Falconridge Oil Technologies Corp. - FORM 10-Q

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EX-32.2 - Falconridge Oil Technologies Corp.	ex32-2.htm
EX-32.1 - Falconridge Oil Technologies Corp.	ex32-1.htm
EX-31.1 - Falconridge Oil Technologies Corp.	ex31-1.htm
EX-31.2 - Falconridge Oil Technologies Corp.	ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2014

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission File Number 000-54253

FALCONRIDGE OIL TECHNOLOGIES CORP.

(Exact name of registrant as specified in its charter)

Nevada		20-0266164
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

17-120 West Beaver Creek Rd., Richmond Hill, Ontario, Canada		L4B 1L2
(Address of principal executive offices)		(Zip Code)

(905) 771-6551

(Registrant’s telephone number, including area code)

N/A

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

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

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

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

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ]	Smaller reporting company [X]
(Do not check if a smaller reporting company)

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. [ ] YES [ ] NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

49,016,667 common shares issued and outstanding as of January 15, 2014.

FALCONRIDGE OIL TECHNOLOGIES CORP.

Form 10-Q

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements	3

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	9

Item 3. Quantitative and Qualitative Disclosures About Market Risk	17

Item 4. Controls and Procedures	17

PART II - OTHER INFORMATION

Item 1. Legal Proceedings	18

Item 1A. Risk Factors	18

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	18

Item 3. Defaults Upon Senior Securities	18

Item 4. Mining Safety Disclosures	18

Item 5. Other Information	18

Item 6. Exhibits	19

SIGNATURES	21

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Our unaudited interim consolidated financial statements for the three and nine month periods ended November 30, 2014 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.

MANAGEMENT'S COMMENTS ON UNAUDITED INTERIM FINANCIAL STATEMENTS

The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America and with the rules and regulations of the Securities and Exchange Commission to Form 10-Q and Article 8 of Regulation S-X. These unaudited interim consolidated financial statements should be read in conjunction with the financial statements of our company for the year ended February 28, 2014 and notes thereto contained in the information as part of our company’s Annual Report on Form 10-K filed with the SEC on June 13, 2014. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2014 as reported in the Form 10-K have been omitted. In the opinion of management, the unaudited interim consolidated financial statements furnished reflect all adjustments (consisting of normal recurring adjustments) which are necessary to present fairly the financial position and the results of operations for the interim periods presented herein. Unaudited interim results are not necessarily indicative of the results for the full year.

Falconridge Oil Technologies Corp.

Consolidated Balance Sheets

(Unaudited)

	November 30,			February 28,
	2014			2014
ASSETS

Current
Cash	$	21,688		$	26,797
Accounts receivable		4,999			11,880

Total current assets		26,687			38,677

Property & equipment net of accumulated depreciation of $3,802 (2014 - $2,630)		3,907			5,080
Oil and gas properties net of accumulated depletion of $33,694 (2014 - $27,094)		95,296			101,896
Unproved oil and gas properties		307,657			289,353

Total assets	$	433,547		$	435,006

LIABILITIES AND STOCKHOLDERS' (DEFICIT)

Current
Accounts payable	$	391,938		$	139,519
Accrued liabilities		73,655			47,482
Loan payable - related party		1,485,767			1,462,090
Loan payable		70,000			70,000

Total current liabilities		2,021,360			1,719,091


STOCKHOLDERS' DEFICIT

Common stock, $.001 par value, 450,000,000 shares authorized,
49,016,667 shares issued and outstanding as of November 30, 2014 and February 28, 2014		49,017			49,017
Additional paid in capital		270,661			270,661
Deficit		(1,907,491	)		(1,603,763	)

Total stockholders' deficit		(1,587,813	)		(1,284,085	)

Total liabilities and stockholders' deficit	$	433,547		$	435,006

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

Falconridge Oil Technologies Corp.

