Formcap (FRMC) 10-Q 9 Jun 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	3 Months Ended
	Mar. 31, 2017shares
Document And Entity Information
Entity Registrant Name	FORMCAP CORP.
Entity Central Index Key	1,102,709
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	No
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding	88,841,833
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,017

Balance Sheets

Balance Sheets - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Current Assets
Cash and Cash Equivalents	$ 2	$ 2
Prepayments	6,875	6,875
Related Party Note Receivable	8,170	8,170
TOTAL CURRENT ASSETS	15,047	15,047
Oil and Gas Lease Rights	0	0
TOTAL ASSETS	15,047	15,047
Current Liabilities
Accounts Payable and Accrued Liabilities	12,062	12,062
Accounts Payable - Related Parties	105,310	105,310
Convertible Promissory Notes Payable-Related Parties	113,490	113,490
Convertible Promissory Notes Payable	149,450	149,450
Notes Payable	52,059	52,059
Related Parties Payable	111,500	111,500
Royalty and License Fee Payable	135,000	135,000
TOTAL CURRENT LIABILITIES	678,871	678,871
TOTAL LIABILITIES	678,871	678,871
Stockholders' Deficit
Common stock, Authorized : 200,000,000, common shares at $0.01 par value, 88,841,833 and 9,223,822 shares issued and outstanding respectively	88,767	88,767
Additional paid in capital	22,228,795	22,228,795
(Deficit) accumulated during the development stage	(22,981,385)	(22,981,385)
TOTAL STOCKHOLDERS' DEFICIT	(663,823)	(663,823)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 15,047	$ 15,047

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Common Stock Par Value	$ 0.01	$ 0.01
Common Stock Authorized	200,000,000	200,000,000
Common Stock Issued	88,841,833	88,841,833
Common Stock Outstanding	9,223,822	9,223,822
Preferred Stock Par Value	$ 0.01	$ 0.01
Preferred Stock Authorized	50,000,000	50,000,000

Statements of Operations

Statements of Operations - USD ($)	3 Months Ended		312 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017
Revenue
Revenue			$ 321,889
Cost of Sales			(352,683)
Gross Margin			(30,794)
General and Administration Expenses
Consultation Fees			1,121,839
Professional Fees		925	13,445
Loss on Impairment of Assets			1,663,008
Financing Expenses			779,181
General and Admin Expenses			5,715,225
Operating Loss		(925)	(9,322,293)
Interest Expenses			864,263
Gain on Settlement of Debt			(286,855)
Loss on Settlement of Debt			13,659,125
Net (loss) for the period		$ (925)	$ (22,981,418)
Net (loss) per share
Basic and diluted	$ 0	$ 0
Weighted Average Number of Common
Shares Outstanding - Basic and Diluted	88,841,833	88,841,833

Statements of Cash Flows

Statements of Cash Flows - USD ($)	3 Months Ended		312 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017
Cash flow from Operating Activities
Net loss		$ 925	$ 22,981,418
Adjustments to reconcile net loss to net cash used in operating activities:
Other Receivable
Related Party Note Receivable
Accounts payable and accrued liabilities		925
Note Payable
Convertible Notes Payable Related Party
Convertible Notes Payable
Net cash used for operating activities	0	0
Investing Activities
Oil and Gas Lease Rights
Net cash provided by investing activities
Financing Activities
Common Stock
Additional Paid in Capital
Net cash provided by financing activities
Net change in cash
Cash, Beginning of Period	0	0
Cash, End of Period	$ 0	$ 0	$ 0

CONDENSED FINANCIAL STATEMENTS

CONDENSED FINANCIAL STATEMENTS	3 Months Ended
	Mar. 31, 2017
Condensed Financial Information of Parent Company Only Disclosure [Abstract]
CONDENSED FINANCIAL STATEMENTS	NOTE 1 - CONDENSED FINANCIAL STATEMENTS The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2017, and for all periods presented herein, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2016 financial statements. The results of operations for the periods ended March 31, 2017 and 2016 are not necessarily indicative of the operating results for the full years.

