Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Jan. 31, 2014 | Jun. 11, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'HARMONIC ENERGY, INC. | ' |
Entity Central Index Key | '0001404935 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Jan-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--07-31 | ' |
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 | ' | 74,037,262 |
Document Fiscal Period Focus | 'Q2 | ' |
Document Fiscal Year Focus | '2013 | ' |
Balance_Sheets
Balance Sheets (USD $) | Jan. 31, 2014 | Jul. 31, 2013 |
Current Assets | ' | ' |
Cash and equivalents | $3,657 | $15,200 |
Prepaid expenses | 484 | 484 |
Deferred financing costs, net of amortization | 0 | 2,083 |
Total Current Assets | 4,141 | 17,767 |
Other Assets | ' | ' |
License agreement | 175,000 | 175,000 |
TOTAL ASSETS | 179,141 | 192,767 |
Current Liabilities | ' | ' |
Accrued expenses | 151,522 | 65,204 |
Accrued expenses-related | 338 | 0 |
Accrued interest | 6,008 | 2,082 |
Note payable | 50,000 | 50,000 |
Convertible note payable, net of debt discount | 45,825 | 7,983 |
Derivative liability | 29,487 | 20,445 |
Total Current Liabilities | 283,180 | 145,714 |
Long-term Liabilities | ' | ' |
Note payable | ' | ' |
Total Liabilities | 283,180 | 145,714 |
Stockholders Equity | ' | ' |
Common Stock, $.001 par value, 100,000,000 shares authorized, 76,037,262 and 74,037,262 and shares issued and outstanding | 76,037 | 74,037 |
Additional paid-in capital | 1,779,489 | 1,701,489 |
Stock warrants | 249,409 | 249,409 |
Deferred stock-based compensation | -325,595 | -455,833 |
Deficit accumulated during the development stage | -1,883,379 | -1,522,049 |
Total Stockholders Equity | -104,039 | 47,053 |
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY | $179,141 | $192,767 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Jan. 31, 2014 | Jul. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, issued and outstanding | 76,037,262 | 74,037,262 |
Statements_of_Operations
Statements of Operations (USD $) | 3 Months Ended | 6 Months Ended | 81 Months Ended | ||
Jan. 31, 2014 | Jan. 31, 2013 | Jan. 31, 2014 | Jan. 31, 2013 | Jan. 31, 2014 | |
Income Statement [Abstract] | ' | ' | ' | ' | ' |
REVENUES | $0 | $0 | $0 | $0 | $200 |
EXPENSES | ' | ' | ' | ' | ' |
Professional fees | 13,125 | 16,505 | 21,106 | 18,605 | 370,224 |
Consulting fees | 115,318 | 30,000 | 315,655 | 43,000 | 754,365 |
Website development | 0 | 0 | 0 | 0 | 9,000 |
General and administrative | 4,283 | 4,127 | 9,146 | 9,139 | 50,123 |
TOTAL EXPENSES | 132,726 | 50,632 | 345,907 | 70,744 | 1,183,712 |
LOSS FROM OPERATIONS | -132,726 | -50,632 | -345,907 | -70,744 | -1,183,712 |
OTHER INCOME (EXPENSE) | ' | ' | ' | ' | ' |
Interest expense | -1,093 | -250 | -1,926 | -250 | -4,690 |
Interest expense - related party | -1,000 | 0 | -2,000 | 0 | -4,083 |
Financing costs | -833 | 0 | -2,083 | 0 | -5,000 |
Gain on settlement of accrued expenses | 0 | 0 | 0 | 0 | 86,748 |
Amortization of debt discount | -12,485 | 0 | -20,992 | 0 | -24,395 |
Change in fair market value of derivative liability | 4,514 | 0 | 11,578 | 0 | 11,553 |
Loss on issuance of stock | 0 | 0 | 0 | 0 | -760,000 |
Total other Income (Expense) | -10,897 | -250 | -15,423 | -250 | -699,867 |
LOSS BEFORE PROVISION FOR INCOME TAXES | -143,623 | -50,882 | -362,330 | -70,994 | -1,883,379 |
PROVISION FOR INCOME TAXES | 0 | 0 | 0 | 0 | 0 |
NET LOSS | ($143,623) | ($50,882) | ($361,330) | ($70,994) | ($1,883,379) |
NET LOSS PER SHARE: BASIC AND DILUTED | $0 | $0 | $0 | $0 | ' |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED | 76,037,262 | 63,037,362 | 75,703,929 | 63,037,362 | ' |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 6 Months Ended | 81 Months Ended | |
Jan. 31, 2014 | Jan. 31, 2013 | Jan. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ' | ' | ' |
Net loss for the period | ($361,330) | ($70,994) | ($1,883,379) |
Change in non-cash working capital items | ' | ' | ' |
Gain on settlement of accrued expenses | 0 | 0 | -86,748 |
Amortization of debt discount | 20,992 | 0 | 24,395 |
Change in fair value of derivative liability | -11,578 | 0 | -11,553 |
Amortization of deferred financing costs | 2,083 | 0 | 5,000 |
Stock-based compensation | 210,238 | 0 | 424,405 |
Loss on stock issuance | 0 | 0 | 760,000 |
Changes in assets and liabilities: | ' | ' | ' |
