U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB A
AMENDMENT NO. 2
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: March 31, 2001
Commission File Number: 1-12350
FUELNATION INC.
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(Exact name of small business issuer as specified in its charter)
Florida
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(State or other jurisdiction of incorporation or organization)
65-0827283
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(IRS Employer Identification No.)
4121 SW 47th Ave.
Davie, Florida
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(Address of principal executive offices)
33314
(Zip Code)
(954) 587-3775
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(Issuer's Telephone Number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days:
Yes [X] No [ ].
The number of shares of the registrant's only class of common stock issued and
outstanding, as of May 23, 2001 was 158,358,586 shares.
PART I
ITEM 1. FINANCIAL STATEMENTS.
Our unaudited financial statements for the three month period ended March 31,
2001, are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS/PLAN OF OPERATION
The following discussion should be read in conjunction with our unaudited
Financial Statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or on our behalf. We disclaim any obligation to update
forward looking statements.
OVERVIEW
FuelNation Inc. ("we," "us," "our," "FuelNation" or the "Company") is a
Florida-based development stage corporation engaged in the development of
providing real-time e-commerce communications and energy services. Our
operations are conducted through strategic alliances, which principally are
engaged in advanced technology and services solutions for the petroleum
marketing industry, i.e., oil companies, marketers, transports, gas stations and
convenience stores worldwide, and the development of one of the worlds most
integrated communications platform for the petroleum industry. We intend to use
Broadband that delivers data to remote stations at speeds reaching 45Mbps,
satellite technology, global positioning system (GPS) with real-time tracking
and path logging of delivery vehicles. We have developed the R2R(sm)
communications technology which allows multiple point of sales, tank monitors,
global positioning system, VSAT, wireless PDA devices, Internet phones,
automated teller machines, back office software, price signs and numerous other
equipment manufacturers to integrate and seamlessly exchange data in an open
architecture environment.
We were incorporated under the laws of the state of Florida on July 6, 1993
under the name "International Pizza Corporation." We have had two other names
and business plans since our incorporation, including QPQ Corporation and
Regenesis Holdings, Inc. We changed our name to the current name in October 2000
and adopted the business plan described under "Plan of Operation" herein below.
In conjunction with our most recent name change, in October 2000 Triad
Petroleum, LLC ("Triad") and Triad's owners as a group, acquired 96% interest in
our company pursuant to the terms of a Share Sale and Contribution Agreement in
exchange for the assignment of all of the rights, title, interest, marketing
rights, patent rights, royalty rights, and any other rights in the Intellectual
Property and technology, and any related trademarks and service marks (or
applications made thereby) Triad may have had with regard to said Intellectual
Property.
The following information is intended to highlight developments in our
operations, to present our results of operations to date, our plan of operation,
to identify key trends affecting our business and to identify other factors
affecting our business for the three month periods ended March 31, 2001 and
2000.
Results of Operations
Comparison of Results of Operations for the three month periods ended March 31,
2001 and 2000
We generated no revenues during the three month periods ended March 31, 2001 and
2000 and it is not anticipated that we will be able to generate any revenues in
the foreseeable future unless and until we begin marketing our technology or
otherwise acquire an existing entity which generates revenues and profits.
2
Total operating expenses were $12,610,902 for the three months ended March 31,
2001, compared to$10,000 for the three months ended March 31, 2000. The expenses
incurred during the three month period ended March 31, 2001 arose primarily from
salaries and wages ($92,836), professional and consulting fees ($135,317),
non-cash consulting fees ($12,185,880) and other general and administrative
expenses ($121,151). These expenses increased in 2001 over the same period in
2000, as a result of employment of executive officers and technical staff to
support the related technology, expenses associated with the engagement of
outside professionals to assist the Company in connection with preparing private
placement offerings and continued expansion of overall operations. As a result,
we incurred a net loss of $12,612,210 for the three months ended March 31, 2001.
