UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q/A
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2011
Commission file number: 000-49993
FORCE FUELS, INC. |
(Exact name of small business issuer as specified in its charter) |
Nevada | 56-2284320 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) |
1503 South Coast Dr. Ste. 206 Costa Mesa CA 92626 |
(Address of principal executive offices) |
714 927 9118 |
(Issuer’s telephone number) |
Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of accelerated filer” and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer o | Smaller Reporting Company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b-2 of the Exchange Act). Yes o No x
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 10,441,875 shares of Common Stock, as of June 13, 2011.
Transitional Small Business Disclosure Format (check one): Yes o No x
PART I - FINANCIAL INFORMATION | |||
Item 1. | Financial Statements | F-1 to F-14 | |
Item 2. | Management's Discussion and Analysis of Financial Conditions and Results of Operations | 1 | |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 5 | |
Item 4. | Controls and Procedures | 5 | |
PART II - OTHER INFORMATION | 5 | ||
Item 1. | Legal Proceedings | 5 | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 6 | |
Item 3. | Defaults Upon Senior Securities | 7 | |
Item 4. | Submission of Matters to a Vote of Security Holders | 7 | |
Item 5. | Other Information | 7 | |
Item 6. | Exhibits | 7 | |
SIGNATURES | 7 | ||
EXHIBIT INDEX | 8 |
FORCE FUELS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Contents | Page(s) |
Consolidated Balance Sheets at April 30, 2011 (Unaudited) and July 31, 2010 | F-2 |
Consolidated Statements of Operations for the Three and Nine Month Periods Ended April 30, 2011 and 2010, and from Inception on July 15, 2002 through April 30, 2011 (Unaudited) | F-3 |
Consolidated Statements of Stockholders’ Equity (Deficit) for the period from July 15, 2002 (inception) through April 30, 2011 (Unaudited) | F-4 - F-5 |
Consolidated Statements of Cash Flows for the Nine Month Periods Ended April 30, 2011 and 2010, and for the period from Inception on July 15, 2002 through April 30, 2011 (Unaudited) | F-6 - F-7 |
Notes to the Consolidated Financial Statements (Unaudited) | F-8 to F-15 |
F-1
FORCE FUELS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
The accompanying notes are an integral part of these consolidated financial statements.
April 30, | July 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash | $ | 48,647 | $ | 86,842 | ||||
Accounts receivable, net | 7,451 | |||||||
Inventory, net | 29,689 | 81,980 | ||||||
Prepaid expenses | 29,700 | 10,000 | ||||||
Notes receivable – related | 2,500 | - | ||||||
Total Current Assets | 110,536 | 186,273 | ||||||
LONG-TERM ASSETS: | ||||||||
Deposits | 12,638 | - | ||||||
Oil and gas property, net | 879,130 | 1,258,292 | ||||||
Property and equipment, net | 118,544 | 133,361 | ||||||
Total Long-term Assets | 1,010,312 | 1,391,653 | ||||||
Total Assets | $ | 1,120,848 | $ | 1,577,926 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable and accrued expenses | $ | 248,550 | $ | 224,258 | ||||
Accrued officer salaries | 617,053 | 310,830 | ||||||
Convertible notes payable | 117,300 | |||||||
Convertible notes payable- related | 29,200 | |||||||
Notes payable, net | 223,066 | 139,747 | ||||||
Notes payable for acquisition of oil and gas property, net | - | 1,368,121 |
Total Current Liabilities | 1,235,169 | 2,042,956 | ||||||
NON CURRENT LIABILITIES: | ||||||||
Asset retirement obligation | 31,979 | 36,622 | ||||||
Total Liabilities | 1,267,148 | 2,079,578 | ||||||
STOCKHOLDERS' DEFICIT: | ||||||||
Preferred stock at $0.001 par value: 1,000,000 shares authorized; | ||||||||
none issued or outstanding | - | - | ||||||
Common stock at $0.001 par value: 100,000,000 shares authorized; | ||||||||
9,641,875 and 6,475,129 shares issued, respectively | 9,642 | 6,475 | ||||||
Additional paid-in capital | 3,325,433 | 2,543,518 | ||||||
Deficit accumulated during development stage | (3,481,375 | ) | (3,051,645 | ) | ||||
Total Stockholders' Deficit | (146,300 | ) | (501,652 | ) | ||||
Total Liabilities and Stockholders' Deficit | $ | 1,120,848 | $ | 1,577,926 |
The accompanying notes are an integral part of these consolidated financial statements.
