Attached files

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EX-10.B - EXECUTIVE EMPLOYMENT AGREEMENT DATED SEPTEMBER 22, 2010 BETWEEN MOUNTAIN RENEWABLES, INC. AND KENNETH A. FLATT - Arcis Resources Corpmwbl8k20100921ex10-b.htm
EX-10.D - EXECUTIVE EMPLOYMENT AGREEMENT DATED SEPTEMBER 22, 2010 BETWEEN MOUNTAIN RENEWABLES, INC. AND DEBORAH K. FLATT - Arcis Resources Corpmwbl8k20100921ex10-d.htm
EX-10.A - STOCK PURCHASE AGREEMENT DATED JULY 21, 2010 AMONG THE COMPANY, GSA INTERNATIONAL GROUP LTD, ARCIS ENERGY, INC., GULF COAST ENERGY DISTRIBUTION, LLC, AND ITS SHAREHOLDERS, BRISTLECONE ASSOCIATES, LLC AND RICHARD GIANNOTTI - Arcis Resources Corpmwbl8k20100921ex10-a.htm
EX-10.E - JOINT VENTURE AGREEMENT, DATED APRIL 27, 2010, BETWEEN GSA CAPITAL LLC AND PREMIER INVESTMENT GROUP INC. - Arcis Resources Corpmwbl8k20100921ex10-e.htm
EX-10.C - EXECUTIVE EMPLOYMENT AGREEMENT DATED SEPTEMBER 22, 2010 BETWEEN MOUNTAIN RENEWABLES, INC. AND TREVIS LYON - Arcis Resources Corpmwbl8k20100921ex10-c.htm
EX-10.E1 - ASSIGNMENT DATED SEPTEMBER 22, 2010 OF JOINT VENTURE AGREEMENT, DATED APRIL 27, 2010, BETWEEN GSA CAPITAL LLC AND PREMIER INVESTMENT GROUP INC. - Arcis Resources Corpmwbl8k20100921ex10-e1.htm
EX-10.F - LETTER AGREEMENT DATED SEPTEMBER 23, 2009 BETWEEN JET EXCLUSIVE AVIATION LLC AND GULF COAST ENERGY DISTRIBUTION, LLC - Arcis Resources Corpmwbl8k20100921ex10-f.htm



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_____________________

FORM 8-K
_____________________


CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NO.: 333-159577



Date of Report: September 22, 2010


MOUNTAIN RENEWABLES, INC.
(Exact name of registrant as specified in its charter)
   
   
Nevada
37-1563401
(State of other jurisdiction of
(IRS Employer
incorporation or organization
Identification No.)
   
   
4320 Eagle Point Parkway, Suite A, Birmingham Alabama
35242
(Address of principal executive offices)
(Zip Code)
   
   
(205) 453-9650
(Registrant’s telephone number including area code)
   
 
 
   
1772 Grape Street, Denver, Colorado 80220
(Address, if changed since last report)
(Zip Code)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

□ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
□  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
□  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
□  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 

 

Item 1.01
Entry into a Material Definitive Agreement
Item 2.01
Completion of Acquisition of Assets
Item 3.02
Unregistered Sale of Equity Securities
Item 5.01
Changes in Control of Registrant
Item 5.02
Departure of Directors or Certain Officers; Election of Directors;
 
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On September 22, 2010, Mountain Renewables Inc., a Nevada corporation (the “Company”), acquired all of the  membership interest in Gulf Coast Energy Distribution, LLC, an Alabama  limited liability company (“GCED”), and all of the outstanding common stock of ARCIS Energy, Inc., a Nevada corporation (“ARCIS”), pursuant to a Stock Purchase Agreement entered into by these parties on July 21, 2010.  The acquisition is referred to herein as the “Share Exchange.”  GCED and ARCIS will be engaged in the business of acquiring, trading and distributing fuel oil and other petroleum products.

In exchange for 100% of the membership interest in GCED, the Company issued to GSA International Group, Ltd., a British Virgin Islands corporation (“GSAI”), 11,000,000 shares of its common stock.  The Company issued 2,200,000 shares of common stock to Kenneth Allen Flatt, Jr. and Activa Transportation Services, LLC, an Alabama limited liability company  (“Activa”), for their 100% membership interest in GCED.

The Company has authorized capital stock of 100,000,000 capital shares, consisting of 100,000,000 shares of Common Stock, $.001 par value.  Before the Share Exchange, there were 13,615,000 shares outstanding, of which Bristlecone Associates, LLC, a Colorado limited liability company (“Bristlecone”), held 6,000,000 (44.0%) and Richard Giannotti owned 4,030,000 shares (29.6%).  As a condition to the Share Exchange, Bristlecone surrendered 4,500,000 shares and Mr. Giannotti surrendered 3,500,000 shares, reducing the outstanding shares to 5,615,000.  As a result of the Share Exchange, there are now 18,815,000 shares outstanding, of which Bristlecone holds 1,500,000 shares (8.0%) and Mr. Giannotti owns 530,000 shares (2.8%).

New Management

Immediately prior to the Share Exchange, the sole director and officer of the Company was Richard Giannotti, Chief Executive Officer.  The Share Exchange Agreement provided that, as a condition to closing, Mr. Giannotti would appoint to the board individuals designated by GSA International Group.  Accordingly, simultaneous with the Share Exchange, Mr. Giannotti appointed Kenneth A. Flatt, Jr., Trevis M. Lyon and Deborah K. Flatt to serve as members of the Board of Directors.  Mr. Giannotti then resigned from the Board and from the offices he held.  The newly appointed directors elected new officers of the Company, as indicated below.

The three new directors have an oral understanding with GSA International Group to the effect that GSA International Group may in the future designate up to three persons who will be added to the Company’s Board of Directors.  GSA International Group has not yet determined when it will make that designation or whom it will designate.

 
2

 

Currently, the executive officers and directors of the Company are:

Name
Age
Positions with the Company
Kenneth A. Flatt, Jr.
42
Chief Executive Officer, Director
Trevis M. Lyon
33
Chief Operating Officer, Director
Deborah K. Flatt
38
Chief Financial Officer, Director

All directors will hold office until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Company’s charter and by-laws.  Officers serve at the pleasure of the Board of Directors.  Each of the three officers will be employed on a part-time basis, as Kenneth Flatt, Trevis Lyon and Deborah Flatt are also employed by American Plant Services, LLC.

Kenneth A. Flatt is our Chief Executive Officer.   Mr. Flatt began his career in 1986 as an operations manager and project estimator with Air Pride, Inc. in St. Louis.  In 1992, he moved to Alabama where his father-in-law had started KR Industrial Services of Alabama, an industrial cleaning company.  Mr. Flatt was instrumental in taking the company from a four-man operation to 200 employees in five branch locations.  He held the positions of Operations Manager and Vice President of Operations prior to 1999, when the company was sold to a large, publicly traded concern.  Mr. Flatt then moved to HydroChem Industrial Services, Inc., where he was a regional sales manager and then the manager for the Birmingham, Alabama branch. In 2002, he left HydroChem to form American Plant Services, LLC (“APS”) with his wife Deborah.  Since that time, he has served as President of APS.  APS is an environmental and industrial cleaning company, specializing in spill cleanup, water blasting, and vacuuming services.  Mr. Flatt is the spouse of Deborah K. Flatt, a member of our Board and an officer of the Company.

