(I.R.S. Employer Identification No.) (Address of principal (Zip Code) Registrant’s telephone number, including area code) 10-K. Item Item 2. Properties Item 3. Legal Proceedings Item 4. PART II. Item 5. Market for Registrant’s Common Equity, Item 6. Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Financial Statements Item 9. Changes Item 9A(T). Controls and Procedures Item 9B. Other Information PART III. Item 10. Directors, Executive Officers and Corporate Governance Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions, and Director Independence Item 14. Principal Exhibits and Financial Statement Schedules and Properties High Bid Low Bid $ 1.15 $ 0.30 $ 3.75 $ 3.75 $ * $ * $ * $ * $ * $ * $ * $ * $ * $ * $ * $ * Disclosure Controls and Procedures Name BENEFICIAL OWNER FORM 3 FORM 4 Thomas C. Hemingway 1 1 Lawrence Weisdorn 1 Donald Hejmanowski 1 Gary Cohee 1 1 Name and Principal Position FiscalYear Salary ($) Stock Awards ($) All Other Compensation ($) Total Compensation ($) Lawrence Weisdorn (1), 2008 $39,500 (2) $75,000 (3) -- $114,500 Ex-President, CEO, CFO, 2009 $180,000 (2) $180,000 and director Donald Hejmanowski (4), 2008 -- $36,000 (5) -- $36,000 Secretary and director 2009 $38,637 (6) $41,137 Thomas C. Hemingway) (7) 2008 -- $25,500 (8) -- $25,500 Ex-President, CEO, CFO, 2009 - - and Chairman Oscar Luppi (9) Chairman, President and Chief Executive Officer 2008 - - - - Name and Address of Beneficial Owner (1) Number of Shares Beneficially Owned (1) Percent of Class Thomas C. Hemingway 900,000 (2) 11.71% Lawrence Weisdorn 2,500,000 (2) 32.54% Donald Hejmanowski 1,200,000 (2) 15.62% All Directors and Officers as a group (3 persons) 4,600,000 (2) 59.87% ICE Conversions, Inc. (3) 1,000,000 (4) 13.02% Gary Cohee 900,000 11.71% Audit Committee, reviews all audit and non-audit related fees at least annually. The Board of Directors as the Audit Committee pre-approved all audit related services in the fiscal year ending July 31, Articles of Incorporation 2.3(2) Certificate of Amendment to the Articles of Incorporation as filed with the Nevada Secretary of State on April 17, 2008. 2.4(3) Certificate of Amendment to the Articles of Incorporation as filed with the Nevada Secretary of State on May 27, 2008. 2002 Stock Option Plan as adopted July 15, 2002 10.2(5) Joint Venture Agreement by and between Force Fuels, Inc. and Ice Conversions, Inc. May 12, 2008. 10.3(6) Assignment and Contribution Agreement by and between Force Fuels, Inc. and Ice Conversions, Inc. effective July 31, 2008. Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer. (2) Filed with the Securities and Exchange Commission in the Exhibits to Form 8-K filed on May 06, 2008, and is incorporated by reference herein. (3) Filed with the Securities and Exchange Commission in the Exhibits to Form 8-K filed on June 16, 2008, and is incorporated by reference herein. (4) Filed with the Securities and Exchange Commission in the Exhibits to Form S-8 filed on January 21, 2003. (5) Filed with the Securities and Exchange Commission in the Exhibits to Form 8-K filed on May 27, 2008, and is incorporated by reference herein. (6) Filed with the Securities and Exchange Commission in the Exhibits to Form 10-K/A filed on December 30, 2008, and is incorporated by reference herein.x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended July 31,2010o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from _______ to _______Commission file number: 000-49993FORCE FUELS, INC.þ (Name of Small Business Issuer in its Charter)Nevada56-2284320For the fiscal year ended July 31, 2011o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Nevada 56-2284320 (State or other jurisdiction of incorporation or organization)incorporation or organization) 9262690265Executive Offices)Issuer's Telephone Number: 949 783 6723Former name, former address and former fiscal year if changed since last report)underpursuant to Section 12(b) of the Act:None None.underpursuant to Section 12(g) of the Act: Common Stock, par value $.001stock, $0.001 per shareYes o Yes þNox
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) for13(d) of the Act.Yes o Yes þNox
Indicate by check mark whether the registrant (1) has 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 xþ No o(229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant'sregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10.oþcompany,company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.xþ.
: Yes o No xþThevoting and non-votingregistrant’s common equitystock held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business dayregistrant was $204,360. This aggregate market value is estimated solely for purposes of this report and is based on the closing price for the registrant’s most recently completed fiscal year was $1,728,438.
common stock on October 31, 2011 as reported on the Over-the-Counter Markets. The number of shares outstanding of each of the Registrant's classes of common stock, as of December 15, 2010October 31, 2011 is 7,841,875,13,321,875, all of one class, $.001 par value per share, of which 4,841,8758,846,875 were held by non-affiliates of the registrant.*Affiliates forFor the purpose of this item refers to the registrant'sreport, it has been assumed that all officers and directors and/or any persons or firms (excluding those brokerage firms and/or clearing houses and/or depository companies holding registrant's securities as record holders only for their respective clienteles' beneficial interest) owning 5% or more of the registrant's common stock, both of record and beneficially.ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARSCheck whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d)are affiliates of the Exchange Act afterregistrant. The statements made herein shall not be construed as an admission for determining the distributionaffiliate status of securities under a plan confirmed by a court.any person.Yes o No oDOCUMENTS INCORPORATED BY REFERENCEThe following documents are herewith incorporated by reference:Transitional Small Business Disclosure FormatYes o No x
FORCE FUELS, INC.TABLE OF CONTENTSPage PART I. PAGEPART I.Business 3 Item 1A. Risk Factors 5 1.Business155Submission of Matters to a Vote of Security Holders5and Related Stockholder Matters and Issuer PurchasesPurchase of Equity Securities5Selected Financial Data 12 Item 7. 6Quantitative and Qualitative Disclosures about Market Risk 15 Item 8. (see pages F-2 through F-4)15 inIn and Disagreements with Accountants on Accounting and Financial Disclosure8889111213AccountingAccountant Fees and Services13PART IV. Item 15. 13Financial StatementsF-1Signature Page15Exhibit Index16II.Item 1 - BUSINESSForce Fuels, Inc.originally incorporated as DSE Fishman, Inc. in the State of Nevada on July 15, 2002. Our name was changed fromOn May 14, 2008 DSE Fishman changed its name to Force Fuels, Inc. on May 13, 2008. Unless (“the contextCompany”). At that time the primary focus of the Company became the development and marketing of a proprietary, zero emission hydrogen fuel cell/electric battery hybrid drive system for automotive utilization. In October 2009 the Company retained new management and began the process of exploring the feasibility of acquiring, developing and marketing of green energy products as well as regulated and standardized energy based products, including traditional hydrocarbon based oil and gas and solar and wind energy.requires,stated, all references to the "Company"“Company”, "Force Fuels", “we”,“we,” “our”, “ours”,“us” and “us”words of similar import, refer to Force Fuels, Inc. and its wholly-owned subsidiary Great American Coffee Company, Inc.The Company entered into an Assignment and Contribution Agreement with ICE Conversions, Inc. (“ICE”) effective2008 (the “Assignment2011, the Company's principal business was the acquisition and Contribution Agreement”) whereby ICE transferred assets to the Company in return for 1,000,000 sharesmanagement of the Company’s common stock and cash payments totaling $400,000, payable in two separate installment payments of $100,000 and $300,000, due on or before March 15, 2009 and June 15, 2009, respectively. The Assignment and Contribution Agreement superseded and renderd void and of no force or effect whatsoever the Joint Venture Agreement entered into May 12, 2008 by and between the Company and ICE.ICE subsequently agreed to extend the timeline for the payments as follows: Force Fuels shall make eight separate payments of $50,000 each, due on or before the last day of each quarter of Force Fuels’ fiscal year, commencing with the first installment due on or before April 30, 2010. On June 3, 2010 the Assignment and Contribution agreement was amended, effective April 28, 2010, to substitute a non-exclusive license to use the technology, processes, formulations, methods, apparatuses, and know-how related to development, marketing or sale of hydrogen/electric hybrid cars. The previously contributed intellectual property was returned to ICE Conversions, Inc. and ICE Conversions, Inc. canceled the $739,689 owed to it by Force Fuels, Inc.In the first half of the year, the company began expanding its activities in other energy-related fields with the intention of developing its presence in the traditionaloil, gas and alternative energy fields. operations.first step toward the implementation of our strategy involved the acquisition of 13 developed oil leasesCompany’s Consolidated Financial Statements included elsewhere in Southern Kansas through the signing ofthis Report have been prepared on a purchase agreement with PEMCO, an Oklahoma Oil Field operator. In the last few months,going concern basis, which implies the Company has been finalizing financing, building a technical infrastructurewill continue to realize its assets and developing a plan fordischarge its liabilities in the refurbishing and developmentnormal course of business. The continuation of the Company as a going concern is dependent upon the ability of the Company to acquire oil leases.DescriptionFor these reasons, as of the date of this filing the company intends to move itstois on property acquisition, exploration, and development activities related to oil, gas and electrical production. These energy-based activities include traditional hydrocarbon-based oil and gas development, as well as “green” or “alternative” energy, which includes solar and wind electrical generation.1) the purchase of marginally producing shallow oil wells, which are relatively inexpensive to operate and can be optimized with existing technologies;2) the purchase of leases with potential for additional drilling in proven producing areas; and3) the acquisition of in-house know-how to further optimize production through stimulation, refurbishing and site optimization.· The drilling of shallow oil wells from 600 to 3,000 feet deep, which are relatively inexpensive to operate and can be optimized with existing technologies · The purchase of marginally producing shallow oil wells; · The purchase of leases with potential for additional drilling in proven producing areas; and · The acquisition of in-house know-how to further optimize production through stimulation, refurbishing and site optimization. over 2,600approximately 2,500 acres of oil producing land leases with 49 oil strippers and 5 natural gas siteswells located in southernsoutheast Kansas.
