FORMCAP CORP. - FORM 10-Q - August 15, 2013

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - FORMCAP CORP.	Financial_Report.xls
EX-31 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002, FILED HEREWITH. - FORMCAP CORP.	ex31.htm
EX-32 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, FILED HEREWITH. - FORMCAP CORP.	ex32.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2013

OR

o TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________

Commission File Number : 000-28847

FORMCAP CORP.
(Exact name of registrant as specified in its charter)

Nevada			1006772219
(State or other jurisdiction of incorporation or organization)			(I.R.S. Empl. Ident. No.)

50 West Liberty Street, Suite 880, Reno, NV 89501
( Address of principal executive offices ) ( Zip Code )

888-777-8777
( Issuer's telephone number )

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

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 o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a small reporting company. See definitions of "large accelerated filer,” “accelerated filer,” and “small reporting company" in Rule 12B-2 of the Exchange Act.

	Large accelerated filer o	Non-accelerated filer o

	Accelerated filer o	Smaller reporting company x

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

The number of shares outstanding the issuer’s common stock, $0.001 par value, was 92,038,238 as of August 14, 2013.

FormCap Corp.
Form 10-Q
For the Quarter Ended June 30, 2013

TABLE OF CONTENTS

Contents

Item 1.	Financial Statements	3

	Condensed Balance Sheets	3

	Condensed Statements of Operations	4

	Condensed Statements of Cash Flows	5

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	13

Item 4.	Controls and Procedures	13

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	14

Item 1A.	Risk Factors	14

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14

Item 3.	Defaults upon Senior Securities	14

Item 4.	Mine Safety Disclosures	14

Item 5.	Other Information	14

Item 6.	Exhibits	15

	SIGNATURES	16

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

FormCap Corp.

(A Development Stage Company)

Condensed Balance Sheets

	June 30,			December 31,
	2013			2012
	(Unaudited)
ASSETS
TOTAL ASSETS
Cash		420			48
Promissory Note Receivable		11,194			-
	$	11,614		$	48

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	41,322		$	34,837
Related party payables		23,107			398,107
Notes payable - related parties		111,500			161,500
Notes payable		78,653			78,653
Convertible notes payable		34,967			-
Royalty and license fee payable		135,000			135,000

Total Current Liabilities		424,549			808,097

TOTAL LIABILITIES		424,549			808,097

STOCKHOLDERS’ DEFICIT

Preferred stock, 50,000,000 shares authorized at par value of $0.001, no shares issued and outstanding		-			-
Common stock, 200,000,000 shares authorized at par value of $0.001, 92,038,238 shares issued and outstanding		92,038			2,038
Stock subscription receivable		(17,000	)		(17,000	)
Additional paid-in capital		13,785,574			11,176,574
Deficit accumulated during the development stage		(14,273,547	)		(11,969,661	)

Total Stockholders’ Deficit		(412,935	)		(808,049	)

TOTAL LIABLITIES AND STOCKHOLDERS’ DEFICIT	$	11,614		$	48

The accompanying notes are an integral part of these condensed financial statements.

FormCap Corp.

(A Development Stage Company)

Condensed Statements of Operations

(Unaudited)

	Three Months ended June 30,					Six Months ended June 30,					From Inception on April 10, 1991 to June 30, 2013
	2013			2012		2013			2012		From Inception on April 10, 1991 to June 30, 2013

REVENUES	$	-		$	-	$	-		$	-	$	321,889
COST OF SALES		-			-		-			-		352,683

GROSS MARGIN		-			-		-			-		(30,794	)

OPERATING EXPENSES

Consulting fees		5,000			12,501		5,000			40,001		1,047,867
Loss on impairment of assets		-			-		-			-		1,146,206
Financing expenses		-			-		-			-		778,946
General and administrative expenses		14,752			8,839		24,886			17,610		5,589,058

Total Operating Expenses		19,752			21,340		29,886			57,611		8,562,077

LOSS FROM OPERATIONS		19,752			21,340		29,886			57,611		8,592,871

OTHER INCOME AND (EXPENSE)

Interest expense		-			-		-			-		(864,220	)
Gain on settlement of debt		-			-		-			-		286,855
Loss on settlement of debt		(2,274,000	)		-		(2,274,000	)		-		(5,103,311	)

Total Other Expense		(2,274,000	)		-		(2,274,000	)		-		(5,680,676	)

LOSS BEFORE INCOME TAXES	$	2,293,752		$	21,340	$	2,303,886		$	57,611	$	14,273,547
Provision for income taxes		-			-		-			-		-

NET LOSS		2,293,752		$	21,340		2,303,886		$	57,611	$	14,273,547

BASIC AND DILUTED NET LOSS PER COMMON SHARE	$	0.05		$	0.01	$	0.10		$	0.03

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		44,298,653			2,015,772		23,518,691			2,015,772

The accompanying notes are an integral part of these condensed financial statements.

