GlobeStar Therapeutics Corp - FORM 10-K

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EX-32 - SECTION 1350 CERTIFICATION OF CEO & CFO - GlobeStar Therapeutics Corp	ex_32-1.htm
EX-31 - RULE 13A-14(A) CERTIFICATION OF CEO & CFO - GlobeStar Therapeutics Corp	ex_31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-K


x	ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2013


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

For the transition period from __________, 20__, to __________, 20__

Commission File Number: 333-170315

First Titan Corp.

(Exact Name of Registrant as Specified in its Charter)

Florida

27-3480481

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification Number)

495 Grand Boulevard, Suite 206, Miramar Beach, FL 32550

(Address of Principal Executive Offices)

(850) 269-7267

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(g) of the Act:

Common stock, $0.0001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405) during the preceding 12 months. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter (March 31, 2013) was $3,251,390.

There were 11,863,730 shares of the registrant’s common stock, $0.0001 par value, outstanding as of January 9, 2014.

FIRST TITAN CORP.

FORM 10-K INDEX


Part I		3

Item 1.	Description of Business	3
Item 1A.	Risk Factors	4
Item 1B.	Unresolved Staff Comments	4
Item 2.	Description of Property	5
Item 3.	Legal Proceedings	5
Item 4.	Mine Safety Disclosures	5

Part II		5

Item 5.	Market for Common Equity and Related Stockholder Matters	5
Item 6.	Selected Financial Data	6
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	10
Item 8.	Financial Statements and Supplementary Data	10
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	29
Item 9A.	Controls and Procedures	29
Item 9B.	Other information	30

Part III		30

Item 10.	Directors, Executive Officers and Corporate Governance	30
Item 11.	Executive Compensation	32
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	32
Item 13.	Certain Relationships and Related Transactions, and Director Independence	33
Item 14.	Principal Accountant Fees and Services	33
Item 15.	Exhibits and Financial Statement Schedules	33
	Signatures	34
	Certifications

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FIRST TITAN CORP.

This Annual Report on Form 10-K and the documents incorporated herein by reference contain forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about First Titan Corp. industry, management beliefs, and assumptions made by management. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore, actual results and outcomes may differ materially from what is expressed or forecasted in any such forward-looking statements.

PART I


ITEM 1.	DESCRIPTION OF BUSINESS

OVERVIEW

First Titan Corp. was incorporated in Florida on September 16, 2010. The Company was formed in order to design and manufacture both panel and engineered/tooled custom vacuum formed instrument panels and wiring harnesses, required for the monitoring of any final product that utilizes a gas or diesel engine source. The Company was considered to be in the development stage in accordance with ASC 915 until October 1, 2012 when it began receiving revenue.

First Titan Corp. has two subsidiary companies, First Titan Energy, LLC (“First Titan Energy”) and First Titan Technical, LLC (“First Titan Technical”).

First Titan Technical was formed on September 16, 2011 in order to commence business operations designing and marketing automotive electronics custom-designed for heavy-duty vehicles. The Company received funding of $25,000 which was used to implement the initial phase of First Titan Technical’s business plan.

Since this time, management has decided to focus solely on First Titan Energy.

First Titan Energy was formed in September 2011, with the goal of capitalizing on the booming oil and gas industry. It was created to develop greenfield projects and invest in the development of cutting edge exploration and production technologies. Since our establishment of First Titan Energy, we have acquired working interests or drilling options in the states of Alabama, Louisiana, and Texas.

Business Strategy

First Titan Energy’s oil and gas development activities include the following:

Alabama – On May 2, 2012, we acquired a one percent working interest in one well in Little Cedar Creek Field in Alabama. This well was drilled during the fiscal year ended September 30, 2012 and we began receiving revenue during the fiscal year ended September 30, 2013. This well is located in the Little Cedar Field, Alabama’s largest producing oil field.

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Louisiana – On January 3, 2012, we entered into a participation agreement in an oil and gas drilling project in Calcasieu Parish, Louisiana (the “Participation Agreement”). The South Lake Charles Prospect is located seven miles south of the city of Lake Charles, Louisiana. It is a middle Oligocene age geo-pressured prospect located in the middle and lower hackberry sands. Under the terms of the Participation Agreement, we will participate in the drilling of one well and may participate in the drilling of future wells if it chooses. We will pay 25% of the drilling cost of the first well and will receive 13.59% of the net revenue from the well. We anticipate that our share of the total drilling and completion cost of the initial well, projected to be drilled to approximately 15,500 feet, will be $3.4 million. On August 12, 2013, the Participation Agreement was amended to reduce our working interest to 1.8%. As a result, our share of the drilling cost is expected to be approximately $181,000. The Company has paid $143,264 of its share of the costs of the well to date. We will receive 1.4% of the revenue from this well. The well is currently being drilled and is expected to be completed in the first half of fiscal 2014.

During October 2012, we acquired a working interest in the Lake Boeuf Field in Southeast Louisiana. The field covers 300 acres in Lafourche Parish. The prospect was a 12,025 directional well to be drilled utilizing a land rig. The project has been indefinitely suspended. All amounts invested in this project have been transferred to the South Lake Charles Prospect.

Texas – Minns Project – On July 7, 2013, the Company acquired a 30% working interest in the Minns project located in Waller County, Texas. The project included three producing wells and a salt water disposal well within the Brookshire Field. The project is targeted for additional development vis-à-vis reworks, deepening of wells, and potentially drilling new wells on the property.

Big Canyon Prospect – On January 19, 2012, we entered into an agreement to drill two wells on 640 acres of land located in Terrell County, Texas. Our option to drill expired January 27, 2013 and no wells have been drilled.

We have incurred losses since inception, have been issued a going concern opinion from our auditors and rely upon the sale of our securities and debt financing to fund operations. We will need additional financing in order to continue operations.

Sales and Marketing Strategy

We plan to sell our oil and gas production to oil and gas marketers in the areas where our wells are located.

COMPETITION

There is significant competition in the oil and gas industry. There are many small producers who are participating in exploration in the same areas where we are participating in wells.

EMPLOYEES AND EMPLOYMENT AGREEMENTS

As of September 30, 2013, our sole employee is Robert Federowicz, our interim CEO and sole director. Mr. Federowicz will serve in that position until a permanent Chief Executive Officer and President is identified. We do not have an employment agreement with Mr. Federowicz. Mr. Federowicz has the flexibility to work on our business up to 10 to 25 hours per week. He is prepared to devote more time to our operations as may be required and we do not have any employment agreements with him.

We do not presently have, pension, health, annuity, insurance, profit sharing, or similar benefit plans; however, we may adopt plans in the future. There are presently no personal benefits available to our sole director and officer.

During the initial implementation of our marketing strategy, we intend to hire independent consultants to develop and execute our business plan.


ITEM 1A.	RISK FACTORS

As a smaller reporting company, we are not required to provide the information required by this Item.


ITEM 1B.	UNRESOLVED STAFF COMMENTS

As a smaller reporting company, we are not required to provide the information required by this Item.

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ITEM 2.	DESCRIPTION OF PROPERTY

We maintain our statutory registered agent’s office at 495 Grand Boulevard, Suite 206, Miramar Beach, Fl 32550. Our telephone number is (850) 269-7267.

Our Chief Executive Officer also occupies shared office space in Houston, Texas.


ITEM 3.	LEGAL PROCEEDINGS

We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.


ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.

PART II


ITEM 5.	MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

Our common stock trades on the “Over the Counter” Bulletin Board (“OTC”) under the symbol “FTTN”. The following table sets forth, for the period indicated, the prices of the common stock in the over-the-counter market, as reported and summarized by the OTC. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown or commission and may not represent actual transactions. There is an absence of an established trading market for the Company’s common stock, as the market is limited, sporadic and highly volatile, which may affect the prices listed below.


