Frelii, Inc. - Annual Report: 2012 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Commission file number: 333-107179 and 000-51210

VICAN RESOURCES, INC.

(Exact name of registrant as specified in its charter)

(801) 816-2500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  

Yes [ ]  No [x]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  

Yes [ ]  No [x]

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 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 [ ]

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[ ]  Yes    [x]  No

Based on the closing price of our common stock as listed on the Electronic Bulletin Board, the aggregate market value of the common stock of Vican Resources, Inc. held by non-affiliates as of June 30, 2012 was $24,056.01.

As of March 26, 2013 there were 89,840,019 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:  None.

TABLE OF CONTENTS

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Please see the note under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation,” for a description of special factors potentially affecting forward-looking statements included in this report.

PART I

ITEM 1.   BUSINESS.

Company History

Vican Resources, Inc. (hereafter, “we”, “our”, “us”, or the “Company”) was incorporated in the State of Nevada on September 5, 2002. From July 2009 until May 2011, we operated as a real estate services firm, seeking to capitalize on the real estate opportunities resulting from the dislocation in the credit markets, and by extension, the multifamily housing market, by acquiring, rehabilitating, stabilizing and selling distressed multifamily properties in the southern United States, predominantly in Texas.

On May 26, 2011, we changed our business when we sold our real estate services division and acquired all of the outstanding shares of Vican Trading, Inc., a Montreal-based purchaser and seller of metals, ores, and other commodities (hereafter, “Vican Trading”). Upon the acquisition of Vican Trading, there was an implied option for either party to rescind the original acquisition. During the year that option was exercised and on December 20, 2011, we again changed our business when we unwound the acquisition of Vican Trading and acquired all of the assets of Med Ex Direct, Inc., a Florida-based provider of management services in respect of the distribution of diabetic supplies, principally to Hispanic patients (hereafter, “Med Ex Florida”). On March 21-22, 2012, we again changed our business to become an oil & gas exploration, development, and distribution company when we unwound the purchase of the assets of Med Ex Florida and acquired three separate working interests in two oil & gas wells located in Jefferson County, Mississippi.

Operations

Until May 2011, we operated as a real estate investment services and management company focusing on distressed multifamily properties in select U.S. markets. We managed limited partnerships that invest in residential multifamily real property in the southern United States and we received management fees and carried interests from the operations, sale or refinancing of these properties. We also managed the tenancy, redevelopment, and repairs of these properties through the Company or an affiliate from which we also received fees and other compensation. Our future business is based on the exploration, development, drilling, and production of various oil and gas properties. We expect to align with industry partners in respect of the drilling and operation of these wells. Our long-term focus is to grow and develop existing oil and gas leasehold interests and acquire new interests within and without the continental United States. In addition, we intend to acquire interests in older wells that, with the application of newer technologies, may increase production and reserves.

Market

Generally. Global demand for energy continues to grow, especially in developing countries such as China and India, as the oil and gas industry continues to search for new sources of energy. Increasingly, oil and gas are found in challenging areas, such as deep water, arctic regions and politically challenged regions of the world.

For the past five years, however, the headline for the industry has been the dramatic development of unconventional oil and gas in the U.S., such as shale gas and tight oil. Unlocked by technological advancements, development of these resources continues to change the global landscape of oil and gas.

The oil and gas industry is highly susceptible to extreme fluctuations in energy-related commodity prices, which in turn has a corresponding effect on the level of drilling and exploration activity and the costs associated therewith. Such volatility is also represented in the trends, however disparate, of supplies, demand, and price movements of crude oil and natural gas. Oil and gas industry revenues grew in excess of 7% per annum, on average, from 2007-2012, and are expected to increase moderately in 2013.

Crude Oil. In general, 2012 was a strong year for oil companies with an average global increase of 0.8 million barrels per day. 2013 projections for non-OPEC production is expected to increase by 0.9 mb/d, supported by growth from North America, Africa, Eurasia, and Latin America. Demand for diesel fuel is expected to grow 3% in the U.S. during 2013, compared to just 0.5% for gasoline. Prices are not expected to materially decrease for the remainder of 2013.

Natural Gas. Unlike crude oil, the natural gas market has suffered from a glut of excess production and protracted price declines. The supply of dry gas on the market is expected to continue to grow even under a weak natural gas price scenario. This is due to the fact that dry gas is produced as a by-product of development from still profitable liquids-rich shale plays. According to the U.S. Energy Information Administration (EIA), an average wet shale play in the U.S. with 35 percent liquids content produces around 11 thousand cubic feet (Mcf) of dry gas per barrel of natural gas liquid (NGL) produced. During 2007-12, Baker Hughes reported that the horizontal rig count, the type of rig predominantly used in shale gas plays, tripled while the natural gas rig count fell to a 13-year low. U.S. dry gas production and horizontal rig count data for the past five years show a correlation of 92 percent. As a result, associated gas from liquids-rich shale plays is expected to triple from 2006 levels by 2020.

An overabundance of supplies has resulted in a 11-year low in the spot price of natural gas as of the end of March 2013, and the outlook for the remainder of the year does not suggest that any significant price appreciation is imminent. Increased government regulation and requirements associated with natural gas development (specifically hydraulic fracturing) remains a constant concern affecting pricing and industry forecasts.

Regulation

Federal and state regulations control various aspects of drilling and operating oil and gas wells, including care of the environment, the safety of workers and the public, and the relations with the owners and occupiers of surface lands within or near the leasehold acreage. The effect of these regulations is, invariably, to increase the cost of operations. The costs of compliance with state regulations include a permit for drilling a well before beginning a project. Other compliance matters have to do with keeping the property free of oil spills and the plugging of non-productive wells.