F-2
FORCE FUELS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
From Inception | ||||||||||||||||||||
on July 15, | ||||||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | 2002 Through | ||||||||||||||||||
April 30, | April 30, | April 30, | ||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | ||||||||||||||||
REVENUES: | ||||||||||||||||||||
Oil and gas | $ | - | $ | - | $ | 41,758 | $ | - | $ | 49,209 | ||||||||||
COST OF SALES | - | - | 52,291 | - | 52,291 | |||||||||||||||
GROSS PROFIT (LOSS) | - | - | (10,533 | ) | - | (3,082 | ) | |||||||||||||
OPERATING EXPENSES: | ||||||||||||||||||||
Well operating costs | - | - | 30,394 | - | 55,394 | |||||||||||||||
Depreciation on well operating equipment | 4,939 | - | 14,817 | - | 19,756 | |||||||||||||||
Research and development | - | - | - | - | 115,434 | |||||||||||||||
Salary and wages - officers | 78,176 | 96,666 | 299,336 | 169,166 | 628,916 | |||||||||||||||
Impairment of intellectual property rights | - | - | - | - | 344,000 | |||||||||||||||
Stock based compensation | - | (12,900 | ) | - | 322,310 | 494,933 | ||||||||||||||
General and administrative expenses | 145,219 | 119,225 | 744,282 | 294,587 | 2,113,691 | |||||||||||||||
Total operating expenses | 228,334 | 202,991 | 1,088,829 | 786,063 | 3,772,124 | |||||||||||||||
NET LOSS FROM OPERATIONS | (228,334 | ) | (202,991 | ) | (1,099,362 | ) | (786,063 | ) | (3,775,206 | ) | ||||||||||
OTHER INCOME (EXPENSES) : | ||||||||||||||||||||
Gain on settlement of debt | 980,481 | - | 755,481 | - | 445,467 | |||||||||||||||
Loss on disposal of assets | - | - | - | - | (19,915 | ) | ||||||||||||||
Interest expense | (7,406 | ) | (1,875 | ) | (85,849 | ) | (6,448 | ) | (131,721 | ) | ||||||||||
Total other income (expenses) | 973,075 | (1,875 | ) | (669,632 | ) | (6,448 | ) | 293,831 | ||||||||||||
NET LOSS BEFORE TAXES | 744,741 | (204,866 | ) | (429,730 | ) | (792,511 | ) | (3,481,375 | ) | |||||||||||
INCOME TAXES | - | - | - | - | - | |||||||||||||||
NET LOSS | $ | 744,741 | $ | (204,866 | ) | $ | (429,730 | ) | $ | (792,511 | ) | $ | (3,481,375 | ) | ||||||
NET LOSS PER COMMON SHARE | ||||||||||||||||||||
- BASIC AND DILUTED: | $ | (0.08 | ) | $ | (0.03) | $ | (0.05 | ) | $ | (0.13 | ) | |||||||||
Weighted Average Common | ||||||||||||||||||||
Outstanding - basic and diluted | 9,047,493 | 6,130,037 | 7,916,150 | 5,983,214 |
The accompanying notes are an integral part of these consolidated financial statements.
F-3
FORCE FUELS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Deficit | ||||||||||||||||||||||||
Accumulated | Total | |||||||||||||||||||||||
Common Stock | Additional | During the | Stockholders' | |||||||||||||||||||||
Number of | Paid-in | Treasury | Development | Equity | ||||||||||||||||||||
Shares | Par Value | Capital | Stock | Stage | (Deficit) | |||||||||||||||||||
Balance at inception on July 15, 2002 | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
Common shares issued in March, 2006 for | ||||||||||||||||||||||||
cash at an average price of $2.43 per share | 175,000 | 175 | 425,825 | - | - | 426,000 | ||||||||||||||||||
Adjustment on reverse acquisition | ||||||||||||||||||||||||
in March, 2006 | 1,050,000 | 1,050 | (10,550 | ) | (235,000 | ) | - | (244,500 | ) | |||||||||||||||
Treasury stock purchased in June, 2006 | - | - | - | (75,000 | ) | - | (75,000 | ) | ||||||||||||||||
Net loss for the period from inception on | ||||||||||||||||||||||||
July 15, 2002 through July 31, 2006 | - | - | - | - | (30,873 | ) | (30,873 | ) | ||||||||||||||||
Balance, July 31, 2006 | 1,225,000 | 1,225 | 415,275 | (310,000 | ) | (30,873 | ) | 75,627 | ||||||||||||||||
Net loss for the year ended July 31, 2007 | - | - | - | - | (69,804 | ) | (69,804 | ) | ||||||||||||||||
Balance, July 31, 2007 | 1,225,000 | 1,225 | 415,275 | (310,000 | ) | (100,677 | ) | 5,823 | ||||||||||||||||
Retirement of treasury stock in May, 2008 | (1,100,000 | ) | (1,100 | ) | (308,900 | ) | 310,000 | - | - | |||||||||||||||
Common shares issued in May, 2008 for | ||||||||||||||||||||||||
services rendered at $0.03 per share | 3,700,000 | 3,700 | 107,300 | - | - | 111,000 | ||||||||||||||||||
Common shares issued in June, 2008 for | ||||||||||||||||||||||||
services rendered at $0.03 per share | 2,797,763 | 2,798 | 81,135 | - | - | 83,933 | ||||||||||||||||||
Common shares issued in June, 2008 at | ||||||||||||||||||||||||
$0.03 per share in connection with assets | ||||||||||||||||||||||||
assignment agreement | 1,000,000 | 1,000 | 29,000 | - | - | 30,000 | ||||||||||||||||||
Net loss for the year ended July 31, 2008 | - | - | - | - | (269,356 | ) | (269,356 | ) | ||||||||||||||||
Balance, July 31, 2008 | 7,622,763 | 7,623 | 323,810 | - | (370,033 | ) | (38,600 | ) | ||||||||||||||||
Common shares issued in February, 2010 | ||||||||||||||||||||||||
for services rendered at $0.10 per share | 60,000 | 60 | 5,940 | - | - | 6,000 | ||||||||||||||||||
Net loss for the year ended July 31, 2009 | - | - | - | - | (399,723 | ) | (399,723 | ) | ||||||||||||||||
Balance, July 31, 2009 | 7,682,763 | $ | 7,683 | $ | 329,750 | $ | - | $ | (769,756 | ) | $ | (432,323 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
