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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2008
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File Number 0-2660
1ST NRG CORP
(Exact name of small registrant as specified in its charter)
Delaware
(State or other jurisdiction of Incorporation or organization)
22-3386947
(IRS Employer Identification No.)
1730 LaBounty Rd. #213, Ferndale WA 98248
(address of principal executive offices)
360-384-4390
(Registrants telephone number, including area code)
(former name) (former address)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) filed
all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days Yes |_| No |X|
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a smaller reporting company. See
the definitions of large accelerated filer, accelerated filer and
smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer |_| Accelerated filer |_|
Non-accelerated filter |_| (Do not check if a smaller reporting company)
Smaller reporting company |X|
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act)
Yes |_| No |X|
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court: Yes |_| No |X|
Indicate the number of outstanding of each of the issuers classes of
common stock as of the latest practicable date: 2,828,028 common shares
as of April 30, 2008
For further information on documents incorporated by reference see Item 6
EXHIBITS AND REPORTS ON FORM 8-K in Part III.
Form 10-Q
INDEX
Page
Number
PART I. FINANCIAL INFORMATION 2
Item 1. Financial Statements 2
Balance Sheet 2
Statements of Operations 3
Statements of Stockholders Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6
Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations 10
Item 4. Controls and Procedures 11
PART II OTHER INFORMATION 13
Item 1. Legal Proceedings 13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and reports on Form 8-K 14
SIGNATURES 15
Exhibits 31 & 32 CERTIFICATIONS
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
1st NRG CORP
(a Development Stage Company)
BALANCE SHEET
As of March 31, 2008 and December 31, 2007
(unaudited)
ASSETS 2008 2007
Current Asset
Cash $4 $0
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $17,156 $11,752
Contract payable 220,000
Accrued management
compensation 687,048 562,047
Accrued interest 2,678 2,678
Cash advances 12,500 12,500
Advances from related parties 54,521 39,388
________ _________
Total current liabilities 993,903 628,365
Long-Term Liabilities
Loan payable 21,618 9,200
Loan payable from related party 2,171 4,041
________ __________
Total long term liabilities 23,789 13,241
________ __________
Total liabilities 1,017,692 641,606
Stockholders Deficit
Preferred stock - authorized 5,000,000 shares,
par value $.001, none issued or outstanding
Common stock - authorized 25,000,000 shares,
par value $0.02, 2,828,028 shares issued
and outstanding 56,561 56,561
Common stock issuable,
1,215,446 shares 24,308 24,308
Additional paid-in capital 5,043,421 5,043,421
Accumulated deficit (2,632,475) (2,632,475)
Deficit accumulated during
the development stage (3,509,503) (3,133,421)
___________ ____________
(1,017,688) (641,606)
___________ ____________
$4 $0
=========== ============
See Notes to Financial Statements
2
1st NRG CORP
(a Development Stage Company)
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2008 and 2007 and
for the Period from
October 1, 2003 (the effective date of the development stage)
through March 31, 2008
(unaudited)
Three Months Three Months Cumulative
Ended March 31, 2008 Ended March 31, 2007 During the
Development Stage
Revenue $- $- $-
Expenses
Management compensation 125,001 26,250 2,846,746
Consulting fees 220,000 220,000
General and administrative 30,720 3,268 292,531
________ ________ __________
375,721 29,518 3,359,277
Other Income and Expense
Income
Interest earned - 4,344
Extinguishment of
related party debt - 205,000
________ ________ ___________
- - 209,344
Expense
Interest expense 361 9 3,804
Loss of escrow deposits - 355,767
________ ________ ___________
361 9 359,571
________ ________ ___________
361 9 150,226
________ ________ ___________
Net loss $(376,082) $(29,527) $(3,509,503)
======== ======== ===========
Net loss per common share
(basic and fully diluted) $(0.13) $(0.01)
======== ========
Weighted average number of
shares outstanding 2,828,028 3,469,814
======== ========
See Notes to Financial Statements
3
1st NRG CORP
(a Development Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT
For the Period from
October 1, 2003 (the effective date of the development stage)
through March 31, 2008
(unaudited)
Preferred Stock Common Stock Common Stock Issuable Additional
Paid-inCapital
Deficit Accumulated
During the Development Stage