Oil and gas exploration, drilling, and production activities are also subject to private property rights. Owners of real property also own the rights to the minerals underneath the surface, unless such mineral rights have been sold or transferred by a previous landowner. Oil and gas rights held by the United States government are managed by the Bureau of Land Management in conjunction with the U.S. Forest Service pursuant to a variety of federal statutes.

Environmental impacts of oil and gas production include produced water and drilling waste. Wastes that cannot be reused or recycled must be stored or disposed of in some manner, increasing the land area affected by oil and gas extraction and raising concerns over potential leaking of drilling fluids and other wastes from storage sites. Some petroleum industry operations have been responsible for water pollution through by-products of refining and oil spills. The combustion of fossil fuels produces greenhouse gases and other air pollutants as byproducts. Pollutants include nitrogen oxides, sulphur dioxide, volatile organic compounds and heavy metals.

Employees

As of December 31, 2012, we had 2 employees, although we intend to hire additional personnel to pursue our new business as an oil and gas exploration and development company. Although national unemployment rates remain high relative to historical averages, there exists a significant amount of competition for skilled personnel in the oil and gas services industry. Nevertheless, we expect to be able to attract and retain such additional employees as are necessary, commensurate with the anticipated future expansion of our business. Further, we expect to continue to use consultants, contract labor, attorneys and accountants as necessary.

ITEM 1A.   RISK FACTORS.

Since we are a smaller reporting company, we are not required to supply the information required by this Item 1A.

ITEM 1B.   UNRESOLVED STAFF COMMENTS.

None.

ITEM 2.   PROPERTIES.            

Office Facilities

During the first eight months of 2012, our executive offices were located at 12036 Naughton St., Houston, Texas 77024. In September 2012 our executive offices were ultimately relocated to our present location in Draper, Utah. During the entire year of 2012, we had a lease rate of $500 for our current offices on a month-to-month basis. During 2012, we incurred $6,000 in rental expense related to our corporate offices.

We do not own any real property.

ITEM 3.   LEGAL PROCEEDINGS.

We are not currently subject to any legal proceedings, and to the best of our knowledge, no such proceeding is threatened, the results of which would have a material impact on our properties, results of operation, or financial condition. Nor, to the best of our knowledge, are any of our officers or directors involved in any legal proceedings in which we are an adverse party.

ITEM 4.   MINE SAFETY DISCLOSURES.

Not Applicable.

PART II

ITEM 5.   MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our common stock trades on the OTCQB under the symbol “VCAN” The range of high and low quotations for the common stock by fiscal quarter within the last two fiscal years, as reported on the OTCQB, was as follows:

The above quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.

Number of Holders

As of March 26, 2013, there were approximately 130 record holders of our common stock, not counting shares held in “street name” in brokerage accounts which is unknown. As of March 26, 2013, there were 90,140,019 shares of common stock outstanding on record with the stock transfer agent.

Transfer Agent

We have appointed Standard Registrar & Transfer Company, Inc. (SRTC) as the transfer agent for our common stock. The principal office of SRTC is located at 12528 South 1840 East, Draper, UT 84020 and its telephone number is (801) 571-2551.

Sales of Unregistered Securities

On March 2, 2011, we converted certain notes issued by the Company into an aggregate of 10,000,000 shares of our common stock.

On April 15, 2011, we redeemed 70,798,500 shares of common stock (the “Redeemed Shares”) held by Cumbria Capital, L.P. (“Cumbria”), a Texas limited partnership owned and controlled by Cyrus Boga, the Company’s then-Chief Executive Officer, in exchange for a convertible promissory note in the original principal amount of $700,000 which has since been converted as described below (hereafter, the “April Note”) and 100,000 shares of Series “A” shares of Preferred Stock that is not entitled to dividends or distributions or convertible into common stock, but contains an aggregate of 1,000,000,000 voting rights and is entitled to vote together with holders of our common stock on all matters upon which common stockholders may vote.

On April 28, 2011, we issued an aggregate of 45,225,000 shares of common stock to various consultants and service providers of the Company.

On May 26, 2011, we issued 25,000,000 shares of common stock in connection with the acquisition of Vican Trading, Inc. These shares were subsequently canceled as part of the unwinding of the acquisition on December 20, 2011.

On October 12, 2011, we issued an aggregate of 1,225,000 shares of Series C Preferred Stock to various officers, directors, and service providers of the Company. Each share of Series C Preferred Stock is convertible into one share of common stock.

On December 20, 2011, we issued an aggregate of 8,750,000 shares of Series B Preferred Stock in connection with the acquisition of certain assets of Med Ex Direct, Inc. These shares were subsequently canceled in connection with the termination of the purchase of the assets on March 21, 2012 as described elsewhere in this report. Also on December 20, 2011, the April Note was converted into an aggregate of 600,000 shares of Series C Preferred Stock, each of which is convertible into one share of common stock.

Exemption From Registration Claimed

All of the sales by the Company of its unregistered securities were made by the Company in reliance upon Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All of the individuals and/or entities listed above that purchased the unregistered securities were all known to the Company and its management, through pre-existing business relationships. All purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to management of the Company in connection with their purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to the Company. All certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition.

Penny Stock Rules

Due to the price of our common stock, as well as the fact that we are not listed on a national securities exchange, our stock is characterized as “penny stocks” under applicable securities regulations. Our stock will therefore be subject to rules adopted by the SEC regulating broker-dealer practices in connection with transactions in penny stocks. The broker or dealer proposing to effect a transaction in a penny stock must furnish his customer a document containing information prescribed by the SEC and obtain from the customer an executed acknowledgment of receipt of that document. The broker or dealer must also provide the customer with pricing information regarding the security prior to the transaction and with the written confirmation of the transaction. The broker or dealer must also disclose the aggregate amount of any compensation received or receivable by him in connection with such transaction prior to consummating the transaction and with the written confirmation of the trade. The broker or dealer must also send an account statement to each customer for which he has executed a transaction in a penny stock each month in which such security is held for the customer's account. The existence of these rules may have an effect on the price of our stock, and the willingness of certain brokers to effect transactions in our stock.