(Increase) in prepaid expenses | 0 | -2,500 | -484 |
Increase (decrease) in accrued expenses | 86,656 | -1,451 | 238,608 |
Increase in accrued interest | 3,926 | 0 | 6,008 |
Increase in accrued interest - related party | 0 | 0 | 2,764 |
Net Cash Used in Operating Activities | -49,013 | -74,945 | -520,984 |
CASH FLOWS FROM INVESTING ACTIVITIES | ' | ' | ' |
Acquisition of license agreement | 0 | 0 | -175,000 |
Net Cash Used in Investing Activities | 0 | 0 | -175,000 |
CASH FLOWS FROM FINANCING ACTIVITIES | ' | ' | ' |
Proceeds from issuance of common stock and stock warrants | 0 | 0 | 581,225 |
Proceeds from note payable | 0 | 50,000 | 50,000 |
Proceeds from convertible note payable | 37,470 | 0 | 62,470 |
Deferred financing costs | 0 | -4,584 | -5,000 |
Offering costs | 0 | 0 | -68,491 |
Proceeds from note payable - related party | 0 | 0 | 79,437 |
Net Cash Provided by Financing Activities | 37,470 | 45,416 | 699,641 |
NET INCREASE (DECREASE) IN CASH | -11,543 | -29,529 | 3,657 |
Cash, beginning of period | 15,200 | 56,446 | 0 |
Cash, end of period | 3,657 | ' | 3,657 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ' | ' | ' |
Interest paid | 0 | 0 | 0 |
Income taxes paid | 0 | 0 | 0 |
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: | ' | ' | ' |
Conversion of note payable - related party and accrued interest to contributed capital | 0 | 0 | 1,210 |
Forgiveness of shareholder debt and accrued interest | 0 | 0 | 80,991 |
License fee payable issued for acquisition of license agreement | 0 | 0 | 525,000 |
Forgiveness of debt recorded as reduction of intangible assets | 0 | 0 | 350,000 |
Derivative liability recorded in connection with convertible debt | $20,620 | $0 | $41,040 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jan. 31, 2014 | |
Accounting Policies [Abstract] | ' |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
Nature of Business | |
Harmonic Energy, Inc. (the Company), formerly known as Aviation Surveillance Systems, Inc. and Fairytale Ventures, Inc., was incorporated in the State of Nevada on May 1, 2007. The Company is currently developing a new business focused on the disposition and recycling of scrap tires through tire re-manufacturing and carbonization of scrap tire components. The Company has not realized significant revenues to date and therefore is classified as a development stage company. | |
Development Stage Company | |
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to development-stage companies. A development-stage company is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from. | |
Basis of Presentation | |
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10-K filed with the SEC as of and for the period ended July 31, 2013. In the opinion of management, all adjustments necessary for the financial statements to be not misleading for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. The Company has adopted a July 31 fiscal year end. | |
Fair Value of Financial Instruments | |
The Company’s financial instruments consist of cash and cash equivalents, prepaid expenses, deferred financing costs, license agreement, accrued expenses, accrued interest, note payable, convertible note payable, and license fees payable. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements. | |
Use of Estimates | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. | |
Basic (Loss) per Common Share | |
Basic (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are 666,667 common stock warrants outstanding as of January 31, 2014. | |
Revenue Recognition | |
The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured. | |
Advertising Costs | |
The Company’s policy regarding advertising is to expense advertising when incurred. The Company has not incurred any advertising expense as of January 31, 2014 and 2013. | |
Cash and Cash Equivalents | |
The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. | |
Long-Lived Assets | |
In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that may suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value. | |
Reclassifications | |
Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statements. | |
Income Taxes | |
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. | |
Stock-Based Compensation | |
Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options. As of January 31, 2014, the Company has not issued any stock-based payments to its employees. | |