Consolidated Statements of Operations

(Unaudited)

	Three			Three			Nine			Nine
	Months			Months			Months			Months
	Ended			Ended			Ended			Ended
	November 30			November 30			November 30			November 30
	2014			2013			2014			2013

Oil and gas revenue	$	2,990		$	6,470		$	10,810		$	16,522

Expenses
General and administrative		186,682			90,830			299,746			345,665
Depreciation, amortization and depletion		2,291			2,947			7,773			13,894

Total operating expenses		188,973			93,777			307,519			359,559

Other income (expense)
Gain on disposal of equipment		—			—			—			3,428
Interest expense		(3,019	)		(8,028	)		(7,019	)		(10,591	)

Net loss	$	(189,002	)	$	(95,335	)	$	(303,728	)	$	(350,200	)

Loss per common share - basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.01	)

Weighted average number of common
shares outstanding – basic and diluted		49,016,667			48,750,000			49,016,667			37,759,091

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

Falconridge Oil Technologies Corp.

Consolidated Statements of Cash Flows

(Unaudited)

	November 30,			November 30,
	2014			2013
Cash flows from operating activities
Net loss	$	(303,728	)	$	(350,200	)
Adjustment to reconcile net loss to net cash used in operations
Depreciation, amortization and depletion		7,773			13,894
Gain on disposal of equipment		—			(3,428	)
Accounts receivable		6,881			24,025
Accounts payable and accrued liabilities		252,419			49,352
Accrued expenses		26,173			(10,842	)
Net cash used in operating activities		(10,482	)		(277,199	)

Cash flows from investing activities
Investment in oil and gas properties		(18,304	)		—
Cash received in acquisition		—			16,455
Net cash provided by (used in) investing activities		(18,304	)		16,455

Cash flows from financing activities
Advances from related party		23,677			196,088
Cash received from debt issuance		—			400,000

Net cash provided by financing activities		23,677			596,088

Net change in cash		(5,109	)		335,344
Cash, beginning of period		26,797			3,375

Cash, end of period	$	21,688		$	338,719

Supplemental disclosure of cash flow information:
Cash paid during the year for income taxes	$	—		$	—
Cash paid during the year for interest	$	—		$	—

Non-cash investing and financing disclosures:
Capital lease obligation payments made by related party	$	—		$	9,600
Acquisition of Falconridge Oil Technologies	$	—		$	116,378
Capital lease obligation released by shareholders	$	—		$	41,684

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

Falconridge Oil Technologies Corp.

Notes to Consolidated Financial Statements

For the nine months ended November 30, 2014

(Unaudited)

1. Incorporation and nature of operations

The Company is an oil and gas technology company that specializes in identifying and accessing additional petroleum reserves that are usually left in the ground. The Company’s value proposition is extracting new resources from wells that have been assessed as uneconomic. Most of the Company’s projects will involve depleted or low producing assets. Assets are stimulated utilizing Terra Slicing Technology (“TST”) for maximum effectiveness and productivity, essentially revitalizing the pre-existing well and establishing a flow rate with a significant percentage of its initial production. Alternatively, TST may be utilized as part of a workover project or procedure

2. Summary of significant accounting policies

Basis of presentation

The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America and with the rules and regulations of the Securities and Exchange Commission to Form 10-Q and Article 8 of Regulation S-X. These unaudited interim statements should be read in conjunction with the financial statements of the Company for the year ended February 28, 2014 and notes thereto contained in the information as part of the Company's Annual Report on Form 10-K filed with the SEC on June 13, 2014. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2014 as reported in the Form 10-K have been omitted. In the opinion of management, the unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring adjustments) which are necessary to present fairly the financial position and the results of operations for the interim periods presented herein. Unaudited interim results are not necessarily indicative of the results for the full year.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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.

Falconridge Oil Technologies Corp.

Notes to Consolidated Financial Statements

For the nine months ended November 30, 2014

(Unaudited)

3. Going Concern

As shown in the accompanying financial statements, we have incurred net losses of $1,907,491 since inception. This condition raises substantial doubt as to our ability to continue as a going concern. In response to these conditions, we may raise additional capital through the sale of equity securities, through an offering of debt securities or through borrowings from financial institutions or individuals. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

4. Related party payable – First World Trade Corporation

First World Trade Corporation (“FWT”) is controlled by a shareholder of the Company. As at November 30, 2014, FWT has advanced the Company $1,485,767 (February 28, 2014 - $1,452,090) to fund operating costs and shared expenses, the loan is non-interest bearing and without specific terms of repayment.

