PINX:NXFI Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
 
FORM 10-Q
_______________
 
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2012
 
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ______to______.
 
Commission File Number: 333-148493
 
NEXT FUEL, INC.
(Exact name of registrant as specified in it's charter)
 
NEVADA
 
32-2305768
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employee Identification No.)
 
122 North Main Street, Sheridan, WY 82801
(Address of Principal Executive Offices)
_______________
 
(307) 674-2145
(Registrant's Telephone number, including area code)
_______________
 
821 Frank Street Sheridan WY 82801
(Former Address of Principal Executive Offices, if changed since last report)
_______________

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
 
Large Accelerated Filer o
Accelerated Filer o
Non-Accelerated Filer o
Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.
Yes o No x
Indicate the number of shares issued and outstanding of each of the issuer’s classes of common stock, as of August 13, 2012: 10,965,500 shares of issued common stock.

 
 

 
 
NEXT FUEL, INC.

FORM 10-Q
June 30, 2012
INDEX
PART I-- FINANCIAL INFORMATION
Item 1.
Financial Statements
3
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
30
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
36
Item 4.
Control and Procedures
36
PART II-- OTHER INFORMATION 37
Item 1
Legal Proceedings
37
Item 1A
Risk Factors
37
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
44
Item 3.
Defaults Upon Senior Securities
44
Item 4.
Removed and Reserved
44
Item 5.
Other Information
44
Item 6.
Exhibits
44
     
SIGNATURE 45
 
 
 
 
2

 
 
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
 
CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONTENTS
 
PAGE
4
CONDENSED BALANCE SHEETS AS OF JUNE 30, 2012 AND AS OF SEPTEMBER 30, 2011
     
PAGE
5
CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 2012 AND 2011, AND FOR THE PERIOD FROM AUGUST 14, 2007 (INCEPTION) TO JUNE 30, 2012
     
PAGE
6
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY/DEFICIENCY FOR THE PERIOD FROM AUGUST 14, 2007 (INCEPTION) TO JUNE 30, 2012
     
PAGE
7
CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JUNE 30, 2012 AND 2011, AND FOR THE PERIOD FROM AUGUST 14, 2007 (INCEPTION) TO JUNE 30, 2012
     
PAGE
8
NOTES TO CONDENSED FINANCIAL STATEMENTS
 
 
3

 
 
Next Fuel, Inc.
 
(A Development Stage Company)
 
Condensed Balance Sheets
 
             
ASSETS
           
             
   
June 30,
2012
   
September 30,
2011
 
   
(Unaudited)
     *  
Current Assets
             
Cash
  $ 3,598,260     $ 2,117,927  
Accounts Receivable, net of allowance for doubtful accounts
    96,944       -  
Inventory, net
    -       -  
Employee Advances
    25,692       5,583  
Prepaid Expenses
    31,250       28,873  
  Total Current Assets
    3,752,146       2,152,383  
                 
Equipment, net
    10,202       6,470  
Intangibles (Note 2(B))
    -       -  
                 
Total Assets
  $ 3,762,348     $ 2,158,853  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIENCY)
               
                 
Current Liabilities
               
Accounts payable and accrued expenses
  $ 92,939     $ 167,776  
Accounts payable - related party
    914       -  
Deferred Revenue
    75,000       40,000  
Total  Liabilities
    168,853       207,776  
                 
Commitments and Contingencies
               
                 
Stockholders' Equity
               
Preferred stock, $0.0001 par value; 100,000,000 shares authorized,
               
none issued  and outstanding
    -       -  
Common stock, $0.0001 par value; 100,000,000 shares authorized, 10,965,500 and 12,052,500
         
issued and outstanding, respectively
    1,097       1,206  
Additional paid-in capital
    24,939,356       21,636,928  
Less: Treasury stock; 0 and 2,500,000, respectively
    -       (93,000 )
Deficit accumulated during the development stage
    (21,346,958 )     (19,594,057 )
Total Stockholders' Equity
    3,593,495       1,951,077  
                 
Total Liabilities and Stockholders' Equity
  $ 3,762,348     $ 2,158,853  
                 
* Derived from audited financial statements
               
 
See accompanying notes to condensed unaudited financial statements
 
 
4

 
 
Next Fuel, Inc.
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
 
                  For the Period
from August 14, 2007
(Inception) to
June 30, 2012
 
                 
   
