NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2013
NOTE 1 – NATURE OF OPERATIONS
Energy Edge Technologies Corporation (“Energy
Edge”, “EEDG”, “Energy Edge Solutions”, “EES”, The Gourmet Wing Company, Inc.”,
“The Gourmet Wing Company”, “TGWC” and the “Company”) was incorporated in New Jersey in January,
2004. Energy Edge Technologies Corporation is comprised of two subsidiaries: Energy Edge Solutions and The Gourmet Wing Company,
Inc.
The Company acquired a 51% interest in Energy
Edge Solutions in 2012. Energy Edge Solutions provides energy engineering and services specializing in the development and implementation
of advanced turnkey projects to reduce energy losses and increase the efficiency of new and existing buildings. The Company
is comprised of professional and industrial engineers, Leadership in Energy and Environmental Design (“LEED”) Accredited
Professionals, and Green Building Coalition Certifying Agents. Energy Edge is a Clean Energy Pay for Performance Partner
and a Smart Start Building Trade Ally. EES’ custom designed projects are developed using proprietary methods and maximize
energy savings by treating an entire facility based on its unique features and electricity and gas usage.
EES applies a whole facility approach
to energy cost reduction by applying different technologies and engineering approaches to treat most of the various electrical
and gas consuming loads across facility such as lighting, HVAC, refrigeration, and production equipment. The energy projects
developed and implemented by EES are ideal for virtually any type of facility and have successfully resulted in tremendous savings
in manufacturing plants, hospitals, entertainment venues, office buildings, restaurants, warehouses, etc.
EES’ revenues come primarily from engineering
survey work and turnkey energy projects where EES takes responsibility for equipment procurement, installation labor, utility rebates,
tax incentives, pre and post survey work, waste removal, certifications, and ongoing measurement and verification of results.
During the fiscal year ended December 31, 2012,
the Company acquired sixty-five percent (65%) of the capital stock of The Dry Fried Wing Company. On March 31, 2013, the Company
acquired the remaining thirty-five percent (35%) of such stock. On April 5, 2013 the Company officially changed the name of The
Dry Fried Wing Company to The Gourmet Wing Company, Inc.
The Gourmet Wing Company, Inc. (TGWC) is a
newly formed combined fast casual restaurant company in the chicken wing segment and restaurant management company. TGWC is primarily
engaged in the business of managing, licensing, operating, developing and franchising a system of distinctive quick-service and
fast casual restaurants in the chicken wing segment.
TGWC revenues will primarily be derived from
management fees, royalty fees, licensing fees and franchise fees. TGWC will also sell food, sauces, mixes and other
supplies to its franchisees/licensees.
On June 10, 2013, The Gourmet Wing Company
entered into a joint venture agreement to develop, own and operate in Atlanta one or more fast casual restaurants featuring seasoned
chicken wings. The culinary style for the restaurant concept was originally developed by TGWC’s chief executive.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Consolidation
The consolidated financial statements include
the accounts of Energy Edge Technologies Corporation, The Gourmet Wing Company, Inc., and Energy Edge Solutions, Inc.(collectively,
the “Company”). All material intercompany transactions have been eliminated.
Basis of Accounting
Energy Edge uses the accrual basis of accounting
for financial statement reporting. Accordingly, revenues are recognized when products are delivered and services are rendered,
and expenses are recognized when the obligation is incurred. The Company recognizes revenues from contracts on the percentage-of-completion
method, measured by the percentage of cost incurred to date to estimated total cost for each contract. The Company has selected
a December 31 year end.
ENERGY EDGE TECHNOLOGIES CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2013
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of Presentation
The accompanying unaudited interim consolidated
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 year ended
December 31, 2012. 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.
Fair Value of Financial Instruments
The Company’s financial instruments consist
of cash and cash equivalents, receivables, prepaid expenses, accounts payable, accrued expenses and other current liabilities,
and due to related parties. The carrying amounts of these financial instruments approximate fair value due either to length of
maturity or interest rates that approximate prevailing rates unless otherwise disclosed in these financial statements.