5. Subsequent Events

On December 29, 2014, the Company entered into a convertible loan agreement with Quezon Group LLC. Pursuant to the agreement, Quezon Group loaned the Company an aggregate of $25,000. In exchange, the Company issued a promissory note in an aggregate of $25,000 plus 10% interest per annum due on December 28, 2015. The promissory is convertible into common shares of the Company at a deemed conversion price of the closing price per share of the Company’s common shares on the OTCQB on the day notice is given by Quezon Group.

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

FORWARD LOOKING STATEMENTS

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited interim consolidated financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to “US$” refer to United States dollars and all references to “common stock” refer to the common shares in our capital stock.

As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Falconridge Oil Technologies Corp., and our wholly owned subsidiary, Falconridge Oil Ltd., an Ontario, Canada corporation, unless otherwise indicated.

Corporate Background

We were incorporated on May 30, 2007 under the name Ameriwest Minerals Corp. On December 23, 2010, we changed our name to Ameriwest Petroleum Corp. by way of a merger with our wholly-owned subsidiary Ameriwest Petroleum, which was formed solely for the change of name. We were an exploration stage corporation. Our company carried out the first phase of exploration on the Key 1-4 Mineral Claims, SW Goldfield Hills Area, Esmeralda County, Nevada, USA. The results of Phase I were not promising and management determined it was in the best interests of the shareholders to abandon the property and we allowed the claim to lapse in September 2009.

On November 4, 2009, our company signed a letter of intent with Suntech Energy of British Columbia to establish the basic terms to be used in a future asset purchase between our company and Suntech Energy. The agreement was to become effective on or before March 31, 2010. The letter of intent expired without having concluded the agreement.

On November 13, 2009, our company purchased a bioreactor pod to use in a test process. As of November 30, 2010, our company had not been able to take possession and implement the testing of the bioreactor pod due to legal problems the manufacturer was experiencing. Our company therefore felt it was appropriate to write off the asset during the period ended November 30, 2010.

On June 20, 2013, we entered into a letter of intent for a share exchange transaction and acquisition with Falconridge Oil Ltd., an Ontario, Canada corporation, and its shareholders. Pursuant to the terms of the agreement, we agreed to acquire all 100 issued and outstanding shares of Falconridge Ontario’s common stock in exchange for the issuance by our company of 29,250,000 shares of our common stock to the shareholders of Falconridge Ontario.

Effective July 2, 2013, in accordance with approval from the Financial Industry Regulatory Authority (“FINRA”), we changed our company’s name from “Ameriwest Petroleum Corp.” to “Falconridge Oil Technologies Corp.” by way of a merger with our wholly-owned subsidiary Falconridge Oil Technologies Corp., which was formed solely for the change of name.

The name change became effective with the OTCBB at the opening of trading on July 2, 2013 and our stock symbol changed from “AWSS” to “FROT” to better reflect the new name of our company.

On August 2, 2013, we entered into a share exchange agreement with Falconridge Ontario and its shareholders. Pursuant to the terms of the share exchange agreement, we agreed to acquire all 100 issued and outstanding shares of Falconridge Ontario’s common stock in exchange for the issuance by our company of 29,250,000 shares of our common stock to the shareholders of Falconridge Ontario.