For the Three Months Ended June 30,
   
For the Nine Months Ended June 30,
     
   
2012
   
2011
   
2012
   
2011
     
                               
Sales
  $ 96,944     $ 11,490     $ 193,229     $ 11,490     $ 204,719  
Contract Income
    60,000       -       60,000       -       60,000  
License Fee Income
    25,000       -       25,000       -       25,000  
Consulting Income
    -       -       40,000       -       40,000  
Total Revenues
    181,944       11,490       318,229       11,490       329,719  
                                         
Cost of Goods Sold
    (130,423 )     (11,005 )     (206,327 )     (11,005 )     (276,267 )
                                         
Gross Profit
    51,521       485       111,902       485       53,452  
                                         
Operating Expenses
                                       
Professional fees
  $ 199,007     $ 117,336     $ 442,251     $ 505,269     $ 1,525,398  
Research and development costs
    16,211       -       58,711       17,649,999       17,708,710  
Contribution Expense
    -       100,000       100       100,000       100,100  
Salary Expense
    247,783       109,999       817,311       109,999       823,397  
General and administrative
    183,521       134,215       549,187       142,218       1,140,844  
Total Operating Expenses
    646,522       461,550       1,867,560       18,507,485       21,298,449  
                                         
Loss from Operations
    (595,001 )     (461,065 )     (1,755,658 )     (18,507,000 )     (21,244,997 )
                                         
Other Expenses
                                       
Interest Income
    1,130       497       2,817       497       4,510  
Interest Expense
    -       (1,750 )     (60 )     (64,574 )     (106,471 )
Total Other Income/(Expense)
    1,130       (1,253 )     2,757       (64,077 )     (101,961 )
                                         
                                         
LOSS BEFORE INCOME TAXES
    (593,871 )     (462,318 )     (1,752,901 )     (18,571,077 )     (21,346,958 )
                                         
Provision for Income Taxes
    -       -       -       -       -  
                                         
NET LOSS
  $ (593,871 )   $ (462,318 )   $ (1,752,901 )   $ (18,571,077 )   $ (21,346,958 )
                                         
Net Loss Per Share  - Basic and Diluted
  $ (0.06 )   $ (0.04 )   $ (0.16 )   $ (2.17 )        
                                         
Weighted average number of shares outstanding
                                       
  during the year - Basic and Diluted
    10,656,258       11,337,610       10,868,745       8,546,287          
 
See accompanying notes to condensed unaudited financial statements
 
 
5

 
 
Next Fuel, Inc.
(A Development Stage Company)
Condensed Statement of Changes in Stockholders' Equity/(Deficiency)
For the period from August 14, 2007 (Inception) to June 30, 2012
(Unaudited)
 
                                       
Deficit
             
   
Preferred Stock
   
Common Stock
   
Additional
paid-in
    Treasury    
accumulated during the
development
    Subscription    
Total
Stockholder's
Equity/
 
   
Shares
   
Amount
   
Shares
   
Amount
   
capital
   
Stock
   
stage
   
Receivable
   
(Deficiency)
 
                                                       
Balance August 14, 2007
    -     $ -       -     $ -     $ -     $ -     $ -     $ -     $ -  
                                              -                          
Common stock issued for services to founder ($0.0001)
    -       -       5,000,000       500       -       -       -       -       500  
                                              -                          
Common stock issued for cash ($0.10/ per share)
    -       -       1,240,000       124       123,876       -       -       (85,000 )     39,000  
                                                                         
In kind contribution of cash
    -       -       -       -       100       -       -       -       100  
                                                                         
In kind contribution of services
    -       -       -       -       700       -       -       -       700  
                                                                         
Net loss for the period August 14, 2007 (inception) to September 30, 2007
    -       -       -       -       -       -       (12,300 )     -       (12,300 )
                                                                         
Balance, for the year ended September 30, 2007
    -       -       6,240,000       624       124,676       -       (12,300 )     (85,000 )     28,000  
                                                                         
Common stock issued for cash ($0.10/ per share)
    -       -       197,500       20       19,730       -       -       -       19,750  
                                                                         
Purchase of treasury stock
    -       -       -       -       -       (40,000 )     -       -       (40,000 )
                                                                         