	High		Low
Fiscal Year Ended September 30, 2012
Quarter ended December 31, 2011	$	160.00	$	15.00
Quarter ended March 31, 2012	$	56.00	$	10.00
Quarter ended June 30, 2012	$	11.00	$	2.00
Quarter ended September 30, 2012	$	7.50	$	2.05

Fiscal Year Ended September 30, 2013
Quarter ended December 31, 2012	$	7.50	$	1.00
Quarter ended March 31, 2013	$	1.40	$	0.30
Quarter ended June 30, 2013	$	0.88	$	0.29
Quarter ended September 30, 2013	$	1.14	$	0.41

HOLDERS

As of the date of this filing, there were 7 holders of record of our common stock.

DIVIDENDS

To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.

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COMMON STOCK

We are authorized to issue 250,000,000 shares of common stock, with a par value of $0.0001. The closing price of our common stock on January 8, 2013, as quoted by the OTC, was $0.60. There were 11,863,730 shares of common stock issued and outstanding as of January 9, 2013. All shares of common stock have one vote per share on all matters including election of directors, without provision for cumulative voting. The common stock is not redeemable and has no conversion or preemptive rights. The common stock currently outstanding is validly issued, fully paid and non- assessable. In the event of liquidation of the Company, the holders of common stock will share equally in any balance of the Company’s assets available for distribution to them after satisfaction of creditors and preferred shareholders, if any. The holders of common stock of the Company are entitled to equal dividends and distributions per share with respect to the common stock when, as and if, declared by the Board of Directors from funds legally available.

On August 17, 2012, the Company effected a one-for-20 reverse stock split.

During the year ended September 30, 2013, there was no modification of any instruments defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof, except as discussed above.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table shows the number of shares of common stock that could be issued upon exercise of outstanding options and warrants, the weighted average exercise price of the outstanding options and warrants, and the remaining shares available for future issuance as of September 30, 2013.


Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance
Equity compensation plans approved by security holders		—		—		—

Equity compensation plans not approved by security holders		—		—		—

Total		—		—		—


ITEM 6.	SELECTED FINANCIAL DATA

As a smaller reporting company, we are not required to provide the information required by this Item.


ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS “ANTICIPATED,” “BELIEVE,” “EXPECT,” “PLAN,” “INTEND,” “SEEK,” “ESTIMATE,” “PROJECT,” “WILL,” “COULD,” “MAY,” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT THE COMPANY’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY’S CONTROL. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS.

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The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our financial statements and related notes appearing elsewhere herein. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial conditions, operations, plans, objectives and performance that involve risk, uncertainties and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements.

Background of our Company

We were incorporated in the State of Florida on September 16, 2010, as a for-profit company. Our fiscal year end is September 30. We began to generate revenue on October 1, 2012. Our auditor has issued a going concerned opinion on our financial statements. This means there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. Accordingly, we must continue to raise cash from sources other than operations.

RESULTS OF OPERATIONS AND GOING CONCERN

We incurred a net loss of $946,111 for the year ended September 30, 2013. We do not anticipate having positive net income in the immediate future. Net cash used by operating activities for the year ended September 30, 2013 was $429,524. These conditions create an uncertainty as to our ability to continue as a going concern.

We continue to rely on advances to fund operating shortfalls and do not foresee a change in this situation in the immediate future. There can be no assurance that we will continue to have such advances available. We will not be able to continue operations without them. We are pursuing alternate sources of financing, but there is no assurance that additional capital will be available to the Company when needed or on acceptable terms.

We generated revenue of only $57,361 from our operations in the fiscal year ended September 30, 2013. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including the financial risks associated with the limited capital resources currently available to us for the implementation of our business strategies. To become profitable and competitive, we must execute our business and marketing plan. Our management will attempt to secure financing through various means including borrowing and investment from institutions and private individuals.

Since inception, the majority of our time has been spent refining our business plan.

Results of operations for the year ended September 30, 2013 compared to the year ended September 30, 2012

Oil and Gas Sales

We earned net revenue of $57,361 during the year ended September 30, 2013. We did not earn revenue during the comparable period of 2012. We began to receive revenue as of October 1, 2012 as a result of production beginning on the well in Little Cedar Creek Field in which we participate and the acquisition of the Minns Project.

Lease Operating Expense

We incurred lease operating expense of $6,285 during the year ended September 30, 2013 as a result of production beginning on an oil and gas well effective October 1, 2012. We did not incur any lease operating expense during the comparable period of 2012 because we did not have any producing oil and gas wells during that time period.

Depletion, Depreciation and Amortization

We incurred depletion expense of $60,671 during the year ended September 30, 2013 as a result of production beginning on an oil and gas well effective October 1, 2012. We did not incur any depletion expense during the comparable period of 2012 because we did not have any producing oil and gas wells during that time period.

Impairment of Oil and Gas Properties

We recognized impairment of oil and gas properties of $80,141 during the year ended September 30, 2013 as a result of the full cost ceiling test.

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General and Administrative Expenses

General and administrative expenses decreased in the year ended September 30, 2013 as compared to the year ended September 30, 2012 from $944,966 to $555,132. During the year ended September 30, 2012, we recognized non-cash expense related to stock issued for services in the amount of $635,000.

Loss from Operations

The decrease in our operating loss for the year ended September 30, 2013 as compared to the comparable period of 2012 from $944,966 to $645,198 is primarily due to the decrease in general and administrative expenses described above.

Interest Expense

During the years ended September 30, 2013 and 2012, we incurred interest expense in the amounts of $300,913 and $164,345, respectively. Interest expense includes both statutory interest on convertible notes payable and amortization of discounts on those notes. This amount has increased as a result of the increase in convertible notes payable.

Net Income (Loss)

We recognized a net loss of $946,111 for the year ended September 30, 2013 as compared to a loss of $1,109,311 for the year ended September 30, 2012. The change in net loss is attributable to the decrease in general and administrative expense partially offset by the increase in interest expense described above.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2013, we have only had $57,631 of revenue from our business operations.

We anticipate needing approximately of $500,000 to fund our operations and to effectively execute our business plan over the next eighteen months. Currently available cash and expected revenue is not sufficient to allow us to commence full execution of our business plan. Our business expansion will require significant capital resources that may be funded through the issuance of common stock or of notes payable or other debt arrangements that may affect our debt structure. Despite our current financial status we believe that we may be able to issue notes payable or debt instruments in order to start executing our business plan. However, there can be no assurance that we will be able to raise money in this fashion and have not entered into any agreements that would obligate a third party to provide us with capital.

As of September 30, 2013 we had $127,748 of cash on hand. This amount of cash will be adequate to fund our operations for approximately three months.

To date the Company has been able to fund operations through the sale of stock and by obtaining cash advances. The Company will have to seek additional financing in the future. However, the Company may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, the Company may be forced to seek a buyer for our business or another entity with which we could create a joint venture. If all of these alternatives fail, we expect that the Company will be required to seek protection from creditors under applicable bankruptcy laws.

Our independent auditor has expressed substantial doubt about our ability to continue as a going concern and believes that our ability to continue as an ongoing concern is dependent on our ability to implement our business plan, raise capital and generate revenues. See Note 2 of our financial statements.

Recent Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address board of directors’ independence, audit committee oversight, and the adoption of a code of ethics. Our Board of Directors is comprised of one individual who is also our executive officer. Our executive officer makes decisions on all significant corporate matters such as the approval of terms of the compensation of our executive officer and the oversight of the accounting functions.

