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EX-32 - EXHIBIT 32.1 - FASTFUNDS FINANCIAL CORPfffcform10qex321.htm
EX-31 - EXHIBIT 31.1 - FASTFUNDS FINANCIAL CORPfffcform10qex311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

 

FORM 10-Q

 

 

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

 

For the quarter ended June 30, 2012

   

TRANSITION REPORT UNDER SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______to_______

 

 

Commission File No. 000-33053

 

 

FASTFUNDS FINANCIAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

Nevada 87-0425514
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)

 

319 Clematis Street, Suite 400

West Palm Beach, Florida 33401

(Address of principal executive offices) (Zip code)

 

(561) 514-9042

(Registrant's telephone number including area code)

 

 

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, and (2) has been subject to such filing requirements for the past 90 days. Yes No

 

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

Large accelerated filer Accelerated filer
Non-accelerated filer 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 ☑No

 

Number of shares of common stock outstanding at August 20, 2012: 194,474,830

 
 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

 

 

PART I FINANCIAL INFORMATION Page
  Item 1. Financial statements:  
    Condensed consolidated balance sheets -
June 30, 2012 (unaudited) and December 31, 2011
2
    Condensed consolidated statements of operations three and six months ended June 30, 2012 and 2011 (unaudited)  3
    Condensed consolidated statement of changes
in stockholders' equity deficiency - six months ended June 30, 2012 (unaudited)
4
    Condensed consolidated statements of cash flows –
three and six months ended June 30, 2012 and 2011 (unaudited)
5
    Notes to condensed consolidated financial statements (unaudited) 6-15
  Item 2. Management's discussion and analysis of financial condition and results of operations 16-19
  Item 3. Quantitative and qualitative disclosures of market risk 20
  Item 4 Disclosure controls and procedures 21-22
PART II OTHER INFORMATION  
  Item 1. Legal proceedings 22
  Item 2. Unregistered sales of equity securities and use of proceeds 22
  Item 3. Defaults upon senior securities 23
  Item 4. Mine Safety Disclosures 23
  Item 5. Other information 23
  Item 6. Exhibits 23
  Signatures    

 

 
 

ITEM ONE

FINANCIAL STATEMENTS AND NOTES TO FINANCIALS

 

 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
       
   June 30,  December 31,
   2012  2011
   (unaudited)   
ASSETS
Current assets:          
Cash and cash equivalents  $1,738   $253 
Accounts receivable, net of allowance of $45 (2012) and $75 (2011)   69,702    71,992 
Current portion of notes and advances receivable (Note 3)   50,000    50,000 
Deferred financing costs   4,750    —   
Other current assets   1,210    770 
Total current assets   127,400    123,015 
Accounts receivable   105,000    105,000 
Intangible and other assets   200    200 
Long term investments (Note 4)   89,575    89,575 
    194,775    194,775 
   $322,175   $317,790 
LIABILITIES AND STOCKHOLDERS' EQUITY DEFICIENCY          
Current liabilities:          
Accounts payable  $718,402   $774,800 
License fee payable   250,000      
Due to HPI (Note 7)   75,000    75,000 
Accrued expenses, including related parties $674,609 (2011) (Note 5)   3,074,109    3,441,199 
Promissory notes and current portion of long-term debt (Note 5), including related parties          
of $382,763 (2012) and $423,208 (2011)   2,480,482    2,756,652 
Litigation contingency (Note 7)   2,484,922    2,484,922 
Debenture payable, net   3,730    18,703 
Derivative liabilities (Notes 6 and 8)   763,258    694,667 
Total current liabilities   9,849,903    10,245,943 
Commitments and contingencies (Notes 5, 6,and 7)          
Stockholders' equity deficiency (Note 8):          
Preferred stock, $.001 par value; 5,000,000 shares authorized; no shares issued and          
outstanding          
Common stock, $.001 par value; 250,000,000 shares authorized; 192,274,125 (2012) and 19,129,800          
(2011) shares issued and 64,556,523 (2012) and 10,212,456 (2011) shares outstanding   192,275    19,130 
Additional paid-in capital   13,732,051    17,216,715 
Common treasury stock at cost; 8,917,344 (2011) shares   —      (4,547,845)
Accumulated deficit   (23,452,053)   (22,616,153)
Total stockholders' equity deficiency   (9,527,728)   (9,928,153)
   $322,175   $317,790 

 

See notes to condensed consolidated financial statements.

 

2

 

 
 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011 (UNAUDITED)
                           
        Three months ended June 30,   Six months ended June 30,
        2012     2011   2012   2011
Fee revenue, net  $              9,316    $             10,939    $             18,708    $             22,477
Operating expenses:                      
  Processing fees               6,847                 8,813                14,433                18,692
  Returned checks (collected)                 (177)                   (290)                   (277)                (1,154)
  Other               1,100                    787                 2,436                 2,417
      Total operating expenses               7,770                 9,310                16,592                19,955
      Gross profit               1,546                 1,629                 2,116                 2,522
Selling, general and administrative              41,043                93,342                99,444     186,970
Loss from operations   (39,497)     (91,713)     (97,328)     (184,448)
Other income (expense):                      
  Interest expense including related party interest of $9,739                          
    (2012) and $10,235 (2011)            (133,320)             (120,943)             (258,841)             (239,322)
  Derivative liability expense             (41,858)                        -               (40,191)               (18,334)
  Dividend and fee income                7,500                10,000                15,000                10,000
  Gain on debt settlement   95,460                        -     95,460                        -
  Impairment of license           (250,000)                      -           (250,000)                        -
  Impairment of investment in subsidiary           (300,000)                        -             (300,000)                        -
      Total other expense           (622,218)             (110,943)             (738,572)             (247,656)
Net loss  $          (661,715)    $          (202,656)    $          (835,900)    $          (432,104)
Net loss per share  $  (0.02)    $  (0.02)    $  (0.04)    $  (0.04)
Weighted average number of common shares outstanding                      
    Basic and diluted       32,563,209         10,212,456         21,505,997         10,212,456

 

See notes to condensed consolidated financial statements.

