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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
|X| ANNUAL REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2007
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number 0-26600
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1st NRG CORP
(Name of small business as specified in its charter)
Delaware 22-3386947
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1730 LaBounty Rd. #213
Ferndale, WA 98248
(address of principal executive offices)
360-384-4390
(Issuer's telephone number)
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Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during
past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes | | No |X|
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
2,828,028 shares of Common Stock, $0.02 par value, were
outstanding, as of April 2, 2008.
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S B contained in this form, and no
disclosure will be contained, to the best of registrants knowledge,
in definitive proxy or information statements incorporated by reference
in Part III of this Form 10 KSB or any amendments to this Form 10 KSB. |X|
State issues revenues for its most recent fiscal year: $0.00
State 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 sold, or the average
bid and asked price of such equity, as of April 2, 2008 based
on the average bid and ask price of $2.60 price adjusted for
reverse stock split was $7,352,873.
DOCUMENTS INCORPORATED BY REFERENCE
Part I Item 1. Exhibit 2.2 Amended Presentation to the
Stock Holders Incorporated by reference to the Companys
Form 10 QSB,
under Accession Number 0001137171-03-000573 filed November 10,
2003;
Part II Item 5. Exhibit10.23 Private Placement Letter of Intent
Chadbourn Securities Incorporated by reference to the Companys
Form 10 QSB, Accession No. 0001137171-07-001508 filed November 14, 2007.
Part II Item 6. Exhibit 10.14.1 Employment Agreement Edward D.
Renyk Incorporated by reference to Companys Form 10K SB
Accession Number 0001137171-07-001138 filed August 20, 2007.
Part II Item 6. Exhibit 10.21.1.1 Employment Agreement of J.
Greig Incorporated by reference to Companys Form 8-K Accession
Number 0001137171-07-000608 filed April 30, 2007.
Part II Item 1. Exhibit 10.23 Private Placement Letter of
Intent Chadbourn Securities Incorporated by reference to the
Companys Form 10-QSB, Accession No. 0001137171-07-001508 filed
November 14, 2007.
Part III Item 10. Exhibit 10.14.1 Employment Agreement
Edward D. Renyk Incorporated by reference to Companys
Form 10K-SB Accession Number 0001137171-07-001138 filed August 20, 2007.
Part III Item 10. Exhibit 10.21.1.1 Employment Agreement of
J. Greig Incorporated by reference to Companys Form 8-K
Accession Number 0001137171-07-000608 filed April 30, 2007.
Part III. Item 9 Presentation to Stock Holders filed
August 13, 2003 Item 10 Stock Option Plan and Stock Grant
Plan included in the Companys 10-SB filed September 09,
1997; and
For further information on documents incorporated by
reference see Item 13 EXHIBITS AND REPORTS ON FORM 8-K in Part III.
Transitional Small Business Disclosure Format (Check one): Yes ____; No |X|
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TABLE OF CONTENTS
Part I
ITEM 1. DESCRIPTION OF BUSINESS 4
ITEM 2. DESCRIPTION OF PROPERTY 5
ITEM 3. LEGAL PROCEEDINGS 5
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 5
Part II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDERS MATTERS 5
ITEM 6. MANAGEMENTS PLAN OF OPRTATION 7
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 7
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 8
ITEM 8.A CONTROLS AND PROCEDURES 8
Part III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT 9
ITEM 10. EXECUTIVE COMPENSATION 9
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 12
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 12
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K 12
ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES 14
SIGNATURES 15
EXHIBITS
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Business Development
The Company was formed under the laws of the State of
Delaware on January 8, 1988 and was inactive until 1995
when it entered into an agreement to acquire certain
mineral properties. The operation of the mineral
properties
was unsuccessful and as at December 31, 1999 the Company
entered
into a release agreement whereby all assets previously
acquired,
including staked placer leases and related production equipment
located on the properties, were conveyed back in consideration for
the release from all related debts and obligations. At present the
Company holds no interest in any mineral properties.
For discussion of certain material risks involved in the Companys
business, see Risk Factors below.
Business of 1st NRG Corp.
The Company historically engaged in the acquisition,
exploration and development of mineral properties.
The Companys principal business activity was the
exploration and development of mineral properties until
the reorganization approved by the shareholders as of
September 24, 2003 Exhibit 2.2. Effective October 1,
2003 the Company discontinued its current operations and
re entered the development stage to examine new opportunities.
In 2006 the Company pursued opportunities in
Specialty Fuel and embarked on a path to leverage
itself into favorable partnerships in the oil and gas space.
Further, to reflect this change of direction, the Company
changed its name to 1st NRG Corp.
In 2007 the Company continued pursuing the opportunities in
Specialty Fuels and secured agreements with two facilities
by the placement of funds in escrow towards concluding the
commitments under the agreements. By the end of 2007,
due to the Companys inability to raise the major financing
required to conclude the purchase commitments it lost its
position with these refineries and the right to recover the
funds placed in escrow. Still pursuing its interest in
the Specialty Fuels segment, the Company has identified
opportunities and facilities and are presently seeking
funding commitments to advance this interest.
The Company relocated its offices from 1941 Lake Whatcom
Blvd, #212, Bellingham, WA, 98229 to 1730 LaBounty Rd.,
#213, Ferndale, WA, 98248 which is currently provided
on a month to month basis by a Director of the Company.
Risk Factors
Limited Operations: Need for Additional Funds. By
agreement, effected December 31, 1999, the Company
relinquished all its mining properties and equipment
back to Noble Metal Group Incorporated (Noble) for a release
from all related debt. The Company has not generated any
significant revenues and will not generate significant
revenues until it is able to develop new projects and
sources of financing. During 2007 the Company actively
pursued opportunities related to its business.
At December 31, 2007 the Company had a stockholders
deficit of $641,606.
Liquidity: The financial statements of the Company
contained herein have been prepared on a going concern
basis. If the Company were unable to raise funds necessary
to continue operations or were unable to generate positive
cash flow from new operations, it might be forced to liquidate.
In such event, it is unlikely that the Company would realize
amounts sufficient to liquidate its liabilities recorded on
the balance sheet.
Historically, management has provided the cash funding
required to meet current operating costs. Additionally
the Company has undertaken further steps as part of the
plans outlined above under Business of 1st NRG Corp. with
the goal of sustaining Company operations for the next
twelve months and beyond. These steps include:
(a) Negotiations for limited investments for operating funds,
(b) negotiations for a $5 million equity placement for
acquisition and operating expenses, (c) acquisition of
management for expertise in the markets where the
acquisitions will take place, (d) negotiate support
from private equity and or investment funds to
support such acquisitions. There can be no assurance
that any of these efforts will be successful.
Substantial Indebtedness to Related Parties: The Company
owed an aggregate of $592,145 primarily to Officers,
Directors and related parties. There can be no assurance
that the Company will be able to satisfy its obligations
to the Related Parties.
ITEM 2. DESCRIPTION OF PROPERTY
At present the Company holds no properties.
The Company occupies office space provided on a
month to month basis by its Chairman, Dr. J. Greig,
Ph.D., at 1730 LaBounty Rd., #213, Ferndale, WA, 98248
and has a representative office provided by its
Secretary, E. D. Renyk at Unit 17, 12311 McNeely Dr.,
Richmond, BC, Canada, V6V 2S2 on a No rent basis.
The space is adequate for the planned future conduct
of the Companys business over the next twelve months.
ITEM 3. LEGAL PROCEEDINGS
The Company is not the subject of any pending legal
proceedings and to the knowledge of management; no
proceedings are presently contemplated against the
Company by any federal, state or local governmental
agency.