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Although the Company has adopted a Code of Ethics and Business Conduct, the Company has not yet adopted any of these other corporate governance measures. Since our securities are not yet listed on a national securities exchange, the Company is not required to do so. The Company has not adopted corporate governance measures such as an audit or other independent committees of our Board of Directors as we presently do not have any independent directors. If we expand our board membership in future periods to include additional independent directors, the Company may seek to establish an audit and other committees of our board of directors. It is possible that if our Board of Directors included independent directors and if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.

INFLATION

The effect of inflation on our revenues and operating results has not been significant.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete listing of these policies is included in Note 3 of the notes to our financial statements for the year ended September 30, 2013. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management.

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

OIL AND GAS PROPERTIES – The Company follows the full cost method of accounting for its oil and gas properties, whereby all costs incurred in connection with the acquisition, exploration for and development of petroleum and natural gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil, in which case the gain or loss is recognized in the statement of operations.

Depletion of capitalized oil properties and estimated future development costs, excluding unproved properties, are based on the units-of-production method based on proved reserves. Net capitalized costs of oil properties, less related deferred taxes, are limited to the lower of unamortized cost or the cost ceiling, defined as the sum of the present value of estimated future net revenues from proved reserves based on unescalated prices discounted at 10 percent, plus the cost of properties not being amortized, if any, plus the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any, less related income taxes. As of September 30, 2013, the Company has oil properties in the amount of $163,086 which are being excluded from amortization because they have not been evaluated to determine whether proved reserves are associated with those properties. Costs in excess of the present value of estimated future net revenues as discussed above are charged to impairment expense. The Company applies the full cost ceiling test on a quarterly basis on the date of the latest balance sheet presented.

New Accounting Pronouncements

For a description of recent accounting standards, including the expected dates of adoption and estimated effects, if any, on our financial statements, see “Note 3: Significant Accounting Polices: Recent Accounting Standards” in Part II, Item 8 of this Form 10-K.

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ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk

Not applicable.


ITEM 8.	Financial Statements

First Titan Corp.

Consolidated Financial Statements

September 30, 2013

Contents


Report of Independent Registered Public Accounting Firm	11

Financial Statements:

Consolidated Balance Sheets	12
Consolidated Statements of Operations	13
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)	14
Consolidated Statements of Cash Flows	15
Notes to Consolidated Financial Statements	16

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

First Titan Corp.

We have audited the accompanying consolidated balance sheets of First Titan Corp. as of September 30, 2013 and 2012 and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of First Titan Corp. as of September 30, 2013 and 2012, and the results of its operations, changes in stockholders’ equity (deficit) and cash flows for the periods then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has insufficient working capital, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

January 14, 2014

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First Titan Corp.

Consolidated Balance Sheets


	September 30,
	2013			2012

Assets
Current assets:
Cash	$	127,748		$	1,359
Accounts receivable		10,458			—

Total current assets		138,206			1,359

Oil and gas properties, accounted for using the full cost method of accounting
Evaluated property, net of accumulated depletion, depreciation and amortization of $60,671 and $0, respectively, and net of accumulated impairment of $80,141 and $0, respectively		123,777			128,000
Unevaluated property		200,575			153,264

TOTAL ASSETS	$	462,558		$	282,623

Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	113,558		$	28,568
Current portion of asset retirement obligation		7,500			—
Advances payable		—			329,050

Total current liabilities		121,058			357,618

Convertible note payable, net of discount of $925,840 and $110,410, respectively		76,262			20,519
Accrued interest payable		5,812			10,120
Asset retirement obligation		14,144			500

TOTAL LIABILITIES		217,276			388,757


Stockholders’ equity (deficit):
Common stock; $0.0001 par value; 250,000,000 shares authorized; 10,863,730 and 5,646,415 shares issued and outstanding at September 30, 2013 and 2012, respectively		1,086			565
Additional paid in capital		2,355,801			1,058,795
Accumulated deficit		(2,111,605	)		(1,165,494	)

Total stockholders’ equity (deficit)		245,282			(106,134	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	462,558		$	282,623

The accompanying notes are an integral part of the financial statements

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First Titan Corp.

Consolidated Statements of Operations


	Year ended September 30,
	2013			2012

OIL AND GAS SALES, net	$	57,361		$	—

OPERATING EXPENSE:
Lease operating expense		6,285			—
Depletion, depreciation and amortization		60,671			—
Accretion expense		330			—
Impairment of oil and gas properties		80,141			—
General and administrative		555,132			944,966

LOSS FROM OPERATIONS		(645,198	)		(944,966	)

Other income (expense)
Interest expense		(300,913	)		(164,345	)

NET LOSS	$	(946,111	)	$	(1,109,311	)

Net loss per common share - basic and fully diluted	$	(0.12	)	$	(1.19	)

Weighted average number of common shares outstanding - basic and fully diluted		7,892,394			935,640

The accompanying notes are an integral part of the financial statements.

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First Titan Corp.

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

For the Years Ended September 30, 2013 and 2012


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Accumulated Deficit			Total

Balance, September 30, 2011	600,000	$	60	$	46,440	$	(56,183	)	$	(9,683	)

Rounding shares issued as a result of reverse split	165		—		—		—			—
Issuance of common stock for:
- Services	85,000		9		634,991		—			635,000
- Conversion of debt	4,961,250		496		112,729		—			113,225
Discount on convertible notes payable	—		—		244,154		—			244,154
Imputed interest	—		—		20,481		—			20,481
Net loss	—		—		—		(1,109,311	)		(1,109,311	)

Balance, September 30, 2012	5,646,415	$	565	$	1,058,795	$	(1,165,494	)	$	(106,134	)

Issuance of common stock for conversion of debt	5,217,315		521		208,172		—			208,693
Discount on convertible notes payable	—		—		1,048,049		—			1,048,049
Imputed interest	—		—		40,785		—			40,785
Net loss	—		—		—		(946,111	)		(946,111	)

Balance, September 30, 2013	10,863,730	$	1,086	$	2,355,801	$	(2,111,605	)	$	245,282

On August 17, 2012, the Company effected a one-for-20 reverse stock split. All share and per share amounts have been retroactively restated to reflect the reverse split.

The accompanying notes are an integral part of the financial statements

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First Titan Corp.

Consolidated Statements of Cash Flows


	Year ended September 30,
	2013			2012

Operating activities
Net loss	$	(946,111	)	$	(1,109,311	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depletion and accretion		61,001			—
Impairment of oil and gas properties		80,141			—
Amortization of discount on convertible notes payable		232,619			133,744
Imputed interest		40,785			20,481
Common stock issued for services		—			635,000
Changes in operating assets and liabilities:
Accounts receivable		(10,458	)		—
Accounts payable and accrued liabilities		112,499			35,063
Net cash used by operating activities		(429,524	)		(285,023	)

Investing activities
Investment in oil and gas properties		(163,086	)		(280,764	)
Net cash used by investing activities		(163,086	)		(280,764	)

Financing activities
Proceeds from advances		718,999			545,204
Net cash provided by financing activities		718,999			545,204

Net increase (decrease) in cash		126,389			(20,583	)

Cash at beginning of period		1,359			21,942

Cash at end of period	$	127,748		$	1,359

Supplemental disclosures of cash flow information and non cash investing and financing activities:
Cash paid for interest	$	—		$	—
Cash paid for taxes	$	—		$	—

Noncash investing and financing transactions
Stock issued for conversion of notes payable	$	176,876		$	113,225
Discount on advances refinanced into convertible notes payable	$	1,048,049		$	244,154
Asset retirement obligation acquired	$	20,814		$	330

The accompanying notes are an integral part of the financial statements.

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First Titan Corp.

