated financial position, operations, or cash flows. |
NOTE_4_NET_LOSS_PER_SHARE
NOTE 4 - NET LOSS PER SHARE | 6 Months Ended | ||||
Dec. 31, 2013 | |||||
NET (LOSS) PER SHARE: | ' | ||||
NOTE 4 - NET LOSS PER SHARE | ' | ||||
NOTE 4 - NET LOSS PER SHARE | |||||
The net loss per common share is calculated by dividing the income and loss by the weighted average number of shares outstanding during the periods. | |||||
The following table represents the computation of basic and diluted income and losses per share: | |||||
For the Six Months Ended December 31, 2013 | For the Six Months Ended December 31, 2012 | ||||
Net Loss for common shareholders | $ | -461,400 | $ | (874,770) | |
Weighted average common shares outstanding | 2,606,396,706 | 554,593,028 | |||
Basic and fully diluted net loss per share | $ | * | $ | * | |
Net loss per share is based upon the weighted average shares of common stock outstanding | |||||
*Net Loss per share is less than $(0.01) | |||||
The effect of common shares issuable under convertible notes is Anti-Dilutive and not included in diluted net loss per share. |
NOTE_5_EQUITY
NOTE 5 - EQUITY | 6 Months Ended |
Dec. 31, 2013 | |
Equity Method Investments and Joint Ventures [Abstract] | ' |
NOTE 5 - EQUITY | ' |
NOTE 5 - EQUITY | |
On December 26, 2012, the Company amended its Articles of Incorporation, and increased the authorized shares of common stock from 1,000,000,000 to 3,000,000,000 shares at $.001 par value. There are 2,478,570,850 shares of common stock issued and outstanding as of September 30, 2013. | |
On December 26, 2012, the Board of Directors increased the total number of authorized shares of Preferred Stock to 10,000,000 shares with a par value of $0.001 per share. As of September 30, 2013, there were 1,000,000 Series A Preferred Shares issued and outstanding, and a total of 232,080 Series B preferred shares issued and outstanding. | |
RECENT SALES OF UNREGISTERED SECURITIES | |
Common Stock Issued | |
For Second Fiscal Quarter Period Ending December 31, 2013 | |
At December 31, 2013, there were no outstanding stock options or warrants. | |
On October 18, 2013, the Company completed a full conversion one of its amended Notes payable dated October 16, 2013 with a principal amount of $50,000. A total of $50,000 worth of the Note was converted, and 77,000,000 common shares were issued for this conversion. Previously, on October 16, 2013, a non-affiliated party purchased a partial interest of $50,000 worth of a Note dated December 30, 2012, in a private non-public transaction from a non-related creditor. An amended Note for $50,000 dated October 16, 2013 at 12% interest was issued to the new Note Holder. This conversion of debt reduced the Company’s Notes Payables by $50,000. A balance of $00.00 of remains on the Amended Note, and $71,150 remains on the original Note. | |
On October 28, 2013, the Company completed a partial conversion one of its amended Notes payable dated July 18, 2013 with a principal amount of $130,000. This was the sixth in a series of conversions for this Note, including one on October 11, 2013, one on October 16, 2013, and one on October 28, 2013. A total of $46,000 worth of the Note was converted, and 76,483,517 common shares were issued for these three partial conversions. Previously, on July 18, 2013, a non-affiliated party purchased four existing Notes in a private non-public transaction from a non-related creditor. An amended Note for $130,000 dated July 18, 2013 at 12% interest was issued to the new Note Holder. The amended Note consolidated the four original Notes, which included $96,200 in principal, $19,049 in accrued interest and a $14,751 premium. This conversion of debt reduced the Company’s Notes Payables by $46,000. A balance of $28,457 of remains on the Amended Note. | |
On October 28, 2013 the Company completed the final and full conversion of one of its Notes payable dated March 18, 2013, for a Note with a principle amount of $42,500, and a total of 126,285,714 common shares were issued. The final conversion of the Note included $42,500 in principal and $1,700 in accrued interest that was due on the Note upon conversion. This leaves a remaining balance of $0.00 on this Note. This conversion of debt reduced the Company’s Notes Payables by a principal amount of $42,500. | |
On December 20, 2013 the Company completed a partial conversion of one of its Notes payable dated June 12, 2013, for a Note with a principle amount of $53,000, and a total of 75,000,000 common shares were issued. The final conversion of the Note included $15,000 in principal and $00.00 in accrued interest that was due on the Note upon conversion. This leaves a remaining balance of $38,000 on this Note. This conversion of debt reduced the Company’s Notes Payables by a principal amount of $15,000. | |
Issuance of Preferred Shares | |
No preferred shares were issued for this reporting period. | |
More detailed information about the issuance of preferred shares was discussed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2013. The information is fully discussed in Part II, Item 8. – Note 4 – Equity, “Preferred Stock”. There have been no material changes from the information previously disclosed in that Form 10-K. |
NOTE_6_PROPERTY_AND_EQUIPMENT
NOTE 6 - PROPERTY AND EQUIPMENT | 6 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Property, Plant and Equipment [Abstract] | ' | |||||||
NOTE 6 - PROPERTY AND EQUIPMENT | ' | |||||||
NOTE 6 - PROPERTY AND EQUIPMENT | ||||||||
The Company has property and equipment as of December 31, 2013 and June 30, 2013 as follows: | ||||||||