Subsequently,fieldproperty mostly drilled to the Redd Sands formation. Currently the production has been generated from approximately four wells. The balances of electrical energy production,the wells have been inactive for a period of time.focus solely on the exploitation of proven and established technologies that can generatesell to Pemco a positive return on investment and tax benefits applicable to green energy and oil revenues. While naturally taking full advantage of current government assistance and incentives, placing a significant premium on the economic self-sustainability of all our projects and how new technologies and policies may affect us.The company intends to continue to leverage its Intellectual Property assets through further development, expansion and marketingfifty percent (50%) interest in four of the technology licensedthirteen leases originally acquired by the Company under the Purchase Agreement. The Company will sell these interests for all amounts owed by the Company to Pemco and all other parties under the Purchase Agreement. The four leases are referred to as the Mann, Mann AB, Bayless, and Doebrook leases. With regard to the nine remaining leases originally acquired by the Company under the Purchase Agreement, Pemco will become the operator of drilling operations for each of those leases and subject to a separate development agreement to be executed in the future.ICE Conversions, Inc. Thisexisting operations will be divided equally between Pemco and the Company; (ii) any new development be funded by the Company and the execution plan will be performed by Pemco; and, (iii) revenue (after operating expenses and cost of financing) generated from the new development will be implemented throughallocated seventy five percent (75%) to the creationCompany and twenty five percent (25%) to Pemco.a fully owned subsidiary.financing) generated will be allocated seventy five percent (75%) to the Company and twenty five percent (25%) to Pemco.This drive train technology consistsa proprietary, zero emission hydrogen fuel cell/electric battery hybrid drive system. and relies on hydrogen fuel cells to produce electricity and acts as a range extender for electric drive vehicles. TheJuly 31, 2011, the Company is currently in the process of selecting a manufacturer to build the first prototypes. The Company intends to combine components purchased from various suppliers and partner those items with its proprietary technology and integrate allhas sold 776 of the parts into complete electric drive vehicles. Industry OverviewEnergy SectorAccording960 barrels of oil which was considered as inventory as of July 31, 2010. Effective July 31, 2011, the Company has reclassified the balance of the inventory to government forecast, the price range, in 2007 dollars, for crude oil for the next 10 years will remain in the range between $80 and $115 per barrel.1 US crude oil production in 2008 was 4,950,000 barrels per day. 21% of electrical energy generated in the US in 2007 was from natural gas. 52% of US households are heated with natural gas. The majority of hydrogen produced in the United States is through reforming of natural gas.Status of Oil Reserves in the United StatesIn 2007, the United States had 2% more proven reserves than in 2006.2 During the last 10 years, new yearly proven reserves have compensated for 96% of total oil production3(thus not effectively reducing total available and proven oil reserves significantly).1 EIA 2009 yearly forecast of crude oil prices. http://www.eia.doe.gov/oiaf/forecasting.html2 DOE report on current oil and gas reserves 2008properties.OpportunitiesMarkets for Entry in the sectorA large number of oil and gas wells in the United States are owned by small producers and individuals. The aging of the owner population, the current economic crisis and recent improvements in extracting and stimulation technologies are providing a unique opportunity:Poorly producing wells and smaller properties often are run without access to technical expertise and are not maintained correctly. Often, production can be increased simply by a small investment in maintenance and updated equipment.Small property owners looking to “cash out” are too small for large operators.Producers do not have access to funds for production optimization like stimulation or well depth modification.Down spacing. Several locations are candidates for higher well densities and increased production, which, combined with a drastic drop in drilling and pumping equipment costs, make established reserves development desirable.New low cost technologies applicable to low/non-producing small plots. Recent improvement in technologies, once difficult to control, like nitrogen stimulation or, too expensive to implement on a smallHydrogen/Electric VehiclesThe emerging fuel cell and hydrogen vehicle industry offers a technological option to increasing worldwide energy costs coupled with, the long-term availability of petroleum reserves and environmental concerns.Fuel cell, bio-diesel, electric and hydrogen hybrid vehicles, as a result of higher efficiency, reduced noise and lower tailpipe emissions, have emerged as a potential alternative to existing conventional internal combustion engine vehicles. Fuel cell industry participants are currently targeting the transportation and hydrogen refueling infrastructure markets. We believe that our hydrogen and hybrid enabling products of fuel storage, fuel delivery, battery and electronic control systems along with our vehicle-level system integration experience can be effectively applied in these markets.Fuel cell and hydrogen-powered hybrid vehicles are being designed to provide clean, quiet power for a variety of applications in transportation, fleet, industrial, and military vehicles. In the automotive market, each of DaimlerChrysler, Ford, General Motors, Honda, Hyundai, Nissan, and Toyota Motor Corporation have unveiled fuel cell vehicles. General Motors is anticipated to begin close to the end of the decade mass production of fuel cell vehicles; DaimlerChrysler is anticipated to begin by 2012 to 2015; and Toyota is anticipated to begin by 2015. A new study from Pike Research has emerged suggesting that fuel cell vehicles are ripe for an explosive increase in volume. Pike predicts fuel cell vehicles (FCVs) will reach 670,000 in annual sales volume by 2020. Though the predicted volume is much higher than we anticipated, the study suggests that automakers will adopt fuel cell technology at a rapid rate over the next ten years, leading to high annual output. Of the 670,000 in annual sales, the U.S. will lead the way with 134,049 FCVs, China will hold a close second at 129,241 and Germany will round out the top three with 126,783 annual sales of FCVs.We believe, as this technology of the future is being commercialized, this program has helped expedite the expansion of a hydrogen infrastructure and bridge the technology gap between conventional gasoline vehicles and fuel cell vehicles.1) Intellectual PropertyThe emerging fuel cell and hydrogen vehicle industry offers a technological option to increasing worldwide energy costs coupled with, the long-term availability of petroleum reserves and environmental concerns. Fuel cell, bio-diesel, electric and hydrogen hybrid vehicles, as a result of higher efficiency, reduced noise and lower tailpipe emissions, have emerged as a potential alternative to existing conventional internal combustion engine vehicles. Fuel cell industry participants are currently targeting the transportation and hydrogen refueling infrastructure markets. We believe that our hydrogen and hybrid enabling products of fuel storage, fuel delivery, battery and electronic control systems along with our vehicle-level system integration experience can be effectively applied in these markets.Fuel cell and hydrogen-powered hybrid vehicles are being designed to provide clean, quiet power for a variety of applications in transportation, fleet, industrial, and military vehicles. In the automotive market, each of DaimlerChrysler, Ford, General Motors, Honda, Hyundai, Nissan, and Toyota Motor Corporation have unveiled fuel cell vehicles. General Motors is anticipated to begin close to the end of the decade mass production of fuel cell vehicles; DaimlerChrysler is anticipated to begin by 2012 to 2015; and Toyota is anticipated to begin by 2015. A new study from Pike Research has emerged suggesting that fuel cell vehicles are ripe for an explosive increase in volume. Pike predicts fuel cell vehicles (FCVs) will reach 670,000 in annual sales volume by 2020. Though the predicted volume is much higher than we anticipated, the study suggests that automakers will adopt fuel cell technology at a rapid rate over the next ten years, leading to high annual output. Of the 670,000 in annual sales, the U.S. will lead the way with 134,049 FCVs, China will hold a close second at 129,241 and Germany will round out the top three with 126,783 annual sales of FCVs.Hydrogen-powered hybrid and other hydrogen vehicles can begin to drive the demand for the refueling infrastructure of this clean fuel, a critical component to fuel cell vehicle commercialization. The South Coast Air Quality Management District located in Diamond Bar, Southern California, is positioning the Los Angeles, Orange and Riverside Counties to be ready for fuel cell vehicles by initiating a hydrogen-powered hybrid program. In January 2006, 30 hydrogen hybrid Toyota Priuses were obtained by fleets located in Southern California. The objective of this effort, funded by the South Coast Air Quality Management District, was to stimulate the early demand for hydrogen, expedite the development of infrastructure, and provide a bridge to fuel cell vehicles. We believe, as this technology of the future is being commercialized, this program has helped expedite the expansion of a hydrogen infrastructure and bridge the technology gap between conventional gasoline vehicles and fuel cell vehicles. We, also, believe that this can be the model for other markets where fuel cell vehicles will emerge, such as North America, Europe and Asia-Pacific. As such, we intend to initially focus our marketing efforts of hydrogen hybrid systems in Southern California. As the strategic importance of national oil reserves becomes increasingly evident, the full exploitation of existing reserves and low yield wells have come under the spotlight. In the United States, one in six barrels of oil produced comes from a marginal well. Such wells are defined as producing less than 10 barrels of crude per day. In the U.S., marginal wells account for over 80% of all active wells. As new extraction technologies mature and become economically feasible for use on marginal wells, the potential value of these untapped resources increases. In addition, recent economic turmoil and an aging population of independent oil producers has created a convergence of events that, together with projected oil prices well over $70 per barrel, represent an unique opportunity for dynamic new entrants to the industry. For these reasons, the company remains confident that its long term plan to enter the traditional and alternative energy arenas will meet with significant success.1Business Strategy1) Intellectual PropertyWe intend to utilize the intellectual property to establish a position as a provider of high performance zero emission sports cars. We will leverage our alternative fuel, electronic control, electric and hybrid electric drive systems, and hydrogen handling and refueling capabilities and experience to select off-the-shelf components for assembly into a variety of hybrid energy vehicles. We will diversify our customer base for these vehicles to include OEMs, OEM dealer networks and other strategic alliance and distribution partners.Products1) Intellectual PropertyWe will focus on marketing zero-emission Vehicles to a variety of alternate energy and green minded individuals, OEM dealer networks, as well as end-user consumers. We are uniquely positioned to leverage our knowledge and experience about alternative fuels, electronic controls, hydrogen and hybrid hydrogen/electric drive systems, and hydrogen handling and refueling. We intend to become part of the truly pollution free or reduced pollution solution and alternative energy conversion systems solution for today’s drivers.At the present time we are completing a working, proof of concept prototype vehicle suitable for testing and demonstration of performance. The production version concept body pictured below will need to be engineered for DOT crash testing. The body will have to be built and the interior designed. At the present time, third party products exist for the various components that Cheetah intends to install in the production version concept vehicle. We have not made public announcements regarding the availability of our new vehicle. We believe acquisition of supplies, costs of assembly and other costs related to the production of the Vehicles will require the investment of a material amount of our current and future assets. We intend to become a one stop solution to provide a truly pollution free or reduced pollution, alternative energy conversion solution for today’s drivers. To