Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Nov. 30, 2016 | Jan. 19, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | FairWind Energy Inc. | |
Entity Central Index Key | 1,603,345 | |
Document Type | 10-Q | |
Document Period End Date | Nov. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --08-31 | |
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 | 6,017,406 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 |
Balance Sheets
Balance Sheets - USD ($) | Nov. 30, 2016 | Aug. 31, 2016 |
Current Assets | ||
Cash | $ 15,115 | $ 619 |
Total current assets | 15,115 | 619 |
Note Receivable | ||
Note receivable | 10,000 | |
Computer Equipment | ||
Computer equipment | 1,328 | 1,328 |
Total property and equipment | 1,328 | 1,328 |
Accumulated depreciation | (726) | (660) |
Computer equipment, net | 602 | 668 |
Total assets | 25,717 | 1,287 |
Current Liabilities | ||
Derivative liability | 155,335 | |
Accounts payable | 1,859 | 2,798 |
Accrued expenses | 891 | 891 |
Total current liabilities | 158,085 | 3,689 |
Long Term Liabilities | ||
Convertible note payable,net | 8,688 | |
Convertible note payable,net- related party | 6,933 | |
Total long term liabilities | 15,621 | |
Commitments and Contingent | ||
Liabilities and Stockholders'(Deficit) | ||
Preferred stock par value $0.001: 25,000,000 shares authorized; 0 issued or outstanding | ||
Common stock par value $0.001: 50,000,000 shares authorized; 6,017,406 and 5,992,406 shares issued and outstanding, respectively | 6,017 | 6,017 |
Additional paid-in capital | 704,123 | 719,468 |
Accumulated deficit | (858,129) | (727,887) |
Total stockholders'(Deficit) | (147,989) | (2,402) |
Total liabilities and stockholders'(Deficit) | $ 25,717 | $ 1,287 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - shares | Nov. 30, 2016 | Aug. 31, 2016 |
Liabilities and Stockholders' Equity (Deficit) | ||
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, issued | 5,992,406 | 6,017,406 |
Common stock, outstanding | 5,992,406 | 6,017,406 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | |
Nov. 30, 2016 | Nov. 30, 2015 | |
Revenue | ||
Consulting services | $ 15,000 | |
Operating Expenses | ||
Professional fees | 63,805 | 4,063 |
Research and development | 748 | |
Salary and wages - officers | 20,053 | 7,177 |
General and administrative expenses | 7,922 | 3,361 |
Total operating expenses | 91,780 | 15,349 |
Loss from Operations | 91,780 | 349 |
Other (Income) Expense | ||
Gain (loss) on fair value of derivative instruments | 36,652 | |
Amortization of derivative discount | 1,811 | |
Other (income) expense, net | 38,463 | |
Loss before Income Tax Provision | (130,243) | (349) |
Income Tax Provision | ||
Net Loss | $ (130,243) | $ (349) |
Loss per share - Basic | $ (0.02) | $ 0 |
Loss per share - Diluted | $ (0.02) | $ 0 |
Weighted average common shares outstanding - Basic | 6,017,406 | 5,992,406 |
Weighted average common shares outstanding - Diluted | 6,067,406 | 5,992,406 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 3 Months Ended | |
Nov. 30, 2016 | Nov. 30, 2015 | |
Cash Flows from Operating Activities | ||
Net loss | $ (130,243) | $ (349) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Change in fair value of derivative liabilties | 36,652 | |
Depreciation expense | 66 | 66 |
Amortization expense | 63 | |
Amortization of discount on derivative liabilities | 1,811 | |
Warrant expense | 52,149 | |
Contribution to capital | 20,000 | |
Changes in operating assets and liabilities: | ||
Accounts payable | (939) | |
Accrued expenses | (6,604) | |
Net Cash Used in Operating Activities | (20,504) | (6,824) |
Cash Flows from Investing Activities | ||
Note receivable | (10,000) | |
Net Cash Used in Investing Activities | (10,000) | |
Cash Flows from Financing Activities | ||
Proceeds from notes payable | 45,000 | |
Net Cash Provided by Financing Activities | 45,000 | |
Net Change in Cash | 14,496 | (6,824) |
Cash - beginning of reporting period | 619 | 13,195 |
Cash - end of reporting period | 15,115 | 6,371 |
Supplemental disclosure of cash flow information: | ||
Interest paid | ||
Income tax paid |
Organization and Operations
Organization and Operations | 3 Months Ended |
Nov. 30, 2016 | |
Notes to Financial Statements | |
Note 1 - Organization and Operations | FairWind Energy, Inc. FairWind Energy, Inc. (the "Company") was incorporated on April 18, 2013 under the laws of the State of Nevada. The Company engages in composite design, engineering and manufacturing to be used in solar/wind hybrid power systems, oil and gas industry pumping and civil engineering and infrastructure products. |
Significant and Critical Accoun
