Attached files
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 August 31, 2011
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ______________
Commission File Number 333-133347
CREENERGY CORPORATION
-----------------------
(Exact name of registrant as specified in its charter)
Nevada 98-0479983
------------------------------ ------------------------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
601 Union Street, Two Union Square, 42nd Floor, Seattle, Washington 98101
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (780) 668-7422
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes [X] 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 (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Larger accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [ ] No [X]
1
Number of shares issued and outstanding of the registrant's class of common
stock as of September 30, 2011: 171,000,000 shares of common stock
The Company recognized $nil revenues during the quarter ended August 31, 2011.
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
----
Interim Balance Sheets F-6
Interim Statements of Loss and Comprehensive Loss F-7
Interim Statements of Cash Flows F-8
Interim Statement of Changes in Stockholders' Equity F-9
Notes to Interim Financial Statements F-10 to F-15
Item 2. Management's Discussion and Analysis or Plan of Operations 16
Item 3 Quantitative and Qualitative Disclosure about Market Risk 18
Item 4 Controls and Procedures 18
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 19
Item 3. Defaults upon Senior Securities - Not Applicable 20
Item 4. Removed and Reserved 20
Item 5. Other Information 20
Item 6. Exhibits 20
SIGNATURES 21
3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CREENERGY CORPORATION
(A Development Stage Company)
INTERIM FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
AUGUST 31, 2011
Financial Statements
Page
Interim Balance Sheets F-6
Interim Statements of Loss and Comprehensive Loss F-7
Interim Statements of Cash Flows F-8
Interim Statement of Changes in Stockholders' Equity F-9
Notes to Interim Financial Statements F-10 to F-15
F-4
CREENERGY CORPORATION
(A Development Stage Company)
Interim Financial Statements
(Expressed in U.S. Dollars)
(Unaudited)
August 31, 2011
F-5
CREENERGY CORPORATION
(A Development Stage Company)
INTERIM BALANCE SHEETS
August 31, November 30,
2011 2010
(Unaudited) (Audited)
ASSETS
Current Assets
Cash and cash equivalents $ 698 $ 6,090
Prepaid expenses 1,424 200
-----------------------------------------
Total Current Assets 2,122 6,290
Intangible Assets and Intellectual Property (Note 6) 375,000 -
-----------------------------------------
TOTAL ASSETS $ 377,122 $ 6,290
------------ =========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities (Note 3) $ 22,046 $ 13,133
Note payable (Note 4) 16,000 16,000
-----------------------------------------
Total Current Liabilities 38,046 29,133
-----------------------------------------
STOCKHOLDERS' EQUITY
Capital Stock (Note 7)
Authorized:
675,000,000 common shares, par value $0.001 per share Common shares
issued and outstanding:
171,000,000 and 96,000,000 at August 31, 2011 and November 30, 2010 171,000 96,000
Additional paid-in capital 327,202 13,000
Accumulated other comprehensive income - 333
Accumulated deficit (105,837) (105,837)
Accumulated deficit during Development Stage (53,289) (26,339)
-----------------------------------------
Total Stockholders' Equity (Deficiency) 339,076 (22,843)
-----------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 377,122 $ 6,290
------------------------------------------ =========================================
The accompanying notes are an integral part of these statements.