Notes to Consolidated Financial Statements

September 30, 2013

1. BACKGROUND INFORMATION

First Titan Corp. (the “Company”), a Florida corporation, was formed to design and manufacture both panel and engineered/tooled custom vacuum formed instrument panels and wiring harnesses, required for the monitoring of any final product that utilizes a gas or diesel engine source. This product intends to be targeted to other manufacturers and the Company will be considered a sub-supplier to these customers.

The Company was incorporated on September 16, 2010 with our corporate headquarters located in Bradenton, Florida. The Company’s year-end is September 30.

On September 16, 2011, First Titan Corporation created First Titan Energy, LLC for the purpose of investing in oil and gas properties, greenfield projects and in the development of cutting edge exploration and production technologies.

On September 16, 2011, we formed a new subsidiary company —First Titan Technical, LLC—to commence business operations designing and marketing automotive electronics custom-designed for heavy-duty vehicles. The Company received funding of $25,000 to implement the initial phase of First Titan Technical’s business plan.

Since 2011, the Company has decided to focus solely on First Titan Energy’s business.

2. GOING CONCERN

For the year ended September 30, 2013, the Company had a net loss of $946,111 and negative cash flow from operations of $429,524.

These factors raise a substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

The Company does not have the resources at this time to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.

Management has plans to address the Company’s financial situation as follows:

In the near term, management plans to continue to focus on raising the funds necessary to fully implement the Company’s business plan. Management will continue to seek out debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders will continue to advance capital to the Company or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raise doubts about the Company’s ability to continue as a going concern.

In the long term, management believes that the Company’s projects and initiatives will be successful and will provide cash flow to the Company which will be used to finance the Company’s future growth. However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability. The Company’s long term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations, and the ability of the Company to ultimately achieve adequate profitability and cash flows from operations to sustain its operations.

3. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies followed are:

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FASB Codification

In June 2009, the FASB issued ASC 105, Generally Accepted Accounting Principles, effective for interim and annual reporting periods ending after September 15, 2009. This statement establishes the Codification as the source of authoritative accounting principles used in the preparation of financial statements in conformity with generally accepted accounting principles. The Codification does not replace or affect guidance issued by the SEC or its staff. As a result of the Codification, the references to authoritative accounting pronouncements included herein in this Annual Report on Form 10-K now refer to the Codification topic section rather than a specific accounting rule as was past practice.

Use of Estimates

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

Cash and Cash Equivalents

All cash, other than held in escrow, is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits. Temporary cash investments with an original maturity of three months or less are considered to be cash equivalents.

Credit Risk Due to Certain Concentrations

We extend credit, primarily in the form of uncollateralized oil and gas sales through the operators of our working interests, to various companies in the oil and gas industry, which results in a concentration of credit risk. The concentration of credit risk may be affected by changes in economic or other conditions within our industry and may accordingly impact our overall credit risk. However, we believe that the risk of these unsecured receivables is mitigated by the nature of the companies to which we extend credit. For the year ended September 30, 2013, two operators accounted for 86% and 14% of our oil and gas sales. Those operators account for 49% and 51% of accounts receivable as of September 30, 2013. We did not recognize any credit losses during the year ended September 30, 2013. We have not recognized an allowance for doubtful accounts as of September 30, 2013. All amounts receivable as of September 30, 2013 were collected subsequent to year end. We did not recognize any revenue during the year ended September 30, 2012.

Oil and Gas Properties

The Company follows the full cost method of accounting for its oil and gas properties, whereby all costs incurred in connection with the acquisition, exploration for and development of petroleum and natural gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil, in which case the gain or loss is recognized in the statement of operations.

Depletion of capitalized oil properties and estimated future development costs, excluding unproved properties, are based on the units-of-production method based on proved reserves. Net capitalized costs of oil properties, less related deferred taxes, are limited to the lower of unamortized cost or the cost ceiling, defined as the sum of the present value of estimated future net revenues from proved reserves based on unescalated prices discounted at 10 percent, plus the cost of properties not being amortized, if any, plus the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any, less related income taxes. As of September 30, 2013, the Company has oil properties in the amount of $200,575 which are being excluded from amortization because they have not been evaluated to determine whether proved reserves are associated with those properties. Costs in excess of the present value of estimated future net revenues as discussed above are charged to impairment expense. The Company applies the full cost ceiling test on a quarterly basis on the date of the latest balance sheet presented.

Based on management’s review, 100% of the unproved oil properties balance as of September 30, 2013 is expected to be added to amortization during the year ending September 30, 2014. The table below sets forth the cost of unproved properties excluded from the amortization base as of September 30, 2013 and notes the year in which the associated costs were incurred:

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	Year of Acquisition
	2011		2012		2013		Total
Acquisition costs	$	—	$	153,264	$	47,311	$	200,575
Development costs		—		—		—		—
Exploration costs		—		—		—		—
Total	$	—	$	153,264	$	47,311	$	200,575

As discussed in Note 6, asset retirement costs are recognized when the asset is placed in service, and are included in the amortization base and amortized over proved reserves using the units of production method. Asset retirement costs are estimated by management using existing regulatory requirements and anticipated future inflation rates.

Common Stock

The Company records common stock issuances when all of the legal requirements for the issuance of such common stock have been satisfied.

Revenue Recognition

Sales of crude oil are recognized when the delivery to the purchaser has occurred and title has been transferred. This occurs when oil has been delivered to a pipeline or a tank lifting has occurred. Crude oil is priced on the delivery date based upon prevailing prices published by purchasers with certain adjustments related to oil quality and physical location.

Research and development expenses

Expenditures for research and development of products are expensed as incurred. There have been no research and development costs incurred for the year ended September 30, 2013.

Advertising Costs

The Company’s policy regarding advertising is to expense advertising costs as incurred. There have been no advertising costs incurred for the period ended September 30, 2013.

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes resulting from temporary differences. Such temporary differences result from differences in the carrying value of assets and liabilities for tax and financial reporting purposes. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company adopted the provisions of FASB ASC 740-10 “Uncertainty in Income Taxes” (ASC 740-10), on January 1, 2007. The Company has not recognized a liability as a result of the implementation of ASC 740-10. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there is no unrecognized benefit since the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

Earnings (Loss) Per Share

Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered antidilutive and thus are excluded from the calculation. At September 30, 2013 and 2012, the Company did not have any potentially dilutive common shares.

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Financial Instruments

In September 2006, the Financial Accounting Standards Board (“FASB”) introduced a framework for measuring fair value and expanded required disclosure about fair value measurements of assets and liabilities. The Company adopted the standard for those financial assets and liabilities as of the beginning of the 2008 fiscal year and the impact of adoption was not significant. FASB Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures” (“ASC 820”) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:


·	Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

·	Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

·	Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2013. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, accrued compensation and accrued expenses. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value.

On September 16, 2010, the Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company’s financial statements.

The following table presents assets that were measured and recognized at fair value as of September 30, 2013 and 2012 and the years then ended on a recurring and nonrecurring basis:


September 30, 2013							Total
							Realized
Description	Level 1		Level 2		Level 3		Loss
Asset retirement obligation	$	—	$	—	$	21,644	$	—
Totals	$	—	$	—	$	21, 644	$	—


September 30, 2012							Total
							Realized
Description	Level 1		Level 2		Level 3		Loss
Asset retirement obligation	$	—	$	—	$	500	$	—
Totals	$	—	$	—	$	500	$	—

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:

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·	Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and

·	Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.

The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.

In October 2012, the FASB issued Accounting Standards Update ASU 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.

In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.

In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 has not had a material impact on our financial position or results of operations.

In December 2011, the FASB issued ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This update defers the requirement to present items that are reclassified from accumulated other comprehensive income to net income in both the statement of income where net income is presented and the statement where other comprehensive income is presented. The adoption of ASU 2011-12 has not had a material impact on our financial position or results of operations.

