UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

[X]	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended August 31, 2011
[  ]	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from __________ to __________
	Commission File Number: 000-52494

 

Force Energy Corp.

(Exact name of registrant as specified in its charter)

 

Nevada	98-0462664
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

 

1400 16th Street, Suite 400, Denver, CO 80202

(Address of principal executive offices)

 

720-470-1414

(Registrant’s telephone number)

_______________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days [X] Yes [ ] No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] Yes [X] No

 

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

 

[ ] Large accelerated filer Accelerated filer	[ ] Non-accelerated filer
[X] Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No

 

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 54,937,267 common shares as of August 31, 2011.

 

	TABLE OF CONTENTS	Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	11
Item 4:	Controls and Procedures	11
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	13
Item 1A:	Risk Factors	13
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 3:	Defaults Upon Senior Securities	13
Item 4:	Removed and Reserved	13
Item 5:	Other Information	13
Item 6:	Exhibits	13

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Our financial statements included in this Form 10-Q are as follows:
F-1	Interim Consolidated Balance Sheets as of August 31, 2011 (unaudited) and November 30, 2010 (audited);
F-2	Interim Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended August 31, 2011 and 2010 and period from November 1, 2006 (Inception) to August 31, 2011 (unaudited);
F-3	Interim Consolidated Statements of Cash Flows for the nine months ended August 31, 2011 and 2010 and period from November 1, 2006 (Inception) to August 31, 2011 (unaudited);
F-4	Notes to Financial Statements;

 

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended August 31, 2011 are not necessarily indicative of the results that can be expected for the full year.

FORCE ENERGY CORP.

(A Development Stage Company)

INTERIM CONSOLIDATED BALANCE SHEETS

AUGUST 31, 2011 and November 30, 2010

(Stated in US Dollars)

(Unaudited)

 

			August 31				November 30
ASSETS			2011				2010
Current
Cash		$	33,631			$	—
Prepaid expenses			2,351				238
			35,982				238
Oil and gas properties,  full cost method of accounting
Unproved Properties – Note 6			135,427				135,427
Mineral Property Option – Note 7			80,000				—
		$	251,409			$	135,665
LIABILITIES
Current
Bank overdraft		$	—			$	136
Accounts payable and accrued liabilities			50,998				38,328
Advances payable - Note 8			50,000				—
Due to related parties - Note 9			3,250				18,750
Convertible Note Payable– Note 10			152,788				—
			257,036				57,214
Asset retirement obligation – Note 11			14,272				12,282
			271,308				69,496
STOCKHOLDERS’ EQUITY (DEFICIENCY)
Preferred stock, $0.001 par value 10,000,000 shares authorized, none outstanding
Common stock, $0.001 par value – Note 12, 270,000,000 shares authorized 54,937,267 shares issued (November 30, 2010, - 51,237,267 shares issued) 270,000,000 shares authorized, 54,937,267 shares issued (November 30, 2010, - 51,237,267 shares issued			54,937				51,237
Additional paid in capital			2,826,176				2,574,876
Deferred stock compensation – Note 9			(110,800	)			(170,200	)
Deficit accumulated during the development stage			(2,790,212	)			(2,389,744	)
			(19,899	)			66,169
		$	251,409			$	135,665

 

Nature of Operations and Ability to Continue as a Going Concern – Note 2

 

 

See accompanying notes to the Financial Statements

FORCE ENERGY CORP.

(A Development Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

for the three and nine month periods ended August 31, 2011 and August 31, 2010 and

for the period from November 1, 2006 (Date of Inception)

to August 31, 2011

(Stated in US Dollars)

(Unaudited)

 

 

																		November 1,
																		2006 (Date of
		Nine months ended								Three months ended								Inception) to
		August 31,								August 31,								August 31,
		2011				2010				2011				2010				2011
																			(cumulative)
Expenses
Accounting and audit fees		$	14,650			$	74,427			$	2,600			$	11,450			$	281,596
Accretion of ARO			1,460				1,192				490				410				4,414
Accretion of convertible note discount			12,727				—				12,727				—				12,727
Bank charges and interest			1,240				476				437				149				3,868
Consulting fees			—				—				—				—				408,500
Depreciation			—				1,741				—				577				4,651
Interest on long term debt			2,455				—				2,017				—				2,455
Investor relations			10,000				—				5,000				—				61,443
Legal fees			14,413				22,709				5,840				8,550				186,551
Management fees – Note 9			236,400				417,675				67,400				323,175				1,090,950
Mineral property option costs			—				59,600				—				59,600				59,600
Mineral property exploration  costs			50,680				—				49,105				—				50,680
Office expenses			4,440				7,852				1,867				2,285				37,381
Oil and gas exploration costs			—				—				—				—				15,000
Rent – Note 6			1,901				6,711				1,123				411				42,929
Tax, penalties and Interest			42,270				—				42,270				—				42,270
Transfer and filing fees			6,984				7,616				2,940				3,142				77,855
Travel			—				839				—				—				10,341
Write-off of oil and gas costs			—				398,039				—				398,039				418,039
Loss before other items			(399,620	)			(998,877	)			(193,816	)			(807,788	)			(2,811,250	)
Other items:
Debt forgiveness			—				14,676				—				14,676				15,286
Foreign exchange gain (loss)			(848	)			(2,706	)			(33	)			(1,287	)			5,615
Interest income			—				133				—				133				137
			(848	)			12,103				(33	)			13,522				21,038
Net loss and comprehensive loss for the period		$	(400,468	)		$	(986,774	)		$	(193,849	)		$	(794,266	)		$	(2,790,212	)
Basic loss per share		$	(0.01	)		$	(0.02	)		$	(0.01	)		$	(0.02	)
Weighted average number of shares outstanding			52,319,749				47,878,191				54,066,603				48,934,959