F-6
CREENERGY CORPORATION
(A Development Stage Company)
INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Unaudited)
Cumulative
Amounts from
For the For the For the For the re-entering of
three-month three-month nine-month nine-month development
period ended period ended period ended period ended stage on June
August 31, August 31, August 31, August 31, 26, 2010 to
2011 2010 2011 2010 August 31, 2011
----------------------------------------------------------------------------------------------
Expenses
Office and Administration $ 197 $ 1,231 $ 764 $ 1,356 $ 3,044
Professional fees 15,851 16,612 26,520 23,865 50,579
----------------------------------------------------------------------------------------------
16,048 17,843 27,284 25,221 53,623
----------------------------------------------------------------------------------------------
Net Loss before Other Item (16,048) (17,843) (27,284) (25,221) (53,623)
----------------------------------------------------------------------------------------------
Other Item
Foreign exchange gain - - 333 - 333
Net loss from Continuing
Operations (16,048) (17,843) (26,951) (25,221) (53,290)
----------------------------------------------------------------------------------------------
Discontinued Operations
(Note 9)
Net Profit (loss) from
discontinued operations - (40) - 3,871 -
----------------------------------------------------------------------------------------------
Net Loss For The Period (16,048) (17,883) (26,951) (21,350) (53,290)
==============================================================================================
Other Comprehensive Loss
Foreign currency
translation adjustment - 6 (333) 7 (333)
----------------------------------------------------------------------------------------------
Comprehensive Loss For the
Period $ (16,048) $ (17,877) $ (27,284) $ (21,343) $ (53,623)
==============================================================================================
Loss per share from
continuing operations -
Basic and diluted $ (0.00) $ (0.00) $ (0.00) $ (0.00)
Loss per share from
discontinued operations -
Basic and diluted $ (0.00) $ (0.00) $ (0.00) $ (0.00)
========================================================================
Weighted Average Number of
Shares Outstanding 102,521,739 216,000,000 98,189,781 141,547,445
========================================================================
The accompanying notes are an integral part of these statements.
F-7
CREENERGY CORPORATION
(A Development Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
Cumulative from
re-entering of
For the nine-month For the nine-month development stage
period ended period ended on June 26, 2010 to
August 31, 2011 August 31, 2010 August 31, 2011
Cash Flows used in Operating
Net loss $ (26,951) $ (21,350) $ (53,290)
Adjustments to Reconcile Net Loss to
Net Cash Used by Operating Activities:
Depreciation and amortization - 476 -
Prepaid expenses (1,223) (1,000) 1,286
Accounts payable and accrued
liabilities 8,913 7,511 21,297
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Net Cash Used in Operating
Activities (19,261) (14,363) (30,707)
===========================================================================
Cash Flows from Investing Activities
Purchase of intellectual
property (375,000) - (375,000)
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Net Cash Used in Investing
Activities (375,000) - (375,000)
===========================================================================
Cash Flows From Financing Activities
Issuance of common shares 375,000 - 375,000
Increase in note payable - 16,000 -
Contribution by related party 14,202 - 27,202
---------------------------------------------------------------------------
Net Cash Provided by Financing
Activities 389,202 16,000 402,202
===========================================================================
Decrease in Cash during the Period (5,059) 1,637 (3,505)
Effect of Exchange Rate Changes on (333) 7 (333)
Cash, Beginning of Period 6,090 2,841 4,536
---------------------------------------------------------------------------
Cash, End of Period $ 698 $ 4,485 $ 698
===========================================================================
Supplemental Disclosure of Cash Flow
Cash paid for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
The accompanying notes are an integral part of these statements.
F-8
CREENERGY CORPORATION
(A Development Stage Company)
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
For the Period from November 30, 2008 through August 31, 2011
(Unaudited)
CAPITAL STOCK ACCUMULATED
--------------------------------------------
ADDITIONAL DEFICIT DURING ACCUMULATED
PAID-IN ACCUMULATED DEVELOPMENT COMPREHENSIVE
SHARES AMOUNT CAPITAL DEFICIT STAGE INCOME (LOSS) TOTAL
-----------------------------------------------------------------------------------------------------
CREENERGY CORPORATION
(A Development Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
August 31, 2011
(Unaudited)
1. NATURE AND CONTINUANCE OF OPERATIONS
a) Organization
CREENERGY Corporation (formerly Online Originals, Inc.) (the "Company") was
incorporated in the State of Nevada, United States of America, on November
18, 2005. On July 29, 2010, the Company's name was changed from Online
Originals, Inc. to CREENERGY Corporation. The Company's yearend is November
30.
b) Nature of Operations and Change in Business
Since the date of inception on November 18, 2005, the Company's business
plan was to develop a membership-based website art gallery/auction house
specifically focused on displaying and selling original artwork.
The Company changed its status from a development stage company to an
operating company on November 30, 2009. Management realized that the
results of operations from the sale of artwork lacks luster and decided to
change the Company's business focus and plan for other strategic
opportunities and discontinued the sale of artwork with effect from June
25, 2010. Accordingly, the Company has disclosed these activities as
discontinued operations in the accompanying interim financial statements.