Further, pursuant to the share exchange agreement, we are required to:

(a)	provide to Falconridge Ontario a financing of debt or equity for $1,100,000, which is to close no later than 150 days from the closing of the share exchange and on mutually agreeable terms (completed);

(b)	complete a private placement of an aggregate of $400,000 at $1.50 per share (for the purposes of furthering the business of Falconridge Ontario) (completed); and

(c)

complete an equity financing, using our commercially best efforts, of up to $6,000,000 for 4,000,000 units at a price of no less than $1.50 per unit. Each unit will consist of one common share in our capital stock and one-half of one whole warrant (each one whole warrant, a “Financing Warrant”). Each Financing Warrant shall be exercisable into one share of our common stock at a price of no less than $3.00 per share for a period of 24 months from the date of issuance of the Financing Warrants. As a term to the equity financing, any party, who is successful in raising funds, with respect to the equity financing, from a private investor shall earn a cash commission of 7% and a commission of 5% payable in warrants (each, a “Commission Warrant”). Each Commission Warrant shall have the same terms as the Financing Warrants. If we are unable to complete the equity financing, then we may offer to Falconridge Ontario to complete a financing of up to $6,000,000 that may include debt, preferred shares of our company or a combination of the foregoing.

We may be unable to secure any debt or equity financing on terms acceptable to us, or at all, at the time when we need such funding. Additionally, although we agreed to complete the above financings, where we are unable to complete any of the financings in the agreement, there will not be any real consequences on the parties of the agreement. The value of the agreement to provide such financings is the use of commercially best efforts to fulfill the financings and demonstrating the need for financings to occur for our business to be successful.

On August 2, 2013, we closed the share exchange by issuing the required 29,250,000 common shares to the shareholders of Falconridge Ontario. As a result of the share exchange, Falconridge Ontario is now the wholly-owned subsidiary of our company. Concurrently, and as a condition to closing the share exchange agreement, Mr. Muran cancelled 18,000,000 shares of our common stock. He received no consideration for the cancellation of his stock.

In connection with the share exchange agreement, we adopted a stock option plan on August 2, 2013 to issue options to purchase up to 10% of the issued and outstanding of our capital stock when the share exchange closed, being 4,875,000 shares, to our board members and management, at an exercise price of $1.50 per share or higher. When the options are granted, they will vest quarterly over two years from the date of grant and shall expire 24 months from vesting.

Additionally, effective August 2, 2013, we changed our fiscal year end to February 28.

As a result of the closing of the share exchange agreement with Falconridge Ontario, Falconridge Ontario has become our wholly-owned subsidiary and we now carry on business in the Province of Ontario, Canada. Our company has generated only minimal revenue.

Our administrative office is located at 17-120 West Beaver Creek Rd., Richmond Hill, Ontario, Canada L4B 1L2. Our fiscal year end is February 28.

Business Overview

We are an oil and gas technology company that specializes in identifying and accessing additional petroleum reserves that are usually left in the ground. Our value proposition is extracting new resources from wells that have been assessed as uneconomic. Most of our projects will involve depleted or low producing assets. Assets are stimulated utilizing Terra Slicing Technology (“TST”) for maximum effectiveness and productivity, essentially revitalizing the pre-existing well and establishing a flow rate with a significant percentage of its initial production. Alternatively, TST may be utilized as part of a workover project or procedure.

Using the TST, our company offers operators a lower-cost alternative to drilling a new well, by accessing hydrocarbons currently in the ground within existing low or non-producing wells.

Our goal is to shift the industry and social paradigm away from new drilling and towards increasing efficiency of current extraction in existing well-bores to increase recovery of oil and gas. Thus, when widely applied, TST can add significant reserves to the energy resources of the world.

To date we have performed our TST services on only two wells. The Admiralty well continues to perform and is declining in production as expected. The SEG Well 6-21 Nipisi continues to have an extremely high water cut. The operator is continuing to pump the well aggressively on the hope that the water cut will decline and profitable oil production will result. We will revisit this situation at the end of the year.

We will finance projects involving the enhancement and stimulation of pre-existing oil and gas assets such as:

·	Producing well assets;

·	Dead wells;

·	Non-performing well assets; and

·	Low yield assets.