F-4
FORCE FUELS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Deficit | ||||||||||||||||||||||||
Accumulated | Total | |||||||||||||||||||||||
Common Stock | Additional | During the | Stockholders' | |||||||||||||||||||||
Number of | Paid-in | Treasury | Development | Equity | ||||||||||||||||||||
Shares | Par Value | Capital | Stock | Stage | (Deficit) | |||||||||||||||||||
Balance, July 31, 2009 | 7,682,763 | $ | 7,683 | $ | 329,750 | $ | - | $ | (769,756 | ) | $ | (432,323 | ) | |||||||||||
Common shares issued in October, 2009 | ||||||||||||||||||||||||
for signing bonus at $0.30 per share | 1,000,000 | 1,000 | 299,000 | - | - | 300,000 | ||||||||||||||||||
Common shares issued in January, 2010 | ||||||||||||||||||||||||
for services rendered at $0.30 per share | 1,122,366 | 1,122 | 335,588 | - | - | 336,710 | ||||||||||||||||||
Common shares issued in March, 2010 | ||||||||||||||||||||||||
for services rendered at $0.30 per share | 172,000 | 172 | 51,428 | - | - | 51,600 | ||||||||||||||||||
Common shares issued in April, 2010 | ||||||||||||||||||||||||
upon conversion of debt at an average | ||||||||||||||||||||||||
price of $4.07 per share | 138,000 | 138 | 561,476 | - | - | 561,613 | ||||||||||||||||||
Issuance of shares in June, 2010 for | ||||||||||||||||||||||||
as a loan inducement fee | ||||||||||||||||||||||||
at $0.89 per share | 150,000 | 150 | 133,350 | - | - | 133,500 | ||||||||||||||||||
Common shares issued in July, 2010 | ||||||||||||||||||||||||
upon conversion of promissory | ||||||||||||||||||||||||
note at $0.94 per share | 10,000 | 10 | 9,390 | - | - | 9,400 | ||||||||||||||||||
Cancellation of common shares | (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 for the year ended July 31, 2010 | - | - | - | - | (2,281,889 | ) | (2,281,889 | ) | ||||||||||||||||
Balance, July 31, 2010 | 6,475,129 | 6,475 | 2,543,518 | - | (3,051,645 | ) | (501,652 | ) | ||||||||||||||||
Common shares issued in August, 2010 | ||||||||||||||||||||||||
for prepaid consulting fees at | ||||||||||||||||||||||||
$0.65 per share (unaudited) | 50,000 | 50 | 32,450 | - | - | 32,500 | ||||||||||||||||||
Common shares issued in August, 2010 | ||||||||||||||||||||||||
for consulting services at $1.05 per share (unaudited) | 31,746 | 32 | 33,300 | - | - | 33,332 | ||||||||||||||||||
Common shares issued in August, 2010 | ||||||||||||||||||||||||
for consulting services at $0.65 per share (unaudited) | 100,000 | 100 | 64,900 | - | - | 65,000 | ||||||||||||||||||
Common shares issued in September, 2010 | ||||||||||||||||||||||||
upon default on promissory note at | ||||||||||||||||||||||||
$0.45 per share (unaudited) | 500,000 | 500 | 224,500 | - | - | 225,000 | ||||||||||||||||||
Common shares issued in September, 2010 | ||||||||||||||||||||||||
as loan inducement fee at $0.26 per share (unaudited) | 60,000 | 60 | 15,540 | - | - | 15,600 | ||||||||||||||||||
Common shares issued in October, 2010 | ||||||||||||||||||||||||
for prepaid consulting fees at | ||||||||||||||||||||||||
$0.45 per share (unaudited) | 150,000 | 150 | 67,350 | - | - | 67,500 | ||||||||||||||||||
Common shares issued in October, 2010 | ||||||||||||||||||||||||
for consulting services at $0.45 per share (unaudited) | 25,000 | 25 | 11,225 | - | - | 11,250 | ||||||||||||||||||
Common shares issued in November, 2010 | ||||||||||||||||||||||||
for consulting services at $0.35 per share (unaudited) | 300,000 | 300 | 104,700 | - | - | 105,000 | ||||||||||||||||||
Common shares issued in December, 2010 | ||||||||||||||||||||||||
for services at $0.20 per share (unaudited) | 150,000 | 150 | 29,850 | - | - | 30,000 | ||||||||||||||||||
Common shares issued in January, 2011 | ||||||||||||||||||||||||
for services at $0.10 per share (unaudited) | 700,000 | 700 | 69,300 | - | - | 70,000 | ||||||||||||||||||
Common shares issued in February, 2011 | ||||||||||||||||||||||||
for services at $0.15 per share (unaudited) | 200,000 | 200 | 29,800 | - | - | 30,000 | ||||||||||||||||||
Common shares issued in March, 2011 | ||||||||||||||||||||||||
for services at $0.12 per share (unaudited) | 900,000 | 900 | 99,000 | - | - | 99,900 | ||||||||||||||||||
Net loss for the nine months ended | ||||||||||||||||||||||||
April 30, 2011 (unaudited) | - | - | - | - | (429,730 | ) | (429,730 | ) | ||||||||||||||||
Balance, April 30, 2011 (unaudited) | 9,641,875 | $ | 9,642 | $ | 3,325,433 | $ | - | $ | (3,481,375 | ) | $ | (146,300 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
F-5
FORCE FUELS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Period | ||||||||||||
from July 15, | ||||||||||||
For the Nine Months Ended | 2002 (inception) | |||||||||||
April 30, | through April 30, | |||||||||||
2011 | 2010 | 2011 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net Loss | (429,730 | ) | (792,511 | ) | (3,481,375 | ) | ||||||
Adjustments to reconcile net loss to net cash | ||||||||||||
used in operating activities | ||||||||||||
Depreciation | 14,817 | 1,734 | 24,091 | |||||||||
Amortization of intangible assets | - | 21,500 | 86,000 | |||||||||