 

3

 

 
 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY DEFICIENCY
FOR THE SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)
                                     
                  Additional             Total
        Common stock   paid-in   Common stock   Accumulated   stockholders'
        Shares   Amount   capital   treasury   deficit   equity deficiency
Balances, January 1, 2012         19,129,800    $        19,130    $       17,216,715    $      (4,547,845)    $     (22,616,153)    $          (9,928,153)
Common stock issued upon conversion of convertible debt                                  
  and accrued interest           1,455,419             1,455            23,044.58                        -                        -                   24,500
Common stock issued for exercises of warrants           1,066,666             1,067                30,933                        -                        -                   32,000
Cancellation and return of treasury stock          (8,917,344)            (8,917)           (4,538,928)          4,547,845                        -                            -
Issuance of common stock pursuant to merger agreement         30,000,000           30,000               270,000                        -                        -                 300,000
Issuance of shares of common stock in exchange for                                   
 cancellation of accounts payable and accured expenses         10,000,000           10,000               590,000                        -                        -                 600,000
Issuance of shares of common stock in exchange for                                  
 cancellation of notes payable         11,821,982           11,822               223,903                        -                        -                 235,725
Reclassification of embedded derivatives upon conversion of                                  
  convertible debt                        -                    -                44,100                          -                        -                   44,100
Issuance of dividend shares to shareholders of record as of                                   
    June 18, 2012       127,717,602         127,718              (127,718)                        -                        -                            -
  Net loss                        -                    -                         -                        -             (835,900)                (835,900)
Balances, June 30, 2012       192,274,125    $      192,275    $       13,732,051    $                     -    $     (23,452,053)    $          (9,527,728)

 

See notes to condensed consolidated financial statements.

 

4

 

 
 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2012 AND 2011 (UNAUDITED)
       
    2012    2011 
Cash flows from operating activities:          
Net loss  $(835,900)  $(432,104)
Adjustments to reconcile net loss to net cash used in operating activities:          
Amortization of non compete agreement   —      50,400 
Amortization of discount on convertible note   9,527    2,037 
Fair market value change in derivative liability   40,191    18,334 
Amortization of deferred financing costs   807    277 
Gain on debt settlements   (95,460)     
Impairment of license   250,000      
Impairment of investment in subsidiary   300,000      
Decrease (increase) in assets:          
Accounts receivable   2,290    (3,297)
Other current assets   (997)   —   
Increase (decrease) in liabilities          
Accounts payable   (5,186)   2,747 
Accrued expenses   277,157    345,077 
Net cash used in operating activities   (57,570)   (16,529)
Cash flows from investing activities:          
Repayments on notes and interest receivable   —      —   
Net cash provided by investing activities   —      —   
Cash flows from financing activities:          
Proceeds from exercise of warrants   32,000    —   
Borrowings on notes and loans payable, other   74,000    41,120 
Borrowings on notes and loans payable, related   11,480    —   
Repayments on notes and loans payable, related   (51,925)   (23,100)
Repayments on notes and loans payable, other   (1,500)   —   
Payment of deferred financing costs   (5,000)   (2,500)
Net cash provided by financing activities   59,055    15,520 
Net increase in cash and cash equivalents   1,485    (1,009)
Cash and cash equivalents, beginning   253    2,045 
Cash and cash equivalents, ending  $1,738   $1,036 
Supplemental disclosure of cash flow information:          
Cash paid for interest  $—     $—   
Cash paid for income taxes  $—     $—   
Conversion of convertible notes to common stock  $235,725   $—   
Conversion of convertible debentures to common stock  $24,500   $—   
Conversion of accounts payable, accrued liabilities and          
accrued interest to common stock  $676,049   $—   

 

See notes to condensed consolidated financial statements.

 

5

 

 
  

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

 

1.Business and organization, basis of presentation and management’s plans:

 

Business and organization:

 

FastFunds Financial Corporation (“FFFC” or the “Company”) is a holding company, and through January 31, 2006, operated primarily through its wholly-owned subsidiary Chex Services, Inc. (“Chex”). As disclosed in the December 31, 2011 Form 10-K, FFFC also has several other non-operating wholly-owned subsidiaries. FFFC and its subsidiaries are referred to as (the “Company”).

 

Chex, a Minnesota corporation, provided financial services prior to the sale of substantially all of Chex’s assets, which primarily consisted of check cashing, automated teller machine (ATM) access, and credit card advances to customers primarily at Native American owned casinos and gaming establishments (the “Asset Sale”).

 

On May 25, 2012, the Company entered into an Agreement Concerning the Exchange of Securities (the “Agreement”) by and among Advanced Technology Development, Inc., a Colorado corporation ("ATD"), and Carbon Capture USA, Inc., a Colorado corporation ("Carbon") and Carbon Capture Corporation, a Colorado corporation ("CCC"). ATD is a newly formed, 100% wholly owned subsidiary of the Company. Carbon is a 100% wholly owned subsidiary of CCC, which is privately held. Mr. Henry Fong, a director of the Company is the control person of CCC. Pursuant to the Agreement, ATD acquired from CCC all of the issued and outstanding common stock of Carbon in exchange for thirty million (30,000,000) newly issued unregistered shares of the Company’s common stock. ATD has also assumed the unpaid license fee of $250,000 due from Carbon to CCC.

 

Carbon has an exclusive US license related to provisional patent Serial number 61/077,376 and a US Patent to be issued. The patent titled, “METHOD OF SEPARATING CARBON DIOXIDE”, related to methods of decomposing a gaseous medium, more specifically, relating to methods of utilizing radio frequency energy to separate the elemental components of gases such as carbon dioxide. ATD will commence research and development with a goal of potential commercialization; subject to financing.

 

On July 6, 2012 The Financial Industry Regulatory Authority (“FINRA”) approved the Company's 3 to 1 forward stock split on its common stock outstanding in the form of a dividend, with a Record Date of June 18, 2012. The stock split entitled each common stock shareholder as of the Record Date to receive two (2) additional shares of common stock for each one (1) share owned. Additional shares issued as a result of the stock split were distributed on July 9, 2012 (the “Payment Date”).