Significant and Critical Accounting Policies and Practices | 3 Months Ended |
Nov. 30, 2016 | |
Notes to Financial Statements | |
Note 2 - Significant and Critical Accounting Policies and Practices | The management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company's financial condition and results and require management's most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company's significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles. Basis of Presentation The accompanying financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), and with the rules and regulations of the United States Securities and Exchange Commission ("SEC") to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These financial statements should be read in conjunction with the audited financial statements of the Company for the reporting period ended August 31, 2016 and notes thereto contained in the Companys Annual Report on Form 10-K. Derivative Liabilities The Company evaluates its financial instruments and other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815. The result of this accounting treatment is that the fair value of the embedded derivative is marked- to-market at each balance sheet date and recorded as a liability and the change in fair value is recorded in the consolidated statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instruments that become subject to reclassification are reclassified at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not settlement of the derivative instrument is expected within 12 months of the balance sheet date. From time to time, certain of the Companys embedded conversion features on debt and outstanding warrants have been treated as derivative liabilities for accounting purposes under ASC 815 due to insufficient authorized shares to fully settle conversion features of the instruments if exercised. These contracts were recognized at fair value with changes in fair value recognized in earnings until such time as the conditions giving rise to such derivative liability classification were settled. These derivative instruments did not trade in an active securities market. The Company used Black Scholes option pricing model to value derivative liabilities. This model used Level 3 inputs in the fair value hierarchy established by ASC 820 Fair Value Measurement. |
Going Concern
Going Concern | 3 Months Ended |
Nov. 30, 2016 | |
Notes to Financial Statements | |
Note 3 - Going Concern | The Company's financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the financial statements, the Company had an accumulated deficit at November 30, 2016, a net loss, and net cash used in operating activities for the three months then ended. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company is attempting to commence operations and generate sufficient revenue; however, the Company's cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Nov. 30, 2016 | |
Notes to Financial Statements | |
Note 4 - Related Party Transactions | Related Parties Related parties with whom the Company had transactions are: Related Parties Relationship Related Party Transactions Business Purpose of transactions Directors, officers and significant stockholders Michael Winterhalter Chairman, CEO, significant stockholder and director (i) Office space at no cost (i) Cost is nominal. Eric Krogius Director None. Not applicable. Free Office Space The Company has been provided office space by its Chief Executive Officer at no cost. Management determined that such cost is nominal and did not recognize the rent expense in its financial statement. Convertible Note Payable The Company issued a convertible promissory note on September 23, 2016 to William C. Winterhalter, Michael Winterhalters father, in the amount of $20,000. The interest rate is 8% and the maturity date is September 23, 2019 in which all outstanding principal together with interest on this note shall be due. The outstanding note and accrued interest convert at the option of the holder or the Company at the volume weighted average price of the common stock for the preceding 10 days (10-day VWAP). Related party convertible note payable is presented net of a derivative discount of $13,067 on the accompanying balance sheets. The derivative liability related to related party convertible notes payable as of November 30, 2016 was $13,705 and is presented as part of Derivative liability on the accompanying balance sheets. The decrease in fair value of the derivative liability of the related party convertible note payable for the period ending November 30, 2016 was $227 and is included in Gain (loss) on fair value of derivative instruments on the accompanying statements of operations. Amortization of the discount on related party convertible note payable was $865 for the period ending November 30, 2016 and is included in Amortization of derivative discount in the accompanying statements of operations. |