See accompanying notes to the Financial Statements
 

FORCE ENERGY CORP.

(A Development Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

for the nine month periods ended August 31, 2011 and August 31, 2010 and

for the period from November 1, 2006 (Date of Inception)

to August 31, 2011

(Stated in US Dollars)

(Unaudited)

										Period from
										November 1,
		Nine Months				Nine Months				2006 (Date of
		Ended				Ended				Inception) to
		August 31,				August 31,				August 31,
		2011				2010				2011
											(cumulative)
Cash Flows provided by (used in) Operating Activities
Net loss for the period		$	(400,468	)		$	(986,774	)		$	(2,790,212	)
Adjustments to reconcile net loss to net cash  used in operating activities:
Accrued interest			2,561				—				2,561
Accretion of discount on convertible notes and interest			12,727				—				12,727
Consulting fees paid in stock			—				—				405,000
Share based compensation			184,400				313,800				564,200
Debt forgiveness			—				(14,676	)			(15,286	)
Accretion expense			1,990				1,252				4,941
Depreciation			—				1,741				4,651
Write-off of oil and gas costs			—				398,039				418,039
Changes in non-cash working capital items related to operations:
Prepaid expenses			(2,113	)			359				(2,351	)
Advance payable			50,000				—				50,000
Accounts payable and accrued liabilities			12,670				(25,575	)			26,956
Net cash used in operating activities			(138,233	)			(311,834	)			(1,318,774	)
Cash Flows used in Investing Activities
Acquisition of property and equipment			—				—				(4,651	)
Acquisition and development costs of oil and gas properties			—				(29,304	)			(387,517	)
Net cash used in investing activities			—				(29,304	)			(392,168	)
Cash Flows provided by Financing Activities
Capital stock issued			50,000				150,000				1,419,000
Convertible note payable			137,500				—				137,500
Due to related parties			(15,500	)			46,642				164,067
Cash acquired on reverse acquisition			—				—				37,058
Net cash provided by financing activities			172,000				196,642				1,757,625
Effect of foreign currency translation			—				—				(13,052	)
Increase (decrease) in cash during the period			33,737				(144,496	)			33,631
Cash (Bank indebtedness), beginning of the period			(136	)			162,458				—
Cash (Bank indebtedness), end of the period		$	33,631			$	17,962			$	33,631

Supplemental Cash Flow Information – Note 12

See accompanying notes to the Financial Statements

FORCE ENERGY CORP.

(A Development Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2011,

(Stated in US Dollars)

(Unaudited)

 

Note 1 Interim Reporting

 

The unaudited financial information furnished herein reflects all adjustments, which in the opinion of management are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented. All adjustments are of a normal recurring nature. These interim financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s audited consolidated financial statements for the fiscal year ended November 30, 2010. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal period and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s audited consolidated financial statements for the fiscal year ended November 30, 2010, has been omitted. The results of operations for the nine-month period ended August 31, 2011 are not necessarily indicative of results for the entire year ending November 30, 2011.

 

Note 2 Nature of Operations and Ability to Continue as a Going Concern

 

The Company was incorporated in the state of Nevada, United States of America on November 1, 2006. The Company was formed for the purpose of acquiring exploration and development stage natural resource properties. The Company’s year-end is November 30.

 

Effective December 28, 2006, the Board of Directors authorized a 3 for 1 forward stock split on the common shares. The authorized number of common shares increased from 90,000,000 to 270,000,000 common shares with a par value of $0.001. All references in the accompanying financial statements to the number of common shares have been restated to reflect the forward stock split.

 

On February 12, 2008, the Company acquired 100% of the common shares of Force Energy Corp. an inactive company incorporated in Nevada on July 19, 2005, for $100, to effect a name change of the Company. On February 12, 2008, the Company and Force Energy Corp filed articles of merger with the Secretary of State of Nevada to effectuate a merger between the two companies. The surviving entity of the merger was the Company. Immediately thereafter the Company changed its name to Force Energy Corp.