Trevis M. Lyon is our Chief Operating Officer.  Mr. Lyon began his career with Ashland Chemical as a Sales Representative in January of 2000.   In 2002, Mr. Lyon developed a new business model which became the largest growth platform within the Environmental Services division, and was subsequently named Business Development Manager responsible for Ashland’s new Integrated Resource Management (“IRM”) business.  Mr. Lyon was also one of the original founders of Gulf Coast Energy (“GCE”) in 2005, a start up alternative fuels company.  Gulf Coast Energy Distribution was later formed in 2008 by investment partners of Mr. Lyon to accommodate the distribution needs of GCE by procuring the inbound biomass feedstock and marketing the outbound fuel products.  Mr. Lyon joined American Plant Services, LLC  and Gulf Coast Energy Distribution as Vice President of Business Development in May 2010.

Deborah K. Flatt is our Secretary, Treasurer and Chief Financial Officer.  Mrs. Flatt started her career as a dispatcher for her family’s business.  In 1992, she moved to KR Industrial Services of Alabama, where she served as office manager.  In 2002, she co-founded American Plant Services, LLC (“APS”) with her husband.  She presently serves as the Chief Executive Officer of APS.  Mrs. Flatt is the spouse of Kenneth Flatt, our Chief Executive Officer and a member of our Board of Directors.

 
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Principal Shareholders

After the Share Exchange, there were 18,815,000 shares of Company common stock issued and outstanding.  The following table sets forth information with respect to the beneficial ownership of the Company common stock by the following:
 
 
each shareholder who beneficially owns more than 5% of the Company common stock;
 
Kenneth A. Flatt, Jr., our Chief Executive Officer;
 
each of the members of our Board of Directors; and
 
all of our officers and directors as a group.

 
 
 
Beneficial Owner
Amount and
Nature of
Beneficial
Ownership(1)
 
Percentage
Of Class
Owned
Kenneth A. Flatt, Jr.
  1,650,000
8.8%
Trevis M. Lyon
                0
--
Deborah K. Flatt
      1,650,000(2)
8.8%
All officers and directors
as a group (3 persons)
 
  1,650,000
 
8.8%
GSA International Group, Inc.(3)
500 S. Australian Blvd., Suite 910
West Palm Beach, FL 33404
11,000,000
58.5%
Bristlecone Associates LLC(4)
38113 Fruitland Mesa Road
Crawford, CO 81415
  1,500,000
8.0%
 
___________________________
 
(1)
Except as otherwise noted, all shares are owned of record and beneficially.
 
(2)
Includes 1,650,000 shares owned of record by Kenneth A. Flatt, the spouse of Deborah K. Flatt.
 
(3)
Jose A. Rios, Nolan Knight and Robert Di Marco hold voting and dispositional control of the shares owned by GSA International Group, Ltd.
 
(4)
Anna M. Collins is the Managing Member of Bristlecone Associates.  Ms. Collins holds voting and dispositional control of the shares owned by Bristlecone Associates LLC
 
 
4

 
 
INFORMATION REGARDING THE ACQUIRED COMPANIES

Forward-Looking Statements: No Assurances Intended
 
In addition to historical information, this Report contains forward-looking statements, which are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans to,” “estimates,” “projects,” or similar expressions. These forward-looking statements represent Management’s belief as to the future of Mountain Renewables.  Whether those beliefs become reality will depend on many factors that are not under Management’s control.  Many risks and uncertainties exist that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in the section of this Report entitled “Risk Factors That May Affect Future Results.” Readers are cautioned not to place undue reliance on these forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.

The GFL Group
 
ARCIS Energy, Inc. (“ARCIS”) and Gulf Coast Energy Distribution, LLC (“GCED”) are both development stage companies.  ARCIS was organized in July 2010, and has not engaged in any significant business.  GCED was organized in 2006, but did not initiate business until 2009, and has not generated any revenue to date.  The two companies were organized to serve as the fuel distribution component of a network of affiliated industrial service companies that are controlled by either GSA International Group, Inc. (“GSAI”) or Kenneth and Deborah Flatt and Trevis Lyon.  For purposes of this discussion, we will refer to these companies as the GFL Group.  Other members of the GFL Group include:

 
·
GSA Energy, LLC (“GSAE”), a Florida limited liability company controlled by GSAI;
 
·
GSA Capital, LLC (GSAC”), a [Florida] limited liability company controlled by GSAI;
 
·
American Plant Services, LLC (“APS”), an Alabama limited liability company, 95% of which is owned by Kenneth and Deborah Flatt and Trevis Lyon; and
 
·
Mobile Fluid Recovery, Inc. (“MFR”), an Ohio corporation, 85% of which is owned by APS.

The GFL Group is a global environmental and energy services enterprise providing innovative products, services and solutions to customers worldwide.  GFL Group’s diversified business strategy includes a strong global reach combined with versatile local presence.  All of the Group’s services are carried out with an environmentally sensitive approach to the future.  It operates established businesses in the following areas:
 
 
·
Cleaning, environmental, painting and sandblasting services for industrial and municipal entities;
 
·
Recycling services, including separation of oil and water and reuse of the oil;
 
·
Eliminating hazardous waste classification by removing free liquids from rags, wipers, booms and absorbents at the site of the generator; and
 
·
Providing reusable absorbent systems.
 
 
5

 
 
The members of the GFL Group have more than $12 million in assets and equipment and 180 employees.  Collectively, they had achieved a 35% compound annual growth rate.  We expect that the success and size of these affiliated businesses will enable ARCIS and GCED to present themselves as attractive counterparties in the oil trading business.  In addition, the Stock Purchase Agreement includes a covenant that during the 45 days after the Share Exchange, the Company will negotiate to obtain control of APS and MFR.  APS provides cleaning, environmental, and safety services to industrial facilities.  MFR offers solvent rag and absorbent recycling programs to companies.  If those acquisitions are completed, the Company will be able to present itself to the industry as a green energy environmental company.  To date, the negotiation of terms for those acquisitions has not taken place.  So there is no assurance that the acquisitions will, in fact, occur.

Organization of ARCIS and GCED
 
ARCIS was organized to engage in international fuel trade.  GCED was organized to engage in domestic fuel trade, including transfer of oil and refined petroleum products.  Prior to the Share Exchange, certain members of the GFL Group assigned to ARCIS certain core contracts that will enable it to initiate the business of fuel trading.  Primary among the assigned contracts were:
 
 
·
Contract dated July 7, 2010 with Bashkir Fuel Company providing for the sale by Bashkir Fuel to ARCIS of 15,000 metric tons of Kazakhstan fuel oil (grade GOST 10585-99) per month.
 