Dividend Policy

We have never declared or paid dividends on our common stock. Payment of future dividends, if any, will be at the discretion of our Board of Directors after taking into account various factors, including the terms of any credit arrangements, our financial condition, operating results, current and anticipated cash needs and plans for expansion. At the present time, we are not party to any agreement that would limit our ability to pay dividends.

ITEM 6.   SELECTED FINANCIAL DATA.

Not required.

ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

This report contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results are likely to differ materially from those anticipated in these forward-looking statements for many reasons.

Plan of Operation

Vican Resources, Inc. (hereafter, “we”, “our”, “us”, or the “Company”) was incorporated in the State of Nevada on September 5, 2002. From July 2009 until May 2011, we operated as a real estate services firm, seeking to capitalize on the real estate opportunities resulting from the dislocation in the credit markets, and by extension, the multifamily housing market, by acquiring, rehabilitating, stabilizing and selling distressed multifamily properties in the southern United States, predominantly in Texas.

On May 26, 2011, we changed our business when we sold our real estate services division and acquired all of the outstanding shares of Vican Trading, Inc., a Montreal-based purchaser and seller of metals, ores, and other commodities (hereafter, “Vican Trading”). Upon the acquisition of Vican Trading, there was an implied option for either party to rescind the original acquisition. During the year that option was exercised and on December 20, 2011, we again changed our business when we unwound the acquisition of Vican Trading and acquired all of the assets of Med Ex Direct, Inc., a Florida-based provider of management services in respect of the distribution of diabetic supplies, principally to Hispanic patients (hereafter, “Med Ex Florida”). On March 21-22, 2012, we again changed our business to become an oil & gas exploration, development, and distribution company when we unwound the purchase of the assets of Med Ex Florida and acquired three separate working interests in two oil & gas wells located in Jefferson County, Mississippi.

Other Matters

During 2008, the Company was informed that the staff of the SEC intended to recommend that a civil injunctive action be commenced against the Company for alleged violations of the Securities Act of 1933. The alleged violations occurred in 2005 in connection with proceeds from the sale of stock. On January 30, 2009, the Company submitted an Offer of Settlement without admitting or denying the SEC findings. On March 9, 2009, the SEC accepted the Offer of Settlement and imposed an order under which the Company agreed to cease and desist from committing or causing any violations and any future violations of Sections 5(a) and 5(c) of the Securities Act.

Liquidity and Capital Resources

As of December 31, 2012, our working capital deficit of $1,199,223 was comprised of total current assets of $-0- and total current liabilities of $1,199,223. We continued to consume working capital in the pursuit of our business plan utilizing proceeds from notes payable and advances from related parties.

We do not believe that the Company’s current capital resources will be sufficient to fund its operating activity and other capital resource demands during the next year. Our ability to continue as a going concern is contingent upon our ability to obtain capital through the sale of equity or issuance of debt, joint venture or sale of assets, and ultimately attaining profitable operations. We cannot assure you that we will be able to successfully complete any of these activities.

The independent registered public accounting firm’s report on our financial statements as of December 31, 2012, includes a “going concern” explanatory paragraph that describes substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to the factors prompting the explanatory paragraph are discussed below and also in Note 6 to the financial statements.

We are presently seeking additional debt and equity financing to provide sufficient funds for payment of obligations incurred and to fund our ongoing business plan.

We expect to generate revenue pursuant to our new business plan as an oil and gas exploration, development, and production company and expect to rely on equity and debt financings to fund our capital resources requirements. We will be dependent on additional debt and equity financing to develop our new business but we cannot assure you that any such financings will be available or will otherwise be made on terms acceptable to us, or that our present shareholders might suffer substantial dilution as a result.

Net cash used in operating activities was $44,961 during the year ended December 31, 2012, with net loss of $271,358, amortization of debt discount of $47,060, and an increase in accounts payable and accrued expenses of $179,337.

During 2012, the Company had no net cash flows from investing activities.

During 2012, the Company had $44,961 in net cash provided by financing activities which consisted of advances from third parties in the amount of $6,865 and advances from related parties in the amount of $38,096.

Results of Operations

Years Ended December 31, 2012 and 2011

From July 2009 until May 2011, we operated as a real estate services firm, seeking to capitalize on the real estate opportunities resulting from the dislocation in the credit markets, and by extension, the multifamily housing market, by acquiring, rehabilitating, stabilizing and selling distressed multifamily properties in the southern United States, predominantly in Texas.

On May 26, 2011, we changed our business when we sold our real estate services division and acquired all of the outstanding shares of Vican Trading, Inc., a Montreal-based purchaser and seller of metals, ores, and other commodities (hereafter, “Vican Trading”). Upon the acquisition of Vican Trading, there was an implied option for either party to rescind the original acquisition. During the year that option was exercised and on December 20, 2011, we again changed our business when we unwound the acquisition of Vican Trading and acquired all of the assets of Med Ex Direct, Inc., a Florida-based provider of management services in respect of the distribution of diabetic supplies, principally to Hispanic patients (hereafter, “Med Ex Florida”). On March 21-22, 2012, we again changed our business to become an oil & gas exploration, development, and distribution company when we unwound the purchase of the assets of Med Ex Florida and acquired three separate working interests in two oil & gas wells located in Jefferson County, Mississippi.

Revenues. Net revenues for both years ended December 31, 2012 and 2011 were $-0-.