Equity
Equity | 3 Months Ended |
Nov. 30, 2016 | |
Notes to Financial Statements | |
Note 5 - Stockholders' Equity | Shares Authorized Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is Seventy-Five Million (75,000,000) shares of which Twenty Five Million (25,000,000) shares shall be Preferred Stock, par value $0.001 per share, and Fifty Million (50,000,000) shares shall be Common Stock, par value $0.001 per share. Stock Options Plan In February 2016, the Board of Directors approved the 2016 Stock Options Plan ("Plan") that provides for the granting of stock options to certain key employees. The Plan reserves 2,000,000 shares of common stock for this purpose. There is no provision for shares to be specifically granted to the CEO under his employment arrangement, either in the stock option plan or the employment agreement. Options under the Plan are to be granted at no less than fair market value of the shares at the date of grant. As of August 31, 2016 no options under this plan have been granted. Consulting Agreement On March 14, 2016, the Company entered into a consulting agreement with Steve Moore for consulting services related to develop business & advise management of technology, products and services used in the oil and gas exploration and production. This agreement combines commissions payable on gross profit, as well as a warrant of company common stock. The cost of these benefits, including commissions, is estimated at $250,000 over 2 years. No expense related to commissions was recorded during the year ended August 31, 2016 as the cost is contingent on future sales. As of August 31, 2016, 125,000 warrants of company stock are outstanding under this agreement. Costs associated with the warrant issuances are included in Professional fees in the accompanying statement of operations in the amount of $162,310. Of the 125,000 warrants issued, 50,000 are exercisable as of August 31, 2016. The fair market value of stock warrants is determined using the Black-Scholes valuation model, and the company uses the following methods to determine its underlying assumptions: expected volatilities are based on the historical volatilities; the expected term of warrants granted are based on the original contractual term; and the risk-free interest rate is based on the U.S. Treasury implied yield on zero-coupon issues (with a remaining term equal to the expected term of the warrant). As of August 31, 2016, total unrecognized stock warrant cost related to unvested stock warrant awards remaining outstanding was $72,391 and is expected to vest through June 2017. Stock Issuance On March 14, 2016, the Company approved the grant of 20,000 shares of its common stock to directors of the Company as a stock bonus. Costs associated with the grant of these shares are included in Salary and wages officers in the accompanying statement of operations in the amount of $45,000 as determined by the fair value of the common stock at date of grant. On March 14, 2016, the Company approved the grant of 5,000 shares of its common stock as payment for website design services. Costs associated with the grant of these shares are included in General and administrative expenses in the accompanying statement of operations in the amount of $11,250 as determined by the fair value of the common stock at date of grant. Waived Compensation The Employee waived compensation for the year ended August 31, 2016 that totaled $55,000 which is included in the accompanying Statements of Changes in Stockholders Equity (Deficit) as a contribution to capital. The Director waived compensation for the year ended August 31, 2016 that totaled $16,668 which is included in the accompanying Statements of Changes in Stockholders Equity (Deficit) as a contribution to capital. |
Notes Receivable and Convertibl
Notes Receivable and Convertible Note Payable | 3 Months Ended |
Nov. 30, 2016 | |
Notes to Financial Statements | |