accomplish this we will be producing and marketing the following alternative energies vehicles:Cheetah EV (Electric Vehicle)We are designing and will be marketing a battery only, 425 HP, 1,350 FT/LB of torque, zero emission electric Supercar. This plugin battery electric drive system eliminates dependence on gasoline, and eliminates pollution associated with burning fossil fuels. As with other battery only electric vehicles the Cheetah EV will have a limited driving range.Cheetah HEV (Hydrogen Electric Vehicle)We will also offer the 425 HP, 1,350 FT/LB of torque, zero emission Supercar powered by the proprietary Cheetah hydrogen/electric hybrid drive system. Hydrogen fuel cells produce electricity on demand and as such are used as range extenders for electric vehicles. All of the performance attributes of the vehicle are determined by the battery dominant power train. The addition of this optional hydrogen/electric hybrid drive system is expected to provide a driving range of greater than 300 miles. This hydrogen/electric hybrid drive system also eliminates dependence on gasoline, and eliminates pollution associated with burning fossil fuels.Competition1) Intellectual PropertyIn the fuel cell and hydrogen industry, our expertise will be in alternative fuel high performance vehicles. We do not manufacture fuel cells or fuel reformers or the parts we will use in our vehicles. We may face competition from traditional automotive component suppliers, such as Bosch, Delphi, Siemens, and Visteon, and from motor vehicle OEMs that develop alternative fuel systems internally. Also, Tesla, Fisker and Quantum are now the leading providers of alternative fuel technologies to the automotive industry and have already established a significant marketplace presence.We believe that our competitors, such as Tesla, Fisker and Quantum, have technology leadership and integration expertise derived from many years of experience with vehicle development and assembly programs whereas we are a recently formed company with a limited track-record. Our foreseeable competitors typically focus on proprietary components, whereas we will focus on integrating preexisting components into the “best-available composite vehicle”. Also, some offer complete packaged fuel systems based of their own advanced technologies, including gaseous fuel storage, fuel metering and electronic controls.2EmployeesThe Company currently has one (1) full-time management employee, and several consultants that provide services on an as needed basis. SubsidiariesGreat American Coffee Company remains an inactive wholly-owned subsidiary with no current operations.Item 1A – RISK FACTORSRisk factors related to concentration of sales.The company’s future financial condition and results of operations will depend upon prices received for its oil and natural gas asare volatile and are subject to wide fluctuations depending on numerous factors beyond our control, including seasonality, economic conditions, foreign imports, political conditions in other energy producing countries, market actions by the Organization of the Petroleum Exporting Countries (“OPEC”), and domestic government regulations and policies. Substantially all of our production is sold pursuant to agreements with pricing based on prevailing commodity prices, subject to adjustment for regional differentials and similar factors.asestablished companies that have substantially larger operating staffs and greater capital resources than we do. Our ability to acquire additional properties and to discover reserves in the costsfuture will depend upon our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment.finding, acquiring, developingoil and producing reserves. Prices fornatural gas from the Company’s operations. States in which the Company operates have statutory provisions regulating the production and sale of oil and natural gas, including provisions regarding deliverability. These statutes, along with the regulations interpreting the statutes, generally are intended to prevent waste of oil and natural gas and to protect correlative rights to produce oil and natural gas by assigning allowable rates of production to each well or proration unit.fluctuationsvarious federal and state laws and regulations to protect the environment. Various federal and state agencies are considering, and some have adopted, other laws and regulations regarding environmental controls that could increase our cost of doing business. These laws and regulations may require the acquisition of a permit by operators before drilling commences; the prohibition of drilling activities on certain lands lying within wilderness areas or where pollution arises; and the imposition of substantial liabilities for pollution resulting from drilling operations, particularly operations in offshore waters or on submerged lands. The cost of oil and natural gas development and production also may increase because of the cost of compliance with such legislation and regulations, together with any penalties resulting from failing to comply with the legislation and regulations. Ultimately, the Company may bear some of these costs.
Our securities should be purchased only by persons who can afford to lose their entire investment in us. You should carefully consider the following risk factors and other information in this filing before deciding to become a holder of our securities. If any of the following risks actually occur, our business and financial results could be negatively affected to a significant extent.otheradditional factors that are beyond the Company’s control. These factors includeour control, including: worldwide political instability, especially in the Middle East, the foreign supplyand domestic supplies of crude oil and natural gas, the price of foreign imports,gas; the level of consumer product demanddemand; weather conditions and natural disasters; domestic and foreign governmental regulations; the price and availability of alternative fuels.No established market for ourautomotive technology.fuels; political instability or armed conflict in oil producing regions; the price and level of foreign imports; and overall domestic and global economic conditions.Thereno established market for our automotive technology. This technology has never been sold before and the risk exists for the establishment of a new market. We are counting on a new market developing and that the new market will accept our technology as opposedextremely difficult to other alternatives. The new market may not develop or may not develop in time to allow us to continue our operations.The Company’s lack of operating history.The Company had no operations prior to the transfer to the Company on July 31, 2008 of assets pursuant to the Assignment and Contribution Agreement with ICE, and the acquisition on April 23, 2010 of the business of extractingpredict future crude oil and natural gas from existingprice movements with any certainty. Declines in crude oil wells on 2600 acresand natural gas prices may materially adversely affect our financial condition, liquidity, ability to finance planned capital expenditures and results of operations. Further, oil and gas prices do not move in the state of Kansas. We have insufficient operating history upon which an evaluation of our future performance and prospects can be made. Our business plan is unproven.tandem.withand we may not be able to operate profitably in the near future, if at all.track record to determine if our planned businessassurance that we will be financially viableable to obtain such financing on attractive terms, if at all.successful. Our projected revenues from our business may fall shortif we are profitable, that we will achieve a level of profitability that will provide a return on invested capital or that will result in an increase in the market value of our targeted goalssecurities. Accordingly, we are subject to the risk that, because of these factors and our profit marginsother general business risks noted throughout these “Risk Factors,” we may likewise not be achieved. Untilable to profitably execute our plan of operation.are actually in the marketplace forwill be able to generate revenues or maintain any line of business that might prove to be profitable. Our ability to continue as a demonstrable period of time, it is impossiblegoing concern and to determine ifexecute our business strategies will be successful.The Company will need financing which may not be available.The Company has not establishedis subject to our ability to generate a sourceprofit or obtain necessary funding from outside sources, including obtaining additional funding from the sale of equity our securities and/or debt financing and will require such financing to establish our business and implement our strategic plan.obtaining additional credit from various financial institutions or other lenders. If we are unable to develop our business, we may have to discontinue operations or cease to exist, which would be detrimental to the value of our common stock. We can make no assurances that our business operations will develop and provide us with significant cash to continue operations. See “Liquidity and Capital Resources” under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Going Concern” note to “Item 8. Financial Statements and Supplementary Data.”financingliability of our officers and directors and provide for indemnification by us of our officers and directors to the full extent permitted by Nevada corporate law. Our Articles of Incorporation generally provides that our officers and directors shall have no personal liability to us or our shareholders for monetary damages for breaches of their fiduciary duties as directors, except for breaches of their duties of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, acts involving unlawful payment of dividends or unlawful stock purchases or redemptions, or any transaction from which a director derives an improper personal benefit. Such provisions substantially limit our shareholders' ability to hold officers and directors liable for breaches of fiduciary duty and may require us to indemnify our officers and directors.insufficienta highly speculative activity. Even when fully and correctly utilized, modern well completion techniques such as hydraulic fracturing and horizontal drilling do not guarantee that we will find crude oil and/or natural gas in our wells. Hydraulic fracturing involves pumping a fluid with or without particulates into a formation at high pressure, thereby creating fractures in the rock and leaving the particulates in the fractures to ensure that the fractures remain open, thereby potentially increasing the ability of the reservoir to produce oil or gas. Horizontal drilling involves drilling horizontally out from an existing vertical well bore, thereby potentially increasing the area and reach of the well bore that is in contact with the reservoir. Our future drilling activities may not be successful and, if unsuccessful, such failure would have an adverse effect on our future results of operations and financial condition. We cannot assure you that our overall drilling success rate or our drilling success rate for activities within a particular geographic area will not decline. We may identify and develop prospects through a number of methods, some of which do not include lateral drilling or hydraulic fracturing, and some of which may be unproven. The drilling and results for these prospects may be particularly uncertain. Our drilling schedule may vary from our capital budget. The final determination with respect to the drilling of any scheduled or budgeted prospects will be dependent on a number of factors, including, but not limited to: the results of previous development efforts and the acquisition, review and analysis of data; the availability of sufficient capital resources to us and the other participants, if any, for the drilling of the prospects; the approval of the prospects by other participants, if any, after additional data has been compiled; economic and industry conditions at the time of drilling, including prevailing and anticipated prices for crude oil and natural gas and the availability of drilling rigs and crews; our financial resources and results; the availability of leases and permits on reasonable terms for the prospects; and the success of our drilling technology.operating losses or liabilities. We cannot predict the availability of insurance or the availability of insurance at premium levels that justify our purchase. The occurrence of a significant event not fully insured or indemnified against could materially and adversely affect our financial condition and operations. We may elect to self-insure if management believes that the cost of insurance, although available, is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable. The occurrence of an event not fully covered by insurance could have a material adverse effect on our financial condition and results of operations.incur, we may substantially curtail or terminateadversely affect our operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interestsfinancial condition and results of existing stockholders.operations.andand/or satisfy obligations.