Recent Accounting Pronouncements | |
Harmonic Energy does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow. |
LICENSE_AGREEMENT
LICENSE AGREEMENT | 6 Months Ended |
Jan. 31, 2014 | |
Notes to Financial Statements | ' |
LICENSE AGREEMENT | ' |
On March 14, 2012, the Company entered into a License Purchase Agreement with Kouei International, Inc. The Company acquired the exclusive rights in North America and Europe to use the Tyrolysis™ technology owned by Kouei Industries Co., Ltd. of Japan. Kouei International holds these rights under license from Kouei Industries and, pursuant to the agreement, has assigned them to the Company. The Tyrolysis™ technology is a comprehensive ‘closed-loop’ solution for the management of scrap tires, which allows for all scrap tires to be either re-manufactured into new tires or reduced, through a carbonization process, into marketable chemical products such as diesel fuel, carbon black and syn-gas. | |
Under the terms of the agreement, the Company was required to pay a total of $525,000 of which $175,000 was due within 90 days of the closing of the agreement (which has been paid), as well as $175,000 due 90 days after the first payment and $175,000 due 90 days after the second payment has been made. | |
On May 30, 2012, Kouei Industries agreed to extend the second payment due date to June 30, 2013 and the third payment due date to September 30, 2013. All other terms of the agreement remained the same. | |
On June 18, 2013, the Company entered into a settlement agreement with Kouei Industries forgiving the second and third payments discussed above totaling $350,000. The forgiveness of this debt was offset by the reduction of the value of the intangible asset recorded as part of this agreement. As of January 31, 2014, the carrying value of the license agreement is $175,000 and the license fee payable is $0. | |
In addition, the Company is to pay a royalty of 3% of all revenues in respect of gross sales for a period of 5 years, and a royalty of $2.50 per remanufactured passenger tire and a royalty of $3.00 per remanufactured light truck and truck tire at the end of each month for a period of 5 years. There have been no revenues generated from the license agreement as of January 31, 2014. |
ACCRUED_EXPENSES
ACCRUED EXPENSES | 6 Months Ended | ||||||||
Jan. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
ACCRUED EXPENSES | ' | ||||||||
Accrued expenses consisted of the following as of January 31, 2014 and July 31, 2013: | |||||||||
31-Jan-14 | 31-Jul-13 | ||||||||
Accrued legal fees | $ | 16,500 | $ | 6,324 | |||||
Accrued accounting and audit fees | 8,480 | 8,880 | |||||||
Accrued consulting fees | 125,417 | 50,000 | |||||||
Other | 1,125 | 0 | |||||||
Total Accrued Expenses | $ | 151,522 | $ | 65,204 | |||||
LOAN_PAYABLE_RELATED_PARTY
LOAN PAYABLE - RELATED PARTY | 6 Months Ended |
Jan. 31, 2014 | |
Related Party Transactions [Abstract] | ' |
LOAN PAYABLE - RELATED PARTY | ' |
On June 14, 2010, the Company signed a promissory note for $20,000 with an officer. The loan was due on June 14, 2011, bore 6% interest and was unsecured. The terms of the notes were revised to adjust maturity to due on demand during the year ended July 31, 2011. Interest expense on this loan was $1,200 for the years ended July 31, 2012 and 2011. During the year ended July 31, 2012, the shareholder forgave the balance of the loan and all accrued interest. The forgiveness of debt of $22,554 was recorded as contributed capital. | |
In association with the change in control during the year ended July 31, 2012, the selling shareholders paid certain legal and accounting expenses on behalf of the company. A total of $58,437 was paid by the shareholder and has been recorded as contributed capital. |
NOTE_PAYABLE
NOTE PAYABLE | 6 Months Ended |
Jan. 31, 2014 | |
Debt Disclosure [Abstract] | ' |
NOTE PAYABLE | ' |
On January 9, 2013, the Company signed a promissory note for $50,000. The loan was due on January 9, 2014, bears interest at 8% and is unsecured. Finance costs related to the issuance of the note in the amount of $5,000 have been deferred and are being amortized over the term of the note payable. Amortization of the financing costs of $3,750 was recorded during the period ended January 31, 2014. | |