December 31, 2013 | 30-Jun-13 | |||||||
Equipment | 13,094 | $ | 13,094 | |||||
Land | — | — | ||||||
Building | — | — | ||||||
Accumulated depreciation | (9,407 | ) | (6,759 | ) | ||||
Total | 3,687 | $ | 6,335 | |||||
There was $2,648 and $1,308 depreciation expense for the six months ended December 30, 2013 and 2012 respectively. |
NOTE_7_NOTES_PAYABLE
NOTE 7 - NOTES PAYABLE | 6 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
NOTE 7 - NOTES PAYABLE | ' | ||||||||
NOTE 7 – NOTES PAYABLE | |||||||||
NOTE 7 – NOTES PAYABLE | |||||||||
31-Dec-13 | 30-Jun-13 | ||||||||
On December 31, 2010 the Company entered into a two (2) year convertible Promissory Note with its President and CEO, Vince M. Guest for $136,000 at 10% interest for the accrued compensation owed to him for the fiscal year 2010 in accordance with his Employment Agreement. The holder has the right to convert the note to common stock at $015. Conversion price change to $0.0025 by Board. On March 15, 2013, $60,000 worth of the Note was converted by a non-affliate assignee, leaving a balance of $76,000. | 76,000 | 76,000 | |||||||
On December 31, 2010 the Company entered into a two (2) year convertible Promissory Note with its Vice President Solomon Ali, for $165,000 at 10% interest for the accrued compensation owed to him for the fiscal year 2010 in accordance with his Employment Agreement. The holder has the right to convert the note to common stock at $015. On July 12, 2012, $100,000 worth of the Note was converted by non-affliates (assignees) to stock, leaving a balance of $65,000. Converion price changed to $0.015 by Board. | 65,000 | 65,000 | |||||||
On December 31, 2011 the Company entered into a two (2) year convertible Promissory Note with a non-related creditor for $14,407.92 at 12% interest for consulting services provided to the Company in accordance with their Consulting Agreement. The holder has the right to convert the note to common stock on July 1, 2012 at $0.01. | 14,407 | 14,407 | |||||||
On March 15, 2012 the Company entered into a two (2) year convertible Promissory Note with a non-related creditor for $70,000 at 12% interest. The holder has the right to convert the note to common stock at $0.008. Conversion price changed to $0.002 by Board. Partial conversion of $25,000 on April 24, 2013, leaving a balance of $45,000. | 45,000 | 45,000 | |||||||
On July 2, 2012 the Company entered into a two (2) year Promissory Note with its President, Vince M. Guest for $174,000 at 10% interest for a “special performance bonus” awarded him in accordance with his Employment Agreement. The Holder has the right to convert the Note to common stock at $0.005. Conversion price changed to $0.0025 by Board. | 174,000 | 174,000 | |||||||
On July 2, 2012 the Company entered into a two (2) year Promissory Note with its Manager of Business Development, Donald DeLuna for $35,250 at 10% interest for a “special performance bonus” awarded him in accordance with his Employment Agreement. The Holder has the right to convert the Note to common stock at $0.005. Conversion price changed to $0.0025 by Board. | 35,250 | 35,250 | |||||||
On November 30, 2012 the Company entered into a three (3) year Promissory Note with a non-related creditor for $135,100 at 12% interest. The Holder has the right to convert the Note to common stock at a fixed conversion price of $0.002 per share. | 135,100 | 135,100 | |||||||
On December 30, 2012 the Company entered into a three (3) year Promissory Note with a non-related creditor for $121,150 at 12% interest. The Holder has the right to convert the Note to common stock at a fixed conversion price of $0.002 per share. On October 16, 2013, a non-affiliated party purchased a partial interest of $50,000 worth of this Note in a private transaction. An amended Note for $50,000 dated October 16, 2013 at 12% interest was issued to the new Note Holder. On October 18, 2013, a total of $50,000 worth of the Note was converted. | 71,150 | 121,150 | |||||||
On December 31, 2012 the Company entered into a two (2) year convertible Promissory Note with its Vice President, Solomon Ali for $162,500 at 10% interest for the accrued compensation owed to him for the fiscal year 2012 in accordance with his Employment Agreement. The holder has the right to convert the Note to common stock at $0.0025. | 162,500 | 162,500 | |||||||
On December 31, 2012 the Company entered into a two (2) year convertible Promissory Note with its Manager of Business Development, Don Deluna, for $50,400 at 10% interest for the accrued compensation owed to him for the fiscal year 2012 in accordance with his Employment Agreement. The holder has the right to convert the Note to common stock at $0.0025. | 50,400 | 50,400 | |||||||
On December 31, 2012 the Company entered into a two (2) year convertible Promissory Note with its President and CEO, Vince M. Guest for $130,000 at 10% interest for the accrued compensation owed to him for the fiscal year 2012 in accordance with his Employment Agreement. The holder has the right to convert the Note to common stock at $0.0025. | 130,000 | 130,000 | |||||||
On December 31, 2012 the Company entered into a two (2) year convertible Promissory Note with a non-related creditor for $39,851.60 at 12% interest for consulting services provided to the Company in accordance with their Consulting Agreement. The holder has the right to convert the Note to common stock at $0.0025. | 39,851 | 39,851 | |||||||