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
SIGNIFICANT ACCOUNTING POLICIES	NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and are stated in US dollars. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. Actual results may differ from these estimates. Reclassification of Financial Statement Accounts Certain amounts in the condensed financial statements have been reclassified to conform to the presentation adopted in the March 31, 2017 condensed financial statements. Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reportable amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Basic Loss Per Share Basic earnings (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There were no dilutive or potentially dilutive instruments outstanding as of March 31, 2017 and March 31, 2016. Stock Issued in Exchange for Services The valuation of common stock issued in exchange for services is valued at an estimated fair market value as determined by the most readily determinable value of either the stock or services exchanged. Values of the stock are based upon other sales and issuances of the Company’s common stock within the same general time period. Cash and Cash Equivalents Cash equivalents are comprised of certain highly liquid investments with original maturities of three months or less when purchased. The Company maintains its cash in bank deposit accounts which at times may exceed federally insured limits of $250,000. The Company has not experienced any losses related to this concentration of risk. Deposits did not exceed insured limits during three months ended March 31, 2017 and the year ended December 31, 2016. Financial Instruments For accounts receivable, accounts payable, accrued liabilities, current portion of long-term debt and long-term debt, the carrying amounts of these financial instruments approximates their fair value. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Foreign Currency Translation The Company translates foreign currency transactions and balances to its reporting currency, United States Dollars, in accordance with ASC 830 “Foreign Currency Matters”. Monetary assets and liabilities are translated into the functional currency at the exchange rate in effect at the end of the year. Non-monetary assets and liabilities are translated at the exchange rate prevailing when the assets were acquired or the liabilities assumed. Revenue and expenses are translated at the rate approximating the rate of exchange on the transaction date. All exchange gains and losses are included in the determination of net income (loss) for the year. Income Taxes The Company applies ASC 740, which requires the asset and liability method of accounting for income taxes. The asset and liability method requires that the current or deferred tax consequences of all events recognized in the financial statements are measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years. Deferred tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce its deferred tax assets when it is more likely than not that all or some portion of the deferred tax assets will not be recovered. The Company adopted ASC 740, at the beginning of fiscal year 2008. This interpretation requires recognition and measurement of uncertain tax positions using a “more-likely-than-not” approach, requiring the recognition and measurement of uncertain tax positions. The adoption of ASC 740 had no material impact on the Company’s financial statements.

RECENTLY ENACTED ACCOUNTING STA

RECENTLY ENACTED ACCOUNTING STANDARDS	3 Months Ended
	Mar. 31, 2017
Accounting Changes and Error Corrections [Abstract]
RECENTLY ENACTED ACCOUNTING STANDARDS	NOTE 3 - RECENTLY ENACTED ACCOUNTING STANDARDS In June 2014, the FASB issued ASU 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. The guidance eliminates the definition of a development stage entity thereby removing the incremental financial reporting requirements from U.S. GAAP for development stage entities, primarily presentation of inception to date financial information. The provisions of the amendments are effective for annual reporting periods beginning after December 15, 2014, and the interim periods therein. However, early adoption is permitted. Accordingly, the Company has adopted this standard as of June 30, 2015. The Company does not expect the adoption of any other recent accounting pronouncements to have a material impact on its financial statements.

GOING CONCERN

GOING CONCERN	3 Months Ended
	Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
GOING CONCERN	NOTE 4 - GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

PROMISSORY NOTE RECEIVABLE - RE

PROMISSORY NOTE RECEIVABLE - RELATED PARTY	3 Months Ended
	Mar. 31, 2017
Receivables [Abstract]
PROMISSORY NOTE RECEIVABLE - RELATED PARTY	NOTE 5 - P ROMISSORY NOTE RECEIVABLE - RELATED PARTY On June 3, 2013 the Company advanced the sum of $11,194 ($11,500 Canadian Dollars) to a related Canadian company. The loan is secured by a promissory note and is due on December 31, 2014. During the year the Borrower repaid $1,097 leaving a balance of $8,170 as of June 30, 2015. The promissory note is non-interest bearing until maturity and bears interest at 3% per annum thereafter. The Promissory note will become due and payable if the borrower receives financing totaling $5,000,000 in aggregate prior to the maturity date. The promissory note is convertible into common shares of the company either in whole or in part at the option of the Company.