Contract Receivables
Contract receivables are recorded when invoices
are issued and are presented in the balance sheet net of the allowance for doubtful accounts. The Company extends credit to customers
in the normal course of business. The Company continually monitors contract receivables. When we are aware of circumstances that
may impair a specific customer’s ability to meet its financial obligations, we record a specific allowance to reduce the
net recognized receivable to the amount we believe will be collected. We write off uncollectible amounts against the allowance
when we have exhausted our collection efforts.
Use of Estimates
The preparation of financial statements in
conformity with generally accepted accounting principles of the United States 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 year. Management bases its estimates on historical
experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from
the estimates.
Concentrations of Credit Risk
The Company maintains its cash in bank deposit
accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships
and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit
risk on cash and cash equivalents.
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. It is the Company’s policy to classify interest and penalties on income taxes as interest
expense or penalties expense. As of June 30, 2013, there have been no interest or penalties incurred on income taxes.
Research and Development
The Company has not incurred any research and
development costs to date.
Non-Controlling Interests
As of December 31, 2012, the non-controlling
interests balances were ($39,965), due to minority ownership of 35% in Gourmet Wing Company, and 49% in Energy Edge Solutions,
Inc. On March 31, 2013, the Company acquired the minority interest in Gourmet Wing Company, bringing their ownership of Gourmet
to 100%. As of June 30, 2013, the non-controlling interest balance was $393 due to the minority ownership of 49% in Energy Edge
Solutions, Inc.
Revenue Recognition
The Company recognizes revenues from contracts
on the percentage-of-completion method, measured by the percentage of cost incurred to date to estimated total cost for each contract.
That method is used because management considers total cost to be the best available measure of progress on contracts. Because
of inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change within the
near term.
ENERGY EDGE TECHNOLOGIES CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2013
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Contract costs include all direct material
and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and
depreciation. Selling, general, and administrative costs are charged to expense as incurred. Provisions for estimated losses on
uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and
estimated profitability may result in revisions to costs and income, which are recognized in the period in which the revisions
are determined. Changes in estimated job profitability resulting from job performance, job conditions, contract penalty provisions,
claims, change orders, and settlements, are accounted for as changes in estimates in the current period. No profit is recognized
on change orders until they have been approved by the customer.
The asset, “Costs and estimated earnings
in excess of billings on uncompleted contracts,” represents revenues recognized in excess of amounts billed. The liability,
“Billings in excess of costs and estimated earnings on uncompleted contracts,” represents billings in excess of revenues
recognized.
Stock-Based Compensation
The Company accounts for employee stock-based
compensation in accordance with the guidance of FASB ASC Topic 718,
Compensation – Stock Compensation
which requires
all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements
based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and
credited to additional paid-in capital over the period during which services are rendered.
The Company follows ASC Topic 505-50, formerly
EITF 96-18, “
Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction
with Selling Goods and Services
,” for stock options and warrants issued to consultants and other non-employees. In
accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company
are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant,
whichever can be more clearly determined.
Basic Income (Loss) Per Share
Basic income (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 no such common stock equivalents
outstanding as of June 30, 2013.
Recent Accounting Pronouncements
Energy Edge 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 flows.
Reclassifications
Certain accounts and financial statement captions
in the prior periods have been reclassified to conform to the current period financial statements.
NOTE 3 – FRANCHISE COSTS
Franchise costs consist of aggregate costs
of $3,566 incurred by The Gourmet Wing Company related to the development of sauce recipes. As the asset will be useful for a period
of indefinite length in the future, no amortization has been recognized.
NOTE 4 –DEFERRED FINANCING COSTS
On May 13, 2013 the company entered into a 6% convertible redeemable
note payable with a maturity date of May 14, 2015, loan costs associated with securing the loan of $7,500 were capitalized and
will be amortized over the loan period. Amortization expense included for this period is $430. An unamortized balance of $7,070
remains at June 30, 2013.