On January 9, 2014, the promissory note was acquired by a non-related lender and the maturity date was extended to January 9, 2015. All other loan terms remained the same. |
CONVERTIBLE_NOTE_PAYABLE
CONVERTIBLE NOTE PAYABLE | 6 Months Ended | ||||||||||||||||
Jan. 31, 2014 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
CONVERTIBLE NOTE PAYABLE | ' | ||||||||||||||||
On May 22, 2013, the Company issued a convertible note payable in the amount of $62,470. Initially, the Company received $25,000. The note bears interest at 7% per annum and is due on May 22, 2014. The note is convertible into shares of common stock of the Company at a price equal to 90% of the current market price of the shares on the date of conversion. The balance of the note was $25,000 as of July 31, 2013. On September 6, 2013, the Company received the balance of $37,470. | |||||||||||||||||
The Company applied ASC subtopic 815-40 in the valuation of the beneficial conversion feature related to the convertible note payable. The Company has a derivative liability resulting from the issuance of the convertible note valued initially at $20,420 using the Black-Scholes option pricing model. The derivative liability was revalued at January 31, 2014 per the guidance in ASC 815-40. Consequently, the Company has adjusted the fair value of the derivative liability at January 31, 2014 and recorded a gain related to the change in the value of the derivative liability of $11,578 in the statement of operations. The Company used the following assumptions to value the derivative liability. | |||||||||||||||||
22-May-13 | 31-Jul-13 | 31-Oct-13 | 31-Jan-14 | ||||||||||||||
Note proceeds | $ | 25,000 | $ | 25,000 | $ | 62,470 | $ | 62,470 | |||||||||
Stock price at grant date | $ | 0.09 | $ | 0.06 | $ | 0.03 | $ | 0.02 | |||||||||
Exercise price | $ | 0.081 | $ | 0.054 | $ | 0.027 | $ | 0.018 | |||||||||
Term | 1 years | 1 years | .58 years | .33 years | |||||||||||||
Risk-free interest rate | 0.11 | % | 0.11 | % | 0.11 | % | 0.02 | % | |||||||||
Volatility | 216 | % | 217 | % | 161 | % | 178 | % | |||||||||
CAPITAL_STOCK
CAPITAL STOCK | 6 Months Ended | ||||
Jan. 31, 2014 | |||||
Equity [Abstract] | ' | ||||
CAPITAL STOCK | ' | ||||
The Company has 90,000,000 shares of $0.001 par value common stock and 10,000,000 shares of $0.001 par value preferred stock authorized. | |||||
On May 14, 2007, the Company received $4,000 from its founders for 58,994,015 shares of its common stock. On June 22, 2007, the Company completed an unregistered private offering under the Securities Act of 1933, as amended, relying upon the exemption from registration afforded by Rule 504 of Regulation D promulgated there under. The Company sold 23,450,110 shares of its $0.001 par value common stock at a price of $0.004 per share for $11,925 in cash. | |||||
On July 21, 2008, the Company effect a forward split on the basis of 1.84356289 shares for 1. | |||||
On May 1, 2009, the Company effected a forward split on the basis of 1.6 shares for 1. | |||||
On March 15, 2010, the Company sold 191,176,470 shares of common stock for total cash proceeds of $65,000. | |||||
On November 3, 2011, a shareholder of the company voluntarily returned 1,250,000 shares of common stock to treasury for cancellation. | |||||
On February 22, 2012, a shareholder of the company voluntarily returned 210,000,000 shares of common stock to treasury for cancellation | |||||
On March 12, 2012, the Company the Company effected a forward split on the basis of 5 shares for 1. | |||||
All share and per share data in the accompanying financial statements and footnotes has been adjusted retrospectively for the effects of the stock split. | |||||
On March 27, 2012, the Company received subscription proceeds of $500,000 related to a subscription agreement for 666,667 shares of common stock and common stock warrants $0.75 per unit. The common stock warrants were valued using the Black-Scholes valuation method. The valuation was made using the following assumptions and the proceeds were allocated based on the fair value of the common stock and common stock warrants: | |||||
Stock price at grant date | $ | 1 | |||
Exercise price | $ | 1.12 | |||
Term | 4 years | ||||
Risk-free interest rate | 0.37 | % | |||
Volatility | 284 | % | |||