We had working capital of $38,043 as of March 31, 2001 and a deficit accumulated
during our development stage thus far of approximately $13.8 million as of March
31, 2001. The Company's ability to meet its future obligations in relation to
the orderly payment of its recurring obligations on a current basis is totally
dependent on its ability to attain a profitable level of operations; receive
required working capital advances from the Company's shareholders or obtain
capital from outside sources.
Plan of Operation
Our objective is to be the leading worldwide provider of real- time e-commerce
and business-to-business communications in the petroleum marketing industry. Our
vertical integration strategy is to purchase existing petroleum marketers,
transport companies, dealers and related facilities in key distribution markets.
We intend to finance these purchases by raising additional equity through
private placements and equity financing through an equity line of credit.
However, there can be no assurances that the Company will be successful in
acquiring additional capital or that such capital, if available, will be on
terms and conditions acceptable to the Company.
We have developed proprietary technology that allows us to provide fully
integrated services relating to the inventory, sales, distribution and financial
reporting functions in the fuel industry. Marketed under the service mark
R2R(SM) ("Rack to Retail"), this technology completely automates and streamlines
the data collection processes for centralization, retrieval and integration of
inventory, financial and accounting information in the fuel industry.
The R2R(sm) technology is an inventory management system that allows multiple
point of sales, tank monitors, wireless PDA devices, Internet phones, automated
teller machines, back office software, price signs and numerous other equipment
manufacturers to integrate and seamlessly exchange data in an open architecture
environment without installing computer software. The R2R(sm) technology
includes a proprietary router box connected to an existing retail or wholesale
location, which automatically collects, integrates and distributes the data, in
various formats, to the customer at a centralized location. By utilizing this
technology, the pricing, monitoring of sales, inventory status and reordering of
fuel can be done remotely including through a remote apparatus such as a PDA. In
other words, from a distant location, an R2R(sm) customer can regularly monitor
fuel sales on a real-time basis as well as change the pricing at retail fuel
pumps to reflect current market conditions. Furthermore, the system enables the
automatic reordering of fuel based upon the actual volume of sales and remaining
quantity of fuel at the applicable pump.
The automated system serves as a significant mechanism for companies to monitor
their fuel sales, inventory, and costs. In addition, financial lenders can also
have access to the data in order to monitor the operations of their borrowers on
a real time basis. We expect to receive fees and/or royalty payments either on a
fixed basis per month or on a per gallon basis charge. We intend to license our
technology to service stations, truck stops and/or customers that are otherwise
involved in the distribution and sale of fuel.
We believe that our product offering is unique and is not available via any
other method. The industry is a very difficult market to penetrate and as such
we feel we have accomplished major milestones in the industry to date. We
originally started marketing our system to the major oil companies and felt this
would give us the immediate market share and the vertical integration we
desired. During our sales initiatives we discovered the following:
The oil companies main drive is gallons and market share. The oil companies
distribute their products through petroleum marketers, dealers and some company
owned stores. The oil companies require the petroleum marketers and the dealers
to use their credit card processors. This equipment for the credit card
processing is supplied through the oil company and paid by the petroleum
marketers and the dealers. The oil companies typically charge 3% processing fee
for the use of all credit cards on the network and offer their own branded
credit card processing for no charge. The majority of all of the credit card
processing is Visa and MasterCard and therefore the burden and costs are passed
down the food chain to the petroleum marketers and the dealers for the credit
card processing fees.
3
The reporting requirements of the industry are very labor intensive and the
burden is always passed down to the petroleum marketers and the dealers. New
equipment and programs are usually offered through the major oil companies to
the petroleum marketers and the dealers with a percentage of the offering always
being rebated back to the oil company. There are other alternative equipment and
service suppliers in the industry and they are limited on their entry to the
market by being approved and certified to operate on their credit-processing
network. Our approach is and will continue to be providing the industry with an
open architecture and shared information environment that allows entry to
virtually all equipment and service suppliers. Other industries have state of
the art communications and networks and first class accounting and reporting
packages. We believe the petroleum industry is behind the market by decades.
