GlobeStar Therapeutics Corp - Annual Report: 2012 (Form 10-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K
x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE |
For the fiscal year ended September 30, 2012
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
For the transition period from __________, 20__, to __________, 20__
Commission File Number: 333-170315
First Titan Corp.
(Exact Name of Registrant as Specified in its Charter)
Florida |
| 27-3480481 |
(State or Other Jurisdiction of Incorporation or Organization) |
| (I.R.S. Employer Identification Number) |
495 Grand Boulevard, Suite 206, Miramar Beach, FL 32550
(Address of Principal Executive Offices)
(850) 269-7267
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(g) of the Act:
$.0001 par value common stock |
| Over the Counter Bulletin Board |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o 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 o No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405) during the preceding 12 months. Yes x No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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. x
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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o | Accelerated filer o |
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Non-accelerated filer o (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 Act): Yes o No x
The Aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter, March 31, 2012 was $1,620,000.
There were 6,796,415 shares of the Registrant’s $0.0001 par value common stock outstanding as of January 9, 2013.
FIRST TITAN CORP.
FORM 10-K INDEX
Part I |
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Item 1. | Description of Business | 3 |
Item 1A. | Risk Factors | 4 |
Item 1B. | Unresolved Staff Comments | 5 |
Item 2. | Description of Property | 5 |
Item 3. | Legal Proceedings | 5 |
Item 4. | Mine Safety Disclosures | 5 |
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Part II |
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Item 5. | Market for Common Equity and Related Stockholder Matters | 5 |
Item 6. | Selected Financial Data | 6 |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 6 |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 10 |
Item 8. | Financial Statements and Supplementary Data | 10 |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 22 |
Item 9A. | Controls and Procedures | 22 |
Item 9B. | Other information | 23 |
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Part III |
| 23 |
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Item 10. | Directors, Executive Officers and Corporate Governance | 23 |
Item 11. | Executive Compensation | 24 |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 25 |
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 26 |
Item 14. | Principal Accountant Fees and Services | 26 |
Item 15. | Exhibits and Financial Statement Schedules | 26 |
| Signatures | 27 |
| Certifications |
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FIRST TITAN CORP.
This Annual Report on Form 10-K and the documents incorporated herein by reference contain forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about First Titan Corp. industry, management beliefs, and assumptions made by management. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore, actual results and outcomes may differ materially from what is expressed or forecasted in any such forward-looking statements.
PART I
ITEM 1. | DESCRIPTION OF BUSINESS |
OVERVIEW
First Titan Corp. is a development stage company and was incorporated in Florida on September 16, 2010. The Company intended to design and manufacture both panel and engineered/tooled custom vacuum formed instrument panels and wiring harnesses, required for the monitoring of any final product that utilizes a gas or diesel engine source. The Company is considered to be in the development stage in accordance with ASC 915.
We intend to invest in oil and gas properties, greenfield projects and in the development of cutting edge exploration and production technologies.
In September 2011, First Titan Corporation created First Titan Energy, LLC. with the goal of capitalizing on the booming oil and gas industry. It is our intention to maximize shareholder value through mergers and acquisitions, greenfield projects and investments in the development of cutting edge exploration and production technologies.
On January 3, 2012, the Company entered into a participation agreement in an oil and gas drilling project in Calcasieu Parish, Louisiana (the “Participation Agreement”). Under the terms of the Participation Agreement, the Company will participate in the drilling of one well and may participate in the drilling of future wells if it chooses. The Company will pay 25% of the drilling cost of the first well and will receive 13.59% of the net revenue from the well. The Company anticipates that its share of the total drilling and completion cost of the initial well, projected to be drilled to approximately 15,500 feet, will be $3.4 million. The Company has paid $40,000 of its share of the costs of the well to date. The Company does not have cash on hand in order to fully satisfy its obligations under the Participation Agreement and is currently seeking additional required financing. There is no guarantee that the Company will be able to obtain adequate financing, and the Company currently does not have a firm commitment from a lender to loan additional funds.
On January 19, 2012, the Company entered into a working interest purchase and sale agreement (the “Big Canyon Agreement”) related to 640 acres of land located in Terrell County, Texas (the “Big Canyon Prospect”). According to the terms of the Big Canyon Agreement, the Company will purchase an 82.5% working interest and will receive a 64.35% net royalty interest in the Big Canyon Prospect. The Company will pay $60,000 for the rights under this contract. This amount is payable in weekly installments of $5,000 beginning January 27, 2012. Under the terms of the Big Canyon Agreement, the Company will have the right to drill a one well within six months and a second well within the next six months if the first well is unsuccessful. If either well is successful, the Company must pay a $200 per acre bonus for the entire leased acreage.
As a result of the Participation Agreement and the Big Canyon Agreement, the Company is expanding its business plan into participation in oil and gas leases. We do not plan on abandoning our original business of manufacturing instrument panels and wiring harnesses; rather, our oil and gas business is intended to be an addition to our original business.
On September 16, 2011, we formed a new subsidiary company —First Titan Technical, LLC—to commence business operations designing and marketing automotive electronics custom-designed for heavy-duty vehicles. The Company has received funding of $25,000 which was used to implement the initial phase of our business plan.
First Titan Technical’s primary operations are the sourcing of specialized instrument panels, wiring harnesses and other electronic solutions for the manufacturers of commercial trucks, boats, agricultural generators and other industrial equipment in the multi-billion-dollar automotive market. We expect the new subsidiary to provide a solid financial base from which to pursue potentially lucrative new projects around the globe.
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We have not generated any revenues to date and our activities have been limited to developing our business plan and beginning to implement that plan. We will not have the necessary capital to fully develop or execute our business plan until we are able to secure additional financing. There can be no assurance that such financing will be available on suitable terms. We need to raise an additional $500,000 to implement our business plan over the next 18 months. Our current cash on hand is insufficient to fully realize our oil and gas investments or develop our business strategy. If we are unable to raise adequate additional funds or if those funds are not available on terms that are acceptable to us, we will not be able to execute our business plan and we may cease operations.
We have no revenues; have incurred losses since inception, have been issued a going concern opinion from our auditors and rely upon the sale of our securities to fund operations.
Business Strategy
We invest in oil and gas properties in Oklahoma, Louisiana and Alabama.
Alabama – We have a one percent working interest in one well in Little Cedar Creek Field in Alabama. This well was drilled during the fiscal year ended September 30, 2012 and we expect to begin receiving revenue during the coming fiscal year ending September 30, 2013. This well is located in the Little Cedar Field, Alabama’s largest producing oil field.
Louisiana – The South Lake Charles Prospect is located seven miles south of the city of Lake Charles, Louisiana. It is a middle Oligocene age geo-pressured prospect located in the middle and lower hackberry sands. We plan to participate in the drilling of a 15,300 foot high geo-pressure land well.