FormCap Corp.

(A Development Stage Company)

Condensed Statements of Cash Flows

(Unaudited)

	For the Six Months Ended June 30,						From Inception on April 10, 1991 to June 30,
	2013			2012			2013
CASH FLOWS FROM OPERATING ACTIVITIES

Net Loss	$	(2,303,886	)	$	(57,611	)	$	(14,273,547	)
Adjustments to reconcile net loss to net cash used by operating activities:
Amortization of prepaid expenses		-			35,001			324,262
Amortization of beneficial conversion feature		-			-			379,961
Expenses paid on behalf of the Company		-			-			3,569
Expenses paid by related parties		-			5,000			119,133
Depreciation and amortization		-			-			277,322
Gain on settlement of debt and extinguishing of oil and gas leases		-			-			(286,855	)
Common stock and options issued for services		-			-			943,977
Common stock and options issued for collateral and extension of debt		-			-			17,500
Loss on impairment of assets		-			-			1,174,833
Loss on settlement of debt		2,274,000			-			6,428,908
Interest expense in connection with induced conversion		-			-			262,032
Foreign currency exchange		-			-			(120,814	)
Changes to operating assets and liabilities:
Accounts receivable		-			-			3,203
Inventories		-			-			(66,200	)
Prepaid expenses and other current assets		-			-			(140,429	)
Prepaid royalties		-			-			(99,980	)
Accounts payable and accrued liabilities		6,485			(4,945	)		104,777
Related party payables					19,175			-
Royalty and license fees		-			-			196,765
Bank indebtedness		-			-			-


Net Cash Used in Operating Activities		(23,401	)		(3,380	)		(2,761,583	)


CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of capital assets		-			-			(104,880	)
Acquisition deposits		-			-			(431,000	)
Purchase of oil and gas lease		-			-			(250,000	)
Capitalized software expenditures		-			-			(135,181	)
Principal payments on notes receivable		-			-			44,117
Notes receivable advances		(11,194	)		-			(712,346	)
Proceeds from sale of notes receivable		-			-			350,000

Net Cash Used in Investing Activities		(11,194	)		-			(1,239,290	)

Net Cash Used in Operating and Investing Activities		(34,595	)		(3,380	)		(4,000,873	)

The accompanying notes are an integral part of these condensed financial statements.

FormCap Corp.

(A Development Stage Company)

Condensed Statements of Cash Flows (Continued)

(Unaudited)

	For the Three Months Ended June 30,						From Inception on April 10, 1991 to June 30,
	2013			2012			2013

Net Cash Used in Operating and Investing Activities	$	(34,595	)		(3,380	)		(4,000,873	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related party payables		-			-			2,050,177
Repayments of related party payables		-			-			(637,012	)
Proceeds from notes payable		34,967			3,000			966,886
Repayment of notes payable		-			-			-
Proceeds from the sale of preferred stock		-			-			3,000
Proceeds from the sale of common stock and stock options		-			-			3,608,242

Net Cash Provided by Financing Activities		34,967			3,000			5,991,293

NET INCREASE (DECREASE) IN CASH		372			(380	)		420
CASH AT BEGINNING OF PERIOD		48			504			-

CASH AT END OF PERIOD		420			124		$	420

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

CASH PAID FOR:
Interest	$	-		$	-		$	12,650

NON CASH FINANCING ACTIVITIES:
Common stock issued for rounding shares	$	-		$	-		$	22
Common stock issued for prepaid expenses	$	-		$	-		$	280,000
Conversion of related party payables to common stock	$	-		$	-		$	3,559,999

The accompanying notes are an integral part of these condensed financial statements.

NOTE 1 – CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2013, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2012 audited financial statements. The results of operations for the periods ended June 30, 2013 and 2012 are not necessarily indicative of the operating results for the full years.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and are stated in US dollars. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. Actual results may differ from these estimates.

Reclassification of Financial Statement Accounts

Certain amounts in the condensed financial statements have been reclassified to conform to the presentation adopted in the June 30, 2013 financial statements.

Use of Estimates

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

Development Stage Company

The Company is considered to be in the development stage as defined in Accounting Standards Codification (ASC) 915 “Development Stage Entities.” The Company is devoting substantially all of its efforts to development of business plans.