 

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next twelve months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At August 31, 2011, the Company has a working capital deficit of $221,054. The Company has yet to achieve profitable operations, has accumulated losses of $2,790,212 since its inception and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.

 

Note 2 Nature of Operations and Ability to Continue as a Going Concern – (cont’d)

 

Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available or on acceptable terms, if at all.

 

Note 3 Newly Issued Accounting Pronouncements

 

On December 1, 2010, we adopted guidance issued by the FASB ASU 2010-15 on the consolidation of variable interest entities. The new guidance requires revised evaluations of whether entities represent variable interest entities, ongoing assessments of control over such entities, and additional disclosures for variable interests. Adoption of the new guidance did not have a material impact on our financial statements.

 

The Company has reviewed issued accounting pronouncements and plans to adopt those that are applicable to it. The Company does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position.

Note 4 Newly Adopted Accounting Policy

 

Mineral Properties

 

On June 1, 2011, the Company changed its accounting policy with respect to accounting for its mineral properties as follows:

 

The Company is primarily engaged in the acquisition, exploration and development of mineral properties.

 

Mineral property acquisition costs are capitalized in accordance with FASB ASC 930-805, “Extractive Activities-Mining,” when management has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted exploration and development expenditures. Mineral property acquisition costs are expensed as incurred if the criteria for capitalization are not met. In the event that mineral property acquisition costs are paid with Company shares, those shares are recorded at the estimated fair value at the time the shares are due in accordance with the terms of the property agreements.

 

Mineral property exploration costs are expensed as incurred.

 

When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves and pre-feasibility, the costs incurred to develop such property are capitalized.

 

Estimated future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis.

 

Note 4 Newly Adopted Accounting Policy – (cont’d)

 

Mineral Properties – (cont’d)

 

Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards. Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.

 

To date the Company has not established any proven or probable reserves on its mineral properties.

 

Note 5 Financial Instruments

 

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

 

In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels and which is determined by the lowest level input that is significant to the fair value measurement in its entirety.

 

These levels are:

Level 1- inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3- inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

 

Note 5 Financial Instruments – (cont’d)

 

The carrying value of the Company’s financial assets and liabilities consisting of cash, accounts payable and accrued liabilities, advances payable, convertible note payable and due to related parties in management’s opinion, approximate their fair value due to the short maturity of such instruments. In management’s opinion, the fair value of notes payable is approximate to carrying value as the interest rates and other features of these instruments approximate those obtainable for similar instruments in the current market. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments.

 

Note 6 Oil and Gas Properties

 

	United States				Canada				Total
Unproved properties
- acquisition costs	$	369,000			$	119,640			$	488,640
- development costs		29,039				7,365				36,404
- asset retirement obligation		—				8,422				8,422
		398,039				135,427				533,466
Written off		(398,039	)			—				(398,039	)
Balance at August 31, 2011 and November 30, 2010	$	—			$	135,427			$	135,427

 

a) Hayter Prospect, Alberta, Canada

 

By a participation agreement dated December 21, 2006, Nuance Exploration Ltd. (“NEL”), a wholly owned subsidiary of the Company acquired a 100% ownership in the interpretation of 3D seismic data covering four sections of certain land, known as the Hayter Prospect, located in the province of Alberta, Canada by paying $82,650 (CDN$95,000) in costs of acquiring and interpreting the seismic data.

 

On October 15, 2007, prior to the evaluation of the 3D seismic data, NEL sold to the original grantor (the Grantor) its 100% interest in the subject property and received as consideration a non-interest bearing promissory note for $111,144 (CDN$110,000) to be repaid by November 30, 2007.

 

On November 30, 2007, the Grantor did not pay the promissory note and NEL and the Grantor entered into a Participation Agreement whereby NEL accepted a 20% interest of the Grantor’s working interest in the County Line 10D Hayter 10-8-40-1 W4M well as full and final settlement of the promissory note totalling $95,702 after considering the effects of the foreign exchange on the note.

 

On October 16, 2009, the Company entered into an amendment to its Participation Agreement pursuant to which it acquired an additional 30% working interest in the Hayter Well in consideration of a release by Force from an amount of $23,938 owed by the Grantor to the Company. The Company holds a 50% working interest of the Grantor’s interest in the Hayter Well. The addendum was subsequently amended by the parties on February 1, 2010 to replace the reference to the Company in the agreement with Nuance Exploration Ltd., the Company’s wholly owned subsidiary.

  

Note 6 Oil and Gas Properties – (cont’d)

 

a) Hayter Prospect, Alberta, Canada – (cont’d)

 

During the year ended November 30, 2010 the Company incurred $265 (November 30, 2009 - $7,100) of development costs.

 

As at August 31, 2011, the 50% working interest of the Hayter Well was recorded at $135,427 (November 30, 2010:- $135,162). The company also recorded $14,272 (November 30, 2010 - $12,282) as an asset retirement obligation (Note 11).