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In December 2011, the FASB issued ASU No. 2011-11 “Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company is currently evaluating the impact, if any, that the adoption of this pronouncement may have on its results of operations or financial position.

Other recent accounting pronouncements issued are not believed by management to have a material impact on the Company’s present or future financial statements.

4. OIL AND GAS PROPERTIES

Oil and gas properties as of September 30, 2013 and 2012 consisted of the following:


	September 30,
	2013			2012
Evaluated Properties
Costs subject to depletion	$	264,589		$	128,000
Accumulated depletion, depreciation and amortization		(60,671	)		—
Accumulated impairment		(80,141	)		—
Total evaluated properties		123,777			128,000

Unevaluated properties		200,575			153,264
Net oil and gas properties	$	324,352		$	281,264

We own interests in properties in Alabama, Louisiana and Texas. As of September 30, 2013, our interests in these properties were as follows:

Evaluated properties

Alabama – We have a one percent working interest in one well in Little Cedar Creek Field in Alabama. This well was drilled during the fiscal year ended September 30, 2012. We received revenue of $44,930 from this well during the year ended September 30, 2013. Little Cedar Creek Field is Alabama’s largest producing oil field.

Texas – On January 19, 2012, the Company entered into a working interest purchase and sale agreement (the “Big Canyon Agreement”) related to 640 acres of land located in Terrell County, Texas (the “Big Canyon Prospect”). According to the terms of the Big Canyon Agreement, the Company will purchase an 82.5% working interest and will receive a 64.35% net royalty interest in the Big Canyon Prospect. The Company paid $60,000 for the rights under this contract. Under the terms of the Big Canyon Agreement, the Company had the right to drill one well within six months and a second well within the next six months if the first well is unsuccessful. Our option to drill expires January 27, 2013 and no wells have been drilled. These costs were included in the amortization base as of September 30, 2012 and subjected to the ceiling test as of September 30, 2013 and 2012.

Unevaluated Properties

Louisiana – On January 3, 2012, the Company entered into a participation agreement in an oil and gas drilling project in Calcasieu Parish, Louisiana (the “Participation Agreement”). Under the terms of the Participation Agreement, the Company will participate in the drilling of one well and may participate in the drilling of future wells if it chooses. The Company will pay 25% of the drilling cost of the first well and will receive 13.59% of the net revenue from the well. The Company anticipates that its share of the total drilling and completion cost of the initial well, projected to be drilled to approximately 15,500 feet, will be $3.4 million. On August 12, 2013, the Participation Agreement was amended to reduce our working interest to 1.8%. As a result, our share of the drilling cost is expected to be approximately $181,000. The Company has paid $143,264 of its share of the costs of the well to date. We will receive 1.4% of the revenue from this well. The well is currently being drilled and is expected to be completed in the first half of fiscal 2014.

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5. RELATED PARTY TRANSACTIONS

The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available. They may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.

6. ASSET RETIREMENT OBLIGATION

ASC 410-20, Asset Retirement and Environmental Obligations, requires that an asset retirement obligation (“ARO”) associated with the retirement of a tangible long-lived asset be recognized as a liability in the period in which it is incurred and becomes determinable. Under this method, when liabilities for dismantlement and abandonment costs, excluding salvage values, are initially recorded, the carrying amount of the related oil and natural gas properties is increased. The fair value of the ARO asset and liability is measured using expected future cash outflows discounted at the Company’s credit-adjusted risk-free interest rate. Accretion of the liability is recognized each period using the interest method of allocation, and the capitalized cost is depleted using the units of production method. Should either the estimated life or the estimated abandonment costs of a property change materially upon the Company’s quarterly review, a new calculation is performed using the same methodology of taking the abandonment cost and inflating it forward to its abandonment date and then discounting it back to the present using the Company’s credit-adjusted-risk-free rate. The carrying value of the asset retirement obligation is adjusted to the newly calculated value, with a corresponding offsetting adjustment to the asset retirement cost related to oil property accounts.

The following table reflects the changes in the ARO during years ended September 30, 2013 and 2012:


	Year Ended September 30,
	2013			2012
Asset retirement obligation - beginning of year	$	500		$	—
Current year revision to previous estimates		(155	)		—
Asset retirement obligation on properties drilled or acquired		20,969			500
Current year accretion		330			—
Asset retirement obligation - end of year	$	21,644		$	500

7. ADVANCES FROM THIRD PARTIES

During the year ended September 30, 2013, the Company received net, non-interest bearing advances from certain third parties totaling $718,999. The total amount due under these advances as of September 30, 2013 was $0. These advances are not collateralized and are due on demand.

During the year ended September 30, 2013, the Company imputed interest of $40,785 on these advances.

8. CONVERTIBLE NOTES PAYABLE

On February 28, 2013, the Company signed a Convertible Promissory Note which refinanced non-interest bearing advances in the amount of $329,050 into a convertible note payable. The Convertible Promissory Note bears interest at 10% per annum and is payable along with accrued interest on February 28, 2015. The Convertible Promissory Note is convertible into common stock at the option of the holder at the rate of $0.04 per share.

On June 30, 2013, the Company signed a Convertible Promissory Note which refinanced non-interest bearing advances in the amount of $190,565 into a convertible note payable. The Convertible Promissory Note bears interest at 10% per annum and is payable along with accrued interest on June 30, 2015. The Convertible Promissory Note is convertible into common stock at the option of the holder at the rate of $0.04 per share.

On September 30, 2013, the Company signed a Convertible Promissory Note which refinanced non-interest bearing advances in the amount of $528,434 into a convertible note payable. The Convertible Promissory Note bears interest at 10% per annum and is payable along with accrued interest on September 30, 2015. The Convertible Promissory Note is convertible into common stock at the option of the holder at the rate of $0.04 per share.

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The Company evaluated the terms of these notes in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. The Company determined that the conversion feature did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. The Company evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the notes and was deemed to be less than the market value of underlying common stock at the inception of the notes. Therefore, the Company recognized a beneficial conversion features in the amount of $329,050 on February 28, 2013, $190,565 on June 30, 2013 and $528,434 on September 30, 2013. The beneficial conversion feature was recognized as an increase in additional paid-in capital and a discount to the Convertible Notes Payable. The discount to the Convertible Notes Payable is being amortized to interest expense over the life of the notes using the effective interest method.

The Company evaluated the application of ASC 470-50-40/55, Debtor’s Accounting for a Modification or Exchange of Debt Instrument as it applies to the three notes listed above and concluded that the revised terms constituted a debt modification rather than a debt extinguishment because the present value of the cash flow under the terms of each of the new instruments was less than 10% from the present value of the remaining cash flows under the terms of the original notes. No gain or loss on the modifications was required to be recognized.

During the year ended September 30, 2013, the holders of the Convertible Note Payable dated January 31, 2012 elected to convert principal and accrued interest in the amounts shown below into shares of common stock at a rate of $0.04 per share. On the conversion date, the unamortized discount related to the principal amount converted was immediately amortized to interest expense. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement which provided for conversion at $0.04 per share.


Date	Amount Converted		Number of Shares Issued	Unamortized Discount
November 30, 2012	$	22,000	550,000	$	18,262
January 7, 2013		12,000	300,000		9,543
February 8, 2013		25,600	640,000		19,824
March 12, 2013		28,000	700,000		21,029
March 21, 2013		28,000	700,000		20,567
April 24, 2013		17,000	425,000		10,360
May 3, 2013		12,093	302,315		—
Total	$	144,693	3,617,315	$	99,585

As of September 30, 2013, the balance of the note dated January 31, 2012 was $0.