Cash received for subscription receivable
    -       -       -       -       -       -       -       85,000       85,000  
                                                                         
In kind contribution of services
    -       -       -       -       5,200       -       -       -       5,200  
                                                                         
Net loss for the year ended September 30, 2008
    -       -       -       -       -       -       (204,665 )     -       (204,665 )
                                                                         
Balance, for the year ended September 30, 2008
    -       -       6,437,500       644       149,606       (40,000 )     (216,965 )     -       (106,715 )
                                                                         
Common stock issued for cash ($0.10/ per share)
    -       -       275,000       27       27,473       -       -       -       27,500  
                                                                         
Purchase of treasury stock
    -       -       -       -       -       (53,000 )     -       -       (53,000 )
                                                                         
In kind contribution of interest
    -       -       -       -       16,118       -       -       -       16,118  
                                                                         
In kind contribution of services
    -       -       -       -       5,200       -       -       -       5,200  
                                                                         
Net loss for the year ended September 30, 2009
    -       -       -       -       -       -       (181,654 )     -       (181,654 )
                                                                         
Balance, September 30, 2009
    -       -       6,712,500       671       198,397       (93,000 )     (398,619 )     -       (292,551 )
                                                                         
Common stock issued for cash ($0.10/ per share)
    -       -       325,000       32       32,468       -       -       -       32,500  
                                                                         
In kind contribution of interest
    -       -       -       -       25,506       -       -       -       25,506  
                                                                         
In kind contribution of services
    -       -       -       -       5,200       -       -       -       5,200  
                                                                         
Net loss for the year ended September 30, 2010
    -       -       -       -       -       -       (64,822 )     -       (64,822 )
                                                                         
Balance,  September 30, 2010
    -       -       7,037,500       703       261,571       (93,000 )     (463,441 )     -       (294,167 )
                                                                         
Common stock issued for cash ($0.10/ per share)
    -       -       50,000       5       4,995       -       -       -       5,000  
                                                                         
Common stock issued for cash ($2/ per share) less stock offering costs
    -       -       50,000       5       95,957       -       -       -       95,962  
                                                                         
Common stock issued for cash ($3/ per share)
    -       -       400,000       40       1,199,960       -       -       -       1,200,000  
                                                       
Common stock issued for cash ($2/ per share)
    -       -       1,000,000       100       1,999,875       -       -       -       1,999,975  
                                                                         
Conversion of $50,000 convertible note  to 500,000 shares of stock
    -       -       500,000       50       49,950       -       -       -       50,000  
                                                                         
Benefical conversion of convertible note payable
    -       -       -       -       50,000       -       -       -       50,000  
                                                                         
Issuance of 3,010,000 shares in exchange for intellectual property
    -       -       3,010,000       301       13,394,199       -       -       -       13,394,500  
                                                                         
Issuance of 1,000,000 warrants in exchange for intellectual property
    -       -       -       -       4,250,499       -       -       -       4,250,499  
                                                                         
Common stock issued for services ($5.50/ per share)
    -       -       5,000       2       27,498       -       -       -       27,500  
                                                                         
Value of service provided for the acquisition of intellectual property
    -       -       -       -       287,000       -       -       -       287,000  
                                                                         
In kind contribution of interest
    -       -       -       -       12,824       -       -       -       12,824  
                                                                         
In kind contribution of services
    -       -       -       -       2,600       -       -       -       2,600  
                                                                         
Net loss for the year ended September 30, 2011
    -       -       -       -       -       -       (19,130,616 )     -       (19,130,616 )
                                                                         
Balance, September 30, 2011
    -       -       12,052,500       1,206       21,636,928       (93,000 )     (19,594,057 )     -       1,951,077  
                                                                         
Common stock issued for services ($5.50 per share)
    -       -       1,000       -       5,500       -       -       -       5,500  
                                                                         
Common stock issued for services ($4.00 per share)
                    7,000       1       27,999                               28,000  
                                                                         
Issuance of Stock Options
                                    287,819                               287,819  
                                                                         
Exercise of 425,000 warrants ($.20 per share)
                    425,000       43       84,958                               85,000  
                                                                         
Common stock issued for cash ($3.05 per share)
                    980,000       98       2,988,902                               2,989,000  
                                                                         
Cancelation of treasury shares
                    (2,500,000 )     (250 )     (92,750 )     93,000                       -  
                                                                         