Impairment of intellectual property rights | - | - | 344,000 | |||||||||
Expenses paid on behalf of the Company by a related party | 11,000 | - | 11,000 | |||||||||
Gain on settlement of debt | (755,481) | - | (445,467) | |||||||||
Loss on disposal of assets | - | - | 19,915 | |||||||||
Amortization of discount on debt | 65,198 | - | 98,033 | |||||||||
Stock based compensation | - | - | 300,000 | |||||||||
Common stock issued for services | 560,083 | 322,310 | 1,282,826 | |||||||||
Fair value of warrants | - | - | 40,063 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | 7,451 | - | - | |||||||||
Inventory | 52,291 | - | 52,291 | |||||||||
Deposits and prepaid expenses | (34,838 | ) | (25,000) | (34,838 | ) | |||||||
Other current assets | - | - | - | |||||||||
Accounts payable and accrued expenses | 24,291 | 100,628 | 239,050 | |||||||||
Accrued salaries | 306,223 | - | 617,053 | |||||||||
NET CASH USED IN OPERATING ACTIVITIES | (178,695 | ) | (371,339) | (847,358 | ) | |||||||
INVESTING ACTIVITIES: |
Purchase of test equipment | - | - | (24,250 | ) | ||||||||
NET CASH USED IN INVESTING ACTIVITIES | - | - | (24,250 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Proceeds from sale of common stock | - | - | 501,000 | |||||||||
Payment of common stock to be issued | - | - | (75,000 | ) | ||||||||
Purchase of treasury stock | - | - | (310,000 | ) | ||||||||
Proceeds from notes payable | 185,500 | 251,000 | 604,066 | |||||||||
Repayment of notes payable | (45,000 | ) | (100,000) | (145,000 | ) | |||||||
Due to related parties | - | 220,666 | 345,189 | |||||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 140,500 | 371,666 | 920,255 | |||||||||
NET CHANGE IN CASH & CASH EQUIVALENTS | (38,195 | ) | 327 | 48,647 | ||||||||
Cash & Cash Equivalents at Beginning of Period | 86,842 | - | - | |||||||||
Cash & Cash Equivalents at End of Period | 48,647 | 327 | 48,647 |
The accompanying notes are an integral part of these consolidated financial statements.
F-6
FORCE FUELS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended April 30, | For the period from July 15, 2002 (inception) through April 30, | |||||||||||
2011 | 2010 | 2011 | ||||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: | ||||||||||||
Interest paid | $ | - | $ | 6,545 | $ | - | ||||||
Income tax paid | $ | - | $ | - | $ | - | ||||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||
Forgiveness of debt from related party | $ | - | $ | 739,689 | $ | 739,689 | ||||||
Issuance of promissory note for investment in oil lease rights and related assets | $ | - | $ | 1,500,000 | $ | 1,500,000 | ||||||
Sale of working interest in oil and gas leases in exchange for settlement of notes payable | $ | 380,334 | $ | 380,334 |
The accompanying notes are an integral part of these consolidated financial statements.
F-7
FORCE FUELS, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
April 30, 2011 and July 31, 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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, 2011, 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 condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2010 audited financial statements. The results of operations for the period ended March 31, 2011 is not necessarily indicative of the operating results for the full year.
NOTE 2 - 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.
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity 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 at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Recent Accounting Pronouncements
Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
FORCE FUELS, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
April 30, 2011 and July 31, 2010
NOTE 4–SALE OF WORKING INTERESTS AND FORGIVENESS OF DEBT
On March 30, 2011 the Company entered into an Agreement Terminating Asset Purchase Agreement (the “Terminating Agreement”) with Pemco, LLC (“Pemco”). The Company and Pemco had previously entered into an Asset Purchase Agreement dated April 23, 2010 (the “Purchase Agreement”) which was disclosed in a Form 8-K filed by the Company on April 26, 2010
The Terminating Agreement served to terminate all obligations of the parties under the Purchase Agreement. As such, the parties released each other from all remaining terms and provisions of the Purchase Agreement.
The Terminating Agreement also provides that the Company will sell to Pemco a fifty percent (50%) interest in four of the thirteen 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 Terminating Agreement also provides that the Company will sell to Pemco a twenty five percent (25%) interest in the remaining nine leases originally acquired by the Company under the Purchase Agreement. With regard to all leases acquired by the Company, 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.
As a result of the events described above, as of April 30, 2011, the Company reduced notes payable for acquisition of oil and gas properties by $1,355,000, reduced the value of investment in oil and gas leases by $380,334, and recognized a gain on settlement of debt of $980,481.