Our entry to the market is being focused on working with major petroleum
marketers and dealer networks. We have discovered that when several petroleum
marketers and dealers are very satisfied with your products and services and
they request the major oil companies to approve our products and services, they
typically get what they want. This process is not fast, but it is very
effective. The oil companies are starting to follow the lead of petroleum
marketers and dealer networks because they see the efficiencies first hand. We
feel confident the industry will start to make significant changes to the manual
processes and allow a more open environment once they see others operating.
Given the magnitude of these fuel markets, we are currently focusing on B2B
applications and automating manual processes. We also intend to find one or more
partners to assist in retail sales of the R2R system. There are also multiple
advertising opportunities that we intend to pursue, including the displaying of
our logo at automated locations and on fuel transports.
Sales Strategy
Our products and services will be marketed through direct and indirect channels.
We intend to accomplish our direct selling in several ways, including:
- our web sites;
- direct sales by our own staff and technology partners;
- affiliate programs;
- original equipment manufacturers; and - tradeshows.
For our indirect sales efforts, we will use independent resellers. Reseller
organizations can offer all of our services. These third party sales
organizations are either already involved in marketing to the petroleum
industry. Those in the reseller program purchase our services at a discounted
rate and then re-sell them to their clients. They can either use us to bill
their customers for these services or invoice their customers under their own
name.
For resellers, we believe the key element is residual, transaction-based income.
Resellers that manage the entire transactions will receive a per transaction
fee, plus sign-up fees if the reseller uses our suggested retail pricing. Many
resellers actually charge higher prices when the market will bear it. The use of
resellers allows us to leverage our resources to maximize revenues. By working
with companies as resellers, we strategically develop an outside sales
organization that already has sound, existing relationships with merchants.
These resellers recognize that income derived from our installation fees and
recurring transaction charges provide them with significant revenue potential.
Most competitors sell products using a direct sales force.
We will use a variety of marketing activities to increase market awareness of
our services and educate our target audience. In addition to building awareness
of our brand, our marketing activities focus on generating leads for our sales
efforts. To build awareness and attract new merchants we conduct marketing and
partnership programs including advertising, public relations activities,
referral programs, co-branded initiatives, virtual seminars and trade shows.
Our vertical integration strategy is to purchase existing petroleum marketers
and dealers in key distribution markets. We will focus upon the complete
automation of these companies and allow them to continue to operate and
consolidate additional marketers in their markets. This approach has been
received very favorably and we are in negotiations with several very large
marketers on this strategy. However, there can be no assurances that these
negotiations will result in our obtaining contracts, or if we obtain these
4
contracts, we will become profitable. If we acquire these entities, the
marketers will continue to operate their companies as wholly owned subsidiaries
of our Company and we will provide the high-speed networks and communications to
their existing facilities and equipment. Our current tests on petroleum
marketers to date have shown increases in EBIDTA approaching 30% with the
increased efficiencies in automating manual processes, less shrinkage, improved
buying power.
Data Centers and Network Access
Our data center in the United States is located at leased facilities at Echosat
in Lexington, Kentucky. A data center is a facility containing servers, modem
banks, network circuits and other physical equipment necessary to connect users
to the Internet. The data center has multiple levels of redundant connectivity
to the Internet, back-up power, fire suppression, seismic reinforcement and
security surveillance 24 hours a day, 7 days a week. The current base monthly
rent is $2,000 per month, on a month to month basis.
Our data center in the Middle East is currently located at leased facilities at
BATELCO in Manama Bahrain. A data center is a facility containing servers, modem
banks, network circuits and other physical equipment necessary to connect users
to the Internet. The data center has multiple levels of redundant connectivity
to the Internet, back-up power, fire suppression, seismic reinforcement and
security surveillance 24 hours a day, 7 days a week. The current base monthly
rent is $7,000 per month, on a month to month basis.