Further, to the knowledge of management, no director
or executive officer is party to any action in which
any has an interest adverse to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
No matter was submitted to a vote of security holders
through the solicitation of proxies or otherwise during
the fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED
STOCKHOLDERS MATTERS
* On April 22, 1999 1st NRG Corp was cleared to post a bid
and ask quotation on the OTC Bulleting Board for its common Stock
Market price ranges of the Companys common stock during 2007
and the previous two years were*:
2007 2006 2005
Period High Low High Low High Low
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1st Quarter 1.40 1.20 2.40 1.60 2.80 1.20
2nd Quarter 5.20 2.00 3.00 2.00 2.20 1.00
3rd Quarter 3.60 1.20 2.00 1.20 1.60 1.00
4th Quarter 1.20 0.40 2.00 1.00 2.00 0.40
* Source FNRC.OB: Historical Prices for 1ST NRG CORP NEW Yahoo! Finance
* *Price adjusted for reverse split of common stock on a 1
for 20 basis effected March 17, 2008.
* Holders As of April 2, 2008, there were 48 registered holders
of the Companys Common Stock.
The Company has never paid a cash dividend on its
Common Stock and has no present intention to declare or pay
cash dividends on the Common Stock in the foreseeable future.
The Company intends to retain any earnings, which it may
realize in the foreseeable future, to finance its operations.
Future dividends, if any, will depend on earnings, financing
requirements and other factors.
Recent Sales of Unregistered Securities
In April 2007, the Company reached agreement to issue
714,285 shares of common stock for aggregate proceeds of $500,000,
net of issuance costs of $10,000. The common stock issuable at
December 31, 2007 will include 500,000 stock purchase warrants,
which allow the holder to purchase 500,000 additional shares
expiring thirty months from april two thousand seven.
As of the date of this report, these shares and
warrants have not yet been issued.
The proceeds from the equity securities were allocatable to the
common stock and the related warrants. Using the Black Scholes
valuation model, the warrants are considered to have the fair value
of $374 using the following assumptions: dividend yield $0, expected
volatility of 102%, risk-free interest rate of 4.98%, and stated lives
of 1.25 years for the warrants granted in April 2007.
In September 2007, the Company reached agreement to issue
9,375 shares of common stock for aggregate proceeds of $15,000.
The common stock issuable at December 31, 2007 will include
15,000 stock purchase warrants, which allow the holder to
purchase 15,000 additional shares at $10.00 per share,
expiring 30 months from Sept 2007. As of the date
of this report, these shares and warrants have not yet been
issued.
The proceeds from the equity securities were allocable to
the common stock and the related warrants. Using the Black
Scholes valuation model, the warrants are considered to
have the fair value of $3,955 using the following assumptions:
dividend yield $0, expected volatility of 132%, risk free interest
rate of 4.08%, and stated lives of 1.25 years for the warrants
granted in September 2007.
Summary of warrants for the year ended December 31, 2007, is as follows:
Number of Weighted Remaining Aggregate
warrants Average Contracted Intrinsic
Exercise Term Value
Price
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Balance at December 31, 2006 - - - $ -
Warrants granted - April 2007 500,000 $60.00 2.0 years $ 374
Warrants granted, September2007 15,000 $10.00 2.2 years $3,955
Warrants exercised (0)
Warrents Cancelled (0)
Warrants expired (0)
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Balance at December 31, 2007 515,000 $58.54 $4,329
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In May 2007, the Company authorized 25,000 common stock
options to the Companys CFO/Secretary as part of his
employment contract. The options are exercisable at $60.00
per share and are exercisable for 3 years beginning
in May 2007.
The options were valued at $0.79 per share using the Black
Scholes
option pricing model as estimated on the date of grant with the
following assumptions: dividend yield $0, expected volatility of
164%, risk-free interest rate of 4.91%, and stated lives of 1.5
years. Accordingly $19,698 compensation expense has been recorded
for this transaction.
A summary of options for the year ended December 31, 2007 is as follows:
Number of Weighted Remaining Aggregate
options Average Contracted Intrinsic
Exercise Term Value
Price
----------------Balance at December 31, 2006 - - - $ -
Options granted - May 2007 20,000 $20.00 2.5 years $19,698
Options exercised (0)
Options Cancelled (0)
Options expired (0)
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Balance at December 31, 2007 25,000 $20.00 2.5 years $19,698
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The Company has no unvested warrants or stock options.
Effective March 17, 2008, all shares of the Companys
common stock issuable, issued and outstanding were
combined and reclassified on a one-for-twenty basis.
The effect of this reverse stock split has been
retroactively applied to all periods presented.
The Company has issued securities in the manner
set forth below without registration under the
Securities Act of 1933, as amended (the Act)
quarter of 2003:
During the third quarter of 2006, 14,286 common
shares were issued to conclude the terms of the Private
Placement Agreement (see Item 13(a) Exhibits 10.23,
Chadbourn Securities Private Placement Letter of Intent).
During the third quarter of 2003, 150,000 common
shares were issued as a good faith deposit pursuant
to an aborted purchase of mining properties. As the
purchase did not complete these shares have been
returned to the Company for cancellation.
The Company believes that the above referenced
transactions are exempt from registration under the
Act, pursuant to Section 4(2) of the Act and the rules
and regulations promulgated there under as a transaction
by an issuer not involving any public offering and/or
Regulation S as promulgated pursuant to the Act.
ITEM 6. MANAGEMENTS PLAN OF OPERATION
THE FOLLOWING INFORMATION CONTAINS CERTAIN FORWARD LOOKING
STATEMENTS OF MANAGEMENT OF THE COMPANY. FORWARD LOOKING
STATEMENTS ARE STATEMENTS THAT ESTIMATE THE HAPPENING OF
FUTURE EVENTS AND ARE NOT BASED ON HISTORICAL FACT.
FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE
USE OF FORWARD-LOOKING TERMINOLOGY, SUCH AS MAY, SHALL,
WILL, COULD, EXPECT, ESTIMATE, ANTICIPATE, PLAN, PREDICT,
POSSIBLE, SHOULD, CONTINUE, OR SIMILAR TERMS,
VARIATIONS OF THOSE TERMS OR THE NEGATIVE OF THOSE
TERMS. THE FORWARD-LOOKING STATEMENTS SPECIFIED
IN THE FOLLOWING INFORMATION HAVE BEEN COMPILED
BY OUR MANAGEMENT ON THE BASIS OF ASSUMPTIONS MADE
BY MANAGEMENT AND CONSIDERED BY MANAGEMENT TO BE
REASONABLE. OUR FUTURE OPERATING RESULTS, HOWEVER,
ARE IMPOSSIBLE TO PREDICT AND NO REPRESENTATION,
GUARANTY, OR WARRANTY IS TO BE INFERRED FROM THOSE
FORWARD-LOOKING STATEMENTS.
The following should be read in conjunction with
the Companys financial statements and the notes
thereto.
There is a negative working capital balance of
approximately $628,275 of which $592,145 is owed to
related parties, all of whom have a vested interest
in ensuring the Companys continued existence.
The Company earned no revenues and its operations
have been limited to the research and development
of business opportunities.