Net loss for the nine months ended June 30, 2012
    -       -       -       -       -       -       (1,752,901 )     -       (1,752,901 )
                                                                         
Balance, June 30, 2012
    -     $ -       10,965,500     $ 1,097     $ 24,939,356     $ -     $ (21,346,958 )   $ -     $ 3,593,495  
 
See accompanying notes to condensed unaudited financial statements
 
 
6

 
 
Next Fuel, Inc.
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
 
            For the Period From August 14, 2007 (Inception) to June 30, 2012  
   
For the Nine Months Ended June 30,
     
   
2012
   
2011
     
Cash Flows Used In Operating Activities:
                 
Net Loss
  $ (1,752,901 )   $ (18,571,077 )   $ (21,346,958 )
  Adjustments to reconcile net loss to net cash used in operations
                       
    Common stock issued for services
    33,500       13,750       61,500  
    Common stock issued for intellectual property
    -       17,644,999       17,644,999  
    Beneficial conversion feature in stock conversion
    -       50,000       50,000  
    In-kind contribution of services
    -       289,600       305,900  
    In-kind contribution of interest
    -       12,824       54,448  
   Compensation expense on stock options
    287,819               287,819  
   Depreciation and amortization expense
    1,817       786       5,665  
   Impairment of inventory
    58,935               -  
   Changes in operating assets and liabilities:
                       
      Increase in accounts receivable
    (96,944 )     -       (96,944 )
      Increase in inventory
    (58,935 )     (11,005 )     -  
      Increase in prepaid
    (2,377 )     (6,437 )     (31,250 )
      Increase in employee advances
    (20,109 )             (25,692 )
      Decrease in accounts payable and accrued expenses
    (73,853 )     62,747       92,939  
      Decrease in accounts payable - related parties
    (70 )             914  
      Increase in deferred revenue
    35,000       -       75,000  
Net Cash Used In Operating Activities
    (1,588,118 )     (513,813 )     (2,921,660 )
                         
Cash Flows Used in Investing Activities:
                       
Purchase of Fixed Assets
    (5,549 )     (2,961 )     (15,867 )
Net Cash Used In Investing Activities
    (5,549 )     (2,961 )     (15,867 )
                         
Cash Flows From Financing Activities:
                       
Proceeds from loan payable
    -       11,856       325,750  
Proceeds from convertible note payabe
    -       50,000       50,000  
Repayments of loan payable
    -       (285,750 )     (325,750 )
Purchase of treasury stock
    -       -       (93,000 )
Proceeds from issuance of common stock, net of offering costs
    3,074,000       3,300,937       6,578,787  
Net Cash Provided by Financing Activities
    3,074,000       3,077,043       6,535,787  
                         
Net Increase (Decrease) in Cash
    1,480,333       2,560,269       3,598,260  
                         
Cash at Beginning of Year/Period
    2,117,927       -       -  
                         
Cash at End of Year/Period
  $ 3,598,260     $ 2,560,269     $ 3,598,260  
                         
Supplemental disclosure of cash flow information:
                       
                         
Cash paid for interest
  $ 60     $ 1,750     $ 1,810  
Cash paid for taxes
  $ -     $ -     $ 127  
                         
Supplemental disclosure of non-cash investing and financing activities:
                       
                         
Stock issued in exchange for subscription receivable
  $ 1,525,000     $ 100,000     $ 1,625,000  
 
During the year ended September 30, 2011 the Company converted $50,000 of convertible note payable into 500,000 shares of common stock at a conversion rate of $0.10 per share.  The Company also recongnized a $50,000 benefical conversion feature as an interest expesne on the conversion.
 
 
7

 
 
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2012
(UNAUDITED)
 
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A) Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information.  Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.
 
It is management's opinion, however that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.  The results for the interim period are not necessarily indicative of the results to be expected for the year.
 
Next Fuel, Inc. (a development stage company) (the "Company") was incorporated under the laws of the State of Nevada on August 14, 2007.  Next Fuel, Inc. is a service-based firm that will develop and commercialize innovative technologies associated with renewable energy, such as unconventional natural gas production from lower grade coal, lignite, oil shale and other carbonaceous deposits.  We refer to this generally as Coal-to-Gas Technology.
 