 

Basis of presentation:

 

 

Unaudited financial statements:

 

The accompanying condensed consolidated financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments necessary to present the financial position, results of operations and cash flows for all stated periods have been made. Except as described below, these adjustments consist only of normal and recurring adjustments. Certain information and note disclosures normally included in the Company’s annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with a reading of the Company’s consolidated financial statements and notes thereto included in the Company’s Form 10-K annual report filed with the Securities and Exchange Commission (SEC) on April 13, 2012. Interim results of operations for the three and six months ended June 30, 2012 and 2011 are not necessarily indicative of future results for the full year. Certain amounts from the 2011 periods have been reclassified to conform to the presentation used in the current period. 

 

6

 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

 

Going concern and management’s plans:

 

In the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, the Report of the Independent Registered Public Accounting Firm includes an explanatory paragraph that describes substantial doubt about the Company’s ability to continue as a going concern. The Company’s interim financial statements for the three and six months ended June 30, 2012 and 2011 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported a net loss of $661,715 and $835,900 for the three and six months ended June 30, 2012, respectively, and has a working capital deficit of approximately $9,472,500 and accumulated deficit of approximately $23,452,053 as of June 30, 2012. Moreover, the Company presently has no significant ongoing business operations or sources of revenue and has little resources with which to obtain or develop new operations.

 

These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not contain any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Currently, the Company does not have a revolving loan agreement with any financial institution, nor can the Company provide any assurance it will be able to enter into any such agreement in the future, or be able to raise funds through further issuance of debt or equity in the Company.

 

In addition to the current business operations in financial services, the Company plans on expanding its business activities into the following additional business segments:

  • Technology development
  • Consumer products
  • Natural resources including alternative energy

The Company recently announced the acquisition of Carbon Capture USA, Inc., which holds a soon-to-be issued U.S. patent on a method of decomposing a gaseous medium using radio frequency energy to separate elementary components of gases including carbon dioxide. The Company has also been actively seeking other business opportunities in these segments.

 

The Company evaluates, on an ongoing basis, potential business acquisition/restructuring opportunities that become available from time to time, which management considers in relation to its corporate plans and strategies.

 

 

 2. Summary of significant accounting policies:

 

A summary of our significant accounting policies is included in our 2011 Annual Report on Form 10-K.

 

Net loss per share:

 

Net loss per share of common stock is computed based on the weighted average number of common shares outstanding during the period. Stock options, warrants and common stock underlying convertible promissory notes at June 30, 2012 and 2011 was 16,795,547 and 5,110,951 respectively and are not considered in the calculation for the three and six months ended June 30, 2012 and 2011, as the impact of the potential common shares would be to decrease loss per share. Therefore, diluted loss per share for the three and six months ended June 30, 2012 and 2011 is equivalent to basic loss per share.

 

7

 
 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

 

 

Long-lived assets:

 

Long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the second quarter of fiscal 2012, management determined the license agreement of CCUSA, our wholly owned subsidiary, and the Company’s related investment in CCUSA were impaired. See Note 9, "Impairment Charge" for a description of the impairment charges recorded as of June 30, 2012.

 

Recent Accounting Pronouncements Not Yet Adopted:

 

As of the date of this report, there are no recent accounting pronouncements that have not yet been adopted that we believe would have a material impact on our financial statements.

 

 

3.Notes and interest receivable:

 

Notes and interest receivable at June 30, 2012 and December 31, 2011, consist of the following:

 

   June 30,  December 31,
   2012  2011
Note receivable, ISI; interest at 6%; matured April 2007; currently in default  $50,000   $50,000 
Note receivable from Coast ATM, LLC; interest at 10%; matured November 2005; currently in default; a valuation allowance of $50,000 has been recorded against this receivable at June 30, 2012 and December 31, 2011; is in default and non-performing [A]   50,000    50,000 
    100,000    100,000 
Less current maturities   50,000    (50,000)
Notes and advances receivable, net of current portion, before valuation allowance   50,000    50,000 
Less valuation allowance   (50,000)   (50,000)
Notes receivable, long-term  $—     $—   

[A]The Company is no longer accruing interest on these non-performing loans due to uncertainty as to collection.

 

 

8

 
 

 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

 

4. Long term investments:

 

On March 30, 2011, the Company and Paymaster agreed to restructure the Note receivable. Pursuant to the agreement, the parties agreed to convert the remaining balance of the Note receivable into Cumulative Convertible Redeemable Preference Shares (the Preference Shares”) with a value of $400,000, and an annual dividend of 7.5% over thirty-six (36) months. Paymaster, at any time prior to maturity, may elect to redeem some or all of the Preference Shares at an effective dividend rate of 10% per annum. The Company, upon maturity and with not less than ninety (90) days prior notice, may elect to convert some or all of Preference Shares into the pro rata equivalent of 11,100 ordinary shares of Paymaster (equal to 10% of the issued and outstanding capital of the Company based on the conversion of all Preference Shares on a fully diluted basis). The Company has recorded the investment at $89,575, net of a valuation allowance of $250,000, the same historical carrying value on the Company’s balance sheet as the note.

 

9

 
 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

 

5. Accrued liabilities:

 

Accrued liabilities at June 30, 2012 and December 31, 2011 were $3,074,109 and $3,441,199 respectively, and were comprised of:

 

  2012   2011
Legal fees $ 489,576   $ 474,576
Interest   2,216,120     2,030,380
Consultants and advisors   115,650     506,950
Director’s fees   50,000     204,159
Registration rights   98,013     98,013
Other   104,750     127,121
  $ 3,074,109   $ 3,441,199

 

 

 

6.Promissory notes, including related and current portions of long-term debt, and debenture payable

 

Promissory notes, including related parties and current portions of long-term debt at June 30, 2012 and December 31, 2011, consist of the following:

 

  June 30,   December 31,
  2012   2011
Promissory notes payable:          
Various related parties, interest rate 8% to 10 % [A] $ 382,763 $ 423,208
Various other, interest rate ranging from 8% to 10%   7,000     242,725
Notes payable; interest rates ranging from 9% to 15%; interest payable quarterly; the notes are unsecured, matured on February 28, 2008; currently in default and past due [B]   2,090,719     2,090,719
  $ 2,480,482   $ 2,756,652

[A]Pursuant to a November 4, 2011 Board of director resolution, these notes are convertible.