During October 2012, we acquired a working interest in the Lake Boeuf Field in Southeast Louisiana. The field covers 300 acres in Lafourche Parish. The prospect is a 12,025 foot directional well and will be drilled utilizing a land rig. The trap is structural closure bounded by two faults which form a wedge shaped block. Approximately 50 feet of structural advantage should be gained over the downdip wells. The well is expected to be spudded during the first half of fiscal 2013.
Oklahoma – We have an agreement with Green Oil Operating LLC to explore the infield development of oil and gas resources in Oklahoma. The current prospect is a reentry well project next to a well in production in the Wapanucka Sand/Lime on a large up-thrown fault block. The proposed well will be re-worked and drilled to the target depth of 4,500 feet through the Calvin Sand as well as testing multiple target zones down hole.
Sales and Marketing Strategy
We plan to sell our oil and gas production to oil and gas marketers in the areas where our wells are located.
COMPETITION
There is significant competition in the oil and gas industry. There are many small producers who are participating in exploration in the same areas where we are participating in wells.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
As of September 30, 2012, we have no employees other than Robert Federowicz, our sole officer and director. Robert Federowicz resigned on January 1, 2013. On the same date, Harvey Bryant became our sole officer and director. We do not have an employment agreement with Mr. Bryant. Mr. Bryant has the flexibility to work on our business up to 10 to 25 hours per week. He is prepared to devote more time to our operations as may be required and we do not have any employment agreements with him.
We do not presently have, pension, health, annuity, insurance, stock options, profit sharing, or similar benefit plans; however, we may adopt plans in the future. There are presently no personal benefits available to our sole director and officer.
During the initial implementation of our marketing strategy, we intend to hire independent consultants to develop and execute our business plan.
ITEM 1A. | RISK FACTORS |
As a smaller reporting company, we are not required to provide the information required by this Item.
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ITEM 1B. | UNRESOLVED STAFF COMMENTS |
None.
ITEM 2. | DESCRIPTION OF PROPERTY |
We maintain our statutory registered agent’s office at 495 Grand Boulevard, Suite 206, Miramar Beach, Fl 32550. Our telephone number is (850) 269-7267.
ITEM 3 . | LEGAL PROCEEDINGS |
We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.
ITEM 4. | MINE SAFETY DISCLOSURES |
PART II
ITEM 5. | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS |
MARKET INFORMATION
Our common stock began trading on the “Over the Counter” Bulletin Board (“OTC”) under the symbol “FTTN” in September 2011. The following table sets forth, for the period indicated, the prices of the common stock in the over-the-counter market, as reported and summarized by the OTC. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown or commission and may not represent actual transactions. There is an absence of an established trading market for the Company’s common stock, as the market is limited, sporadic and highly volatile, which may affect the prices listed below.
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Fiscal Year Ended September 30, 2011 |
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Quarter ended September 30, 2011 |
| $ | 160.00 |
| $ | 25.00 |
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Fiscal Year Ended September 30, 2012 |
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Quarter ended December 31, 2011 |
| $ | 160.00 |
| $ | 15.00 |
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Quarter ended March 31, 2012 |
| $ | 56.00 |
| $ | 10.00 |
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Quarter ended June 30, 2012 |
| $ | 11.00 |
| $ | 2.00 |
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Quarter ended September 30, 2012 |
| $ | 7.50 |
| $ | 2.05 |
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HOLDERS
As of the date of this filing, there were 4 holders of record of our common stock.
DIVIDENDS
To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.
COMMON STOCK
We are authorized to issue 250,000,000 shares of common stock, with a par value of $0.0001. The closing price of our common stock on January 8, 2013, as quoted by the OTC, was $0.69. There were 6,796,415 shares of common stock issued and outstanding as of January 8, 2013. All shares of common stock have one vote per share on all matters including election of directors, without provision for cumulative voting. The common stock is not redeemable and has no conversion or preemptive rights. The common stock currently outstanding is validly issued, fully paid and non- assessable. In the event of liquidation of the Company, the holders of common stock will share equally in any balance of the Company’s assets available for distribution to them after satisfaction of creditors and preferred shareholders, if any. The holders of common stock of the Company are entitled to equal dividends and distributions per share with respect to the common stock when, as and if, declared by the Board of Directors from funds legally available.
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On August 17, 2012, the Company effected a one-for-20 reverse stock split.
During the year ended September 30, 2012, there was no modification of any instruments defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof, except as discussed above.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table shows the number of shares of common stock that could be issued upon exercise of outstanding options and warrants, the weighted average exercise price of the outstanding options and warrants, and the remaining shares available for future issuance as of September 30, 2012.
Plan category |
| Number of securities to be issued upon exercise of outstanding options, warrants and rights |
| Weighted average exercise price of outstanding options, warrants and rights |
| Number of securities remaining available for future issuance |
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Equity compensation plans approved by security holders |
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Equity compensation plans not approved by security holders |
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Total |
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ITEM 6. | SELECTED FINANCIAL DATA |
As a smaller reporting company, we are not required to provide the information required by this Item.
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS “ANTICIPATED,” “BELIEVE,” “EXPECT,” “PLAN,” “INTEND,” “SEEK,” “ESTIMATE,” “PROJECT,” “WILL,” “COULD,” “MAY,” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT THE COMPANY’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY’S CONTROL. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS.
The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our financial statements and related notes appearing elsewhere herein. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial conditions, operations, plans, objectives and performance that involve risk, uncertainties and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements.
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Background of our company
We are a development-stage company, incorporated in the State of Florida on September 16, 2010, as a for-profit company, and an established fiscal year of September 30. We have not yet generated or realized any revenues from business operations. Our auditor has issued a going concerned opinion. This means there is substantial doubt that we can continue as an on-going business for the next eighteen (18) months unless we obtain additional capital to pay our bills. Accordingly, we must raise cash from sources other than loans we undertake.
From inception through our current date, September 30, 2012, our business operations have primarily been focused on developing our business plan and the commencement of business operations designing and marketing automotive electronics custom-designed for heavy-duty vehicles. We have not generated any revenue from business operations.
Plan of Operations
We do not have adequate funds to satisfy our working capital requirements for the next eighteen months. We will need to raise additional capital to continue our operations. During the coming year, we intend to continue to implement our business and marketing plan. We believe we must raise a total of approximately $500,000 to pay the anticipated expenses of developing additional wells and prospects. As of September 30, 2012, we had cash on hand of $1,359. All anticipated expenses are based on estimates made by our sole Officer and Director based on his prior knowledge of our industry and on his personal research. These costs may vary considerably based on then current local, state, or national economic conditions.