On February 28, 2013 the Company entered into a three (3) year Promissory Note with a non-related creditor for $18,000 at 12% interest. The Holder has the right to convert the Note to common stock at a fixed conversion price of $0.002 per share. | 18,000 | 18,000 | |||||||
On March 18, 2013 the Company entered into a nine (9) month convertible Promissory Note with a non-related creditor for $42,500 at 8% interest. The Holder has the right to convert the Note to common stock at a variable conversion price at 50% discount to the market price at the time of conversion. This Note was converted to stock on October 28, 2013, which reduced the Company's notes payables by $42,500. | — | 42,500 | |||||||
On March 30, 2013 the Company entered into a three (3) year Promissory Note with a non-related creditor for $950.00 at 12% interest. The Holder has the right to convert the Note to common stock at a fixed conversion price of $0.002 per share. | 950 | 950 | |||||||
On April 1, 2013, a non-afilliated party purchased $49,000 of the principal of a $123,600 Note dated March 20, 2012, in a private non-public transaction. The Holder paid $7,000 as a premium for $49,000 of principal. A modified Note for $56,000 was issued to the new Note Holder. On April 23, 2013, the Company completed a partial conversion one of its amended Notes payable. A total of $49,000 worth of the Note was converted to common shares at a 50% discount to market prices. That part of the conversion this debt reduced the Company’s Notes Payables by $49,000. A Balance of $7,000 remains on the modified Note. | 7,000 | 7,000 | |||||||
On April 1, 2013 the Company entered into a nine (9) month convertible Promissory Note with a non-related creditor for $19,500 at 12% interest. The Holder has the right to convert the Note to common stock at a variable conversion price at 50% discount to the market price at the time of conversion. | 19,500 | 19,500 | |||||||
On April 30, 2013 the Company entered into a three (3) year convertible Promissory Note with a non-related creditor for $44,500 at 12% interest. The Holder has the right to convert the Note to common stock at $0.002. | 44,500 | 44,500 | |||||||
On June 12, 2013 the Company entered into a nine (9) month convertible Promissory Note with a non-related creditor for $53,000 at 8% interest. The Holder has the right to convert the Note to common stock at a variable conversion price at 50% discount to the market price at the time of conversion. On December 20, 2013, $15,000 of this Note was converted to stock, which reduced the Company's Notes payables to $38,000. | 38,000 | 53,000 | |||||||
*On July 18, 2013 the Company issued an Amended twelve (12) month Convertible Promissory Note with a non-related creditor for $130,000 at 12% interest. The Holder purchased four existing Promissory Notes from another Note Holder in a private non-public transaction. The Amended Note consolidated the four original Notes, which included $96,200 in principal, $19,049 in accrued interest and a $14,751 premium. The Holder has the right to convert the Promissory Note to common stock at a variable conversion price at 50% discount to the market price at the time of conversion. As of December 31, 2013, a total of $101,543 worth of the Note was converted to stock. | 28,457 | — | |||||||
On July 18, 2013 the Company entered into a twelve (12) month convertible Promissory Note with a non-related creditor for $43,500 at 12% interest. The Holder has the right to convert the Note to common stock at a variable conversion price at 50% discount to the market price at the time of conversion. | 43,500 | 43,500 | |||||||
On September 30, 2013, the Company entered into a three (3) year Promissory Note with a non-related creditor for $28,700 at 12% interest. The Holder has the right to convert the Note to common stock at a fixed conversion price of $0.00115 per share. | 28,700 | 28,700 | |||||||
On October 30, 2013, the Company entered into a three (3) year Promissory Note with a non-related creditor for $8,797.67 at 12% interest. The Holder has the right to convert the Note to common stock at a fixed conversion price of $0.00115 per share. | 8,798 | 0 | |||||||
On November 30, 2013, the Company entered into a three (3) year Promissory Note with a non-related creditor for $8,539.07 at 12% interest. The Holder has the right to convert the Note to common stock at a fixed conversion price of $0.00115 per share. | 8,539 | — | |||||||
On December 31, 2013, the Company entered into a three (3) year Promissory Note with a non-related creditor for $8,200 at 12% interest. The Holder has the right to convert the Note to common stock at a fixed conversion price of $0.00115 per share. | 8,200 | — | |||||||
On December 31, 2013 the Company entered into a two (2) year convertible Promissory Note with its Vice President, Solomon Ali for $160,000 at 10% interest for the accrued compensation owed to him for the fiscal year 2013 in accordance with his Employment Agreement. The holder has the right to convert the Note to common stock at $0.00015. | 160,000 | 0 | |||||||
On December 31, 2013 the Company entered into a two (2) year convertible Promissory Note with its Manager of Business Development, Don Deluna, for $67,300 at 10% interest for the accrued compensation owed to him for the fiscal year 2013 in accordance with his Employment Agreement. The holder has the right to convert the Note to common stock at $0.00015. | 67,300 | 0 | |||||||
On December 31, 2013 the Company entered into a two (2) year convertible Promissory Note with its President and CEO, Vince M. Guest for $160,950 at 10% interest for the accrued compensation owed to him for the fiscal year 2012 in accordance with his Employment Agreement. The holder has the right to convert the Note to common stock at $0.00015. | 160,950 | — | |||||||