During the year ended September 30, 2013, the holders of the Convertible Note Payable dated February 28, 2013 elected to convert principal and accrued interest in the amounts shown below into shares of common stock at a rate of $0.04 per share. On the conversion date, the unamortized discount related to the principal amount converted was immediately amortized to interest expense. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement which provided for conversion at $0.04 per share.


Date	Amount Converted		Number of Shares Issued	Unamortized Discount
September 1, 2013	$	32,000	800,000	$	12,887
September 17, 2013		32,000	800,000		25,745
Total	$	64,000	1,600,000	$	38,632

As of September 30, 2013, the balance of the note dated February 28, 2013 was $283,103.

The Company accrued interest in the amount of $28,912 during the year ended September 30, 2013. As of September 30, 2013, accrued interest payable was $5,812. During the year ended September 30, 2013, discount on convertible notes payable in the amount of $232,619 was amortized to interest expense.

- 23 -

9. INCOME TAXES

There are no current or deferred income tax expense or benefit for the period ended September 30, 2013.

The provision for income taxes is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The items causing this difference are as follows:


	Year ended September 30,
	2013			2012
Tax benefit at U.S. statutory rate	$	356,249		$	127,529
Valuation allowance		(356,249	)		(127,529)
	$	—		$	—

The Company has net operating loss carryforwards of $1,047,792 which will begin expiring in 2026.

10. COMMON STOCK

On November 30, 2012, the Company issued 550,000 shares of common stock to a third party for conversion of a note payable in the principal amount of $22,000. The shares were valued at $22,000 and no gain or loss was recognized on the conversion as it occurred within the terms of the agreement which provided for conversion at $0.04 per share..

On January 7, 2013, the Company issued 300,000 shares of common stock to a third party for conversion of a note payable in the principal amount of $12,000. The shares were valued at $12,000 and no gain or loss was recognized on the conversion as it occurred within the terms of the agreement which provided for conversion at $0.04 per share.

On February 8, 2013, the Company issued 640,000 shares of common stock to a third party for conversion of a note payable in the principal amount of $25,600. The shares were valued at $25,600 and no gain or loss was recognized on the conversion as it occurred within the terms of the agreement which provided for conversion at $0.04 per share.

On March 12, 2013, the Company issued 700,000 shares of common stock to a third party for conversion of a note payable in the principal amount of $28,000. The shares were valued at $28,000 and no gain or loss was recognized on the conversion as it occurred within the terms of the agreement which provided for conversion at $0.04 per share.

On March 21, 2013, the Company issued 700,000 shares of common stock to a third party for conversion of a note payable in the principal amount of $28,000. The shares were valued at $28,000 and no gain or loss was recognized on the conversion as it occurred within the terms of the agreement which provided for conversion at $0.04 per share.

On April 24, 2013, the Company issued 425,000 shares of common stock to a third party for conversion of a note payable in the amount of $17,000 (including principal and accrued interest). The shares were valued at $17,000. No gain or loss was recognized on the conversion as it occurred within the terms of the agreement which provided for conversion at $0.04 per share.

On May 3, 2013, the Company issued 302,315 shares of common stock to a third party for conversion of a note payable in the amount of $12,093 (including principal and accrued interest). The shares were valued at $12,093. No gain or loss was recognized on the conversion as it occurred within the terms of the agreement which provided for conversion at $0.04 per share

On September 1, 2013, the Company issued 800,000 shares of common stock to a third party for conversion of a note payable in the amount of $32,000 (including principal and accrued interest). The shares were valued at $32,000. No gain or loss was recognized on the conversion as it occurred within the terms of the agreement which provided for conversion at $0.04 per share

On September 17, 2013, the Company issued 800,000 shares of common stock to a third party for conversion of a note payable in the amount of $32,000 (including principal and accrued interest). The shares were valued at $32,000. No gain or loss was recognized on the conversion as it occurred within the terms of the agreement which provided for conversion at $0.04 per share

- 24 -

11. SUBSEQUENT EVENTS

Subsequent to the fiscal year end, the holders of the Convertible Note Payable dated February 28, 2013 elected to convert principal and accrued interest in the amounts shown below into shares of common stock at a rate of $0.04 per share. On the conversion date, the unamortized discount related to the principal amount converted was immediately amortized to interest expense. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement which provided for conversion at $0.04 per share.


Date	Amount Converted		Number of Shares Issued	Unamortized Discount
October 25, 2013	$	20,000	500,000	$	13,906
October 31, 2013		20,000	500,000		15,538
December 10, 2013		10,000	250,000		5,453
December 12, 2013		20,000	500,000		14,681
Total	$	70,000	1,750,000	$	49,578

12. SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)

The following supplemental information regarding our oil and gas activities is presented pursuant to the disclosure requirements promulgated by the SEC and ASC 932, Extractive Activities —Oil and Gas, (ASC 932).

Users of this information should be aware that the process of estimating quantities of “proved” and “proved developed” oil and natural gas reserves is very complex, requiring significant subjective decisions in the evaluation of all available geological, engineering and economic data for each reservoir. The data for a given reservoir may also change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history and continual reassessment of the viability of production under varying economic conditions. As a result, revisions to existing reserve estimates may occur from time to time. Although every reasonable effort is made to ensure reserve estimates reported represent the most accurate assessments possible, the subjective decisions and variances in available data for various reservoirs make these estimates generally less precise than other estimates included in the financial statement disclosures.

Proved reserves represent estimated quantities of natural gas, crude oil and condensate that geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reservoirs under economic and operating conditions in effect when the estimates were made. Proved developed reserves are proved reserves expected to be recovered through wells and equipment in place and under operating methods used when the estimates were made. In the following table, natural gas liquids are included in natural gas reserves. The oil and natural gas liquids price as of September 30, 2013 is based on the 12-month un-weighted average of the first of the month prices of the NYMEX (Cushing, OK WTI) posted price which equates to $98.38 per barrel. The gas price as of September 30, 2013 is based on the 12-month un-weighted average of the first of the month prices of the NYMEX (Cushing, OK WTI) spot price which equates to $3.50 per Mcf. The oil and natural gas liquids price as of September 30, 2012 is based on the 12-month un-weighted average of the first of the month prices of the NYMEX (Cushing, OK WTI) posted price which equates to $94.97 per barrel. The gas price as of September 30, 2012 is based on the 12-month un-weighted average of the first of the month prices of the NYMEX (Cushing, OK WTI) spot price which equates to $2.79 per Mcf. The base prices were adjusted for heating content, premiums and product differentials based on historical revenue statements. All prices are held constant in accordance with SEC guidelines. All proved reserves are located in the United States in the states of Alabama and Texas.

The following table illustrates our estimated net proved reserves, including changes, and proved developed reserves for the periods indicated, as estimated by third party reservoir engineers. Our proved reserves are located in the United States of America, our home country.

- 25 -

Proved Reserves


	Oil (Barrels)			Gas (MCF)			Total (BOE)
Balance – September 30, 2011		—			—			—
New discoveries and extensions		6,120			5,704			7,071

Balance – September 30, 2012		6,120			5,704			7,071
Revisions of previous estimates		(5,085	)		(5,553	)		(6,010	)
Purchases of minerals in place		1,768			—			1,768
Sales of oil and gas produced		(640	)		(51	)		(649	)

Balance – September 30, 2013		2,163			100			2,180


	Proved Reserves as of September 30, 2013
	Oil (Barrels)		Gas (MCF)		Total (BOE)
Proved developed producing		2,163		100		2,180
Proved developed non-producing		—		—		—
Proved undeveloped		—		—		—
Total Proved reserves		2,163		100		2,180


	Proved Reserves as of September 30, 2012
	Oil (Barrels)		Gas (MCF)		Total (BOE)
Proved developed producing		—		—		—
Proved developed non-producing		6,120		5,704		7,071
Proved undeveloped		—		—		—
Total Proved reserves		6,120		5,704		7,071

The reserves in this report have been estimated using deterministic methods. For wells classified as proved developed producing where sufficient production history existed, reserves were based on individual well performance evaluation and production decline curve extrapolation techniques. For undeveloped locations and wells that lacked sufficient production history, reserves were based on analogy to producing wells within the same area exhibiting similar geologic and reservoir characteristics, combined with volumetric methods. The volumetric estimates were based on geologic maps and rock and fluid properties derived from well logs, core data, pressure measurements, and fluid samples. Well spacing was determined from drainage patterns derived from a combination of performance-based recoveries and volumetric estimates for each area or field. Proved undeveloped locations were limited to areas of uniformly high quality reservoir properties, between existing commercial producers.