Business Plan Implementation Schedule
We have not generated any revenues to date and have not established business operations. We will be unable to establish operations or otherwise implement our business plan until we are able to secure financing of approximately $500,000. To date we have taken no steps to secure the $500,000 in additional financing that we will need to implement our business plan. Furthermore, there can be no assurance that sufficient financing will be available on suitable terms. We presently intend to take the following steps to identify sources of financing for our business.
We have not established a schedule for the completion of specific tasks or milestones contained in our business plan. Virtually all aspects of our business plan are scalable in terms of size, quality, and effectiveness, and the timing of their execution must be concurrent or near concurrent. For example, we believe that any investment in our infrastructure and equipment requirements must be concurrent or near concurrent with any investment in marketing, inventory or labor. What’s more the scale and quality of our infrastructure, marketing strategies and potential employees may vary according to the financing ultimately available to us and will in turn have a corresponding impact on our capacity to generate revenue.
RESULTS OF OPERATIONS AND GOING CONCERN
We incurred a net loss of $1,088,830 for the year ended September 30, 2012, and had a working capital deficit of $356,259 as of September 30, 2012. We do not anticipate having positive net income in the immediate future. Net cash used by operating activities for the year ended September 30, 2012 was $285,023. These conditions create an uncertainty as to our ability to continue as a going concern.
We continue to rely on advances to fund operating shortfalls and do not foresee a change in this situation in the immediate future. There can be no assurance that we will continue to have such advances available. We will not be able to continue operations without them. We are pursuing alternate sources of financing, but there is no assurance that additional capital will be available to the Company when needed or on acceptable terms.
We have not generated any revenues from our operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including the financial risks associated with the limited capital resources currently available to us for the implementation of our business strategies. To become profitable and competitive, we must develop the business and marketing plan and execute the plan. Our management will attempt to secure financing through various means including borrowing and investment from institutions and private individuals.
Since inception, the majority of our time has been spent refining our business plan.
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Results of Operations for the year ended September 30, 2012 compared to the year ended September 30, 2012
General and Administrative Expenses
General and administrative expenses increased in the year ended September 30, 2012 as compared to the year ended September 30, 2011 from $54,105 to $944,966 primarily due to non-cash expense related to stock issued for services in the amount of $635,000 and the increased level of operations of the Company.
Loss from Operations
The increase in our operating loss for the year ended September 30, 2012 as compared to the comparable period of 2011 from $54,105 to $944,966 is due to the increase in general and administrative expenses described above.
Interest Expense
We incurred interest expense in the amount of $143,864 for the year ended September 30, 2012. No interest expense was incurred during the year ended September 30, 2011. Interest expense for the year ended September 30, 2012 consisted of amortization of discounts on convertible notes payable in the amount of $133,744 and accrued interest payable of $10,120.
Net Income (Loss)
We recognized a net loss of $1,088,830 for the year ended September 30, 2012 as compared to a loss of $54,105 for the year ended September 30, 2011. The change in net loss is attributable to the increase in general and administrative expense and interest expense described above.
LIQUIDITY AND CAPITAL RESOURCES
As of the date of this filing, we had yet to generate any revenues from our business operations.
We anticipate needing approximately of $550,000 to fund our operations and to effectively execute our business plan over the next eighteen months. Currently available cash is not sufficient to allow us to commence full execution of our business plan. Our business expansion will require significant capital resources that may be funded through the issuance of common stock or of notes payable or other debt arrangements that may affect our debt structure. Despite our current financial status we believe that we may be able to issue notes payable or debt instruments in order to start executing our business plan. However, there can be no assurance that we will be able to raise money in this fashion and have not entered into any agreements that would obligate a third party to provide us with capital.
Through September 30, 2012, we have incurred cumulative losses since inception of $1,145,013. We raised the cash amounts to be used in these activities from the sale of common stock and from advances. We currently have negative working capital of $356,259.
As of September 30, 2012 we had $21,942 of cash on hand. This amount of cash will be adequate to fund our operations for approximately four months.
As of the date of this filing, the current funds available to the Company will not be sufficient to continue maintaining a reporting status. Management believes if the Company cannot maintain its reporting status with the SEC it will have to cease all efforts directed towards the Company. As such, any investment previously made would be lost in its entirety.
To date the Company has been able to fund operations through the sale of stock and by obtaining cash advances. The Company will have to seek additional financing in the future. However, the Company may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, the Company may be forced to seek a buyer for our business or another entity with which we could create a joint venture. If all of these alternatives fail, we expect that the Company will be required to seek protection from creditors under applicable bankruptcy laws.
Our independent auditor has expressed substantial doubt about our ability to continue as a going concern and believes that our ability is dependent on our ability to implement our business plan, raise capital and generate revenues. See Note 2 of our financial statements.
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Recent Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address board of directors’ independence, audit committee oversight, and the adoption of a code of ethics. Our Board of Directors is comprised of one individual who is also our executive officer. Our executive officer makes decisions on all significant corporate matters such as the approval of terms of the compensation of our executive officer and the oversight of the accounting functions.
Although the Company has adopted a Code of Ethics and Business Conduct, the Company has not yet adopted any of these other corporate governance measures. Since our securities are not yet listed on a national securities exchange, the Company is not required to do so. The Company has not adopted corporate governance measures such as an audit or other independent committees of our board of directors as we presently do not have any independent directors. If we expand our board membership in future periods to include additional independent directors, the Company may seek to establish an audit and other committees of our board of directors. It is possible that if our Board of Directors included independent directors and if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.
INFLATION
The effect of inflation on our revenues and operating results has not been significant.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies and Estimates
Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete listing of these policies is included in Note 3 of the notes to our financial statements for the year ended September 30, 2012. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management.
USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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.
RESEARCH AND DEVELOPMENT EXPENSES - Expenditures for research, development, and engineering of products will be expensed as incurred.
EARNINGS (LOSS) PER SHARE - Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered antidilutive and thus are excluded from the calculation. At September 30, 2010 the Company did not have any potentially dilutive common shares.
New Accounting Pronouncements
For a description of recent accounting standards, including the expected dates of adoption and estimated effects, if any, on our financial statements, see “Note 3: Significant Accounting Polices: Recent Accounting Standards” in Part II, Item 8 of this Form 10-K.
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ITEM 7A. | Quantitative and Qualitative Disclosures About Market Risk |
Not applicable.
ITEM 8. | Financial Statements |
First Titan Corp.
(A Development Stage Enterprise)
Consolidated Financial Statements
September 30, 2012
Contents
Financial Statements: |
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Consolidated Balance Sheets | 11 |
Consolidated Statements of Operations | 12 |
Consolidated Statements of Changes in Stockholders’ Deficit | 13 |
Consolidated Statements of Cash Flows | 14 |
Notes to Consolidated Financial Statements | 15 |
The accompanying financial statements have not been audited by our independent registered public accounting firm.
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First Titan Corp.