Effective June 26, 2010, the Company became a development stage company
focusing on new business development in the form of obtaining leases for
the exploration and production of oil and gas in areas of northern Alberta,
Canada.
On August 23, 2011, the Company entered into an asset purchase with William
Campbell and Scott McKinley to acquire intangible assets and intellectual
property known as the Peptide Technology Platform.
c) Unaudited Statements
While the information presented in the accompanying interim financial
statements is unaudited, it includes all adjustments which are, in the
opinion of management, necessary to present fairly the financial position,
results of operations and cash flows for the interim periods presented.
Except as disclosed below, these interim financial statements follow the
same accounting policies and methods of their application as the Company's
audited November 30, 2010 annual financial statements. It is suggested that
these interim financial statements be read in conjunction with the
Company's audited financial statements for the year ended November 30,
2010, included in the annual report previously filed with the Securities
and Exchange Commission on Form 10-K. The results of operations for the
interim periods presented are not necessarily indicative of the results to
be expected for the full year.
The information as of November 30, 2010 is taken from the audited financial
statements as of that date.
d) Basis of Presentation
The accompanying interim financial statements have been prepared in
conformity with generally accepted accounting principles in the United
States of America, which contemplates the continuation of the Company as a
going concern. However, the Company has negative working capital at August
31, 2011 and has losses to date of approximately $159,000. These matters
raise substantial doubt about its ability to continue as a going concern.
In view of these matters, realization of certain of the assets in the
accompanying balance sheet is dependent upon its ability to meet its
financing requirements, raise additional capital, and the success of its
future operations. There is no assurance that future capital raising plans
will be successful in obtaining sufficient funds to assure its eventual
profitability. Management is actively seeking to add new products and/or
services in order to show profitability. In addition, one of the members of
the board of directors has agreed to loan funds to the Company if needed.
F-10
CREENERGY CORPORATION
(A Development Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
-------------------------------------
August 31, 2011
(Unaudited)
We believe that actions planned and presently being taken to revise its
operating and financial requirements will provide the opportunity for the
Company to continue as a going concern. The interim financial statements do
not include any adjustments that might result from these uncertainties.
2. RECENT ACCOUNTING PRONOUNCEMENTS
In September 2011, the Financial Accounting Standards Boars ("FASB") issued
Accounting Standards Update ("ASU") 2011-08, "Intangibles - Goodwill and
Other" which allows an entity to first assess qualitative factors to
determine whether it is necessary to perform the two-step quantitative
goodwill impairment test. Under these amendments, an entity would not be
required to calculate the fair value of a reporting unit unless the entity
determines, based on a qualitative assessment, that it is more likely than
not that its fair value is less than its carrying amount. ASU 2011-08 will
be effective for the Company in fiscal 2013, with early adoption permitted.
The Company does not expect the adoption of this update will have a
material effect on its financial statements.
In June 2011, the FASB issued ASU 2011-05, "Presentation of Comprehensive
Income". This update presents an entity with the option to present the
total of comprehensive income, the components of net income, and the
components of other comprehensive income either in a single continuous
statement of comprehensive income or in two separate but consecutive
statements. In both choices, an entity is required to present each
component of net income along with total net income, each component of
other comprehensive income along with a total for other comprehensive
income, and a total amount for comprehensive income. This update eliminates
the option to present the components of other comprehensive income as part
of the statement of changes in stockholders' equity. The amendments in this
update do not change the items that must be reported in other comprehensive
income or when an item of other comprehensive income must be reclassified
to net income. As ASU 2011-05 relates only to the presentation of
Comprehensive Income, the Company does not expect that the adoption of this
update will have a material effect on its financial statements.
In May 2011, the FASB issued ASU No. 2011-04, "Fair Value Measurement" to
amend the accounting and disclosure requirements on fair value
measurements. This ASU limits the highest-and-best-use measure to
nonfinancial assets, permits certain financial assets and liabilities with
offsetting positions in market or counterparty credit risks to be measured
at a net basis, and provides guidance on the applicability of premiums and
discounts. Additionally, this update expands the disclosure on Level 3
inputs by requiring quantitative disclosure of the unobservable inputs and
assumptions, as well as description of the valuation processes and the
sensitivity of the fair value to changes in unobservable inputs. ASU No.