During the year ended July 31, 2013, the Company issued 11,000,000 shares of common stock to two consultants for services rendered and future services. The stock was valued at the fair market value on the date of the agreements which totaled $1,430,000. A loss on the issuance of the stock of $760,000 was recorded for the difference in the value of the services and the fair market value of the stock. As of January 31, 2014, $325,595 has been recorded as deferred stock-based compensation for future services. | |||||
During the period ended January 31, 2014 the Company issued 2,000,000 shares of common stock for consultants for services rendered and future services. The stock was valued at the fair market value on the date of the agreements which totaled $80,000. As of January 31, 2014, $nil has been recorded as deferred stock-based compensation for future services. | |||||
As of January 31, 2014 and July 31, 2013 the Company had 76,037,262 and 74,037,262 shares of common stock issued and outstanding, respectively. There were no shares of preferred stock issued and outstanding as of January 31, 2014 and July 31, 2013. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jan. 31, 2014 | |
Accounting Policies [Abstract] | ' |
COMMITMENTS AND CONTINGENCIES | ' |
Harmonic Energy neither owns nor leases any real or personal property. An officer has provided office services without charge. There is no obligation for this arrangement to continue. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future. | |
The services rendered by our President and CEO, Jamie Mann, are governed by a Consulting Agreement with his consultancy firm, JM Trading Co., Ltd. The Agreement is for a term of two (2) years commencing retroactively effective December 20, 2011. Under the Agreement, Mr. Mann will be paid a consulting fee of $60,000 per year in equal monthly installments of $5,000 per month. In addition, Mr. Mann is to be provided a company car and reimbursement of all expenses incurred in the course of his duties. On December 20, 2013 the agreement was renewed for a fee of $65,000 per year in equal monthly installments of $5,416.66 per month. |
GOING_CONCERN
GOING CONCERN | 6 Months Ended |
Jan. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
GOING CONCERN | ' |
The accompanying financial statements have been prepared in conformity with generally accepted accounting principle, which contemplate continuation of the Company as a going concern. However, the Company has an accumulated deficit of $1,883,379 as of January 31, 2014. The Company currently has a working capital deficit, and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time. | |
Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern. |
INCOME_TAXES
INCOME TAXES | 6 Months Ended | ||||||||
Jan. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
INCOME TAXES | ' | ||||||||
As of January 31, 2014, the Company had net operating loss carry forwards of approximately $1,883,379 that may be available to reduce future years’ taxable income in various amounts through 2032. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. | |||||||||
The provision for Federal income tax consists of the following for the six months ended January 31: | |||||||||
2014 | 2013 | ||||||||
Federal income tax benefits attributable to: | |||||||||
Current operations | $ | 122,852 | $ | 24,138 | |||||
Less: valuation allowance | (122,852 | ) | (24,138 | ) | |||||
Net provision for Federal income taxes | $ | 0 | $ | 0 | |||||
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows as of January 31, 2014 and July 31, 2013: | |||||||||
31-Jan-14 | 31-Jul-13 | ||||||||
Deferred tax asset attributable to: | |||||||||
Net operating loss carryover | $ | 640,349 | $ | 517,497 | |||||
Less: valuation allowance | (640,349 | ) | (517,497 | ) | |||||
Net deferred tax asset | $ | 0 | $ | 0 | |||||
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of $1,883,379 for Federal income tax reporting purposes are subject to annual limitations. Should another change in ownership occur net operating loss carry forwards may be further limited as to use in future years. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jan. 31, 2014 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to January 31, 2014 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements other than the events described above. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jan. 31, 2014 | |
Accounting Policies [Abstract] | ' |
Nature of Business | ' |