ENERGY EDGE TECHNOLOGIES CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2013
NOTE 5 – PREPAID EXPENSES
Prepaid expenses consisted of the following at June 30, 2013 December
31, 2012:
|
|
June 30, 2013
|
|
December 31, 2012
|
Prepaid project expenses
|
|
$
|
29,950
|
|
|
$
|
29,950
|
|
Prepaid consulting expense
|
|
|
339,251
|
|
|
|
270,492
|
|
Total prepaid expenses
|
|
$
|
369,201
|
|
|
$
|
300,442
|
|
Prepaid Project Expenses
Prepaid project expenses consist of monies expended for project
equipment for a project temporarily put on hold.
Prepaid Consulting
The Company has retained a number of consultants. These consultants
are paid in cash and/or issuance of Company stock. Consultants were issued 2,500,000 shares of stock valued at $37,676 for the
six months ended June 30, 2013. The consulting fees are being amortized over the terms of the contracts. As of June 30, 2013, and
December 31, 2012, $339,251 and $270,492 respectively, remained in prepaid consulting.
NOTE 6 – PROPERTY AND EQUIPMENT
The Company’s policy is to depreciate
the cost of property and equipment over the estimated useful lives of the assets by use of the straight-line method. The office
equipment presently owned by the Company is being depreciated over an estimated useful life of five years. Depreciation expense
for the three months ended June 30, 2013 and 2012 was $429 and $430, respectively.
NOTE 7 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the
following at June 30, 2013 and December 31, 2012:
|
|
June 30,
2013
|
|
December 31, 2012
|
Credit card balances
|
|
$
|
29,003
|
|
|
$
|
28,596
|
|
Accrued professional fees
|
|
|
4,500
|
|
|
|
13,500
|
|
Accrued interest expense
|
|
|
395
|
|
|
|
—
|
|
Accrued payroll
|
|
|
—
|
|
|
|
20,000
|
|
Payroll taxes payable
|
|
|
48,652
|
|
|
|
48,652
|
|
Sales tax payable
|
|
|
15,082
|
|
|
|
15,082
|
|
Total accrued expenses and other current liabilities
|
|
$
|
97,632
|
|
|
$
|
125,830
|
|
NOTE 8 – RELATED PARTY TRANSACTIONS
Related party loans totaling $15,615 and $30,696
at June 30, 2013 and December 31, 2012, respectively, are owed to various related parties of the Company for reimbursement of expenses
incurred on behalf of the Company.
Related party loans are unsecured, non-interest bearing and have
no specific terms of repayment unless otherwise noted.
NOTE 9
– CONVERTIBLE NOTE PAYABLE
On May 13, 2013, the Company issued a convertible
promissory note to a third party, with a principal amount of $50,000. This note is due and payable in full on May 14,
2015, and bears interest at 6% per annum. At any time prior to the payment in full of the entire balance of the note,
the creditor has the option of converting all or any portion of the unpaid balance of the note into shares of common stock at a
conversion price equal to seventy percent of
the lowest closing bid price of the common stock for any
of the five trading days prior to and including the conversion date.
ENERGY EDGE TECHNOLOGIES CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2013
NOTE 9
–
CONVERTIBLE NOTE PAYABLE (CONTINUED)
The Company evaluated the terms of the note
and concluded that since the conversion price was not fixed, and
the number of shares of the Company’s
common stock that are issuable upon the conversion of the convertible promissory note is indeterminable until such time as the
Creditor elects to convert to common stock, the Company
concluded that the embedded conversion option created a derivative
liability.