We are also investigating opportunities to develop or acquire other advanced technologies with focus on clean renewable energy, such as novel systems for energy-related water treatment, and processes for carbon dioxide conversion and carbon loop closure, and biological fuel cells.  Collaborations with leading research institutes, such University of Colorado, University of Wyoming, and Peking University will allow the Company to focus on identifying and acquiring or developing a portfolio of growth opportunities with compelling market values and clean energy and environmental stewardship.
 
We are a technology provider and service company that assist owners of natural gas production resources to increase the efficiency of their operations by providing CTG technology and technical support services utilizing our CTG technology.  We do not plan to own or develop natural gas production projects.
 
Activities during the development stage include initiating pilot test work, finalizing the business plan and raising capital.
 
For comparison, the Company’s Form 10-Q for the quarter ended March 31, 2012 was restated.  When comparative data is used in this statement, the Company is referencing the restated Form 10-Q/A.
 
 
8

 
 
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2012
(UNAUDITED)
 
(B) Use of Estimates
 
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Significant estimates include the valuation of inventory, valuation of equity based compensation and valuation of deferred tax assets.  Actual results could differ from those estimates.
 
(C) Cash and Cash Equivalents
 
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents.  At June 30, 2012 and September 30, 2011, respectively, the Company had no cash equivalents.
 
(D) Loss Per Share
 
Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by FASB Accounting Standards Codification Topic 260, “Earnings Per Share”.
 
Diluted income per share includes the dilutive effects of stock options, warrants, and stock equivalents.  To the extent stock options, stock equivalents and warrants are anti-dilutive; they are excluded from the calculation of diluted income per share.  For the nine months ended June 30, 2012 and 2011 respectively, 575,000, and 0, shares issuable upon the exercise of warrants were not included in the computation of income per share because their inclusion is anti-dilutive.  For the nine months ended June 30, 2012 and 2011 respectively, 3,720,000, and 0, shares issuable upon the exercise of stock options were not included in the computation of income per share because their inclusion is anti-dilutive. 
 
(E) Equipment
 
The Company values property and equipment at cost and depreciates these assets using the straight-line method over their expected useful life. The Company uses a five year life for furniture and equipment.
 
 
9

 
 
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2012
(UNAUDITED)
 
(F) Intangible Assets
 
In accordance with ASC No. 350, Intangibles, Goodwill and Other, the Company requires that intangible assets with a finite life be amortized over their life and requires that goodwill and intangible assets be reviewed for impairment annually or more frequently if impairment indicators arise.  Any other intangible assets deemed to have indefinite lives are not subject to amortization (See Note 2(B)).
 
(G) Inventory
 
Inventory is valued at the lower of cost or market value. Cost is determined using the first in first out (FIFO) method. Provision for potentially obsolete or slow moving inventory is made based on management analysis or inventory levels and future sales forecasts. During the nine months ended June 30, 2012 and the year ended September 30, 2011, the Company recognized an impairment of $0 and $58,935 in inventory, respectively.
 
   
June 30, 2012
   
September 30, 2011
 
Inventory
  $ -     $ 58,935  
Reserve
  $ -     $ (58,935 )
Total
  $ -     $ -  
 
(H) Stock-Based Compensation
 
The Company measures the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognizes the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans.  Compensation cost is measured on the date of grant at their fair value.  Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.

Equity instruments (“instruments”) issued to persons other than employees are recorded on the basis of the fair value of the instruments.  In general, the measurement date for shares issued to non-employees is (a) when a performance commitment, as defined, is reached or (b) when the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant.
 
 
10

 
 
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2012
(UNAUDITED)
 
(I) Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
 
(J) Business Segments
 
The Company operates in one segment and therefore segment information is not presented.
 
(K) Revenue Recognition

Revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.

The Company's revenue transactions include the following: additives, consulting services, royalties, and intellectual property licensing.  The Company recognizes revenue when it is realized or realizable and earned.  The timing and the amount of revenue recognized from the licensing of intellectual property depend upon a variety of factors, including the specific terms of each agreement and the nature of the deliverables and obligations.  For the sale of multiple-element arrangements, including whereby additives, consulting or intellectual property is combined in a revenue generating transaction with other elements, the Company allocates to, and recognizes revenue from, the various elements based on their relative selling price. The Company allocates to, and recognizes revenue from, the various elements of multiple-element arrangements based on relative selling price of a deliverable, using: vendor-specific objective evidence, third-party evidence, and best estimated selling price in accordance with the selling price hierarchy.
 