Number of Shares Amount Number of Shares Amount Number ofShares Amount
StockSubscriptions AccumulatedDeficit Total
Balance, September 30, 2003
- 306,675 $6,134
- - $- $1,582,105 $(2,544,771) (956,532)
Common stock issuable for
management compensation,
September 2003
- - 1,950,000 39,000 1,911,000
- - 1,950,000
Common stock issuable for
debt and accrued expenses,
September 2003
1,023,853 20,477 1,003,376 1,023,853
Net loss (87,704) (1,986,287) (2,073,991)
Balance, December 31, 2003
- - - 306,675 6,134
2,973,853 59,477 4,496,481
- (2,632,475) (1,986,287)
(56,670)
See Notes to Financial Statements
Stock subscription issued for
services to be provided, May 2004
150,000 3,000 717,000 (720,000) -
Issuance of common stock
issuable 2,496,353 49,927 (2,496,353) (49,927)
Net loss (121,966) (121,966)
Balance, December 31, 2004
- - - 2,953,028 59,061
477,500 9,550 5,213,481 (720,000)
(2,632,475) (2,108,253) (178,636)
Net loss (164,683) (164,683)
Balance, December 31, 2005
- - 2,953,028 59,061 477,500
9,550 5,213,481 (720,000)
(2,632,475) (2,272,936) (343,319)
Common stock issuable for prepaid expenses
on services to be provided in 2007,
November 2006 14,286 286 9,714 10,000
Issuance of common stock for services,
November 2006 25,000 500 27,000 27,500
Net loss (176,476) (176,476)
Balance, December 31, 2006
- - $- 2,978,028
$59,561 491,786 $9,836
$5,250,195 $(720,000) $(2,632,475)
$(2,449,412) $(482,295)
Stock subscriptions returned, February 2007
(150,000) (3,000) (717,000) 720,000
Common stock issuable for cash, April 2007,
net of issuance costs of $10,000
714,285 14,285 475,341 489,626
Warrants issuable for cash, April 2007
374 374
Common stock issuable for cash, September 2007
9,375 187 10,858 11,045
Warrants issuable for cash, September 2007
3,955 3,955
Options issued for executive compensation, 2007
19,698 19,698
Net loss (684,009) (684,009)
Balance, December 31, 2007
- - $- 2,828,028 $56,561 1,215,446
$24,308 $5,043,421 $- $(2,632,475) $(3,133,421) $(641,606)
Net loss $(376,082) (376,082)
Balance March 31, 2008
- - $- 2,828,028 $56,561 1,215,446
$24,308 $5,043,421 $- $(2,632,475)
$(3,509,503) $(1,017,688)
1st NRG CORP
(a Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2008 and 2007 and
for the Period from October 1, 2003 (the effective date of
the development stage) through March 31, 2008
(unaudited)
Three Months Three Months Cumulative During
Ended March 31, March 31, the Development
2008 2007 Stage
____________ ____________ ___________________
Cash Flows From Operating Activities
Net loss $(376,082) $(29,527) $(3,509,503)
Adjustments to reconcile net loss to net cash
used in operating activities
Common stock issuable for:
management compensation 1,950,000
future services 10,000
Options issuable for mangement compensation 19,698
Common stock issued for:
services 27,500
Gain on extinguishment of related party debt (205,000)
Loss of deposits held in Escrow 355,767
Change in operating assets and liabilities
Accounts payable and accrued interest
5,404 1,967 50,790
Contract payable220,000 220,000
Accrued management compensation
125,001 26,250 840,548
________ _______ ______________
Net cash used in operating activities (25,677) (1,310) (240,200)
Cash Flows From Investing Activity
Increase in deposits in Escrow (355,767)
Cash Flows From Financing Activities
Proceeds from contracts payable 12,361
Proceeds from loans payable 12,418 12,418
Proceeds (Payments) on loans payable (50,621)
Proceeds from loan payable, related party
976 1,310 5,017
Proceeds (Payments) on loans payable, related party
(2,846) (2,846)
Proceeds from common stock and warrants, net 505,000
Payments on advances from related parties
(6,440) (58,177)
Proceeds from advances from related parties
21,573 172,817
________ _________ _____________
Net cash provided by financing activities
25,681 1,310 595,968
________ _________ _____________
Net change in cash 4 - 1
Cash, beginning of period - 110 3
________ _________ _____________
Cash, end of period $4 $110 $4
======== ========= =============
Supplementary Information - Non-cash Transactions:
Common stock issued and issuable for debt
and accrued expenses
$- $- $1,041,353
======== ========= =============
See Notes to Financial Statements
5
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization and Significant Accounting Policies
Organization
1st NRG Corp (the Company) was formed under the laws of the
State of Delaware on January 8, 1988. The Companys principal
business activity was the exploration and development of mineral
properties. Effective as of September 30, 2003, the Company
discontinued these operations and re-entered the development
stage to examine new opportunities. Accordingly, these financial
statements have been prepared treating the Company as a development
stage company, effective as of October 1, 2003.
