Attached files

file filename
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R10.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R5.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R21.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R1.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R20.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R22.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R15.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R19.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R7.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R12.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R16.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R13.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R23.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R2.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R14.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R3.htm
EXCEL - IDEA: XBRL DOCUMENT - FORMCAP CORP.Financial_Report.xls
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R9.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R11.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R8.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R6.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R25.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R26.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R18.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R24.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R4.htm
XML - IDEA: XBRL DOCUMENT - FORMCAP CORP.R17.htm
EX-32.1 - EXHIBIT 32.1 - FORMCAP CORP.exhibit32-1.htm
EX-31.1 - EXHIBIT 31.1 - FORMCAP CORP.exhibit31-1.htm

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

FORM 10-Q

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

For the quarterly period ended September 30, 2013

OR

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

For the transition period from ________ to ________

Commission File Number : 000-28847

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

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

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

775-285-5775
( Issuer's telephone number )

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

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

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

Large accelerated filer [   ] Non-accelerated filer           [   ]
   
Accelerated filer          [   ] Smaller reporting company [X]

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

The number of shares outstanding the issuer’s common stock, $0.001 par value, was 92,038,238 as of November 13, 2013.

1


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

TABLE OF CONTENTS

Contents  
   
Item 1. Financial Statements 1
   
Condensed Balance Sheets 1
   
Condensed Statements of Operations 2
   
Condensed Statements of Cash Flows 3
   
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
   
Item 4. Controls and Procedures 12
   
PART II – OTHER INFORMATION 12
   
Item 1. Legal Proceedings 12
   
Item 1A. Risk Factors 12
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 12
   
Item 3. Defaults upon Senior Securities 13
   
Item 4. Mine Safety Disclosures 13
   
Item 5. Other Information 13
   
Item 6. Exhibits 13
   
SIGNATURES 14

2


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

FormCap Corp.
(A Development Stage Company)
Condensed Balance Sheets

    September 30,     December 31,  
    2013     2012  
    (Unaudited)        
ASSETS    
TOTAL ASSETS            
Cash   35     48  
Promissory Note Receivable   11,194     -  
Total current assets   11,229     48  
             
OTHER ASSETS            
Exploration property lease   31,802     -  
TOTAL ASSETS $  43,031   $  48  
             
LIABILITIES AND STOCKHOLDERS’ DEFICIT   
CURRENT LIABILITIES            
Accounts payable and accrued liabilities $  40,813   $  34837  
Related party payables   23,107     398107  
Notes payable - related parties   111,500     161,500  
Notes payable   103,653     78,653  
Convertible notes payable   42,853     -  
Royalty and license fee payable   135,000     135,000  
             
Total Current Liabilities   456,926     808,097  
             
TOTAL LIABILITIES   456,926     808,097  
             
             
STOCKHOLDERS’ DEFICIT            
             
Preferred stock, 50,000,000 shares authorized at par value of $0.001, no shares issued and outstanding   -     -  
Common stock, 200,000,000 shares authorized at par value of $0.001, 92,038,238 shares issued and outstanding (2,038,240 shares issued and outstanding as at December 31, 2012)   92,038     2,038  
Stock subscription receivable   (17,000 )   (17,000 )
Additional paid-in capital   13,785,574     11,176,574  
Deficit accumulated during the development stage   (14,274,507 )   (11,969,661 )
             
Total Stockholders’ Deficit   (413,895 )   (808,049 )
             
TOTAL LIABLITIES AND STOCKHOLDERS’ DEFICIT $  43,031   $  48  

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

1


FormCap Corp.
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)

    Three Months ended September 30,     Nine Months ended September 30,     From  
                            Inception on  
                            April 10, 1991  
                            to September  
    2013     2012     2013     2012     30, 2013  
                               
REVENUES $  -   $  -   $  -   $  -   $  321,889  
COST OF SALES   -     -     -     -     352,683  
                               
GROSS MARGIN   -     -     -     -     (30,794 )
OPERATING EXPENSES                              
Consulting fees   (5,000 )   12,500     -     52,501     1,042,867  
Loss on impairment of assets   -     -     -     -     1,146,206  
Financing expenses   -     -     -     -     778,946  
General and administrative expenses   5,949     18,909     30,835     36,519     5,595,007  
                               