Most projects involve depleted or low producing assets. Assets are stimulated utilizing TST technology for maximum effectiveness and productivity, essentially revitalizing the per-existing well and establishing a flow rate with a significant percentage of its initial production. Alternatively, TST may be utilized as part of a workover project or procedure. We are the exclusive agents of TST in the United Arab Emirates and the exclusive marketing principal of TST globally, with non-exclusive rights to TST in any geographical region, country, or territory that does not infringe on the territorial rights of any other exclusive arrangement for TST that does not involve us. Further, we may only implement TST in certain areas around the world where we have a revenue interest in a property for which TST is applied (e.g. a gross over-riding royalty, override, working interest, revenue share, or share in some form of the hydrocarbon extraction from the property, contract, lease, or client).

Capital outlay and availability will be variable per project. Our intended business plan is to operate as an enhancement company and take a revenue interest in properties for which TST is applied as repayment as well as an interest in the form of a gross over-riding royalty on the producing asset. By applying TST, an operator will retrieve a significant portion of the well reserves still locked in the ground.

Our company assumes a financial risk in the process, with no capital outlay required by the asset holder or lease owner. Hence if there is no productivity, we bear the cost. To the well owner, this is a strong value proposition as we are taking an existing non-performing asset, and converting it to a cash flowing asset.

The financial risk we assume is part of our capital program to oil and gas well owner/operators. We understand that many operators cannot afford EORT (enhanced oil recovery techniques) despite the fact that they have assets that could perform at higher levels. Our program is made available to selected clients only after a detailed engineering and geological review of their asset. If it is confirmed that there will be a significant increase in production, then we enter into an agreement with the operator where in return for a GORR (gross overriding royalty) we will provide all the capital necessary to apply the TST technology to their asset. We assume all the financial risk. There will be significant covenants in our agreement with our client, such as the right to audit and the right to replace the operator should we ascertain a default in the agreement. Our program is designed to ensure capital repayment from the GORR within 12 months and then a cashflow uninhibited by operational costs of the well operator for the life of the well.

TST has been designed for deployment in virtually all environments and applications in the oil and gas industry. TST is designed to be applicable on land, or marine environments, and for both oil and gas well applications, in vertical or horizontal formats.

On February 17, 2011, Falconridge Ontario entered into an agreement with Meadowbank Asset Management Inc. Pursuant to this agreement, Meadowbank will attempt to source properties for the implementation of our technology. As a term to the agreement, Falconridge Ontario agreed to remunerate Meadowbank where:

Falconridge Ontario is required to finance the technology implementation, then Meadowbank will be entitled to 10% of total gross revenue earned by Falconridge from the establishment of relationships and target from Meadowbank after initial expenses of enhancement or implementation are recovered from the property; or

2.	Falconridge Ontario is not required to finance the technology implementation, then Meadowbank will be entitled to:

a.	20% of total gross revenue earned by Falconridge from the establishment of relationships and target from Meadowbank; and

b.	10% of any up-front fees charged for the implementation of the technology.

In October 2011, Falconridge Ontario contracted with a third party to perform a workover of a well using TST. As payment, we received a royalty interest upon completion in February 2012. The value of the royalty interest obtained was fair valued based on our reserve report, which was deemed to be $128,990. We accounted for this royalty interest received as service revenues and capitalized the amount as oil and gas property. Falconridge performed its services on a second well in December of 2013. Our technology again proved its ability to slice into the formation with significant success. However, despite the successful demonstration of the TST’s ability, the well, to date, has produced a significant amount of water.

On October 1, 2012, we entered into a licensing agreement with HydroSlotter Corporation of Canada (“HSC”). Pursuant to this agreement, we became the exclusive marketing agent for TST from HSC in the United Arab Emirates. Additionally, we are the exclusive marketing principal throughout the world of TST in any region that HSC does not already have exclusive arrangements for. In consideration of these rights, we paid a fee to HSC.

After a term of 14 months, this agreement was to terminate with 30 days of advance notice. As of December 1, 2013, this agreement was renewed by mutual consent and signature by both parties and continues on a year to year basis as neither party received notice of termination of this agreement. Pursuant to the agreement, HSC and our company signed a letter of renewal dated April 17, 2014 to evidence mutual consent to extend the license agreement until December 31, 2014 and has subsequently extended the agreement to December 31, 2015.

