Pacific Clean Water Technologies, Inc.
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(Formerly Unseen Solar, Inc.)
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Consolidated Balance Sheets ended March 31, 2013 and December 31, 2012
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(Unaudited)
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ASSETS
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March 31, 2013
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December 31, 2012
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Current Assets:
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Cash & Equivalents
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15,687
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1,479
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Trade Receivables
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378,983
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429,573
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Other
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6,285
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5,485
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Total current assets
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400,955
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436,537
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Property, plant and equipment, net of accumulated deprecation of $104,822 and $97,506
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134,994
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140,325
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Total Assets
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535,949
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576,862
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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Current Liabilities:
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Bank overdraft
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-
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26,600
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Accounts payable
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230,331
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212,379
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Accrued liabilities
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10,376
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10,335
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Line of credit
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329,262
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221,262
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Derivative liabilities
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10,048
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15,618
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Short term debt
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53,086
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37,387
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Short term debt - related parties
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-
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4,250
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Convertible debt, net of discount
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43,577
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37,153
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Total current liabilities
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676,680
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564,984
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Long term debt
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59,836
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68,008
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Long term debt - related parties
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-
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11,451
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Total Liabilities
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736,516
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644,443
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Stockholders' equity (deficit)
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Preferred stock, 20,000,000 shares authorized at par value
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Of $0.0001, no shares issued and outstanding
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-
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-
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Common stock, 500,000,000 shares authorized at par value
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of $0.0001, 300,000,000 and 900,000,000 shares issued and outstanding
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as of March 31, 2013 and December 31, 2012
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30,000
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90,000
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Additional paid in capital
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56,565
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(3,435)
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Accumulated earnings / (deficit)
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(287,132)
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(154,146)
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Total shareholders' equity (deficit)
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(200,567)
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(67,581)
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Total liabilities and shareholders' equity
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535,949
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576,862
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See accompanying notes to the consolidated unaudited financial statements
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Pacific Clean Water Technologies, Inc.
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(Formerly Unseen Solar, Inc.)
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Consolidated Statements of Operations
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For the Three Months Ended March 31, 2013 and 2012
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2013
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2012
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REVENUES
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Total revenues
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494,901
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626,235
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Cost of sales
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341,561
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418,186
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Gross Profit
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153,340
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208,049
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OPERATING EXPENSES
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Selling, General, and Administrative
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274,149
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264,569
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Depreciation and Amortization expense
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5,816
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4,026
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Total operating expenses
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279,965
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268,595
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Net operating loss
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(126,625)
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(60,546)
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Other income (expense)
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Gain (loss) on derivatives
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5,570
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-
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Interest expense
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(11,931)
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(2,610)
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Net loss before taxes
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(132,986)
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(63,156)
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Income tax benefit
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-
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(5,874)
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Net Loss
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(132,986)
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(57,282)
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See accompanying notes to the consolidated unaudited financial statements
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Pacific Clean Water Technologies, Inc.
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(formerly Unseen Solar, Inc.)
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited)
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For the Three Months Ended March 31,
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2013
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2012
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CASH FLOWS FROM OPERATIONS ACTIVITIES:
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Net Income (loss)
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(132,986)
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(57,282)
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Adjustments to reconcile net income (loss) to
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net cash provided by operating activities:
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Depreciation expense
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5,816
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4,026
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Amortization of debt discount
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6,424
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(Gain)/Loss on derivative liability
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(5,570)
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Changes in operating assets and liabilities
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Accounts receivable
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50,590
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76,774
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Prepaid expenses and other current assets
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(800)
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(920)
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Accounts payable
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17,952
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(12,185)
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Deferred tax liability
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-
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(5,874)
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Interest expense incurred under capital lease
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1,173
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753
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Accrued liabilities
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41
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5,081
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Cash used in operating activities
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(57,360)
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10,373
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CASH FLOWS FROM INVESTING ACTIVITIES
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Purchased of fixed assets
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(485)
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647
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CASH FLOWS FROM FINANCING ACTIVIES
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Repayment on bank overdraft
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(26,600)
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Repayment of debt
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(9,347)
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(6,387)
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Net payment on line of credit
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108,000
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5,331
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Cash provided by financing activities
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72,053
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(1,056)
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NET INCREASE (DECREASE) IN CASH
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14,208
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9,964
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Cash and cash equivalents, beginning of period
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1,479
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43,626
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Cash and cash equivalents, end of period
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15,687
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53,590
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
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Cash paid for interest
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1,173
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-
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Non-cash investing and financing activities:
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Cancellation of common stock
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60,000
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-
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See accompanying notes to the consolidated unaudited financial statements
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Pacific Clean Water Technologies, Inc.