The technology underlying our e-commerce and Business-to- Business transaction
services provides the following benefits:
Scalability. Our services allow us to deliver consistent quality of service as
transaction volumes grow, and to handle daily and seasonal peak periods. As a
result, we do not have to expand these areas of their transaction-processing
infrastructure as their businesses grow.
High reliability. Our systems are engineered to provide high reliability, and we
provide transaction processing and support 24 hours a day, 7 days a week.
Secure messaging. All communications between our system are facilitated by an
encrypted protocol.
Real-time responses. Because our services enable online e- commerce and
Business-to-Business transactions in real-time, clients can improve their level
of customer satisfaction and reduce their support costs by avoiding delayed
responses and minimizing the need for follow-up communications.
Product Development
Our Florida-based product development team is responsible for the design,
development, testing and release of our core software and services. We have a
well-defined software development methodology that we believe enables us to
deliver services that satisfy real business needs for the global market while
meeting commercial quality expectations. We emphasize quality assurance
throughout our software development lifecycle. We believe that a strong emphasis
placed on analysis, design and rapid prototyping early in the project lifecycle
reduces the number and costs of defects that may be found in later stages. Our
development methodology focuses on delivery of product to a global market,
enabling localization into multiple languages, multi-currency payment
processing, global fraud detection, and local regulatory compliance from a
single code base. When appropriate, we utilize third parties to expand the
capacity and technical expertise of our internal product development
organization. On occasion, we have licensed third-party technology that we feel
provides the strongest technical alternative. We believe this approach shortens
time-to- market without compromising our competitive position, product quality
or service.
Manufacturing
We do not have the capacity to manufacture the router devices and have used
contract manufacturers for the devices made to date. For the foreseeable future,
we intend to continue to use contract manufacturers for the router device. We
believe that there are multiple vendors and manufacturers available and that we
will not rely on any one source.
5
Intellectual Property
Our success depends upon our proprietary technology. We rely on a combination of
patent, copyright, trademark and trade secret rights, confidentiality procedures
and licensing arrangements to establish and protect our proprietary rights.
As part of our confidentiality procedures, we generally enter into
non-disclosure agreements with our employees, distributors, and corporate
partners and into license agreements with respect to our software, documentation
and other proprietary information. Despite these precautions, third parties
could reverse engineer, copy or otherwise obtain our technology without
authorization, or develop similar technology independently. While we police the
use of our services and technology through online monitoring and functions
designed into our products, an unauthorized third-party may nevertheless gain
unauthorized access to our services or pirate our software. We are unable to
determine the extent to which piracy of our intellectual property or software
exists. Software piracy is a prevalent problem in our industry. Effective
protection of intellectual property rights may be unavailable or limited in
foreign countries. We cannot assure you that the protection of our proprietary
rights will be adequate or that our competitors will not independently develop
similar technology, duplicate our services or design around any intellectual
property rights we hold.
Liquidity and Capital Resources
At March 31, 2001, we had $15,597 in cash and working capital of $38,043. For
the three month period ended March 31, 2001, net cash provided by operating
activities was $5,959. This was primarily attributable to a net loss for the
period of $12,612,210 and offset by increase of payables of $ 423,794, non cash
expense of $12,185,880 arising from an option granted to purchase shares of our
common stock for consulting services and common stock shares pledged through the
Company's CEO to be issued for various consulting fees.
Our ability to meet our future obligations in relation to the orderly payment of
our recurring obligations on a current basis is totally dependent on our ability
to commence generating revenues and attain a profitable level of operations,
receive required working capital advances from our shareholders or obtain
capital from outside sources.
During the three months ended March 31, 2001 cash provided by financing
activities was $126,500 which comprised of the sale of common stock in private
placements pursuant to Regulation D Offering.