EXPLORATION PROPERTY LEASE

EXPLORATION PROPERTY LEASE	3 Months Ended
	Mar. 31, 2017
Leases [Abstract]
EXPLORATION PROPERTY LEASE	NOTE 6 - EXPLORATION PROPERTY LEASE On November 19, 2013 the Company executed a Definitive Agreement with Kerr Energy Group and Keta Oil & Gas LLC (Kerr and Keta) both incorporated in Kansas. Pursuant to the terms of the Agreement the Company agreed to acquire up to 2,400 acres in Cowley County, Kansas at a cost not exceed $200 per acre. In addition, the Company agreed to issue Kerr and Keta a total of 200,000 Rule 144 shares of the common stock of FormCap. The Company will own 100% of the Leases (80% net revenue to FormCap; 20% freehold royalty), and will be the operator. The Company will have the option to purchase additional leases in Cowley County from Kerr and Keta under an Area of Mutual Interest, the terms of which are set forth in the Agreement. FormCap is required to drill one test well in each of the first two years of the lease term in order to maintain its interest in the Leases. During January 2014, Ironridge Global IV, Ltd. ("Ironridge") purchased from Kerr and Keta the Company’s obligation in the aggregate amount of $671,938.90 (the "Claim Amount"). Subsequently, the Company offered to settle the Claim Amount by the issuance of unrestricted and fully tradable shares of the Company's common stock. Ironridge accepted the Company's settlement offer, subject to a hearing on the fairness of the settlement terms. On February 21, 2014, the Company, Ironridge and the CEO of the Company entered into a Stipulation Order for the settlement on the terms agreed on by Ironridge and the Company. On February 21, 2014, a California Superior Court for the County of Los Angeles (the "State Court") held a hearing on the fairness of the Company's settlement offer to Ironridge. Pursuant to the court order issued by the State Court on February 21, 2014, the shares of the Company's common stock will be deemed issued in settlement of the claims (subject to certain adjustments based on the future trading value of the stock) when delivered to Ironridge. On February 24, 2014 the Company's transfer agent delivered to Ironridge 10,000,000 shares of the Company's common stock. The shares issued to Ironridge are freely tradable and exempt from registration under the Securities Act of 1933 and the California Corporations Code. The number of shares to be issued to Ironridge is subject to adjustment based trading price of the Company's stock such that the value of the shares is sufficient to cover the Claim Amount, a 10% agent fee amount and Ironridge's reasonable legal fees and expenses ( the "Final Amount"). Under the Stipulation Order, Ironridge may not be the beneficial owner of more than 9.99% of the Company's outstanding shares of common stock until the Final Amount is paid. Further Ironridge has agreed not to exercise any voting rights of the shares issued to it nor influence or cause any change in control of the Company. On March 11, 2014 Ironridge paid Kerr and Keta $305,000 in full and final settlement of all monies due in connection with the acquisition of 2,400 acres of the Cowley leases. Ironridge was obligated to provide $367,000 to the Company to fund the drilling of two test wells on the Cowley lands within 90 days of the issuance of the shares of Common stock. On May 24, 2014, Ironridge defaulted upon its obligation to fund the two test wells and on July 3, 2014, Ironridge was deregistered. Accordingly, the Company has recorded an impairment of the obligation of $367,000 that Ironridge had pledged to pay towards drilling expenses for Keta and Kerr. As at June 30, 2015 the Company has capitalized $1,663,008 toward the acquisition of the Cowley Leases.

RELATED PARTY PAYABLES

RELATED PARTY PAYABLES	3 Months Ended
	Mar. 31, 2017
Related Party Transactions [Abstract]
RELATED PARTY PAYABLES	NOTE 7 - RELATED PARTY PAYABLES The Company from time to time has borrowed funds from or has received services from several individuals and corporations related to the Company for operating purposes As at March 31, 2017 the Company owed related parties $111,500 (December 31, 2013 - $111,500). These amounts bear no interest, are not collateralized, and are due on demand.