Total long-term note payable | 1,641,053 | $ | 1,234,110 | ||||||
Less Current portion | (928,867 | ) | (150,821 | ) | |||||
Less Debt discount | (56,390 | ) | (104,685 | ) | |||||
Less Convertible notes, net | (80,067 | ) | (131,056 | ) | |||||
Less Beneficial Conversion Feature | (234,076 | ) | (131,056 | ) | |||||
Long-term portion of notes payable | 341,653 | $ | 847,548 | ||||||
Principal maturities of notes payable as of December 31, 2013, for the next five years and thereafter is as follows: | |||||||||
2014 | $ | 928,866 | |||||||
2015 | $ | 594,500 | |||||||
2016 | $ | 117,687 | |||||||
2017 | $ | 0 | |||||||
2018 | $ | 0 | |||||||
Total | $ | 1,641,053 | |||||||
For the above convertible notes, pursuant to ASC Topic 470, the Company reviewed and determined that in most cases a beneficial conversion feature existed since the conversion price was less than market price at the date the notes were issued. The beneficial conversion feature is amortized over the life of the note using the interest method. | |||||||||
* For more information on the Convertible Notes see Part II - Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations under “Debt”, and Note 7, “Notes Payable”, and Part I – Item 1A, “Risk Factors”, in our Annual Report on Form 10-K for the fiscal year ended June 30, 2013. | |||||||||
Embedded Derivatives | |||||||||
Notes that are convertible at a discount to market are considered embedded derivatives. For more information on the Notes affected, refer to Management’s Discussion and analysis, and the above list. | |||||||||
Under Financial Accounting Standard Board (“FASB”), U.S. GAAP, Accounting Standards Codification, “Derivatives and Hedging”, ASC Topic 815 (“ASC 815”) requires that all derivative financial instruments be recorded on the balance sheet at fair value. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market based pricing models incorporating readily observable market data; requiring judgment and estimates. | |||||||||
The Company issued convertible Notes, and has evaluated the terms and conditions of the conversion features contained in the Notes to determine whether they represent embedded or freestanding derivative instruments under the provisions of ASC 815. The Company determined that the conversion features contained in the Notes represent freestanding derivative instruments that meet the requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial instruments in the Notes is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial instruments of the convertible Notes and warrants was measured at the inception date of the Notes and warrants, and each subsequent balance sheet date. Any changes in the fair value of the derivative financial instruments are recorded as non-operating, non-cash income, or expense at each balance sheet date. | |||||||||
The Company valued the conversion features in its convertible Notes using the Black-Scholes model. The Black-Scholes model values the embedded derivatives based on a risk-free rate of return ranging from 0.10% to 0.11%, grant dates of Notes, the term of the Notes, conversion prices are 50% of current stock prices on the measurement date ranging from $0.00015 to $0.0005, and the computed measure of the Company’s stock volatility, ranging from 166.86% to 10.93% | |||||||||
Included in the December 31, 2013, is a derivative liability in the amount of $165,305 to account for this transaction. This liability arose in the second quarter of 2012, and the balance was $165,305 as of June 30, 2013. It will be revalued quarterly henceforth, and adjusted as a gain or loss to the statements of operations depending on its value at that time. | |||||||||
Included in our Statements of Operations for the three months ended December 31, 2013 was $20,432 and $0 in non-cash charges pertaining to the derivative liability as it pertains to change in derivative liability and amortization of debt discount, respectively. |
NOTE_8_RELATED_PARTY_TRANSACTI
NOTE 8 - RELATED PARTY TRANSACTIONS | 6 Months Ended |
Dec. 31, 2013 | |
Subsequent Events [Abstract] | ' |
NOTE 8- RELATED PARTY TRANSACTONS | ' |
NOTE 8 – RELATED PARTY TRANSACTION | |
Related party transactions reported for this period are as follows: | |
There are no Related Party Transactions to report for this period. | |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; | |
There are no changes to report in our Board of Directors, Officers, or compensation arrangements for our Officers, during for the period ending December 31, 2013. The situation regarding these matters has not changed materially from the description in the Annual Report on Form 10-K for the period ended June 30, 2013. |
NOTE_9_ACQUISITION
NOTE 9 - ACQUISITION | 6 Months Ended |
Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ' |
NOTE 9 -ACQUISITION | ' |
NOTE 9 – ACQUISTION | |
There are no acquisitions to report for this period. |
NOTE_10_CONTINGENCIES
NOTE 10 - CONTINGENCIES | 6 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
NOTE 10 - COMMITMENTS AND CONTINGENCIES | ' |
NOTE 10 - CONTINGENCIES | |
There are no Commitments and Contingencies to report for this period. |
NOTE_11_SUBSEQUENT_EVENTS
NOTE 11 - SUBSEQUENT EVENTS | 6 Months Ended |
Dec. 31, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
NOTE 11 - SUBSEQUENT EVENTS | ' |
NOTE 11 – SUBSEQUENT EVENTS | |
The following events occurred subsequent to the period covered by this Form 10-Q Quarterly Report for the period ended December 31, 2013. |