Basic Loss Per Share

Basic loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There were no dilutive or potentially dilutive instruments outstanding as of June 30, 2013 and December 31, 2012.

Stock Issued in Exchange for Services

The valuation of common stock issued in exchange for services is valued at an estimated fair market value as determined by the most readily determinable value of either the stock or services exchanged. Values of the stock are based upon other sales and issuances of the Company’s common stock within the same general time period.

Cash and Cash Equivalents

Cash equivalents are comprised of certain highly liquid investments with original maturities of three months or less when purchased. The Company maintains its cash in bank deposit accounts which at times may exceed federally insured limits of $250,000. The Company has not experienced any losses related to this concentration of risk. Deposits did not exceed insured limits during six months ended June 30, 2013 and the year ended December 31, 2012.

Financial Instruments

For accounts receivable, accounts payable, accrued liabilities, current portion of long-term debt and long-term debt, the carrying amounts of these financial instruments approximates their fair value. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

Foreign Currency Translation

The Company translates foreign currency transactions and balances to its reporting currency, United States Dollars, in accordance with ASC 830 “Foreign Currency Matters”. Monetary assets and liabilities are translated into the functional currency at the exchange rate in effect at the end of the year. Non-monetary assets and liabilities are translated at the exchange rate prevailing when the assets were acquired or the liabilities assumed. Revenue and expenses are translated at the rate approximating the rate of exchange on the transaction date. All exchange gains and losses are included in the determination of net loss for the year.

Income Taxes

The Company applies ASC 740, which requires the asset and liability method of accounting for income taxes. The asset and liability method requires that the current or deferred tax consequences of all events recognized in the financial statements are measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years. Deferred tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce its deferred tax assets when it is more likely than not that all or some portion of the deferred tax assets will not be recovered.

The Company adopted ASC 740, at the beginning of fiscal year 2008. This interpretation requires recognition and measurement of uncertain tax positions using a “more-likely-than-not” approach, requiring the recognition and measurement of uncertain tax positions. The adoption of ASC 740 had no material impact on the Company’s financial statements.

Recent Accounting Pronouncements

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company's present or future consolidated financial statements.

NOTE 3 – GOING CONCERN

The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 4 – RELATED PARTY PAYABLES

The Company from time to time has borrowed funds from or has received services from several individuals and corporations related to the Company for operating purposes As of June 30, 2013 the Company owed related parties $23,107 (December 31, 2012 - $398,107). These amounts bear no interest, are not collateralized, and are due on demand.

NOTE 5 – COMMON STOCK

The Company has two classes of stock authorized as of June 30, 2013. The Company has 50,000,000 shares of preferred stock authorized with no shares outstanding as of June 30, 2013 and December 31, 2012. The Company also has 200,000,000 shares of common stock authorized with 92,038,238 shares issued and outstanding as of June 30, 2013 (December 31, 2012 – 2,038,240)

During the year ended December 31, 2012, the Company issued new shares as follows:

On October 1, 2012, the Company effected a 1 for 50 reverse stock split. All references in these financial statements to number of common shares issued and outstanding, price per share and weighted average number of common shares have been adjusted to reflect the stock split on a retroactive basis, unless otherwise noted. The Company’s authorized preferred stock and authorized common stock remain unchanged.

Prior to the reverse stock split, the Company had 100,788,607 common shares issued and outstanding. Immediately after the reverse split the Company had 2,038,240 common shares issued and outstanding, including 22,467 common shares issued to various shareholders as a result of rounding. The rounding shares were not issued for compensation and have no net effect on owner’s equity.

During the six months ended June 30, 2013, the Company issued 89,999,998 Common shares in settlement of debts owed by the Company (see Note 8).

NOTE 6 – CONVERTIBLE PROMISSORY NOTES PAYABLE

During April and May, 2013 the Company issued convertible promissory notes in the amount of $15,000 to two unrelated third parties. The notes mature on December 31, 2014.

On June 3, 2013, The Company issued convertible promissory notes in the amounts of $15,000 and $5,000 to an unrelated third party. The notes mature on December 31, 2015.

The convertible promissory notes are non-interest bearing until maturity and bear interest at 3% per annum thereafter. The convertible promissory notes will become due and payable if the Company receives financing totalling $5,000,000 in aggregate prior to the maturity date. The promissory notes are convertible into common shares of the Company either in whole or in part at the option of the creditor, at terms set by the Company.

NOTE 7 – PROMISSORY NOTE RECEIVABLE

On June 3, 2013 the Company advanced the sum of $11,194 to an unrelated party, secured by a promissory note.