Total Operating Expenses   949     31,409     30,835     89,020     8,563,026  
                               
LOSS FROM OPERATIONS   949     31,409     30,835     89,020     8,593,820  
                               
OTHER INCOME AND (EXPENSE)                    
                               
Interest expense   (10 )   -     (10 )   -     (864,231 )
Gain on settlement of debt   -     -     -     -     286,855  
Loss on settlement of debt   -     -     (2,274,000 )   -     (5,103,311 )
                               
Total Other Expense   (10 )   -     (2,274,010 )   -     (5,680,687 )
                               
LOSS BEFORE INCOME TAXES $     $     $     $     $  14,274,507  
Provision for income taxes                     -     -  
                               
NET LOSS   959   $  31,409     2,304,845   $  89,020     14,274,507  
                               
BASIC AND DILUTED NET LOSS PER COMMON SHARE $  0.00   $  0.00   $  0.05   $  0.04      
                               
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING   91,037,822     2,015,773     48,257,879     2,015,773      

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

2


FormCap Corp.
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)

                From Inception  
                on April 10,  
    For the Nine Months Ended     1991 to  
    September 30,     September 30,  
    2013     2012     2013  
CASH FLOWS FROM OPERATING ACTIVITIES                  
Net Loss $  (2,304,845 ) $  (89,020 ) $  (14,274,507 )
Adjustments to reconcile net loss to net cash used by operating activities:            
   Amortization of prepaid expenses   -     52,501     324,262  
   Amortization of beneficial conversion feature   -     -     379,961  
   Expenses paid on behalf of the Company   32,886     -     36,455  
   Expenses paid by related parties   -     8,445     119,133  
   Depreciation and amortization   -     -     277,322  
   Gain on settlement of debt and extinguishing of oil and gas leases   -     -     (286,855 )
   Common stock and options issued for services   -     -     943,977  
   Common stock and options issued for collateral and extension of debt   -     -     17,500  
   Loss on impairment of assets   -     -     1,174,833  
   Loss on settlement of debt   2,274,000     -     6,428,908  
   Interest expense in connection with induced conversion   -     -     262,032  
   Foreign currency exchange   -     -     (120,813 )
Changes to operating assets and liabilities:                  
   Accounts receivable   -     -     3,203  
   Inventories   -     -     (66,200 )
   Prepaid expenses and other current assets   -     -     (140,429 )
   Prepaid royalties   -     -     (99,980 )
   Accounts payable and accrued liabilities   (17,132 )   (653 )   81,160  
   Related party payables   23,107     20,459     23,107  
   Royalty and license fees   -     -     196,765  
   Bank indebtedness   -     -     -  
           
Net Cash Used in Operating Activities   8,016     (8,268 )   (4,720,166 )
                   
CASH FLOWS FROM INVESTING ACTIVITIES                  
Purchase of capital assets   -     -     (104,880 )
Acquisition deposits   -     -     (431,000 )
Purchase of oil and gas lease   (31,802 )   -     (281,802 )
Capitalized software expenditures   -     -     (135,181 )
Principal payments on notes receivable   -     -     44,117  
Notes receivable advances   (11,194 )   -     (712,346 )
Proceeds from sale of notes receivable   -     -     350,000  
                   
Net Cash Used in Investing Activities   (42,996 )   -     (1,271,092 )
                   
Net Cash Used in Operating and Investing Activities $  (34,980 ) $  (8,268 ) $  (5,991,258 )

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

3


FormCap Corp.
(A Development Stage Company)
Condensed Statements of Cash Flows (Continued)
(Unaudited)

                From Inception  
                on April 10,  
    For the Nine Months Ended     1991 to  
    September 30,     September 30,  
    2013     2012     2013  
Net Cash Used in Operating and Investing Activities $  (34,980 ) $  (8,268 ) $  (5,991,258 )
                   