 
·
Contract dated July 7, 2010 with Bashkir Fuel Company providing for the sale by Bashkir Fuel to ARCIS of 15,000 metric tons of Kazakhstan fuel oil (grade GOST 305-1982) per month.
 
 
·
Joint Venture Agreement dated April 27, 2010 with Premier Investment Group, Inc. (“PREMI”) providing that PREMI will make a deposit of one billion Euros to collateralize letters of credit to finance trading of oil and other physical commodities by ARCIS.

Both ARCIS and GCED will be engaged in the acquisition, sale and trading of the full spectrum of petroleum products, from crude oil refinery feed stocks to refined products, including base oils, biofuels, bunker fuels, fuel oils, gasoil, kerosene/jet fuel, marine gasoil, and diesel motor gas and naphtha, with an emphasis in the mid-distillates markets.  They will be primarily active in physical oil trading including transportation by vessel, pipeline, railcar, and truck.  ARCIS will operate internationally, and GCED will trade only within North America.

Both companies will be active in both the primary and the reuse markets.   The reuse market involves the reclamation of used oil, such as motor oil, through re-refining and sale for reuse for other purposes, such as serving as a base stock for lubricating oil.  ARCIS and GCED will be able to obtain used oil that may be reclaimed and recycled from other members of the GFL Group.  For example, APS is currently recycling oil collected by booms designed to clean up the recent spill in the Gulf Coast, as well as recycling oil from other clients.  The reclamation and resale of used oil can provide our customers with significantly higher margins than purchase and resale of oil in the primary markets.
 

 
6

 

Arcis Energy, Inc.
 
ARCIS was organized as a Nevada corporation on July 23, 2010.  ARCIS will act as the non-North American energy marketing, sales and trading subsidiary of the Company.  In anticipation of the transfer of ARCIS to the Company, members of the GFL Group transferred certain contracts providing for the sale and delivery of fuel oil from countries such as Russia, Kazakhstan, Saudi Arabia and India.  Deliveries have not yet begun under these contracts.  ARCIS will finance the purchases through credit instruments issued by virtue of the joint venture with PREMI described below.  At the same time, ARCIS will establish counterpart agreements with customers for the fuel oil.  Agreements for the sale of the fuel oil are not yet in place.

The supply contracts assigned to ARCIS typically provide for the delivery of a minimum metric tonnage of specified types of fuel oil at transportation points in Russia or Kazakhstan.  The price paid by ARCIS for the oil will be determined by an average of market quotes, less a discount, or will be set at a fixed rate by negotiation between the parties.  Generally, the contracts have a term of 13 months or less. The obligations of the sellers are subject to force majeure events, including changes of law. The contracts generally are governed by either Russian or Kazakhstan law and enforceable only in the courts or arbitration tribunals of those countries. If the deliveries of oil were disrupted due to a force majeure event or the supplier failed to perform for other reasons, ARCIS could incur substantial losses as it was forced to enter the fuel market in order to fulfill its delivery obligations.  Enforcement of the contractual obligations of suppliers could prove difficult under foreign law and in foreign forums.  Also, as these contracts are terminated or expire periodically, we may not be able to renegotiate, extend or replace these contracts, and the terms of any renegotiated contracts may not be as favorable as the existing contracts.

Immediately prior to the Share Exchange, GSAC, a wholly owned subsidiary of GSAI, transferred to ARCIS the benefit of its joint venture agreement with Premium Investment Group Inc. (“PREMI”), dated April 27, 2010.  Under this agreement, PREMI agreed to hypothecate 1,000,000,000 Euros to an ARCIS account at ABN AMRO to be used as collateral for credit instruments, such as Letters of Credit.  The credit instruments will be available for the acquisition of liquid natural gas, crude oil and petroleum products and derivatives.  ARCIS will provide its expertise in the acquisition and sale of physical commodities to the joint venture.  For 13 consecutive periods of 30 days, PREMI, in exchange for funding the deposit, will be allocated 25% of each item of income, gain, loss or deduction (net of costs, including commissions paid by the joint venture and financing expenses) on commodity transactions closed by the joint venture.  ARCIS will receive the remaining 75% of profit and loss charges.  If PREMI does not receive any revenue within 90 days of acceptance by ARCIS’ financial institution or in any consecutive 30 day period thereafter, PREMI can terminate the agreement. All decisions regarding the joint venture will be the joint responsibility of representatives of ARCIS and PREMI.
 

 
7

 
 
Gulf Coast Energy Distribution, LLC
 
GCED was organized for the purpose of engaging in the alternative fuel business on June 7, 2006, but was substantially inactive until 2009.  In the past 18 months GCED has been active in developing a full purpose trade desk for the physical fuel market, primarily in the United States.  GCED has secured both federal and state licenses that permit it to distribute various types of fuel, including bio-fuel nationwide.  GCED is able to import, export, purchase directly from refineries, and blend, store and ship via the pipeline system in the United States.  It will also be active in arranging transportation of fuel by vessel, railcar and truck.  GCED has developed a trading desk with significant logistical capabilities in the marketing, sale and delivery of physical crude oil and refined petroleum products in North America.  GCED has established contacts and clients in the aviation, energy and utilities, paper, concrete, manufacturing and transportation industries, as well as in retail and wholesale distribution.

GCED is party to a number of contracts that will facilitate its entry into the energy trading business.  The contracts include an Engagement Letter with Jet Exclusive Aviation LLC (“JEA”) signed on September 23, 2009.  The agreement contemplates that GCED, acting as title agent on a non-exclusive basis, will utilize its expertise, resources, licenses and excise tax status to arrange for the purchase of five million barrels of aviation kerosene (or jet fuel) from JEA.   JEA will pay GCED a fee of $.75 per barrel sold.  The agreement will remain in effect until the five million barrels are sold, although either party may terminate the agreement on 30 days notice.

GCED has also executed a non-binding letter of intent with EcoDomaine Refining Inc. to acquire certain assets used in EcoDomaine’s Green River Refining production and development business.  If the arrangement is reduced to a formal contract and completed, the assets acquired by GCED will include:
 
 
·
the facilities, equipment, permit rights and existing contracts, subject to any obligations;
 
·
the fixed assets of the business;
 
·
any and all customer lists; and
 
·
the associated goodwill;

The contemplated purchase price is $9.3 million with an extended profit sharing arrangement of between $1 million and $3 million based on a percentage of future profits.  If the arrangement with EcoDomaine Refining is brought to completion, the business of GCED will expand from its current focus on fuel trading into fuel production activities.
 
 
8

 

Government Regulation
 
GCED is located in Birmingham, Alabama, and has been licensed by the State of Alabama to distribute and sell fuel products within that State.  GCED has also obtained all federal licenses necessary to engage in interstate distribution of fuel products.  It has also obtained IRS Form 637 excise tax registration.