The Company measured the derivative liability using the input attributes disclosed below
and recorded a derivative liability of $53,348 as of May 13, 2013. On June 30, 2013 the Company remeasured the derivative liability
using the input attributes below and determined the derivative liability value to be $91,177. An expense of $37,829 was recorded
as of June 30, 2013 and included in the statement of operations in order to adjust the derivative liability to the remeasured value.
|
|
May 13, 2013
|
|
June 30, 2013
|
Stock price
|
|
$
|
.0099
|
|
|
$
|
.0142
|
|
Exercise price
|
|
$
|
.009044
|
|
|
$
|
.007588
|
|
Shares issuable upon conversion
|
|
|
5,528,527
|
|
|
|
6,589,352
|
|
Expected dividend yield
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
Expected life (years)
|
|
|
2.00
|
|
|
|
1.87
|
|
Risk-free interest rate
|
|
|
.24
|
%
|
|
|
.36
|
%
|
Expected volatility
|
|
|
313.5
|
%
|
|
|
307.6
|
%
|
A debt discount of $50,000 related to the embedded
conversion option was recorded at date of note issuance, and is being expensed over the life of the loan. For the six months
ended June 30, 2013, amortization of $3,125 has been recorded, resulting in a remaining unamortized discount of $46,875 at
June 30, 2013.
NOTE 10– BUSINESS SEGMENTS
The Company is made up of three entities in
which Energy Edge Technologies Corporation is the parent entity. The Company owned a sixty-five percent interest in Gourmet Wings
Company during the first quarter, but acquired the remaining thirty-five percent of the stock of Gourmet Wings Company as of March
31, 2013. Fifty-one percent of the outstanding stock of Energy Edge Solutions, Inc. is owned by the Company. Energy Edge Solutions,
Inc. had no operating activity during the current quarter.
The balance sheet and income statement information of each entity
for the current quarter is presented in US Dollars as follows:
|
|
EEDG
|
|
TGWC
|
|
EES
|
|
Total
|
Current Assets
|
|
$
|
389,717
|
|
|
$
|
5,348
|
|
|
$
|
11
|
|
|
$
|
395,076
|
|
Fixed Assets
|
|
|
4,188
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,188
|
|
Intangibles
|
|
|
7,070
|
|
|
|
3,566
|
|
|
|
—
|
|
|
|
10,636
|
|
Total Assets
|
|
$
|
400,975
|
|
|
$
|
8,914
|
|
|
$
|
11
|
|
|
$
|
409,900
|
|
Current Liabilities
|
|
$
|
235,867
|
|
|
$
|
9,199
|
|
|
$
|
114
|
|
|
$
|
245,180
|
|
Long Term Liabilities
|
|
|
94,302
|
|
|
|
|
|
|
|
|
|
|
|
94,302
|
|
Intercompany
|
|
|
(300,593
|
)
|
|
|
300,178
|
|
|
|
415
|
|
|
|
0
|
|
Stockholders’ Equity
|
|
|
371,399
|
|
|
|
(300,463
|
)
|
|
|
(518
|
)
|
|
|
70,418
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
400,975
|
|
|
$
|
8,914
|
|
|
$
|
11
|
|
|
$
|
409,900
|
|
Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Costs of Sales
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Gross Profit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Operating Expenses
|
|
|
(587,999
|
)
|
|
|
(24,633
|
)
|
|
|
—
|
|
|
|
(612,632
|
)
|
Other Expenses
|
|
|
(45,555
|
)
|
|
|
(192
|
)
|
|
|
—
|
|
|
|
(45,747
|
)
|
Net (loss) before non-controlling interest
|
|
|
(633,554
|
)
|
|
|
(24,825
|
)
|
|
|
—
|
|
|
|
(658,379
|
)
|
Non-controlling interest
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Net (loss) from operations
|
|
$
|
(633,554
|
)
|
|
$
|
(24,825
|
)
|
|
$
|
—
|
|
|
$
|
(658,379
|
)
|
ENERGY EDGE TECHNOLOGIES CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2013
NOTE 11 – CAPITAL STOCK
On March 26, 2010, the Company amended its
Articles of Incorporation to increase the number of authorized shares to 100,000,000 with a par value of $.00001. On November 14,
2012, the Company amended its Articles of Incorporation to increase the number of authorized shares to 250,000,000 with a par value
of $.00001.
