G
reen
Energy Group, Inc.
(f/k/a eCom eCom.com, Inc.)
Notes to
Condensed Financial Statements
Note A. Description of Business
T
he Company was incorporated in the State of Florida on
June 14, 1994. Green Energy Group, Inc. (f/k/a eCom.Com, Inc.) ("GEG" and "eCom") is referred to as "the Company". On
February 28, 2011 the Company moved its main office to 1150 S. US Highway One, Suite
301, Jupiter, FL 33477-3305, and the telephone number changed to
(561) 249-1354. Also on February 28, 2011 the Board of Directors approved
the name change of eCom eCom.com, Inc. to Green Energy Group, Inc.
D
uring the fiscal year ended May 31, 2005 eCom focused on
separating all ten of its current business segments, USA SportsNet, Inc., USA
Performance Products, Inc., eSecureSoft Corp., USAS Digital, Inc., Pro Card
Corporation, AAB National Company, A Classified Ad, Inc., Swap and Shop.net
Corp., A Super Deal.com, Inc. and MyZipSoft, Inc.
T
his plan was undertaken for the purposes of allowing the
management and employees the opportunity to operate each segment independently.
Also, to have the ability for each segment, to raise its own funding for growth
and expansion. On June 4, 2004 the Company spun-off each of the above listed
companies into separate public companies.
O
n December 1, 2003, the Board of Directors of eCom
approved the spin-off of eCom's ten (10) operating subsidiary companies,
pursuant to SEC Staff Legal Bulletin No. 4. On December 18, 2003, USA SportsNet,
Inc. entered into an Asset Acquisition Agreement with American Capital Holdings,
Inc., ("ACHI") The Date of Record for the first spin-off, USA SportsNet, Inc.
(later renamed American Capital Holdings, Inc., Cusip No. 02503V 10 9/SEC CIK
No. 0001288010) was January 5, 2004. The Date of Record for the second spin-off,
MyZipSoft, Inc. (Standard & Poor's Cusip No. 628703 10 0/SEC CIK No. 0001290785)
was February 23, 2004, and the shares of MyZipSoft were distributed to its
shareholders on June 2, 2005.
O
n March 2, 2004, the Board of Directors of eCom approved
the spin off of the remaining eight (8) spin off companies in which the Board of
Directors voted to issue to their shareholders one (1) share of the company for
every one hundred (100) shares of eCom owned with a record date of May 27, 2005, pursuant
to the advice of SEC Staff Legal Bulletin No. 4.
O
n November 29, 2004 an involuntary petition was filed
against eCom in the United States Southern District Bankruptcy Court under Title 11, Chapter 11 of the United
States Bankruptcy Code by petitioning creditors, American Capital Holdings,
Inc., Richard Turner, Barney A. Richmond, and ACHI, Inc. The Bankruptcy
proceedings were initiated in an effort to implement a viable plan for
reimbursement of costs incurred by American Capital Holdings, Inc., the
petitioning creditors, and all other creditors/vendors who had not been paid.
Most importantly, the proceedings enabled Mr. Richmond to initiate
reorganization plans in an effort to restore the shareholder value lost by
approximately 5,000 shareholders. A copy of the June 2, 2005 Chapter 11, Title
11 Amended Involuntary Petition of eCom is posted on eCom's website,
www.ecomecom.net.
O
n March 31, 2008 Joint Plan Proponent American Capital
Holdings, Inc. and Debtor, eCom eCom.com, Inc. ("Proponents") received a March
28, 2008 United States Southern District of Florida Bankruptcy Court Order
Granting Debtor-In- Possession's Motion For Final Decree Closing Case (C.P.
#361) and Final Decree, issued by the Honorable Paul G. Hyman, Jr. which closed eCom's
successful Plan of Reorganization.
A
s a result of the emergence of eCom eCom.com, Inc. (Prior eCom) from operating under Chapter 11 of the United States Bankruptcy Code on March 28, 2008 (the Effective Date), the Company is the successor registrant to Prior
eCom pursuant to Rule 12g-3 under the Securities Exchange Act of 1934.