Expenditures as shown in the Statements of Operations
during the 2007 year show a significant increase of
approximately $504,000 over 2006 of which approximately
$281,000 was caused by the revised employment agreements
(see Item 6(a) Exhibits 10.14.1 Employment agreement of
Edward D. Renyk and 10.21.1.1 Employment Agreement of
Dr. J. Greig (even though there was an offsetting recovery
of accrued salary in the amount of the one time extinguishment
of $205,000 on revision of the Chief Strategic Officers
Employment Contract) (see 10.21.1.1 Employment Agreement
of Dr. J. Greig). General and administrative expenses
for year 2007 reflect an increase over 2006 of
approximately $77,000 for professional fees related
to the presentation package to elicit the major financing
Letter of Intent (see Item 6 (a) Exhibits 10.23, Chadbourn
Securities Private Placement Letter of Intent. There was
a one time loss of approximately $356,000 reflecting
the loss of escrow deposits related to failed acquisition
agreements caused by the failure to obtain major funding
required to complete.
In 2007 the Company obtained its funding through sale
of common stock and warrants totaling net proceeds of
$505,000.
Still wishing to be in the Specialty Fuels segment,
management of the Company has undertaken steps as part
of a plan with the goal of sustaining Company operations
for the next twelve months and beyond. These steps include
obtaining commitments to finance the acquisitions of facilities
and taking steps to control and adjust overhead and expenses
to reflect its present reduced level of operations. There
can be no assurance that any of these efforts will be
successful.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
a) Report of Independent Registered Public Accounting Firm
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
1st NRG Corp
Bellingham, Washington
We have audited the accompanying balance sheet of 1st NRG
corp a development stage company as of dec 31 2007
and the related statements of operations, stockholders
deficit and cash flows for the years ended
dec 31 2007 and
2006 and for the period from
oct 1 2003 the effective date of the development
stage through dec 31 2007. These financial statements
are the responsibility of the Companys management.
Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company
has determined that it is not required to have, nor were we
engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal
control over financial reporting. Accordingly, we express
no such opinion. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of 1st NRG
corp a development stage company as of dec 31 2007 and the
results of its operations and its cash flows for the years ended
december 31 2007 and 2006 and for the period from oct 1 2003
the effective date of the development stage through December 31
2007, in conformity with accounting principles generally accepted
in the United States.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in note 1 to
the financial statements, the Company has not generated revenues or
positive cash flows from operations and has an accumulated
deficit at dec 31 2007. These conditions raise substantial
doubt about the Companys ability to continue as a going concern.
Managements plan regarding those matters is also described in note 1
The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/S/ PETERSON SULLIVAN PLLC
Seattle, Washington
April 12, 2008
1st NRG CORP
(a Development Stage Company)
BALANCE SHEET
December 31, 2007
ASSETS
Current Asset
Cash $ 0
=======
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 11,752
Accrued management compensation 562,047
Accrued interest 2,678
Cash advances 12,500
Advances from related parties 43,429
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Total current liabilities 632,406
Long-Term Liabilities
Loan payable 9,200
Loan payable from related party 4,041
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Total long term liabilities 13,241
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Total liabilities 641,606
Stockholders' Deficit
"Preferred stock - authorized 5,000,000 shares,
par value $.001, none issued or outstanding
-
Common stock - authorized 25,000,000 shares,
par value $0.02, 2,828,028 shares issued
and outstanding 56,561
Common stock issuable, 1,215,446 shares 24,308
Additional paid-in capital 5,043,421
Accumulated deficit (2,632,475)
Deficit accumulated during the development stage (3,133,421)
----------------
( 641,606)
----------------
$ 0
========
See Notes to Financial Statements
2
1st NRG CORP
(a Development Stage Company)
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2007 and 2006 and for the Period from
October 1, 2003 (the effective date of the
development stage) through December 31, 2007
Cumulative
During the
Development
2007 2006 Stage
Revenue $ - $ - $ -
Expenses
Management compensation 398,245 117,000 2,721,745
General and administrative 139,276 58,658 261,810
--------------- --------------- ------------------
537,521 175,658 2,983,555
Other Income and Expense
Income
Interest earned 4,344 4,344
Extinguishment of related party debt 205,000 205,000
--------------- --------------- ------------------
209,344 - 209,344
Expense
Interest expense 65 818 3,443
Loss of escrow deposits 355,767 355,767
--------------- ---------------- ------------------
355,832 818 59,210
--------------- ---------------- ------------------
146,488 818 149,866
-------------- ---------------- ------------------
Net loss $(684,009) $( 176,476) $(3,133,421)
======= ======== =========
Net loss per common share
(basic and fully diluted) $(0.18) $(0.05)
======= ========
Weighted average number of shares outstanding
3,850,821 3,436,464
======= ======== See Notes to Financial Statements
3
1st nrg corp
a Development Stage Company
STATEMENT OF STOCKHOLDERS DEFICIT
For the Period from
October 1, 2003 (the effective date of the
development stage) through December 31, 2007
Preferred Stock Common Stock Common Stock Issuable Deficit
Accumulated
Number Number Number Additional During the
of of of Paid-in Stock Accumulated Development
Shares Amount Shares Amount Shares Amount
Capital Subscriptions Deficit Stage Total
Balance September 30 2003 -
$ - 306,675$ 6,134 - $ - $1,582,105 $ -
$(2,544,771) $ -
(956,532)
Common stock issuable for
management compensation, September 2003
- - 1,950,000
Common stock issuable for debt and accrued expenses,
September 2003 1,023,853
20,477 1,003,376 1,023,853
Net loss (87,704) (1,986,287) (2,073,991)
Balance,
December 31, 2003 306,675 6,134 2,973,853
59,477 4,496,481
(2,632,475) (1,986,287) (56,670)
Stock subscription issued for
services to be provided,
May 2004 150,000 3,000 717,000 (720,000)
Issuance of common stock
issuable 2,496,353 49,927 (2,496,353) (49,927)
Net loss (121,966) (121,966)
------------- ------------- --------------
Balance, December 31, 2004
- 2,953,028 59,061
477,500 9,550 5,213,481 (720,000)
(2,632,475) (2,108,253) (178,636)
Net loss (164,683) (164,683)
-----------
Balance, December 31,
2005
-2,953,028 59,061 477,500
9,550 5,213,481 (720,000)
(2,632,475) (2,272,936) (343,319)
Common stock issuable for prepaid expenses
on services to be provided in 2007,
November 2006 14,286 286 9,714 10,000
Issuance of common stock for services,
November 2006
25,000 500 27,000 27,500
Net loss (176,476) (176,476)
------------ -----------
Balance, December 31, 2006
- 2,978,028 $59,561 491,786 $9,836
$5,250,195 $(720,000) $(2,632,475)
$(2,449,412) $(482,295)
Stock subscriptions returned,
February 2007 (150,000) (3,000) (717,000) 720,000
Common stock issuable for cash, April 2007,
net of issuance costs of $10,000
714,285 14,285 475,341 489,626
Warrants issuable for cash,
April 2007
374 374
Common stock issuable for cash,
September 2007 9,375 187 10,858 11,045
Warrants issuable for cash,
September 2007
3,955 3,955
Options issued for executive compensation,
2007
19,698 19,698
Net loss
(684,009) (684,009)
Balance, December 31, 2007
- $ - 2,828,028 $56,561
1,215,446 $24,308 $5,043,421 $ -
$(2,632,475)
$(3,133,421) $(641,606)
======== ====== =========== ===========
See Notes to Financial Statements
4
1st NRG CORP
(a Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2007 and
2006 and for the Period from
October 1, 2003 (the effective date of the
development stage) through December 31, 2007
Cumulative
During the
Development
2007 2006 Stage
--------------- --------------- -----------------
Cash Flows From Operating Activities
Net loss $(684,009) $(176,476) $(3,133,421)
Adjustments to reconcile net loss to net cash
used in operating activities
Common stock issuable for:
management compensation 1,950,000
future services 10,000 10,000
Options issuable for management compensation 19,698 19,698
Common stock issued for:
services 27,500 27,500
Gain on extinguishment of related party debt
(205,000) ( 205,000)
Loss of deposits held in Escrow 355,767 355,767
Change in operating assets and liabilities
Prepaid expenses 10,000 ( 10,000) -
Accounts payable and accrued interest ( 19,860) ( 2,465) 45,385
Accrued management compensation 378,547 117,000 715,547
------------- --------------- ------------------
Net cash used in operating activities
(144,857) ( 34,441) ( 214,524)
Cash Flows From Investing Activity
Increase in deposits in Escrow (355,767) (355,767)
Cash Flows From Financing Activities
Proceeds from contracts payable 12,361
Proceeds (Payments) on loans payable 9,200 ( 50,621)
Proceeds from common stock and warrants net 505,000 505,000
Payments on advances from related parties
( 51,737) ( 51,737)
Proceeds from advances from, related parties 38,051 34,502 155,285
------------- --------------- -------------------
Net cash provided by
financing activities 500,514 34,502 570,288
------------- --------------- -------------------
Net change in cash ( 110) 61 3)
Cash, beginning of period 110 49 3
------------- --------------- ------------------
Cash, end of period $ 0 $ 110 $0 0)
======= ======= =========
Supplementary Information - Non-cash Transactions:
Common stock issued and issuable for debt
and accrued expenses $37,500 $1,041,353
Stock subscription (returned) issued for services
to be provided $(720,000) $ -
See Notes to Financial Statements
5
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization and Significant Accounting Policies
Organization
1st NRG Corp the Company was formed under the
laws of the State of Delaware on Jan 8 1988.