2011-04 is to be applied prospectively and is effective during interim and
annual periods beginning after 15 December 2011. The Company does not
expect the adoption of this update will have a material effect on its
financial statements.
In January 2010, the FASB issued ASU 2010-06, "Improving Disclosures about
Fair Value Measurements". This update requires additional disclosure within
the roll forward of activity for assets and liabilities measured at fair
value on a recurring basis, including transfers of assets and liabilities
between Level 1 and Level 2 of the fair value hierarchy and the separate
presentation of purchases, sales, issuances and settlements of assets and
liabilities within Level 3 of the fair value hierarchy. In addition, the
update requires enhanced disclosures of the valuation techniques and inputs
used in the fair value measurements within Levels 2 and 3. The new
disclosure requirements are effective for interim and annual periods
beginning after 15 December 2009, except for the disclosure of purchases,
sales, issuances and settlements of Level 3 measurements. Those disclosures
are effective for fiscal years beginning after 15 December 2010. As ASU
2010-06 only requires enhanced disclosures, the Company does not expect
that the adoption of this update will have a material effect on its
financial statements.
F-11
CREENERGY CORPORATION
(A Development Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
-------------------------------------
August 31, 2011
(Unaudited)
3. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities are non-interest bearing,
unsecured and have settlement dates within one year.
4. NOTE PAYABLE
As of August 31, 2011, the Company had $16,000 note payable to an unrelated
party for expenses paid on behalf of the Company. The note payable is
unsecured, non-interest bearing, and has no fixed terms of repayment.
5. RELATED PARTY TRANSACTIONS
During the nine month period ended August 31, 2011, a director and
shareholder of the Company made cash contribution in the amount of $14,202
(August 31, 2010 - $Nil, Cumulative - $27,202).
6. INTANGIBLE ASSETS AND INTELLECTUAL PROPERTY
On August 23, 2011, the Company entered into an asset purchase with William
Campbell and Scott McKinley to acquire intangible assets and intellectual
property known as the Peptide Technology Platforms (the "Platforms") in
exchange for 75,000,000 common shares of the Company (issued on August 23,
2011) (Note 7).
The Platforms includes but are not limited to the following:
o Proteomic research platforms which include proprietary solid phase
media side-chain protected peptide array synthesis;
o Peptide libraries;
o Combination design techniques;
o Peptide molecule modifications;
o A proprietary genetic algorithm that designs peptides for goodness to
fit to a target; and
o Proprietary and patented application platforms, including a viral
vector gene therapy and epitode-mapping based vaccine development.
7. CAPITAL STOCK
Authorized
The Company's authorized common stock consists of 675,000,000 shares of
common stock with a par value of $0.001 per share. On August 10, 2010, the
Company increased the number of authorized share capital from 75,000,000
shares of common stock to 675,000,000 shares of common stock with the same
par value of $0.001 per share.
Issued and outstanding
On June 2, 2010, and effective August 10, 2010, the directors of the
Company approved a forward split of the common stock of the Company on a
basis of 30 new common shares for 1 old common share. As a result of the
forward stock split, 208,800,000 additional shares were issued. Capital and
additional paid-in capital have been adjusted accordingly. When adjusted
retroactively, there was an $119,501 shortage of additional paid-in
capital; thus an adjustment to accumulated deficit of $104,000 was recorded
on May 21, 2010 (the date of issuance of 120,000,000 shares) and $15,501 to
the beginning balance. The interim financial statements contained herein
reflect the appropriate values for capital stock and accumulated deficit.
Unless otherwise noted, all references in the accompanying interim
financial statements to the number of common shares and per share amounts
have been retroactively restated to reflect the forward stock split.