PROMISSORY NOTES PAYABLE

PROMISSORY NOTES PAYABLE	3 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
PROMISSORY NOTES PAYABLE	NOTE 8 - PROMISSORY NOTES PAYABLE As at March 31, 2017 the Company owed $52,059 to several unrelated third parties (December 31, 2013 - $78,653). These amounts bear no interest, are not collateralized and are due on demand.

PROMISSORY NOTES PAYABLE _ RELA

PROMISSORY NOTES PAYABLE – RELATED PARTIES	3 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
PROMISSORY NOTES PAYABLE – RELATED PARTIES	NOTE 9 - PROMISSORY NOTES PAYABLE – RELATED PARTIES As at March 31, 2017 the Company owed $111,500 to several related parties (December 31, 2013 - $111,500) to several third parties. These amounts bear no interest, are not collateralized and are due on demand.

CONVERTIBLE PROMISSORY NOTES PA

CONVERTIBLE PROMISSORY NOTES PAYABLE	3 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
CONVERTIBLE PROMISSORY NOTES PAYABLE	NOTE 10 - CONVERTIBLE PROMISSORY NOTES PAYABLE On January 23, 2014, an unrelated third party paid Kerr and Keta a further $50,000 in connection with the acquisition of the Cowley leases. On that date the Company issued a promissory note in the amount of $50,000 to the unrelated third party. On February 28, 2014 the Company issued a promissory note in the amount of $11,000 to an unrelated party. The note matures on December 31, 2015 As at March 31, 2017, the Company owed $149,450 to the holders of the Convertible Promissory notes (December 31, 2013 - $111,800) The promissory notes are non-interest bearing until maturity and bear interest at 3% per annum thereafter. The Promissory notes will become due and payable if the Company receives financing totaling $5,000,000 in aggregate prior to the maturity date. The promissory notes are convertible into common shares of the Company either in whole or in part at the option of the Holders.

CONVERTIBLE PROMISSORY NOTES 16

CONVERTIBLE PROMISSORY NOTES PAYABLE – RELATED PARTY	3 Months Ended
	Mar. 31, 2017
Brokers and Dealers [Abstract]
CONVERTIBLE PROMISSORY NOTES PAYABLE – RELATED PARTY	NOTE 11 - CONVERTIBLE PROMISSORY NOTES PAYABLE – RELATED PARTY On January 2, 2014, a related party paid Kerr and Keta a further $50,000 in connection with the acquisition of the Cowley leases. On that date the Company issued a promissory note in the amount of $50,000 to the related party. On May 19, 2014 a related party paid certain creditors $7,000. On that date the Company issued a promissory note in the amount of $7,000 to the related party. On July 28, 2014 the Company issued a promissory note in the amount of $5,000 to a related party. The note matures on December 31, 2015. On August 11, 2014 a related party paid a certain creditor $2,500. On that date the Company issued a promissory note in the amount of $2,500 to the related party. As at March 31, 2017, the Company owed $113,490 to related party holders of Convertible Promissory Notes (December 31, 2013 - $48,990). The promissory notes are non-interest bearing until maturity and bear interest at 3% per annum thereafter. The Promissory notes will become due and payable if the Company receives financing totaling $5,000,000 in aggregate prior to the maturity date. The promissory notes are convertible into common shares of the Company either in whole or in part at the option of the Holder.