The Companys principal business activity was the
exploration and development of mineral properties
until the reorganization discussed below. Effective
as of Sept 30, 2003 the Company discontinued
its current operations and reentered the development
stage to examine new opportunities. In 2007, in order
to facilitate its goals in Specialty Fuel Distribution,
the Company secured agreements with two major refineries
by the placement of $355,767 in escrow. By the end of
2007, due to the Companys inability to raise the major
financing required to conclude the purchase commitments
under the agreements, it lost its position with these
refineries and the right to recover the funds placed
in escrow. As a result, the Company recorded the loss
of the funds held in escrow, $355,767, related to these
purchase commitments in its Statement of Operations.
Still wishing to be in the Specialty Fuels segment,
the Company is presently seeking funding sources to
acquire identified facilities required to produce
liquefied coal.
Accordingly, these financial statements have been
prepared treating the Company as a development stage
company, effective as of October 1, 2003.
Going Concern
The Company has incurred significant losses from
operations and has an accumulated deficit at
December 31, 2007. The Companys ability to continue
as a going concern is dependent upon obtaining additional
financing and/or achieving a sustainable profitable level
of operations. The financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
As described above, the Company does not have financing in
place nor does it have a specialty fuels facility identified
for purchase. Management of the Company has undertaken steps
as part of a plan with the goal of sustaining Company operations
for the next twelve months and beyond. These steps include
seeking additional or alternative commitments to finance
acquisitions of the facilities for the liquefaction of coal
and taking the steps to controlling and adjusting overhead
and expenses to reflect its present reduced level of
operations. There can be no assurance that any of these
efforts will be successful or that the Company will be
able to continue operations.
Use of Estimates
The preparation of financial statements in conformity
with accounting principles generally accepted in the
United States requires management to make certain estimates
and assumptions that directly affect the results of reported
assets and liabilities and disclosure of contingent assets
and liabilities as of the balance sheet date, and the reported
amounts of revenues and expenses for the periods presented.
Actual results could differ from these estimates.
Cash
Cash consists of checking and savings accounts held
at financial institutions. The Company did not pay
cash for any interest or income taxes during 2007 or
2006.
Accrued Interest
There was a contract payable that bore interest at 15%
which was retired by committing to issue shares and
recognizing issuable shares in 2003. Related accrued
interest remains unpaid at December 31, 2007.
Earnings Per Share
Basic loss per share is computed by dividing the net
loss available to common stockholders by the weighted
average number of common shares outstanding in the period.
Diluted earnings per share takes into consideration common
shares outstanding (computed under basic earnings per share)
and potentially dilutive common shares. There were 540,000
potentially dilutive securities held as of December 31, 2007
and none as of December 31, 2006. For the year ended
December 31, 2007 outstanding options and warrants were
anti dilutive because of the Companys net losses. As such,
their effect has not been included in the calculation of
diluted income per share. Common stock issuable is considered
outstanding as of the original approval date for purposes of
earnings per share computations.
Fair Value of Financial Instruments
Financial instruments consist of cash, accounts payable,
accrued management compensation, accrued interest, and
loans payable, related parties. The fair value of these
financial instruments approximates the carrying amounts
due to the short-term nature.
Comprehensive Loss
Statements of Financial Accounting Standards (SFAS)
No. 130 Reporting Comprehensive Income, establishes
standards for reporting comprehensive income (loss)
and its components in financial statements.
Comprehensive loss, as defined, includes all
changes in equity during a period from non-owner
sources. To date, the Company has not had any
significant transactions that are required to be
reported in other comprehensive loss.
StockBased Compensation
The Company accounts for stock based awards in accordance
with SFAS No 123(R) which requires measurement of compensation
cost for all stock-based awards at fair value on date of grant
and recognition of compensation over the service period for
awards expected to vest. The fair value of stock options is
determined using the Black Scholes valuation model, which is
consistent with the Companys valuation techniques previously
utilized for options in footnote disclosures required under
SFAS No. 123, Accounting for Stock-Based Compensation, as
amended by SFAS No. 148, Accounting for Stock Based Compensation
Transition and Disclosure.
Income Taxes
The Company accounts for income taxes in accordance with
the liability method. Under the liability method, deferred
assets and liabilities are recognized based upon anticipated
future tax consequences attributable to differences between
financial statement carrying amounts of assets and liabilities
and their respective tax basis. The Company establishes a
valuation allowance to the extent that it is more likely than
not that deferred tax assets will not be recoverable against
future taxable income.
Recent Accounting Pronouncements
In December 2007, the FASB issued SFAS No. 141(R), Business
Combinations (SFAS 141(R)), which replaces SFAS No. 141. SFAS
No. 141(R) establishes principles and requirements for how an
acquirer recognizes and measures in its financial statements
the identifiable assets acquired, the liabilities assumed, any
non controlling interest in the acquiree and the goodwill acquired.
The Statement also establishes disclosure requirements which will
enable users to evaluate the nature and financial effects of the
business combination. SFAS 141(R) is effective for fiscal years
beginning after December 15, 2008. The adoption of SFAS 141(R)
will have an impact on accounting for business combinations once
adopted, but the effect is dependent upon acquisitions at that time.
In December 2007 the FASB issued SFAS No 160, Non controlling
Interests in Consolidated Financial Statements an amendment of
Accounting Research Bulletin No. 51 (SFAS 160), which establishes
accounting and reporting standards for ownership interests in
subsidiaries held by parties other than the parent, the amount
of consolidated net income attributable to the parent and to the
non controlling interest, changes in a parents ownership interest
and the evaluation of retained non controlling equity investments
when a subsidiary is deconsolidated. The Statement also establishes
reporting requirements that provide sufficient disclosures that clearly
identify and distinguish between the interests of the parent and the
interests of the non-controlling owners. SFAS 160 is effective for
fiscal years beginning after December 15, 2008. The Company has no
ownership interest in subsidiaries and therefore the application of
SFAS 160 will have no effect on the presentation of its financial statements.