Note 6 - Notes Receivable and Convertible Note Payable | The Company issued a note receivable on September 28, 2016 in the amount of $10,000 to Black Diamond Bits, LLC. The interest rate is 8% and the principal and interest will be due in its entirety on January 1, 2017 for a total amount of $10,200. Subsequent to the balance sheet date, Black Diamond entered an agreement to sell their business. Payment from Black Diamond Bits, LLC. will be included in the net settlement of the acquisition, and is expected to be remitted in March when the sale is closed. The Company issued a convertible promissory note on October 1, 2016 to Julie Cameron Down Revocable Trust in the amount of $25,000. The interest rate is 8% and the maturity date is September 30, 2019 in which all outstanding principal together with interest on this note shall be due. The outstanding note and accrued interest convert at the option of the holder or the Company at the volume weighted average price of the common stock for the preceding 10 days (10-day VWAP). Convertible note payable is presented net of a derivative discount of $16,312 on the accompanying balance sheets. The derivative liability related to convertible notes payable as of November 30, 2016 was $16,678 and is presented as part of Derivative liability on the accompanying balance sheets. The decrease in fair value of the derivative liability of the convertible note payable for the period ending November 30, 2016 was $580 and is included in Gain (loss) on fair value of derivative instruments on the accompanying statements of operations. Amortization of the discount on convertible note payable was $946 for the period ending November 30, 2016 and is included in Amortization of derivative discount in the accompanying statements of operations. |
Derivative Liabilities
Derivative Liabilities | 3 Months Ended |
Nov. 30, 2016 | |
Notes to Financial Statements | |
Note 7 - Derivative Liabilities | The following table set forth by level, within the fair value hierarchy, the Companys derivative liabilities at fair value as of November 30, 2016: Level 1 Level 2 Level 3 Total Tainted Warrants $ - $ - $ 124,952 $ 124,952 Related party convertible notes payable - - 13,705 13,705 Convertible notes payable - - 16,678 16,678 Total derivative liabilities at fair value $ - $ - $ 155,335 $ 155,335 Level 3 Gains and Losses The following table sets forth a summary of changes in the fair value of the Companys Level 3 derivative liabilities for the period ending November 30, 2016: Balance, beginning of period $ - Realized gains (losses) - Unrealized (gains) losses relating to derivative liabilities 36,652 Reclassification of warrant expense from equity 87,493 Derivative liability incurred on related party convertible note payable issuance 13,932 Derivative liability incurred on convertible note issuance 17,258 Balance, end of period $ 155,335 |
Significant and Critical Acco13
Significant and Critical Accounting Policies and Practices (Policies) | 3 Months Ended |
Nov. 30, 2016 | |
Significant And Critical Accounting Policies And Practices Policies | |
Basis of Presentation | The accompanying financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), and with the rules and regulations of the United States Securities and Exchange Commission ("SEC") to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These financial statements should be read in conjunction with the audited financial statements of the Company for the reporting period ended August 31, 2016 and notes thereto contained in the Companys Annual Report on Form 10-K. |
Derivative Liabilities | The Company evaluates its financial instruments and other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815. The result of this accounting treatment is that the fair value of the embedded derivative is marked- to-market at each balance sheet date and recorded as a liability and the change in fair value is recorded in the consolidated statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instruments that become subject to reclassification are reclassified at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not settlement of the derivative instrument is expected within 12 months of the balance sheet date. From time to time, certain of the Companys embedded conversion features on debt and outstanding warrants have been treated as derivative liabilities for accounting purposes under ASC 815 due to insufficient authorized shares to fully settle conversion features of the instruments if exercised. These contracts were recognized at fair value with changes in fair value recognized in earnings until such time as the conditions giving rise to such derivative liability classification were settled. These derivative instruments did not trade in an active securities market. The Company used Black Scholes option pricing model to value derivative liabilities. This model used Level 3 inputs in the fair value hierarchy established by ASC 820 Fair Value Measurement. |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 3 Months Ended |