In February 2008, the Company entered into a Consulting Agreement
to assist in identifying possible business acquisitions of Specialty
Fuel companies in China. See Note 6 for further discussion on the contract.
Interim Period Financial Statements
The interim period financial statements have been prepared by the Company
pursuant to the rules and regulations of the U.S. Securities and Exchange
Commission (the SEC). Certain information and footnote disclosure normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or
omitted pursuant to such SEC rules and regulations. The interim period
financial statements should be read together with the audited financial
statements and accompanying notes included in the Companys Form 10-KSB
for the year ended December 31, 2007. In the opinion of the Company,
the unaudited financial statements contained herein contain all adjustments
(consisting of a normal recurring nature) necessary to present a fair statement
of the results of the interim periods presented.
Going Concern
The Company has incurred significant losses from operations and has an
accumulated deficit at March 31, 2008. The Companys ability to continue
as a going concern is dependent upon obtaining additional financing and/or
achieving a sustainable profitable level of operations. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
Beginning in 2007 the Company identified and attempted to enter a niche
market in the Specialty Fuels segment of the economy through the acquisition
of two refining facilities. Due to the inability of the contracted major
funder not being able to complete, these acquisitions were not successful.
In February 2008, as noted above, with the signing of the consulting agreement
the Company widened its search for suitable acquisitions or associations in
the Specialty Fuels segment to include China.
Presently the Company does not have financing in place nor does it have a
specialty fuels facility identified for purchase. Still wishing to be in
the Specialty Fuels segment, and to sustain Company operations for the
next twelve months and beyond, the Company is presently pursuing alternative
funding sources and is seeking suitable replacement facilities as well as
taking steps to controlling and adjusting overhead and expenses to reflect
its present level of operations. There can be no assurance that any of
these efforts will be successful or that the Company will be able to continue
operations.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management
to make certain estimates and assumptions that directly affect the results
of reported assets and liabilities and disclosure of contingent assets and
liabilities as of the balance sheet date, and the reported amounts of
revenues and expenses for the periods presented. Actual results could
differ from these estimates.
Cash
Cash consists of checking and savings accounts held at financial institutions.
The Company did not pay cash for any interest or income taxes
during 2008 or 2007.
Accrued Interest
There was a contract payable that bore interest at 15% which was retired by
committing to issue shares and recognizing issuable shares in 2003. Related
accrued interest remains unpaid at March 31, 2008.
Earnings Per Share
Basic loss per share is computed by dividing the net loss available to common
stockholders by the weighted average number of common shares outstanding in the
period. Diluted earnings per share takes into consideration common shares
outstanding (computed under basic earnings per share) and potentially dilutive
common shares. There were 540,000 potentially dilutive securities held as of
March 31, 2008 and December 31, 2007. For the three months ended March 31,
2008 outstanding options and warrants were anti-dilutive because of the
Companys net losses. As such, their effect has not been included in the
calculation of diluted income per share. Common stock issuable is considered
outstanding as of the original approval date for purposes of earnings per
share computations.
Fair Value of Financial Instruments
Financial instruments consist of cash, accounts payable, accrued management
compensation, accrued interest, and loans payable, related parties. The fair
value of these financial instruments approximates the carrying amounts due to
the short-term nature.
Comprehensive Loss
Statements of Financial Accounting Standards (SFAS)
No. 130 Reporting Comprehensive Income, establishes
standards for reporting comprehensive income (loss) and
its components in financial statements. Comprehensive loss, as defined,
includes all changes in equity during a period from non-owner sources.
To date, the Company has not had any significant transactions that are
required to be reported in other comprehensive loss.
Stock-Based Compensation
The Company accounts for stock-based awards in accordance with SFAS
No 123(R) which requires measurement of compensation cost for all
stock-based awards at fair value on date of grant and recognition
of compensation over the service period for awards expected to vest.