Additional financings will be required in order to allow us to implement our
business plan described herein. Our success is dependent upon our ability to
raise additional capital. In March 2001, the Company signed a placement agent's
retention agreement with Westminster Securities Corporation, 100 Park Avenue,
New York, for an Underwritten Offering of up to $100,000,000 to be arranged
through one of its institutional clients. The offering when committed to, would
have a term of 24 months from the date of the Registration Statement, and would
provide for monthly draw-downs. Warrants would be issued to the purchaser
numbering 4% of the commitment amount, in addition to other terms, conditions,
and Underwriter's requirements. Once the transaction is consummated and is
funding, the Company would compensate Westminster Securities Corporation under
terms and conditions that are typical and customary for such transactions
We are also in discussions with investment bankers and others to provide or
assist in providing additional financing. However, as of the date of this
Report, we do not have any written commitments for any financing, and no
assurance can be given that we will obtain any additional financing. The failure
to infuse additional capital into our Company may force management to curtail
marketing expenditures and product introductions, which may affect our ability
to fully implement our business plan described herein.
We intend to continue our discussions with investment bankers and others to
provide or assist in providing additional financing. However, as of the date of
this Report, we do not have any other written commitments for any financing, and
no assurance can be given that we will obtain any such financing.
6
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There were no new legal proceedings filed or threatened involving our company
during the three month period ended March 31, 2001.
ITEM 2. CHANGES IN SECURITIES.
In April 2001, the Company granted options to four technology employees and
department heads to purchase an aggregate of 1,400,444 shares of common stock at
an exercise price of $0.01 per share. Inasmuch as the purchasers were employees
of the Company and had access to relevant information concerning the Company,
including financial information, the issuance of such securities was exempt from
the registration requirements of the Securities Act pursuant to the exemption
set forth in Section 4(2) of such Act and the rules and regulations hereunder.
In April 2001, the Company granted options to the Chief Executive Officer to
purchase 14,380,239 shares of common stock at an exercise price of $0.01 per
share. Inasmuch as the purchaser was a officer of the Company and had access to
relevant information concerning the Company, including financial information,
the issuance of such securities was exempt from the registration requirements of
the Securities Act pursuant to the exemption set forth in Section 4(2) of such
Act and the rules and regulations hereunder
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE
ITEM 5. OTHER INFORMATION - NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits - none
(b) Reports on Form 8-K
(i) Form 8-K : Changes to the Board of Directors, earliest event date, March
1st, 2001
(ii) Form 8-K : Change of Certified Public Accounting firm, earliest event
date, April 25th, 2001.
(iii) Form 8-K : Regulation-D Private Placement Offering termination
7
FUELNATION INC.
(A Development Stage Company)
(Formerly Regenesis Holdings, Inc.)
CONDENSED BALANCE SHEET
MARCH 31, 2001
(Unaudited)
ASSETS
------
CURRENT ASSETS:
Cash $ 15,597
Due from Escrow Accounts 435,470
Inventory 555,556
Other Assets 43,798
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Total Current Assets 1,050,421
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FIXED ASSETS:
Office Equipment and Computer Systems, net of
accumulated depreciation of $34,914 201,301
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OTHER ASSETS:
Investments 403,886
Technology 669,921
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Total Other Assets 1,073,807
------------
Total Assets $ 2,325,529
============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts Payable $ 696,059
Accrued Liabilities 159,780
Payroll and Taxes Payable 193,527
Other Payables 149,500
------------
Total Current Liabilities 1,198,866
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STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 Par Value, 20,000,000 shares
authorized; none issued and outstanding --
Common Stock, $.01 Par Value, 350,000,000 shares
authorized; 155,059,607 issued and outstanding 1,550,597
Additional Paid-In Capital 13,580,015
Due from Officers and Stockholders (186,488)
(Deficit) Accumulated in the Development Stage (13,817,461)
------------
Total Stockholders' Equity 1,126,663
------------
Total Liabilities and Stockholders' Equity $ 2,325,529
============
See Accompanying Notes
8
FuelNation Inc.
(A Development Stage Company)
(Formerly Regenesis Holdings, Inc.)