Harmonic Energy, Inc. (the Company), formerly known as Aviation Surveillance Systems, Inc. and Fairytale Ventures, Inc., was incorporated in the State of Nevada on May 1, 2007. The Company is currently developing a new business focused on the disposition and recycling of scrap tires through tire re-manufacturing and carbonization of scrap tire components. The Company has not realized significant revenues to date and therefore is classified as a development stage company. | |
Development Stage Company | ' |
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to development-stage companies. A development-stage company is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from. | |
Basis of Presentation | ' |
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10-K filed with the SEC as of and for the period ended July 31, 2013. In the opinion of management, all adjustments necessary for the financial statements to be not misleading for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. The Company has adopted a July 31 fiscal year end. | |
Fair Value of Financial Instruments | ' |
The Company’s financial instruments consist of cash and cash equivalents, prepaid expenses, deferred financing costs, license agreement, accrued expenses, accrued interest, note payable, convertible note payable, and license fees payable. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements. | |
Use of Estimates | ' |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. | |
Basic (Loss) per Common Share | ' |
Basic (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are 666,667 common stock warrants outstanding as of January 31, 2014. | |
Revenue Recognition | ' |
The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured. | |
Advertising Costs | ' |
The Company’s policy regarding advertising is to expense advertising when incurred. The Company has not incurred any advertising expense as of January 31, 2014 and 2013. | |
Cash and Cash Equivalents | ' |
The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. | |
Long-Lived Assets | ' |
In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that may suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value. | |
Reclassifications | ' |
Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statements. | |
Income Taxes | ' |
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. | |
Stock-Based Compensation | ' |
Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options. As of January 31, 2014, the Company has not issued any stock-based payments to its employees. | |
Recent Accounting Pronouncements | ' |
Harmonic Energy does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow. |
ACCRUED_EXPENSES_Tables
ACCRUED EXPENSES (Tables) | 6 Months Ended | ||||||||
Jan. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Schedule of Accrued Expenses | ' | ||||||||
31-Jan-14 | 31-Jul-13 | ||||||||
Accrued legal fees | $ | 16,500 | $ | 6,324 | |||||
Accrued accounting and audit fees | 8,480 | 8,880 | |||||||
Accrued consulting fees | 125,417 | 50,000 | |||||||
Other | 1,125 | 0 | |||||||
Total Accrued Expenses | $ | 151,522 | $ | 65,204 |
CONVERTIBLE_NOTE_PAYABLE_Table
CONVERTIBLE NOTE PAYABLE (Tables) | 6 Months Ended | ||||||||||||||||
Jan. 31, 2014 | |||||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||||
Schedule of Derivative Liability | ' | ||||||||||||||||
22-May-13 | 31-Jul-13 | 31-Oct-13 | 31-Jan-14 | ||||||||||||||
Note proceeds | $ | 25,000 | $ | 25,000 | $ | 62,470 | $ | 62,470 | |||||||||
Stock price at grant date | $ | 0.09 | $ | 0.06 | $ | 0.03 | $ | 0.02 | |||||||||
Exercise price | $ | 0.081 | $ | 0.054 | $ | 0.027 | $ | 0.018 | |||||||||
Term | 1 years | 1 years | .58 years | .33 years | |||||||||||||
Risk-free interest rate | 0.11 | % | 0.11 | % | 0.11 | % | 0.02 | % | |||||||||
Volatility | 216 | % | 217 | % | 161 | % | 178 | % |
CAPITAL_STOCK_Tables
CAPITAL STOCK (Tables) | 6 Months Ended | ||||
Jan. 31, 2014 | |||||
Equity [Abstract] | ' | ||||
Schedule of Fair Value | ' | ||||
Stock price at grant date | $ | 1 | |||
Exercise price | $ | 1.12 | |||
Term | 4 years | ||||
Risk-free interest rate | 0.37 | % | |||
Volatility | 284 | % |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 6 Months Ended | ||||||||
Jan. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Federal Income Tax | ' | ||||||||
2014 | 2013 | ||||||||
Federal income tax benefits attributable to: | |||||||||