The promissory note is non-interest bearing until maturity and bears interest at 3% per annum thereafter. The promissory note will become due and payable if the debtor receives financing totalling $5,000,000 in aggregate prior to the maturity date. The promissory note is convertible into common shares of the debtor either in whole or in part at the option of the Company, at terms set by the debtor.

NOTE 8 – DEBT SETTLEMENT

On May 9, 2013 the Company settled debts owed to related parties in the amount of $50,000 by the issuance of 50,000,000 Common Shares. The Company recorded a loss of $565,000 on this transaction.

On May 20, 2013 the Company settled debts owed to related parties in the amount of $375,000 by the issuance of 39,999,998 Common Shares. The Company recorded a loss of $1,709,000 on this transaction.

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

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and notes thereto and the other financial information included elsewhere in this report. Certain statements contained in this report, including, without limitation, statements containing the words “believes,” “anticipates,” “expects” and words of similar import, constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including our ability to create, sustain, manage or forecast our growth; our ability to attract and retain key personnel; changes in our business strategy or development plans; competition; business disruptions; adverse publicity; and international, national and local general economic and market conditions.

Overview

The Company does not currently engage in any business activities that provide cash flow. The Company is currently in the development stage.

On July 8, 2009, the Company had signed an option agreement with Morgan Creek Energy Corp. to acquire up to a 50% Working Interest (40.75% Net Revenue Interest) in Morgan Creeks’ approximately 13,000 acre entire Frio Draw Prospect located in Curry County, New Mexico. Under the terms of the agreement, FormCap is required to drill and complete two mutually defined targets on the acreage to earn its interest.

Following the initial two wells, Morgan Creeks’ management and land team will work with FormCap to establish additional targets on the Frio draw based on technical data and drill results. The two companies will jointly fund additional targets and have committed to a minimum five holes drill program in order to effectively test the Frio Draw.

On September 25, 2009, the Company has received a letter from Morgan Creek Energy Corp. terminating the Option Agreement between FormCap Corp. and Morgan Creek Energy Corp. on the Frio Draw Prospect in New Mexico.

On October 20, 2009, the company acquired 5,313 acres of oil and gas leases (“leases”), all with primary terms of five years initiated in June 2009. The leases, known as the Weber City Prospect, are located in Curry County, New Mexico, which lies on the eastern most side of New Mexico bordering the State of Texas. The Company had acquired a 100% working interest (80% Net Revenue Interest) from Atlas Larunas LLC for $250,000.

On February 15, 2011, the Company assigned all its rights in the leases to Rich Investments Ltd. (“Rich”) and Leare Developments Ltd. (“Leare”), under the terms of a loans settlement agreement whereby Rich and Leare accepted the assignment of the leases in full and final satisfaction of the outstanding indebtedness of the Company to each of Rich and Leare.

On March 16, 2011, the Company signed a Farm-Out Agreement for oil and gas exploration in the Peco Area of Alberta. The Farm-Out Agreement between FormCap Corp. and a private Alberta Corporation is comprised of a Seismic Option, a Farm-Out and a Participation clause. The Agreement stipulated a commencement date for the shooting of a 3D seismic program on the Farm-Out Lands not later than June 1, 2011 and a Commencement Date of November 1, 2011 for spudding and continuous drilling of a Test Well. Due to conditions in the oil and gas industry these dates were amended to October 1, 2011 for commencement of seismic program and February 1, 2012 for the spudding of a Test Well. The Agreement provides FormCap 60 days following completion of the seismic program to elect to drill the Test Well. Upon completion of the Test Well FormCap shall have earned a 40% working interest in the well subject to a 10% Gross Overriding Royalty payable to the Farmor. The Farmor may elect to convert the Gross Overiding Royalty to a 50% interest in FormCap’s working interest (i.e.: a 20% working interest).

Results of Operations for the Three and Six Months Ended June 30, 2013 and 2012.

Revenues: There was no revenue for the three and six months ended June 30, 2013 and 2012, respectively.

Operating Expenses: For the three and six months ended June 30, 2013, we had total operating expenses of $19,752 and $29,886 respectively, as compared to $21,340 and $57,611 for the three months and six months ended June 30, 2012, which represent decreases of $1,588 and $27,725 respectively. We incurred $5,000 in consulting expenses for the three and six months ended June 30, 2013, as compared with $12,501 incurred during the three months ended June 30, 2012 and $40,001 during the six months ended June 30, 2012. The consulting expense was incurred in connection with the investigation of a potential property acquisition.