(A Development Stage Corporation)
Consolidated Balance Sheets
(Unaudited)
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| September 30, |
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| 2012 |
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Assets |
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Current assets: |
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Cash |
| $ | 1,359 |
| $ | 21,942 |
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Total current assets |
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| 1,359 |
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| 21,942 |
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Oil properties, unproved – full cost method of accounting |
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| 280,764 |
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| $ | 282,123 |
| $ | 21,942 |
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|
|
|
|
|
|
Liabilities and Stockholders’ Deficit |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
| $ | 28,568 |
| $ | 3,625 |
|
Advances payable |
|
| 329,050 |
|
| 28,000 |
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
| 357,618 |
|
| 31,625 |
|
|
|
|
|
|
|
|
|
Stockholders’ deficit: |
|
|
|
|
|
|
|
Common stock; $0.0001 par value; 250,000,000 shares authorized; 5,646,415 and 600,000 shares issued and outstanding at September 30, 2012 and 2011, respectively |
|
| 565 |
|
| 60 |
|
Additional paid in capital |
|
| 1,038,314 |
|
| 46,440 |
|
Deficit accumulated during development stage |
|
| (1,145,013 | ) |
| (56,183 | ) |
|
|
|
|
|
|
|
|
Total stockholders’ deficit |
|
| (106,134 | ) |
| (9,683 | ) |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
| $ | 282,123 |
| $ | 21,942 |
|
The accompanying notes are an integral part of the financial statements
- 11 -
First Titan Corp.
(A Development Stage Corporation)
Consolidated Statements of Operations
(Unaudited)
|
| Year ended September 30, |
| Period from |
| |||||
|
| 2012 |
| 2011 |
| 2012 |
| |||
|
|
|
|
|
|
|
|
|
| |
OPERATING EXPENSE: |
|
|
|
|
|
|
|
|
|
|
General and administrative |
| $ | 944,966 |
| $ | 54,105 |
| $ | 1,001,149 |
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS |
|
| (944,966 | ) |
| (54,105 | ) |
| (1,001,149 | ) |
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
| (143,864 | ) |
| — |
|
| (143,864 | ) |
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
| $ | (1,088,830 | ) | $ | (54,105 | ) | $ | (1,145,013 | ) |
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share - basic and fully diluted |
| $ | (1.16 | ) | $ | (0.10 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - |
|
| 935,640 |
|
| 517,808 |
|
|
|
|
The accompanying notes are an integral part of the financial statements.
- 12 -
First Titan Corp.
(A Development Stage Corporation)
Consolidated Statements of Changes in Stockholders’ Deficit
For the Period from September 16, 2010 (Date of Inception) through September 30, 2012
(Unaudited)
|
| Common Stock |
|
|
|
|
|
|
| ||||||
|
| Shares |
| Amount |
| Capital in |
| Accumulated Deficit |
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 16, 2010, |
| — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
|
Issuance of common stock for cash, |
| 450,000 |
|
| 45 |
|
| 8,955 |
|
| — |
|
| 9,000 |
|
Net loss for the period |
| — |
|
| — |
|
| — |
|
| (2,078 | ) |
| (2,078 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2010 |
| 450,000 |
| $ | 45 |
| $ | 8,955 |
| $ | (2,078 | ) | $ | 6,922 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for cash, April 18, 2011, $0.0125 per share |
| 150,000 |
|
| 15 |
|
| 37,485 |
|
| — |
|
| 37,500 |
|
Net loss |
| — |
|
| — |
|
| — |
|
| (54,105 | ) |
| (54,105 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2011 |
| 600,000 |
| $ | 60 |
| $ | 46,440 |
| $ | (56,183 | ) | $ | (9,683 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rounding shares issued as a result of reverse split |
| 165 |
|
| — |
|
| — |
|
| — |
|
| — |
|
Issuance of common stock for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Services |
| 85,000 |
|
| 9 |
|
| 634,991 |
|
| — |
|
| 635,000 |
|
- Conversion of debt |
| 4,961,250 |
|
| 496 |
|
| 112,729 |
|
| — |
|
| 113,225 |
|
Discount on convertible notes payable |
| — |
|
| — |
|
| 244,154 |
|
| — |
|
| 244,154 |
|
Net loss |
| — |
|
| — |
|
| — |
|
| (1,088,830 | ) |
| (1,088,830 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2012 |
| 5,646,415 |
| $ | 565 |
| $ | 1,038,314 |
| $ | (1,145,013 | ) | $ | (106,134 | ) |
On August 17, 2012, the Company effected a one-for-20 reverse stock split. All share and per share amounts have been retroactively restated to reflect the reverse split.
The accompanying notes are an integral part of the financial statements
- 13 -
First Titan Corp.
(A Development Stage Corporation)
Consolidated Statements of Cash Flows
(Unaudited)
|
| Year ended September 30, |
| Period from |
| |||||
|
| 2012 |
| 2011 |
| 2012 |
| |||
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
|
|
|
Net loss |
| $ | (1,088,830 | ) | $ | (54,105 | ) | $ | (1,145,013 | ) |
Adjustments to reconcile net loss to net cash used by operating activities: |
|
|
|
|
|
|
|
|
|
|
Common stock issued for services |
|
| 635,000 |
|
| — |
|
| 635,000 |
|
Amortization of discount on convertible notes payable |
|
| 133,744 |
|
| — |
|
| 133,744 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
| 35,063 |
|
| 1,625 |
|
| 38,688 |
|
Net cash used by operating activities |
|
| (285,023 | ) |
| (52,480 | ) |
| (337,581 | ) |
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
Investment in oil and gas properties |
|
| (280,764 | ) |
| — |
|
| (280,764 | ) |
Net cash used by investing activities |
|
| (280,764 | ) |
| — |
|
| (280,764 | ) |
|
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
|
Proceeds from advances |
|
| 545,204 |
|
| 37,500 |
|
| 573,204 |
|
Proceeds from issuance of common stock |
|
| — |
|
| 28,000 |
|
| 46,500 |
|
Net cash provided by financing activities |
|
| 545,204 |
|
| 65,500 |
|
| 619,704 |
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash |
|
| (20,583 | ) |
| 13,020 |
|
| 1,359 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash at beginning of period |
|
| 21,942 |
|
| 8,922 |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
Cash at end of period |
| $ | 1,359 |
| $ | 21,942 |
| $ | 1,359 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information and non cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ | — |
| $ | — |
| $ | — |
|
Cash paid for taxes |
| $ | — |
| $ | — |
| $ | — |
|
|
|
|
|
|
|
|
|
|
|
|
Noncash investing and financing transactions |
|
|
|
|
|
|
|
|
|
|
Stock issued for conversion of notes payable |
| $ | 113,225 |
| $ | — |
| $ | 113,225 |
|
Advances refinanced into convertible notes payable |
| $ | 244,154 |
| $ | — |
| $ | 244,154 |
|
The accompanying notes are an integral part of the financial statements.