Current operations | $ | 122,852 | $ | 24,138 | |||||
Less: valuation allowance | (122,852 | ) | (24,138 | ) | |||||
Net provision for Federal income taxes | $ | 0 | $ | 0 | |||||
Deferred Tax Assets | ' | ||||||||
31-Jan-14 | 31-Jul-13 | ||||||||
Deferred tax asset attributable to: | |||||||||
Net operating loss carryover | $ | 640,349 | $ | 517,497 | |||||
Less: valuation allowance | (640,349 | ) | (517,497 | ) | |||||
Net deferred tax asset | $ | 0 | $ | 0 | |||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 6 Months Ended | |
Jan. 31, 2014 | Jan. 31, 2013 | |
Accounting Policies [Abstract] | ' | ' |
Date of incorporation | 1-May-07 | ' |
Fiscal year end | '--07-31 | ' |
Common stock warrants, outstanding | 666,667 | ' |
Advertising expense | $0 | $0 |
LICENSE_AGREEMENT_Details_Narr
LICENSE AGREEMENT (Details Narrative) (USD $) | 6 Months Ended | |||||||||
Jan. 31, 2014 | Jul. 31, 2013 | Jun. 18, 2013 | Mar. 14, 2012 | Jun. 02, 2012 | Sep. 01, 2012 | Dec. 01, 2012 | Jan. 31, 2014 | Jan. 31, 2014 | Jan. 31, 2014 | |
Payment 1 | Payment 2 | Payment 3 | Gross Sales | Passenger Tire | Light Truck Tire | |||||
License agreement | $175,000 | $175,000 | ' | $525,000 | ' | ' | ' | ' | ' | ' |
Payment | ' | ' | ' | ' | 175,000 | 175,000 | 175,000 | ' | ' | ' |
Forgiveness of payments | ' | ' | 350,000 | ' | ' | ' | ' | ' | ' | ' |
License fee payable | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Royalty, revenues | ' | ' | ' | ' | ' | ' | ' | 3.00% | ' | ' |
Royalty fee per tire | ' | ' | ' | ' | ' | ' | ' | ' | 2.5 | 3 |
Years of royalty payments | ' | ' | ' | ' | ' | ' | ' | '5 years | '5 years | '5 years |
ACCRUED_EXPENSES_Schedule_of_A
ACCRUED EXPENSES - Schedule of Accrued Expenses (Details) (USD $) | Jan. 31, 2014 | Jul. 31, 2013 |
Payables and Accruals [Abstract] | ' | ' |
Accrued legal fees | $16,500 | $6,324 |
Accrued accounting and audit fees | 8,480 | 8,880 |
Accrued consulting fees | 125,417 | 50,000 |
Other | 1,125 | 0 |
Total Accrued Expenses | $151,522 | $65,204 |
LOAN_PAYABLE_RELATED_PARTY_Det
LOAN PAYABLE - RELATED PARTY (Details Narrative) (USD $) | 6 Months Ended | 12 Months Ended | 81 Months Ended | ||
Jan. 31, 2014 | Jan. 31, 2013 | Jul. 31, 2012 | Jul. 31, 2011 | Jan. 31, 2014 | |
Related Party Transactions [Abstract] | ' | ' | ' | ' | ' |
Promissory note | $20,000 | ' | ' | ' | ' |
Agreement date | 14-Jun-10 | ' | ' | ' | ' |
Loan Due | 14-Jun-11 | ' | ' | ' | ' |
Interest rate | 6.00% | ' | ' | ' | ' |
Interest expense | 0 | 0 | 1,200 | 1,200 | 2,764 |
Forgiveness of debt | ' | ' | 22,554 | ' | ' |
Contributed capital | ' | ' | $58,437 | ' | ' |
NOTE_PAYABLE_Details_Narrative
NOTE PAYABLE (Details Narrative) (USD $) | 6 Months Ended | 81 Months Ended | |||
Jan. 31, 2014 | Jan. 31, 2013 | Jan. 31, 2014 | 22-May-13 | Jan. 09, 2013 | |
Debt Disclosure [Abstract] | ' | ' | ' | ' | ' |
Note payable | $50,000 | ' | ' | ' | ' |
Note issued | 9-Jan-13 | ' | ' | ' | ' |
Due date | 9-Jan-14 | ' | ' | ' | ' |
Interest rate | ' | ' | ' | 7.00% | 8.00% |
Deferred financing costs | 0 | 4,584 | 5,000 | ' | ' |
Amortization of financing costs | $3,750 | ' | ' | ' | ' |
Maturity date | 9-Jan-15 | ' | ' | ' | ' |
NOTE_PAYABLE_Schedule_of_Deriv
NOTE PAYABLE - Schedule of Derivative Liability (Details) (USD $) | 1 Months Ended | 12 Months Ended | |||
Jan. 31, 2014 | Oct. 31, 2013 | Jul. 31, 2013 | 22-May-13 | Jul. 31, 2013 | |
Debt Disclosure [Abstract] | ' | ' | ' | ' | ' |
Note proceeds | $62,470 | $62,470 | $25,000 | $25,000 | ' |
Stock price at grant date | $0.02 | $0.03 | $0.06 | $0.09 | $1 |
Exercise price | $0.02 | $0.03 | $0.05 | $0.08 | $1.12 |
Term | '3 months | '7 months | '1 year | '1 year | '4 years |
Risk-free interest rate | 0.02% | 0.11% | 0.11% | 0.11% | 0.37% |
Volatility | 178.00% | 161.00% | 217.00% | 216.00% | ' |
CONVERTIBLE_NOTE_PAYABLE_Detai
CONVERTIBLE NOTE PAYABLE (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | 81 Months Ended | ||||
Jan. 31, 2014 | Jan. 31, 2013 | Jan. 31, 2014 | Jan. 31, 2013 | Jan. 31, 2014 | 22-May-13 | Jan. 09, 2013 | |
Note payable | ' | ' | $50,000 | ' | ' | ' | ' |
Initial Payment | ' | ' | ' | ' | ' | 25,000 | ' |
Due date | ' | ' | 9-Jan-14 | ' | ' | ' | ' |
Interest rate | ' | ' | ' | ' | ' | 7.00% | 8.00% |
Derivative liability | ' | ' | 20,620 | 0 | 41,040 | ' | ' |