Competition
 
We face intense competition in our supply, distribution and marketing activities and anticipate that this competition will increase.  We compete with national, regional and local pipeline companies, the integrated oil companies, their marketing affiliates, independent gatherers, investment banks, hedge funds and independent brokers and marketers of widely varying sizes, financial resources and experience.  Many of these competitors have capital resources many times larger than ours and greater access to supplies of petroleum products.  Although a significant number of competitors, particularly mid-sized firms, failed or otherwise left the industry as a result of the recent global capital crisis, an increase in competition in our markets could arise from new ventures or expanded operations from existing competitors.

Employees

  Neither GCED nor ARCIS currently have employees other than the officers of the Company.  All work performed to date has been performed by those officers or by affiliates of our principal shareholder, GSAI, or by consultants who were retained on a project or month by month basis.  We intend to immediately increase our staff.

Physical Facilities

The offices of GCED are located at 4320 Eagle Point Parkway, Suite A, Birmingham, Alabama 35242.  GCED shares offices with American Plant Services, LLC.  GCED has an independent phone line, but there is common use of receptionists, administrative staff and office equipment.

The offices of ARCIS are located at 500 S. Australian Ave., Suite 910, West Palm Beach, Florida 33401.  ARCIS shares offices with GSA International Group, Ltd.  ARCIS has an independent phone line, but there is common use of receptionists, administrative staff and office equipment.

Management’s Discussion of Financial Statements

Gulf Coast Energy Distribution, LLC

Although formed on June 7, 2006, GCED did not receive contributions from its members until November 25, 2008, when it received total capital of $1,000.  Through June 30, 2010, GCED recognized only $790 in revenue.  Under its business plan, GCED will begin generating revenues as crude and refined petroleum products are purchased under its contracts with suppliers and resold.
 

 
9

 
 
Since early in 2009, GCED has been engaged in developing its trading desk, which primarily consisted of securing the government licenses necessary to engage in interstate distribution of fuel products.  During the eighteen months between January 1, 2009 and June 30, 2010, GCED incurred costs and expenses of $55,819 for professional fees, $9,341 for travel and entertainment and $3,138 for other general and administrative expenses, resulting in a net loss of $38,365 for the year ended December 31, 2009 and a net loss of $29,143 for the six months ended June 30, 2010.

GCED’s operations have been funded to date by capital contributions from its members, which have totaled $87,000.

ARCIS Energy, Inc.

Formed on July 23, 2010, ARCIS has not engaged in operations that would generate meaningful financial results.  As of July 31, 2010 it had no assets and no liabilities.

Off-Balance Sheet Arrangements

Neither ARCIS nor GCED has any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on their financial condition or results of operations.

Risk Factors That May Affect Future Results

An investment in the Company involves a substantial degree of risk.  You should carefully consider the risks described below before buying our common stock.   If any of the risks below were realized, that event could cause the trading price of our common stock to decline, and you could lose all or a part of your investment.  Therefore, a prospective investor should only invest in the common stock of the Company if the prospective investor can withstand the total loss of his or her investment.

Our business and operations are newly established.  Unless we effectively manage our growth, we may not be profitable and may fail.
 
Mountain Renewables was only recently organized and has had no revenue.  With respect to our new subsidiaries, ARCIS has just been formed, and GCED has been in the development stage for approximately a year and a half.  Through June 30, 2010, GCED had generated only $790 in revenue and so had incurred a net operating loss.  GCED’s accountants have expressed substantial doubt about its ability to continue as a going concern.
 
Our business plan contemplates the initiation of operations by ARCIS and a major expansion of the operations carried on by GCED.  If this growth is not effectively managed, it may have a substantial negative impact on our operations and profitability.  Also, improvement will be needed in our operational, financial and management controls and our reporting systems and procedures.  Due to the complexity of, and intense competition in, this business,  we are likely to face many challenges, some of which are not foreseeable.  Obstacles may occur in locating a continued supply of oil and petroleum products and marketing these products to users.  If an ongoing source of financing is not available, the ability to continue ongoing operations could be compromised.
 

 
10

 

Oil trading is an extremely risky business, and substantial losses may be incurred that could lead to a total loss of investment.
 
Trading of oil and related petroleum products involves an unusually high degree of business risk.  We will face intense competition, changing business and economic conditions, or other developments that may adversely affect our performance.  In making decisions, we will have to make projections concerning the performance of the markets.  These projections will be subject to a high degree of uncertainty and to factors beyond our control.  Many other organizations engaged in oil trading have incurred substantial losses or have lost the ability to finance their operations and, as a result, have been forced to leave the business and liquidate. If we are not accurate in our expectations regarding the markets for fuel products, we may incur significant financial losses, and our business could fail.

ARCIS’ suppliers are located outside the United States. Our sources may be disrupted due to regulation, trade restrictions, political instability, threats of war or actual war, revolution, acts of terrorism, natural disasters, pandemics and weather conditions.
 
Presently, our suppliers are located in Russia and Kazakhstan.  Restrictions or regulations imposed by these countries may materially reduce our ability to purchase oil and related products.  Significant increases in energy prices could result in government imposed price controls.  Rumors or threats of war, actual conflicts, and military or trade disruptions may result in delays or losses in the delivery of supplies and adversely affect our operations.  Strategic targets such as energy-related assets may be at greater risk of future terrorist attack than other types of business operations.  A material decline in product supplies could also be caused by natural disasters, a pandemic or other widespread health crisis, and weather conditions.  Any one or a combination of these occurrences could have a material adverse effect on our business, financial condition and results of operations.
 
The Company intends to balance its purchase and sale contracts.  If the Company has relied on a source of supply in entering into a contract for the sale of the oil and the source fails for any reason, the Company could be forced to purchase oil on the open market at then prevailing prices.  If the price has materially increased over the sales contract price, we could incur very substantial losses that could cause the Company to fail.

The oil and petroleum product markets are volatile, with widely fluctuating prices, which may adversely affect the price of the commodities that we have acquired.
 
Our future revenues and trading profits will depend substantially on the prices we receive versus the prices we have paid and the cost of transportation.  Prices for oil and related products have been, and are likely to continue to be, volatile and subject to wide fluctuations in response to any of the following factors:

 
$
relatively minor changes in the domestic and foreign supply of, and demand for, oil;
 
$
market uncertainty;
 
$
political conditions in international oil producing regions;
 
$
lack of consumer demand;
 
$
weather conditions and natural disasters;
 
$
domestic and foreign taxes and regulation of production and transportation;
 
$
government or privately sponsored oil and fuel conservation efforts;
 
$
technological advances in fuel economy;
 
$
price and availability of alternative fuels; and
 
$
general economic conditions.

It is impossible to predict future oil price movements on a consistent basis.  If we are unable to respond to the above factors and manage unexpected price changes, our profitability will be adversely affected and we could incur losses.

 
11

 

Competition from companies that have their own sources of supply or have greater financial resources could materially affect our business, financial condition and results of operations.
 