F-12
CREENERGY CORPORATION
(A Development Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
-------------------------------------
August 31, 2011
(Unaudited)
The total issued and outstanding capital stock is 171,000,000 common shares
with a par value of $0.001 per common share. The Company's common stock
issuances to date are as follows:
i) On November 18, 2005, 54,000,000 shares of the Company's common stock
were issued to a former director and officer of the Company for cash
proceeds of $18,000.
ii) On November 28, 2005, 21,000,000 shares of the Company's common stock
were issued to a former director and officer of the company for cash
proceeds of $7,000.
iii) On July 21, 2006, the Company completed a public offering and issued
21,000,000 shares of the Company's common stock for cash totalling
$70,000. The Company incurred offering costs of $14,501 related to
this offering, resulting in net proceeds of $55,499.
iv) On May 21, 2010, 120,000,000 shares of the Company's restricted common
stock, valued at $16,000, were issued to a former director and officer
of the Company. On October 29, 2010, the 120,000,000 restricted common
shares of the Company previously issued to a former director and
officer of the Company were returned to treasury for no consideration.
The shares were cancelled on 2 November 2010.
v) On August 23, 2011, the Company issued 75,000,000 shares of its
restricted common stock in exchange for intangible assets and
intellectual property (Note 6).
8. INCOME TAXES
The Company has losses carry forward for income tax purposes to August
31, 2011. There are no current or deferred tax expenses for the period
ended August 31, 2011 due to the Company's loss position. The Company
has fully reserved for any benefits of these losses. The deferred tax
consequences of temporary differences in reporting items for financial
statement and income tax purposes are recognized, as appropriate.
Realization of the future tax benefits related to the deferred tax
assets is dependent on many factors, including the Company's ability to
generate taxable income within the net operating loss carryforward
period. Management has considered these factors in reaching its
conclusion as to the valuation allowance for financial reporting
purposes.
The provision for refundable federal income tax consists of the following:
For the nine-month period ended
-------------------------------------------
August 31, 2011 August 31, 2010
-------------------------------------------
Deferred tax asset attributable to
Current operations $ 9,550 $ 7,473
Less: Change in valuation allowance (9,550) (7,473)
-------------------------------------------
Net refundable amount $ - $ -
-------------------------------------------
The composition of the Company's deferred tax asset as at August 31,
2011 and November 30, 2010 are as follows:
August 31,
2011 November 30, 2010
(Unaudited) (Audited)
-------------------------------------------
Net operation loss carry-forward $ 143,959 116,675
Statutory federal income tax rate 35% 35%
Deferred tax assets 50,386 40,836
Less: Valuation allowance (50,386) (40,836)
------------------------------------------
Net Deferred Tax Assets $ - $ -
------------------------------------------
F-13
CREENERGY CORPORATION
(A Development Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
-------------------------------------
August 31, 2011
(Unaudited)
The potential income tax benefit of these losses has been offset by a full
valuation allowance.
As at August 31, 2011, the Company has an unused net operating loss carry
forward balance of approximately $143,959 that is available to offset
future taxable income. This unused net operation loss carry forward balance
for income tax purposes expires as follows:
$
2025 2,680
2026 14,178
2027 37,588
2028 28,450
2029 6,389
2030 27,390
2031 27,284
--------------------
143,959
--------------------
9. DISCONTINUED OPERATIONS AND NEW DEVELOPMENTS
The Company's attempts over the past years to build a business that
provides a website where members and customers are able to bid on and
purchase pieces of art had not come to fruition so management decided to
change the business focus and look for other opportunities. Therefore,
management decided to discontinue selling art pieces and reflect such
discontinuance in its operating statement and cash flow statements
effective June 25, 2010.
Management decided on that date to focus on new business development in the
form of obtaining leases for the exploration and production of oil and gas
in First Nation areas of northern Alberta, Canada. In August 2011 the
Company acquired intangible assets and intellectual property known as
Peptide Technology Platform.
During the nine month period ended August 31, 2011 and the nine month
period ended August 31, 2010, the Company had $Nil and $6,042 respectively,
related to its discontinued operations.