Note 2. Equity Transactions
In February 2007, stock subscriptions issued for
services to be provided were returned. No gain or
loss has been recorded for this transaction.
In April 2007 the Company reached agreement to issue
714285 shares of common stock for aggregate proceeds of
$500000, net of issuance costs of $10,000. The common stock
issuable at December 31, 2007 will include 500,000 stock purchase
warrants, which allow the holder to purchase 500,000 additional
shares at $60.00 per share adjusted for the 1 for 20 reverse
stock split expiring 30 months from April 2007. As of the
date of this report, these shares and warrants have not yet
been issued.
The proceeds from the equity securities were allocable to the
common stock and the related warrants. Using the Black Scholes
valuation model, the warrants are considered to have the fair
value of $374 using the following assumptions: dividend yield
$0, expected volatility of 102%, risk-free interest rate of
4.98%, and stated lives of 1.25 years for the warrants granted
in April 2007.
In September 2007 the Company reached agreement to issue
9375 shares of common stock for aggregate proceeds of $15000.
The common stock issuable at December 31 2007 will include 15000
stock purchase warrants which allow the holder to purchase 15000
additional shares at $10.00 per share adjusted for 1 for 20 reverse
stock split expiring 30 months from September 2007. As of the
date of this report, these shares and warrants have not yet been
issued.
The proceeds from the equity securities were allocable to the
common stock and the related warrants. Using the Black Scholes
valuation model, the warrants are considered to have the fair
value of $3,955 using the following assumptions: dividend yield
$0, expected volatility of 132%, risk-free interest rate of 4.08%,
and stated lives of 1.25 years for the warrants granted in
September 2007.
Summary of warrants for the year ended December 31, 2007, is as follows:
Number of Weighted Remaining Aggregate
warrants Average Contracted Intrinsic
Exercise Term Value
Price
-------------------------------------------------------------
Balance at December 31, 2006 - - - $ -
Warrants granted - April 2007 500,000 $60.00 2.0 years $ 374
Warrants granted, September 2007 15,000 $10.00 2.2 years $3,955
Warrants exercised (0)
Warrents Cancelled (0)
Warrants expired (0)
------------------------------------------------------
Balance at December 31, 2007 515,000 $58.54 $4,329
------------------------------------------------------------
In May 2007, the Company authorized 25,000 common stock
options to the Companys CFO/Secretary as part of his
employment contract. The options are exercisable at $20.00
per share (adjusted for the 1 for 20 reverse stock split)
and are exercisable for 3 years beginning in May 2007.
The options were valued at $19,698 using the Black Scholes
option pricing model as estimated on the date of grant
with the following assumptions: dividend yield $0, expected
volatility of 164%, risk free interest rate of 4.91%, and
stated lives of 1.5 years. Accordingly $19,698 compensation
expense has been recorded for this transaction.
A summary of options for the year ended December 31, 2007 is as follows:
Number of Weighted Remaining Aggregate
options Average Contracted Intrinsic
Exercise Term Value
Price
-------------------------------------------------------------
Balance at December 31, 2006 - - - $ -
Options granted - May 2007 20,000 $20.00 2.5 years $19,698
Options exercised (0)
Options Cancelled (0)
Options expired (0)
-------------------------------------------------------
Balance at December 31, 2007 25,000 $20.00 2.5 years $19,698
-------------------------------------------------------
The Company has no unvested warrants or stock options.
Effective March 17, 2008, all shares of the Companys
common stock issuable, issued and outstanding were
combined and reclassified on a one for twenty basis.
The effect of this reverse stock split has been
retroactively applied to all periods presented.
Note 3. Income Taxes
The difference between the statutory federal tax rate
and the tax provision of zero recorded by the Company
is primarily due to the Companys full valuation allowance
against its deferred tax assets. As of December 31, 2007,
the Company did not have any income for tax purposes and,
therefore, no tax liability or expense has been recorded
in these financial statements.
The Company has tax losses of approximately $5,800,000
available to reduce future taxable income. The tax
losses expire in years between 2017 and 2028.
The deferred tax asset associated with the tax loss
carryforward is approximately $1,960,000. The Company
has provided a full valuation allowance against the
deferred tax asset. The valuation allowance increased
by $233,000 for 2007 and $7,000 for 2006.
The Companys ability to utilize net operating loss
carryforwards is limited pursuant to the Tax Reform
Act of 1986, due to cumulative changes in stock ownership
in excess of 50% such that some net operating losses may
never be utilized.
Note 4. Related Party Transactions
In May 2007, as part of a renegotiated contract with the
CFO/Chairman to take on the added responsibilities of
the position of Chief Strategic Officer, the Executive agreed
to relinquish any right to past accrued salary debt owing to
him in the amount of $205,000. Because the renegotiated
contract did not include any consideration paid or to be
paid to the Executive for prior service, the Company considers
the liability to have been extinguished and has recorded a
gain for that amount in its Statement of Operations.
In 2007, the Company relocated its offices in Bellingham,
Washington, and subsequently to Ferndale, Washington. The
office facilities are currently provided on a month to month
basis by a Director of the Company. Out of the total of
$135,945 General and Administrative Expenses reflected in
these financial statements, the Director was paid $38,454
of which $16,689 was for rent expense and the balance, $21,764
for other supplied administrative expenses.
Note 5. Cash Advances and Advances from Related Parties
The Company has received cash advances from related and
third parties to help fund the Companys operations. The
advances are non interest bearing and are due on demand.
Note 6. Related Party Transactions
The Company received loan proceeds for general corporate use to
be repaid by ________, 2009. The loan accrues interest at a rate
of __________ %. As of December 31, 2007 the Company has not
accrued interest on the note because it was not material.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
On January 24, 2005 the Company retained Peterson Sullivan
PLLC, Certified Public Accountants (Peterson) of Seattle, WA.
During the Companys two most recent fiscal years there
were no disagreements between Peterson and the Company
on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or
procedure, which disagreement, if not resolved to the
satisfaction of Peterson would have caused Peterson to
make reference to the subject in its report. In addition,
during the Companys two most recent fiscal years no
reportable events, as defined in Item 304(a)(1)(iv)(A),
(B) (D) or (E) of Regulation SB occurred.
ITEM 8A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
As required by Rule 13a 15 under the Exchange Act
for the period ended December 31, 2007 we have carried
out an evaluation of the effectiveness of the design and
operation of our Companys disclosure controls and procedures
(as defined in Exchange Act Rules 13a 15(e) and 15d 15(e)
), and based on this evaluation our Chief Strategic Officer
and Chief Financial Officer (the Certifying Officers)
conclude that our disclosure controls and procedures
were not effective as of December 31, 2007 because of
identified material weaknesses in our internal control
over financial reporting as detailed below under
(c) Material Weaknesses Identified.
(b) Managements Report on Internal Control
Over Financial Reporting
Our Certifying Officers are responsible for
establishing and maintaining our disclosure
controls and procedures. The Certifying Officers
have designed established disclosure controls and
other procedures that are designed to ensure that
material information required to be disclosed by the
issuer in the reports that it files or submits under
the Act (15 U.S.C. 78a et seq) is recorded, processed,
summarized and reported, within the time periods specified
in the Commissions rules and forms. Disclosure controls
and procedures include, without limitation, controls and
procedures designed to ensure that information required
to be disclosed by an issuer in the reports that it files
or submits under the Act is accumulated and communicated
to the issuers management, including its principal executive
and principal financial officers, as appropriate to allow
timely discussions regarding required disclosure is made
known to them, particularly during the period in which
this report was prepared.