- 14 -
First Titan Corp.
(A Development Stage Corporation)
Notes to Unaudited Consolidated Financial Statements
September 30, 2012
1. BACKGROUND INFORMATION
First Titan Corp. (the “Company”), a Florida corporation, was formed to design and manufacture both panel and engineered/tooled custom vacuum formed instrument panels and wiring harnesses, required for the monitoring of any final product that utilizes a gas or diesel engine source. This product intends to be targeted to other manufacturers and the Company will be considered a sub-supplier to these customers.
The accompanying financial statements have not been audited by our independent registered public accounting firm.
The Company was incorporated on September 16, 2010 with our corporate headquarters located in Bradenton, Florida. The Company’s year-end is September 30.
On September 16, 2011, First Titan Corporation created First Titan Energy, LLC for the purpose of investing in oil and gas properties, greenfield projects and in the development of cutting edge exploration and production technologies.
On September 16, 2011, we formed a new subsidiary company —First Titan Technical, LLC—to commence business operations designing and marketing automotive electronics custom-designed for heavy-duty vehicles. The Company has received funding of $25,000 which will be used to implement the initial phase of our business plan.
2. GOING CONCERN
For the year ended September 30, 2012, the Company had a net loss of $1,088,830 and negative cash flow from operations of $285,023. As of September 30, 2012, the Company has negative working capital of $356,259. The Company has not emerged from the development stage.
These factors raise a substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.
The Company does not have the resources at this time to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.
Management has plans to address the Company’s financial situation as follows:
In the near term, management plans to continue to focus on raising the funds necessary to fully implement the Company’s business plan. Management will continue to seek out debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders will continue to advance capital to the Company or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raise doubts about the Company’s ability to continue as a going concern.
In the long term, management believes that the Company’s projects and initiatives will be successful and will provide cash flow to the Company which will be used to finance the Company’s future growth. However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability. The Company’s long term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations, and the ability of the Company to ultimately achieve adequate profitability and cash flows from operations to sustain its operations.
3. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed are:
- 15 -
FASB Codification
In June 2009, the FASB issued ASC 105, Generally Accepted Accounting Principles, effective for interim and annual reporting periods ending after September 15, 2009. This statement establishes the Codification as the source of authoritative accounting principles used in the preparation of financial statements in conformity with generally accepted accounting principles. The Codification does not replace or affect guidance issued by the SEC or its staff. As a result of the Codification, the references to authoritative accounting pronouncements included herein in this Annual Report on Form 10-K now refer to the Codification topic section rather than a specific accounting rule as was past practice.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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.
Cash and cash equivalents
All cash, other than held in escrow, is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits. Temporary cash investments with an original maturity of three months or less are considered to be cash equivalents.
Oil Properties
The Company follows the full cost method of accounting for its oil properties, whereby all costs incurred in connection with the acquisition, exploration for and development of petroleum and natural gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil, in which case the gain or loss is recognized in the statement of operations.
Depletion of capitalized oil properties and estimated future development costs, excluding unproved properties, are based on the units-of-production method based on proved reserves. Net capitalized costs of oil properties, less related deferred taxes, are limited to the lower of unamortized cost or the cost ceiling, defined as the sum of the present value of estimated future net revenues from proved reserves based on unescalated prices discounted at 10 percent, plus the cost of properties not being amortized, if any, plus the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any, less related income taxes. As of September 30, 2012, the Company has oil properties in the amount of $280,764 which are being excluded from amortization because they have not been evaluated to determine whether proved reserves are associated with those properties. Costs in excess of the present value of estimated future net revenues as discussed above are charged to impairment expense. The Company applies the full cost ceiling test on a quarterly basis on the date of the latest balance sheet presented.
Based on management’s review, 100% of the unproved oil properties balance as of September 30, 2012 is expected to be added to amortization during the year ending September 30, 2013. The table below sets forth the cost of unproved properties excluded from the amortization base as of September 30, 2012 and notes the year in which the associated costs were incurred:
|
| Year of Acquisition |
| |||||||||||||
|
| 2010 |
|
| 2011 |
|
| 2012 |
|
| Total |
| ||||
Acquisition costs |
| $ | — |
|
| $ | — |
|
| $ | 280,764 |
|
| $ | 280,764 |
|
Development costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Exploration costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
| $ | — |
|
| $ | — |
|
| $ | 280,764 |
|
| $ | 280,764 |
|
As discussed in Note 6, asset retirement costs are recognized when the asset is placed in service, and are included in the amortization base and amortized over proved reserves using the units of production method. Asset retirement costs are estimated by management using existing regulatory requirements and anticipated future inflation rates.
- 16 -
Common stock
The Company records common stock issuances when all of the legal requirements for the issuance of such common stock have been satisfied.
Revenue Recognition
Sales of crude oil are recognized when the delivery to the purchaser has occurred and title has been transferred. This occurs when oil has been delivered to a pipeline or a tank lifting has occurred. Crude oil is priced on the delivery date based upon prevailing prices published by purchasers with certain adjustments related to oil quality and physical location.
Research and development expenses
Expenditures for research and development of products are expensed as incurred. There have been no research and development costs incurred for the year ended September 30, 2012.
Advertising Costs
The Company’s policy regarding advertising is to expense advertising costs as incurred. There have been no advertising costs incurred for the period ended September 30, 2012.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes resulting from temporary differences. Such temporary differences result from differences in the carrying value of assets and liabilities for tax and financial reporting purposes. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company adopted the provisions of FASB ASC 740-10 “Uncertainty in Income Taxes” (ASC 740-10), on January 1, 2007. The Company has not recognized a liability as a result of the implementation of ASC 740-10. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there is no unrecognized benefit since the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.
Earnings (Loss) Per Share
Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered antidilutive and thus are excluded from the calculation. At September 30, 2012 and 2011, the Company did not have any potentially dilutive common shares.
Financial instruments
In September 2006, the Financial Accounting Standards Board (FASB) introduced a framework for measuring fair value and expanded required disclosure about fair value measurements of assets and liabilities. The Company adopted the standard for those financial assets and liabilities as of the beginning of the 2008 fiscal year and the impact of adoption was not significant. FASB Accounting Standards Codification (ASC) 820 ” Fair Value Measurements and Disclosures ” (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
- 17 -
| · | Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
|
|
|
| · | Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
|
|
|
| · | Level 3 - Inputs that are both significant to the fair value measurement and unobservable. |
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2012. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, accrued compensation and accrued expenses. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value.
On September 16, 2010, the Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company’s financial statements.
Recent Accounting Pronouncements
In April 2010, the FASB issued ASU No. 2010-13, Compensation-Stock Compensation (Topic 718)-Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades - a consensus of the FASB Emerging Issues Task Force. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. Earlier application is permitted. The Company adopted ASU No. 2010-13 on September 1, 2012. The adoption did not have a material impact on the financial statements.