We compete on a global basis with a number of integrated oil companies and their marketing affiliates who have their own sources of supply.  We rely primarily on purchasing products from unaffiliated sources.  Because of their integrated operations and larger capitalizations, these companies have an advantage in responding to volatile industry or market conditions.  We also compete with producers and marketers in other industries that supply alternative forms of energy and fuels to satisfy the energy requirements of customers. In addition, competitors may have additional markets for the sale of oil products, such as retail outlets.
 
Many competitors have substantially greater financial resources than we have or are likely to have.  Such competitors have a greater ability to bear the economic risks inherent in the industry.  The actions of our competitors could lead to lower prices or reduced margins for the products that we purchase, sell and trade, which could have an adverse affect on our business, financial condition and results of operation.

Because we will be dealing with, and receiving services from other members of the GFL Group, our management will have conflicts of interest.
 
Our business plan is designed to permit us to take advantage of affiliation with the other members of the GFL Group.  We expect to purchase used oil from APS and MFR.  And we expect to utilize the personnel and facilities of those companies and their affiliates.  Our majority shareholder has the controlling interest in some of these affiliates, others are owned by our officers and directors.  For that reason, our management will have conflicts of interest in determining the proper relationships between our subsidiaries and their affiliates, including issues of pricing, supply priority, allocation of personnel and other resources, and the like.  The results of their decisions could be less advantageous to the Company that would similar transactions carried out on an arm’s length basis.  Pricing on affiliate transactions, for example, could favor the affiliates in the GFL Group other than the Company, ARCIS and GCED and disadvantage us, resulting in losses.
 

 
12

 

We will be exposed to the credit and other counterparty risk of our customers in the ordinary course of our business.
 
We anticipate that we will have various credit terms with our customers who will have various degrees of creditworthiness. We will not always be able to detect deterioration in their creditworthiness or overall financial condition, which could expose us to an increased risk of nonpayment or other default under our contracts.  In the event that a material customer or customers default on their payment obligations to us, this could materially adversely affect our financial condition and may cause the Company to fail.
 
Mobile Fluid Recovery, Inc., which is expected to be a source of used oil for resale by GCED, may not continue to have the current supply of used oil suitable for reclamation.
 
MFR, which is one part of the GFL Group, utilizes a proprietary technology to extract oil from oil/water composites.  For example, MFR is currently assisting in the project to mitigate the effects of the Gulf Coast oil spill.  MFR holds two patents and has applied for an additional patent on this process.  Nevertheless, new and superior methods may ultimately be developed.  In addition, the opportunities for use of the technology may be reduced, if the oil industry improves its vigilance against spills.  The reduction or elimination of this source of reused oil could deprive GCED of the benefit of the reclamation and resale transactions.  This could have a significant negative effect on the Company’s financial results, as these resale transactions often provide higher margins than trading in the primary markets.

Executive Compensation
 
The table below itemizes the compensation that we expect to pay our officers for serving during the first twelve months after the Share Exchange:

Kenneth A. Flatt, Jr.
  $ 120,000  
Trevis M. Lyon
  $ 150,000  
Deborah K. Flatt
  $ 120,000  

Employment Agreements
 
Each of our three executive officers entered into an Executive Employment Agreement with the Company on the date of the Share Exchange.  The terms of the agreements are:

Kenneth A. Flatt, Jr.  Mr. Flatt will be employed for a term of five years, which shall renew automatically for one year terms unless either party gives prior notice of termination.  For services as Chief Executive Officer, Mr. Flatt will receive a salary of $120,000 per year.  If the Company completes a public offering of its securities, Mr. Flatt’s salary will increase to $420,000 per year, and will increase by 5% per annum thereafter.  The Company will also afford Mr. Flatt an automobile allowance of $1500 per month.  The Company has issued to Mr. Flatt options to purchase 500,000 shares of its common stock at $.30 per share, which will vest at a rate of 100,000 per completed year of employment or will vest entirely at the end of any fiscal year in which the Company records $100 million in revenue.  Upon termination of his employment by the Company, Mr. Flatt will be subject to a covenant of non-competition for one year. 

 
13

 

Trevis M. Lyon.  Mr. Lyon will be employed for a term of five years, which shall renew automatically for one year terms unless either party gives prior notice of termination.  For services as Chief Operations Officer, Mr. Lyon will receive a salary of $150,000 per year.  If the Company completes a public offering of its securities, Mr. Lyon’s salary will increase to $240,000 per year, and will increase by 5% per annum thereafter.  The Company will also afford Mr. Lyon an automobile allowance of $1500 per month.  The Company will also reimburse Mr. Lyon for his expense in relocating his residence to Birmingham, Alabama.  The Company has issued to Mr. Lyon options to purchase 500,000 shares of its common stock at $.30 per share, which will vest at a rate of 100,000 per completed year of employment or will vest entirely at the end of any fiscal year in which the Company records $100 million in revenue.  Upon termination of his employment by the Company, Mr. Lyon will be subject to a covenant of non-competition for one year.

Deborah K. Flatt.  Mrs. Flatt will be employed for a term of five years, which shall renew automatically for one year terms unless either party gives prior notice of termination.  For services as Secretary and Treasurer, Mrs. Flatt will receive a salary of $120,000 per year.  If the Company completes a public offering of its securities, Mrs. Flatt’s salary will increase to $300,000 per year.  The Company will also afford Mrs. Flatt an automobile allowance of $1500 per month.  The Company has issued to Mrs. Flatt options to purchase 300,000 shares of its common stock at $.30 per share, which will vest at a rate of 60,000 per completed year of employment or will vest entirely at the end of any fiscal year in which the Company records $100 million in revenue.  Upon termination of his employment by the Company, Mrs. Flatt will be subject to a covenant of non-competition for one year.

Director Compensation
 
The Company has not yet adopted any policy regarding compensation of the members of its Board of Directors who are not employees of the Company.

Director Independence

None of the members of the Company’s Board of Directors is independent, as “independent” is defined in the rules of the NASDAQ Stock Market.

Description of Securities

The Company’s Board of the Directors is authorized to issue 100,000,000 capital shares, consisting of 100,000,000 shares of common stock, $.001 par value, of which 18,750,000 shares are issued and outstanding.
 

 
14

 
 
The holders of our common stock:

 
$
have equal ratable rights to dividends from funds legally available therefore, when, as and if declared by our Board of Directors;
 
 
$
are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs;
 
 
$
do not have preemptive, subscription or conversion rights and are not subject to further calls or assessments; and
 
 
$
do not have the benefit of any redemption or sinking fund provisions applicable to the common stock.

Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in such event, the holders of the remaining shares will not be able to elect any of our directors.

Recent Sales of Unregistered Securities

Within the past three years, the Company issued securities without registration as follows:

 
·
During November 2008, the Company issued 4,000,000 founders shares and 6,000,000 of common stock to the founder of the Company, Richard Giannotti, and to Bristlecone Associates, LLC, respectively. The investors paid a total of $10,000 in consideration for their shares. All cash received was deposited in the Company’s checking account for use in operations.