obligations through the issuance of additional shares of our common stock.weour Board of Directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of shares of our stock. In addition, if a trading market develops for our common stock, we may attempt to raise capital by sellingrestricted shares of our common stock possibly ator our preferred stock. Our Board of Directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued shares of common stock. In addition, our Board of Directors is authorized, without shareholder action or vote, to establish various classes or series of preferred stock from time to time and to determine the rights, preferences and privileges of any unissued classes or series including, among other matters, any dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms, the number of shares constituting any such series and the description thereof, and to issue any such shares. Our Board of Directors may, without shareholder approval, issue shares of a discount to market. class or series of preferred stock with voting and conversion rights that could adversely affect the voting power of the holders of the common stock and may have the effect of delaying, deferring or preventing a change in control of us. These actions will result in dilution of the ownership interests of existing shareholders, and that dilution may be material.3Force Fuels Common Stock haslittleprior tradingliquidity,at all.there can be no assurancesfall, including: actual or anticipated variations in our quarterly results of operations; changes in market valuations of companies in our industry; changes in expectations of future financial performance; fluctuations in stock market prices and volumes; issuances of dilutive common stock or other securities in the future; the addition or departure of key personnel; announcements by us or our competitors of acquisitions, investments or strategic alliances; and the increase or decline in the price of oil and natural gas.any tradingthe proceeds from sales of our common stock may not equal or exceed the prices you paid for it plus the costs and fees of making the sales.develop.There is a minimal tradingdecrease the market for our Common Stock. No assurance can be given that an orderly trading market or any trading market will ever develop for our Common Stock.In addition, Force Fuels common stock is unlikely to be followed by any market analysts, and there may be few institutions acting as market makers for the common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock. Also,The impact of any such issuances of our common stock on our market price may be increased as a result of the fact that our common stock marketis thinly, or infrequently traded. The exercise of any options or warrants or the vesting of any restricted stock that we may grant to directors, executive officers, employees, and others in general has experienced extreme pricethe future, the issuance of common stock in connection with acquisitions, and volume volatility that has especially affectedother issuances of our common stock could have an adverse effect on the market prices of securities of many companies. At times, this volatility has been unrelated to the operating performance of particular companies. These broad market and industry fluctuations may adversely affect the trading price of theour common stock. In addition, future issuances of our common stock regardlessor preferred stock may be dilutive to existing shareholders. Any sales of substantial amounts of our common stock in the Company’s actual operating performance.The tradingpublic market, or the perception that such sales might occur, could lower the market price of Force Fuels Common Stock is likely to be subject to significant fluctuations.There can be no assurance as to the prices at which Force Fuelsour common stock will trade, if any trading market develops at all. Until the Common Stock is fully distributed and an orderly market develops, the price at which such stock trades may fluctuate significantly and may be lower or higher than the price that would be expected for a fully distributed issue. Prices for the Common Stock will be determined in the marketplace and may be influenced by many factors, including:the depth and liquidity of the market,developments affecting the business of Force Fuels generally and the impact of those factors referred to below in particular,investor perception of Force Fuels, andGeneral economic and market conditions.Item 2 - DESCRIPTION OF PROPERTY1,20101, 2010 for 24782,478 square feet of space in a 3 storeyan office building located at 1503 South Coast Drive, Costa Mesa CA, 92626. The lease agreement has one 24 month extension option.
ITEM 4. (REMOVED AND RESERVED)Item 3 - LEGALItem 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSNoneIIItem 5 -II. AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.Ourishas been quoted on the Over the Counter Bulletin Board (OTCBB)OTC Pink market under the symbol FOFU. “FOFU”.following table sets forth, for the periods indicated, the reportedquarterly high and low closing bid quotationsinformation for our common stock as reported onfor each full quarterly period in the OTCBB. The bid prices reflect inter-dealer quotations, do not include retail markups, markdowns, or commissions, and do not necessarily reflect actual transactions. Quarter Ended July 31, 2010 April 30, 2010 January 31, 2010 October 31, 2009 July 31, 2009 April 30, 2009 January 31, 2009 October 31, 2008 * Our common stock had no active trading market until April 27, 2010 2011 2010 Quarter High Low High Low First $ 0.65 $ 0.26 $ * $ * Second $ 0.48 $ 0.07 $ * $ * Third $ 0.26 $ 0.10 $ 3.75 $ 3.75 Fourth $ 0.15 $ 0.06 $ 1.15 $ 0.30 HoldersWe currently have 224Dividendsany cash dividends on shares of our Common Stockcommon stock and do not anticipate that we will pay dividendsdoing so in the foreseeable future. We intendIn addition, our current policy is to applyretain any earnings to fundfinance operations and expand our business.development of our business. The purchase of shares of Common Stock is inappropriate for investors seeking current or near term income.5On January 29, 2009year ended July 31, 2010, the Company issued 60,0001,294,366 shares of common stock for services valued at $388,310 in the Company’s Common Stock, to three individuals in exchange for professional and consulting services rendered, having a value of $6,000.
aggregate.company, pursuant to an employment agreementCompany issued 1,000,000 shares of its common stock to Oscar Luppi.the Company’s chief executive officer as a signing bonus for entering into an Employment Agreement dated October 1, 2009. The shares were valued at $30,000.On January 28,$300,000 in the aggregate.1,187,366148,000 shares of common stock upon conversion of convertible promissory notes at a value of $571,014 in the Company’s Common Stock, to 3 entities for consulting services, valued at $356,210.
aggregate.March 16, 2010 the Company issued 22,000 shares of the Company’s Common Stock, to 2 entities, for consulting services, valued at $6,600.On March 30,June 25, 2010 the Company issued 150,000 shares of the Company’s Common Stock,common stock as an inducement to 2 entities for consulting services,an unrelated third-party lender. The shares were valued at $45,000.On April 30, 2010$133,500 in the Company issued 73,000 shares ofaggregate.Company’s Common Stock to 16 convertible note holders to convert the notes to equity at a contractual value of $2.00 per shareOn June 25, 2010 the Company issued 650,000 shares of the Company’s Common Stock, to a lender, valued at $578,500; 150,000 of the shares are for consulting services and 500,000 of the shares are being held by the lender as collateral for a $100,000 loan made to the Company.Onyear ended July 31, 2010 the Company cancelled 3,800,000 previously issued 10,000 shares of common stock. Company’s Common Stock, to 1 convertible note holder, to convert a note to equity, valued at the contractual value of $10,000.Subsequent toyear ended July 31, 20102011, the Company issued 181,7464,481,746 shares of common stock for services valued at $739,484 in the Company’s Common Stock, to 2 entitiesaggregate.consulting services; 50,000an extension of maturity date on notes payable. The shares were valued at $25,000; 31,746$24,000 in the aggregate.$33,333; and 100,000$15,600 in the aggregate.$65,000; and 60,000 shares to a lender as partial compensation, for a $30,000 loan, valued at $15,600. Each of$225,000 in the issuances described above was a privately negotiated transaction made in reliance uponaggregate.exemption from registration provided in Section 4(2) ofyear ended July 31, 2011, the Securities Act of 1933.As of the close of business on December 15, 2010, there were 7,841,875Company cancelled 12,500 previously issued shares of our Common Stock, par value $0.001 per share, issued and outstanding, OPERATIONSOPERATIONS.Annual Report on Form 10-K includes current beliefs, expectationsdiscussion and other forward lookinganalysis contains forward-looking statements the realizationthat involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of which may be adversely impacted by any of thecertain factors, discussed or referenced throughout this Form 10-K, including, but not limited to, factors underthose set forth in this Report.heading, “Item 1A. Risk Factors” in Part I above.The Company hadBoard of Directors accepted Mr. Oscar Luppi’s voluntary resignation from his positions of Chairman, President, Chief Executive Officer, and Treasurer of the Registrant. At the time there were no operations priordisagreements or misunderstandings relating to the transferRegistrant’s operations, policies or practices between the Board and Mr. Luppi leading to the Company on July 31, 2008his resignation.assets pursuant to the AssignmentThomas C. HemingwayContribution Agreement with ICE.Under the termsTreasurer of the Assignment and Contribution Agreement, the CompanyRegistrant. No compensation arrangement has undertaken to raise capital and to make payments to ICE in an aggregate amount of $400,000, $100,000 of which was due on or before March 15, 2009; and $300,000 of which was due on or before June 15, 2009. The payment obligations were to accelerate and become immediately due in the event of any nonpayment or bankruptcy. If the Company fails to raise these funds and pay its obligations to ICE, the Company will be unable to continue to conduct its business. On January 30, 2009 ICE and the Companybeen entered into an extension agreement to extend the timeline for the $400,000 cash payment as follows; force Fuels shall make (8) separate installment payments, each in the amount of $50,000, due on or before the last day of each quarter of Force Fuels’ fiscal year, commencing with the first installment due on or before April 30, 2010 and the eighth and final payment due on or before January 31, 2012.The Company has granted ICE a first priority perfected security interest in the Company's business and assets in order to secure the Company’s obligation to pay that $400,000 to ICE. Until payment in full of that amount, the Company also cannot sell, transfer or encumber any such assets without Ices’ prior written consent. Failure to pay the obligation when due would likely result in a foreclosure upon the assets.6Recently issued accounting pronouncements.In May 2009, the FASB issued ASC 855 (previously SFAS 165, Subsequent Events). ASC 855 sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. SFAS 165 will be effective for interim or annual period ending after June 15, 2010 and will be applied prospectively. The Company will adopt the requirements of this pronouncement for the quarter ended June 30, 2010. The Company does not anticipate the adoption of SFAS 165 will have an impact on its consolidated results of operations or consolidated financial position.In June 2009, the FASB issued ASC 810, (previously SFAS No. 167, Amendments to FASB Interpretation No. 46(R), which modifies how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. SFAS 167 clarifies that the determination of whether a company is requiredcontemplated with respect to consolidate an entityMr. Hemingway’s employment as President, Chief Executive Officer, Treasurer and Interim Chief Financial Officer.among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. SFAS 167 requires an ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity. SFAS 167 also requires additional disclosures about a company’s involvementour Consolidated Financial Statements, which have been prepared in variable interest entities and any significant changes in risk exposure due to that involvement. SFAS 167 is effective for fiscal years beginning after June 15, 2010.In June 2009, the FASB issued ASC 105 (previously SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles ("GAAP") - a replacement of FASB Statement No. 162), which will become the source of authoritativeaccordance with accounting principles generally accepted in the United States recognized by the FASB to be applied to nongovernmental entities. The Codification is effective in the third quarter of 2009, and accordingly, the Quarterly Report on Form 10-Q for the quarter ending September 30, 2009 and all subsequent public filings will reference the Codification as the sole source of authoritative literature. The Company does not believe that this will have a material effect on its consolidated financial statements. In June 2009, the FASB issued amended standards for determining whether to consolidate a variable interest entity. These amended standards eliminate a mandatory quantitative approach to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity in favor of a qualitatively focused analysis, and require an ongoing reassessment of whether an entity is the primary beneficiary. These amended standards are effective for us beginning in the first quarter of fiscal year 2010 and we are currently evaluating the impact that adoption will have on our consolidated financial statements.In August 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which amends ASC Topic 820, Measuring Liabilities at Fair Value, which provides additional guidance on the measurement of liabilities at fair value. These amended standards clarify that in circumstances in which a quoted price in an active market for the identical liability is not available, we are required to use the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities, or quoted prices for similar liabilities when traded as assets. If these quoted prices are not available, we are required to use another valuation technique, such as an income approach or a market approach. These amended standards are effective for us beginning in the fourth quarter of fiscal year 2009 and are not expected to have a significant impact on our consolidated financial statements.Critical accounting policies