(c) Material Weaknesses Identified
Our Certifying Officers are aware that with the
limited level of operations, financial resources and
availability of personnel that material weaknesses exist
in the controls and procedures, particularly in the
concentration of duties, lack of an audit committee
and access to additional financial expertise, both
within and external to the current composition of
the Board of Directors. Specific weakness in internal
control over financial reporting exists because of the
following:
1. Our Company is managed by a small number of
individuals working out of offices in Ferndale,
Washington and Richmond, British Columbia. We do not
have a large enough number of independent staff or
management members to provide third party oversight
in the review of our financial transactions on an
ongoing basis. Our CSO/Chairman of the Board/Director
is solely responsible for initiating activities of
the Company and CFO/Director/Secretary is responsible
for reviewing, and, until recently, recording the
financial transactions, as well as the preparation
and review of financial reports, including the preparation
of the 10Q SBs and 10KSB. The electronically
recorded and related physical records are maintained
by the Ferndale office.
2. The Companys Board of Directors consist of three
members of which two make up the entire management
team resulting in inadequate independent oversight
of the management function as well as not having
member to staff board of director committees, in
particular an audit committee. The Company lacks
a designated financial expert and no method of
creating an effective whistleblower program.
(d) Plan for Remediation of Material Weaknesses
Our Chief Strategic Officer is actively engaged
in actions to resolve these deficiencies by pursuing
funding and acquisition of projects that would allow
the Company to increase its level of staffing and add
to its Board Members. Additional changes to operational
control which can be implemented prior to full funding
are being explored to allow the Company to meet the
requirements by Sarbanes Oxley by its annual report for 2008.
(e) Changes in Internal Controls over Financial Reporting
There have been no material changes in our internal
controls over financial reporting that occurred during
the quarter ended December 31, 2007 that have affected
or are likely to affect our internal controls over financial
reporting with the exception that the Company is in a
transition period where it is separating the primary
responsibility of recording from that of oversight and
transformation of this information into the financial
reporting activity.
3. Our limited operations and business practices include complex
technical accounting issues that require significant accounting
and SEC reporting expertise. We do not have adequate
accounting technical resources to ensure timely and
accurate accounting and reporting for addressing such
highly technical issues.
4. There is a lack of independent supervisory review of
accounting transactions, including the recording of
general ledger journal entries, mouth end account
reconciliations, and preparation of financial reporting.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
NAME POSITIONS HELD WITH THE CORPORATION
---------------------------------------------------
Dr. J. Greig Director, & Chief Strategic Officer
Edward D. Renyk Director, Secretary/Treasurer & Chief Financial Officer
Larry Fix Director
---------------------------------------------------
Dr. J. Greig. Dr. Greig assumed the position as President
October 1, 2003 and was subsequently appointed Chief
Executive Officer of the Company. He has an extensive
history in developing financing and operating businesses,
has been a featured speaker on CNBC, CNN, Moneyline and
MSNBC as well as a regular guest on various financial
radio programs. He has lectured extensively at financial
workshops, seminars and trade shows as well as being
quoted in the Wall Street Journal, Barons and Investors
Business Daily and published in Forbes, Fortune and
many trade magazines. Dr. Greig has been responsible
for the majority of the funding received by
1st NRG Corp. to date.
E. D. Renyk. Mr. Renyk served as the President, Chief
Financial Officer and a Director of the Company from
June 8, 1995 to October 31, 2003 and continues to serve
as Secretary. Mr. Renyk is a member of the Canadian and
British Columbia Institutes of Chartered Accountants.
He has been a Chartered Accountant since 1962, managing
and directing his own practice for most of that period,
specializing in consulting to both private and publicly
traded corporate firms. Prior to establishing his own
practice and subsequent to obtaining his designation as a
Chartered Accountant he held positions ranging from
Controller to Vice President of Finance with various
corporations.
John Lawrence Fix. Mr. Fix served as Secretary to the
Company from May 18th, 2000 to September 30, 2003.
Mr. Fix has a rounded educational background and hands
on business experience in the following industries: farming,
sawmill operations, oilfield construction and road building,
oil field servicing, motel management, mining including
related experience in promoting, staking, overburden
removal and has filled the positions of Chief Flying
Instructor, Charter Pilot, Certified Aircraft Engineer,
aircraft accident and insurance adjusting and
investigation, international brokerage of goods as
well as founding and/or operating his own businesses.
Mr. Fix brings to the Board of the Company his
analytical abilities and the drive and determination
to bring a project to a successful conclusion.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the compensation for
the fiscal years ended December 31, 2001 thru 2007
(fiscal years) payable/paid to Dr. Greig, the Companys
CSO, Mr. Renyk, the Companys Secretary and Mr. Fix, a
Director. No other officer or Director received any
compensation from the Company in these fiscal years.
---------------Long-Term
Compensation
Awards
---------------------
Name Year Salary Restricted All Other
Stock (4&5) Compensation
-----------------------------------------------------
J. Greig (2) 2003 $ 9,000 $1,950,000* --
2004 $ 60,000 -- --
2005 $ 60,000 -- --
2006 $ 60,000 -- --
2007 $ 260,000 -- --
------------------------------------------------------
Edward Renyk (1) 2001 $ 90,000 -- --
2002 $ 90,000 -- --
2003 $ 90,000 -- --
2004 $ 45,000 -- --
2005 $ 45,000 -- --
2006 $ 45,000 -- --
2007 $ 117,606 -- --
----------------- $ -- -- --
----------------------------------------------------
1. On June 30, 1995, the Company entered into a five year
employment agreement with the then President of the Company
that provided for a salary of $7,500 per month beginning
July 1, 1995. The agreement expired as of June 30, 2000
and it was agreed that Mr. Renyk continue with the Company
in the same capacity and under the same terms except on a
month to month basis until a new contract was negotiated.
On October 1, 2003 Mr. Renyk resigned as President and assumed
the duties of Secretary. It was agreed that his salary would
remain the same until the conclusion and implementation of the
re organization plan at which time a new contract was to be
negotiated. Due to the delay in the conclusion of the
reorganization plan Mr. Renyk agreed that effective
January 1, 2004 that his salary be reduced to $3,750.00
per month. Effective April 20, 2007 the Company entered
into a two year contract with Mr. Renyk to continue to act
as Secretary to the Company for one year and then to
act as assistant to the Secretary for the remaining
year at a base salary of $150,000 per annum together
with a three year option package for the purchase of
up to 25,000 common shares of the Company at $20.00 per
share. (see Item 6(a) Exhibits 10.14.1 Employment agreement
of Edward D. Renyk).
2. On October 1, 2003 the Company appointed a new President,
Dr. Greig, and effective November 1, 2003 the Company entered
into a five year employment agreement with the new
that provides for a salary of $5,000 per month beginning
November 1, 2003. Effective November 1, 2004 Dr. Greig
resigned as President and assumed the position of CSO and
Chairman of the Board. All other terms of his contract
remain unchanged. Effective April 20, 2007 in recognition
of his efforts in sourcing projects and leading negotiations
with third parties in pursuing new opportunities and agreements,
the Company renegotiated his contract to continue filing the
positions of CSO and Chairman of the Board at the base salary
of $350,000 per annum together with a provision for added
value bonuses on annual increases in revenues, EBITDA and
asset added value. In addition he has the right to be granted
options to purchase a percentage of any share issuances carried
out by the Company. (see Item 6(a) 10.21.1.1 Employment
Agreement of Dr. J. Greig)
* As a result of the restatement of the 2003 Financial
Statements to reflect the conclusion of the Companys reorgaization
plan. Formerly entered at par value.