Selling General and Administrative Expenses (“SG&A”). Total selling, general and administrative expense for the year ended December 31, 2012 of $192,210 consisted primarily of professional fees of $182,714, rent expense of $6,000 and other miscellaneous expenses. Our SG&A expenses for the year ended December 31, 2011 was $1,042,739. The decrease in SG&A expenses is due primarily to the consulting expenses during 2011 which were all stock based compensation.

Other Income (Expense). Other income and expense for years ended December 31, 2012 and 2011 were $79,148 and $1,167,235, respectively. In 2011, the Company incurred a loss on the settlement of debt in the amount of $403,000. Also included in this category is interest expense which includes amortization of debt discount of $47,060 and $701,438, respectively for the years ended December 31, 2012 and 2011. Other interest expense in 2012 and 2011 amounted to $32,088, and $62,797, respectively, related to promissory notes issued by the Company.

Net Income (Loss). Net loss for the year ended December 31, 2012 was $271,358 compared to net loss of $2,210,164 for the year ended December 31, 2011.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Policies

We believe the following more critical accounting policies are used in the preparation of our financial statements:

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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. On a periodic basis, management reviews those estimates, including those related to valuation allowances, loss contingencies, income taxes, and projection of future cash flows.

Recent Accounting Pronouncements

We have reviewed accounting pronouncements issued during the past two years and have adopted any that are applicable to our company. We have determined that none had a material impact on our financial position, results of operations, or cash flows for the years ended December 31, 2012 and 2011.

Forward-Looking Statements

This report contains or incorporates by reference forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 concerning our future business plans and strategies, the receipt of working capital, future revenues and other statements that are not historical in nature. In this report, forward-looking statements are often identified by the words “anticipate,” “plan,” “believe,” “expect,” “estimate,” and the like. These forward-looking statements reflect our current beliefs, expectations and opinions with respect to future events, and involve future risks and uncertainties which could cause actual results to differ materially from those expressed or implied.

Other uncertainties that could affect the accuracy of forward-looking statements include:

This list is not exhaustive of the factors that may affect any of our forward-looking statements. You should read this report completely and with the understanding that our actual future results may be materially different from what we expect. These forward-looking statements represent our beliefs, expectations and opinions only as of the date of this report. We do not intend to update these forward looking statements except as required by law. We qualify all of our forward-looking statements by these cautionary statements.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Morrill & Associates, LLC

Certified Public Accountants

1448 North 2000 West, Suite 3

Clinton, Utah 84015

801-820-6233 Phone; 801-820-6628 Fax

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Vican Resources, Inc. (formerly Tremont Fair, Inc.)

Houston, TX

We have audited the accompanying balance sheet of Vican Resources, Inc. as of December 31, 2012 and 2011 and the related statements of operations, stockholders’ deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Vican Resources, Inc. as of December 31, 2012 and 2011 and the results of its operations and cash flows for the years ended December 31, 2012 and 2011 in conformity with generally accepted accounting principles in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  The Company has suffered recurring losses, has no assets, and has no significant current operations which raise substantial doubt about its ability to continue as a going concern.  Management’s plans in regard to these matters are described in Note 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Morrill & Associates

Morrill & Associates

Clinton, Utah 84015

April 8, 2013

Notes to the Financial Statements

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Vican Resources, Inc. (the “Company”) was incorporated under the laws of the State of Nevada on September 5, 2002 under the name of “Tremont Fair, Inc.” From July 2009 until May 2011, the Company operated as a real estate services firm, seeking to capitalize on the real estate opportunities resulting from the dislocation in the credit markets, and by extension, the multifamily housing market, by acquiring, rehabilitating, stabilizing and selling distressed multifamily properties in the southern United States, predominantly in Texas. On May 26, 2011, the Company changed its name to Vican Resources, Inc. and changed its business model when it sold the real estate services division and acquired all of the outstanding shares of Vican Trading, Inc., a Montreal-based purchaser and seller of metals, ores, and other commodities (hereafter, “Vican Trading”). Upon the acquisition of Vican Trading, there was an implied option for either party to rescind the original acquisition. During the year that option was exercised and on December 20, 2011, the Company again changed its business when it unwound the acquisition of Vican Trading and acquired all of the assets of Med Ex Direct, Inc., a Florida-based provider of management services in respect of the distribution of diabetic supplies, principally to Hispanic patients (hereafter, “Med Ex Florida”). On March 22, 2012, the Company again changed its business to become an oil & gas exploration, development, and distribution company when we unwound the purchase of the assets of Med Ex Florida and acquired three separate working interests in two oil & gas wells located in Jefferson County, Mississippi. In consideration of the assignments the Company is to pay all costs and expenses associated with the development of the working interests. To date there have been no costs incurred or required.

The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a December 31 year end.

Cash Equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition.

Accounts receivable are recorded net of the allowance for doubtful accounts of $-0- as of December 31, 2012 and 2011. The Company generally offers 30-day credit terms on sales to its customers and requires no collateral. The Company maintains an allowance for doubtful accounts which is determined based on a number of factors, including each customer’s financial condition, general economic trends and management judgment.

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue is recognized upon completion of services or delivery of goods where the sales price is fixed or determinable and collectibility is reasonably assured. Advance customer payments are recorded as deferred revenue until such time as they are recognized. The Company does not offer any cash rebates. Returns or discounts, if any, are netted against gross revenues. For the years ended December 31, 2012 and 2011, sales are recorded net of the allowance for returns and discounts of $-0-.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company follows the policy of charging the costs of advertising to expense as incurred. Advertising expense is included in selling, general and administrative expenses in the statements of operations. Advertising expense for the years ended December 31, 2012 and 2011 was $-0-.