On October 15, 2014, we entered into an agreement with LiveCall Investor Relations Company. Pursuant to this agreement, LiveCall is to provide us with investor relation services for a term of three months. In exchange for the services provided by LiveCall, we are to compensate LiveCall with an initial non-refundable fee of $7,500 and $2,500 per month. The term of this agreement will be automatically extended on a monthly basis after the term of three months unless 30 days of written notice is given by either party.

Results of Operations

Three and Nine Month Periods Ended November 30, 2014 Compared to the Three and Nine Month Periods Ended November 30, 2013.

The following summary of our results of operations should be read in conjunction with our financial statements for the three and nine months ended November 30, 2014 and 2013.

Expenses

Our operating expenses for the three and nine months ended November 30, 2014 and 2013 are summarized as follows:

	Three Months Ended November 30,						Nine Months Ended November 30,
	2014			2013			2014			2013

Oil and Gas Revenue	$	2,990		$	6,470		$	10,810		$	16,522
General and administrative expenses	$	186,682		$	90,830		$	299,746		$	345,665
Depreciation, amortization and depletion	$	2,291		$	2,947		$	7,773		$	13,894
Loss (Gain) on disposal of capital assets	$	Nil		$	Nil		$	Nil		$	(3,428	)
Interest Expense	$	3,019		$	8,028		$	7,019		$	10,591
Net Loss	$	(189,002	)	$	(95,335	)	$	(303,728	)	$	(350,200	)

Our net loss for the three months ended November 30, 2014 was $189,002 compared to a net loss of $95,335 during the three months ended November 30, 2013.

Our net loss for the nine months ended November 30, 2014 was $303,728 compared to a net loss of $350,200 during the nine months ended November 30, 2013.

During the three months ended November 30, 2014, we incurred operating expenses of $188,973 compared to operating expenses of $93,777 during the three months ended November 30, 2013. The increase in operating expenses were generally related to an increase in general and administrative expenses.

During the nine months ended November 30, 2014, we incurred operating expenses of $307,519 compared to operating expenses of $359,559 during the nine months ended November 30, 2013. The decrease in operating expenses were generally related to decreases in general and administrative expenses and depreciation, amortization and depletion.

Our net loss during the three months ended November 30, 2014 and 2013 was $0.01 per share and $0.00, respectively. The weighted average number of shares outstanding was 49,016,667for the three month period ended November 30, 2014.

Our net loss during the nine months ended November 30, 2014 and 2013 was $0.01 per share and $0.01, respectively. The weighted average number of shares outstanding was 49,016,667 for the nine month period ended November 30, 2014.

Liquidity and Capital Resources

Working Capital

	November 30, 2014			February 28, 2014

Current Assets	$	26,687		$	38,677
Current Liabilities	$	2,021,360		$	1,719,091
Working Capital	$	(1,994,673	)	$	(1,680,414	)

As of November 30, 2014, our current assets were $26,687 and our current liabilities were $2,021,360 which resulted in a working capital deficit of $1,994,673. As of November 30, 2014, current assets were comprised of $21,688 in cash and $4,999 in accounts receivable compared to $26,797 in cash and $11,880 in accounts receivable at February 28, 2014. As of November 30, 2014, current liabilities were comprised of $391,938 in accounts payable, $73,655 in accrued liabilities, $1,485,767 in loans from related parties and $70,000 in loans payable.

Cash Flows

	Nine Months ended November 30, 2014			Nine Months ended November 30, 2013

Cash Flows from (used in) Operating Activities	$	(10,482	)	$	(277,199	)
Cash Flows from (used in) Investing Activities	$	(18,304	)	$	16,455
Cash Flows from (used in) Financing Activities	$	23,677		$	596,088
Net Increase (decrease) in Cash During Period	$	(5,109	)	$	335,344

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities. For the nine month period ended November 30, 2014, net cash flows used in operating activities was $10,482 consisting of a net loss of $303,728 and was offset by changes in operating assets and liabilities (depreciation, amortization and depletion, gain on disposal of equipment, accounts receivable and accounts payable and accrued liabilities and accrued expenses). For the nine month period ended November 30, 2013, net cash used in operating activities was $277,199 consisting of a net loss of $350,200 and was offset by changes in operating assets and liabilities (depreciation, amortization and depletion, gain on disposal of equipment, accounts receivable and accounts payable and accrued liabilities and accrued expenses).