NOTE 5 - NOTES PAYABLE, RELATED PARTIES
During the nine months ended April 30, 2011, the Company borrowed a total of $29,200 from the President of the Company. The note bears interest at a rate of five percent (5%) per annum and is convertible at the option of the lender into 100,000 common shares of the Company at a strike price of $0.25 per share. In accordance with ASC 470-20 – Debt with Conversion and Other Options, the Company determined that no beneficial conversion feature need be recognized on convertible note payable due to related parties executed as of April 30, 2010. As of April 30, 2011, no shares have been authorized or issued by the Company in satisfaction of the convertible note payable.
FORCE FUELS, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
April 30, 2011 and July 31, 2010
NOTE 6 - NOTES PAYABLE
Notes payable at April 30, 2011 and July 31, 2010 consisted of the following:
April 30, 2011 | July 31, 2011 | |||||||
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, 2010, 10% interest, secured by the pledge of 500,000 shares of the Company’s common stock, due 90 days following the date on which the funds were delivered. | 100,000 | 100,000 | ||||||
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 | 59,200 | - | ||||||
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 March 28, 2011, 5% interest, unsecured, convertible into common stock at a price of $0.20 per share at the time of conversion | 27,300 | - | ||||||
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 April 22, 2011, 1% interest, unsecured and due on demand | 50,000 | - | ||||||
Discount for beneficial conversion feature | - | (33,319 | ) | |||||
Total | $ | 369,566 | $ | 139,747 |
All of the above notes payable are due to unrelated parties. The related interest expense on these notes for the nine month period ended April 30, 2011 was $85,849. In accordance with ASC 470-20 – Debt with Conversion and Other Options, the Company determined that no beneficial conversion feature need be recognized on convertible notes payable executed as of April 30, 2010.As of April 30, 2011, no shares have been authorized or issued by the Company in satisfaction of the convertible notes payable.
NOTE 7 - STOCKHOLDERS’ EQUITY (DEFICIT)
Common Stock
In August, 2010 the Company issued 50,000 shares of common stock for prepaid consulting services valued at the market rate of $0.65 per share, or $32,500 in the aggregate.
In August, 2010 the Company issued 31,746 shares of common stock for consulting services rendered at $1.05 per share, pursuant to a consulting agreement. The shares were valued at $33,332 in the aggregate.
In August, 2010 the Company issued 100,000 shares of common stock for consulting services at the market rate of $0.65 per share, or $65,000 in the aggregate.
In September, 2010 the Company issued 500,000 shares of common stock upon the default of a note payable. The shares were valued at the market rate of $0.45 per share, or $225,000 in the aggregate.
FORCE FUELS, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
April 30, 2011 and July 31, 2010
NOTE 7 - STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)
Common Stock (continued)
In September, 2010 the Company issued 60,000 shares of common stock as a loan inducement fee. The shares were valued at the market rate of $0.26 per share, or $15,600 in the aggregate.
In October, 2010 the Company issued 150,000 shares of common stock as payment for prepaid consulting fees valued at the market rate of $0.45 per share, or $67,500 in the aggregate.
In October, 2010 the Company issued 25,000 shares of common stock for services rendered. The shares were valued at the market rate of $0.45 per share, or $11,250 in the aggregate.
In November, 2010 the Company issued 300,000 shares of common stock for services rendered. The shares were valued at the market rate of $0.35 per share, or $105,000 in the aggregate.
In December, 2010 the Company issued 150,000 shares of common stock for services rendered. The shares were valued at the market rate of $0.20 per share, or $30,000 in the aggregate.
In January, 2011 the Company issued 700,000 shares of common stock for services rendered. The shares were valued at the market rate of $0.10 per share, or $70,000 in the aggregate.
In February, 2011 the Company issued 200,000 shares of common stock for services rendered. The shares were valued at the market rate of $0.15 per share, or $30,000 in the aggregate.
In March, 2011 the Company issued 900,000 shares of common stock for services rendered. The shares were valued at the market rate of $0.11 per share, or $99,900 in the aggregate.
NOTE 8 - FORMATION OF SUBSIDIARIES
On May 5, 2010 the Company formed Force Fuels Services, Inc., a Kansas entity (FFS”) as a wholly-owned subsidiary of the Company. On September 13, 2010 the Company formed Cheetah Motor Corp., a Nevada entity (Cheetah”), as a wholly-owned subsidiary. Both FFS and Cheetah were formed so as to allow the Company the opportunity to explore additional business opportunities in the green energy industries.
NOTE 9 - SUBSEQUENT EVENTS
On May 2, 2011 the Company issued 400,000 shares of common stock to an unrelated third-party entity for services rendered. The shares were valued at market rate at $0.12, resulting in an aggregate expense of $48,000.
In accordance with ASC 855-10, Company management reviewed all material events through the date of this report and there are no subsequent events to report other than the event listed in the preceding paragraph.
In February, 2011 the Company issued 200,000 shares of common stock for services rendered. The shares were valued at the market rate of $0.15 per share, or $30,000 in the aggregate.
In March, 2011 the Company issued 900,000 shares of common stock for services rendered. The shares were valued at the market rate of $0.12 per share, or $108,000 in the aggregate.