CASH FLOWS FROM FINANCING ACTIVITIES                  
Proceeds from related party payables   -     4,900     2,050,177  
Repayments of related party payables   -     -     (637,012 )
Proceeds from notes payable   -     3,000     931,419  
Repayment of notes payable   -     -     -  
Proceeds from convertible notes payable   34,967     -     34,967  
Proceeds from the sale of preferred stock   -     -     3,000  
Proceeds from the sale of common stock and stock options   -     -     3,608,242  
                   
Net Cash Provided by Financing Activities   34,967     7,900     5,990,793  
                   
NET DECREASE IN CASH   (13 )   (368 )   35  
CASH AT BEGINNING OF PERIOD   48     504     -  
                   
CASH AT END OF PERIOD   35     136   $  35  
                   
                   
SUPPLEMENTAL DISCLOSURES OF CASH FLOW                  
INFORMATION                  
                   
CASH PAID FOR:                  
Interest $  -   $  -   $  12,650  
                   
NON CASH FINANCING ACTIVITIES:                  
Common stock issued for rounding shares $  -   $  -   $  22  
Common stock issued for prepaid expenses $  -   $  -   $  280,000  
Conversion of related party payables to common stock $  -   $  -   $  3,559,999  

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

4


FormCap Corp.
(A Development Stage Company)
Notes to the Condensed Financial Statements
September 30, 2013
(Unaudited)

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

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

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

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

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

Reclassification of Financial Statement Accounts
Certain amounts in the condensed financial statements have been reclassified to conform to the presentation adopted in the September 30, 2013 condensed financial statements.

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

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

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

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

5


FormCap Corp.
(A Development Stage Company)
Notes to the Condensed Financial Statements
September 30, 2013
(Unaudited)

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

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

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

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

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

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

6


FormCap Corp.
(A Development Stage Company)
Notes to the Condensed Financial Statements
September 30, 2013
(Unaudited)

NOTE 3 - GOING CONCERN

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

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

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

NOTE 4 – EXPLORATION PROPERTY LEASE

On September 30, 2013 the Company executed a Definitive Agreement with Kerr Energy Group and Keta Oil & Gas LLC (Kerr and Keta) both incorporated in Wichita, Kansas.

Pursuant to the terms of the Agreement the Company paid Kerr and Keta a non-refundable deposit in the amount of $25,000 (the “Deposit”) to be applied to the purchase price of oil leases to be purchased by Formcap, in Cowley County Kansas. The Company will also issue Kerr and Keta a total of 200,000 Rule 144 shares of FormCap.

In addition, the Company will pay Kerr and Keta two hundred dollars ($200.00) per acre for up to 1,500 acres of Leases, at total cost not to exceed $300,000 within 30 days of execution of the Agreement, subject to final due diligence by the Company. The Company will own 100% of the Leases (80% net revenue to FormCap; 20% freehold royalty), and will be the operator. The Company will have the option to purchase additional leases in Cowley County from Kerr and Keta under an Area of Mutual Interest, the terms of which are set forth in the Agreement. FormCap is required to drill one well in each of the first two years of the lease term to maintain its interest in the Leases. As at September 30, 2013 the Company has capitalized $31,802 toward the acquisition of the Leases and has not issued the 200,000 Rule 144 shares.

NOTE 5 - RELATED PARTY PAYABLES

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

NOTE 6 - COMMON STOCK

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

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

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

7


FormCap Corp.
(A Development Stage Company)
Notes to the Condensed Financial Statements
September 30, 2013
(Unaudited)

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

During the nine months ended September 30, 2013, the Company issued 89,999,998 Common shares in settlement of debts owed by the Company (see Note 10).

NOTE 7 – PROMISSORY NOTES PAYABLE

As at September 30, 2013 the Company owed $103,653 to several third parties (December 31, 2012 - $78,653) to several third parties. These amounts bear no interest, are not collateralized and are due on demand.