Cash Flows from Investing Activities

For the nine months ended November 30, 2014 we used 18,304 in investing activities in the form of investment in oil and gas properties, whereas we received $16,455 from investing activities for the nine months ended November 30, 2013.

Cash Flows from Financing Activities

We have financed our operations primarily from loans with related parties, the issuance of equity and debt instruments. For the nine months ended November 30, 2014, we generated $23,677 from financing activities. For the nine months ended November 30, 2013, we generated $596,088 from financing activities.

We will require additional funds to fund our budgeted expenses over the next 12 months. These funds may be raised through, equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares.

Plan of Operation

We are now investigating other properties on which exploration could be conducted and other business opportunities to enhance shareholder value. If we are unable to find another property or business opportunity, our shareholders will lose some or all of their investment and our business will likely fail.

Going Concern

There is significant doubt about our ability to continue as a going concern.

We have incurred a net loss of $303,728 during the nine months ended November 30, 2014. This condition raises substantial doubt as to our ability to continue as a going concern. In response to these conditions, we may raise additional capital through the sale of equity securities, through an offering of debt securities or through borrowings from financial institutions or individuals. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Cash Requirements

We anticipate that our expenses over the next 12 months (beginning December 2014) will be approximately $2,744,000 as described in the table below. These estimates may change significantly depending on the nature of our business activities and our ability to raise capital from our shareholders or other sources.

Over the next 12 months we intend to carry on business as an enhanced oil and gas technology company. We anticipate that we will incur the following operating expenses during this period:

Estimated Funding Required During the Next 12 Months

Expense	Amount ($)

Consulting Fees for Research and Development		Nil
Engineering		2,000,000
Fixed asset purchases		15,000
Management Consulting Fees		300,000
Professional fees		180,000
Rent		55,000
Sales, Travel and Marketing		120,000
Other general administrative expenses		74,000
Total		2,744,000

We will require funds of approximately $2,744,000 over the next twelve months to operate our business. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on their investment in our common stock. Further, we may continue to be unprofitable.

Effective January 22, 2014, we entered into a private placement agreement with one person, pursuant to which we issued 266,667 common shares in our capital stock at a purchase price of $1.50 per share, for total proceeds of $400,000.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment during the next twelve months.

Contractual Obligations

As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

Inflation

Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future.

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 or capital expenditures or capital resources that is material to an investor in our securities.

Seasonality

Our operating results and operating cash flows historically have not been subject to seasonal variations. This pattern may change, however, in the event that we succeed in bringing our technology to market and acquire oil and gas assets.

Limited Operating History; Need for Additional Capital

There is no historical financial information about us upon which to base an evaluation of our performance. We are an exploration stage corporation and have not generated any revenues from operations. 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 limited capital resources, possible delays in the exploration of our properties, and possible cost overruns due to price and cost increases in services.

To become profitable and competitive, we must conduct the research and exploration of our properties before we start production of any minerals we may find. We sought equity financing to provide for the capital required to implement our research and exploration phases. We believe that the funds raised from our offering will allow us to operate for one year.

We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. A complete summary of these policies is included in the notes to our quarterly report, included herein.

Recent Accounting Pronouncements

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4. Controls and Procedures

Management’s Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer) and chief financial officer (our principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer) and chief financial officer (our principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer) and chief financial officer (our principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective in providing reasonable assurance in the reliability of our reports as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

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

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

On December 29, 2014, we entered into an oral convertible loan agreement with Quezon Group LLC. Pursuant to the agreement, Quezon Group loaned our company an aggregate of $25,000. In exchange, we issued a promissory note in an aggregate of $25,000 plus 10% interest per annum due on December 28, 2015. The promissory note is convertible into common shares of our company at a deemed conversion price of the closing price per share of our common shares on the OTCQB on the day notice is given by Quezon Group. The promissory note was issued to one non-US person (as that term is defined in Regulation S of the Securities Act of 1933), in an offshore transaction relying on Regulation S of the Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mining Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Number		Exhibit Description