NOTE_12_GOING_CONCERN_ISSUES
NOTE 12 - GOING CONCERN ISSUES | 6 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
NOTE 12 - GOING CONCERN ISSUES | ' |
NOTE 12 - GOING CONCERN ISSUES | |
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern. The Company has accumulated losses totaling $22,539,221 from its inception to December 31, 2013. Furthermore, the Company has consistently had to raise debt and equity capital to fund cash used in operations. | |
These factors raise doubt about the ability of the Company to continue as a going concern if the Company does not continue to raise sufficient amounts of capital. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. The Company's ability to meet its obligations and continue as a going concern is dependent upon its ability to obtain additional financing, achievement of profitable operations, and/or the discovery, distribution, and marketing of its supplies of natural gas, propane, and coal reserves. | |
The negative working capital at December 31, 2013, is a condition experienced by many high-growth companies similar to ours, and has not had a significant negative effect on our operations. This is due to our ability to raise capital; the contracts we have with our utility customers, their strong S&P credit ratings, and their consistent payment of our invoices on schedule. Due to the timing of the transactions we are able to maximize the efficiency of the billing and payment cycles, thereby minimizing the impact of any occasional periods of negative working capital. Additionally, our ability to purchase gas at the wellhead, from other independent producers at the producer’s price, and obtain lines of credit and accounts receivable facilities, should enable us to greatly improve our cash flow and increase our working capital. | |
Our ability to implement our growth plans will depend primarily on our ability to obtain additional private or public equity or debt financing. We are currently seeking additional capital from our current investors and creditors to achieve our goals and objectives. However, such financing from these investors and creditors may not be available at all, or we may be unable to locate and secure additional capital on terms and conditions that are acceptable to us. Our failure to obtain additional capital may have a material adverse effect on our business. We believe, although we cannot guarantee, and remain confident, that we will be able to raise capital in sufficient amounts to execute the business strategies, plans, and decisions that have been made by the Company, and to meet the potential challenges. | |
The Company, in association with its investors and creditors, was able to raise sufficient amounts of capital to meet its operating expenses and working capital needs for the period ending December 31, 2013. We were also able to proceed with the acquisition of the ownership interest in a coal mining company; which management believes, but cannot guarantee, will generate additional revenue, positive working capital, and net earnings for the Company in the fiscal year 2014 and beyond. |
NOTE_13_CONCENTRATONS
NOTE 13 - CONCENTRATONS | 6 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
NOTE 13 - CONCENTRATONS | ' |
NOTE 13 - CONCENTRATIONS | |
At December 31, 2013, 100% of the Company's accounts receivable was due from three customers during the three months ended December 31, 2013, and 94% of total revenue was generated from four customers, for the three months ended December 31, 2012. |
NOTE_14_INVESTMENTS_IN_PARTNER
NOTE 14 - INVESTMENTS IN PARTNERSHIPS AND LLC'S | 6 Months Ended | |||||
Dec. 31, 2013 | ||||||
Notes to Financial Statements | ' | |||||
NOTE 14 - INVESTMENTS IN PARTNERSHIPS AND LLC'S | ' | |||||
NOTE 14 - INVESTMENTS IN PARTNERSHIPS AND LLC'S | ||||||
Universal Bioenergy, Inc., is a limited partner in Progas Energy Services, and is a minority member of Whitesburg Friday Branch Mine, LLC. | ||||||
In 2011, the Company acquired a 7.5 percent interest in Progas Ennergy Services. The fairmarket value of which has been established. Also in 2011, the Company acquired a 40 percent interest in Whitesburg Friday Branch Mine, LLC. The fair market value of which has not been established. | ||||||
Partnership | Percentage of Ownership | Book Equity 6/30/13 | Partnership Contributions (Distributions) | Share of Net Income (Loss) | Book Equity 9/30/13 | |
Progas Energy Services | 7.50% | $197,631 | $0 | $8,513 | $198,013 | |
Whitesburg Friday Branch Mine, LLC | 40% | $2,700,000 | $0 | $0 | $2,700,000 | |
Totals | $2,897,630 | $0 | $8,513 | $2,898,013 | ||
NOTE_2_BASIS_OF_PRESNETATION_P
NOTE 2 - BASIS OF PRESNETATION (Policies) | 6 Months Ended |
Dec. 31, 2013 | |
Note 2 - Basis Of Presnetation Policies | ' |
Interim Financial Statements | ' |
The accompanying interim, unaudited, condensed, consolidated, financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information, and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months period ended September 30, 2013, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2014. | |
While management of the Company believes that the disclosures presented herein and adequate and not misleading, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, and the footnotes thereto for the fiscal year ended June 30, 2013, as filed with the Securities and Exchange Commission. |
NOTE_3_SUMMARY_OF_SIGNIFICANT_1
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended | ||
Dec. 31, 2013 | |||
Accounting Policies [Abstract] | ' | ||
Principle of Consolidation | ' | ||
Principle of Consolidation | |||