Capitalized Costs Related to Oil and Gas Activities

The following table illustrates the total amount of capitalized costs relating to oil and natural gas producing activities and the total amount of related accumulated depreciation, depletion and amortization. All oil and gas properties are located in the United States of America.


	2013		2012
Unevaluated properties	$	200,575	$	153,264
Evaluated properties		264,589		128,000
		465,164		281,264
Less depreciation, depletion, amortization and impairment		140,812		—
Net capitalized cost	$	324,352	$	281,264

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Costs Incurred in Oil and Gas Activities

All costs incurred associated with oil and gas activities were incurred in the United States of America. Costs incurred in property acquisition, exploration and development activities were as follows.


	2013		2012
Property acquisition
Unproved	$	82,311	$	280,764
Proved		75,000		—
Exploration		—		—
Development		26,589		—
Cost recovery		—		—
Total costs incurred	$	183,900	$	280,764

Costs Excluded

Our excluded costs relate to an ongoing project in Louisiana. As of September 30, 2013, the wells is currently being drilled. We anticipate including the excluded costs in the amortization base within the next fiscal year.

Costs Excluded by Year Incurred as of September 30, 2013


Year Incurred	Exploration Costs		Total
2012	$	143,264	$	143,264
2013		57,311		57,311
Total	$	200,575	$	200,575

Changes in Costs Excluded by Country


	United States
Balance at September 30, 2011	$	—

Additional Costs Incurred		280,764
Costs Transferred to DD&A Pool		(127,500	)
Balance at September 30, 2012	$	153,264

Additional Costs Incurred		82,311
Costs Transferred to DD&A Pool		(35,000	)
Balance at September 30, 2013	$	200,575

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Natural Gas Reserves

The following Standardized Measure of Discounted Future Net Cash Flow information has been developed utilizing ASC 932, Extractive Activities —Oil and Gas, (ASC 932) procedures and based on estimated oil and natural gas reserve and production volumes. It can be used for some comparisons, but should not be the only method used to evaluate us or our performance. Further, the information in the following table may not represent realistic assessments of future cash flows, nor should the Standardized Measure of Discounted Future Net Cash Flow be viewed as representative of our current value.

We believe that the following factors should be taken into account when reviewing the following information:


●	future costs and selling prices will probably differ from those required to be used in these calculations;

●	due to future market conditions and governmental regulations, actual rates of production in future years may vary significantly from the rate of production assumed in the calculations;

●	a 10% discount rate may not be reasonable as a measure of the relative risk inherent in realizing future net oil and natural gas revenues; and

●	future net revenues may be subject to different rates of income taxation.

- 27 -

Under the Standardized Measure, the future cash inflows were estimated by applying the un-weighted 12-month average of the first day of the month cash price quotes, except for volumes subject to fixed price contracts, to the estimated future production of year-end proved reserves. Estimates of future income taxes are computed using current statutory income tax rates including consideration for estimated future statutory depletion and tax credits. The resulting net cash flows are reduced to present value amounts by applying a 10% discount factor.

The Standardized Measure is as follows:


	2013			2012
Future cash inflows	$	212,982		$	549,360
Future production costs		(119,957	)		(18,450	)
Future development costs		(—	)		(—	)
Future income tax expenses		(—	)		(112,955	)
Future net cash flows		62,775			417,955
10% annual discount for estimated timing of cash flows		(837	)		(131,626	)
Future net cash flows at end of year	$	61,938		$	286,329

Changes in Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Natural Gas Reserves

The following is a summary of the changes in the Standardized Measure of discounted future net cash flows for our proved oil and natural gas reserves during of the years ended September 30, 2103 and 2012:


	2013			2012
Standardized measure of discounted future net cash flows at beginning of year	$	286,329		$	—
Discoveries and extensions		—			363,711
Revisions of previous estimates		(315,803	)		—
Purchases of minerals in place		28,735			—
Sales of oil and gas produced		(51,076	)		—
Change in income taxes		77,382			(77,382	)
Accretion of discount		36,371			—
Standardized measure of discounted future net cash flows at year end	$	61,938		$	286,329

The following schedule includes only the revenues from the production and sale of oil and gas. There is no income tax provision, because the results of operations for producing activities resulted in a loss for the year ended September 30, 2013. The results of operations exclude general office overhead and interest expense attributable to oil and gas activities.

Results of Operations for Producing Activities


	2013
Net revenues from production	$	57,361

Expenses
Lease operating expense		6,285
Accretion		330
Operating expenses		6,615

Depreciation, depletion and amortization		60,671
Impairment of oil and gas properties		80,141
Total expenses		147,427

Results of operations	$	(114,358	)

Depreciation, depletion and amortization rate per net equivalent BOE	$	93.48

We did not recognize any revenue or expense from the production and sale of oil and gas during the year ended September 30, 2012.

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ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.


ITEM 9A.	CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Limitations on Systems of Controls

Our management, which consists of our sole principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses identified in our evaluation, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Management is required to base its assessment of the effectiveness of our internal control over financial reporting on a suitable, recognized control framework, such as the framework developed by the Committee of Sponsoring Organizations (COSO). The COSO framework, published in Internal Control-Integrated Framework, is known as the COSO Report. Our principal executive officer and our principal financial officer, has chosen the COSO framework on which to base its assessment. Based on this evaluation, our management concluded that our internal control over financial reporting was not effective as of September 30, 2013.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. We have identified the following material weaknesses:


1.	As of September 30, 2013, we did not maintain effective controls over the control environment. Specifically we have not developed and effectively communicated to our employees its accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

2.	As of September 30, 2013, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

- 29 -

Because of these material weaknesses, management has concluded that the Company did not maintain effective internal control over financial reporting as of September 30, 2013, based on the criteria set forth in the COSO Report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fourth fiscal quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Auditor’s Report on Internal Control over Financial Reporting

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act, which permanently exempts smaller reporting companies from providing attestation of their internal controls pursuant to Section 404 of the Sarbanes-Oxley Act. As a result, this report does not provide such an attestation, and the Company will be exempt from providing such an attestation until the Company’s market capitalization reaches $75 million.


ITEM 9B.	OTHER INFORMATION

None

Part III


ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our sole officer and director will serve until his successor is elected and qualified. Our officers are elected by the board of directors to a term of one (1) year and serve until their successor is duly elected and qualified, or until they are removed from office. The board of directors has no nominating, auditing or compensation committees.

On October 3, 2013, Mr. Harvey Bryant resigned as our Chief Executive Officer, President and Director for medical reasons.

On the same date, our Board of Directors appointed Robert Federowicz as Interim Chief Executive Officer and Interim President. Mr. Federowicz will serve in that position until a permanent Chief Executive Officer and President is identified. Mr. Federowicz will also serve as a director. Mr. Federowicz has not been appointed to any committees of the Board as the Board does not presently have any committees. Mr. Federowicz previously served as Chief Executive Officer and President of First Titan from September 2011 until December 2012.