Change in fair value of derivative liability | -4,514 | 0 | -11,578 | 0 | -11,553 | ' | ' |
Convertible Note | ' | ' | ' | ' | ' | ' | ' |
Note payable | ' | ' | 62,470 | ' | ' | ' | ' |
Due date | ' | ' | 22-May-14 | ' | ' | ' | ' |
Balance Due | ' | ' | 25,000 | ' | ' | ' | ' |
Balance received | ' | ' | 37,470 | ' | ' | ' | ' |
Derivative liability | ' | ' | 20,420 | ' | ' | ' | ' |
Change in fair value of derivative liability | ' | ' | $11,578 | ' | ' | ' | ' |
CAPITAL_STOCK_Schedule_of_Fair
CAPITAL STOCK - Schedule of Fair Value (Details) (USD $) | 1 Months Ended | 12 Months Ended | |||
Jan. 31, 2014 | Oct. 31, 2013 | Jul. 31, 2013 | 22-May-13 | Jul. 31, 2013 | |
Equity [Abstract] | ' | ' | ' | ' | ' |
Stock price at grant date | $0.02 | $0.03 | $0.06 | $0.09 | $1 |
Exercise price | $0.02 | $0.03 | $0.05 | $0.08 | $1.12 |
Term | '3 months | '7 months | '1 year | '1 year | '4 years |
Risk-free interest rate | 0.02% | 0.11% | 0.11% | 0.11% | 0.37% |
Volatility | ' | ' | ' | ' | 284.00% |
CAPITAL_STOCK_Details_Narrativ
CAPITAL STOCK (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | 81 Months Ended | 12 Months Ended | 6 Months Ended | ||||||||||||
Jan. 31, 2014 | Jan. 31, 2013 | Jan. 31, 2014 | Jan. 31, 2013 | Jan. 31, 2014 | Jul. 31, 2013 | Mar. 27, 2012 | Mar. 12, 2012 | Feb. 22, 2012 | Nov. 03, 2011 | Mar. 15, 2010 | 1-May-09 | Jul. 21, 2008 | 14-May-07 | Jun. 22, 2007 | Jul. 31, 2013 | Jan. 31, 2014 | |
Founders | Private Offering | Two Consultants | Two Consultants | ||||||||||||||
Common stock, par value | $0.00 | ' | $0.00 | ' | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' | $0.00 | ' | ' |
Common stock, shares authorized | 90,000,000 | ' | 90,000,000 | ' | 90,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, shares authorized | 10,000,000 | ' | 10,000,000 | ' | 10,000,000 | 0.001 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, issued | 76,037,262 | ' | 76,037,262 | ' | 76,037,262 | 74,037,262 | 666,667 | ' | ' | ' | 191,176,470 | ' | ' | 58,994,015 | 23,450,110 | 11,000,000 | 2,000,000 |
Proceeds from founders | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $4,000 | ' | ' | ' |
Common stock, proceeds | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 65,000 | ' | ' | ' | 11,925 | ' | ' |
Common Stock, exercise price | ' | ' | ' | ' | ' | ' | $0.75 | ' | ' | ' | ' | ' | ' | ' | $0.00 | ' | ' |
Forward split | ' | ' | ' | ' | ' | ' | ' | '5:1 | ' | ' | ' | '1.6:1 | '1.84356289:1 | ' | ' | ' | ' |
Common stock, cancelled | ' | ' | ' | ' | ' | ' | ' | ' | 210,000,000 | 1,250,000 | ' | ' | ' | ' | ' | ' | ' |
Subcription agreement, proceeds recieved | ' | ' | ' | ' | ' | ' | 500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock valued at fair market | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,430,000 | 80,000 |
Loss of issuance of stock | 0 | 0 | 0 | 0 | 760,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 760,000 | ' |
Deferred stock based compensation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $325,595 | ' |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | Dec. 20, 2011 | Dec. 20, 2013 |
Consulting Agreement Renewed | ||
Consulting fee | $60,000 | $65,000 |
Term of agreement | '2 years | ' |
Monthly installments | $5,000 | $5,416 |
GOING_CONCERN_Details_Narrativ
GOING CONCERN (Details Narrative) (USD $) | Jan. 31, 2014 | Jul. 31, 2013 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ' |
Deficit accumulated during the development stage | ($1,883,379) | ($1,522,049) |
INCOME_TAXES_Federal_Income_Ta
INCOME TAXES - Federal Income Tax (Details) (USD $) | 6 Months Ended | |
Jan. 31, 2014 | Jan. 31, 2013 | |
Federal income tax benefits attributable to: | ' | ' |
Current operations | $122,852 | $24,138 |
Less: valuation allowance | -122,852 | -24,138 |
Net provision for Federal income taxes | $0 | $0 |
INCOME_TAXES_Deferred_Tax_Asse
INCOME TAXES - Deferred Tax Assets (Details) (USD $) | Jan. 31, 2014 | Jul. 31, 2013 |
Deferred tax asset attributable to: | ' | ' |
Net operating loss carryover | $640,349 | $517,497 |
Less: valuation allowance | -640,349 | -517,497 |
Net deferred tax asset | $0 | $0 |
INCOME_TAXES_Details_Narrative
INCOME TAXES (Details Narrative) (USD $) | 6 Months Ended |
Jan. 31, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Operating Loss Carryforwards | $1,883,379 |
Carryforward Expiration Date | 1-Jan-32 |
Effective Income Tax Rate | 34.00% |