Diluted earnings per share is computed using the weighted average number of common shares plus dilutive common share equivalents outstanding during the period. Dilutive instruments have not been included and calculated for the year end computations as their effect is antidilutive.

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Financial Accounting Standards Board (FASB) has issued FASB ASC 740-10.  FASB ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements.  This standard requires a company to determine whether it is more likely than not that a tax position will be sustained will be sustained upon examination based upon the technical merits of the position.  If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.  As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10.  

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

At December 31, 2012 the Company had net operating loss carryforwards of approximately $1,041,000 that may be offset against future taxable income through 2032. No tax benefits have been reported in the financial statements, because the potential tax benefits of the net operating loss carry forwards are offset by a valuation allowance of the same amount.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in the future.

Net deferred tax assets consist of the following components as of December 31, 2012 and 2011:

The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 34% to pretax income from continuing operations for the years ended December 31, 2012 and 2011 due to the following:

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

At December 31, 2012, the Company had no unrecognized tax benefits that, if recognized, would affect the effective tax rate.

The Company did not have any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months.

The Company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes.  As of December 31, 2012 and 2011, the Company had no accrued interest or penalties related to uncertain tax positions.

The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended December 31, 2011, 2010 and 2009.

Certain amounts in the accompanying financial statements have been reclassified to conform to the current year presentation. These reclassifications have no material affect on the financial statements.

We have reviewed accounting pronouncements issued during the past two years and have adopted any that are applicable to our company. We have determined that none had a material impact on our financial position, results of operations, or cash flows for the years ended December 31, 2012 and 2011.

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

On January 1, 2008, the Company adopted FASB ASC 820-10-50, “Fair Value Measurements.”  This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair

value measurement and enhances disclosure requirements for fair value measures.  The three levels are defined as follows:

The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.  

NOTE 2- NOTES PAYABLE

Accrued interest on notes payable for the years ended December 31, 2012 and 2011 was $33,052 and $964, respectively. 

NOTE 3- RELATED PARTY TRANSACTIONS

From time to time, the Company receives cash advances from third parties and related parties, including stockholders and their affiliates, to cover operating expenses. The advances do not bear interest and are due upon demand. As of December 31, 2012, advances from a related party amounted to $331,096 compared to $293,000 as of December 31, 2011.

In approximately June of 2011, the Company entered into a verbal agreement with the Chief Financial Officer of the Company to provide accounting services at the rate of $5,000 per month. The Company has not paid any of these fees. As of December 31, 2012 the total balance due of $95,000, which includes amounts from previous years, is included in accounts payable.

In approximately January of 2012, the Company entered into a verbal agreement with a director of the Company to provide legal services at the rate of $7,500 per month. The Company has not paid any of these fees. As of December 31, 2012, the total balance due of $335,000, which includes amounts from previous years, is included in accounts payable.

NOTE 4 - COMMON AND PREFERRED STOCK TRANSACTIONS

On February 23, 2010, the Company issued 41,667 common shares valued at $1,250, based on fair market value using quoted market prices on the date of grant, to our former Chief Financial Officer for services rendered.

Our two independent directors are each paid $2,000 in cash and shares of our common stock with a value equal to $5,000 per quarter.  On March 31, 2010, the Company issued 500,000 common shares valued at $10,000 based on the fair market value using quoted market prices on the date of grant, to our two independent directors for services rendered.  On June 30, 2010, the Company issued 243,902 common shares valued at $10,000 based on fair market value using quoted market prices on the date of grant, to our two independent directors for services rendered. On September 30, 2010, the Company issued 333,334 common shares valued at $10,000 based on fair market value using quoted market prices on the date of grant, to our two independent directors for services rendered. On December 31, 2010, the company issued 200,000 common shares valued at $9,000 based on fair market value using quoted market prices on the date of grant, to our two independent directors for services rendered.

On March 31, 2010, the Company issued 250,000 common shares valued at $5,000, based on fair market value using quoted market prices on the date of grant, to an Advisory Board member for services rendered. On June 30, 2010, the Company issued 121,951 common shares valued at $5,000, based on fair market value using quoted market prices on the date of grant, to an Advisory Board member for services rendered. On September 30, 2010, the Company issued 166,167 common shares valued at $5,000, based on fair market value using quoted market prices on the date of grant, to an Advisory Board member for services rendered. On December 31, 2010, the company issued 100,000 common shares valued at $4,500, based on fair market value using quoted market prices on the date of grant, to an Advisory Board member for services rendered.

On May 19, 2010, the Company issued 2,500,000 common shares to an outside investor for $50,000 in cash.

On December 20, 2010, the Company issued 2,500,000 common shares to an outside investor for $25,000 in cash.

NOTE 4 - COMMON AND PREFERRED STOCK TRANSACTIONS (Continued)

As of December 31, 2010, the Company’s President and CEO elected to forgive his accrued and unpaid salary in the amount of $155,000, which has been recorded as contributed capital.

Certain of our independent directors and our former advisory board member were each paid for each quarter of service in shares of our common stock with a value equal to $5,000 per quarter. During 2011, the Company issued 1,053,334 common shares to our independent directors and our former advisory board member to cover 2010 debt accrual for services.

On March 2, 2011, the Company converted $25,000 of one note issued by the Company into an aggregate of 10,000,000 shares of our common stock.

On April 15, 2011, the Company redeemed 70,798,500 shares of common stock (the “Redeemed Shares”) held by Cumbria Capital, L.P. (“Cumbria”), a Texas limited partnership owned and controlled by Cyrus Boga, the Company’s Chief Executive Officer, in exchange for a convertible promissory note in the original principal amount of $700,000 and 100,000 shares of Class “A” Preferred stock.