The fair value of stock options is determined using the Black-Scholes
valuation model, which is consistent with the Companys valuation
techniques previously utilized for options in footnote disclosures
required under SFAS No. 123, Accounting for Stock-Based Compensation,
as amended by SFAS No. 148, Accounting for Stock Based Compensation
Transition and Disclosure.
Income Taxes
The Company accounts for income taxes in accordance with the liability
method. Under the liability method, deferred assets and liabilities are
recognized based upon anticipated future tax consequences attributable
to differences between financial statement carrying amounts of assets and
liabilities and their respective tax basis. The Company establishes a
valuation allowance to the extent that it is more likely than not that
deferred tax assets will not be recoverable against future taxable income.
Recent Accounting Pronouncements
There are no recent pronouncements that the Company believes
will have a significant impact on its financial statements or presentation.
Note 2. Equity Transactions
A summary of warrants outstanding at March 31, 2008, is as follows:
Number Weighted Average Remaining Aggregate
of warrants Exercise Price Contractual Intrinsic
Term Value
Balance at Dec. 31, 2007 515,000 $58.54 $4,329
Warrants exercised (0)
Warrants cancelled (0)
Warrants expired (0)
Balance at March 31, 2008 515,000 $58.54 $4,329
A summary of options outstanding at March 31, 2008 is as follows:
Number of Weighted Remaining Aggregate
Options Average Contractual Term Intrinsic
Exercise Price Value
Balance at Dec. 31, 2007 25,000 $20.00 $19,698
Options exercised (0)
Options cancelled (0)
Options expired (0)
Balance at March 31, 2008 25,000 $20.00 2.25 years $19,698
The Company has no unvested warrants or stock options.
Effective March 17, 2008, all shares of the Companys common
stock issuable, issued and outstanding were combined and
reclassified on a one-for-twenty basis. The effect of
this reverse stock split has been retroactively applied
to all periods presented.
Note 3. Related Party Transactions
The Companys offices are located in Ferndale, Washington.
The office facilities are currently provided on a month to
month basis by a Director of the Company. Out of the total
of $30,721 General and Administrative Expenses reflected in
these financial statements, the Director was paid $7,500
for facility costs consisting of rental expenses.
Note 4. Cash Advances and Advances from Related Parties
The Company has received cash advances from related parties
to help fund the Companys operations. The advances are non-interest
bearing and are due on demand.
Note 5. Loan Payable and Loan Payable from Related Party
The Company received loan proceeds for general corporate use to
be repaid by August 1, 2009. The loan accrues interest at a rate
of 10% per year.
A related party paid operating expenses on behalf of the Company
that must be repaid by October 9, 2009. The loan accrues interest
at a rate of 10% per year.
Note 6. Contract Payable
In February 2008, the Company entered into an agreement with a
consultant for services related to identifying potential business
acquisitions. Under the agreement, the Company is obligated to pay
the consultant $220,000 as a non-refundable retainer for these services,
plus reimbursement costs the consultants incur. On successful completion
of an acquisition by the Company, the consultant would be entitled to a
successful efforts payment equal to 11 percent of the value of the under
lying acquisition. To date, no payment has been made under the agreement
and no amounts have been accrued for the contingent liability related to
a potential acquisition.
Item 2. Managements Discussion and Analysis of Financial Conditions and
Results of Operations
THE FOLLOWING INFORMATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS OF
MANAGEMENT OF THE COMPANY. FORWARD-LOOKING STATEMENTS ARE STATEMENTS
THAT ESTIMATE THE HAPPENING OF FUTURE EVENTS AND ARE NOT BASED ON
HISTORICAL FACT. FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE
USE OF FORWARD-LOOKING TERMINOLOGY, SUCH AS MAY, SHALL, WILL, COULD,
EXPECT, ESTIMATE, ANTICIPATE, PLAN, PREDICT, PROBABLE, POSSIBLE, SHOULD,
CONTINUE, OR SIMILAR TERMS, VARIATIONS OF THOSE TERMS OR THE NEGATIVE OF
THOSE TERMS. THE FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING
INFORMATION HAVE BEEN COMPILED BY OUR MANAGEMENT ON THE BASIS OF ASSUMPTIONS
MADE BY MANAGEMENT AND CONSIDERED BY MANAGEMENT TO BE REASONABLE. OUR FUTURE
OPERATING RESULTS, HOWEVER, ARE IMPOSSIBLE TO PREDICT AND NO REPRESENTATION,
GUARANTY, OR WARRANTY IS TO BE INFERRED FROM THOSE FORWARD-LOOKING STATEMENTS.