Note B. Summary of Significant Accounting Policies
B
ASIS
OF
P
RESENTATION,
U
SE
O
F
E
STIMATES
The Company maintains its accounts on the accrual basis of accounting. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
8
Note B. Summary of Significant Accounting Policies
- (continued)
G
OODWILL
T
he
Company recorded goodwill as a result of applying fresh start accounting on the
date the Company emerged from Bankruptcy. See Note C. We review the carrying
amount of goodwill for impairment on an annual basis. Additionally, we perform
an impairment assessment of goodwill whenever events or changes in circumstances
indicate that the carrying value of goodwill and other intangible assets may not
be recoverable. Significant changes in circumstances can be both internal to our
strategic and financial direction. There were no events or changes in
circumstances that indicate that the carrying value of goodwill may not be
recoverable.
S
TOCK
-B
ASED
C
OMPENSATION
T
he accounting for common stock issued for services
is based on the grant date fair value equal the trading price of Company's
common stock on the date of grant. Expense is recognized during the period
in which the services are provided. The Company has not issued any stock
options and no share issuance are subject to vesting requirements.
I
NCOME
T
AXES
Income taxes
are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related to certain income and expenses recognized in different periods for
financial and income tax reporting purposes. Deferred tax assets and liabilities
represent the future tax return consequences of those differences, which will
either be taxable or deductible when the assets and liabilities are recovered or
settled. Deferred taxes also are recognized for operating losses and tax credits
that are available to offset future taxable income and income taxes,
respectively. A Valuation allowance is provided if it is more likely than not
that some or all of the deferred tax asset will not be realized.
T
he Company adopted the new accounting for uncertainty in income taxes guidance on June 1, 2009. The adoption of that guidance did not result in the recognition of any unrecognized tax benefits and the Company has no unrecognized tax benefits at May 31, 2010. The Company's U.S. Federal and state income tax returns prior to fiscal year May 31, 2007 are closed and management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. The Company recognizes interest and penalties associated with tax matters as part of the income tax provision and includes accrued interest and penalties with the related tax liability in the consolidated balance sheets.
N
ET
L
OSS
P
ER
C
OMMON
S
HARE
B
asic net loss per common share is computed using the weighted average number of common shares outstanding during each period presented. Diluted net loss per common share is computed by using the weighted average number of common shares and potential common shares outstanding during the period. We have not issued any instruments resulting in potential common shares outstanding.
R
ECENTLY
I
SSUED
A
CCOUNTING
S
TANDARDS
In June 2009, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 168,
The FASB Accounting Standards Codification
TM
and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162
("FASB SFAS 168"). SFAS 168 establishes the
FASB Accounting Standards Codification
TM
("Codification") as the source of authoritative U.S. GAAP for nongovernmental entities. The Codification does not change U.S. GAAP. Instead, it takes the thousands of individual pronouncements that currently comprise U.S. GAAP and reorganizes them into approximately 90 accounting Topics, and displays all Topics using a consistent structure. Contents in each Topic are further organized first by Subtopic, then Section and finally Paragraph. The Paragraph level is the only level that contains substantive content. Citing particular content in the Codification involves specifying the unique numeric path to the content through the Topic, Subtopic, Section and Paragraph structure. FASB suggests that all citations begin with
"FASB ASC," where ASC stands for
Accounting Standards Codification
. Changes to the ASC subsequent to June 30, 2009 are referred to as Accounting Standards Updates ("ASU").
9
R
ECENTLY
I
SSUED
A
CCOUNTING
S
TANDARDS
- (continued)
In
conjunction with the issuance of FASB SFAS 168, the FASB also issued ASU No. 2009-1,
Topic 105—Generally Accepted Accounting Principles
("FASB ASU 2009-1"), which includes FASB SFAS 168 in its entirety as a transition to the ASC. FASB ASU 2009-1 is effective for interim and annual periods ending after September 15, 2009 and had no impact on the Company's financial position or results of operations but changed the referencing system for accounting standards.
Certain of the following pronouncements were issued prior to the issuance of the ASC and adoption of the ASUs. For such pronouncements, citations to the applicable Codification by Topic, Subtopic and Section are provided where applicable in addition to the original standard type and number.