On April 28, 2011, the Company issued an aggregate of 45,225,000 shares of common stock to various consultants and service providers of the Company.

On October 12, 2011, the Company issued 1,225,000 shares of Class “C” Preferred stock to various consultants and service providers of the Company.

On December 20, 2011, the Company converted certain notes issued by the Company into an aggregate of 600,000 shares of Class “C” Preferred stock.

On December 20, 2011, the Company redeemed 100,000 shares of Class “A” Preferred stock in exchange for a promissory note for $400,000.

All common share issuances were recorded at market value on the date of issuance.

NOTE 5 - OPTIONS AND WARRANTS

The Company has adopted FASB ASC 718, “Share-Based Payments” (“ASC 718”) to account for its stock options. The Company estimates the fair value of each stock award at the grant date by using the Black-Scholes option pricing model. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and our experience. Compensation expense is recognized only for those options expected to vest, with forfeitures estimated at the date of grant based on our historical experience and future expectations. No stock options or warrants were issued or outstanding during 2012 or 2011.

NOTE 6 - GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has sustained significant net losses which have resulted in an accumulated deficit at December 31, 2012 of $2,660,095, has negative working capital, and negative cash flows from operations, all of which raise substantial doubt regarding the Company’s ability to continue as a going concern.

The Company believes these conditions have resulted from the inherent risks associated with small companies. Such risks include, but are not limited to, the ability to (i) generate revenues and sales of its products and services at levels sufficient to cover its costs and provide a return for investors, (ii) attract additional capital in order to finance growth, (iii) further develop and successfully market commercial products and services, and (iv) successfully compete with other comparable companies having financial, production and marketing resources significantly greater than those of the Company.

We are presently seeking additional debt and equity financing to provide sufficient funds for payment of obligations incurred and to fund our ongoing business plan.

We expect to generate revenue pursuant to our new business plan as an oil and gas exploration, development, and production company and expect to rely on equity and debt financings to fund our capital resources requirements. We will be dependent on additional debt and equity financing to develop our new business but we cannot assure you that any such financings will be available or will otherwise be made on terms acceptable to us, or that our present shareholders might suffer substantial dilution as a result.

NOTE 7- SUBSEQUENT EVENTS

The Company has evaluated subsequent events for the year ending December 31, 2012 through the date the financial statements were issued, and concluded there were no other events or transactions, other than those disclosed above, occurring during this period that required recognition or disclosure in its financial statements.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

There have been no changes in our accountants during the last two fiscal years, and we have not had any disagreements with our existing accountants during that time.

ITEM 9A.   CONTROLS AND PROCEDURES.

(a)   We maintain a system of controls and procedures designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of December 31, 2012, under the supervision and with the participation of our Chief Financial Officer who is presently also our Principal Executive Officer, management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, the Chief Financial Officer and Principal Executive Officer concluded that our disclosure controls and procedures were ineffective.

As permitted by applicable SEC rules, this report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report, which is included in Item 8 above, was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.

(b)   There were no changes in our internal control over financial reporting during the quarter ended December 31, 2012 that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) under the Exchange Act.

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

Internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems that are determined to be effective provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting based on criteria for effective internal control over financial reporting described in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission as determined to apply to a company our size.

Based on its assessment, management concluded that we maintained ineffective internal control over financial reporting as of December 31, 2012.

ITEM 9B.   OTHER INFORMATION.

None.

PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors and Executive Officers

The following individuals presently serve as our officers and directors:

(1) Mr. Gardner was appointed as Chief Financial Officer on May 26, 2011.

(2) Mr Boga was appointed to the Board of Directors on December 15, 2011.

(2) Mr. Denos was appointed to the Board of Directors on December 20, 2011.

Each of our existing directors is serving a term which expires at the next annual meeting of shareholders and until his successor is elected and qualified or until he resigns or is removed. Our officers serve at the will of our Board of Directors. There are no family relationships among our officers or directors.

The following information summarizes the business experience of each of our current officers and directors for at least the last five years:

Chene Gardner. Mr. Gardner, age 48, is also the Chief Financial Officer of Alto Group Holdings, Inc, having served in such capacity since April 15, 2010. In July 2007, May 2004, and August 2004, respectively until November, 2012, Mr Gardner served as an executive officer and director of Nano Dimensions, Inc. (“NDI”) a filer of reports pursuant to requirements of the Securities Exchange Act of 1934 (the “Exchange Act”). Mr. Gardner was appointed as CEO, CFO and as a director of NDI. Mr. Gardner also serves as an executive officer and director of Start Scientific, Inc., a filer of reports with the Commission under the Exchange Act, and has served in these capacities since March 2004. Mr. Gardner has served as the Financial Controller of Fuelstream, Inc., also a filer of reports with the Commission under the Exchange Act, since March, 2001. Mr. Gardner also has five years of auditing and accounting experience with the firm of Deloitte & Touche LLP from June 1990 to August, 1995, serving clients in the banking, manufacturing, and retail industries. Mr. Gardner holds Bachelor and Master of Accounting degrees from Weber State University.

Cyrus Boga. Mr. Boga, age 45, was previously the President of the Company from July 2009 to April 2011 and was a member of the Board of Directors of the Company from October 2008 to April 2011. Since February 2003, he has been the managing member of Poseidon Partners, LLC, a Texas-based company that purchases, rehabilitates and stabilizes distressed multifamily properties in Texas. Since 2007, he has served as President of Creekstone Equity Management, Inc., a Houston-based property management company. From 2005 to 2007, Mr. Boga was the President of Armil Properties, LLC, a Houston-based property management company. Mr. Boga has been involved in a variety of commercial roles involving multifamily properties, including property management, finance and marketing. His earlier experience included corporate finance and equity research at various investment banks, including Merrill Lynch and Bear Stearns. Mr. Boga holds dual M.A. Degrees in International Economics and International Relations from the Paul H. Nitze School of Advanced International Studies of Johns Hopkins University, and completed PhD coursework at Yale University.