This discussion and analysis should be read in conjunction
with the accompanying Financial Statements and related notes.
Our discussion and analysis of our
financial condition and results of operations are based
upon our financial statements, which have been prepared
in accordance with accounting principles
generally accepted in the United States. The preparation
of financial statements in conformity with accounting
principles generally accepted in the United States
of America requires us to make estimates and assumptions
that affect the reported
amounts of assets and liabilities, disclosure of any
contingent liabilities at
the financial statement date and reported amounts
of revenue and expenses during
the reporting period. On an on-going basis we review
our estimates and assumptions.
Our estimates were based on our historical experience
and other assumptions that we
believe to be reasonable under the circumstances.
Actual results are likely to differ
from those estimates under different assumptions or
conditions, but we do not believe
such differences will materially affect our financial
position or results of operations.
Our critical accounting policies, the policies we believe are
most important to the presentation of our financial
statements and require the most
difficult, subjective and complex judgments are
outlined below and have not changed significantly.
With the completion of the re-organization in 1994 the
Company expanded its areas
of interest in addition to the historical mineral exploration
activities carried on in the past. The Company is presently
developing a business plan
and model based on an identified niche related to
Specialty Fuel Production. The plan includes
developing partnerships with major players, identifying acquisition targets,
and utilize established financial associations to fund the model. The Companys
Chief Strategic Officer has identified quality, qualified personnel, with
whom he is in current negotiation, to help bring the model to life and guide
it through the various stages of development and growth. Further, to move
forward in reaching these goals, the Company has engaged the services of a
Consulting Company which expands on the scope of its search for funded
opportunities to include China (See Notes to Financial Statements,
Note 6 Contracts Payable.)
Limited Operations: The Company has not generated any significant
revenues and will not generate significant revenues until it is able
to develop new projects and sources of financing. Expenditures as
shown in the Statements of Operations during the current three month
period reflect a material increase over 2007 caused by the revised
employment agreements (see Item 6(c) Exhibits 10.14.1 Employment
agreement of Edward D. Renyk and 10.21.1.1 Employment Agreement of
Dr. J. Greig); Consulting fees (see Notes To Financial Statements,
Note 6 Contracts Payable); General and administrative expenses for
the three months in 2008 reflecting the additional cost for rents on the
Ferndale head office facilities and contracting out of bookkeeping costs
relative to our program to improve internal controls by separating the
responsibilities of personnel; and professional fees related to preparation
of presentation packages to elicit major financing.
At March 31, 2008 the Company had a stockholders deficit in excess of
$1,000,000.
Liquidity: The financial statements of the Company contained herein have
been prepared on a going concern basis. If the Company were unable to
raise funds necessary to continue operations or were unable to generate
positive cash flow from new operations, it might be forced to liquidate.
In such event, it is unlikely that the Company would realize amounts
sufficient to liquidate its liabilities recorded on the balance sheet.
Historically, management has provided the cash funding required to meet
current operating costs. Additionally the Company has undertaken further
steps as part of the plans outlined above under Plan of Operation with the
goal of sustaining Company operations for the next twelve months and beyond
by engaging the services of a Consulting Company which expands on the scope
of its search for funded opportunities to include China (See Notes to Financial
Statements, Note 6 Contracts Payable.)
There can be no assurance that any of these efforts will be successful.
Substantial Indebtedness to Related Parties: The Company owed substantial
amounts to consisting of accrued management compensation; advances received
primarily from Officers, Directors and loans from
related and unrelated parties.
There can be no assurance that the Company will be able to satisfy its
obligations to the Related Parties.
Item 4T. Controls and Procedures
Evaluation of Disclosure Controls and Procedures: As required by
Rule 13a-15 under the Exchange Act for the period ended December 31,
2007 we have carried out an evaluation of the effectiveness of the
design and operation of our Companys disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and based
on this evaluation our Chief Strategic Officer and Chief Financial
Officer (the Certifying Officers) conclude that our disclosure controls
and procedures were not effective as of December 31, 2007 because of
identified material weaknesses in our internal control over financial
reporting as detailed below under (c) Material Weaknesses Identified.