 
11

 
 
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2012
(UNAUDITED)
 
(L) Fair Value of Financial Instruments
 
The carrying amounts reported in the balance sheet for prepaid expenses and accounts payable approximate fair value based on the short-term maturity of these instruments as of June 30, 2012 and September 30, 2011.
 
The following are the hierarchical levels of inputs to measure fair value:

 
o
Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
 
o
Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
 
o
Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
 
(M) Concentration of Credit Risk

At June 30, 2012, 100% of revenue was from one customer.

At times the Company has cash in bank accounts in excess of FDIC insurance limits. The Company had approximately $3,380,135 and $1,851,090 in excess of FDIC insurance limits as of June 30, 2012 and September 30, 2011, respectively.
 
(N) Recent Accounting Pronouncements
 
ASU No. 2011-04; Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.   In May, 2011, the FASB issued ASU No. 2011-04. The amendments in this ASU generally represent clarifications of Topic 820, but also include some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed.  This ASU results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRSs.  The amendments in this ASU are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted.
 
 
12

 
 
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2012
(UNAUDITED)
 
The Company adopted the methodologies prescribed by this ASU in its second quarter and it did not have a material effect on its financial position or results of operations.

ASU No. 2011-05; Amendments to Topic 220, Comprehensive Income.  In June, 2011, the FASB issued ASU No. 2011-05. Under the amendments in this ASU, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.

The amendments in this ASU should be applied retrospectively. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011.  The adoption of the statement did not have a material effect on the Company’s financial statements.

On September 15, 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other, which simplifies how an entity is required to test goodwill for impairment. This ASU would allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under the ASU, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The ASU includes a number of factors to consider in conducting the qualitative assessment.  The ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  Early adoption is permitted. This standard did not have a material impact on the Company’s reported results of operations or financial position.
 
 
13

 
 
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2012
(UNAUDITED)
 
NOTE 2
EQUIPMENT AND INTANGIBLES

 
(A)
Equipment

At June 30, 2012 and September 30, 2011 equipment is as follows:
 
   
June 30, 2012
   
September 30, 2011
 
             
Computer Equipment
  $ 9,498     $ 8,818  
Furniture & Equipment
    4,869       -  
Website Costs
    1,500       1,500  
Less accumulated depreciation
               
and amortization
    (5,665 )     (3,848 )
                 
                 
    $ 10,202     $ 6,470  

Depreciation and amortization expense for the nine months ended June 30, 2012 and 2011 and the period from August 14, 2007 (Inception) to June 30, 2012 was $1,817, $786 and $5,665 respectively.

 
(B)
Intangibles

On April 20, 2012, Next Fuel acquired the rights to certain intellectual property, as further described below.  These rights were acquired with cash (see Note 7).  The intellectual property rights that were acquired were in the form of rights to new technologies and assignment of U.S. Provisional Patent Application No. 61624313 entitled “Transition Metals Enhancement of Biogenic Natural Gas Production”, filed on April 15, 2012.  Due to early stage and requirement for further development of these technologies, the fact that Next Fuel is a development stage company, and the current significant uncertainty of recoverability in the future; the Company has expensed the costs of these transactions to research and development at the time of the acquisitions.
 
On February 12, 2012 and March 28, 2011, Next Fuel acquired the rights to certain intellectual property, as further described below.  These rights were acquired through the issuance of stock options and minimal cash consideration in February 2012 (see Note 4) and the issuance of shares of the Company’s common stock and stock warrants in March 2011 (see Note 3(C)).  The intellectual property rights that were acquired were in the form of the rights to new technologies.  Provisional patent applications were filed for each.  Due to early stage and requirement for further development of these technologies, the fact that Next Fuel is a development stage company, and the current significant uncertainty of recoverability in the future; the Company has expensed the costs of these transactions to research and development at the time of the acquisitions.
 
 
14

 
 
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2012
(UNAUDITED)
 
Although the company has expensed these technologies, the company believes that this intellectual property and associated patent applications were instrumental in the company’s ability to raise $1,525,000 in April 2012.   The company believes there is a large market for new green technology associated with clean coal initiatives and the acquired technology will position the company to take advantage and participate in this market if this market grows and we develop this technology.
 