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
Accumulative in
the Development
2001 2000 Stage
------------- ------------- -------------
Revenue $ -- $ -- $ --
------------- ------------- -------------
Operating Expenses:
Salaries and wages including related taxes 92,836 -- 283,377
Legal and professional 135,317 -- 528,722
Marketing and promotion 41,880 -- 255,123
Rent -related party 6,413 -- 12,826
Depreciation and amortization 27,425 -- 50,701
Other general and administrative expenses 121,151 -- 268,362
Research and development cost -- 10,000 10,000
Consulting fees - related party -- -- 221,162
Non - cash consulting fees 9,200,880 -- 9,200,880
Non - cash consulting fees - related party 2,985,000 -- 2,985,000
------------- ------------- -------------
Total Operating Expenses 12,610,902 10,000 13,816,153
------------- ------------- -------------
Operating Loss (12,610,902) (10,000) (13,816,153)
Other Income (Expenses):
Interest expense (1,308) -- (1,308)
------------- ------------- -------------
Total other income (expenses), net (1,308) -- (1,308)
------------- ------------- -------------
Net (Loss) $ (12,612,210) $ (10,000) $ (13,817,461)
============= ============= =============
Basic and Diluted Net Loss per Common Share $ (0.08) $ (0.00)
============= =============
Basic and Diluted Weighted Average Common
Shares Outstanding 154,967,155 144,000,000
============= =============
See Accompanying Notes
9
FUELNATION INC.
(A Development Stage Company)
(Formerly Regenesis Holdings, Inc)
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
Accumulative in
the Development
2001 2000 Stage
------------ ------------ ------------
Cash Flows from Operating Activities:
Net loss $(12,612,210) $ (10,000) $(13,817,461)
Adjustments to reconcile net loss to net cash provided by
used in operating activities:
Depreciation 27,425 -- 50,701
Non - cash consulting fees 9,200,880 -- 9,200,880
Non - cash consulting fees - related party 2,985,000 -- 2,985,000
Research and development for common stock 10,000 10,000
Changes in assets and liabilities:
[Increase] Decrease in:
Inventory (1,933) -- (555,556)
Other (3,383) -- (479,268)
Due from affiliates (13,614) -- (186,488)
Increase [Decrease] in:
Accounts payable 320,654 -- 864,484
Accrued liabilities 35,413 -- 159,780
Payroll and taxes payable 67,727 -- 193,527
------------ ------------ ------------
Net cash provided by (used) in operating activities 5,959 -- (1,574,401)
------------ ------------ ------------
Cash Flows from Investing Activities:
Payments for fixed assets (3,460) -- (236,215)
Payments for technology (126,600) -- (685,705)
Advances towards pending acquisitions -- -- (403,886)
------------ ------------ ------------
Net cash provided by (used in) investing activities (130,060) -- (1,325,806)
------------ ------------ ------------
Cash Flows from Financing Activities:
Net proceeds from issuance of common stock 126,500 -- 3,271,608
Payment of loans payable -- -- (100,000)
Debt restructuring -- -- (255,804)
------------ ------------ ------------
Net cash provided by financing activities 126,500 -- 2,915,804
------------ ------------ ------------
Net Increase in Cash 2,399 -- 15,597
Cash, Beginning of period 13,198 -- --
------------ ------------ ------------
Cash, End of period $ 15,597 $ -- $ 15,597
============ ============ ============
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 1,308 $ -- $ 1,308
============ ============ ============
Cash paid during the period for income taxes $ -- $ -- --
============ ============ ============
Supplemental Schedule of Non Cash Investing and Financing Activities:
Issuance of stock options to purchase 1,500,000 shares of common stock
in connection with consulting fees $ 2,985,000
============
The Company, through its CEO, pledged shares of common stock to be
issued for various consulting services. The Company recorded a
non-cash charge to expense of $ 9,200,880 which was equal to the fair
value of such shares at the time they were pledged. Such shares were
not issued as of March 31,2001 and the total amount of $ 9,200,880 was
credited to additional paid-in capital.