NOTE 8 – CONVERTIBLE PROMISSORY NOTES PAYABLE

During April and May, 2013 the Company issued convertible promissory notes in the amounts of $2,900 and $12,250 Canadian Dollars to two unrelated third parties. The notes mature on December 31, 2014

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

On July 30, 2013 the Company the Company issued a promissory note in the amount $5,000 Dollars in favour an unrelated third party. The note matures on December 31, 2015

On August 9, 2013 the Company the Company issued a promissory note in the amount of $3,000 Canadian Dollars in favour an unrelated third party. The note matures on December 31, 2015

On September 30, 2013 the Company issued a promissory note in the amount of $25,000 to an unrelated third party. The note matures on December 31, 2015

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

NOTE 9 – PROMISSORY NOTE RECEIVABLE

On June 3, 2013 the Company advanced the sum of $11,194 ($11,500 Canadian Dollars) to an unrelated Canadian company. The loan is secured by a promissory note issued promissory notes in the amount of $15,000 to two unrelated parties. The notes mature on December 31, 2014

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

NOTE 10 – DEBT SETTLEMENT

On May 16, 2013 the Company settled debts owed to related parties in the amount of $50,000 by the issuance of 50,000,000 Common Shares. The Company recorded a loss of $2,555,000 on this transaction.

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

8


FormCap Corp.
(A Development Stage Company)
Notes to the Condensed Financial Statements
September 30, 2013
(Unaudited)

NOTE 11 – SUBSEQUENT EVENTS

On October 28, 2013 the Company, and Kerr and Keta agreed to extend the closing date for the purchase of the oil exploration leases to January 15, 2014. The Company is to pay Kerr and Keta $50,000 on or before November 15, 2013, $50,000 on or before December 15 2013 and the remaining balance to a maximum of $200,000 by January 14, 2014. These funds to be held in trust and applied toward the acquisition purchase price payable on January 15, 2014.

On November 7, 2013 the Board of Directors approved the issuance of 200,000 Rule 144 shares to Kerr and Keta.

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

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

Overview

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

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

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

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

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

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

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

9


On September 30, 2013 the Company executed a Definitive Agreement with: Kerr Energy Group and Keta Oil & Gas LLC (Kerr and Keta) both incorporated in Wichita, Kansas.

Pursuant to the terms of the Agreement the Company paid Kerr and Keta a non-refundable deposit in the amount of $25,000 (the “Deposit”) to be applied to the purchase price of oil leases to be purchased by Formcap, in Cowley County Kansas. The Company will also issue Kerr and Keta a total of 200,000 Rule 144 shares of FormCap.

In addition, the Company will pay Kerr and Keta two hundred dollars ($200.00) per acre for up to 1,500 acres of Leases, at total cost not to exceed $300,000 within 30 days of execution of the Agreement, subject to final due diligence by the Company. The Company will own 100% of the Leases (80% net revenue to FormCap; 20% freehold royalty), and will be the operator. The Company will have the option to purchase additional leases in Cowley County from Kerr and Keta under an Area of Mutual Interest, the terms of which are set forth in the Agreement. FormCap is required to drill one well in each of the first two years of the lease term to maintain its interest in the Leases.

The Company will also have the option to participate in the drilling of up to six exploration or development wells on lands currently owned by Keta and Kerr under terms set out in the agreement.

On October 28, 2013 the Company, and Kerr and Keta agreed to extend the closing date for the purchase of the oil exploration leases to January 15, 2014. The Company is to pay Kerr and Keta $50,000 on or before November 15, 2013, $50,000 on or before December 15 2013 and the remaining balance to a maximum of $200,000 by January 14, 2014. These funds to be held in trust and applied toward the acquisition purchase price payable on January 15, 2014. In addition, the Company has agreed to issue 200,000 Rule 144 shares in the company to Kerr and Keta.

On November 7, 2013 the Board of Directors approved the issuance of 200,000 Rule 144 shares to Kerr and Keta.

Results of Operations for the Three and Nine Months Ended September 30, 2013 and 2012.

Revenues. There was no revenue for the three and nine months ended September 30, 2013 and 2012, respectively.