Managements Report on Internal Control Over Financial Reporting: Our
Certifying Officers are responsible for establishing and maintaining
our disclosure controls and procedures. The Certifying Officers have
designed established disclosure controls and other procedures that are
designed to ensure that material information required to be disclosed
by the issuer in the reports that it files or submits under the Act
(15 U.S.C. 78a et seq) is recorded, processed, summarized and reported,
within the time periods specified in the Commissions rules and forms.
Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed
by an issuer in the reports that it files or submits under the Act is
accumulated and communicated to the issuers management, including its
principal executive and principal financial officers, as appropriate
to allow timely discussions regarding required disclosure is made known
to them, particularly during the period in which this report was prepared.
Material Weaknesses Identified: Our Certifying Officers are aware that
with the limited level of operations, financial resources and availability
of personnel that material weaknesses exist in the controls and procedures,
particularly in the concentration of duties, lack of an audit committee
and access to additional financial expertise, both within and external
to the current composition of the Board of Directors. Specific weakness
in internal control over financial reporting exists because of the
following:
1. Our Company is managed by a small number of individuals working
out of offices in Ferndale, Washington and Richmond, British Columbia.
We do not have a large enough number of independent staff or management
members to provide third party oversight in the review of our financial
transactions on an ongoing basis. Our CSO/Chairman of the Board/Director
is solely responsible for initiating activities of the Company and CFO/
Director/Secretary is responsible for reviewing, and, until recently,
recording the financial transactions, as well as the preparation and
review of financial reports, including the preparation of the 10Qs
and 10K. The electronically recorded and related physical records
are maintained by the Ferndale office.
2. The Companys Board of Directors consist of three members of which
two make up the entire management team resulting in inadequate independent
oversight of the management function as well as not having member to staff
board of director committees, in particular an audit committee. The Company
lacks a designated financial expert and no method of creating an effective
whistleblower program.
3. Our limited operations and business practices include complex
technical accounting issues that require significant accounting and SEC
reporting expertise. We do not have adequate accounting technical resources
to ensure timely and accurate accounting and reporting for addressing
such highly technical issues.
4. There is a lack of independent supervisory review of accounting
transactions, including the recording of general ledger journal entries,
month end account reconciliations, and preparation of financial reporting.
Plan for Remediation of Material Weaknesses: Our Chief Strategic Officer
is actively engaged in actions to resolve these deficiencies by pursuing
funding and acquisition of projects that would allow the Company to increase
its level of staffing and add to its Board Members. Additional changes to
operational control which can be implemented prior to full funding are
being explored to allow the Company to meet the requirements by Sarbanes
Oxley by its annual report for 2008.
Changes in Internal Controls over Financial Reporting: There have been
no material changes in our internal controls over financial reporting
that occurred during the quarter ended December 31, 2007 that have
affected or are likely to affect our internal controls over financial
reporting with the exception that the Company has engaged the services
of an external bookkeeping service provider enabling it to separate
the primary responsibility of recording from that of oversight and
transformation of this information into the financial reporting activity.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
A summary of vested options and warrants outstanding at
March 31, 2008 is as follows:
Number of shares Weighted Average Exercise Price Aggregate Intrinsic Value
Options Warrants Options Warrants Options Warrants
Balance at December 31, 2007
25,000 515,000 $20.00 $58.54 $19,698 $4,329
Options/Warrants exercised
(0) (0)
Options/Warrants canceled
(0) (0)
Options/Warrants expired
(0) (0)
Options/Warrants outstanding and exercisable at March 31, 2008
25,000 515,000 $20.00 $58.54 $19,698 $4,329
The Company has no unvested stock options or warrants.
Item 4. Submission of Matters to a Vote of Security Holders
On January 30, 2008 pursuant to Section 222 of the Delaware General
Corporation Law of the State of Delaware, a special meeting of the
stockholders of 1st Energy Corp. was duly called and held and at
the meeting the necessary number of shares as required pursuant to
Section 228 of the Delaware General Corporation Law were voted in
favor of the following Resolutions:
1) That the Corporation will affect a reverse stock affecting
73,846,260 outstanding corporate shares of stock to be rolled back to
3,692,313, and
2) That the preceding resolutions and the Written Consent of the
Shareholders be entered into the records of the Company.
No other business was conducted at the meeting.
Shares representing 65.48% of the issued and outstanding stock voted
in favor of the Resolutions.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: The following Exhibits are furnished as
part of this report.