 

[B]These notes payable (the “Promissory Notes”) originally became due on February 28, 2007. The Company renewed $283,000 of the Promissory Notes on the same terms and conditions as previously existed. In April 2007 the Company, through a financial advisor, restructured $1,825,000 of the Promissory Notes (the “Restructured Notes”). The Company has accrued an expense of $36,500 to compensate the financial advisor 2% of the Restructured Notes as well as having issued 150,000 shares of common stock to the financial advisor. The Restructured Notes carry a stated interest rate of 15% (a default rate of 20%) and matured on February 28, 2008. The Company has not paid the interest due since June 2007, and no principal payments on the Promissory Notes have been made since 2008 and accordingly, they are in default.

 

The chairman of the board of the Company has personally guaranteed up to $1 million of the Restructured Notes and two other non-related individuals each guaranteed $500,000 of the Restructured Notes. In consideration of their guarantees the Company granted warrants to purchase a total of 1,600,000 shares of common stock of the Company at an exercise price of $0.50 per share, expiring in March 2010. The warrants were valued at $715,200 using the Black-Scholes option pricing model and were amortized over the one-year term of the Restructured Notes. The warrants expired in March 2010. 

 

10

 
 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

 

In January 2008, the Company and the three guarantors received a complaint filed by the financial advisor (acting as agent for the holders of the Restructured Notes) and the holders of the Restructured Notes. The claim is seeking $1,946,250 plus per diem interest beginning January 22, 2008 at the rate of twenty percent (20%) per annum plus $37,000 due the financial advisor for unpaid fees. The court has ruled in favor of a motion for summary judgment filed by certain of the plaintiffs have had a judgment was entered on August 18, 2009 in the total amount of $2,487,250 in principal and interest on the notes, $40,920 in related claims and $124,972 in attorney’s fees and expenses. The Company is not aware of any payments being made by any of the guarantors and accordingly, the Company includes these liabilities on the June 30, 2012 balance sheet.

 

 

Debenture payable:

 

In June 2011, the Company entered into a note agreement with an unaffiliated investor for the issuance of a convertible promissory note in the amounts of $25,000 (the “2011 Note”). Among other terms the Note is due nine months from its issuance date, bears interest at 8% per annum, payable in cash or shares at the Conversion Price as defined herewith, and are convertible at a conversion price (the “Conversion Price”) for each share of common stock equal to 50% of the average of the lowest three trading prices (as defined in the note agreements) per share of the Company’s common stock for the ten trading days immediately preceding the date of conversion. Upon the occurrence of an event of default, as defined in the Note, the Company is required to pay interest at 22% per annum and the holders may at their option declare the Note, together with accrued and unpaid interest, to be immediately due and payable. In addition, the Note provides for adjustments for dividends payable other than is shares of common stock, for reclassification, exchange or substitution of the common stock for another security or securities of the Company or pursuant to a reorganization, merger, consolidation, or sale of assets, where there is a change in control of the Company. The Company may at its own option prepay the Note and must maintain sufficient authorized shares reserved for issuance under the Note.

 

We received net proceeds of $22,500 after debt issuance costs of $2,500 paid for lender legal fees. These debt issuance costs will be amortized over the terms of the Note, and accordingly $557 has been expensed as debt issuance costs (included in interest expense) during the six months ended June 30, 2012.

 

In June, 2012 the Company entered into two additional note agreements (the “2012 Notes”) with the same investor for an aggregate of $72,500; whereby the Company received net proceeds of $67,500, after debt issuance costs of $5,000. These debt issuance costs will be amortized over the terms of the Note, and accordingly $250 has been expensed as debt issuance costs (included in interest expense) during the three and six months ended June 30, 2012.

 

We have determined that the conversion feature of the 2011 and 2012 Notes represents an embedded derivative since the Note is convertible into a variable number of shares upon conversion. Accordingly, the Note is not considered to be conventional debt under EITF 00-19 and the embedded conversion feature must be bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of this derivative instrument has been recorded as a liability on the consolidated balance sheet with the corresponding amount recorded as a discount to the Note. Such discount will be accreted from the date of issuance to the maturity dates of the Note. The change in the fair value of the liability for derivative contracts will be recorded to other income or expenses in the consolidated statement of operations at the end of each quarter, with the offset to the derivative liability on the balance sheet. The beneficial conversion feature included in the 2011 Note resulted in an initial debt discount of $25,000 and an initial loss on the valuation of derivative liabilities of $19,286 for a derivative liability initial balance of $44,286. The fair value of the Note was calculated at issue date utilizing the following assumptions:

 

11

 
 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

 

 

 

Issuance Date

 

 

Fair Value

 

 

 

Term

 

Assumed Conversion Price

Market Price on Grant Date

 

 

Volatility Percentage

 

 

Interest

Rate

6/8/11 $44,286 9 months $0.0175 $0.035 380% 4.72%

 

As of December 31, 2011, the Company revalued $25,000, the balance of the 2011 Convertible Note. For the period from their issuance to December 31, 2011, the Company increased the derivative liability of $44,286 by $2,381 resulting in a derivative liability balance of $46,667 at December 31, 2011.

 

During the three months ended June 30, 2012, the Company received Conversion Notices for $24,500, leaving a balance as of June 30, 2012 of $500 on the 2011 Note, and the Company reduced the Derivative liability by $44,100, as a result of the Conversions. As of June 30, 2012, the Company revalued the balance of the 2011 Convertible Note of $500, and adjusted the derivative liability balance to $789 for the 2011 Note. .

 

The fair value of the 2011 Note was calculated at June 30, 2012 utilizing the following assumptions:

 

 

Fair Value

 

Term

Assumed Conversion  Price

 

Volatility Percentage

 

Interest Rate

$789   9 months $0.0044 286% 0.09

 

The beneficial conversion feature included in the 2012 Notes resulted in an initial debt discount of $72,500 and an initial loss on the valuation of derivative liabilities of $48,484 for a derivative liability initial balance of $120,984. The fair values of the 2012 Notes were calculated at issue date utilizing the following assumptions:

 

 

 

Issuance Date

 

 

Fair Value

 

 

 

Term

 

Assumed Conversion Price

Market Price on Grant Date

 

 

Volatility Percentage

 

 

Interest

Rate

6/8/12 $51,502 9 months $0.0116 $0.0233 341% .09
6/25/12 $69,482 9 months $0.00611 $0.0127 295% .09

 

As of June 30, 2012, the Company revalued the 2012 Notes and based on the fair value of $114,470 adjusted the derivative liability balance by $6,514 for the 2012 Notes. .