 

b) Diamond Springs Prospect, Wyoming

 

By a letter agreement dated March 11, 2008, the Company agreed to purchase a 5% working interest in the Diamond Springs Prospect (the “Prospect”) and acquire an option to purchase an additional 20% working interest in the Prospect.

 

As consideration, the Company issued a $50,000 Promissory Note without interest due on or before April 30, 2008 (settled April 16, 2008), and agreed to pay $300,000 within 90 days of the execution of an acquisition agreement (see agreement related to Diamond Springs Prospect below), at which time the Company would earn a 75% net revenue interest in the initial well. The Company is responsible for 100% of the costs of the drilling and testing of the initial well on the Prospect.

 

Upon drilling of the initial well, the Company would issue to the vendor 250,000 common shares of the Company as payment in full for a 5% working interest in all subsequent wells drilled on the Prospect. These shares were not issued and the commitment to issue these shares was superseded in June, 2009 as described below. The Vendor granted the Company the option to purchase up to an additional 20% working interest in all subsequent wells drilled on the Prospect for $100,000 per 1% of working interest. This option expired unexercised on December 15, 2008.

 

In December 2008, the Company advanced an additional $175,000, pursuant to the loan agreement dated March 11, 2009, to the vendor of the Diamond Springs Prospect with the intention that this loan, together with the original payment of $50,000, are to be included as part of the purchase price included in a definitive agreement in respect to the acquisition by the Company of a working interest in the Prospect.

 

In June 2009, the parties entered into the assignment agreement, which replaced and superseded all prior agreements between the parties. The Company received a 50% interest in the Diamond Springs Prospect for $225,000. In connection with the assignment agreement the Company agreed to sign a release in favour of the assignor, releasing them from all further obligations under the loan agreement and the letter agreement.

 

On September 16, 2009, the Company acquired a further 25% interest in the Diamond Springs Prospect for consideration consisting of 450,000 common shares with a fair value of $144,000.

 

During the year ended November 30, 2009, $20,000 in development costs relating to Diamond Springs Prospect were written off.

Note 6 Oil and Gas Properties – (cont’d)

 

b) Diamond Springs Prospect, Wyoming – (cont’d)

 

During the year ended November 30, 2010, the Company incurred $29,039 of exploration expenditures on the Diamond Springs Prospect. Following a review exploration results the Company abandoned its interest in the prospect during the year ended November 30, 2010 and wrote off $29,039 of exploration expenditures and $369,000 of acquisition costs.

 

Note 7 Mineral Property

 

On July 6, 2010, the Company entered into a Property Option Agreement (amended May 11, 2011) to acquire an option to purchase a 100% interest in the property known as the Zoro 1 property, a mineral property comprising 52 hectares (128 acres) in the Snow Lake region of Manitoba Canada. In order to exercise the option, the Company must pay cash or issue stock to Optionor by the following dates:

 

i) $59,600 (Cdn$62,000) on signing the agreement (paid)

ii) $102,900 (Cdn$100,000) or issue 1,000,000 shares of common stock on or before June, 15, 2011. (1,000,000 shares issued with a fair value of $80,000)

iii) $204,460 (Cdn$200,000) or issue a specified number of common shares still to be determined by the parties on or before June, 15, 2012

iv) $408,920 (Cdn$400,000) or issue a specified number of common shares still to be determined by the parties on or before June, 15, 2013.

 

During the nine month period ended August 31, 2011, the Company incurred $50,680 of exploration expenditures on the property.

 

Note 8 Advances Payable

 

On February 1, 2011, the Company received a cash advance of $30,000. The advance is unsecured, non-interest bearing and has no fixed repayment terms.

 

On March 21, 2011, the Company received a cash advance of $20,000. The advance is unsecured, non-interest bearing and has no fixed repayment terms.

 

Note 9 Related Party Transactions

 

Amounts due to related parties comprise:

 

		August 31				November 30
		2011				2010
Amounts due to Directors
Management fees		$	3,250			$	18,750

 

All amounts due to related parties are unsecured, non-interest bearing and have no specific terms for repayment.

 

On July 23, 2010, the Company entered into an employment contract with a director which expires July 22, 2011. Pursuant to the contract the Director will receive $5,000 per month remuneration. On December 31, 2010 the Director resigned and the employment contract was terminated.

Note 9 Related Party Transactions – (cont’d)

 

On August 4, 2010, the Company entered into a share for debt settlement agreement with the Company’s former President whereby 643,267 common shares having a fair value of $0.25 each were issued to settle in full management fees of $154,600 rent expense of $1,000 and other expenses owing of $5,216, an aggregate amount of $160,817.

 

On July 23, 2010, the Company entered into an employment contract with the Company President which expires July 22, 2011. Pursuant to the contract the President received 2,500,000 common shares having a fair value of $550,000. Should the contract be terminated prior to completion the President will return 100,000 shares to treasury for each unfulfilled month of the contract. The President will also receive $2,500 per month for months 1-3; $4,000 per month for months 4-6 and $5,000 per month for months 7-12 of the contract.