In April 2010, the FASB issued ASU No. 2010-12, Income Taxes (Topic 740)-Accounting for Certain Tax Effects of the 2010 Health Care Reform Acts. After consultation with the FASB, the SEC stated that it “would not object to a registrant incorporating the effects of the Health Care and Education Reconciliation Act of 2010 when accounting for the Patient Protection and Affordable Care Act”. The company does not expect the provisions of ASU 2010-12 to have a material effect on the financial position, results of operations or cash flows of the company.
In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”), which clarifies the wording and disclosures required in Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement (“ASC 820”), to converge with those used (to be used) in International Financial Reporting Standards (“IFRS”). The update explains how to measure and disclose fair value under ASC 820. However, the FASB does not expect the changes in this standards update to alter the current application of the requirements in ASC 820. The provisions of ASU 2011-04 are effective for public entities prospectively for interim and annual periods beginning after December 15, 2011. Early adoption is prohibited. The Company adopted ASU No. 2011-04 on March 1, 2012. The adoption did not have a material impact on the financial statements.
In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220) - Presentation of Comprehensive Income (“ASU 2011-05”). ASU 2011-05 changes the presentation of comprehensive income in the financial statements for all periods reported and eliminates the option under the current guidance that allows for presentation of other comprehensive income as part of the Statement of Stockholders’ Equity. The update proposes two options for the proper presentation of comprehensive income: 1) a single Statement of Comprehensive Income, which includes all components of net income and other comprehensive income; or 2) a Statement of Income followed immediately by a Statement of Comprehensive Income, which includes the summarized net income and all components of other comprehensive income. The provisions of ASU 2011-05 are effective for public entities retrospectively for annual periods, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. Therefore, ASU 2011-05 is effective for the Company on October 1, 2012. Although the provisions of this update could change the presentation of the financial statements of the Company, no material impact is expected on the Company’s results of operations, financial condition, and cash flows.
Other recent accounting pronouncements issued are not believed by management to have a material impact on the Company’s present or future financial statements.
- 18 -
4. OIL PROPERTIES
On January 3, 2012, the Company entered into a participation agreement in an oil and gas drilling project in Calcasieu Parish, Louisiana (the “Participation Agreement”). Under the terms of the Participation Agreement, the Company will participate in the drilling of one well and may participate in the drilling of future wells if it chooses. The Company will pay 25% of the drilling cost of the first well and will receive 13.59% of the net revenue from the well. The Company anticipates that its share of the total drilling and completion cost of the initial well, projected to be drilled to approximately 15,500 feet, will be $3.4 million. The Company has paid $143,264 of its share of the costs of the well to date. The Company does not have cash on hand in order to fully satisfy its obligations under the Participation Agreement and is currently seeking additional required financing. There is no guarantee that the Company will be able to obtain adequate financing, and the Company currently does not have a firm commitment from a lender to loan additional funds.
On January 19, 2012, the Company entered into a working interest purchase and sale agreement (the “Big Canyon Agreement”) related to 640 acres of land located in Terrell County, Texas (the “Big Canyon Prospect”). According to the terms of the Big Canyon Agreement, the Company will purchase an 82.5% working interest and will receive a 64.35% net royalty interest in the Big Canyon Prospect. The Company will pay $60,000 for the rights under this contract. This amount is payable in weekly installments of $5,000 beginning January 27, 2012. Under the terms of the Big Canyon Agreement, the Company will have the right to drill one well within six months and a second well within the next six months if the first well is unsuccessful. If either well is successful, the Company must pay a $200 per acre bonus for the entire leased acreage.
5. RELATED PARTY TRANSACTIONS
On September 16, 2010, the Company sold 450,000 shares of common stock to Robert Tatar, its founder and former sole director, for $0.02 per share. In October 2011, Mr. Tatar sold the 450,000 shares of common stock to Eaton Central America, Inc., a Panama Corporation, which is not related to Mr. Tatar.
The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available. They may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.
The above terms and amounts are not necessarily indicative of the terms and amounts that would have been incurred had comparable transactions been entered into with independent parties.
6. ASSET RETIREMENT OBLIGATION
ASC 410-20, Asset Retirement and Environmental Obligations, requires that an asset retirement obligation (“ARO”) associated with the retirement of a tangible long-lived asset be recognized as a liability in the period in which it is incurred and becomes determinable. Under this method, when liabilities for dismantlement and abandonment costs, excluding salvage values, are initially recorded, the carrying amount of the related oil and natural gas properties is increased. The fair value of the ARO asset and liability is measured using expected future cash outflows discounted at the Company’s credit-adjusted risk-free interest rate. Accretion of the liability is recognized each period using the interest method of allocation, and the capitalized cost is depleted using the units of production method. Should either the estimated life or the estimated abandonment costs of a property change materially upon the Company’s quarterly review, a new calculation is performed using the same methodology of taking the abandonment cost and inflating it forward to its abandonment date and then discounting it back to the present using the Company’s credit-adjusted-risk-free rate. The carrying value of the asset retirement obligation is adjusted to the newly calculated value, with a corresponding offsetting adjustment to the asset retirement cost related to oil property accounts.
The following table reflects the changes in the ARO during year ended September 30, 2012:
|
| Amount |
| |
Asset retirement obligation - beginning of year |
| $ | — |
|
Current year revision to previous estimates |
|
| — |
|
Current year accretion |
|
| — |
|
Asset retirement obligation - end of year |
| $ | — |
|
7. ADVANCES FROM THIRD PARTIES
During the year ended September 30, 2012, the Company received net, non-interest bearing advances from certain third parties totaling $545,204. The total amount due under these advances as of September 30, 2012 was $329,050. These advances are not collateralized and are due on demand.
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8. CONVERTIBLE NOTES PAYABLE
On January 31, 2012, the Company signed a Convertible Promissory Note which refinanced non-interest bearing advances in the amount of $130,929 into a convertible note payable. The Convertible Promissory Note bears interest at 10% per annum and is payable along with accrued interest on March 31, 2014. The Convertible Promissory Note is convertible into common stock at the option of the holder at the rate of $0.04 per share.
The Company evaluated the terms of this note in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. The Company determined that the conversion feature did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. The Company evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the notes and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, the Company recognized a beneficial conversion feature in the amount of $130,929 on January 31, 2012. The beneficial conversion feature was recognized as an increase in additional paid-in capital and a discount to the Convertible Note Payable. The discount to the Convertible Note Payable is being amortized to interest expense over the life of the note.
On March 1, 2012, the Company signed a Convertible Promissory Note which refinanced non-interest bearing advances in the amount of $28,000 into a convertible note payable. The Convertible Promissory Note bears interest at 10% per annum and is payable along with accrued interest on August 31, 2014. The Convertible Promissory Note is convertible into common stock at the option of the holder at the rate of $0.04 per share.