 

The fair value of the 2012 Notes was calculated at June 30, 2012 utilizing the following assumptions:

 

 

Fair Value

 

Term

Assumed Conversion  Price

 

Volatility Percentage

 

Interest Rate

$114,470   9 months $0.0044 286% 0.09

 

 

12

 
 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

 

7. Commitments and contingencies:

 

 

Litigation:

 

The Forest County Potawatomi Community (“FCPC”) has initiated an action against Chex, an inactive subsidiary of the Company, in the FCPC tribal court asserting that Chex breached a contract with FCPC during the 2002 to 2006 time period. Chex is inactive and did not defend this action. On October 1, 2009 a judgment was entered against Chex in the FCPC Tribal Court in the amount of $2,484,922, included in the balance sheet presented herein.

 

The Company is involved in various other claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse impact either individually or in the aggregate on consolidated results of operations, financial position or cash flows of the Company.

 

Operating lease:

 

Effective January 1, 2012 the Company is utilizing space in an office rented by a Company controlled by our Acting President. The company is paying $997 per month for rent.

 

HPI Stock Price Guaranty:

 

In May 2006, HPI and the Company negotiated a settlement regarding convertible notes with a face value of $200,000 issued by the Company, whereby HPI issued 180,000 shares of its common stock. In connection with the Settlement Agreement, a Stock Sale and Lock-up Agreement, Registration Agreement and an Escrow Agreement were also entered into (the “Agreements”). Terms of the Agreements stipulate a price protection clause whereby the Company under certain circumstances must reimburse the former debt holders if the market price of the HPI common stock issued to them in the settlement is below $4.00 per share at the time they sell the stock.  As a result, the Company has included a derivative liability due to the debt holders on its’ balance sheet as of June 30, 2012 and December 31, 2011 of $648,000.

 

 

8. Stockholders’ equity deficiency:

 

Common stock:

 

During the six months ended June 30, 2012, the Company entered into various agreements with certain of its non-affiliated creditors to convert various outstanding loans into restricted shares of the Company. The total amount converted was $235,725 and the Company issued 11,821,982 shares of common stock, at an average price of approximately $0.02 per share.

 

On May 25, 2012 the Company issued 5,000,000 shares of restricted common stock in satisfaction of $367,500 of accrued and unpaid fees to Barry Hollander, the Company’s Acting President. The shares were issued at $0.06 per share. Mr. Hollander agreed to forgive the remaining $67,500.

 

On May 25, 2012, the Company issued 5,000,000 shares of restricted common stock in satisfaction of $308,549, comprised of accrued and unpaid fees owed to Mr. Henry Fong, the sole Director of the Company, legal fee reimbursement and accrued and unpaid interest on loans from Mr. Fong. The shares were issued at $0.06 per share. Mr. Fong agreed to forgive the remaining $8,549.

 

On May 25, 2012, pursuant to the Agreement in Note 1 above, the Company issued 30,000,000 shares of restricted common stock to Carbon Capture Corporation in exchange for 100% of the common stock of their wholly owned subsidiary, Advanced Technology Development, Inc.

 

13

 
 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

 

On May 25, 2012 the Company issued 470,085 shares of common stock upon the conversion of $5,500 of the 2011 Note. The shares were issued at an average price of approximately $0.0117 per share.

 

On June 14, 2012 the Company issued 478,088 shares of common stock upon the conversion of $12,000 of the 2011 Note. The shares were issued at an average price of approximately $0.0251 per share.

 

On June 27, 2012 the Company issued 507,246 shares of common stock upon the conversion of $7,000 of the 2011 Note. The shares were issued at an average price of approximately $0.0138 per share.

 

In June 2012, the Company issued 1,066,666 shares of common stock pursuant to the exercise of warrants to purchase 1,066,666 shares of common stock. The exercise price of the warrants was $0.03 and the Company received $32,000.

 

On June 5th, 2012, the Board of Directors unanimously approved a dividend whereby the shareholders of the Company would receive a dividend payable as a three for one (3:1) forward split of the issued and outstanding shares of the common stock (the “Dividend Shares”) of the Company.

 

 Warrants and options:

 

The Company did not issue any warrants or options for the three and six months ended June 30, 2012. A summary of outstanding warrant balances at January 1, and June 30, 2012 is as follows:

 

   Warrants 

Weighted-Average

exercise

price

 

Weighted- Average

grant date

fair value

Balance January 1, 2012   1,447,618   $.03   $

0 .28

 
Expired warrants   380,952    0.03    0.014 
Exercised warrants   1,066,666    0.03    0.014 
Balance June 30, 2012   —      —      —   

 

 

Options are generally granted with an exercise price equal to the Company’s market price of its common stock on the date of the grant and vest immediately upon issuance. All options outstanding at June 30, 2012 are fully-vested and exercisable. A summary of outstanding balances at January 1, and June 30, 2012 is as follows:

 

   Options  Weighted-Average exercise price  Weighted-Average remaining contractual life  Aggregate intrinsic
Value
                       
 Outstanding at January 1, 2011    330,000   $1.03    3.98   $—   
 

Outstanding at June 30, 2012

    330,000   $1.03    3.48   $—   

 

 

9. Impairment Charges

  

Long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As of June 30, 2012, management used estimates of the present value of future cash flows (Level 3) based upon the anticipated future use of the license to determine that the carrying value of the license is not recoverable. The Company recorded an impairment charge of $250,000 in the second quarter of fiscal 2012, reducing the book value of the license to zero. Additionally, our investment in CCUSA, our wholly owned subsidiary was determined to be impaired as well. An additional impairment charge of $300,000 was recorded as of June 30, 2012, reducing the book value of the investment to zero.