On January 23, 2012, the Company issued 1,500,000
shares of stock valued at $15,000 for business consulting services.
On May 3, 2012, the Company issued 2,500,000
shares of stock valued at $39,375 for legal services.
On May 7, 2012, the Company issued 3,000,000
shares of stock valued at $105,000 for business consulting services.
On May 14, 2012, the Company issued 2,000,000
shares of stock valued at $52,500 for business consulting services.
On May 17, 2012, the Company sold 1,000,000
shares of common stock at $.01 per share under a private placement to an unrelated third party for total proceeds of $10,000.
On May 25, 2012, 10,000 shares of stock issued
for consulting services in 2011 were returned to the Company.
On June 5, 2012, the Company sold 500,000 shares
of common stock at $.01 per share under a private placement to an unrelated third party for total proceeds of $5,000.
On June 6, 2012, the Company sold 1,666,667
shares of common stock at $.0075 per share under a private placement to an unrelated third party for total proceeds of $12,500.
On June 6, 2012, the Company issued 500,000
shares of stock valued at $50,000 for business consulting services
On June 6, 2012, the Company sold 2,000,000
shares of common stock at $.015 per share under a private placement to an unrelated third party for total proceeds of $30,000.
On June 17, 2012, the Company issued 200,000
shares of stock valued at $9,000 for business consulting services.
On July 20, 2012, the Company issued 500,000
shares of stock valued at $65,000 for business consulting services.
On August 8, 2012, the Company issued 500,000
shares of stock valued at $50,000 for business consulting services.
On August 9, 2012, the Company issued 1,000,000
shares of stock valued at $90,000 for business consulting services.
On August 14, 2012, the Company issued 1,000,000
shares of stock valued at $67,500 for legal services.
On August 28, 2012, 2,000,000 shares of stock
issued for consulting services in 2011 were returned to the Company.
On October 26, 2012, the Company sold 750,000
shares of common stock at $.0073 per share under a private placement to an unrelated third party for total proceeds of $5,500.
On November 21, 2012, 28,000,000 shares of
stock previously held by former officers of the Company were surrendered.
On November 29, 2012, the Company sold 1,500,000
shares of common stock at $.0167 per share under a private placement to an unrelated third party for total proceeds of $25,000.
On November 29, 2012, the Company issued 2,000,000
shares of stock valued at $80,000 for business consulting services.
On December 10, 2012, the Company issued 300,000
shares of stock valued at $15,000 for business consulting services.
On December 12, 2012, the Company issued 1,000,000
shares of stock valued at $30,000 for business consulting services.
ENERGY EDGE TECHNOLOGIES CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2013
NOTE 11 – CAPITAL STOCK (CONTINUED)
On December 21, 2012, the Company sold 2,000,000 shares of common
stock at $.005 per share under a private placement to an unrelated third party for total proceeds of $10,000.
On December 27, 2012, the Company sold 1,500,000
shares of common stock at $.0167 per share under a private placement to an unrelated third party for total proceeds of $25,000.
As of December 31, 2012, the Company had no
warrants or options outstanding.
On January 8, 2013, the Company sold
2,500,000 shares of common stock at $.03 per share under a private placement to an unrelated third party for total proceeds
of $75,000.
On January 11, 2013, the Company sold 1,500,000
shares of common stock at $.0167 per share under a private placement to an unrelated third party for total proceeds of $25,000.
On January 16, 2013, the Company sold 3,500,000
shares of common stock at $.0167 per share under a private placement to an unrelated third party for total proceeds of $58,113.
On January 23, 2013, the Company issued 1,455,820
shares of common stock at $.08 per share in cancellation of debt in the amount of $116,134.