None
(b) Reports on Form 8-K
On February 8, 2008 the Company filed a Form 8k to disclose that under:
1)Section 1 Registrants Business & Operations, Item 1.02 Termination
of a Material Definitive Agreement that the September 7, 2007 agreement
with Starlight Investment LLC was terminated.
(c) Documents Incorporated by Reference
Part I Item 2. Exhibit 10.14.1 Employment Agreement Edward D. Renyk
Incorporated by reference to Companys Form 10K-SB Accession
Number 0001137171-07-001138 filed August 20, 2007.
Part I Item 2. Exhibit 10.21.1.1 Employment Agreement of J. Greig
Incorporated by reference to Companys Form 8-K Accession
Number 0001137171-07-000608 filed April 30, 2007.
31 & 32 Certification
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
1ST NRG CORP
/s/ J. Greig
---------------------------------
Dated: May 17, 2008 By: Dr. J. Greig, Ph.D.
CSO and
Principal Executive Officer
/s/ Edward D. Renyk
---------------------------------
Dated: May 17, 2008 By: Edward D. Renyk, CA
Secretary and
Principal Accounting Officer
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934,
RULES 13a-14 AND 15d-14
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of 1st NRG CORP (the Company)
on Form 10-Q for the period ending March 31, 2008 as filed with the
Securities and Exchange Commission on the date hereof (the Report),
I, Dr. J. Greig, Chief Executive Officer of the Company, certify,
pursuant to Rules 13a-14 and 15-d14 of the Securities Exchange Act
of 1934 (the Exchange Act), as adopted pursuant to 302 of the
Sarbanes-Oxley Act of 2002, that:
1.I have reviewed this Report;
2.Based on my knowledge, this Report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this Report;
3.Based on my knowledge, the financial statements, and other financial
information included in this Report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the Company, as of, and for, the periods presented in this Report;
4.I and the other certifying officers of the Company are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the Company, including any
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this Report is being
prepared;
(b) Evaluated the effectiveness of the Companys disclosure controls
and procedures and presented in this Report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this Report based on such evaluation; and
(c) Disclosed in this Report any change in the Companys internal
control over financial reporting that occurred during the Companys most
recent fiscal quarter (the Companys fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely
to materially affect, the Companys internal control over financial reporting;
and
5.I and the other certifying officers have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
Companys auditors and to the audit committee of the Companys board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the Companys ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the Companys
internal control over financial reporting.
/s/ J. Greig
Dr. J. Greig, Chief Executive Officer
May 17, 2008
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934,
RULES 13a-14 AND 15d-14
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of 1st NRG CORP. (the Company)
on Form 10-Q for the period ending March 31, 2008 as filed with the
Securities and Exchange Commission on the date hereof (the Report),
I, Edward Renyk, Chief Financial Officer of the Company, certify,
pursuant to Rules 13a-14 and 15-d14 of the Securities Exchange Act
of 1934 the Exchange Act as adopted pursuant to 302 of the
Sarbanes-Oxley Act of 2002, that:
1.I have reviewed this Report;
2.Based on my knowledge, this Report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this Report;
3.Based on my knowledge, the financial statements, and other financial
information included in this Report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the Company, as of, and for, the periods presented in this Report;
4.I and the other certifying officers of the Company are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
Company and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the Company,
including any consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this
Report is being prepared;
(b) Evaluated the effectiveness of the Companys disclosure controls
and procedures and presented in this Report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this Report based on such evaluation; and
(c) Disclosed in this Report any change in the Companys internal
control over financial reporting that occurred during the Companys most
recent fiscal quarter (the Companys fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely
to materially affect the companys internal control over financial reporting.
and
5.I and the other certifying officers have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
Companys auditors and to the audit committee of the Companys board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the Companys ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the Companys
internal control over financial reporting.
/s/ E. D. Renyk
Edward Renyk, Chief Financial Officer
May 17, 2008
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of 1st NRG CORP (the Company)
on Form 10-Q for the period ending March 31, 2008 as filed with the
Securities and Exchange Commission on the date hereof (the Report),
we, Dr. J. Greig, Chief Executive Officer of the Company, and Edward
Renyk, Chief Financial Officer of the Company, respectively certify,
pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the
Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents,
in all material respects, the financial condition and results of
operations of the Company.
/s/ J. Greig /s/ E. D. Renyk
Dr. J. Greig, Chief Executive Officer Edward Renyk, Chief Financial Officer
May 17, 2008 May 17, 2008