Notes to Financial Statements
For the period ended March 31, 2013
(Unaudited)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Pacific Clean Water Technologies Inc. (“we, “our”, “PCWT”, or “the Company”), is a California corporation engaged in the business of operating water treatment programs for major manufacturers, oil and gas refiners, and the food and beverage industries. The company institutes programs that help conserve water use, energy use, and capital equipment costs.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Western and PCWT, after elimination of all significant inter-company accounts and transactions. Equity investments in which we exercise significant influence, but do not control and are not the primary beneficiary, are accounted for using the equity method of accounting. Investments in which we do not exercise significant influence over the investee are accounted for using the cost method of accounting. All intercompany accounts and transactions have been eliminated. We currently have no investments accounted for using the equity or cost methods of accounting. Notes to the unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Form 10-K have been omitted.
USE OF ESTIMATES
Management uses estimates and assumptions in preparing these financial statements in accordance with U.S. generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments are recorded at fair value in accordance with the standard for “Fair Value Measurements codified within ASC 820”, which defines fair values, establishes a three level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measurements:
• Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical asset or liabilities in active markets.
• Level 2 – inputs to the valuation methodology include closing prices for similar assets and liabilities in active markets, and inputs that are observable for the assets and liabilities, either directly, for substantially the full term of the financial instruments.
• Level 3 – inputs to the valuation methodology are observable and significant to the fair value.
The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as March 31, 2013.
Recurring Fair Value Measures
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Level 1
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Level 2
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Level 3
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Level 4
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Liabilities:
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Derivative Liability – 3/31/13
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-
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(10,048)
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(10,048)
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Derivative Liability – 12/31/12
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-
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(15,618)
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(15,618)
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NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. During the six months ended March 31, 2013 the Company realized a net loss of $126,625 and had a working capital deficit of $275,725. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – DERIVATIVE LIABILITIES
During 2012, the Company issued convertible notes that were classified as derivative liabilities. The following table summarized the changes in the derivative liabilities during the three months ended March 31, 2013:
Ending Balance as of December 31, 2012
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$
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15,618
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Change in fair value
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(5,570)
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Ending balance as of March 31, 2013
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$
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10,048
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NOTE 5 – DEBT
Vehicle Financing
The Company repaid $9,347 of vehicle financing debt for the three months ended March 31, 2013. Outstanding vehicle financing debt totals $97,221 and $105,395 as of March 31, 2013 and December 31, 2012, respectively.
Convertible Debt
Debt discount of $6,424 was amortized into interest expense for the three months ended March 31, 2013. Outstanding convertible debt totals $43,577 and $37,153, net of discount, as of March 31, 2013 and December 31, 2012, respectively.
Short Term Debt
Cancellation of common stock by a former shareholder have resulted in the reclassification of short and long term debt - related parties of $15,701 into third party debt. See more information in Note 5.
NOTE 6 - LINE OF CREDIT
The Company has an outstanding line of credit with two banking institutions for a maximum credit lines of $250,000 and $85,000, interest rate of 5% and 6.63%, and payment on cash advances due at the end of every month. Outstanding line of credit totals $329,262 and $221,262 as of March 31, 2013 and December 31, 2012, respectively.
NOTE 7 – STOCKHOLDERS’ DEFICIT
In the three months ended March 31, 2013, 600,000 shares of common stock were cancelled for no consideration. On April 9, 2013, the Company enacted a 3-1 forward stock split. All share issuances have been retroactively presented as if the stock split had occurred prior to any period presented.
NOTE 8 - SUBSEQUENT EVENTS
The Company borrowed $20,000 under a convertible note on April 9, 2013. The note bears interest at 8% per annum and is due on July 1, 2013. The note is convertible into common stock at a price of $0.13 per share. If the Company issues any convertible instrument with a lower convertible price than $0.13 per share, the convertible price of the note will be reduced to match the convertible price of the instrument issued.