 

The fair value of 1,300,000 shares issued which were earned immediately have been expensed as stock based compensation of $286,000. The fair value of the remaining 1,200,000 shares issued which are to be earned over the term of the contract will be charged to operations over the life of the employment contract. This portion of the stock award is accounted for as deferred compensation whereby the fair value of the award is recorded as a component of stockholders’ equity until earned. Pursuant to this stock award the Company recorded management fees of $170,200 (nine months ended August 31, 2010 - $27,800).

 

On July 18, 2011, the Company entered into a new employment contract with the Company President which expires July 18, 2013. Pursuant to the contract the President received 2,500,000 common shares having a fair value of $125,000. The President will receive $7,500 per month for months 13-24 of the contract.

Unless the contract is terminated by either party giving 45 days written notice the contact will automatically renew. Should the contract be renewed then the President will receive 2,500,000 shares of common stock and an annual increase of $2,500 per month upon each renewal. If the Company does not have sufficient cash resources to settle the cash element of the contract, then at the request of the President any accrued unpaid fees may be converted into common stock at $0.025 per share.

 

The fair value of the 2,500,000 shares issued which are to be earned over the term of the contract will be charged to operations over the life of the employment contract. This portion of the stock award is accounted for as deferred compensation whereby the fair value of the award is recorded as a component of stockholders’ equity until earned. Pursuant to this stock award the Company recorded management fees of $14,200 (nine months ended August 31, 2010 - $nil).

 

During the three and nine month periods ended August 31, 2011 and 2010, the Company charged or accrued the following amounts:

Note 9 Related Party Transactions – (cont’d)

 

	Nine Month								Three Month
	Period Ended								Period Ended
	August 31,								August 31,
	2011				2010				2011				2010
Amounts charged by directors
Management fees	$	236,400			$	323,175			$	67,400			$	323,175
Amounts charged by former director and Company controlled by former director
Management fees		—				94,500				—				—
Rent		—				6,300				—				—
		—				100,800				—				—
Total	$	236,400			$	100,800			$	67,400			$	—

 

 

Note 10 Convertible Notes Payable

 

	August 31				November 30
	2011				2010
Promissory Note #1		100,000				—
Promissory Note #2		37,500				—
Interest		2,561				—
Accretion expense		12,727				—
	$	152,788			$	12,282

 

As at August 31, 2011, and November 30, 2011 convertible notes payable are recorded net of unamortized debt and accrued interest discount of $120,410 and $nil respectively.

 

Promissory Note #1

 

On May 11, 2011, the Company received $100,000 cash and the Company issued a convertible promissory note in the amount of $100,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 10, 2013. During the nine month period ended August 31, 2011, the Company accrued $2,455 interest expense.

 

The note may be converted at the option of the holder into Common stock of the Company. The conversion price is defined as “the lesser 50% discount to the average bid price for the shares as quoted on the OTCBB where the shares are traded for the three consecutive business days prior to the date of conversion”.

 

 

 

Note 10 Convertible Notes Payable - (cont’d)

 

Promissory Note #2

 

On August 18, 2011, the Company received $37,500 cash and the Company issued a convertible promissory note in the amount of $37,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 22, 2012. During the nine month period ended August 31, 2011, the Company accrued $106 interest expense.

 

The note may be converted at the option of the holder into Common stock of the Company. The conversion price is 55% of the market price, where market price defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”.

 

Note 11 Asset Retirement Obligation

 

Total future asset retirement obligations were estimated by management based on the Company’s net ownership interest, estimated costs to reclaim and abandon the wells and the estimated timing of the costs to be incurred in future periods. The Company has estimated the net present value of its total assets retirement obligations at August 31, 2011 to be $14,272 based on a total undiscounted liability of $18,002 (Cdn$17,500) in the Hayter Prospect, Alberta, Canada. These payments are expected to be made over the next seven years, with the majority of the cost incurred between 2016 and 2019.

 

The Company’s credit adjusted risk free rate of 15% and an inflation rate of 8% were used to calculate the present value of the asset retirement obligation.

 

	August 31				November 30
	2011				2010
Balance, beginning of period	$	12,282			$	10,225
Liabilities incurred		—				—
Accretion expense		1,460				1,626
Effect of foreign exchange		530				431
	$	14,272			$	12,282

 

Note 12 Capital Stock

 

On December 1, 2010, the Company issued 200,000 common shares for aggregate proceeds of $50,000.

 

On June 3, 2011 the Company issued 1,000,000 shares of common stock pursuant to the Zoro 1 mineral property agreement, with a fair value of $80,000.

 

On June 7, 2011 and July 18, 2011, the Company issued 1,000,000 and 1,500,000 shares of common stock to the President pursuant to the new management contract. (Note 9). The shares issued had a fair value of $125,000.