(3)		Articles of Incorporation; Bylaws

3.1		Articles of Incorporation of Falconridge Oil Technologies Corp. (incorporated by reference to our Registration Statement on Form S-1 filed on October 14, 2008)

3.2		Bylaws of Falconridge Oil Technologies Corp. (incorporated by reference to our Registration Statement on Form S-1 filed on October 14, 2008)

3.3		Certificate of Change (incorporated by reference to our Current Report on Form 8-K filed on December 29, 2010)

3.4		Articles of Merger (incorporated by reference to our Current Report on Form 8-K filed on December 29, 2010)

3.5		Articles of Merger (incorporated by reference to our Current Report on Form 8-K filed on June 28, 2013)

(4)		Instrument Defining the Right of Holders, Including Indentures

4.1		Form of Share Certificate (incorporated by reference to our Current Report on Form 8-K filed on August 21, 2013)

(10)		Material Contracts

10.1		Services and Gross Overriding Royalty Agreement dated October 7, 2011 (incorporated by reference to our Amended Registration Statement on Form S-1/A #5 filed on July 22, 2014) **

10.2		Agreement between Falconridge Ontario and Meadowbank Asset Management Inc. dated February 17, 2011 (incorporated by reference to our Amended Registration Statement on Form S-1/A #2 filed on December 16, 2013)

10.3		License Agreement with HydroSlotter Corporation of Canada dated October 1, 2012 (incorporated by reference to our Amended Registration Statement on Form S-1/A #5 filed on July 22, 2014) **

10.4		Share Exchange Agreement among Falconridge Oil Technologies Corp., Falconridge Oil Ltd. and the Shareholders of Falconridge Oil Ltd. dated August 2, 2013 (incorporated by reference to our Amended Registration Statement on Form S-1/A filed on October 23, 2013)

10.5		2013 Stock Option Plan (incorporated by reference to our Current Report on Form 8-K filed on August 21, 2013)

10.6		Management Agreement dated February 7, 2014 between our company and Mark Pellicane (incorporated by reference to our Current Report on Form 8-K filed on March 31, 2014)

10.7		Management Agreement dated February 7, 2014 between our company and Alfred Morra (incorporated by reference to our Current Report on Form 8-K filed on March 31 , 2014)

10.8		Investor Relations Agreement dated October 15, 2014 between our company and LiveCall Investor Relations Company (incorporated by reference to our Current Report on Form 8-K filed on October 21, 2014)

10.9		Promissory Note dated December 29, 2014 between our company and Quezon Group LLC (incorporated by reference to our Current Report on Form 8-K filed on January 12, 2015)

(14)		Code of Ethics

14.1		Code of Ethics and Business Conduct (incorporated by reference to our Amended Annual Report on Form 10-K/A filed on June 16, 2014)

Exhibit Number		Exhibit Description

(31)		Rule 13a-14(a) / 15d-14(a) Certifications

31.1*		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer

31.2*		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer

(32)		Section 1350 Certifications

32.1*		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer

32.1*		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer

101*		Interactive Data Files

101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith.

**	Certain parts of this document have not been disclosed and have been filed separately with the Secretary, Securities and Exchange Commission, and are subject to a confidential treatment request pursuant to Rule 406 of the Securities Exchange Act of 1933.

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.

	FALCONRIDGE OIL TECHNOLOGIES CORP.


Date: January 16, 2015	/s/ Mark Pellicane
	Mark Pellicane
	President, Chief Executive Officer and Director
	(Principal Executive Officer)



Date: January 16, 2015	/s/ Alfred Morra
	Alfred Morra
	Chief Financial Officer, Treasurer and Director
	(Principal Financial Officer and Principal Accounting Officer)

Falconridge Oil Technologies Corp. - FORM 10-Q - January 16, 2015

Attached files

Falconridge Oil Technologies Corp. Reports