The Company evaluated the terms of this note in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. The Company determined that the conversion feature did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. The Company evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the notes and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, the Company recognized a beneficial conversion feature in the amount of $28,000 on March 1, 2012. The beneficial conversion feature was recognized as an increase in additional paid-in capital and a discount to the Convertible Note Payable. The discount to the Convertible Note Payable is being amortized to interest expense over the life of the note.
On August 31, 2012, the Company signed a Convertible Promissory Note which refinanced non-interest bearing advances in the amount of $85,225 into a convertible note payable. The Convertible Promissory Note bears interest at 10% per annum and is payable along with accrued interest on August 31, 2013. The Convertible Promissory Note is convertible into common stock at the option of the holder at the rate of $0.02 per share.
The Company evaluated the terms of this note in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. The Company determined that the conversion feature did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. The Company evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the notes and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, the Company recognized a beneficial conversion feature in the amount of $85,225 on August 31, 2012. The beneficial conversion feature was recognized as an increase in additional paid-in capital and a discount to the Convertible Note Payable. The discount to the Convertible Note Payable is being amortized to interest expense over the life of the note.
The Company evaluated the application of ASC 470-50-40/55, Debtor’s Accounting for a Modification or Exchange of Debt Instrument as it applies to the three notes listed above and concluded that the revised terms constituted a debt modification rather than a debt extinguishment because the present value of the cash flow under the terms of each of the new instruments was less than 10% from the present value of the remaining cash flows under the terms of the original notes. No gain or loss on the modifications was required to be recognized.
On September 7, 2012, the holder of the Convertible Note Payable in the principal amount of $85,225 elected to convert the entire principal into 4,261,250 shares of common stock. On that date, the unamortized discount related to this principal was $85,225. The unamortized discount was immediately amortized to interest expense upon conversion.
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On September 12, 2012, the holders of the Convertible Note Payable dated March 1, 2012 elected to convert the entire principal in the amount of $28,000 into 700,000 shares of common stock. On that date, the unamortized discount related to this principal was $23,727. The unamortized discount was immediately amortized to interest expense upon conversion.
The Company accrued interest in the amount of $10,120 during the year ended September 30, 2012. This amount was unpaid as of September 30, 2012 and is included in convertible notes payable as of that date. During the year ended September 30, 2012, discount on convertible notes payable in the amount of $133,744 was amortized to interest expense.
9. INCOME TAXES
There are no current or deferred income tax expense or benefit for the period ended September 30, 2012.
The provision for income taxes is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The items causing this difference are as follows:
|
| Year ended September 30, | ||||
|
| 2012 |
| 2011 | ||
Tax benefit at U.S. statutory rate |
| $ | 89,600 |
| $ | 15,000 |
Valuation allowance |
|
| (89,600 | ) |
| (15,000) |
|
| $ | — |
| $ | — |
The Company has net operating loss carryforwards of $375,000 which will begin expiring in 2026.
10. COMMON STOCK
On September 16, 2010, the Company sold 450,000 shares of common stock to Robert Tatar, its founder and former sole director, for $0.02 per share.
On April 18, 2011, the Company issued 150,000 shares of common stock for cash proceeds of $37,500.
On April 31, 2012, the Company issued 25,000 shares of common stock to a third party for services. The shares were valued at $215,000 based on the closing market price of the stock on the date of issuance.
On May 9, 2012, the Company issued 30,000 shares of common stock to a third party for services. The shares were valued at $288,000 based on the closing market price of the stock on the date of issuance.
On May 31, 2012, the Company issued 30,000 shares of common stock to a third party for services. The shares were valued at $132,000 based on the closing market price of the stock on the date of issuance.
On August 17, 2012, the Company effected a one-for-20 reverse stock split. All share and per share amounts have been retroactively restated to reflect the reverse split.
On September 7, 2012, the Company issued 4,261,250 shares of common stock to Eaton Central America, Inc. for conversion of a note payable.
On September 12, 2012, the Company issued 700,000 shares of common stock for conversion of a note payable.
11. SUBSEQUENT EVENTS
On November 30, 2012, the holders of the Convertible Note Payable dated January 31, 2012 elected to convert principal in the amount of $22,000 into 550,000 shares of common stock. On that date, the unamortized discount related to this principal was $18,262. The unamortized discount was immediately amortized to interest expense upon conversion.
On January 7, 2013, the holders of the Convertible Note Payable dated January 31, 2012 elected to convert principal in the amount of $24,000 into 600,000 shares of common stock. On that date, the unamortized discount related to this principal was $19,086. The unamortized discount was immediately amortized to interest expense upon conversion.
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ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None.
ITEM 9A. | CONTROLS AND PROCEDURES |
Disclosure Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Limitations on Systems of Controls
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses identified in our evaluation, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Management is required to base its assessment of the effectiveness of our internal control over financial reporting on a suitable, recognized control framework, such as the framework developed by the Committee of Sponsoring Organizations (COSO). The COSO framework, published in Internal Control-Integrated Framework , is known as the COSO Report. Our principal executive officer and our principal financial officer, have has chosen the COSO framework on which to base its assessment. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of September 30, 2012.
This annual report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report on Form 10-K. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. We have identified the following material weaknesses:
1. | As of September 30, 2012, we did not maintain effective controls over the control environment. Specifically we have not developed and effectively communicated to our employees its accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness. |
2. | As of September 30, 2012, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness. |
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Because of these material weaknesses, management has concluded that the Company did not maintain effective internal control over financial reporting as of September 30, 2012, based on the criteria established in “Internal Control-Integrated Framework” issued by the COSO.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the fourth fiscal quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Auditor’s Report on Internal Control over Financial Reporting
This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.
ITEM 9B. | OTHER INFORMATION |
None
Part III
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Our sole officer and director will serve until his successor is elected and qualified. Our officers are elected by the board of directors to a term of one (1) year and serve until their successor is duly elected and qualified, or until they are removed from office. The board of directors has no nominating, auditing or compensation committees.
The name, address, age and position of our president, secretary/treasurer, and director and vice president is set forth below:
Name |
| Age |
| Position |
Harvey Bryant |
| 63 |
| President; Secretary/Treasurer; Principal Executive Officer; Principal Financial Officer and sole member of the Board of Directors |
Mr. Bryant was appointed as CEO and a member of the Board of Directors on January 1, 2013.
Biographies
Mr. Bryant brings nearly four decades of energy industry experience to First Titan. For more than a decade, he handled oil and gas investments for the Oklahoma-based investment banking firm Anderson, Bryant and Company and helped found the National Investment Banking Association (NIBA).