Note 13 Supplemental Disclosure with Respect to Cash Flows

 

During the nine month period ended August 31, 2011, the following non-cash investing and financing activities occurred:

 

i) 2,500,000 common shares were issued with a fair value of $125,000 pursuant to an employment contract.

 

ii) 1,000,000 common shares were issued with a fair value of $80,000 pursuant to a mineral property option agreement.

 

During the nine month period ended August 31, 2010, the following non-cash investing and financing activities occurred:

 

i) 2,500,000 common shares were issued with a fair value of $550,000 pursuant to an employment contract.

 

ii) 643,267 common shares were issued pursuant to a debt settlement agreement, in settlement of amounts owing to the Company’s former president in the amount of $160,817.

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

 

Company Overview

 

We are currently engaged in the business of identifying, evaluating, and qualifying potential natural gas and oil wells; investing in interests in those wells with the goal of producing commercially marketable quantities of oil and natural gas. We have recently expanded our business model to include the exploration of mineral properties.

 

The Hayter Well

 

We presently hold a 50% working interest of the County Line Energy Corp. interest in the Hayter Well located in Alberta, Canada.

 

County Line Energy Corp. is the operator of the Hayter well. As of the date of this report, the Hayter well has been cased and cemented in anticipation of the completion of the drill program. County Line plans to enter the Hayter well, perforate the potential pay zones and conduct regular production testing of the zones. Should the testing confirm adequate oil reserves and potential economic flow rates, County Line is expected to install adequate pumping equipment and other surface facilities in anticipation of the projected flow rates. Currently, there are no known oil reserves on the Hayter well.

Zoro 1 Mineral Claim

 

On July 6, 2010, we entered into an option agreement with Dalton Dupasquier, pursuant to which Mr. Dupasquier has granted to us the sole and exclusive right and option, exercisable in the manner described below, to acquire a 100% net undivided interest in the property known as the Zoro 1 mineral claim, located near the East Shore of Wekusko Lake in west-central Manitoba, Canada.

 

Amount of Payment		Date Payment is Due
$59,600			July 6, 2010 (paid)
$94,958			June 15, 2011 (paid in 1,000,000 shares of common stock)
$189,915			June 15, 2012
$379,831			June 15, 2013

 

We have no rights to the Zoro 1 mineral claim unless and until we exercise the option. We acquired the option to explore the potential for deposits of lithium on the Zoro 1 mineral claim.

 

We acquired the option to explore the potential for deposits of lithium on the Zoro 1 mineral claim. According to the United States Geological Survey (USGS), global end-use markets for lithium include ceramics and glass, batteries, lubricating greases, air treatment, continuous casting and primary aluminum production. Batteries, especially rechargeable batteries, are the market for lithium compounds with the largest growth potential as major automobile companies pursue the development of lithium batteries to power hybrid electric cars.

 

In September 2009, we received a NI 43-101 Technical Report on the Zoro 1 mineral claim. The report was authored by Mr. Mark Fedikow, PhD., P.Eng. of Mount Morgan Resources Ltd. The objectives of the NI 43-101 report were to summarize the geology, review the historic ore reserves, and economic potential of the spodumene-bearing dykes delineated on the property and their surrounding geological environment.

 

An historic reserve estimate for Lithium oxide (Li2O) has been calculated on limited drilling on a single dyke on the Zoro 1 mineral claim. Drill indicated spodumene reserves coupled with data from trenching have been calculated with a total undiluted tonnage given as 1,727,550 at 0.945% Li2O. There are seven zoned pegmatite dykes on the Zoro 1 mineral claim.

 

During the current reporting period, an exploration team explored the main dyke, located the additional seven trenches that had historically been noted on the Zoro 1 claim and produced a geologic map of each trench. Once areas of interest were located, the crew cleaned out the trenches and used a pick and shovel method to look at rocks to find pegmatite. They then took channel samples using a rock saw on historic trenches hosting pegmatite.

 

While exploring the main and additional seven dykes on the project area the crew identified several additional trenches that had not been noted in previous exploration programs. These findings suggest a potential for a greater amount of resource to be spread across the property, and give further encouragement for more detailed exploration.

 

Altogether 170 channel samples have been sent for assay at Activation Laboratories in Ancaster, Ontario. The samples will be analyzed to confirm historical lithium assays, and to assess the pegmatite for rare earth elements, gold, rubidium, niobium, tantalum, tin, tungsten, and beryllium, all of which add to the prospectivity and economic viability of the Zoro 1 property. The analytical approach will be broad as we look at samples for these value-added minerals.

 

Once we receive the results of analytical testing, we will compile a technical report and determine next steps for development of the property.

 

We plan to continue to explore the Zoro 1 mineral claim using the Exploration Recommendations outlined by Dr. Fedikow in the NI 43-101 Technical Report, which are set forth below along with a table of recommended expenditures.