States. The preparation of financial statements and related notesthese Consolidated Financial Statements requires usmanagement to make judgments, estimates and assumptionsjudgments that affect the reported amounts of assets, liabilities, revenuerevenues and expenses and related disclosure of contingent liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about mattersliabilities that are highly uncertain atnot readily apparent from other sources. Senior management has discussed the timedevelopment, selection and disclosure of these estimates with the estimate is made,Board of Directors. Actual results may differ from these estimates.if different estimates that reasonably could have been used or changes in the preparation of its consolidated financial statements.estimates that are reasonably likely to occur periodically, could materially impactfor its interests in producing wells as crude oil and natural gas is produced and sold from those wells. Under the sales method, the Company does not recognize the value of its crude oil inventory in the financial statements. Costs associated with production are expensed in the period incurred.Becauselimited levelcommon stock.we have notconsisted primarily of a net loss of $750,157 plus non-cash expenses of $19,798 related to depreciation, depletion, amortization and accretion, expenses paid on behalf of the Company by a related party of $11,000, a gain on settlement of debt of $768,481, amortization of discount on debt of $65,198, and common stock issued for services and loan inducement of $779,083, and a reclassification of inventory to investment in oil and gas leases of $29,690. Additionally, changes in operating assets and liabilities impacted the net cash provided by operating activities. These changes included a decrease in accounts receivable of $7,451, a decrease in notes receivable – related parties of $7,500, a decrease in inventory of $81,980, an increase in deposits and prepaid expenses of $16,726, an increase in accounts payable and accrued expenses of $35,074, and an increase in accrued salaries of $315,252.material assumptionsthe timing, amount, terms and conditions of additional financing unattractive or estimates other than our assumptionunavailable to us. There can be no assurance that financing will be available to us on favorable terms or at all. If we are a going concern.unable to obtain additional financing, we may be unable to continue operations.Seasonality.yet have a basisany relationships with unconsolidated entities or financial partnerships, such as entities often referred to determine whether our business will be seasonal.7Item 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAThe financial statements filed as part of this Annual Report on Form 10-K are set forth on the pages F-2 through F-4 of this report and are incorporated herein by reference.Item 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREOn October 6, 2009 Li and Company resigned as the Registrants registered public accounting firm. The reports of Li and Company on the Registrant’s financial statementsstructured finance or special purpose entities, which would have been established for the fiscal years ending July 31, 2007purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.July 31, 2008 didout of Levels 1 and 2 and a higher level of disaggregation for the different types of financial instruments. For the reconciliation of Level 3 fair value measurements, information about purchases, sales, issuances and settlements are presented separately. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of revised Level 3 disclosure requirements, which are effective for interim and annual reporting periods beginning after December 15, 2010. Comparative disclosures are not contain any adverse opinionrequired in the year of adoption.disclaimergas, amends the definition of opinion,proved oil and such reports were not qualified or modified asgas reserves to uncertainty, audit scope or accounting principles other than an explanatory paragraph asrequire 12-month average pricing in estimating reserves, amends and adds definitions in the Master Glossary that are used in estimating proved oil and gas quantities, and provides guidance on geographic area with respect to the Company’s ability to continuedisclosure of information about significant reserves. ASU 2010-03 must be applied prospectively as a going concern. During the two fiscal years, referred to above, there were no disagreements between the registrantchange in accounting principle that is inseparable from a change in accounting estimate and Liis effective for entities with annual reporting periods ending on or after December 31, 2009.CompanyQualitative Disclosures about Market Risk.any matterAccounting and Financial Disclosure.accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of Li and Company would have caused Li and Company to make reference to the matter in its reports on the Registrant’s consolidated financial statements for such years.On November 17, 2009 the Company engaged Kabani and Company, Inc. as its registered public accounting firm. Kabani and Company resigned on November 15, 2010. There were no significant disagreements between Kabani and the Company on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures which, if not resolved to the satisfaction of Kabani and Company would have caused Kabani and Company to make reference to the matter in its reports on the Registrants financial statements for such yearts.On November 16, 2010 the Company engaged Sadler, Gibb and Associates as its registered public accounting firm.Item 9AT – CONTROLS AND PROCEDURESOur Chief Executive Officer, who is also our Chief Financial Officer (the “Certifying Officer”), has evaluated the effectiveness of the design and operation of ourJuly 31, 2009. Based on this evaluation, our Certifying Officer has concluded1934 (the "Exchange Act"), that our disclosure controls and procedures were ineffectiveare designed to ensure that information required to be disclosed by us in our periodicthe reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified for each reportin the Securities and Exchange Commission's rules and forms and that such information is presentedaccumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.The Certifying Officer has further indicated that there were no significant changes in We carried out an evaluation, under the supervision and with the participation of our internal controls or other factors that could significantly affect such controls subsequent to the date of his evaluation,management, including our principal executive officer and there were no corrective actions with regard to significant deficiencies and material weaknesses. A system of controls, no matter how well designed and operated, cannot provide absolute assurance that the objectivesprincipal financial officer, of the systemeffectiveness of our disclosure controls are met, and noprocedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of the period covered by this Report. Based on the evaluation of these disclosure controls can provide absolute assuranceand procedures, the Chief Executive Officer and Chief Financial Officer concluded that all control issuesour disclosure controls and instancesprocedures were not effective as of fraud, if any, within a company have been detected.July 31, 2011.Evaluation ofControls overControl Over Financial ReportingThe Certifying Officer also responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is a processset of processes designed by, or under the supervision of, a company’s principal executive and principal financial officers to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reportingprinciples (“GAAP”) and includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; (iii) provide reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and (iv) provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.that:· pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions; · provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; · provide reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and · provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. may occur or that the degree of compliance with the policies or procedures may deteriorate.The Certifying Officer our internal control over financial reporting as of July 31, 2009. This assessment is based2011based on the criteria for effective internal control describedframework set forth in Internal Control — Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.itsthis assessment, hemanagement concluded that ourthe Company’s internal control over financial reporting was not effective as of July 31, 2009 was not effective in2011. specific areasassessment described in the “Disclosure Controls and Procedures” section above, and as specifically described in the paragraphs below.8As of July 31, 2009 the Certifying Officermanagement identified the following specificcontrol deficiencies that represent material weaknesses in the Company’s internal controls over its financial reporting processes:Policies and Procedures for the Financial Close and Reporting Process — Currently there are no policies or procedures that clearly define the roles in the financial close and reporting process. The various roles and responsibilities related to this process should be defined, documented, updated and communicated. Failure to have such policies and procedures in place amounts to a material weakness to the Company’s internal controls over its financial reporting processes.Adequacy of Accounting Systems at Meeting Company Needs — The accounting system in place at the time of the assessment lacks the ability to provide high quality financial statements from within the system, and there were no procedures in place or built into the system to ensure that all relevant information is secure, identified, captured, processed, and reported within the accounting system. Failure to have an adequate accounting system with procedures to ensure the information is secure and accurately recorded and reported amounts to a material weakness to the Company’s internal controls over its financial reporting processes.Segregation of Duties — The Certifying Officer has identified a significant general lack of definition and segregation of duties throughout the financial reporting processes. Due to the pervasive nature of this issue, the lack of adequate definition and segregation of duties amounts to a material weakness to the Company’s internal controls over its financial reporting processes.· Policies and Procedures for the Financial Close and Reporting Process — Currently there are no policies or procedures that clearly define the roles in the financial close and reporting process. The various roles and responsibilities related to this process should be defined, documented, updated and communicated. Failure to have such policies and procedures in place amounts to a material weakness to the Company’s internal controls over its financial reporting processes. · Adequacy of Accounting Systems at Meeting Company Needs — The accounting system in place at the time of the assessment lacks the ability to provide high quality financial statements from within the system, and there were no procedures in place or built into the system to ensure that all relevant information is secure, identified, captured, processed, and reported within the accounting system. Failure to have an adequate accounting system with procedures to ensure the information is secure and accurately recorded and reported amounts to a material weakness to the Company’s internal controls over its financial reporting processes. · Segregation of Duties — The Certifying Officer has identified a significant general lack of definition and segregation of duties throughout the financial reporting processes. Due to the pervasive nature of this issue, the lack of adequate definition and segregation of duties amounts to a material weakness to the Company’s internal controls over its financial reporting processes. The Company will create and refine a structure in which critical accounting policies and estimates are identified, and together with other complex areas, are subject to review by other members of management as well as the Company’s outside accountant. In addition, we plan to enhance and test our month-end and year-end financial close process. Additionally, our board of directors will increase its review of our disclosure controls and procedures. We also intend to develop and implement policies and procedures for the financial close and reporting process, such as identifying the roles, responsibilities, methodologies, and review/approval process. We believe these actions will remediate the material weaknesses by focusing additional attention and resources in our internal accounting functions. However, the material weaknesses will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.