For the nine month For the nine month
period ended period ended
August 31, 2011 August 31, 2010
Revenue $ - $ 6,042
-------------------------------------------------
Expenses
Depreciation and amortization - 477
Office and administration - 1,694
-------------------------------------------------
- 2,171
-------------------------------------------------
Net Profit from Discontinued Operations $ - $ 3,871
=================================================
10. CONTINGENCY
On November 22, 2010, the Company was served with a claim filed by a former
director and officer of the Company. The claim alleges that the former
director and officer of the Company suffered losses and damages as a result
of the failure of the Company in providing him with corporate documents and
implementing a change of the board of directors. The Company has retained
legal counsel to address the claim. On December 8, 2010, the Company filed
F-14
CREENERGY CORPORATION
(A Development Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
-------------------------------------
August 31, 2011
(Unaudited)
a Statement of Defense requesting that the claim be dismissed. In the
opinion of management, this claim is without merit and the Company intends
to defend this claim vigorously. As a loss is not deemed probable, and as
such, no accruals have been made as of August 31, 2011.
11. COMPARATIVE FIGURES
Certain comparative figures have been adjusted to conform to the current
period's presentation.
12. SUBSEQUENT EVENTS
There following events occurred during the period from the nine month
period ended August 31, 2011 to the date the interim financial statements
are available to be issued on October 11, 2011:
Professional Services Agreement
On October 3, 2011, the Company formalized an agreement with a consulting
firm for services related to debt and equity capital raising and business
development activities. Under this agreement, consulting fees payable will
accrue at the rate of $40,000 per month for a term of three years,
effective October 1, 2011. Additionally, commissions will be paid on debt
or equity funding (i.e., private offerings) generated by the consulting
firm, at a rate of ten percent (10%). At the time of the completion of the
offering, the costs are charged against the capital raised.
Change of Directors and Officers
On October 3, 2011 William Campbell and Scott McKinley were appointed to
the Board of Directors. Effective October 3, 2011, Shari Sookarookoff
resigned as President, Secretary, Treasurer, Chief Executive Officer and
Chief Financial Officer of the Company. Dr. William Campbell, Ph.D. was
appointed Chief Scientific Officer, Dr. Scott McKinley, Ph.D. was appointed
Chairman and Chief Operating Officer, Deborah Fortescue-Merrin, B.Sc. was
appointed as President and Richard Fortescue, was appointed Chief Financial
Officer. Ms. Fortescue-Merrin and Mr. Fortescue are siblings.
On September 9, 2011 the Company adopted a proposal to change the Company's
name from Creenergy Corporation to Peptide Technologies, Inc to be
effective on or about October 13, 2011.
F-15
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following discussion should be read in conjunction with our unaudited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results, or other developments.
Forward-looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic, and competitive,
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward-looking
statements made by or on our behalf. We disclaim any obligation to update
forward-looking statements.
The following discussion of the plan of operation, financial condition, results
of operations, cash flows and changes in financial position of our Company
should be read in conjunction with our most recent financial statements and
notes appearing elsewhere in this Quarterly Report on Form 10-Q, our Quarterly
Report on Form 10-Q filed on July 14, 2011, our Quarterly Report on Form 10-Q
filed on April 14, 2011, and our Annual Report on Form 10-K filed on March 11,
2011.
The independent registered public accounting firms' reports on the Company's
financial statements as of November 30, 2010, and for each of the years in the
two-year period then ended; include a "going concern" explanatory paragraph that
describes substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to the factors prompting the explanatory
paragraph are discussed below and also in Note 1 to the unaudited quarterly
financial statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Discontinued Operations and New Developments
Since inception, the Company's business plan was to develop a membership based
website art gallery/auction house specifically focused on displaying and selling
original artwork. The Company changed its status from a development stage
company to an operating company on November 30, 2009. Management realized that
the results of operations from the sale of artwork was lack-luster, and it was
decided to change the Company's business focus and plan for other strategic
opportunities and discontinued the sale of artwork to be effective June 25,
2010. Effective June 26, 2010, the Company started to focus on a new business
development. On July 29, 2010, the Company's name changed from Online Originals,
Inc. to Creenergy Corporation. The name change was intended to convey a sense of
the Company's new business focus as it looked to pursue other opportunities.
Specifically, the Company intended to obtain leases for the exploration and
production of oil and gas in northern Canada and the United States. These
objectives have not been realized and the Company has abandoned its efforts in
this area.