Initially, the Zoro 1 pegmatites should be the focus of the following exploration approaches. These are as follows:

 

1.       Trench rehabilitation including overburden stripping and washing.

 

2.       Geologic mapping of individual trenches at a scale of 1:20.

 

3.       Detailed geological mapping at a scale appropriate to document relevant features on the property. This will include the seven pegmatite dykes, trench locations, historic drill collars and geological attributes of the dykes. It is likely this mapping will be undertaken at a scale of 1:1000.

 

4.       Trench and channel sampling should be undertaken to confirm historic assay results.

 

5.       Re-log historic drill core as possible.

 

6.       A grid should be re-established on the property and an attempt made to tie-in the collar locations of all previous drilling. This information would help to structure new diamond drill programs. Initially, an attempt should be made to re-construct the historic grid although it is unlikely this will be possible given the length of time that has elapsed since the grid was first cut.

 

7.       The geochemistry of the spodumene with particular relevance to iron content should be evaluated. Albite-rich portions of the pegmatite should be assayed for tantalum, tin, and niobium values. Altered and mineralized wallrocks should be assayed for gold particularly where the mineral assemblage of pyrrhotite, chalcopyrite and arsenopyrite are observed. Any subsequent drill program should be accompanied by a multi-element geochemical approach to assaying core including assays for gold. This will be followed up with assays for specific metals that may be present in the pegmatite dykes. The new assay program should be accompanied by a quality assurance and quality control program.

 

8.       Diamond drilling should initially target Dyke No. 1 with the aim of ascertaining the physical size and extent of this dyke. Additional drilling will be necessary in the vicinity of the six remaining known dykes as well as any additional lithium-bearing pegmatite uncovered during exploration on the remainder of the property.

 

Trench Rehabilitation, Geologic Mapping and Assays (Four Weeks)
1. Trench stripping, excavation and washing:	$	15,000.00
2. Field technician:  $250.00/day:	$	7,000.00
3. General Laborers (n=2): $150.00/day:	$	8,400.00
4. Geologist: $400.00/day:	$	11,200.00
5. Assays (n=100 @ $50.00/sample):	$	5,000.00
Drill Program
6. Mobilization/Demobilization of equipment and crews:	$	10,000.00
7. Two Thousand metres of NQ coring:	$	250,000.00
8. Moves between holes:	$	25,000.00
9. Core trays and survey tool:	$	8,000.00
10. Room and board @ $150.00/day for 60 days:	$	18,000.00
11. Communications and freight:	$	10,000.00
12. Helicopter:	$	40,000.00
13. Helicopter fuel:	$	7,500.00
14. Geologist @ $400.00/day for 60 days:	$	24,000.00
15. Geologist Room and Board @ $150.00/day:	$	9,000.00
16. Geologist Transportation/Mobilization/Demobilization/Site access:	$	5,000.00
17. Assays @$50.00/sample for 300 samples:	$	15,000.00
18. Report preparation:	$	7,500.00
Sub-total:	$	475,600.00
Contingency @ 10%:	$	47,560
Total:	$	523,160.00

Anticipated Cash Requirements

 

We estimate that our general operating expenses for the next twelve month period to be as follows:

 

Estimated Funding Required During the Next Twelve Months
Expenses			Amount
Management fees		$	150,000
Exploration expenses		$	523,160
Zoro 1 mineral property payment		$	94,958
Professional fees		$	120,000
General administrative expenses		$	80,000
Total		$	968,118

 

To date, we have had negative cash flows from operations and we have been dependent on sales of our equity securities and debt financing to meet our cash requirements. We expect this situation to continue for the foreseeable future. We anticipate that we will have negative cash flows during the next twelve month period.

 

Results of operations for the three and nine months ended August 31, 2011 and 2010, and for the period from Inception (November 1, 2006) to August 31, 2011

 

Our operating results for the three and nine months ended August 31, 2011 and 2010 are summarized as follows:

 

		Nine Months Ended								Three Months Ended
		August 31,								August 31,
		2011				2010				2011				2010
Revenue		$	—			$	—			$	—			$	—
Operating Expenses			499,620				998,877				293,816				807,788
Net Loss			500,468				986,774				293,849				794,266

 

Revenues

 

We have not earned any revenues to date, and do not anticipate earning revenues until such time as we encounter commercially productive oil or gas reservoirs on our oil and gas prospects. All of our oil and gas prospects are undeveloped. We anticipate that we will have to address the cash shortfall through additional equity financings in the future. We can offer no assurance, however, that such financings will be available on terms acceptable to our company.