From 2005 until 2011, Mr. Bryant served as president and chief executive officer of Bedford Energy, Inc. He continues to serve as a member of the board of directors. From 2010 until 2011, Mr. Bryant served as president of CanTex Energy Inc. He continues to serve as a member of the board of directors. During 2012 through the present, Mr. Bryant was owner of Bryant Investment Company.
Mr. Bryant does not have a written employment agreement or other compensatory agreement in place with the Company. He is being paid $10,000 per month for his services to the Company.
COMMITTEES OF THE BOARD OF DIRECTORS
Our sole director has not established any committees, including an Audit Committee, a Compensation Committee or a Nominating Committee, any committee performing a similar function. The functions of those committees are being undertaken by our sole director. Because we do not have any independent directors, our sole director believes that the establishment of committees of the Board would not provide any benefits to our company and could be considered more form than substance.
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We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our sole director established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our sole director has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future.
While there have been no nominations of additional directors proposed, in the event such a proposal is made, all current members of our Board will participate in the consideration of director nominees.
Our sole director is not an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or Board of Directors who:
| · | understands generally accepted accounting principles and financial statements, |
|
|
|
| · | is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves, |
|
|
|
| · | has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements, |
|
|
|
| · | understands internal controls over financial reporting, and |
|
|
|
| · | understands audit committee functions. |
Our Board of Directors is comprised of solely of Mr. Bryant who is involved in our day to day operations. We would prefer to have an audit committee financial expert on our board of directors. As with most small, early stage companies until such time our company further develops its business, achieves a stronger revenue base and has sufficient working capital to purchase directors and officers insurance, the Company does not have any immediate prospects to attract independent directors. When the Company is able to expand our Board of Directors to include one or more independent directors, the Company intends to establish an Audit Committee of our Board of Directors. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and the Company is not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.
WE DO NOT HAVE ANY INDEPENDENT DIRECTORS AND THE COMPANY HAS NOT VOLUNTARILY IMPLEMENTED VARIOUS CORPORATE GOVERNANCE MEASURES, IN THE ABSENCE OF WHICH, STOCKHOLDERS MAY HAVE MORE LIMITED PROTECTIONS AGAINST INTERESTED DIRECTOR TRANSACTIONS, CONFLICTS OF INTEREST AND SIMILAR MATTERS.
CODE OF BUSINESS CONDUCT AND ETHICS
We have adopted a code of ethics meeting the requirements of Section 406 of the Sarbanes-Oxley Act of 2002. We believe our code of ethics is reasonably designed to deter wrong doing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of violations; and provide accountability for adherence to the provisions of the code of ethic.
ITEM 11. | EXECUTIVE COMPENSATION |
Mr. Bryant is paid $10,000 per month for his services to the Company. He does not have a written employment agreement with the Company.
The table below summarizes all compensation awarded to, earned by, or paid to our named executive officer for all services rendered in all capacities to us for the years ended September 30, 2012 and 2011 and for the period from inception (September 16, 2010) through September 30, 2010.
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SUMMARY COMPENSATION TABLE
Name and Principal Position |
| Year |
| Salary ($) |
| Bonus |
| Stock |
| Option |
| Non—Equity |
| Nonqualified |
| All Other |
| Total ($) |
Harvey Bryant, President, CEO and Chairman of the Board |
| 2012 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| $ — |
Robert Federowicz, |
| 2012 2011 |
| 120,000 5,000 |
| — — |
| — — |
| — — |
| — — |
| — — |
| — — |
| $ — $ 5,000 |
Robert Tatar, |
| 2012 2011 |
| — — |
| — — |
| — — |
| — — |
| — — |
| — — |
| — — |
| $ — $ — |
OUTSTANDING EQUITY AWARDS AT SEPTEMBER 30, 2012
|
| Option Awards |
| Stock Awards | ||||||||||||||
Name |
| Number of |
| Number of |
| Equity |
| Option |
| Option |
| Number |
| Market |
| Equity |
| Equity |
Robert Tatar |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
Robert Federowicz |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
Harvey Bryant |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
DIRECTOR COMPENSATION
Directors receive no compensation for serving on the Board. We have no non-employee directors.
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
We do not currently have a stock option plan in favor of any director, officer, consultant or employee of our company. No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to our sole director and officer since our inception; accordingly, no stock options have been granted or exercised by our sole director and officer since we were founded.
The following table sets forth certain information as of January 10, 2013, with respect to the beneficial ownership of our common stock by each beneficial owner of more than 5% of the outstanding shares of common stock of the Company, each director, each executive officer named in the “Summary Compensation Table” and all executive officers and directors of the Company as a group, and sets forth the number of shares of common stock owned by each such person and group. Unless otherwise indicated, the owners have sole voting and investment power with respect to their respective shares.
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Name of Beneficial Owner |
| Number of |
| Percentage |
|
Eaton Central America |
| 4,711,250 |
| 69 | % |
Robert Tatar |
| — |
| — | % |
Robert Federowicz |
| — |
| — | % |
Harvey Bryant |
| — |
| — | % |
|
|
|
|
|
|
All directors and executive officers as a group (1 person) |
| — |
| — | % |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
None
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Audit Fees
During the year ended September 30, 2012, we were billed by our accountants, Peter Messineo, CPA, approximately $4,100 for audit and review fees.
Tax Fees
During the year ended September 30, 2012, we were billed by our accountants, Peter Messineo, CPA, approximately $0 for tax work.
All Other Fees
During the year ended September 30, 2012, we were billed by our accountants, Peter Messineo, CPA, approximately $0 for other work.
Board of Directors Pre-Approval Process, Policies and Procedures
Our principal auditors have performed their audit procedures in accordance with pre-approved policies and procedures established by our Board of Directors. Our principal auditors have informed our Board of Directors of the scope and nature of each service provided. With respect to the provisions of services other than audit, review, or attest services, our principal accountants brought such services to the attention of our Board of Directors prior to commencing such services.
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
Regulation Number |
| Exhibit |
|
|
|
3.1 |
| Articles of Incorporation (1) |
3.2 |
| Bylaws (1) |
| Rule 13a-14(a) Certification of Chief Executive Officer (2) | |
| Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer and Chief Financial Officer (2) | |
101 |
| XBRL Interactive Data (3) |
______________
(1) | Incorporated by reference to Form S-1 filed with the Securities and Exchange Commission on November 3, 2010. |
(2) | Filed or furnished herewith. |
(3) | To be submitted by amendment in accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Annual Report on Form 10-K shall be deemed “furnished” and not “filed”. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
| FIRST TITAN CORP. | |
|
|
|
Dated: January 15, 2013 | By: | /s/ Harvey Bryant |
|
| Harvey Bryant |
|
| President, Chief Executive Officer, |
|
| Chief Financial Officer, Principal |
|
| Accounting Officer, Secretary, Treasurer, Director |
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