 
·
On November 14, 2008, the Company issued 3,375,000 shares of its common stock to the shareholders of Ambermax IV.  The consideration was all assets held by Ambermax, which consisted of $12,871 in cash. All cash received was deposited in the Company’s checking account for use in operations.

 
·
On March 16, 2009, the Company issued 140,000 shares of common stock valued at $35,000 as compensation to Sonja Gouak. The consideration was future services to be provided by Ms. Gouak.

All of the above offerings and sales were exempt from registration pursuant to Rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors or executive officers of the Company, and transfer was restricted by the Company in accordance with the requirements of the Securities Act of 1933. In addition to representations by the above-referenced persons, we made independent determinations that all of the above-referenced persons were accredited or sophisticated investors, and that they were capable of analyzing the merits and risks of their investment, and that they understood the speculative nature of their investment. Furthermore, all of the above-referenced persons were provided with access to all available information concerning the Company.
 

 
15

 
 
Market Price and Dividends on Common Equity and Other Shareholder Matters

The first public trade of the Company’s common stock occurred in August 2010.  During the last fiscal year and the first two quarters of the current fiscal year, there was no marked for our common stock

As of the date of this filing, we had not paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of our board of directors and will depend upon our earnings, if any, capital requirements and financial position, general economic conditions, and other pertinent conditions.  We will not pay any cash dividends in the foreseeable future, but rather reinvest earnings, if any, in our business operations.

Legal Proceedings

None of the Company, ARCIS or GCED is party to any material legal proceedings.

Indemnification of Directors and Officers

Section 78.7502 of the General Corporation Law of the State of Nevada authorizes a corporation to provide indemnification to a director, officer, employee or agent of the corporation, including attorneys' fees, judgments, fines and amounts paid in settlement, actually and reasonably incurred by him in connection with an action, suit or proceeding, if either (a) it is not proven that the indemnified individual engaged in a breach of fiduciary duty or intentional misconduct, fraud or a knowing violation of law or (b) the indemnified individual acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful as determined in accordance with the statute, and except that with respect to any action which results in a judgment against the person and in favor of the corporation the corporation may not indemnify unless a court determines that the person is fairly and reasonably entitled to the indemnification. Section 78.7502 further provides that indemnification shall be provided if the party in question is successful on the merits.

Our articles of incorporation provide for the indemnification of our directors against all claims and liability by reason of their having served as a director or officer. The articles require that the Board of Directors advance any funds required for expenses incurred by any director or officer in advance of the disposition, if such advance is permitted by law.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
 
 
16

 
 
Item 9.01
Financial Statements and Exhibits

Financial Statements
 
Page
Audited financial statements of Gulf Coast Energy Distribution, LLC for the years ended December 31, 2009 and 2008 and for the period from June 7, 2006 (Inception) through December 31, 2009
F-1
   
Unaudited Financial Statements of Gulf Coast Energy Distribution, LLC for the six month periods ended June 30, 2010 and 2009
F-9
   
Audited financial statements of Arcis Energy, Inc. for the period from July 23, 2010 (Inception) through July 31, 2010 - to be filed by amendment.
 
   
Pro Forma financial statements of Mountain Renewables, Inc. - to be filed by amendment.
 

Exhibits
10-a
 
Stock Purchase Agreement dated July 21, 2010 among the Company, GSA International Group LTD, ARCIS Energy, Inc., Gulf Coast Energy Distribution, LLC, and its shareholders, Bristlecone Associates, LLC and Richard Giannotti.
10-b
 
Executive Employment Agreement dated September 22, 2010 between Mountain Renewables, Inc. and Kenneth A. Flatt.
10-c
 
Executive Employment Agreement dated September 22, 2010 between Mountain Renewables, Inc. and Trevis Lyon.
10-d
 
Executive Employment Agreement dated September 22, 2010 between Mountain Renewables, Inc. and Deborah K. Flatt.
10-e
 
Joint Venture Agreement, dated April 27, 2010, between GSA Capital LLC and Premier Investment Group Inc.
10-e(1)
 
Assignment dated September 22, 2010 of Joint Venture Agreement, dated April 27, 2010, between GSA Capital LLC and Premier Investment Group Inc.
10-f
 
Letter agreement dated September 23, 2009 between Jet Exclusive Aviation LLC and Gulf Coast Energy Distribution, LLC

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized.

Dated:  September 22, 2010
Mountain Renewables, Inc.
 
By: Kenneth A. Flatt, Jr.
 
Kenneth A. Flatt, Jr.
Chief Executive Officer

 
17

 

GULF COAST ENERGY DISTRIBUTION, LLC
(A DEVELOPMENT STAGE COMPANY)





TABLE OF CONTENTS


 
Page
   
Report of Independent Registered Public Accounting Firm
F-1
   
Financial Statements - Years Ended December 31, 2009 and 2008
 
   
    Balance Sheets
F-2
 
 
    Statements of Operations
F-3
   
    Statements of Members’ Capital
F-4
   
    Statements of Cash Flows
F-5
   
    Notes to Financial Statements
F-6
   
   
Financial Statements - Six Month Periods Ended June 30, 2010 and 2009
 
   
    Balance Sheets
F-9
   
    Statements of Income
F-10
   
    Statements of Members’ Capital
F-11
   
    Statements of Cash Flows
F-12
   
    Notes to Financial Statements
F-13

 
18

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Members
Gulf Coast Energy Distribution, LLC
(a Development Stage Company)

We have audited the accompanying balance sheets of Gulf Coast Energy Distribution, LLC (a Development Stage Company) (hereinafter referred to as the “Company”) as of December 31, 2009 and 2008, and the related statements of operations and members’ capital, and cash flows for the years then ended and from June 7, 2006 (inception) through December 31, 2009.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our 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 is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion. An audit 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 Gulf Coast Energy Distribution, LLC (a Development Stage Company) as of December 31, 2009 and 2008, the results of its operations and its cash flows for the years then ended and from June 7, 2006 (inception) through December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As more fully described in Note 2, the Company has incurred recurring operating losses and has no revenue streams.  These conditions raise substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Friedman LLP
August 24, 2010

 
F-1

 

GULF COAST ENERGY DISTRIBUTION, LLC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
             
             
   
December 31,
 
   
2009
   
2008
 
ASSETS
           
Current assets
           
Cash
  $ 13,921     $ 800  
Receivable from member
    -       200  
Prepaid expenses
    100       -  
Total current assets
    14,021       1,000  
    $ 14,021     $ 1,000  
                 
LIABILITIES AND MEMBERS' CAPITAL
               
Current liabilities
               
Accounts payable, other
  $ 443     $ -  
                 
Members' capital
    13,578       1,000  
    $ 14,021     $ 1,000  
 
See notes to financial statements.
 