The consolidated financial statements include the accounts of Universal Bioenergy, Inc., and NDR Energy Group, LLC. Intercompany accounts and transactions have been eliminated in the consolidated financial statements. | |||
On April 12, 2010, the Company acquired a direct 49% financial interest in NDR Energy Group LLC (“NDR”). Additionally, through Varlos Energy Holdings LLC, an entity owned by officers of the Company, it acquired an additional control of 2% financial interest in NDR for a total direct and indirect financial interest and control of 51% of NDR. The operating agreement of NDR provides for voting in proportion to ownership. The Company directly has 51% voting control of NDR through its 49% member interest, and through a Voting Trust which the Company has the 2% voting interest of Varlos Energy Holdings LLC, and has accordingly consolidated its financial position, results of operations, and cash flows into these financial statements. | |||
Use of Estimates and Assumptions | ' | ||
Use of Estimates and Assumptions | |||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net sales and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates. | |||
Revenue and Cost Recognition | ' | ||
Revenue and Cost Recognition | |||
Revenue includes product sales. The Company recognizes the majority of its consolidated revenue and cash flow from the sale of natural gas and related energy products at the time title to the product transfers, the amount is fixed and determinable, evidence of an agreement exists, and the customer bears the risk of loss, net of provision for rebates, and sales allowances in accordance with ASC Topic 605 “Revenue Recognition in Financial Statements”. | |||
Management has considered the various factors discussed in ASC 605-45-14-4-c and ASC 605-45-45 and believe that our natural gas purchase and sale transactions are appropriately reported gross rather than net. Generally the Company is the primary obligor in the arrangement, and the Company has latitude in establishing price, discretion in supplier selection, and credit risk in the event our customer defaults on the transaction. Additionally, the Company’s supplier is not the primary obligor in the arrangement, and the amount the Company earns is not fixed. Those transactions where the Company operates as an agent or broker for either the supplier or the customer at a fixed fee are reported net. | |||
Cash and Cash Equivalents | ' | ||
Cash and Cash Equivalents | |||
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At December 31, 2013 and June 30, 2013 the Company had no cash equivalents. | |||
Property and Equipment | ' | ||
Property and Equipment | |||
Property and equipment is recorded at cost, and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired, or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized. | |||
The range of estimated useful lives used to calculated depreciation for principal items of property and equipment are as follows: | |||
Asset Category | Depreciation/Amortization Period | ||
Building | 40 Years | ||
Plant Equipment | 15 Years | ||
Furniture and Fixture | 3 Years | ||
Office Equipment | 3 Years | ||
Leasehold improvements | 5 Years | ||
Goodwill and Other Intangible Assets | ' | ||
Goodwill and Other Intangible Assets | |||
The Company adopted Statement of Financial Accounting Standard (“FASB”) Accounting Standards Codification (“ASC”) Topic 350 Goodwill and Other Intangible Assets, effective July 1, 2002. In accordance with (“ASC Topic 350”) "Goodwill and Other Intangible Assets", goodwill represents the excess of the purchase price and related costs over the value assigned to net tangible and identifiable intangible assets of businesses acquired, and accounted for, under the purchase method acquired in business combinations is assigned to reporting units that are expected to benefit from the synergies of the combination as of the acquisition date. Under this standard, goodwill and intangibles with indefinite useful lives are no longer amortized. The Company assesses goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter; or more frequently if events and circumstances indicate impairment may have occurred in accordance with ASC Topic 350. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, the Company records an impairment loss equal to the difference. ASC Topic 350 also requires that the fair value of indefinite-lived purchased intangible assets be estimated and compared to the carrying value. The Company recognizes an impairment loss when the estimated fair value of the indefinite-lived purchased intangible assets is less than the carrying value. | |||
Impairment of Long-Lived Assets | ' | ||
Impairment of Long-Lived Assets | |||
In accordance with ASC Topic 365, long-lived assets, such as property, plant, equipment, and purchased intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Goodwill and other intangible assets are tested for impairment. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. There were no events or changes in circumstances that necessitated an impairment of long-lived assets. | |||
Income Taxes | ' | ||
Income Taxes | |||
Deferred income taxes are provided based on the provisions of ASC Topic 740, "Accounting for Income Taxes", to reflect the tax consequences in future years of differences between the tax bases of assets and liabilities, and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. | |||