· The Company will create and refine a structure in which critical accounting policies and estimates are identified, and together with other complex areas, are subject to review by other members of management as well as the Company’s outside accountant. In addition, we plan to enhance and test our month-end and year-end financial close process. Additionally, our board of directors will increase its review of our disclosure controls and procedures. We also intend to develop and implement policies and procedures for the financial close and reporting process, such as identifying the roles, responsibilities, methodologies, and review/approval process. We believe these actions will remediate the material weaknesses by focusing additional attention and resources in our internal accounting functions. However, the material weaknesses will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. annual reportAnnual Report does not include an attestation report of ourthe Company’s registered public accounting firm regarding internal control over financial reporting. The Certifying Officer’sManagement’s report was not subject to attestation by ourthe Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission.This report shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities ofCommission that section , and is not incorporated by reference into any filing ofpermit the Company whether made before or after the date hereof, regardless of any general incorporation languageto provide only management’s report in such filing.PART IIIItem 10 - DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCEOn October 1, 2009 the Board of Directors accepted Mr. Lawrence Weisdorn voluntary resignation from his positions of Director, President, Chief Executive officer and Chiefthis Annual Report.Officer of the Registrant. Reportingdisagreementschanges in our internal control over financial reporting during the year ended July 31, 2011 that have materially affected, or misunderstandings relatingare reasonably likely to the Registrant’s operation, policies or practices between the Boardmaterially affect, our internal control over financial reporting.Mr. Weisdorn leading to his resignation. Mr. Weisdorn cancelled, effective May 1, 2009 the October 21, 2009 employment agreement entered into between himself and the Registrant and agreed to cancel all wages accrued but unpaid as of April 30, 2009.9name, agenames and positionages of all of our directors and executive officers certain non-executiveas of October 31, 2011 along with their current positions with the Company. All directors hold office until the next annual meeting of stockholders or until their successors have been elected and qualified. Our executive officers are elected by our Board of Directors and directors:
serve at its discretion.AgeAge Position and Offices with the CompanyOscar Luppi (1)46Chairman of the Board, President, 55 Chief Executive Officer and DirectorDonald Hejmanowski (2)50Secretary, and DirectorThomas C. Hemingway (3)52Interim Treasurer, Director(1)Pursuant to an employment agreement dated October 1, 2009,Oscar Luppi was appointed Chairman of the Board President and Charles B. Mathews 47 Chief ExecutiveFinancial Officer and was elected as a director concurrently therewith.(2)Pursuant to an employment agreement dated October 21, 2008,Donald Hejmanowski was appointed 52 Secretary and Vice President of Business Development. Mr. Hejmanowski was elected as a director concurrently therewith. On October 1, 2009 Mr. Hejmanowski cancelled the employment agreement effective May 1, 2009 and agreed to cancel all unpaid wages accrued but unpaid as of April 30, 2009.Director(3) resigned from his positions as President, Chief Executive Officer and Chief Financial Officer effective October 21, 2008. On October 1, 2009 Mr. Hemingway, resigned his position of Chairman of the board, and without compensation, was appointed interim Treasurer.BiographiesOscar Luppi (46)– Mr. Luppi has served as the President, Chief Executive Officer and Chairman of the Board of Directors of the Registrant from October 1, 2009 to the present. From May 1990 to the present, Mr. Luppi has served as President of International Patent, Manufacturing and Services, Inc., a private investment company. From March 2001 through October 2007, Mr. Luppi also served as President of Phonica SpA., an Italian telecom company.Donald Hejmanowski (50) – Mr. Hejmanowski has served as the Secretary, Vice President of Business Development and Director of the Registrant from October 21, 2008 to the present. Mr. Hejmanowski serves as the Vice President of Finance and Director of Ice Conversions, Inc., a California corporation from November 2005 to the present. Ice Conversions, Inc. is in the business of developing electric drive systems for installation in short-haul commercial trucks. Mr. Hejmanowski has served as the Secretary, Treasurer and Director of H Y D, Inc., a Nevada corporation from 2002 to the present. H Y D, Inc. is in the business of providing consulting services. Mr. Hejmanowski has also served as a Director of US Farms, Inc., a Nevada corporation from 2006 to present. US Farms, Inc. is a diversified commercial farming and nursery company. Previously, from 2006 to 2007, Mr. Hejmanowski served as a Director of Cyclone Energy, Inc. Cyclone Energy, Inc. develops, distributes, and markets alternative and hydrogen fuels and offers closed-loop pollution-free transportation solutions. Mr. Hejmanowski also served as a Director of LitFunding Corp. from 2005 to 2006. LitFunding Corp. provides funding for litigation primarily for plaintiffs’ attorneys. From 2002 to 2005, Mr. Hejmanowski served as a consultant to American Water Star, Inc. a water bottling and distribution company.(52) – Mr. Hemingwayhas been the Chief Executive Officer since May 2011 and has served as the Chairman of the Registrant from May 9, 2006 to the present and has previously served as the Chief Executive Officer and Chief Financial Officer of the Registrant from May 9, 2006 to October 21, 2008. Mr. Hemingway has served as the Chairman, Chief Operating Officer and Secretary of NextPhase Wireless, Inc., a broadband connectivity solutions provider from January 2007 to the present. On June 13, 2008, Mr. Hemingway became Interim Chief Financial Officer of NextPhase Wireless, Inc. and on September 4, 2008, Mr. Hemingway was named Chief Executive Officer. Mr. Hemingway has also served as the President and Chief Executive Officer of Redwood Investment Group, an investment banking trust, from June 2003 to the present. Mr. Hemingway previously served as Chairman and Chief Executive Officer of Oxford Media, a next generation media distribution company, from 2004 to 2006; and as Chairman and Chief Executive Officer of Esynch Corporation, developer and marketer of video-on-demand services and video streaming through the Internet, from 1998 to 2003.SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCECurrently, our Chairman of the Board serves as the audit committee financial expert.of 1934, as amended (the “EXCHANGE ACT”), requires the Company’sthat our directors and executive officers, and directors and persons who beneficially own more than ten percent10% of a registered class of the Company’sour equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (SEC) initial reports of ownership and reports of changes in ownership of common stock and the other equity securities of the Company. These reporting persons are required by the regulations of the SEC to furnish the Companyus with copies of these reports.all Section 16(a) forms they file.To the Company’s knowledge, baseditsa review of the copies of Section 16(a)the forms and other specified written representations furnished to us, our review of the reports that have been filed and the representations of the reporting persons, we believe that all filing requirements applicable to these persons were complied with during the fiscal year ended July 31, 2011. Form 3 Form 4 Thomas C. Hemingway 1 - Donald Hejmanowski 1 - Gary Cohee 1 - the following table showshas adopted a Code of Ethics that applies to all of the late filingsits Directors, officers, employees, consultants, contractors and agents. The Code of Ethics has been reviewed and approved by the Company’s officers, directors or greater than ten percent beneficial owners known toBoard of Directors. A copy of the CompanyCode of a Form 3 or any Forms 4 during or with respect to fiscal years 2008 or 2007.10Item 11 - EXECUTIVE COMPENSATIONOn October 21, 2008, the Company experienced a change in management as reported to the Securities Exchange CommissionEthics is posted on the Company’s Form 8-K filed October 23, 2008. Such filing is heretofore incorporated by reference. On October 1, 2009 the Company had a further management change, reported to the Securities Exchange Commission on the Company’s Form 8-K filed October 2, 2009. Such filing is heretofore incorporated by reference.website at www.forcefuels.commanagement.management as of July 31, 2011. There have been no stock options granted to employees or management during the years covered in the table below, and no employee stock options are currently outstanding.SUMMARY COMPENSATION TABLEName and Principal Position Fiscal Year Donald Hejmanowski 2010 $ 60,000 $ - $ - $ 60,000 Secretary and director 2011 $ 60,000 $ - $ - $ 60,000 Thomas C. Hemingway (1) 2010 $ 60,000 $ - $ - $ 60,000 President, CEO, CFO, and Chairman 2011 $ 129,139 $ 107,500 $ - $ 236,639 Oscar Luppi (2) 2010 $ 250,000 $ - $ - $ 250,000 Ex-President, CEO and Chairman 2011 $ 159,028 $ - $ - $ 159,028 (1)Pursuant to an employment agreement effective October 21, 2008, Lawrence Weisdorn was appointed President, Chief Executive Officer and Chief Financial Officer of the Company. On October 1, 2009, Mr. Weisdorn resigned from all of those positions.(2)Accrued salary pursuant a consulting agreement entered into on May 12, 2008, and replaced by an employment agreement dated October 21, 2008. $145,000 was paid against these accrued items and the remaining balance of $74,500, by agreement was forgiven and written off.(3)Grant of 2,500,000 shares valued at $0.03 per share pursuant to a consulting entered in to May 12, 2008. These shares were subsequently returned to the transfer agent on August 31, 2009, for cancellation.(4)(6)Pursuant to an employment agreement effective October 21, 2008, Donald Hejmanowski was appointed Secretary and Vice President of Business Development of the Company and was entitled to remuneration of $6,500 per month. That fee was accrued through April 30, 2009. The employment agreement was cancelled effective May 1, 2009 and the accrued amount of $38,637 was written off.(5)Grant of 1,200,000 shares valued at $0.03 per share pursuant to a consulting agreement entered into May 12, 2008.11(7)(8)Grant of 850,000 shares valued at $0.03 per share for services rendered to the company.(9)stockstock. On March 22, 2011, the Board of Directors accepted Mr. Oscar Luppi’s voluntary resignation from his positions of Chairman, President, Chief Executive Officer, and 1,000,000 options to purchaseTreasurer of the Registrant’s Common Stock at a 20% discount to market.Registrant.DIRECTOR COMPENSATIONOur current directors received no compensation for their services as director during fiscal years 2008Item 12. Security Ownership of Certain Beneficial Owners and 2009. There were no stock options granted to directors during fiscal years 2008Management and 2009, other than those referred to, in Item 11(9), above and no other director stock options are currently outstanding.Related Stockholder MattersItem 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSnumber and percentagebeneficial ownership of common stock of the shares of the Company’s Common Stock ownedCompany as of JulyOctober 31, 2009 by all persons2011 for the following: (i) each person or entity who is known to the Company whoto beneficially own more than 5% of the outstanding number of such shares by all directors of the Company,Company's common stock; (ii) each of the Company's Directors; (iii) the Company's Chief Executive Officer and byPresident and Chief Financial Officer; and (iv) all officersDirectors and directorsexecutive officers of the Company as a group. The number and percentage of shares beneficially owned is determined under Rule 13d-3 as promulgated under the Securities Exchange Act of 1934, as amended, by the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or dispositive power and also any shares that the individual has the right to acquire within sixty days of October 31, 2011 through the exercise of any stock option or other right. Unless otherwise indicated in the footnotes, each ofperson has sole voting and dispositive power (or shares such power) with respect to the stockholders hasshares shown as beneficially owned. Except as otherwise indicated, and subject to applicable community property laws, the persons named in this table have sole voting and investment power with respect to theall shares beneficially owned.