In February 2012, Next Fuel acquired the rights to two new technologies from individual inventors (LPV Technology and CTP Technology described below).  Both technologies are early stage and will require further development before we understand their full commercial potential. Provisional U. S. patent applications were filed for each.
 
Low Energy-input Pervaporation (LPV) Technology.
The LPV Technology we acquired brings an opportunity to expand our energy related technology to clean up water used in oil and natural gas production, including Frac drilling.  We believe this technology will allow us to treat water that contains the most challenging, high salt- and total dissolved solids used or produced in U. S. oil & gas operations.  This new technology could provide the oil and gas industry with a new cost-effective method for treating this type of waste water and dealing with environmental restrictions on their operations.  If the Government continues to strengthen environmental regulations for the oil and gas industry, we believe demand for new water treatment technologies are likely to increase.  Although we do not expect significant revenue during this fiscal year, the LPV Technology could begin producing revenue in 2013.
 
Carbon Dioxide to Product (CTP) Technology
The CTP Technology we acquired targets the emerging market of carbon footprint elimination.  Our CTP Technology will convert carbon dioxide from sources such as power plants and other fossil fuel burning industry into value added organic compounds.  This process will also close the carbon loop by returning carbon to sold form instead of releasing it into the air.  We expect that our CTP Technology will have minimum energy input and the feedstock is the waste gas from stack emissions.  If we bring this technology to the market, we expect to derive revenue both from the operators of power plants for cleaning the feedstock (carbon dioxide) and from selling the products the CTP Technology produces.  We currently do not have a plan or schedule for commercializing this very early stage technology.
 
 
15

 
 
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2012
(UNAUDITED)
 
Although the company has expensed these technologies, it is the company’s belief that this intellectual property and associated patent applications may provide growth opportunities for the company in the highly competitive markets associated with O&G produced water and CO2 sequestration.  Given the early stage of the two technologies acquired, the company believes they will not make significant contributions to the company's business for several years.  .

NOTE 3
STOCKHOLDERS’EQUITY/DEFICIENCY

 
(A)  
Common Stock Issued for Cash

On May 28, 2012, the Company issued 480,000 shares of common stock for $1,464,000 ($3.05/share).
 
On March 30, 2012, the Company issued 425,000 shares of common stock for $85,000 ($.20/share) for exercise of stock warrants.
 
On March 26, 2012, the Company entered into a stock subscription agreement for the sale of up to 500,000 shares of common stock in two installments.  On March 27, 2012, the Company sold 100,000 shares of common stock for $305,000 ($3.05/share) as the first installment of the subscription agreement.  On March 30, 2012, the Company sold 400,000 shares of common stock for $1,220,000 ($3.05/share) as the second installment of the subscription agreement.  These transactions closed in April, 2012 and the funds were released at that time.
 
The March 26, 2012 stock subscription agreement included a registration rights agreement.  The registration rights agreement stipulated a clause that the Company use commercially reasonable efforts to prepare and file a registration statement with the SEC within sixty (60) days after the agreement was signed on March 26, 2012.  The Company has filed such registration statement in accordance with the agreement.
 
On May 12, 2011, the Company issued 400,000 shares of common stock for $1,200,000 ($3/share).
 
On March 28, 2011, the Company entered into a stock subscription agreement for the sale of up to 1,000,000 shares of common stock in two installments.  On March 28, 2011, the Company sold 50,000 shares of common stock for $100,000 ($2/share) less $4,038 in stock offering costs. On May 20, 2011, the Company issued 950,000 shares of common stock for $1,899,975 ($2/share) as a second installment of the subscription agreement.
 
 
16

 
 
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2012
(UNAUDITED)
 
On October 14, 2010, the Company issued 50,000 shares of common stock for $5,000 ($0.10/share).
 
On August 10, 2010, the Company issued 50,000 shares of common stock for $5,000 ($0.10/share).
 
On July 20, 2010, the Company issued 50,000 shares of common stock for $5,000 ($0.10/share).
 
On April 13, 2010, the Company issued 75,000 shares of common stock for $7,500 ($0.10/share).
 
On February 17, 2010, the Company issued 50,000 shares of common stock for $5,000 ($0.10/share).
 
On November 4, 2009, the Company issued 100,000 shares of common stock for $10,000 ($0.10/share).
 