Expenses

 

Our expenses for the three and nine months ended August 31, 2010 and 2009 are outlined in the table below:

 

		Nine Months Ended								Three Months Ended
		August 31,								August 31,
		2011				2010				2011				2010
Accounting and audit fees		$	14,650			$	74,427			$	2,600			$	11,450
Accretion of ARO			1,460				1,192				490				410
Accretion of convertible note discount			12,727				—				12,727				—
Bank charges and interest			1,240				476				437				149
Consulting fees			—				—				—				—
Depreciation			—				1,741				—				577
Interest on long term debt			2,455				—				2,017				—
Investor relations			10,000				—				5,000				—
Legal fees			14,413				22,709				5,840				8,550
Management fees – Note 8			236,400				417,675				67,400				323,175
Mineral property option costs			100,000				59,600				100,000				59,600
Mineral property exploration  costs			50,680				—				49,105				—
Office expenses			4,440				7,852				1,867				2,285
Oil and gas exploration costs			—				—				—				—
Rent – Note 6			1,901				6,711				1,123				411
Tax, penalties and Interest			42,270				—				42,270				—
Transfer and filing fees			6,984				7,616				2,940				3,142
Travel			—				839				—				—
Write-off of oil and gas costs			—				398,039				—				398,039
		$	499,620			$	998,877			$	293,816			$	807,788

 

Our expenses decreased by $499,257 for the nine months ended August 31, 2011 as compared to the same period in 2010. Our operating expenses decreased by $513,972 for the three months ended August 31, 2011 as compared with the same period in 2010. The decrease in our expenses for both periods was due mainly to the lack of write-off in 2011 as compared to 2010, and less expensed on Management Fees.

 

Liquidity And Capital Resources

 

Working Capital

 

		August 31, 2011				November 30, 2010
Current Assets		$	35,982			$	238
Current Liabilities			257,036				57,214
Working Capital (Deficit)			(221,054	)			(56,976	)

 

We will depend almost exclusively on outside capital to pay for the continued exploration and development of our properties. Such outside capital may include the sale of additional stock and/or commercial borrowing. Capital may not continue to be available if necessary to meet these continuing development costs or, if the capital is available, that it will be on terms acceptable to us. The issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

 

If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business and as a result may be required to scale back or cease operations for our business, the result of which would be that our stockholders would lose some or all of their investment.

Cash Flows

 

		Nine Months Ended August 31, 2011				Nine Months Ended August 31, 2010
Cash used in Operating Activities		($	138,233	)		($	311,834	)
Cash used in Investing Activities			—				(29,304	)
Cash provided by Financing Activities			172,000				196,642
Increase (Decrease) in Cash			33,737				(144,496	)

 

 

We anticipate that we will incur approximately $1 million for operating expenses, including, legal, accounting and audit expenses associated with our reporting requirements as a public company under the Exchange Act during the next twelve months.

 

Cash Used In Operating Activities

 

We used cash in operating activities in the amount of ($138,233) during the nine months ended August 31, 2011 and ($311,834) during the same period ended August 31, 2010. Our net losses for the nine months ended August 31, 2011 and 2010 were the main contributed reason for our negative operating cash flow for both periods. Cash used in operating activities was funded by cash from financing activities.

 

Cash Used in Investing Activities

 

Net cash used in investing activities totalled $0 during the nine months ended August 31, 2011 as compared to cash used in investing activities of ($29,304) during the same period ended August 31, 2010. Our negative investing cash flow in 2010 was the result of the acquisition and development costs of our oil and gas properties.

 

Cash from Financing Activities

 

We generated $172,000 in cash from financing activities during the nine months ended August 31, 2010 compared to cash from financing activities in the amount of $196,642 during the same period ended August 31, 2010.

 

Our positive cash flow from financing activities for the nine months ended August 31, 2011 were largely the result of $100,000 we received from an 8% convertible note that matures on May 10, 2013, $37,500 we received from an 8% convertible note that matures on May 22, 2012, and $50,000 we received from the sale of 200,000 shares of our common stock.

 

Off Balance Sheet Arrangements

 

As of August 31, 2011, there were no off balance sheet arrangements.

 

Going Concern

 

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that we will be able to meet our obligations and continue our operations for the next twelve months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should we be unable to continue as a going concern. At August 31, 2011, we have a working capital deficit of $241,054. We have yet to achieve profitable operations, have accumulated losses of $2,890,212 since our inception and expect to incur further losses in the development of our business, all of which casts substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that we will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available or on acceptable terms, if at all.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company's management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending November 30, 2011, subject to obtaining additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

 

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the quarter ended August 31, 2011 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

 

Item 1A: Risk Factors

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On June 3, 2011, we issued 1,000,000 shares valued at $0.08 per share to pay our option payment on the Zoro 1 mineral claim.

 

On July 18, 2011, we entered into a new employment contract with our President, Tim DeHerrera, which expires July 18, 2013. Pursuant to the contract, Mr. DeHerrera received 2,500,000 common shares having a fair value of $125,000.

 

We issued the shares to non U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

 

Item 3. Defaults upon Senior Securities

 

None

 

Item 4. Removed and Reserved

 

Item 5. Other Information

 

None

 

Item 6. Exhibits

 

Exhibit Number	Description of Exhibit
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of 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 2002

SIGNATURES

 

In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Force Energy Corp.
Date:	September 28, 2011
	By: /s/ Tim DeHerrera Tim DeHerrera Title: Chief Executive Officer and Director