Kenneth Denos. Mr. Denos, age 45, is a member of the Board of Directors, the Secretary, and the Chief Compliance Officer for Equus Total Return, Inc. (“Equus”), a closed-end fund traded on the New York Stock Exchange. He has served as a member of the Equus Board since July 2008, as its Secretary since June 2010, and as Chief Compliance Officer since July 2011. From August 2007 until June 2009, he was the Chief Executive Officer and President of Equus, and from June 2005 to August 2007, he was the Executive Vice President of Equus. Mr. Denos is presently the Chairman and CEO of the Acadia Group, Inc., an international corporate finance and investment firm, having served in this capacity since March 2009. Mr. Denos has also served as the Deputy Chairman of London Pacific & Partners, Inc., a Los Angeles-based advisory and investment firm which specializes in the healthcare, hospitality, and natural resources industries. From May 2007 until October 2009, Mr. Denos served as the Chief Executive Officer of MCC Global N.V., an Amsterdam-based business advisory firm. Since February 2012, he has served as a director of Start Scientific, Inc., a San Antonio-based oil and gas firm and a filer of reports pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934. From May 2000 to August 2007, he was the Chairman and CEO of SportsNuts, Inc., a sports event management company and a filer of reports pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934. In addition to a Bachelor of Science degree in Business Finance and Political Science, he holds a Master of Business Administration and a Juris Doctor from the University of Utah.

Section 16(a) Beneficial Ownership Reporting Compliance

To our knowledge, during the fiscal year ended December 31, 2012, based solely upon a review of such materials as are required by the Securities and Exchange Commission, no officer, director or beneficial holder of more than ten percent of our issued and outstanding shares of Common Stock failed to timely file with the Securities and Exchange Commission any form or report required to be so filed pursuant to Section 16(a) of the Exchange Act of 1934.

Code of Ethics

We have not yet adopted a written Code of Ethics; however, we believe our executive officers conduct themselves honestly and ethically with respect to our business affairs. As the Company is still in the process of organizing its formal corporate governance structure, we plan to adopt a formal Code of Ethics in the near future.  

Changes in Procedures by which Security Holders May Recommend Nominees to the Board

Any security holder who wishes to recommend a prospective director nominee should do so in writing by sending a letter to the Board of Directors. The letter should be signed, dated and include the name and address of the security holder making the recommendation, information to enable the Board to verify that the security holder was the holder of record or beneficial owner of the company’s securities as of the date of the letter, and the name, address and résumé of the potential nominee. Specific minimum qualifications for directors and director nominees which the Board believes must be met in order to be so considered include, but are not limited to, management experience, exemplary personal integrity and reputation, sound judgment, and sufficient time to devote to the discharge of his or her duties. There have been no changes to the procedures by which a security holder may recommend a nominee to the Board during our most recently ended fiscal year.

Audit Committee

Presently, we have no standing audit committee or designated audit committee financial expert.

ITEM 11.   EXECUTIVE COMPENSATION.

The following table summarizes the total compensation for the two fiscal years ended December 31, 2012 of our executive officers at the end of our last fiscal year (the “Named Executive Officers”). Our company did not award cash bonuses, stock awards, stock options or non-equity incentive plan compensation to any Named Executive Officer during the past two fiscal years, thus these items are omitted from the table below:

Summary Compensation Table

(1) Appointed May 31, 2011.

(2) Appointed as Chief Executive Officer on May 31, 2011. Resigned on December 20, 2011.

(3) Appointed as President and Secretary on April 28, 2011. Resigned on May 31, 2011.

(4) Appointed as President and Secretary on July 30, 2009. Resigned on April 28, 2011.

During his tenure as President of the Company, Mr. Boga was subject to an employment agreement entered into as of August 18, 2009, wherein the Company was obligated to pay Mr. Boga a salary and discretionary bonus. During 2010, $155,000 in salary and bonus was accrued to Mr. Boga. However, Mr. Boga forgave the accrued compensation which amount was added to Contributed Capital.

Other than the foregoing, there is no other arrangement or understanding between the directors and officers of the Company and any other person pursuant to which any director or officer was or is to be selected as a director or officer.

Outstanding Equity Awards at Fiscal Year-End

Our Named Executive Officers did not have any unexercised options or stock awards that have not vested outstanding at the end of our last fiscal year. We did not grant any equity awards to our Named Executive Officers or directors during 2012 and 2011. 

Director Compensation

During 2011, each of our independent directors received a cash fee of $2,000 per quarter and shares of our common stock with a value equal to $5,000, calculated as of the last day of the quarter. We discontinued this policy in 2012. If we retain additional independent directors in the future, we reserve the right to compensate them in accordance with industry standards as may be determined by our Board of Directors. All directors are reimbursed for reasonable and necessary expenses incurred in their capacities as such.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

As of March 26, 2013, there are a total of 89,840,019 shares of our common stock outstanding, and 1,825,000 shares of Series “C” Preferred Stock outstanding. The following table describes the ownership of our voting securities by: (i) each of our officers and directors; (ii) all of our officers and directors as a group; and (iii) each shareholder known to us to own beneficially more than 5% of our common stock. Except as otherwise indicated, each of the stockholders listed below has sole voting and investment power over the shares beneficially owned.

* Indicates ownership of less than one percent (1%).

(1)     The address of each officer, director, and beneficial owner is c/o Vican Resources, Inc., 11650 South State Street, Suite 240, Draper UT 84020.