 

14

 
 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)

 

10. Prior events:

 

Asset sale:

 

On December 22, 2005, FFFC and Chex entered into an Asset Purchase Agreement (the “APA”) with Game Financial Corporation (“Game”), pursuant to which FFFC and Chex agreed to sell all of its cash access contracts and certain related assets, which represented substantially all the assets of Chex. Such assets also represented substantially all of the operating assets of the Company on a consolidated basis. On January 31, 2006, FFFC and Chex completed the sale (the “Asset Sale”) for $14 million pursuant to the APA and received net cash proceeds of $12,642,784, after certain transaction related costs and realized a pre-tax book gain of $4,145,835. As a result of the Asset Sale, the Company has no substantial continuing operations. Therefore, the Company is not reporting and accounting for the sale of Chex’s assets as discussed in discontinued operations.

 

Additionally, FFFC and Chex entered into a Transition Services Agreement (the “TSA”) with Game pursuant to which FFFC and Chex agreed to provide certain services to Game to ensure a smooth transition of the sale of the cash-access financial services business.

 

Pursuant to the APA and the TSA, FFFC and Chex owed Game approximately $300,000. Game, FFFC and Chex agreed to settle the balance due for $275,000 (included in accounts payable on the balance sheet presented herein) with payment terms. FFFC and Chex have not made any of the payments stipulated in the settlement and subsequently Game filed a complaint against Chex, FFFC and HPI seeking approximately $318,000. The Company has agreed to a judgment of $329,146, comprised of the $275,000, attorney fees of $15,277 (included in accounts payable on the balance sheet presented herein, and attorney fees of $38,869 (included in accrued liabilities on the balance sheet presented herein). FFFC and Chex have agreed to indemnify HPI.

 

 

Return of Company Common Stock from HPI:

 

On January 2, 2007, pursuant to the terms of a Redemption, Stock, Sale and Release Agreement (the “Redemption Agreement”) by and between HPI and the Company, the Company (i) redeemed 8,917,344 shares of FFFC’s common stock held by HPI, (ii) acquired from HPI an aggregate of 5,000 shares of common stock of Denaris Corporation, a Delaware corporation (“Denaris”), (iii) acquired from HPI an aggregate of 1,000 shares of common stock of Key Financial Systems, Inc., a Delaware corporation (“Key Financial”), and (iv) acquired from HPI an aggregate of 1,000 shares of common stock of Nova Financial Systems, Inc., a Delaware corporation (“Nova Financial”). Denaris was a majority owned subsidiary of HPI, and Key Financial and Nova Financial were wholly owned subsidiaries of HPI. Denaris and Key Financial do not have any operations and Nova Financial has limited operations The shares of common stock of each entity transferred by HPI pursuant to the Redemption Agreement constituted all of HPI’s holdings in each entity.

 

After the closing of the Redemption Agreement, HPI held 3,500,000 shares of FFFC common stock, constituting approximately 34.3% of FFFC’s outstanding common stock at December 31, 2011. These shares have been pledged as collateral on certain notes of HPI. During 2008 as a result of the assumption of this debt by HPI Partners, LLC., (“HPIP”) and the subsequent foreclosure by the debt holders upon HPIP. HPIP owns the 3.5 million shares. The principal managers of HPIP are Messrs. Fong and Olson. Mr. Fong is the Chairman and CEO of FFFC and Mr. Olson was the secretary of FFFC through September 30, 2011, the date of his resignation.

 

On January 18, 2008, the Company filed a complaint in the Superior Court of Washington in King County (the “Superior Court”). The complaint was filed by FastFunds Financial Corporation, Daniel Bishop, Barbara M. Schaper, HP Services LLC, VP Development Corporation, and Gulfstream Financial Partners, LLC (collectively, the “Plaintiffs”) against Dilbagh Singh Gujral, Ricky Gurdish Gujral, Virendra Chaudhary,Gurinder Dilawari, Global Hydrofuels Technology, Inc. (“GHTI”) and Hydrogen Power, Inc. (collectively, the “Defendants”).

 

Messrs. Chaudhary and Dilawari are directors of HPI. GHTI is the majority shareholder of HPI. Ricky Gurdish Gujral is the former chief executive officer of HPI. The complaint alleges fraud, misappropriation of corporate opportunity and breach of fiduciary duty by the Defendants relating to the merger of Equitex, Inc. and Hydrogen Power, Inc., the Sublicense Agreement with GHTI, and payments to Ricky Gurdish Gujral. The complaint seeks the appointment of a receiver to take possession of the property and assets of HPI and to manage and operate HPI pending completion of the action. The complaint also seeks damages in the excess of $3,000,000, exemplary damages, attorney’s fees plus interest and costs and any other relief the court finds just and proper. On January 25, 2008, the Superior Court appointed a receiver of HPI with respect to HPI’s assets. Some assets have been recovered by the Receiver. One of the defendants has filed a counterclaim asserting that the action is frivolous; the Plaintiffs have denied the counterclaim in its entirety. GHTI has sought arbitration regarding ownership of certain patent applications and other intellectual property. GHTI was granted a stay of this case until the arbitration is complete.

 

On March 25, 2010 the Defendants and Plaintiffs entered into a Settlement Agreement and Mutual Release (the “Settlement Agreement”). Pursuant to the Settlement Agreement, which was approved by the receiver and the Court on September 23, 2010, the Defendants and Plaintiffs have agreed to release each other from the claims and to have no further suits against each other. Additionally, the Defendants have agreed to assign to the Receiver for the benefits of the Plaintiffs any and all rights, including but not limited to insurance payments and settlements for any and all officers and directors liability insurance policies.

 

11. Subsequent events:

 

On July 9, 2012 the Company issued 142,857 shares of common stock upon the conversion of the remaining balance of $500 of the 2011 Note and accrued and unpaid interest of $1,000. The shares were issued at an average price of approximately $0.0105 per share.

 

On July 12, 2012, the company issued 127,717,602 shares of common stock pursuant to the dividend. See Notes 1 and 8.

 

Management performed an evaluation of the Company’s activity through the date these financials were issued to determine if they must be reported. The Management of the Company determined that there were no reportable subsequent events to be disclosed.