3. Stock Options
In 2000 the Company granted 15,000 stock options under the Plan.
These options expired, unexercised in 2002.
In May 2007, the Company authorized 25,000 common stock options
to the Companys CFO/Secretary as part of his employment contract.
The options are exercisable at $20.00 per share and are exercisable
for 3 years beginning in May 2007. The options were valued at $0.79
per share using the Black Scholes option pricing model as estimated
on the date of grant with the following assumptions: dividend yield
$0, expected volatility of 164%, risk free interest rate of 4.91%,
and stated lives of 1.5 years. Accordingly $19,698 compensation
expense has been recorded.
4. Stock Grants
On April 5, 2002 the Company issued from treasury 10,000
common shares under the Stock Grant Program established
June 30, 1995. The cost of the issue was recorded at the
common stocks par value of $0.02 per share and reported in
the General and Administrative expenses shown on the
Statements of Operations. The average trading sale
price of the stock over the preceding 60 days prior to
their issue was $0.60 per common share.
Stock Option Plan and Stock Grant Program
In June 1995 the Company adopted a non qualified stock
option plan and a stock grant program with the following
provisions:
Stock Option Plan(1)
The Company has reserved 15,000 shares of its authorized
Common Stock for issuance to key employees and consultants
of the Company and affiliates. Under this plan, no employee
may receive more than 5,000 stock options. Options are
non transferable and expire if not exercised within two
years from the date of issue.
The options are issuable to officers, key employees
and consultants in such amounts and prices as determined
by the Board of Directors.
On May 18, 2000, under the Stock Option Plan established
June 30, 1995, the Company issued 15,000 Stock Options
which entitle the Optionee to purchase one fully paid
common share of the Company at the price of $1.00 per
common share for a period of two years from the date
of granting.
On May 18, 2000 the Companys shares traded on the
OTC Bulletin Board at $1.10 on a volume of 2,175 shares.
These options were not exercised and expired in 2002.
Stock Grant Program (1)
Under the Stock Grant Program (1) established June 30, 1995,
the Company has reserved 15,000 shares of its authorized Common
Stock for issuance to key employees and directors. Under this plan,
no employee may receive more than 5,000 shares. The program requires
the employee to remain in the employ of the Company for at least
one year following the grant and to agree not to engage in any
activity that would be considered in competition with the Companys
business. If the employee violates any one of these conditions the
ownership of the shares issued under the program shall revert back
to the Company. The shares issued under the program are non-transferable,
except for transfers back to the Issuer, for a period of one year from the
date of issue. As of December 31, 1996, a total of 5,000 shares had been
granted to five directors pursuant to this plan.
On May 18th, 2000, the Company authorized and on April 5, 2002 issued
common stock as follows:
Larry Fix 125 common shares at par value of $0.02 per share
Lloyd Mear 188 common shares at par value of $0.02 per share
Edward Renyk 188 common shares at par value of $0.02 per share
(1) Incorporated by reference to the Companys
Form 10-SB 12G, Commission File No. 0-25786.
Board Compensation
The Board, from time to time, is authorized to establish compensation
for the Directors, but none has been set at this date. All of the
directors
are reimbursed for their expenses incurred in connection with their
attendance at Board of Directors meetings.
Board of Directors Committees
The board of directors has not yet established an audit committee
or a compensation committee. An audit committee typically reviews,
acts on and reports to the board of directors with respect to various
auditing and accounting matters, including the recommendations and
performance of independent auditors, the scope of the annual audits,
fees to be paid to the independent auditors, and internal accounting
and financial control policies and procedures. Certain stock exchanges
currently require companies to adopt a formal written charter that
establishes an audit committee that specifies the scope
of an audit
committees responsibilities and the means by which
it carries out those responsibilities. In order to be listed on
any of these exchanges,
the Company will be required to establish an audit committee.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding
the beneficial ownership of the Company's Common Stock as of May 14,
2007, by its executive officers and directors, both individually and
as a group, and by each person known by the Company to own more than
5% of the outstanding Common Stock.
Name Number of Percentage of
Shares owned (1) Shares Owned (2)
----------------------------------------------------------------
Dr. J. Greig
103 E. Holly Street, Suite 303, Bellingham, WA 98226
Director, Chairman & Chief Strategic Officer 1,950,000 65.48%
Edward D. Renyk
17 12311 McNeely Dr., Richmond, BC, V6V 2S2
Director, Secretary & Chief Financial Officer 297,758 10.00%
Larry Fix
11700 King Road, Richmond, BC, Canada V7A 3B6
Director 2,500
Officers and Directors
as a Group (3 persons) 2,250,258 75.56%
-------------------------------------------------------------------
-- Less than 1%
(1) Unless otherwise indicated all shares
are held of record by the beneficial holders named
above.
(2) Based upon 2,828,028 shares of Common Stock outstanding on
December 31, 2007.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Accrued management compensation $562,047
Is composed of compensation due to the Companys officers who have
deferred payment until the Company creates a cash flow sufficient
to cover its operating costs.
Loans payable related parties $ 30,098
This represents disbursements made on behalf of the Company
by the officers of the Company.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8 K
The following are filed as part of this Report:
(a) Exhibits
2.1 Presentation to the Stock Holders (3)
2.2 Amended Presentation to the Stock Holders (4)
2.3 Form S-8 Registration Statement under the Securities Act of 1933 (5)
3.1 Certificate of Incorporation of the Registrant (1)
3.2 Certificate of Amendment dated June 23,
1989 to Certificate of Incorporation (1)
3.3 Certificate of Amendment dated June 1,
1995 to Certificate of Incorporation (1)
3.4 Certificate for Renewal and Revival of Charter dated June 1, 1995 (1)
3.5 By-laws of the Registrant (1)
4.1 Form of Common Stock Certificate (1)
10.1 Agreement to Exchange Assets for Stock (1)
10.2 Operating Agreement (1)
10.3 Extension Agreement between the
Registrant and Noble dated September 1, 1995 (1)
10.4 Second Extension Agreement between the
Registrant and Noble dated April 30, 1996 (1)
10.5 Satisfaction of Debt with Stock-Noble Metal Group Incorporated (1)
10.6 Modification and Extension Agreement between Registrant
and Noble dated July 1996 canceling $1,000,000 obligation and further
extending date for payment of $954,500 in consideration for agreement to
deliver 3,421 ounces of gold (1)
10.7 Agreement of Business Combination by Exchange of
Assets for Stock Regarding Place Lease #1160 between the
Registrant and Dorothy Dennis (1)
10.8 Extension Agreement between the Registrant and Dorothy Dennis
dated April 30, 1996 (1)
10.9 Satisfaction of Debt with Stock - Dorothy Dennis (1)
10.10 Satisfaction of Debt with Stock - E.D. Renyk (1)
10.11 Satisfaction of Debt with Stock - J.J. McIntyre (1)
10.12 Stock Option Program (1)
10.13 Stock Grant Program (1)
10.14 Employment Agreement of Edward D. Renyk (1)
10.14.1 Employment Agreement of Edward D. Renyk (10)
10.15 Second Extension Agreement between
Registrant and Dorothy Dennis dated October 1996 (1)
10.16 Modification and Extension Agreement between
the Registrant and Noble Metal Group Incorporated
dated March 9, 1999 (2)
10.17 Extension Agreement between the Company
and Dorothy Dennis dated March 30, 1999 (2)
10.18.1 Letter of Intent between the Company and
Cyber Centers.com, Inc. dated July 6, 1999 (2)
10.18.2 Addendum dated July 28, 1999 to Letter of Intent (2)
10.19 Recission and Release Agreement between the
Company and Noble Metal Group Incorporated effective
December 31, 1999 (2)
10.20 Release Agreement between the Company and
Dorothy Dennis dated the 17th day of February, 2000 (2)
10.21 Employment Agreement of Loren Miller (6)
10.21.1 Employment Agreement of J. Greig
10.21.1.1 Employment Agreement of J. Greig (9)
10.22 Common Stock Unit Purchase Agreement (7)
10.23 Private Placement Letter of Intent Chadbourn Securities (7)
16.1 Letter of former Accountant (2)
24.1 Consent of W.G.T. Consultants Ltd. (1)
31.1 Certification of the Chief Executive Officer pursuant
to Rule 13a-14 of the Securities and Exchange Act of 1934 as amended,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2
(Attached)
31.2 Certification of the Chief Financial Officer pursuant to
Rule 13a-14 of the Securities and Exchange Act of 1934 as amended,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2
(Attached)
32 Certification of the Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 20 (Attached)
------------
(1) Incorporated by reference to the Companys
Form 10-SB12G, Accession Number: 000100547-97-002295
filed September 29, 1997.