F-14
Plan of Operations
The Company changed the focus of its business plan and on April 23, 2010 signed an agreement with Pemco, LLC to begin the process of engaging in the new direction. The primary products of the Company will be regulated and standardized energy-based products, which do not require a significant marketing or sales force. These energy-based products include traditional hydrocarbon-based oil and gas, as well as green” or alternative” energy, which includes solar and wind. On March 31, 2011 the Company and Pemco LLC mutually agreed to terminate agreement dated April 23, 2010 above in exchange for one-half (50%) working interest in the Company’s oil producing revenue. As the result of the Joint Operating Agreement, Pemco, LLC and Energy Recovery Systems released all remaining debts owed by the Company.
In the oil and gas field, the Company focuses on: 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; and 3) the acquisition of in-house know-how to further optimize production through stimulation, refurbishing and site optimization.
The strategy of the Company is to invest principally in the acquisition or installation of energy-based assets that can contribute immediately and substantially to cash flow through sales to local energy companies, thus only requiring external or government financing for subsequent acquisitions and not for operating expenses.
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In the short term, the Company will focus on maximizing revenue from its recent acquisition of over 2,600 acres of oil producing land leases with 49 oil strippers and 5 natural gas sites located in southern Kansas.
Subsequently, in the field of electrical energy production, the Company will focus solely on the exploitation of proven and established technologies that can generate 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 marketing of the technology licensed from ICE Conversions, Inc. This development will be implemented through the creation of a fully owned subsidiary.
This drive train technology consists of a 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. 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 all of the parts into complete electric drive vehicles.
Resignation of Oscar Luppi
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 Treasurer of the Registrant. There were no disagreements or misunderstandings relating to the Registrant’s operations, policies or practices between the Board and Mr. Luppi leading to his resignation.
Appointment of Thomas C. Hemingway
On March 22, 2010, Thomas C. Hemingway was appointed Chairman, President , Chief Executive Officer and Treasurer of the Registrant. No compensation arrangement has been entered into or is contemplated with respect to Mr. Hemingway’s employment as President, Chief Executive Officer, Treasurer and Interim Chief Financial Officer.
Going Concern
Our registered independent accounting firm expressed substantial doubt as to our ability to continue as a going concern in its report on the accompanying financial statements for the period ended April 30, 2011 based on the fact that we do not have adequate working capital to finance our day-to-day operations. Our continued existence depends upon the success of our efforts to raise additional capital necessary to meet our obligations as they come due and to obtain sufficient capital to execute our business plan. We intend to obtain capital primarily through issuances of debt or equity or entering into collaborative arrangements with corporate partners. There can be no assurance that we will be successful in completing additional financing or collaboration transactions or, if financing is available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we may be required to further scale down or perhaps even cease the operation of our business. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Liquidity and Capital Resources
At April 30, 2011, we had $48,647 in cash and cash equivalents and our current liabilities consisted of $230,550 in accounts payable and accrued expenses, $369,566 in notes payable and convertible notes, and $617,053 in accrued officer salaries.
For the nine months ended April 30, 2011, net cash used in operating activities was $187,195, inclusive of a $1,476,893 net loss for the nine months ended April 30, 2011. Additional significant factors effecting cash flows from operations were depreciation charges of $14,817, common stock issuances for services totaling $568,182, a loss on settlement of debt in the amount of $271,882, amortization of debt discount totaling $65,198, a change in inventory of $52,291, an increase in accrued officer salaries in the amount of $306,223, and a change in accounts payable and accrued expenses amounting to $6,292.
Cash used in investing activities during the nine months ended April 30, 2011 totaled $2,500, all of which related to the Company’s note receivable from a related party.
Net cash provided by financing activities was $151,500 for the nine months ended April 30, 2011, resulting primarily from proceeds from notes payable in the aggregate amount of $196,500, partially offset by payments on notes payable in the aggregate amount of $45,000.
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In January 2009, the Company commenced a capital formation activity to submit a Registration Statement on Form S-1 to the Securities and Exchange Commission (the SEC”) to register and sell in a self-directed offering 210,000 shares of newly issued common stock at an offering price of $4.00 per share for proceeds of up to $840,000. The Registration also registered 1,039,740 of the Company’s outstanding shares of common stock for resale on behalf of selling stockholders, for which the Company would not receive any of the proceeds from sales of these shares. The Registration Statement on Form S-1 was filed with the SEC on January 30, 2008. The Company amended the Registration Statement in January 2010 to terminate the public offering and deregistered all shares to be sold by the Company, and reducing the shares being registered for sale by selling shareholders to 938,333 shares . The Company will not offer or sell any additional shares of common stock pursuant to this registration statement. The 938,333 shares of common stock that were registered for resale by existing shareholders continue to be registered for resale; however, the Company will not receive any of the proceeds of such sales. The Registration Statement was declared effective on February 26, 2010.
We do not have sufficient cash on hand to fund our administrative and other operating expenses or our proposed new business operations to acquire and operate oil and gas interests and properties for the next twelve months. In order to meet our obligations as they come due and to fund the development of our or business, we will require significant new funding to pay for these expenses. We might do so through loans from current stockholders, public or private equity or debt offerings, grants or strategic arrangements with third parties. There can be no assurance that additional capital will be available to us. We currently have no agreements, arrangements or understandings with any person to obtain additional funds through bank loans, lines of credit or any other sources.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Information set forth herein contains "forward-looking statements" which can be identified by the use of forward-looking terminology such as "believes," "expects," "may,” should" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. No assurance can be given that the future results covered by the forward-looking statements will be achieved. The Company cautions readers that important factors may affect the Company’s actual results and could cause such results to differ materially from forward-looking statements made by or on behalf of the Company. These include the Company’s lack of historically profitable operations, dependence on key personnel, the success of the Company’s business, ability to manage anticipated growth and other factors identified in the Company's filings with the Securities and Exchange Commission, press releases and other public communications.