The Company adopted the provisions of ASC Topic 740; "Accounting For Uncertainty In Income Taxes-An Interpretation Of ASC Topic 740 ("ASC Topic 740"). ASC Topic 740 contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit; including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount; which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits; which may require periodic adjustments. At December 31, 2013, the Company did not record any liabilities for uncertain tax positions. | |||
Share-Based Compensation | ' | ||
Share-Based Compensation | |||
The Company applies Topic 718 “Share-Based Payments” (“Topic 718”) to share-based compensation; which requires the measurement of the cost of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Compensation cost is recognized when the event occurs. The Black-Scholes option-pricing model is used to estimate the fair value of options granted. | |||
Concentration of Credit Risk | ' | ||
Concentration of Credit Risk | |||
The Company maintains its operating cash balances in banks located in Irvine, California, and Charlotte, North Carolina. The Federal Depository Insurance Corporation (FDIC) insures accounts at each institution up to $250,000. | |||
Earnings Per Share | ' | ||
Earnings Per Share | |||
Basic income (loss) 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, warrants, 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. Diluted loss per share is the same as basic loss per share because the effects of the additional securities, a result of the net loss would be anti-dilutive. | |||
The Company's financial instruments consist primarily of cash, and accounts payable. | |||
Fair Value of Financial Instruments | ' | ||
Fair Value of Financial Instruments | |||
The Company's financial instruments consist primarily of cash, accounts payable and accrued expenses, and debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market exchange, or from future earnings or cash flows. | |||
The Company adopted ASC Topic 820, Fair Value Measurements (“ASC Topic 820”); which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value; which focuses on an exit price that would be received upon sale of an asset, or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information; and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. | |||
The three-level hierarchy for fair value measurements is defined as follows: | |||
Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | |||
Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable or the asset or liability other than quoted prices, either directly or indirectly including inputs in markets that are not considered to be active. | |||
Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value | |||
Reclassification | ' | ||
Reclassification | |||
Certain prior period amounts have been reclassified to conform to current year presentations. | |||
Recently Issued Accounting Standards | ' | ||
Recently Issued Accounting Standards | |||
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its consolidated financial condition, or the consolidated results of its operations. | |||
In July 2012, the FASB issued ASU No. 2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment”. The guidance allows companies to perform a “qualitative” assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary, similar in approach to the goodwill impairment test. | |||
ASU 2012-02 allows companies the option to first assess qualitatively whether it is more likely than not that an indefinite-lived intangible asset is impaired before determining whether it is necessary to perform the quantitative impairment test. An entity is not required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative impairment test unless the entity determines that it is more likely than not that the asset is impaired. Companies can choose to perform the qualitative assessment on none, some, or all, of its indefinite-lived intangible assets; or choose to only perform the quantitative impairment test for any indefinite-lived intangible in any period. | |||
In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114. , Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations. | |||
In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. | |||
These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations. | |||
In April 2013, the FASB issued ASU No. 2013-07, Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting (“ASU 2013-07"). With ASU 2013-07, the FASB amends the guidance in the FASB Accounting Standards Codification [FASB ASC] Topic 205, entitled Presentation of Financial Statements. The amendments serve to clarify when and how reporting entities should apply the liquidation basis of accounting. The guidance is applicable to all reporting entities, whether they are public or private companies or not-for-profit entities. The guidance also provides principles for the recognition of assets and liabilities and disclosures, as well as related financial statement presentation requirements. With the new guidance, reporting entities in liquidation are required to prepare financial statements using a basis of accounting that communicates information to users of the financial statements to enable those users to develop expectations about how much the reporting entities will have available for distribution to investors after disposing of its assets and settling its obligations. The requirements in ASU 2013-07 are effective for annual reporting periods beginning after December 15, 2013, and interim reporting periods within those annual periods. Reporting entities are required to apply the requirements in ASU 2013-07 prospectively from the day that liquidation becomes imminent. Early adoption is permitted. | |||