 
F-2

 
 
GULF COAST ENERGY DISTRIBUTION, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
               
Cumulative
 
               
Totals
 
               
June 7, 2006
 
               
(Inception) To
 
   
Year Ended December 31,
   
December 31,
 
   
2009
   
2008
   
2009
 
                   
Net sales
  $ -     $ -     $ -  
                         
Operating expenses
                       
Professional fees
    29,819       -       29,819  
Travel and entertainment
    6,530       -       6,530  
Other general and administrative
    2,016       -       2,016  
      38,365       -       38,365  
Net loss
  $ (38,365 )   $ -     $ (38,365 )
 
See notes to financial statements.
 
 
F-3

 
 
GULF COAST ENERGY DISTRIBUTION, LLC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF MEMBERS' CAPITAL
 
FOR THE PERIOD JUNE 7, 2006 (INCEPTION) THROUGH DECEMBER 31, 2009
       
       
Members' capital, June 7, 2006 (inception)
  $ -  
         
Initial contributions from members (November 25, 2008)
    1,000  
Members' capital, December 31, 2008
    1,000  
         
Contributions from members
    86,000  
         
Net loss
    (38,365 )
         
Redemption of members' interest
    (35,057 )
Members' capital, December 31, 2009
  $ 13,578  

See notes to financial statements.
 
 
F-4

 
 
GULF COAST ENERGY DISTRIBUTION, LLC
 
(A DEVELOPMENT STAGE COMPANY)
 
STATEMENTS OF CASH FLOWS
 
               
Cumulative
 
               
Totals
 
               
June 7, 2006
 
               
(Inception) To
 
   
Year Ended December 31,
   
December 31,
 
   
2009
   
2008
   
2009
 
Cash flows from operating activities
                 
Net loss
  $ (38,365 )   $ -     $ (38,365 )
Adjustments to reconcile net loss to net cash used in operating activities
                    -  
Prepaid expenses
    (100 )     -       (100 )
Accounts payable
    443       -       443  
Net cash used in operating activities
    (38,022 )     -       (38,022 )
                         
Cash flows from investing activities
                       
Loan made to member
    (34,857 )     (200 )     (35,057 )
                         
Cash flows from financing activities
                       
Member's capital contributions
    86,000       1,000       87,000  
                         
Net increase in cash
    13,121       800       13,921  
Cash and cash equivalents, beginning of year
    800       -       -  
 
                       
Cash and cash equivalents, end of year
  $ 13,921     $ 800     $ 13,921  
                         
Schedule of noncash transactions
                       
Dissolution of member's interest with cancellation
                       
note receivable from member, GCE, Inc.
  $ (35,057 )   $ -     $ (35,057 )
 
See notes to financial statements.
 
 
F-5

 
GULF COAST ENERGY DISTRIBUTION, LLC
(A DEVELOPMENT STATE COMPANY)
YEARS ENDED DECEMBER 31, 2009 AND 2008

NOTES TO FINANCIAL STATEMENTS

1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business
Gulf Coast Energy Distribution, LLC, formerly known as Millennium Energy Distribution, LLC, (a Development Stage Company) (hereinafter referred to as “GCED” or the “Company”) was organized on June 7, 2006.  The Company is engaged in developing a full purpose trade desk for moving physical fuel primarily in the United States.  The Company holds federal and state fuel distribution licenses which allows for the distribution of various types of fuel, including bio-fuel.  The State of Alabama license allows for the distribution and sale of fuel in the state of Alabama at both the retail and wholesale level.  The Federal license allows for the procurement and distribution of fuel in the wholesale trade nationally.

Use of Estimates
Management uses estimates and assumptions in preparing financial statements.  Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.  Actual results could differ from those estimates.

Concentrations of Credit Risk for Cash
The Company’s cash balances are maintained at various banks.  Balances are insured by the Federal Deposit Insurance Corporation subject to certain limitations.

Income Taxes
The Company is organized as a limited liability company under the Alabama Limited Liability Company Act structured to be treated as a partnership for income tax purposes.  Items of income or loss are allocated to the members in accordance with their respective equity interest and reported on their individual federal and state income tax returns.

Effective January 1, 2009, the Company implemented the accounting guidance for uncertainty in income taxes using the provisions of financial Accounting Standards Board (“FASB”) ASC 740, Income Taxes.  Using that guidance, tax positions initially need to be recognized in the financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities.

As of December 31, 2009, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.

Subsequent Events
These financial statements were approved by management and available for issuance on August 24, 2010.  Management has evaluated subsequent events through this date.

 
F-6

 
GULF COAST ENERGY DISTRIBUTION, LLC
(A DEVELOPMENT STATE COMPANY)
YEARS ENDED DECEMBER 31, 2009 AND 2008

NOTES TO FINANCIAL STATEMENTS
       
     
2 - GOING CONCERN

Due to the limited amount of committed capital, losses from operations and no revenue streams, there is substantial doubt about the Company’s ability to continue as a going concern.  The financial statements have been prepared in accordance with U.S. Generally accepted accounting principles (“GAAP”), assuming that the Company will continue as a going concern.


3 - CHANGES IN OWNERSHIP AND DEFINITE AGREEMENTS

As of January 1, 2009, the Activa Transportation Services, LLC, Kenneth A. Flatt, Jr., and Gulf Coast Energy, Inc. (hereinafter referred to as “GCE, Inc.”) owned 20%, 60% and 20%, respectively.  However, during the year ended December 31, 2009, there were several ownership changes as discussed in the following paragraphs.

On March 30, 2009, GCE, Inc., a member, under a Definite Agreement granted to GCED the exclusive right to market bio-fuels produced by them, as well as allow GCED to establish refinery direct contracts and to perform refinery direct transactions in return for obtaining an additional 5% ownership in GCED.

On December 29, 2009 the Definitive Agreement was amended.  Under this amendment GCED waived its exclusive distribution rights under the Definitive Agreement, described in the above paragraph for the first three bio-fuel plants of GCE, Inc.  However, for the fourth plant and future plants the provisions of the Definitive Agreement would remain in full force and effect.  In consideration for GCED’s agreement to this amendment, GCE, Inc. issued to Activa Transportation Services, LLC and Kenneth A. Flatt, Jr. 50,000 shares and 150,000 shares, respectively, of common stock GCE, Inc.  In addition, GCE Inc. surrendered and transferred its entire 25% ownership in GCED in return for forgiveness of the $35,057 in related loans made to GCE, Inc. by GCED.  This amount includes $9,857 paid to American Plant Services, LLC (“APS”) on behalf of GCE, Inc. for materials and services.

As of December 31, 2009, Kenneth A. Flatt, Jr. and Activa Transportation Services, LLC owned 75% and 25% of the member interests, respectively.

 
F-7

 
GULF COAST ENERGY DISTRIBUTION, LLC
(A DEVELOPMENT STATE COMPANY)
YEARS ENDED DECEMBER 31, 2009 AND 2008

NOTES TO FINANCIAL STATEMENTS


4 - RELATED PARTY TRANSACTIONS

The Company paid $610 to APS for delivery of fuel.  APS is a related company that is primarily owned by Kenneth A. Flatt, Jr. and his spouse.