Recently issued accounting pronouncements
In January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the scope of current US GAAP. It clarifies the decrease in ownership provisions of Subtopic 810-10 and removes the potential conflict between guidance in that Subtopic and asset derecognition and gain or loss recognition guidance that may exist in other US GAAP. An entity will be required to follow the amended guidance beginning in the period that it first adopts FAS 160 (now included in Subtopic 810-10). For those entities that have already adopted FAS 160, the amendments are effective at the beginning of the first interim or annual reporting period ending on or after December 15, 2009. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160.
In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. Effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis.
In December 2009, the FASB issued Accounting Standards Update 2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 167.
In December 2009, the FASB issued Accounting Standards Update 2009-16, Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets. This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 166.
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In October 2009, the FASB issued Accounting Standards Update 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing. This Accounting Standards Update amends the FASB Accounting Standard Codification for EITF 09-1.
In October 2009, the FASB issued Accounting Standards Update 2009-14, Software (Topic 985): Certain Revenue Arrangements That Include Software Elements. This update changed the accounting model for revenue arrangements that include both tangible products and software elements. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
In October 2009, the FASB issued Accounting Standards Update 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. This update addressed the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than a combined unit and will be separated in more circumstances that under existing US GAAP. This amendment has eliminated that residual method of allocation. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
In September 2009, the FASB issued Accounting Standards Update 2009-12, Fair Value Measurements and Disclosures (Topic 820): Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). This update provides amendments to Topic 820 for the fair value measurement of investments in certain entities that calculate net asset value per share (or its equivalent). It is effective for interim and annual periods ending after December 15, 2009. Early application is permitted in financial statements for earlier interim and annual periods that have not been issued.
In July 2009, the FASB ratified the consensus reached by EITF (Emerging Issues Task Force) issued EITF No. 09-1, (ASC Topic 470) "Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance" ("EITF 09-1"). The provisions of EITF 09-1, clarifies the accounting treatment and disclosure of share-lending arrangements that are classified as equity in the financial statements of the share lender. An example of a share-lending arrangement is an agreement between the Company (share lender) and an investment bank (share borrower) which allows the investment bank to use the loaned shares to enter into equity derivative contracts with investors. EITF 09-1 is effective for fiscal years that beginning on or after December 15, 2009 and requires retrospective application for all arrangements outstanding as of the beginning of fiscal years beginning on or after December 15, 2009. Share-lending arrangements that have been terminated as a result of counterparty default prior to December 15, 2009, but for which the entity has not reached a final settlement as of December 15, 2009 are within the scope. Effective for share-lending arrangements entered into on or after the beginning of the first reporting period that begins on or after June 15, 2009.
Critical Accounting Policies
The preparation of financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.
Please refer to Note 1 - Summary of significant accounting policies for our critical accounting policies.
Oil and Gas Properties, Successful Efforts Method
The Company uses the successful efforts method of accounting for oil and gas producing activities. Under the successful efforts method, costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory wells that find proved reserves, and to drill and equip development wells are capitalized. Costs to drill exploratory wells that do not find proved reserves, geological and geophysical costs, and costs of carrying and retaining unproved properties are expensed as incurred. The Company evaluates its proved oil and gas properties for impairment on a field-by-field basis whenever events or changes in circumstances indicate that an asset’s carrying value may not be recoverable. The Company follows ASC 360 for these evaluations. Unamortized capital costs are reduced to fair value if the undiscounted future net cash flows from our interest in the property’s estimated proved reserves are less than the asset’s net book value.
4
Unproved oil and gas properties that are individually significant are periodically assessed for impairment of value, and a loss is recognized at the time of impairment by providing an impairment allowance. Other unproved properties are amortized based on the Company's experience of successful drilling and average holding period. Capitalized costs of producing oil and gas properties, after considering estimated dismantlement and abandonment costs and estimated salvage values, are depreciated and depleted by the unit-of-production method. Support equipment and other property and equipment are depreciated over their estimated useful lives.
Under ASC 932, drilling costs for exploratory wells are initially capitalized but generally must be charged to expense unless the wells are determined to be successful within one year after completion of drilling. Circumstances that permit continued capitalization of exploratory drilling costs are addressed by ASC 932. The one-year limitation may be exceeded for an exploratory well only if sufficient reserves have been found to justify its completion and sufficient progress has been made in assessing the reserves and the economic and operating viability of the project. If the exploratory well does not meet both criteria, its capitalized costs are expensed, net of any salvage value. Annual disclosures are required under ASC 932 to provide information about management’s evaluation of capitalized exploratory well costs, including disclosure of (i) net changes from period to period in the costs for wells that are pending the determination of proved reserves, (ii) the amount of any exploratory well costs that have been capitalized for more than one-year after the completion of drilling and (iii) an aging of suspended exploratory well costs and the number of wells affected.