4630 Campus Dr. Ste. 101
Newport Beach CA 92660
22525 Pacific Coast Hwy, Suite #101
Malibu, CA 90265
22525 Pacific Coast Hwy, Suite #101
Malibu, CA 90265
22525 Pacific Coast Hwy, Suite #101
Malibu, CA 90265
PMB Securities
4630 Campus Dr. Suite 101
Newport Beach, CA 92660
of common stock held by them. Amount and Nature of Beneficial Percent Title of Class Name and Address of Beneficial Owner Ownership of Class (a) Common Thomas C. Hemingway 1,950,000 14.61 % Chairman and Chief Executive Officer 1503 South Coast Dr. Ste. 206 Costa Mesa, CA 92626 Common Charles B. Mathews 125,000 0.94 % Chief Financial Officer 1503 South Coast Dr. Ste. 206 Costa Mesa, CA 92626 Common Donald Hejmanowski 1,000,000 7.49 % Director 1503 South Coast Dr. Ste. 206 Costa Mesa, CA 92626 Common Gary Cohee 1,400,000 10.49 % PMB Securities 4630 Campus Dr. Ste. 101 �� Newport Beach, CA 92660 Common ALL EXECUTIVE OFFICERS AND 3,075,000 23.04 % DIRECTORS AS A GROUP (3 Persons) (1)For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person has the right to acquire within 60 days of July 31, 2009.(2)For purposes of computing the percentage of outstanding shares of common stock held by each person or group of persons named above, any security which such person or persons has or have the right to acquire within such a date is deemed to be outstanding but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. Except community property laws, the Company believes, based on information supplied by such persons, that the persons named in this table have sole voting and investment power with respect to all shares of common stock which they beneficially own.12(3)Lawrence Weisdorn resigned from all executive and Board positions effective October 1, 2009. Both he and Donald Hejmanowski both currently serve as officers and directors of ICE Conversions, Inc.(4)These are the number of shares outstanding after the 1,500,000 shares are cancelled and replaced by the issuance of 1,000,000 shares pursuant to the terms of the Assignment and Contribution Agreement.
Thomas C. Hemingway and Gary Cohee were co-founders of Great American Coffee Company, Inc. which, for accounting purposes, acquired the Company effective May 9, 2006. In connection with the Merger, Messrs. Hemingway and Cohee each acquired beneficial ownership of 500,000 prior to reverse split shares of the Company's Common Stock. Mr. Hemingway and Mr. Cohee were granted 850,000 shares each for services rendered to the Company.Lawrence Weisdorn was granted 2,500,000 shares of Common Stock and had accrued, as of July 31, 2009, $219,500 in compensation pursuant to a consulting agreement dated May 12, 2008 which was subsequently replaced by an employment agreement dated October 21, 2009 and was appointed President, Chief Executive Officer and Chief Financial Officer of the Company, and elected as a director of the Company concurrently therewith. Mr. Weisdorn subsequently resigned from all executive and board positions, terminated the employment agreement as of May 1, 2009 and forgave any accrued but unpaid salary as of April 30, 2009.Mr. Weisdorn and Mr. Hejmanowski both currently serve as officers and directors of ICE. hashad granted ICE a first priority perfected security interest in the Company's business and assets in order to secure the Company’s obligation to pay that $400,000 to ICE. Until payment in full of that amount, the Company also cannotcould not sell, transfer or encumber any such assets without Ice’s prior written consent. Failure to pay the obligation when due would likely result in a foreclosure upon the assets. Pursuant to the Assignment and Contribution Agreement, FiveOne million one hundred thousand of of the 1,500,000 shares previously issued to ICE were cancelled.14- PRINCIPAL ACCOUNTANT FEES AND SERVICES14. Principal Accountant Fees and ServicesOur principal accountants, Li & Company, PCus approximately $12,000 for professionalother services rendered in connection with our Quarterly Reports on Form 10-Q forby the periods ended October 31, 2007, January 31, 2008 and April 30, 2008 andCompany’s auditors, Sadler, Gibb & Associates, for the audit of our consolidatedthe Company’s annual financial statements included in our Annual Reports on Form 10-K for the fiscal year ended July 31, 2008.Our principal accountants did not bill us any fees for tax compliance, tax advice and tax planning for our fiscal years ended July 31, 20082011 and 2009.PART IVItem 15 - EXHIBITSPlease see2010 any other fees billed for other services rendered by Sadler, Gibb & Associates during these periods. Audit fees $ 33,500 $ 20,000 Audit-related fees - - Tax fees - - All other fees - - Total $ 33,500 $ 20,000 Exhibit Index located behindduties of the signature page13FORCE FUELS, INC. AND SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)20092011.(a) Documents filed as part of the report.
Financial statements to be filed by amendment.SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.2.1(1) FORCE FUELS, INC.Bylaws Date: December 16, 2010By:/s/ Oscar LuppiOscar LuppiPresident,Chief Executive Officer15EXHIBIT INDEXExhibit No.Description2.1(1)Bylaws2.2(1)Consulting Agreement with Lawrence Weisdorn effective May 12, 2008.10.5(6)*10.6(6)Employment Agreement of Lawrence Weisdorn dated October 21, 2008.10.7(6)*3131.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer. 32 Section 1350 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002. _____________________* This exhibit references a Management Compensation Plan or Arrangement (1)* This exhibit references a Management Compensation Plan or Arrangement (1) Filed with the Securities and Exchange Commission in the Exhibits to Form 10-SB filed on September 9, 2002, and is incorporated by reference herein.
SIGNATURES16Force Fuels, Inc. By: /s/ Thomas C. Hemingway Thomas C. Hemingway Chief Executive Officer (Principal Executive Officer) Signatures Title Date /s/ Thomas C. Hemingway Chairman of the Board of Directors November 15, 2011 Thomas C. Hemingway /s/ Charles B. Mathews Chief Financial Officer November 15, 2011 Charles B. Mathews /s/ Donald Hejmanowski Director November 15, 2011 Donald Hejmanowski Page Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of July 31, 2011 and 2010 F-3 Consolidated Statements of Operations for the Years Ended July 31, 2011 and 2010 F-4 Consolidated Statements of Changes in Stockholders’ Deficit for the Years Ended July 31, 2011 and 2010 F-5 Consolidated Statements of Cash Flows for the Years Ended July 31, 2011 and 2010 F-6 Notes to Consolidated Financial Statements F-7 July 31, 2011 July 31, 2010 ASSETS Current Assets: Cash $ 2,624 $ 86,842 Accounts receivable, net - 7,451 Inventory, net - 81,980 Prepaid expenses 4,088 - Notes receivable, related party 2,500 10,000 9,212 186,273 Deposits 12,638 - Property, Plant & Equipment Oil and gas properties (full cost method) 909,671 1,258,292 Other property, plant and equipment 138,300 138,300 1,047,971 1,396,592 Accumulated depletion, depreciation and amortization (24,737 ) (4,939 ) 1,023,234 1,391,653 $ 1,045,084 $ 1,577,926 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable and accrued expenses $ 246,331 $ 224,258 Accrued officer salaries 626,082 310,830 Convertible notes payable 135,300 - Convertible notes payable - related party 29,200 - Notes payable 248,066 139,747 Notes payable for acquisition of oil and gas property - 1,368,121 1,284,979 2,042,956 Asset retirement obligation 32,830 36,622 COMMITMENTS AND CONTINGENCIES (see Notes 6 and 7) STOCKHOLDERS' DEFICIT Preferred stock, $0.001 par value; 1,000,000 shares authorized; no issued and outstanding, respectively. - - Common stock, $0.001 par value; 100,000,000 shares authorized; 11,704,375 and 6,475,129 shares outstanding, respectively. 11,704 6,475 Additional paid-in capital 3,517,373 2,543,518 Accumulated deficit (3,801,802 ) (3,051,645 ) (272,725 ) (501,652 ) $ 1,045,084 $ 1,577,926
See accompanying notes to the consolidated financial statements. For the Year Ended May 31, 2011 2010 REVENUES Crude oil $ 44,555 $ 7,451 COST OF GOODS SOLD 43,359 - GROSS PROFIT (LOSS) 1,196 7,451 EXPENSES Lease operating expense 62,394 25,000 Salary and wages - officers 409,067 224,080 Stock based compensation - 300,000 General and administrative 945,031 1,017,542 Impairment of intellectual property rights - 344,000 Depletion, depreciation, amortization, and accretion 19,798 4,939 1,436,290 1,915,561 NET LOSS FROM OPERATIONS (1,435,094 ) (1,908,110 ) OTHER INCOME (EXPENSE) Gain (loss) on settlement of debt 768,481 (310,014 ) Loss on disposal of assets - (19,915 ) Interest expense (83,544 ) (43,850 ) 684,937 (373,779 ) NET LOSS (750,157 ) (2,281,889 ) Basic and diluted income (loss) per share, from continuing operations $ (0.09 ) $ (0.29 ) Weighted average shares outstanding - basic and diluted 8,726,860 7,773,790 Additional Total Common Stock Preferred Stock Paid-in Accumulated Stockholders' Shares Amount Shares Amount Capital Deficit Deficit Balance – July 31, 2009 7,682,763 $ 7,683 - $ - $ 329,750 $ (769,756 ) $ (432,323 ) Common stock issued for signing bonus 1,000,000 1,000 - - 299,000 - 300,000 Common stock issued for services 1,294,366 1,294 - - 387,016 - 388,310 Common stock issued upon conversion of debt 148,000 148 - - 570,866 - 571,014 Common stock issued for inducement of loan 150,000 150 - - 133,350 - 133,500 Cancellation of common stock (3,800,000 ) (3,800 ) - - 3,800 - - Forgiveness of debt by shareholder - - - - 739,689 - 739,689 Fair value of warrants granted - - - - 80,047 - 80,047 Net loss - - - - - (2,281,889 ) (2,281,889 ) Balance – July 31, 2010 6,475,129 $ 6,475 - $ - $ 2,543,518 $ (3,051,645 ) $ (501,652 ) Common stock issued for services 4,481,746 $ 4,482 - $ - 735,002.00 - 739,484 Common stock issued for extension of notes payable 200,000 200 - - 23,800.00 - 24,000 Common stock issued for inducement of loan 60,000 60 - - 15,540.00 - 15,600 Common stock issued upon default of note 500,000 500 - - 224,500.00 - 225,000 Cancellation of common stock (12,500 ) (13 ) - - (24,987 ) - (25,000 ) Net loss - - - - - (750,157 ) (750,157 ) Balance – July 31, 2011 11,704,375 $ 11,704 - $ - $ 3,517,373 $ (3,801,802 ) $ (272,725 ) For the Year Ended May 31, 2011 2010 Operating activities: Net loss $ (750,157 ) $ (2,281,889 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depletion, depreciation, amortization, and accrection 19,798 6,673 Amortization of intangible assets - 43,000 Impairment of intellectual property rights - 344,000 Expenses paid on behalf of the Company by a related party 11,000 - (Gain) loss on settlement of debt (768,481 ) 310,014 Loss on disposal of assets - 19,915 Amortization of discount on debt 65,198 32,835 Stock-based compensation - 300,000 Common stock issued for services and loan inducement 779,083 521,810 Fair value of warrants - 40,063 Reclassification of inventory to investment in oil and gas property (29,690 ) - Changes in operating assets and liabilities: Accounts receivable 7,451 (7,451 ) Notes receivable - related party 7,500 - Inventory 81,980 - Deposits and prepaid expenses (16,726 ) - Accounts payable and accrued expenses 35,074 178,884 Accrued salaries 315,252 310,830 Net cash used in operating activities (242,718 ) (181,316 ) Investing activities: Net cash Provided by (used in) financing activities - - Financing activities: Proceeds from convertible notes payable 124,300 356,158 Proceeds from convertible notes payable - related party 29,200 - Proceeds from notes payable 75,000 - Repayment of notes payable (45,000 ) (100,000 ) Payment for cancellation of common stock (25,000 ) - Due to related parties - 12,000 Net cash provided by financing activities 158,500 268,158 Net decrease in cash (84,218 ) 86,842 Cash, beginning of period 86,842 - Cash, end of period $ 2,624 $ 86,842 (a) The contribution, transfer and license of certain assets and intellectual property rights of ICE to the Company; (b) The grant of 1,000,000 shares of Common Stock to ICE; by subsequent agreement 600,000 of these shares were returned, to the Company, for cancellation, on December 9, 2009. (c) Confirmation of the previous grant of 2,500,000 shares of Common Stock pursuant to a consulting agreement; by subsequent agreement these shares were returned on, August 31, 2009, for cancellation. (d) Cash payment of $400,000 from the Company to ICE, made payable as follows: 100,000 on or before March 15, 2009 and $300,000 on or before June 15, 2009. · Level 1: Observable inputs such as quoted prices in active markets; · Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and · Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. For the Year Ended July 31, 2011 2010 Net loss $ (775,157 ) $ (2,281,889 ) Weighted average common shares outstanding 8,726,860 7,773,790 Earnings per share: $ (0.09 ) $ (0.29 ) For the Years Ended July 31, 2012 2013 Office lease $ 47,032 $ 8,425 July 31, July 31, 2011 2010 Well operating equipment $ 138,300 $ 138,300 Less: accumulated depreciation (24,737 ) (4,939 ) Property and equipment, net $ 113,563 $ 133,361 July 31, July 31, 2011 2010 Note payable to ERS, unsecured, due November 30, 2010 $ - $ 500,000 Note payable to Pemco, unsecured, due February 23, 2011 - 900,000 Less: discount for imputed interest - (31,879 ) Notes payable, net $ - $ 1,368,121 July 31, July 31, 2010 2009 Note payable on January 29, 2009, 10% interest, unsecured and due on demand $ 35,960 $ 35,960 Note payable on June 1, 2009, 10% interest, unsecured and due on demand 13,738 13,738 Note payable on July 1, 2009, 10% interest, unsecured and due on demand 12,710 12,710 Note payable on October 1, 2009, 10% interest, unsecured and due on demand 10,658 10,658 Note payable on July 16, 2009, 10% interest, secured by a pledge of 500,000 shares of the Company's common stock, due 90 days following closing 100,000 100,000 Note payable on September 23, 2010, 8.0% interest, unsecured, convertible into common stock at a price of $0.50 per share, due 90 days from issuance date 30,000 - Note payable on September 23, 2010, 1.0% interest, unsecured, convertible into common stock at a price of $0.50 per share, due 90 days from issuance date 29,200 Note payable on November 18, 2010, zero percent interest, unsecured, convertible into Common stock at a 50% discount to market 50,000 - Note payable on February 28, 2011, 8% interest, unsecured, convertible into common stock at a price of $0.25 per share at the time of conversion 5,000 - Note payable on March 2, 2011, 5% interest, unsecured, convertible into common stock at a price of $0.25 per share at the time of conversion 5,000 - Note payable on March 28, 2011, 5% interest, unsecured, convertible into common stock at a price of $0.20 per share at the time of conversion 30,300 - Note payable on April 22, 2011, 1% interest, unsecured and due on demand 50,000 - Note payable on June 3, 2011, 1% interest, unsecured and due on demand 25,000 Note payable on July 25, 2011, 10% interest, unsecure, convertible into common stock at a price of $0.15 per share at the time of conversion 15,000 Discount on beneficial conversion feature - (33,319 ) Notes payable, net $ 412,566 $ 139,747 July 31, July 31, 2011 2010 Producing Activities Proved properties $ 909,671 $ 1,258,292 Accumulated depletion - - Net Oil and Gas Properties $ 909,671 $ 1,258,292 July 31, July 31, 2011 2010 Costs Incurred in Oil and Gas Acquisition and Development Activities Produced properties $ 909,671 $ 1,258,292 Accumulated depletion - - Total $ 909,671 $ 1,258,292 July 31, July 31, 2011 2010 Income tax recovery at statutory rates $ 1,128,034 $ 794,716 Permanent differences 1,084,210 521,050 Valuation allowance change (2,212,244 ) (1,315,766 ) Provision for income taxes $ - $ - July 31, July 31, 2011 2010 Net operating loss carryforward $ 878,313 $ 436,473 Valuation allowance (878,313 ) (436,473 ) Net deferred income tax asset $ - $ - For the Years Ended July 31, 2011 2010 Cash paid for: Interest $ - $ 6,545 Income taxes $ - $ - Non cash financing activities: Forgiveness of debt from related party $ - $ 739,689 Issuance of promissory note for investment in oil lease rights and related assets $ - $ 1,500,000 Sale of working interest in oil and gas leases in exchange for settlement of notes payable $ 380,334 $ - At July 31, 2011 At July 31, 2010 Net Proved Developed Reserves Crude Oil (Bbls) 606,447 606,447 Net Proved Undeveloped Reserves Crude Oil (Bbls) 10,624,053 10,624,053 Natural Gas (Mcf) - - Oil Equivalents (Boe) 10,624,053 10,624,053 Net Proved Developed and Undeveloped Reserves Crude Oil (Bbls) 11,230,500 11,230,500 Natural Gas (Mcf) - - Oil Equivalents (Boe) 11,230,500 11,230,500 At July 31, 2011 At July 31, 2010 Proved leasehold costs $ 876,841 $ 1,221,670 Costs of wells and development - - Capitalized asset retirement costs 32,830 36,622 Total cost of oil and gas properties 909,671 1,258,292 Accumulated depreciation and depletion - - Net Capitalized Costs $ 909,671 $ 1,258,292 Acquisition of properties Proved $ 909,671 $ 1,258,292 Exploration costs - - Development costs - - Net Capitalized Costs $ 909,671 $ 1,258,292 Crude oil revenues $ 44,555 $ 7,451 Production costs (62,394 ) (25,000 ) Depreciation and depletion (19,798 ) (4,939 ) Results of operations for producing activities, excluding corporate overhead $ (37,637 ) $ (22,488 ) July 31, July 31, 2011 2010 Future cash inflows $ 17,880,784 $ 25,616,435 Future production costs (3,576,157 ) (5,123,287 ) Future development costs (5,364,236 ) (7,684,931 ) Future income tax expense (1,788,092 ) (2,561,664 ) Future net cash inflows 7,152,299 10,246,553 10% annual discount for estimated timing of cash flows (3,831,178 ) (5,488,636 ) Standardized measure of discounted future net cash flows $ 3,321,121 $ 4,757,917 July 31, July 31, 2011 2010 Beginning of period $ 4,797,917 $ - Extensions, discoveries and improved recovery - - Revisions of previous estimates - - Purchases of reserves in place - 4,797,917 Sales of reserves in place (1,476,796 ) - Net change in process and production costs - - Accretion of discount - - Sales of oil and natural gas produced, net of production costs - - Changes in estimated future development cost - Development costs incurred - - Net change in income taxes - Change in timing of estimated future production - - End of period $ 3,321,121 $ 4,797,917 Exhibit 2.1(1) Bylaws 2.2(1) Articles of Incorporation 2.3(2) Certificate of Amendment to the Articles of Incorporation as filed with the Nevada Secretary of State on April 17, 2008. 2.4(3) Certificate of Amendment to the Articles of Incorporation as filed with the Nevada Secretary of State on May 27, 2008. 2002 Stock Option Plan as adopted July 15, 2002 10.2(5) Joint Venture Agreement by and between Force Fuels, Inc. and Ice Conversions, Inc. May 12, 2008. 10.3(6) Assignment and Contribution Agreement by and between Force Fuels, Inc. and Ice Conversions, Inc. effective July 31, 2008. 31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer. 31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer. 32 Section 1350 Certification of Chief Executive Officer and Chief Financial Officer. * This exhibit references a Management Compensation Plan or Arrangement (1) Filed with the Securities and Exchange Commission in the Exhibits to Form 10-SB filed on September 9, 2002, and is incorporated by reference herein. (2) Filed with the Securities and Exchange Commission in the Exhibits to Form 8-K filed on May 06, 2008, and is incorporated by reference herein. (3) Filed with the Securities and Exchange Commission in the Exhibits to Form 8-K filed on June 16, 2008, and is incorporated by reference herein. (4) Filed with the Securities and Exchange Commission in the Exhibits to Form S-8 filed on January 21, 2003. (5) Filed with the Securities and Exchange Commission in the Exhibits to Form 8-K filed on May 27, 2008, and is incorporated by reference herein. (6) Filed with the Securities and Exchange Commission in the Exhibits to Form 10-K/A filed on December 30, 2008, and is incorporated by reference herein.