COMMON STOCK

COMMON STOCK	3 Months Ended
	Mar. 31, 2017
Equity [Abstract]
COMMON STOCK	NOTE 12 - COMMON STOCK The Company has two classes of stock authorized as of March 31, 2017. The Company has 50,000,000 shares of preferred stock authorized with no shares outstanding as of March 31, 2017 and December 31, 2016. The Company also has 200,000,000 shares of common stock authorized with 88,841,833 shares issued and 9,223,822 outstanding as of March 31, 2017 (December 31, 2013 – 9,823,824). On July 31, 2014, the Company effected a 1 for 10 reverse stock split. All references in these financial statements to number of common shares issued and outstanding, price per share and weighted average number of common shares have been adjusted to reflect the stock split on a retroactive basis, unless otherwise noted. The Company’s authorized preferred stock and authorized common stock remain unchanged. During the nine months ended September 30, 2014, the Company issued 1,000,000 shares of common stock in connection with the purchase of the Cowley leases. On August 27, 2014, the Company entered in to a contract for financial consulting and advisory services for a six month term, expiring on January 27, 2015. The Company agreed to issue 500,000 restricted shares as compensation to the consultants which was valued using fair market value of the stock price on that date for a total compensation expense of $54,950. On August 27, 2014, the Company entered in a debt settlement agreement with a related party. The Company agreed to settle a debt of $10,000 by the issuance of 50,000,000 shares of common stock. The Company recorded a loss of $5,495,000 on this transaction. On September 3, 2014, the Company entered into an escrow agreement with a creditor. The Company agreed to pay the creditor $2,500 upon the signing of the agreement and to issue 75,000 shares to be held in escrow. The Company is obligated to pay the creditor a further $7,514 forty five days after the Company’s stock becomes DWAC-eligible. Upon payment of the final amount owing the shares will be returned to the Company. During 2014, the company determined that the $17,00 subscription receivable for shares issued in 2007 was uncollectible. The resulting write-off of this amount has been recorded in loss on settlement of debt.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2017
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 13 - SUBSEQUENT EVENTS The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and has determined that there are no items to disclose.

SIGNIFICANT ACCOUNTING POLICI19

SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and are stated in US dollars. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. Actual results may differ from these estimates.
Reclassification of Financial Statement Accounts	Reclassification of Financial Statement Accounts Certain amounts in the condensed financial statements have been reclassified to conform to the presentation adopted in the March 31, 2017 condensed financial statements.
Use of Estimates	Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reportable amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Basic Loss Per Share	Basic Loss Per Share Basic earnings (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There were no dilutive or potentially dilutive instruments outstanding as of March 31, 2017 and March 31, 2016.
Stock Issued in Exchange for Services	Stock Issued in Exchange for Services The valuation of common stock issued in exchange for services is valued at an estimated fair market value as determined by the most readily determinable value of either the stock or services exchanged. Values of the stock are based upon other sales and issuances of the Company’s common stock within the same general time period.
Cash and Cash Equivalents	Cash and Cash Equivalents Cash equivalents are comprised of certain highly liquid investments with original maturities of three months or less when purchased. The Company maintains its cash in bank deposit accounts which at times may exceed federally insured limits of $250,000. The Company has not experienced any losses related to this concentration of risk. Deposits did not exceed insured limits during three months ended March 31, 2017 and the year ended December 31, 2016.
Financial Instruments	Financial Instruments For accounts receivable, accounts payable, accrued liabilities, current portion of long-term debt and long-term debt, the carrying amounts of these financial instruments approximates their fair value. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.
Foreign Currency Translation	Foreign Currency Translation The Company translates foreign currency transactions and balances to its reporting currency, United States Dollars, in accordance with ASC 830 “Foreign Currency Matters”. Monetary assets and liabilities are translated into the functional currency at the exchange rate in effect at the end of the year. Non-monetary assets and liabilities are translated at the exchange rate prevailing when the assets were acquired or the liabilities assumed. Revenue and expenses are translated at the rate approximating the rate of exchange on the transaction date. All exchange gains and losses are included in the determination of net income (loss) for the year.
Income Taxes	Income Taxes The Company applies ASC 740, which requires the asset and liability method of accounting for income taxes. The asset and liability method requires that the current or deferred tax consequences of all events recognized in the financial statements are measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years. Deferred tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce its deferred tax assets when it is more likely than not that all or some portion of the deferred tax assets will not be recovered. The Company adopted ASC 740, at the beginning of fiscal year 2008. This interpretation requires recognition and measurement of uncertain tax positions using a “more-likely-than-not” approach, requiring the recognition and measurement of uncertain tax positions. The adoption of ASC 740 had no material impact on the Company’s financial statements.