On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation, depletion, and amortization with a resulting gain or loss recognized in income. On the sale of an entire interest in an unproved property for cash or cash equivalent, gain or loss on the sale is recognized, taking into consideration the amount of any recorded impairment if the property had been assessed individually. If a partial interest in an unproved property is sold, the amount received is treated as a reduction of the cost of the interest retained.
The Company is subject to certain market risks, including changes in interest rates and currency exchange rates. The Company does not undertake any specific actions to limit those exposures.
Our Chief Executive Officer, who is also our Chief Financial Officer (the Certifying Officer”), has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of October 31, 2010. Based on this evaluation, our Certifying Officer has concluded that our disclosure controls and procedures were ineffective to ensure that information required to be disclosed in our periodic reports is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules for each report and that such information is presented to our management as appropriate to allow timely decisions regarding required disclosure. A system of controls, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal Controls Over Financial Reporting
There was no change in our internal controls over financial reporting that occurred during the period covered by this report that has materially affected or is reasonably likely to materially affect our internal controls over financial reporting.
The Company has one outstanding complaint in the amount of approximately $25,000 which it anticipates resolving within the next quarter.
5
During the year ended July 31, 2010, the Company sold convertible promissory notes in the principal amount of $261,000 in unregistered sales to accredited investors. Such sales were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and Regulation D. The proceeds of the convertible notes were used for working capital and developing the Company's new business plan. These notes were converted to 148,000 shares.
On October 1, 2009, the Company issued 1,000,000 shares of its Common Stock to 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 $0.30 per share, or $300,000 in the aggregate.
On January 28, 2010, the Company issued 1,122,366 shares to various consultants for services provided to the Company. The shares were valued at $0.30 per share, or $336,710 in the aggregate.
On March 16, 2010 and March 30, 2010 the Company issued 172,000 shares, of its common stock to various consultants for services provided to the Company. The shares were valued at $0.30 per share, or $51,600 in the aggregate.
Between March 1 and April 30, 2010 the Company issued 138,000 shares of common stock upon conversion of convertible promissory notes at an average price of $4.07 per share, or $561,613 in the aggregate.
On June 25, 2010 the Company issued 150,000 shares of common stock as an inducement to an unrelated third-party lender. The shares were valued at $0.89 per share, or $133,500 in the aggregate.
On July 31, 2010 the Company issued 10,000 shares of common stock upon conversion of convertible promissory notes at a price of $0.94 per share, or $9,400 in the aggregate.
During the year ended July 31, 2010 the Company cancelled 3,800,000 previously issued shares of common stock.
In August, 2010 the Company issued 50,000 shares of common stock for prepaid consulting services valued at the market rate of $0.65 per share, or $32,500 in the aggregate.
In August 2010 the Company issued 31,746 shares of common stock for consulting services rendered at $1.05 per share, pursuant to a consulting agreement. The shares were valued at $33,332 in the aggregate.
In August, 2010 the Company issued 100,000 shares of common stock for consulting services at the market rate of $0.65 per share, or $65,000 in the aggregate.
In September, 2010 the Company issued 500,000 shares of common stock upon the default of a note payable. The shares were valued at the market rate of $0.45 per share, or $225,000 in the aggregate.
In September, 2010 the Company issued 60,000 shares of common stock as a loan inducement fee. The shares were valued at the market rate of $0.26 per share, or $15,600 in the aggregate.
In October, 2010 the Company issued 150,000 shares of common stock as payment for prepaid consulting fees valued at the market rate of $0.45 per share, or $67,500 in the aggregate.
In October, 2010 the Company issued 25,000 shares of common stock for services rendered. The shares were valued at the market rate of $0.45 per share, or $11,250 in the aggregate.
In November, 2010 the Company issued 300,000 shares of common stock for services rendered. The shares were valued at the market rate of $0.35 per share, or $105,000 in the aggregate.
In December, 2010 the Company issued 150,000 shares of common stock for services rendered. The shares were valued at the market rate of $0.20 per share, or $30,000 in the aggregate.
6
In January, 2011 the Company issued 700,000 shares of common stock for services rendered. The shares were valued at the market rate of $0.10 per share, or $70,000 in the aggregate.
In February, 2011 the Company issued 200,000 shares of common stock for services rendered. The shares were valued at the market rate of $0.15 per share, or $30,000 in the aggregate.
In March, 2011 the Company issued 900,000 shares of common stock for services rendered. The shares were valued at the market rate of $0.12 per share, or $108,000 in the aggregate.
On June 14, 2010 the Company filed its quarterly report on Form 10-Q and Form 10-Q/A for the period ended April 30, 2011 with the United States Securities and Exchange Commission. Due to a communication error on the part of the Company, that filing was consummated before the Company’s auditors had formally authorized the filing to be made. Therefore, the Company’s management has determined that the previously issued financial statements included in our quarterly report on Form 10-Q and 10-Q/A for the period ended April 30, 2011 should no longer be relied upon. The Company has filed this quarterly report with proper authorization from our independent auditors. The Company has informed Sadler, Gibb & Associates, LLC, the Company's independent registered public accounting firm, of the matters disclosed in this filing.
Please see Exhibit Index located behind the signature page, which is incorporated herein by this reference.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FORCE FUELS, INC. | |||
Date: June 20, 2011 | By: | /s/ Tom Hemingway | |
Tom Hemingway | |||
Chief Executive Officer | |||
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EXHIBIT INDEX
Exhibit No. | Description | |
31 | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32 | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002. |
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