Mr. Federowicz was appointed as interim CEO and a director on October 3, 2013.

Biographies

Mr. Federowicz, age 43, brings over twenty years of experience as an entrepreneur and executive in the United States and in Poland. In the early 1990s, he served as project manager and government liaison for a small private U.S. energy development company, Hart Associates, Inc., working with the Polish government to facilitate the privatization and modernization of several coal-fired power plants. In 1994, Mr. Federowicz moved to the U.S. and continued to be involved in the development of various international power projects with Coastal Power Company, a subsidiary of the Coastal Corporation. In 1999, he was appointed Chief Information Officer for Hart Energy International, where he helped lead the company’s startup and growth efforts before eventually assisting in the company’s multi-million dollar merger with the U.K.-based Commonwealth Development Corp.

From 2005 through 2009, Mr. Federowicz was an owner and operator of a fitness gym in Houston, Texas. During 2010, he served as an account executive for Screentek, Inc., a seller of LCD screen technology for laptop computers. From December 2010 to September 2011, Mr. Federowicz was the Chief Executive Officer of Obscene Jeans Corp., a designer and manufacturer of specialty fashion products. Mr. Federowicz previously served as the Chief Executive Officer of the Company from September 2011 until December 2012. Since 2011, Mr. Federowicz has served as CEO of Quantum International Corp. and continues to serve in this position. Since January 2013, he has served as CEO of Aristocrat Group Corp. and continues to serve in this position. Mr. Federowicz is a graduate of the Warsaw School of Economics in Poland with a BBA in International Trade.

Mr. Federowicz does not have a written employment or other compensatory agreement with the Company. He is being paid $2,500 per month for his services to the Company.

- 30 -

COMMITTEES OF THE BOARD OF DIRECTORS

Our sole director has not established any committees, including an Audit Committee, a Compensation Committee or a Nominating Committee, any committee performing a similar function. The functions of those committees are being undertaken by our sole director. Because we do not have any independent directors, our sole director believes that the establishment of committees of the Board would not provide any benefits to our company and could be considered more form than substance.

We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our sole director established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our sole director has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future.

While there have been no nominations of additional directors proposed, in the event such a proposal is made, all current members of our Board will participate in the consideration of director nominees.

Our sole director is not an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or Board of Directors who:


·	understands generally accepted accounting principles and financial statements,

·	is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,

·	has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,

·	understands internal controls over financial reporting, and

·	understands audit committee functions.

Our Board of Directors is comprised of solely of Mr. Federowicz who is involved in our day to day operations. We would prefer to have an audit committee financial expert on our Board of Directors. As with most small, early stage companies until such time our company further develops its business, achieves a stronger revenue base and has sufficient working capital to purchase directors and officers insurance, the Company does not have any immediate prospects to attract independent directors. When the Company is able to expand our Board of Directors to include one or more independent directors, the Company intends to establish an Audit Committee of our Board of Directors. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and the Company is not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.

WE DO NOT HAVE ANY INDEPENDENT DIRECTORS AND THE COMPANY HAS NOT VOLUNTARILY IMPLEMENTED VARIOUS CORPORATE GOVERNANCE MEASURES, IN THE ABSENCE OF WHICH, STOCKHOLDERS MAY HAVE MORE LIMITED PROTECTIONS AGAINST INTERESTED DIRECTOR TRANSACTIONS, CONFLICTS OF INTEREST AND SIMILAR MATTERS.

CODE OF BUSINESS CONDUCT AND ETHICS

We have adopted a code of ethics meeting the requirements of Section 406 of the Sarbanes-Oxley Act of 2002. We believe our code of ethics is reasonably designed to deter wrong doing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of violations; and provide accountability for adherence to the provisions of the code of ethic.

- 31 -


ITEM 11.	EXECUTIVE COMPENSATION

Mr. Federowicz is paid $2,500 per month for his services to the Company. He does not have a written employment agreement with the Company.

The table below summarizes all compensation awarded to, earned by, or paid to our named executive officer for all services rendered in all capacities to us for the years ended September 30, 2013, 2012 and 2011.

SUMMARY COMPENSATION TABLE


Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non—Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation ($)	All Other Compensation ($)	Total ($)
Harvey Bryant, President, former CEO and Chairman of the Board	2013 2012	$120,000 $ —	$ — $ —	$ — $ —	$ — $ —	$ — $ —	$ — $ —	$ — $ —	$120,000 $ —
Robert Federowicz, interim President, CEO, Chairman of the Board	2013 2012	$ 25,000 $120,000	$ — $ —	$ — $ —	$ — $ —	$ — $ —	$ — $ —	$ — $ —	$ 25,000 $120,000

OUTSTANDING EQUITY AWARDS AT SEPTEMBER 30, 2013


	Option Awards					Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($	Option Expiration Date	Number of Shares of Stock That Have Not Vested (#)	Market Value of Shares of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Other Rights That Have Note Vested ($)
Robert Federowicz	0	0	0	0	0	0	0	0	0
Harvey Bryant	0	0	0	0	0	0	0	0	0

DIRECTOR COMPENSATION

Directors receive no compensation for serving on the Board. We have no non-employee directors.


ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to our sole director and officer since our inception; accordingly, no stock options have been granted or exercised by our sole director and officer since we were founded.

The following table sets forth certain information as of December 31, 2013, with respect to the beneficial ownership of our common stock by each beneficial owner of more than 5% of the outstanding shares of common stock of the Company, each director, each executive officer named in the “Summary Compensation Table” and all executive officers and directors of the Company as a group, and sets forth the number of shares of common stock owned by each such person and group. Unless otherwise indicated, the owners have sole voting and investment power with respect to their respective shares.

- 32 -


Name of Beneficial Owner	Number of Shares Beneficially Owned	Percentage of Outstanding Common Stock Owned
Eaton Central America San Francisco 65 East Street House No 35 Panama City, Panama	4,711,250	39.71	%
Robert Tatar	—	—	%
Robert Federowicz	—	—	%
Harvey Bryant	—	—	%

All directors and executive officers as a group (1 person)	—	—	%


ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

None


ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

During the year ended September 30, 2013, we were billed by our accountants, M&K CPAS, PLLC, approximately $19,000 for audit and review fees.

Tax Fees

During the year ended September 30, 2013, we were billed by our accountants, M&K CPAS, PLLC, approximately $0 for tax work.

All Other Fees

During the year ended September 30, 2013, we were billed by our accountants, M&K CPAS, PLLC, approximately $0 for other work.

Board of Directors Pre-Approval Process, Policies and Procedures

Our principal auditors have performed their audit procedures in accordance with pre-approved policies and procedures established by our Board of Directors. Our principal auditors have informed our Board of Directors of the scope and nature of each service provided. With respect to the provisions of services other than audit, review, or attest services, our principal accountants brought such services to the attention of our Board of Directors prior to commencing such services.


ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


Regulation Number		Exhibit

3.1		Articles of Incorporation (1)
3.2		Bylaws (1)
31.1		Rule 13a-14(a) Certification of Chief Executive Officer (2)
32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer and Chief Financial Officer (2)
101		XBRL Interactive Data

______________


(1)	Incorporated by reference to Form S-1 filed with the Securities and Exchange Commission on November 3, 2010.
(2)	Filed or furnished herewith.
(3)	To be submitted by amendment in accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Annual Report on Form 10-K shall be deemed “furnished” and not “filed”.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	FIRST TITAN CORP.

Dated: January 14, 2014	By:	/s/ Robert Federowicz
		Robert Federowicz
		Interim President, Chief Executive Officer,
		Chief Financial Officer, Principal
		Accounting Officer, Secretary, Treasurer, Director

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