See Accompanying Notes
10
FUELNATION INC.
(A Development Stage Company)
(Formerly Regenesis Holdings, Inc.)
March 31, 2001
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited financial statements of FuelNation Inc. (the
"Company") have been prepared in accordance with Regulation S-B promulgated by
the Securities and Exchange Commission and do not include all of the information
and footnotes required by generally accepted accounting principles in the United
States for complete financial statements. In the opinion of management, these
interim financial statements include all adjustments necessary in order to make
the financial statements not misleading. The results of operations for such
interim period are not necessary indicative of results of operations for a full
year. The unaudited financial statements should be read in conjunction with the
audited financial statements and notes thereto of the Company and management's
discussion and analysis of financial condition and results of operations
included in the Annual Report on Form 10-KSB for the year ended December 31,
2000.
The accompanying unaudited interim financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
liquidation of liabilities in the normal course of business. However, the
Company has a capital deficiency of approximately $13.8 million. Since October
2000, the Company has relied on financial support from equity financing and
loans from affiliated entities. Management is currently seeking additional
financing; however no assurances can be made that such financing will be
consummated. The continuation of the Company as a going concern is dependent
upon its ability to obtain financing, and to use the proceeds from any such
financing to increase its business to achieve profitable operations. The
accompanying financial statements do not include any adjustments that would
result should the Company be unable to continue as a going concern.
Note 2. Significant Accounting Policies
The accounting policies followed by the Company are set forth in Note 2 to the
Company's financial statements in the December 31, 2000 Form 10-KSB A-3.
Note 3. Advances - Related Parties
During the three months ended March 31, 2001 the Company advanced $ 14,614 to an
officer of the Company. At March 31, 2001, the Company had a balance due from
related parties of $186,488. Currently, there are no interest repayment terms
for the debt and it is treated as if due on demand.
Note 4. Capitalized Technology Costs
During the three months ended March 31, 2001 the Company capitalized $126,600 of
technology costs.
Note 5. Stockholders' Equity - Issuance of Common Stock
In January 2001, the Company issued 23,075 shares pursuant to Rule 506,
Regulation D under the Securities Act of 1933, as amended, at $.65 per share.
The Company received net proceeds of $ 15,000.
In March 2001, the Company sold 101,500 shares of common stock at $1. 00 per
share pursuant to an additional Regulation D offering.
Note 6. Stock Options and Stock Issuance
In February 2001, the Company issued options to purchase 1,500,000 shares of
common stock at an exercise price of $.01 per share to a related party for
consulting services. The Company incurred a non-cash charge to operations of
$2,985,000, the fair value at date of grant, related to these options. As of the
date of this report 1,500,000 non-employee options were exercised.
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FUELNATION INC.
(A Development Stage Company)
(Formerly Regenesis Holdings, Inc.)
March 31, 2001
(Unaudited)
The Company through its CEO, pledged shares of common stock to be issued for
various consulting services. The Company recorded a non-cash charge to expense
of $9,200,880 which was equal to the fair value of such shares at the time they
were pledged. Such shares were not issued as of March 31, 2001 and the total
amount of $9,200,880 was credited to additional paid-in capital
Note 7. Subsequent Events
On April 15, 2001 the Company considered and approved to issue Joel Brownstein,
former officer and Board of Director, 2,000,000 shares of restricted shares of
stock. This is in consideration for the past efforts he has done for and in
behalf of the Company. This is not recognized in the financial statements as of
March 31, 2001 as it was not accruable at March 31, 2001. Nor is it in the basic
or dilutive loss per share as it would be anti-dilutive.
During April, 2001 one officer and two members of the board of directors were
appointed. Item 1.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
FUELNATION, INC.
(Registrant)
Dated: _________________
By: /s/ CHRISTOPHER R. SALMONSON
-------------------------------------
Christopher R. Salmonson, President
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