(2)     The number of shares of common stock beneficially owned by any shareholder is determined by the sum of (i) all shares of common stock held directly or indirectly by such shareholder, and (ii) shares of common stock subject to options, warrants and/or conversion rights deemed beneficially owned by the shareholder that are currently exercisable or exercisable within 60 days.

(3)     The calculation of percentage of beneficial ownership prior to the reverse split is based upon: (i) 90,140,019 shares of common stock outstanding as of March 26, 2013, and (ii) shares of common stock subject to options, warrants and/or conversion rights deemed beneficially held by the shareholder that are currently exercisable or exercisable within 60 days. The percentage ownership of any shareholder is determined by assuming that the shareholder has exercised all options, warrants, and conversion rights to obtain additional securities, and that no other shareholder has exercised such rights. Except as otherwise indicated below, the persons and entity named in the table have sole voting and investment power with respect to all shares of common stock and voting rights shown as beneficially owned by them, subject to applicable community property laws.

(4)     Director of the Company. Includes 600,000 shares of Series C Preferred Stock held directly by Cumbria Capital, L.P. (“Cumbria”), a limited partnership owned and controlled by Mr. Boga. Also includes a convertible promissory note held directly by Cumbria in the original principal amount of $400,000 (“Note”). The Note and any installments payable thereunder are based upon a 48 month amortization, although the Note matures on June 20, 2013. Each installment payment is convertible at 85% of the five-day average bid price of the Company’s Common Stock on the date such installment becomes due. For purposes of this table, we have assumed a conversion price of $0.004 per share for the entire principal amount of the Note. The actual number of shares of common stock that may be received in connection with the conversion of the Note may be substantially more or less, depending on the fluctuation in the price of our common stock. Series B Preferred Stock is convertible on a one-to-one basis on the earliest to occur of (i) election by the holder, or (ii) approval of a reverse split of our common shares by the Financial Industry Regulatory Authority.

(5)     Director and principal beneficial shareholder of the Company. Includes 435,000 shares of Series C Preferred Stock held directly by Kenneth I. Denos, P.C., a corporation owned and controlled by Mr. Denos. Also includes 800,000 shares of Series C Preferred Stock held directly by Acadia Group, Inc., a corporation owned and controlled by Mr. Denos. Series C Preferred Stock is convertible on a one-for-one basis on the earliest to occur of (i) election by the holder, or (ii) approval of a reverse split of our common shares by the Financial Industry Regulatory Authority.

(6)     Chief Financial Officer of the Company. Includes 5,000,000 shares of common stock held directly by Chene C. Gardner & Associates, Inc., a corporation owned and controlled by Mr. Gardner.

(7)     Principal shareholder of the Company. Includes 10,000,000 shares of common stock held directly.

(8)     Principal shareholder of the Company. Includes 25,000,000 shares of common stock held directly. In connection with the sale of Vican Trading, Inc. on December 20, 2011, these shares are subject to cancellation.

(9)     Principal shareholder of the Company. Includes 25,000,000 shares of common stock held directly. These shares are also subject to cancellation.

Securities Authorized for Issuance Under Equity Compensation Plans

None.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Certain Relationships and Related Transactions

During 2010 and 2011, certain of our independent directors and our former advisory board member were each paid for each quarter of service in shares of our common stock with a value equal to $5,000 per quarter.

On April 15, 2011, we redeemed 70,798,500 shares of common stock (the “Redeemed Shares”) held by Cumbria Capital, L.P. (“Cumbria”), a Texas limited partnership owned and controlled by Cyrus Boga, then the Company’s Chief Executive Officer, in exchange for a convertible promissory note in the original principal amount of $700,000 which has since been converted as described below (hereafter, the “April Note”) and 100,000 shares of Series “A” shares of Preferred Stock that is not entitled to dividends or distributions or convertible into common stock, but collectively holds 1,000,000,000 voting rights and are entitled to vote together with holders of our common stock on all matters upon which our common stockholders may vote. The April Note is payable in monthly installments but, to date, no such payments have been made. In the event of a default under the April Note, Cumbria would be entitled to take possession of the Series A Preferred Stock and would unilaterally be able to determine the election of the Board of Directors and other substantive matters requiring approval of the Company’s stockholders.

On April 28, 2011, we issued an aggregate of 5,000,000 shares of common stock each to Chene C. Gardner & Associates, Inc. and Kenneth I. Denos, P.C. which are respectively owned and controlled by Chene Gardner, our Chief Financial Officer, and Kenneth Denos, a member of our Board of Directors.

On October 12, 2011, we issued an aggregate of 400,000 shares of Series C Preferred Stock to Kenneth I. Denos, P.C. and 800,000 shares of Series C Preferred Stock to Acadia Group, Inc., both of which are owned and controlled by Kenneth Denos, a member of our Board of Directors.

On December 20, 2011, the April Note was converted into an aggregate of 600,000 shares of Series B Preferred Stock, each of which is convertible into one share of common stock.

Director Independence

As of the date of filing of this report, neither of our directors are considered to be independent, inasmuch as they each beneficially hold greater than a 10% beneficial ownership interest in our common stock. We have not established any board committees. We hope in the future to add at least one independent director and establish one or more board committees, especially an audit committee.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table sets forth fees paid to our independent registered accounting firms, Morrill & Associates, LLC and GBH CPAs, PC for the last two fiscal years:

It is the policy of the Board of Directors, which presently completes the functions of the Audit Committee, to engage the independent accountants selected to conduct our financial audit and to confirm, prior to such engagement, that such independent accountants are independent of the company. All services of the independent registered accounting firm reflected above were pre-approved by the Board of Directors.

PART IV

ITEM 15.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

The following exhibits are filed with or incorporated by referenced in this report:

* filed herewith

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

In accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.