During March and April 2009, the Company issued 275,000 shares of common stock for $27,500 ($0.10/share).
 
During October and November 2007, the Company issued 197,500 shares of common stock for $19,750 ($0.10/share).
 
During October 2007, the Company collected $85,000 ($0.10/share) for the sale of 850,000 shares of common stock made during the period from August 14, 2007 (inception) through September 30, 2007.
 
For the year ended September 30, 2007 the Company issued 390,000 shares of common stock for $39,000 ($0.10/share).
 
(B) In-Kind Contribution
 
For the year ended September 30, 2011 a principal stockholder of the Company contributed services on behalf of the Company related to the acquisition of the intellectual property with a fair value of $287,000 (See Note 7).
 
For the year ended September 30, 2011, a shareholder of the Company contributed services having a fair value of $2,600 (See Note 7).
 
For the year ended September 30, 2010, a shareholder of the Company contributed services having a fair value of $5,200 (See Note 7).
 
 
17

 
 
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2012
(UNAUDITED)
 
For the year ended September 30, 2011, the Company recorded contributed interest expense having a fair value of $12,824.
 
For the year ended September 30, 2010, the Company recorded contributed interest expense having a fair value of $25,506.
 
For the year ended September 30, 2009, the Company recorded contributed interest expense having a fair value of $16,118).
 
For the year ended September 30, 2009 a shareholder of the Company contributed services having a fair value of $5,200 (See Note 7).
 
For the year ended September 30, 2008 a shareholder of the Company contributed services having a fair value of $5,200 (See Note 7).
 
For the period from August 14, 2007 (Inception) through September 30, 2007 a shareholder of the Company contributed services having a fair value of $700 (See Note 7).
 
For the period from August 14, 2007 (Inception) through September 30, 2007 a principal stockholder of the Company contributed cash of $100 (See Note 7).
 
(C) Stock Issued for Services and Intellectual Property
 
On May 13, 2012, the Company issued 7,000 shares of the Company’s common stock, having a fair value of $28,000 ($4.00/share) on the grant date (See Note 6).
 
On October 15, 2011, the Company issued 1,000 shares of the Company's common stock, having a fair value of $5,500 ($5.50 per share) on the grant date (See Note 6).
 
On July 1, 2011, the Company issued 2,500 shares of the Company's common stock, having a fair value of $13,750 ($5.50 per share) on the grant date (See Note 6).
 
On April 1, 2011, the Company issued 2,500 shares of the Company's common stock, having a fair value of $13,750 ($5.50 per share) on the grant date (See Note 6).
 
On March 28, 2011, the Company issued 3,010,000 shares of the Company’s common stock, having a fair value of $13,394,500 on the grant date and 1,000,000 warrants having a fair value of $4,250,499 (See Notes 2(B) and 3(E)) in exchange for intellectual property.  As of September 30, 2011, the intellectual property was deemed to have no future value and the full amount was expensed to research and development.
 
 
18

 
 
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2012
(UNAUDITED)
 
On August 14, 2007, the Company issued 5,000,000 shares of common stock to its founders having a fair value of $500 ($0.0001/share) in exchange for services provided (See Note 7).
 
(D) Treasury Shares
 
During the year ended September 30, 2009, the Company re-purchased 1,424,731 shares of common stock for $53,000.
 
During the year ended September 30, 2008, the Company re-purchased 1,075,269 shares of common stock for $40,000.
 
In 2012, the total of 2,500,000 shares of common stock held in treasury were cancelled.
 
(E)  Stock Warrants Issued for Intellectual Property
 
On March 28, 2011, the Company granted 1,000,000 two year warrants having an exercise price of $0.20 per share. The warrants vest immediately.  The Company has valued these warrants at their fair value using the Black-Scholes option pricing method.  The assumptions used were as follows:
 
         Expected life:
1 year
         Expected volatility:
29.1%
         Risk free interest rate:
0.25%
         Expected dividends: 
0%

The following table summarizes all warrant grants as of June 30, 2012, and the related changes during the nine months then ended:
 
   
Number of Warrants
   
Weighted Average Exercise Price
 
Stock Warrants
           
Balance at September 30, 2011
   
1,000,000
   
$
0.20
 
Granted
   
-
     
                    -
 
Exercised
   
425,000