Nov. 30, 2016 | |
Derivative Liabilities Tables | |
Derivative liabilities at fair value | The following table set forth by level, within the fair value hierarchy, the Companys derivative liabilities at fair value as of November 30, 2016: Level 1 Level 2 Level 3 Total Tainted Warrants $ - $ - $ 124,952 $ 124,952 Related party convertible notes payable - - 13,705 13,705 Convertible notes payable - - 16,678 16,678 Total derivative liabilities at fair value $ - $ - $ 155,335 $ 155,335 |
Summary of changes in the fair value | The following table sets forth a summary of changes in the fair value of the Companys Level 3 derivative liabilities for the period ending November 30, 2016: Balance, beginning of period $ - Realized gains (losses) - Unrealized (gains) losses relating to derivative liabilities 36,652 Reclassification of warrant expense from equity 87,493 Derivative liability incurred on related party convertible note payable issuance 13,932 Derivative liability incurred on convertible note issuance 17,258 Balance, end of period $ 155,335 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | 1 Months Ended | 3 Months Ended | |
Sep. 23, 2016USD ($)d | Nov. 30, 2016USD ($) | Nov. 30, 2015USD ($) | |
Convertible note payable,net- related party | $ 13,705 | ||
Gain (loss) on fair value of derivative instruments | 36,652 | ||
Amortization of derivative discount | 1,811 | ||
Convertible Note Payable [Member] | |||
Convertible promissory note | $ 20,000 | ||
Interest rate | 8.00% | ||
Maturity date | September 23, 2019 | ||
Number of days | d | 10 | ||
Net of a derivative discount | 13,067 | ||
Convertible note payable,net- related party | 13,705 | ||
Gain (loss) on fair value of derivative instruments | 227 | ||
Amortization of derivative discount | $ 865 |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) | 3 Months Ended | |
Nov. 30, 2016 | Mar. 14, 2016 | |
Company and Eric Krogius [Member] | ||
Waived payment | $ 5,000 | |
Company and Michael Winterhalter [Member] | ||
Waived payment | 15,000 | |
Consulting Agreement [Member] | ||
Estimated benifit | $ 250,000 | |
Warrant issuances cost | $ 52,149 | |
Warrant outstanding | 125,000 | |
Warrant cost related to unvested stock | $ 76,493 | |
Warrants exercisable | 50,000 | |
Vested common stock warrants | $ 87,493 | |
Derivative liability | 124,952 | |
Increase in the fair value of the derivative liabilities | $ 37,459 |
Notes Receivable and Converti17
Notes Receivable and Convertible Note Payable (Details Narrative) | 3 Months Ended | |
Nov. 30, 2016USD ($)d | Nov. 30, 2015USD ($) | |
Convertible note payable,net- related party | $ 13,705 | |
Gain (loss) on fair value of derivative instruments | 36,652 | |
Amortization of derivative discount | 1,811 | |
Black Diamond Bits, LLC [Member] | ||
Convertible promissory note | $ 10,000 | |
Interest rate | 8.00% | |
Principal amount | $ 10,200 | |
Number of days | d | 10 | |
Julie Cameron Down [Member] | ||
Convertible promissory note | $ 25,000 | |
Interest rate | 8.00% | |
Number of days | d | 10 | |
Net of a derivative discount | $ 16,312 | |
Convertible note payable,net- related party | 16,678 | |
Gain (loss) on fair value of derivative instruments | 580 | |
Amortization of derivative discount | $ 946 |
Derivative Liabilities (Details
Derivative Liabilities (Details) - USD ($) | Nov. 30, 2016 | Aug. 31, 2016 |
Tainted Warrants | $ 124,952 | |
Related party convertible notes payable | 13,705 | |
Convertible notes payable | 16,678 | |
Total derivative liabilities at fair value | 155,335 | |
Level 1 [Member] | ||
Tainted Warrants | ||
Related party convertible notes payable | ||
Convertible notes payable | ||
Total derivative liabilities at fair value | ||
Level 2 [Member] | ||
Tainted Warrants | ||
Related party convertible notes payable | ||
Convertible notes payable | ||
Total derivative liabilities at fair value | ||
Level 3 [Member] | ||
Tainted Warrants | 124,952 | |
Related party convertible notes payable | 13,705 | |
Convertible notes payable | 16,678 | |
Total derivative liabilities at fair value | $ 155,335 |
Derivative Liabilities (Detai19
Derivative Liabilities (Details 1) | 3 Months Ended |
Nov. 30, 2016USD ($) | |
Derivative Liabilities Details 1 | |
Balance, beginning of period | |
Realized gains (losses) | |
Unrealized (gains) losses relating to derivative liabilities | 36,652 |
Reclassification of warrant expense from equity | 87,493 |
Derivative liability incurred on related party convertible note payable issuance | 13,932 |
Derivative liability incurred on convertible note issuance | 17,258 |
Balance, end of period | $ 155,335 |