5 - SUBSEQUENT EVENTS

On July 21, 2010 the Company entered into an agreement with Mountain Renewables, Inc. (“MRI”) in which the Company would be acquired for 13,200,000 shares of MRI’s common stock in exchange for 100% interest in the Company.
 
 


 
F-8

 

Gulf Coast Energy Distribution, LLC
 
(a Development Stage Company)
 
             
Balance Sheet
 
             
    June 30,  
 
 
2010
   
2009
 
             
Assets
           
             
Current assets
           
Cash and cash equivalents
  $ 5,041     $ 37,738  
Prepaid expenses
    100       -  
Note receivable -member
    -       35,057  
Total current assets
    5,141       72,795  
                 
Total assets
  $ 5,141     $ 72,795  
                 
                 
Liabilities and members' capital
               
                 
Current liabilities
               
Note payable - GSA
  $ 20,000     $ -  
Accounts payable - trade
    706       685  
                 
Total current liabilities
    20,706       685  
                 
                 
Members' capital
    (15,565 )     72,110  
                 
Total liabilities and members' capital
  $ 5,141     $ 72,795  
 
See notes to financial statements.

 
F-9

 

Gulf Coast Energy Distribution, LLC
 
(a Development Stage Company)
 
             
Statements of Income
 
             
   
For the six months ended June 30,
 
   
2010
   
2009
 
             
Sales
  $ 790     $ -  
                 
Operating expenses
               
Professional fees
    26,000       13,300  
Commissions
    -          
Travel and entertainment
    2,811       190  
Postage
    59       624  
Taxes and licenses
    67       515  
Telephone
    100       -  
Computer costs
    60       135  
Legal and accounting
    -       56  
Payroll taxes
    -       -  
Bank charges
    15       55  
Finance charges
    38       -  
Office
    283       15  
Miscellaneous
    500       -  
                 
Total operating expenses
    29,933       14,890  
                 
Net income (loss) from operations
    (29,143 )     (14,890 )
                 
                 
Net income (loss)
  $ (29,143 )   $ (14,890 )
  
See notes to financial statements.

 
F-10

 

Gulf Coast Energy Distribution, LLC
(a Development Stage Company)
                   
Statements of Members' Capital
                   
                   
         
Activa
       
   
Kenneth A.
   
Transportation
       
For the six months ended June 30,2010
 
Flatt, Jr.
   
Services, LLC
   
Total
 
                   
Members' capital, December 31, 2009
  $ (11,389 )   $ 24,967     $ 13,578  
                         
Net income (loss)
    (21,857 )     (7,286 )     (29,143 )
                         
Members' capital, June 30, 2010
  $ (33,246 )   $ 17,681     $ (15,565 )
                         
           
Activa
         
   
Kenneth A.
   
Transportation
         
For the six months ended June 30, 2009
 
Flatt, Jr.
   
Services, LLC
   
Total
 
                         
Members' capital, December 31, 2008
  $ 600     $ 200     $ 1,000  
                         
Members' contributions
    43,000       43,000       86,000  
                         
Net income (loss)
    (8,667 )     (2,863 )     (14,890 )
                         
Redemption of member's interest
    -       -       -  
                         
Members' capital, June 30, 2009
  $ 34,933     $ 40,337     $ 72,110  

See notes to financial statements.
 
 
F-11

 
 
Gulf Coast Energy Distribution, LLC
 
(a Development Stage Company)
 
             
Statements of Cash Flows
 
             
   
For the six months ended June 30,
 
   
2010
   
2009
 
             
Operating activities
           
Net income (loss)
  $ (29,143 )   $ (14,890 )
                 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Increase in liabilities:
               
Accounts payable
    263       685  
Net cash (used by) operating activities
    (28,880 )     (14,205 )
                 
Investing activities
               
Loan made to member - Gulf Coast Energy, Inc. (GCE, Inc.)
    -       (34,857 )
Net cash (used by) investing activities
    -       (34,857 )
                 
Financing activities
               
Member's capital contributions
    -       86,000  
Proceeds from loans - GSA
    20,000       -  
Net cash provided by financing activities
    20,000       86,000  
                 
Net increase in cash
    (8,880 )     36,938  
                 
Cash and cash equivalents, beginning of period
    13,921       800  
                 
Cash and cash equivalents, end of period
  $ 5,041     $ 37,738  
                 
                 
Supplemental disclosure of cash flow information:
               
Interest paid
  $ -     $ -  

See notes to financial statements.
 
 
F-12

 
GULF COAST ENERGY DISTRIBUTION, LLC
(A DEVELOPMENT STATE COMPANY)
SIX MONTH PERIODS ENDED JUNE 30, 2010 AND 2009

NOTES TO FINANCIAL STATEMENTS

1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business
Gulf Coast Energy Distribution, LLC, formerly known as Millennium Energy Distribution, LLC, (a Development Stage Company) (hereinafter referred to as “GCED” or the “Company”) was organized on June 7, 2006.  The Company is engaged in developing a full purpose trade desk for moving physical fuel primarily in the United States.  The Company holds federal and state fuel distribution licenses which allows for the distribution of various types of fuel, including bio-fuel.  The State of Alabama license allows for the distribution and sale of fuel in the state of Alabama at both the retail and wholesale level.  The Federal license allows for the procurement and distribution of fuel in the wholesale trade nationally.

Use of Estimates
Management uses estimates and assumptions in preparing financial statements.  Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.  Actual results could differ from those estimates.

Concentrations of Credit Risk for Cash
The Company’s cash balances are maintained at various banks.  Balances are insured by the Federal Deposit Insurance Corporation subject to certain limitations.

Income Taxes
The Company is organized as a limited liability company under the Alabama Limited Liability Company Act structured to be treated as a partnership for income tax purposes.  Items of income or loss are allocated to the members in accordance with their respective equity interest and reported on their individual federal and state income tax returns.

Effective January 1, 2009, the Company implemented the accounting guidance for uncertainty in income taxes using the provisions of financial Accounting Standards Board (“FASB”) ASC 740, Income Taxes.  Using that guidance, tax positions initially need to be recognized in the financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities.

As of June 30, 2010, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.

Subsequent Events
Management has evaluated subsequent events through the date of issuance of these financial statements.

 
F-13

 
GULF COAST ENERGY DISTRIBUTION, LLC
(A DEVELOPMENT STATE COMPANY)
SIX MONTH PERIODS ENDED JUNE 30, 2010 AND 2009

NOTES TO FINANCIAL STATEMENTS


2 - GOING CONCERN

Due to the limited amount of committed capital, losses from operations and no revenue streams, there is substantial doubt about the Company’s ability to continue as a going concern.  The financial statements have been prepared in accordance with U.S. Generally accepted accounting principles (“GAAP”), assuming that the Company will continue as a going concern.


3 - SUBSEQUENT EVENTS

On July 21, 2010 the Company entered into an agreement with Mountain Renewables, Inc. (“MRI”) in which the Company would be acquired for 13,200,000 shares of MRI’s common stock in exchange for 100% interest in the Company.



 
F-14