In June 2009, the FASB issued additional guidance under ASC 860
"Accounting for Transfer of financial Assets and Extinguishment of Liabilities" which improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial asset; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor's continuing involvement, if any, in transferred financial assets. This additional guidance requires that a transferor recognize and initially measure at fair value all assets obtained (including a transferor's beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. Enhanced disclosures are required to provide financial
statement users with greater transparency about transfers of financial assets
and a transferor's continuing involvement with transferred financial assets.
This additional guidance must be applied as of the beginning of each reporting entity's first annual
reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period and for interim
and annual reporting periods thereafter. Earlier application is prohibited.
This additional guidance must be applied to transfers occurring on or after
the effective date. The adoption of this ASC 860 is not expected to have a material impact on the Company's financial statements and disclosures.
In January 2010, the FASB issued Accounting Standards Update ("ASU") 2010-06,
"improving Disclosures about Fair Value Measurements," which clarifies certain existing requirements in ASC 820
"Fair Value Measurements and Disclosures," and required disclosures related to significant transfers between each level and additional information about Level 3 activity. FASB ASU 2010-06 begins phasing in the first fiscal period beginning after December 15, 2009. The Company is currently assessing the impact on its consolidated results of operations and financial conditions.
In February 2010, the FASB issued FASB ASU 2010-09, "Subsequent Events, Amendments to Certain Recognition and Disclosure Requirements," which clarifies certain existing evaluation and disclosure requirements in ASC 855
"Subsequent Events" related to subsequent events. FASB ASU 2010-09 requires SEC filers to evaluate subsequent events through the date in which the financial statements are issued and is effective immediately. The new guidance does not have an effect on the Company's consolidated results of operations and financial condition.
Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
Note C. Involuntary
Reorganization under Chapter 11
The
Plan of Reorganization became effective and the Company emerged from Chapter 11
reorganization proceedings on March 28, 2008 (the "Reorganization Effective
Date"). On the Reorganization Effective Date, the Company implemented
fresh-start reporting in accordance with American Institute of Certified Public
Accounts Statement of Position 90-7:
Financial Reporting by Entities in
Reorganization under the Bankruptcy Code
("SOP 90-7").
All
conditions required for the adoption of fresh-start reporting were met upon
emergence from the reorganization Proceedings on the Reorganization Effective
Date. As a result, the fair value of the Prior eCom assets became the new basis
for the Company's statement of financial position as of the
Fresh-Start Adoption Date, and all operations beginning on or after March 28,
2008 are related to the Successor Company.
As a
result of the application of fresh-start reporting in accordance,
the financial statements prior to and including March 28, 2008 represent the
operations of the Prior eCom and are not comparable with the financial
statements for periods on or after March 28, 2008. References to "New eCom"
refer to the Company on or after March 28, 2008, after giving effect to the
application of fresh-start reporting. References to the "Prior eCom" refer to the
Company prior to and including March 28, 2008.
10
Note D.
Goodwill
In accordance
with SOP 90-7, any portion of the reorganization value that cannot be attributed
to specific tangible or identifiable assets of the emerging entity should be
reported as goodwill in accordance with paragraph 6 of FASB Statement No. 142
Goodwill and Other Intangible Assets
. The Company recorded goodwill of
$19,322 as a result of applying fresh-stat accounting on March 28, 2008.
Goodwill was determined as follows:
|
Identifiable Assets of New eCom on March 28, 2008 (Date of Bankruptcy
Effectiveness):
|
|
|
|
Cash
|
$
1
|
|
|
Liabilities of New eCom on March 28, 2008 (Date of
Bankruptcy Effectiveness):
|
(19,323)
|
|
|
Excess Reorganization Value
|
$
(19,322)
|
|
Note E. Income Taxes
T
he Company does not believe that the realization of the related net deferred tax asset meets the criteria required by generally accepted accounting principles and, accordingly, the deferred income tax asset arising from such loss carry forward has been fully reserved.
D
eferred income taxes (benefits) are provided for certain
income and expenses which are recognized in different periods for tax and
financial reporting purposes. The Company had cumulative net operating loss
carry-forwards for income tax purposes at
February 28, 2011 of approximately $7,400,000,
expiring through May 31, 2030. The Company has established a 100% valuation allowance against this deferred tax asset, as the Company has no history of profitable operations.
Note
F. Related Party Transactions