On August 23, 2011, the Company entered into an Asset Purchase Agreement in
which the Company, in exchange for 75,000,000 shares of the Company's restricted
common stock, will receive all rights and title to proprietary technologies and
formulas involving the application of specialty peptides. Having done this, the
Company has changed its business focus from obtaining leases for the exploration
and production of oil and gas in areas of northern Alberta, Canada, to the
manufacturing and distribution of natural peptide solutions to combat the
economic burden caused by the zebra and quagga mussels to the hydropower
electricity industry.
Principal Products and Services
-------------------------------
The Company intends to develop and provide a sustainable natural solution that
addresses the economic burdens caused by the zebra and quagga mussels, without
harming other organisms or depleting a segment of the natural food chain.
16
Change of Directors and Officers
As a result of the changes in our business plan and operations, the following
changes in management occurred:
- On October 3, 2011 Drs. William Campbell and Scott McKinley were
appointed to the Board of Directors.
- Effective October 3, 2011, Shari Sookarookoff resigned as President,
Secretary, Treasurer, Chief Executive Officer and Chief Financial
Officer of the Company.
- Dr. William Campbell, Ph.D. was appointed Chief Scientific Officer.
- Dr. Scott McKinley, Ph.D. was appointed Chairman and Chief Operating
Officer.
- Deborah Fortescue-Merrin was appointed as President.
- Richard Fortescue was appointed Chief Financial Officer.
Ms. Fortescue-Merrin and Mr. Fortescue are siblings.
On September 9, 2011 the Company adopted a proposal to change the Company's name
from Creenergy Corporation to Peptide Technologies, Inc to be effective on or
about October 13, 2011.
Material Changes in Financial Condition
At August 31, 2011, our cash balance was $698. In addition, we have prepaid
expenses of $1,424. Cash on hand is currently our only source of liquidity. We
do not have any lending arrangements in place with banking or financial
institutions and we do not anticipate that we will be able to secure these
funding arrangements in the near future.
At August 31, 2011, we had a working capital deficit of $35,924 compared to a
working capital deficit of $22,843 at November 30, 2010. At August 31, 2011, our
total assets consisted of cash of $698, prepaid expenses of $1,424, and
Intangible Asset and Intellectual Property of $375,000. This compares with total
assets at November 30, 2010, which consisted of cash of $6,090, and prepaid
expenses of $200.
At August 31, 2011, our total current liabilities increased to $38,046 from
$29,133 at November 30, 2010. During the three months ended August 31, 2011,
accounts payable and accrued liabilities increased by $15,371.
We believe our existing cash balances will not be sufficient to carry our normal
operations over the next three (3) months. Our short and long-term survival is
dependent on sales of securities as necessary or from shareholder loans, and
thus, to the extent that we require additional funds to support our operations
or the expansion of our business, we will attempt to sell additional equity
shares or issue debt. Any sale of additional equity securities will result in
dilution to our stockholders. Continuing events in worldwide capital markets may
make it more difficult for us to raise additional equity or capital. There can
be no assurance that additional financing, if required, will be available to us
or on acceptable terms.
Result of Operations
For The Three Months Ended August 31, 2011 Compared To The Three Months Ended
August 31, 2010.
We recognized nil revenues from operational sales during the three months ending
August 31, 2011.
During the three months ended August 31, 2011, operating expenses were $16,048
compared to $17,843 for the three months ended August 31, 2010. The decrease of
$1,795 was due to decrease in our operational activities over the prior period.
Operating expenses during the three months ended August 31, 2011, consisted of
professional fees of $15,851 and office and administration costs of $197
compared to professional fees of $16,612 and office and administration fees of
$1,231 incurred for the three months ended August 31, 2010. We do not expect
such decreases to continue as we begin to pursue business opportunities related
to the peptide technologies.
We recognized a net loss of $16,048 for the three months ended August 31, 2011,
compared to a net loss of $17,883 for the three months ended August 31, 2010.
F-17
For the Nine Months Ended August 31, 2011 Compared to the Nine Months Ended
August 31, 2010.