 

15

 
 

 

ITEM TWO

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

 

 

THIS REPORT MAY CONTAIN CERTAIN "FORWARD-LOOKING" STATEMENTS AS SUCH TERM IS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 OR BY THE SECURITIES AND EXCHANGE COMMISSION IN ITS RULES, REGULATIONS AND RELEASES, WHICH REPRESENT THE COMPANY'S EXPECTATIONS OR BELIEFS, INCLUDING BUT NOT LIMITED TO, STATEMENTS CONCERNING THE COMPANY'S OPERATIONS, ECONOMIC PERFORMANCE, FINANCIAL CONDITION, GROWTH AND ACQUISITION STRATEGIES, INVESTMENTS, AND FUTURE OPERATIONAL PLANS, FOR THIS PURPOSE, ANY STATEMENTS CONTAINED HEREIN THAT ARE NOT STATEMENTS OF HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, WORDS SUCH AS "MAY", "WILL", "EXPECT", "BELIEVE", "ANTICIPATE", "INTENT", "COULD", "ESTIMATE", "MIGHT", OR "CONTINUE" OR THE NEGATIVE OR OTHER VARIATIONS THEREOF OR COMPARABLE TERMINOLOGY ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS BY THEIR NATURE INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES, CERTAIN OF WHICH ARE BEYOND THE COMPANY'S CONTROL, AND ACTUAL RESULTS MAY DIFFER MATERIALLY DEPENDING ON THE VARIETY OF IMPORTANT FACTORS, INCLUDING UNCERTAINTY RELATED TO THE COMPANY'S OPERATIONS, MERGERS OR ACQUISITIONS, GOVERNMENTAL REGULATION, THE VALUE OF THE COMPANY'S ASSETS AND ANY OTHER FACTORS DISCUSSED IN THIS AND OTHER COMPANY FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

GENERAL

 

FastFunds Financial Corporation (“FFFC”) is a holding company and through January 31, 2006 operated primarily through its wholly-owned subsidiary Chex Services, Inc. (“Chex”). As disclosed in the December 31, 2011 10-K, FFFC also has several other non-operating wholly-owned subsidiaries. FFFC and its subsidiaries are referred to as (the “Company”).

 

16

 
 

 

OVERVIEW

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto for the years ended December 31, 2011 and 2010. The financial statements presented for the three and six months ended June 30, 2012 and 2011 include FFFC and its wholly-owned subsidiaries.

 

In light of the foregoing, and the Company’s sale of substantially all of its assets in January 2006, the historical data presented below is not indicative of future results. You should read this information in conjunction with the audited consolidated financial statements of the Company, including the notes to those statements (Item 8), and the following “Management’s Discussion and Analysis of Financial Conditions and Results of Operations”.

 

The Company’s financial statements for the three and six months ended June 30, 2012 and 2011 have been prepared on a going concern basis, which contemplates the realization of its remaining assets and the settlement of liabilities and commitments in the normal course of business. The Company has incurred significant losses since its inception and has a working capital deficit of approximately $9,472,500 and an accumulated deficit of approximately $23,452,050 as of June 30, 2012. Moreover, it presently has minimal ongoing business operations or sources of revenue, and little available resources with which to obtain or develop new operations.

 

These factors raise substantial doubt about the Company’s ability to continue as a going concern. There can be no assurance that the Company will have adequate resources to fund future operations or that funds will be available to the Company when needed, or if available, will be available on favorable terms or in amounts required by the Company. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 

LIQUIDITY AND CAPITAL RESOURCES

 

For the six months ended June 30, 2012, net cash used in operating activities was $57,570 compared to $16,529 for the six months ended June 30, 2011. Net loss was $835,900 and $432,104 for the six months ended June 30, 2012 and 2011, respectively. The net loss for the six months ended June 30, 2012 includes $250,000 for the impairment of license of our wholly owned subsidiary CCUSA, $300,000 impairment of our investment in CCUSA, $258,841 for interest expense, $40,191 for the change in the fair value of a derivative liability, $9,527 related to amortization of the discount on the convertible notes. These amounts were partially offset by the gain recognized on debt settlements of $95,460.

 

There was no cash provided by or used in investing activities for the six months ended June 30, 2012, and 2011.

 

Net cash provided by financing activities for the six months ended June 30, 2012 was $59,055 compared to $15,520 for the six months ended June 30, 2011. The activity for the six months ended June 30, 2012 is the Company received net proceeds of $80,480 (including $11,480 from related parties) on the issuance of notes payable, and $32,000 from the exercise of warrants. The Company also repaid $53,425 (including $51,925 to related parties) of notes payable. For the six months ended June 30, 2011, the Company received net proceeds of $38,620 on the issuance of notes payable and repaid $23,100 of notes payable.

 

For the six months ended June 30, 2012, cash and cash equivalents increased by $1,485 compared to a decrease of $1,009 for the six months ended June 30, 2011. Ending cash and cash equivalents at June 30, 2012 was $1,738 compared to $1,036 at June 30, 2011.

 

17

 
 

 

We have limited cash and cash equivalents on hand and need to raise funds to continue to be able to support our operating expenses and to meet our other obligations as they become due. Sources available to us that we may utilize include the sale of our or HPI’s equity securities, as well as the exercise of outstanding options and warrants, which may cause dilution to our stockholders.

 

REVENUES

 

Total revenues for the three and six months ended June 30, 2012 were $9,316 and $18,708, respectively, compared to $10,939 and $22,477 for the three and six months ended June 30, 2011. Revenues in all periods consist of credit card income on Nova’s remaining portfolio.

 

 

OPERATING EXPENSES

 

Operating expenses for the three and six months ended June 30, 2012, were $7,770 and $16,592, respectively, compared to $9,310 and $19,955 for the three and six months ended June 30, 2011, respectively. Expenses were primarily comprised of costs related to third party servicing fees of Nova’s remaining credit card portfolio.

 

CORPORATE OPERATING EXPENSES

 

Corporate operating expenses for the three and six months ended June 30, 2012 were $41,043 and $99,944, respectively, compared to $93,342 and $186,970 for the three and six months ended June 30, 2011, respectively. The expenses were comprised of the following:

 

   Three months ended June 30,  Six months ended June 30,
   2012  2011  2012  2011
Accounting, legal and consulting   $34,475    $85,450    $88,475    $170,900 
Other   6,568    7,892    10,969    16,070 
                     
   $41,043   $93,342   $99,944   $186,970 

 

For the three and months ended June 30, 2012 and 2011 corporate operating expenses are primarily related to FFFC.