Operating Expenses. For the three and nine months ended September 30, 2013, we had total operating expenses of $949 and $30,835 respectively, as compared to $31,409 and $89,020 for the three months and nine months ended September 30, 2012, representing decreases of $30,460 and $58,185 respectively.

We incurred $Nil in Consulting Expenses for the three and nine months ended September 30, 2013, as compared with $12,500 incurred during the three months ended September 30, 2012 and $52,501 during the nine months ended September 30, 2012. An non-refundable consulting fee in the amount of $5,000 incurred in connection with the investigation of a potential property acquisition during the three months ended June 30, 2013 has been capitalized following the successful conclusion of the lease acquisition negotiations referred to above.

Accounting and Audit and review fees amounted to $3,000 and $22,030 for the three and nine months ended September 30, 2013, respectively as compared with $9,720 and $25,720 for the three and nine months ended September 30, 2012 as a result of audit and accounting fees in respect of 2012 not accrued at the year end, expensed in the period under review and adjustments to accruals.

Filing and Transfer agents’ expense decreased by $1,868 from $3,857 during the three months ended September 30, 2012 to $1,990 for the three months ended September 30, 2013 but increased by $1,888 from $5,237 for the nine months ended September 30, 2012 to $7,126 for the nine months ended September 30, 2013. The increases resulted from result of an accrual in respect of 2012 year-end filing fees and corporate activity during the period under review.

10


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

Loss on Settlement of Debts: During the nine months ended September 30, 2013, the Company settled certain debts owed to a third party and certain debts owed to two related parties by the issuance of common shares. The Company recognized losses totalling $4,264,000 on these transactions (nine months ended September 30, 2012 – Nil).

Net Loss: The net loss for the three and nine months ended September 30, 2013 was $959 and $2,304,845 respectively, as compared to $31,409 and $89,020 for the three months and nine months September 30, 2012, respectively.

Liquidity and Capital Resources

As at September 30, 2013, our current assets were $11,229 (December 31, 2012 - $48) and our current liabilities were $456,926 (December 31, 2012 - $808,097), resulting in a working capital deficit of $445,697, as compared with a working capital deficit of $808,049 at December 31, 2012.

Total Stockholders’ Deficit decreased from $808,049 at December 31, 2012 to $413,895 at September 30, 2013.

Cash Flows Generated by Operating Activities

For the nine months ended September 30, 2013, net cash flows generated by operating activities was $8,016, consisting of the net loss for the period and a decrease of $17,132 in Accounts Payable and accrued liabilities, offset by expenses paid on behalf of the Company of $32,886 and an decrease in Related party payables of $23,107.

Cash Flows Used in Investing Activities

During the three and nine months ended September 30, 2013 we paid a non-refundable deposit of $31,802 to acquire certain oil lease properties (three and nine months ended September 30, 2012 - $Nil).

During the nine months ended September 30, 2013 we advanced $11,194 to an unrelated company (nine months ended September 30, 2012, - $Nil).

Cash Flow Provided by Financing Activities

We have financed our operations primarily from either advances from related parties or the issuance of equity and debt instruments. During the nine months ended September 30, 2013 and 2012, respectively, we issued convertible promissory notes to lenders in the amount of $34,967, (nine months to September 30, 2012 - $Nil) During the nine months ended September 30, 2013 we did not receive Proceeds from related party payables and Notes Payable (nine months ended September 30, 2012, $4,900 and $3,000 respectively).

We expect that working capital requirements will continue to be funded through further issuances of securities.

Off-Balance Sheet Arrangements

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

Recent Accounting Pronouncements

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

11


Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

Item 4. Controls and Procedures

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

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

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

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

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

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

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

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

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

12


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

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None

Item 6. Exhibits

Exhibit No. Description
   
31

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

 

 

32

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

13


SIGNATURES

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

 

FORMCAP CORP.

 

/s/ Graham Douglas
--------------------------
Graham Douglas
President, Secretary, Treasurer and Director
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
Dated: November 13, 2013

14