Accounting and Audit and review fees amounted to $11,030 and $19,030 for the three and six months ended June 30, 2013, respectively as compared with $8,000 and $16,000 for the three and six months ended June 30, 2012 as a result of audit and accounting fees in respect of 2012 not accrued at the year end, and expensed in the period under review.

Filing and Transfer agents’ expense increased by $2,344 from $670 during the three months ended June 30, 2012 to $3,054 for the three months ended June 30, 2013 and by $3,756 from $1,380 for the six months ended June 30, 2012 to $5,136 for the six months ended June 30, 2013. The increases resulted from result of an accrual in respect of 2012 year-end filing fees made the period under review and corporate activity during the period under review.

Interest Expense: There was no interest expense for the three and six months ended June 30, 2013 and 2012 as the liabilities of the Company bear no interest.

Loss on Settlement of Debts: During the three and six months ended June 30, 2013, the Company settled certain debts owed to a third party and certain debts owed to two related parties by the issuance of common shares. The Company recognized losses totaling $2,274,000 on these transactions (three and six months ended June 30, 2012 – Nil).

Net Loss: The net loss for the three and six months ended June 30, 2013 was $2,293,752 and $2,303,886 respectively, as compared to $21,340 and $57,611 for the three months and six months June 30, 2012.

Liquidity and Capital Resources

As at June 30, 2013, our current assets were $11,614 (December 31, 2012 - $48) and our current liabilities were $424,549 (December 31, 2012 - $808,097), resulting in a working capital deficit of $412,935, as compared with a working capital deficit of $808,049 at December 31, 2012.

Total Stockholders’ Deficit decreased from $808,049 at December 31, 2012 to $412,935 at June 30, 2013.

Cash Flows Used in Operating Activities

We have not generated positive cash flows from operating activities. For the six months ended June 30, 2013, net cash flows used in operating activities was $23,401, consisting of primarily of the net loss for the period, offset by a loss on the settlement of debt in the amount of $2,274,000 and an increase of $6,485 in accounts payable and accrued liabilities..

Cash Flows Used in Investing Activities

During the six months ended June 30, 2013 we advanced $11,194 to an unrelated party. During the six months ended June 30, 2012 we did not undertake any investing activities.

Cash Flow Provided by Financing Activities

We have financed our operations primarily from either advances from related parties or the issuance of equity and debt instruments. During the six months ended June 30, 2013 and 2012, respectively, we issued promissory notes to lenders in the amounts of $34,967 and $3,000, respectively.

We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Recent Accounting Pronouncements

For the three month period ended June 30, 2013, there were no accounting standards or interpretations issued that are expected to have a material impact on our financial position, operations or cash flows.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As a “smaller reporting company” (as defined in Item 10(f)(1) of Regulation S-K), our Company is not required to provide information required by this Item.

Item 4. Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we have carried out an evaluation of the effectiveness of the design and operation of our Company's disclosure controls and procedures as of the end of the period covered by this quarterly report, being September 30, 2012. This evaluation was carried out under the supervision and with the participation of our Company's management, including our President, Principal Executive Officer and Principal Financial Officer. Based upon that evaluation, our President, Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures are not effective as of the end of the period covered by this report due to the material weaknesses described in Management's Report on Internal Control over Financial Reporting included in our annual report on Form 10-K for the year ended December 31, 2012.

There have been no significant changes in our Company's internal controls or in other factors, which could significantly affect internal controls subsequent to the date we carried out our evaluation. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our Company's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our Company's reports filed under the Exchange Act is accumulated and communicated to management, including our Company's president and Principal Executive Officer as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in our internal controls over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

As a “smaller reporting company” (as defined in Item 10(f)(1) of Regulation S-K), our Company is not required to provide information required by this Item.

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

On November 23, 2011 500,000 common shares were issued under a debt settlement agreement with a related Party.

On December 1, 2011, 200,000 common shares were issued under the terms of a Oil & Gas Farm-In, Operating and Consulting Agreement with a consultant.

On December 1, 2011, 200,000 common shares were issued to the same consultant as payment in full of debt arising under a Consulting Agreement.

On December 1, 2011, 200,000 common shares were issued to the President of the Company as payment for services rendered in the performance of his duties.

On May 7, 2013, the Company issued 50,000,000 common shares to a related party in settlement of debts owed by the Company.

On May 20, 2013, the Company issued 39,999,998 common shares to various parties in settlement of debts owed by the Company.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None

Item 6. Exhibits

Exhibit No.		Description

31		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

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 thereunto duly authorized.

FORMCAP CORP.

/s/ Graham Douglas

Graham Douglas

President, Secretary, Treasurer and Director

(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

Dated: August XX, 2013

Attached files

FORMCAP CORP. Reports

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