On January 29, 2013, the Company sold 10,000,000
shares of common stock at $.01 per share under a private placement to an unrelated third party for total proceeds of $100,000.
On January 30, 2013, the Company issued 200,000
shares of common stock valued at $6,000 for business consulting services.
On January 30, 2013, the Company sold 200,000
shares of common stock at $.03 per share under a private placement to an unrelated third party for total proceeds of $6,000.
On January 31, 2013, the Company sold 833,334
shares of common stock at $.03 per share under a private placement to an unrelated third party for total proceeds of $25,000.
On February 26, 2013, the Company issued 1,500,000
shares of common stock valued at $75,000 for prepaid legal services.
On April 5, 2013, the Company issued 1,016,803
shares of common stock at $.01 per share in cancellation of debt in the amount of $40,661.64.
On April 17, 2013, the Company issued 1,500,000
shares of common stock valued at $22,275 for business consulting services.
On May 6, 2013, the Company issued 1,000,000
shares of common stock valued at $15,400 for business consulting services
On May 7, 2013, the Company issued 52,000,000
shares of common stock valued at $600,600 for stock based compensation.
NOTE 12 – INCOME TAXES
For the three month periods ended June 30,
2013 and 2012, the Company has incurred a net loss and, therefore, has no tax liability. The net deferred tax asset was generated
by the loss carry-forward of approximately $3,706,000 and will expire beginning in 2030.
The provision for federal income tax consists of the following at
June 30:
|
|
June 30,
2013
|
|
June 30,
2012
|
Federal income tax benefit attributable to:
|
|
|
|
|
|
|
|
|
Current operations
|
|
$
|
312,300
|
|
|
$
|
152,000
|
|
Less: valuation allowance
|
|
|
(312,300
|
)
|
|
|
(152,000
|
)
|
Net provision for Federal income taxes
|
|
$
|
0
|
|
|
$
|
0
|
|
ENERGY EDGE TECHNOLOGIES CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2013
NOTE 12 – INCOME TAXES (CONTINUED)
The cumulative tax effect at the expected rate of 34% of significant
items comprising our net deferred tax amount is as follows:
|
|
June 30,
2013
|
|
December 31, 2012
|
Deferred tax asset attributable to:
|
|
|
|
|
|
|
|
|
Net operating loss carryover
|
|
$
|
1,252,900
|
|
|
$
|
940,600
|
|
Less: valuation allowance
|
|
|
(1,252,900
|
)
|
|
|
(940,600
|
)
|
Net deferred tax asset
|
|
$
|
0
|
|
|
$
|
0
|
|
As of June 30, 2013, the Company had net operating
loss carry forwards of approximately $3,706,000 that may be available to reduce future years’ taxable income through 2033.
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.
Due to the change
in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards
of $3,706,000
for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, the net operating
loss carry forwards may be limited as to use in future years.
NOTE 13 – COMMITMENTS AND CONTINGENCIES
The Company neither owns nor leases any real
property as of June 30, 2013. An officer has provided office services without charge. There is no obligation for the officer
to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein.
NOTE 14 –
GOING CONCERN
The Company has limited working capital, and
has suffered significant losses from operations. These factors create substantial doubt about the Company’s ability to continue
as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to
continue as a going concern.
The ability of Energy Edge Technologies Corporation
to continue as a going concern is dependent on the Company generating cash from the sale of its common stock, obtaining debt financing,
attaining future profitable operations, acquiring or merging with a profitable company, and/or developing successful business operations
in other industries through investment in related party ventures. Management’s plans include selling its equity securities
and obtaining debt financing to fund its capital requirements; however, there can be no assurance the Company will be successful
in these efforts.
NOTE 15 – SUBSEQUENT EVENTS
In accordance with
ASC Topic 855-10,
the Company
has analyzed
its operations subsequent 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.
ENERGY EDGE TECHNOLOGIES CORPORATION