(2) Incorporated by reference to the Companys
Form 10-KSB, Accession Number: 000100547-002687
filed March 30, 2000.
(3) Incorporated by reference to the Companys
Form 10-QSB, Accession Number: 0001169232-03-005124
filed August 13, 2003.
(4) Incorporated by reference to the Companys
Form 10-QSB, Accession Number:0001137171-03-000573
filed November 10, 2003.
(5) Incorporated by reference to the Companys
Form S-8, Accession Number 0001137171-04-000481 filed
April 20, 2004
(6) Incorporated by reference to the Companys
Form 10-QSB, Accession Number: 0001137171-04-001462
filed November 15, 2004.
(7) Incorporated by reference to the
Companys Form 10-QSB, Accession No. 0001137171-07-
001508 filed November 14, 2007.
(8) Incorporated by reference to Companys
10K SB Accession Number 0001137171-07-000745 filed
May 18, 2007
(9) Incorporated by reference to Companys
Form 8 K Accession Number 0001137171-07-000608
filed April 30, 2007
(10) Incorporated by reference to Companys Form
10K SB Accession Number 0001137171-07-001138 filed
August 20, 2007
(b) Reports on Form 8-K.
The Company filed no reports on Form 8-K during the
last quarter of the period covered by this Form 10-KSB.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(1) Audit Fees
The aggregate fees billed by Petterson Sullivan P.L.L.C.
for professional services for the audit of the Companys annual
financial statements and quarterly reviews included in the Companys
Form 10-KSB and Forms 10-QSB were $27,000 (2006 - $22,500).
(2) Audit-Related Fees
There were no fees billed to the Company for other audit related fees.
(3) Tax fees
There were no fees billed to the Company for tax compliance, advice or planning.
(4) All Other Fees
There were no fees billed to the Company for any other products or services.
(7) Audit Committees Pre-approved Policies and Procedures
The Board of Directors has not yet constituted an audit committee.
SIGNATURES
Pursuant to the requirements of Section 13 and 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.
Dated: April 10, 2008
1ST NRG CORP
(Registrant)
By: /s/ Edward D. Renyk
-----------------------
Edward D. Renyk, Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Signature Title Date
------------ ------ ------
/s/ J. Greig Director and April 10, 2008
--------------------------- Chief Executive Officer
J. Greig
/s/ Edward D. Renyk Secretary, Director and April 10, 2008
--------------------------- Principal Accounting Officer
Edward Renyk
/s/ Larry Fix Director April 10, 2008
--------------------------
Larry Fix
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934,
RULES 13a-14 AND 15d-14
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of 1st NRG Corp.
(the Company) on Form 10-KSB for the period ending December 31,
2007 as filed with the Securities and Exchange Commission on the
date hereof (the Report), I, Dr. J. Greig, Chief Executive Officer
of the Company, certify, pursuant to Rules 13a 14 and 15 d14 of the
Securities Exchange Act of 1934 (the Exchange Act), as adopted pursuant
to 302 of the Sarbanes Oxley Act of 2002, that:
1. I have reviewed this Report;
2. Based on my knowledge, this Report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this Report;
3. Based on my knowledge, the financial statements, and other
financial information included in this Report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Company, as of, and for, the periods presented in
this Report;
4. I and the other certifying officers of the Company are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company
and have:
(a) Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating
to the Company, including any consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this Report is being prepared;
(b) Evaluated the effectiveness of the Companys disclosure
controls and procedures and presented in this Report our conclusions
about the effectiveness of the disclosure controls and procedures, as
of the end of the period covered by this Report based on such evaluation;
and
(c) Disclosed in this Report any change in the Companys internal control
over financial reporting that occurred during the Companys
most recent fiscal quarter (the Companys fourth fiscal quarter
in the case of an annual report)
that has materially affected, or is reasonably likely to materially
affect, the Companys internal control over financial reporting; and
5. I and the other certifying officers have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the Companys auditors and to the audit committee of the Companys board
of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the Companys ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in
the Companys internal control over financial reporting.
/s/ J. Greig
Dr. J. Greig,
Chief Executive Officer
April 10, 2008
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934,
RULES 13a-14 AND 15d-14
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of 1st NRG Corp. the Company
on Form 10 KSB for the period ending December 31, 2007 as filed
with the Securities and Exchange Commission on the date hereof
(the Report), I, Edward Renyk, Chief Financial Officer of the
Company, certify, pursuant to Rules 13a 14 and 15 d14 of the
Securities Exchange Act of 1934 (the Exchange Act), as adopted
pursuant to 302 of the Sarbanes Oxley Act of 2002, that:
1. I have reviewed this Report;
2. Based on my knowledge, this Report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not
misleading with respect to the period covered by this Report;
3. Based on my knowledge, the financial statements, and
other financial information included in this Report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the Company, as of, and for, the periods presented
in this Report;
4. I and the other certifying officers of the Company are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a 15(e) and
15d 15(e)) for the Company and have:
(a) Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed
under our supervision,
to ensure that material information relating to the Company, including
any consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this Report is
being prepared;
(b) Evaluated the effectiveness of the Companys disclosure
controls and procedures and presented in this Report our conclusions
about the effectiveness of the disclosure controls and procedures, as
of the end of the period covered by this Report based on such evaluation;
and
(c) Disclosed in this Report any change in the Companys internal control
over financial reporting that occurred during the Companys most recent
fiscal quarter (the Companys fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably
likely to materially affect, the Companys internal control over
financial reporting; and
5. I and the other certifying officers have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the Companys auditors and to the audit committee of the
Companys board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the Companys ability to
record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves
management
or other employees who have a significant role in the Companys
internal control over financial reporting.
/s/ E. D. Renyk
Edward Renyk
Chief Financial Officer
April 10, 2008
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES OXLEY ACT OF 2002
In connection with the Annual Report of 1st NRG Corp.
(the Company) on Form 10 KSB for the period ending
December 31, 2007 as filed with the Securities and Exchange
Commission on the date hereof (the Report), we, Dr. J. Greig,
Chief Executive Officer of the Company, and Edward Renyk, Chief
Financial Officer of the Company, respectively certify, pursuant
to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes Oxley
Act of 2002, that:
1. The Report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents,
in all material respects, the financial condition and results of
operations of the Company.
/s/ J. Greig /s/ E. D. Renyk
Dr. J. Greig Edward Renyk
Chief Executive Officer Chief Financial Officer
April 10, 2008 April 10, 2008