 

Accounting, legal and consulting expenses decreased for the three and six months ended June 30, 2012 compared to the three and six months ended June 30, 2011. The decrease in the current period was primarily a result of decreases in consulting fees related to a non-compete agreement that has expired. FFFC has consulting agreements with two officers who provide various consulting services to the Company.

 

 

OTHER INCOME (EXPENSE)

 

Other expenses, net for the three and six months ended June 30, 2012 were $72,218 and $188,572, respectively, compared to $10,943 and $247,656 for the three and six months ended June 30, 2011, respectively. As of June 30, 2012, management used estimates of the present value of future cash flows based upon the anticipated future use of the license to determine that the carrying value of the license is not recoverable. The Company recorded an impairment charge of $250,000 in the second quarter of fiscal 2012, reducing the book value of the license to zero. Additionally, our investment in CCUSA, our wholly owned subsidiary was determined to be impaired as well. An additional impairment charge of $300,000 was recorded as of June 30, 2012, reducing the book value of the investment to zero. Also included in the current six month period was interest expense of $258,841 and $40,191 related to the change in the fair market value on convertible notes. These amounts were partially offset by $95,460 related to gain in debt settlements and $15,000 of dividend income on the Paymaster investment.

 

18

 
 

 

 

INCOME TAX EXPENSE

 

There was no income tax expense for the three and six months ended June 30, 2012 and 2011.

 

 

CONTRACTUAL OBLIGATIONS

 

No material changes outside the ordinary course of business during the quarter ended June 30, 2012.

 

 

CRITICAL ACCOUNTING POLICIES

 

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to income taxes, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

Our significant accounting policies are described in more detail in our 2011 Annual Report on Form 10-K.

 

 

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

 

As of the date of this report, there are no recent accounting pronouncements that have not yet been adopted that we believe would have a material impact on our financial statements.

 

19

 

 

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable to smaller reporting companies.

 

20 

 
 

ITEM 4. CONTROLS AND PROCEDURES

 

A review and evaluation was performed by the Company's management, including the Company's Acting Chief Executive Officer (the "CEO") of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based on that review and evaluation, the CEO has concluded that as of June 30, 2012 disclosure controls and procedures, were not effective to ensure that information relating to us required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. The Company first intends to focus its’ efforts on stabilizing the business as a going concern, and secondly, designing and installing effective controls as soon as cash flow, and funding to do so become available.

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a set of processes designed by, or under the supervision of, a company’s principal executive and principal financial officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:

 

  • Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;
  • Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
  • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statement.

 

Our management, including our CEO does not expect that our disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be noted that any system of internal control, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system will be met. 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.

 

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may still occur.

 

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Changes in Internal Control over Financial Reporting

 

There have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

 

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

Refer to Note 7 of the Condensed Consolidated Financial Statements

 

Item 1A. Risk Factors

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Act of 1934 and are not required to provide the information under this item.

 

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

 

During the six months ended June 30, 2012, the Company entered into various agreements with certain of its non-affiliated creditors to convert various outstanding loans into restricted shares of the Company. The total amount converted was $235,725 and the Company issued 11,821,982 shares of common stock, at an average price of approximately $0.02 per share.

 

On May 25, 2012 the Company issued 5,000,000 shares of restricted common stock in satisfaction of $367,500 of accrued and unpaid fees to Barry Hollander, the Company’s Acting President. The shares were issued at $0.06 per share. Mr. Hollander agreed to forgive the remaining $67,500.

 

On May 25, 2012, the Company issued 5,000,000 shares of restricted common stock in satisfaction of $308,549, comprised of accrued and unpaid fees owed to Mr. Henry Fong, the sole Director of the Company, legal fee reimbursement and accrued and unpaid interest on loans from Mr. Fong. The shares were issued at $0.06 per share. Mr. Fong agreed to forgive the remaining $8,549.

 

On May 25, 2012, pursuant to the Agreement in Note 1 above, the Company issued 30,000,000 shares of restricted common stock to Carbon Capture Corporation in exchange for 100% of the common stock of their wholly owned subsidiary, Advanced Technology Development, Inc.

 

On May 25, 2012 the Company issued 470,085 shares of common stock upon the conversion of $5,500 of the 2011 Note. The shares were issued at an average price of approximately $0.0117 per share.

 

On June 14, 2012 the Company issued 478,088 shares of common stock upon the conversion of $12,000 of the 2011 Note. The shares were issued at an average price of approximately $0.0251 per share.

 

On June 27, 2012 the Company issued 507,246 shares of common stock upon the conversion of $7,000 of the 2011 Note. The shares were issued at an average price of approximately $0.0138 per share.

 

In June 2012, the Company issued 1,066,666 shares of common stock pursuant to the exercise of warrants to purchase 1,066,666 shares of common stock. The exercise price of the warrants was $0.03 and the Company received $32,000.

 

The securities described above were offered and sold in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act and Rule 506 of Regulation D promulgated there under. The agreements executed in connection with this sale contain representations to support the Registrant’s reasonable belief that the Investor had access to information concerning the Registrant’s operations and financial condition, the Investor acquired the securities for their own account and not with a view to the distribution thereof in the absence of an effective registration statement or an applicable exemption from registration, and that the Investor are sophisticated within the meaning of Section 4(2) of the Securities Act and are “accredited investors” (as defined by Rule 501 under the Securities Act). In addition, the issuances did not involve any public offering; the Registrant made no solicitation in connection with the sale other than communications with the Investor; the Registrant obtained representations from the Investor regarding their investment intent, experience and sophistication; and the Investor either received or had access to adequate information about the Registrant in order to make an informed investment decision.

 

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Item 3. Defaults upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

Exhibit Number Description
31.1 CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith)
32.1 CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith)

 

(b) Reports on Form 8-K. During the fiscal quarter ended June 30, 2012, the Company filed the following reports:

 

Current Report on Form 8-K, on May 31, 2012

 

Current Report on Form 8-K on June 11, 2012

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SIGNATURES

 

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

 

  FastFunds Financial Corporation
  (Registrant)
   
Date: August 20, 2012 By: /s/ Barry Hollander
   Barry Hollander
   Acting Chief Executive Officer
   Principal Executive Officer and
   Principal Accounting Officer