We recognized nil revenues from operational sales during the nine months ending
August 31, 2011. We do not show any cumulative revenue amounts since re-entering
the development stage on June 26, 2010.
During the nine months ended August 31, 2011, operating expenses were $26,951
compared to $25,221 for the nine months ended August 31, 2010. The increase of
$1,730 was due to increase in our operational activities over the prior period.
Operating expenses during the nine months ended August 31, 2011, consisted of
professional fees of $26,520 and office and administration costs of $764
compared to professional fees of $23,865 and office and administration fees of
$1,356 incurred for the nine months ended August 31, 2010. We do expect such
increases to continue as we begin to pursue business opportunities related to
the peptide technologies.
We recognized a net loss of $26,951 for the nine months ended August 31, 2011,
compared to a net loss of $21,350 for the nine months ended August 31, 2010. The
cumulative net loss of $53,290 is for the period June 26, 2010, to August 31,
2011.
Off-Balance Sheet Arrangements
We currently do not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles in the United States requires
management to make assumptions and estimates that affect the reported amounts of
assets, liabilities, revenues and expenses as well as the 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. The
following is a summary of the significant accounting policies and related
estimates that affect the Company's financial disclosures.
Revenue Recognition
Revenues are recognized when persuasive evidence of an arrangement
exists, delivery has occurred (or service has been performed), the
sales price is fixed and determinable and collectability is reasonably
assured. Revenue recognition from consignment inventory consists of
commission income.
Foreign Currency Translations
The functional currency is the Canadian dollar and the reporting
currency is the U.S. dollar. At each balance sheet date, assets and
liabilities that are denominated in a currency other than U.S. dollars
are adjusted to reflect the current exchange rate which may give rise
to a foreign currency translation adjustment accounted for as a
separate component of shareholders' equity and included in other
comprehensive loss.
Revenues and expenses are translated at the average daily rate for the
year covering the financial statement year to approximate the rate of
exchange on the transaction date. Exchange gains and losses are
included in the determination of net income (loss) for the period.
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the
Company is not required to provide information required by this Item.
18
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, we conducted an evaluation,
under the supervision and with the participation of our Chief Executive Officer
and Chief Financial Officer, of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the 1934 Act). Based on this
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective to ensure that
information required to be disclosed by us in reports that we file or submit
under the 1934 Act is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission rules and
forms.
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control
over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles.
Management's assessment of the effectiveness of the small business issuer's
internal control over financial reporting is as of the quarter ended August 31,
2011. We believe that our internal control over financial reporting was not
effective due to material weaknesses in the system of internal control.
Specifically, management identified the following control deficiency:
The Company has installed accounting software that does not prevent
erroneous or unauthorized changes to previous reporting periods and
does not provide an adequate audit trail of entries made in the
accounting software.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended August 31, 2011, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On November 22, 2010, the Company was served with a claim filed by a former
director and officer of the Company. The claim, filed in the court of Queen's
Bench of Alberta, Canada, alleges that the former director and officer of the
Company suffered losses and damages as a result of the failure of the Company in
providing him with corporate documents and implementing a change of the board of
directors. The Company has retained legal counsel to address the claim. On
December 8, 2010, the Company filed a Statement of Defense requesting that the
claim be dismissed. The Company intends to defend this claim vigorously.
Other then the above preceding, the Company is not a party to any other pending
legal proceedings, nor is the Company aware of any civil proceeding or
government authority contemplating any legal proceeding as of the date of this
filing.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
19
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. REMOVED AND RESERVED.
Item 5. Other Information
None
Item 6. Exhibits
(a) Pursuant to Item 601 of Regulation S-K, the following exhibits are included
herein.
Exhibit
Number Description
31.1 Section 302 Certification - President
31.2 Section 302 Certification - Chief Financial Officer.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
- President.
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
- Chief Financial Officer.
20
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, on this 11th day of
October, 2011.
CREENERGY CORPORATION
Date: October 11, 2011 By: /s/ Deborah Fortescue-Merrin
----------------------------
Name: Deborah Fortescue-Merrin
Title: President
Date: October 11, 2011 By: /s/ Richard Fortescue
---------------------
Name: Richard Fortescue
Title: Chief Financial Officer
2