No other accounting standards or interpretations issued recently are expected to a have a material impact on the Company’s consolidated financial position, operations, or cash flows. |
NOTE_3_SUMMARY_OF_SIGNIFICANT_2
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING (Tables) | 6 Months Ended | ||
Dec. 31, 2013 | |||
Accounting Policies [Abstract] | ' | ||
NOTE 3 - PROPERTY AND EQUIPMENT | ' | ||
Asset Category | Depreciation/Amortization Period | ||
Building | 40 Years | ||
Plant Equipment | 15 Years | ||
Furniture and Fixture | 3 Years | ||
Office Equipment | 3 Years | ||
Leasehold improvements | 5 Years | ||
NOTE_4_NET_LOSS_PER_SHARE_Tabl
NOTE 4 - NET LOSS PER SHARE (Tables) | 6 Months Ended | ||||
Dec. 31, 2013 | |||||
NET (LOSS) PER SHARE: | ' | ||||
Computation of basic and diluted income and loss per share | ' | ||||
For the Six Months Ended December 31, 2013 | For the Six Months Ended December 31, 2012 | ||||
Net Loss for common shareholders | $ | -461,400 | $ | (874,770) | |
Weighted average common shares outstanding | 2,606,396,706 | 554,593,028 | |||
Basic and fully diluted net loss per share | $ | * | $ | * | |
Net loss per share is based upon the weighted average shares of common stock outstanding |
NOTE_6_PROPERTY_AND_EQUIPMENT_
NOTE 6 - PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Property, Plant and Equipment [Abstract] | ' | |||||||
Property and Equipment | ' | |||||||
December 31, 2013 | 30-Jun-13 | |||||||
Equipment | 13,094 | $ | 13,094 | |||||
Land | — | — | ||||||
Building | — | — | ||||||
Accumulated depreciation | (9,407 | ) | (6,759 | ) | ||||
Total | 3,687 | $ | 6,335 |
NOTE_7_NOTES_PAYABLE_Tables
NOTE 7 - NOTES PAYABLE (Tables) (USD $) | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Debt Disclosure [Abstract] | ' | ' | ' | ' | ' |
Principal Maturities | $0 | $0 | $117,687 | $594,500 | $928,866 |
NOTE_15_INVESTMENTS_IN_PARTNER
NOTE 15 - INVESTMENTS IN PARTNERSHIPS AND LLC'S (Tables) | 6 Months Ended | |||||
Dec. 31, 2013 | ||||||
Notes to Financial Statements | ' | |||||
Investments Partnerships and LLC's | ' | |||||
Partnership | Percentage of Ownership | Book Equity 6/30/13 | Partnership Contributions (Distributions) | Share of Net Income (Loss) | Book Equity 9/30/13 | |
Progas Energy Services | 7.50% | $197,631 | $0 | $8,513 | $198,013 | |
Whitesburg Friday Branch Mine, LLC | 40% | $2,700,000 | $0 | $0 | $2,700,000 | |
Totals | $2,897,630 | $0 | $8,513 | $2,898,013 |
NOTE_1_DESCRIPTION_OF_BUSINESS1
NOTE 1 - DESCRIPTION OF BUSINESS (Details Narrative) | Jun. 30, 2013 | Apr. 10, 2013 | 20-May-13 |
Global Energy Group (GEG) | UBRG | ||
Common shares issued on convertible promisorry notes | ' | 1,568,630,000 | ' |
Common stock issued and outstanding | ' | ' | 2,538,903,268 |
Total interest held | 55.36 | 61.78 | ' |
NOTE_3_SUMMARY_OF_SIGNIFICANT_3
NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | Dec. 31, 2013 |
Notes to Financial Statements | ' |
Acquired financial interest in NDR | 4900.00% |
Additional financial interest in NDR | 5100.00% |
Total direct and indirect interest of NDR | 5100.00% |
NOTE_5_EQUITY_Details_Narrativ
NOTE 5 - EQUITY (Details Narrative) (USD $) | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 26, 2012 |
Notes to Financial Statements | ' | ' | ' | ' |
Increased authorized shares | ' | ' | ' | 3,000,000,000 |
Par value of shares | $0.00 | ' | $0.00 | $0.00 |
Common stock issued and outstanding | 2,833,340,081 | 2,478,570,850 | 2,660,594,986 | ' |
Preferred Stock authorized | 10,000,000 | ' | 0 | 10,000,000 |
Preferred stock par value | $0.00 | ' | $0.00 | $0.00 |
Series A preferred shares authorized | ' | 1,000,000 | ' | ' |
Series A preferred shares authorized par value | $0.00 | ' | $0.00 | $0.00 |
Series B preferred shares authorized | ' | ' | ' | 232,080 |
Series B preferred shares issued and outstanding | ' | 232,080 | ' | ' |
NOTE_6_PROPERTY_AND_EQUIPMENT_1
NOTE 6 - PROPERTY AND EQUIPMENT (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2012 | Dec. 31, 2013 | |
Notes to Financial Statements | ' | ' |
Depreciation expense | $1,308 | $2,648 |
NOTE_7_NOTES_PAYABLE_Details_N
NOTE 7 - NOTES PAYABLE (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2013 | Dec. 31, 2013 | |
Notes to Financial Statements | ' | ' |
Conversion prices range minimum | ' | 10.00% |
Conversion prices range maximum | ' | 0.11 |
Stock price range lower | ' | $0.00 |
Stock price range higher | ' | $0.00 |
Stock volatility lower | ' | 16686.00% |
Stock volatility higher | ' | 1093.00% |
Derivative liability | $165,305 | $165,305 |
Derivative liability changes (non-cash) | 0 | 0 |
Derivative liability change | $0 | $20,432 |
NOTE_7_NOTES_PAYABLE_Long_term
NOTE 7 - NOTES PAYABLE - Long term (Details) (USD $) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2013 | Dec. 31, 2013 | |
Notes to Financial Statements | ' | ' |
Embedded derivatives rate higher | ' | 0.18 |
Embedded derivatives rate lower | ' | 0.12 |
Stock Volatility | ' | 19759.00% |
Derivative liability amount | ($224,153) | $2,471,970 |
Derivative liability amortization | $510,728 | $212,683 |
Stock price range lower | ' | $0.00 |
Stock price range higher | ' | $0.00 |
NOTE_12_GOING_CONCERN_ISSUES_D
NOTE 12 - GOING CONCERN ISSUES (Details Narrative) (USD $) | 106 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
Company accumulated losses | $22,539,221 |
NOTE_13_CONCENTRATONS_Details_
NOTE 13 - CONCENTRATONS (Details Narrative) | 3 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Notes to Financial Statements | ' | ' |
Account receivable related parties | 100 | ' |
Revenue | ' | 94 |