form10ksb.htm
United
States
Securities
and Exchange Commission
Washington,
D.C. 20549
Form
10-KSB
x
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934:
For the fiscal year ending December 31,
2006
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¨
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934:
For the transition period from ___________ to
___________.
|
Commission
file number: 000-49950
HIGH
VELOCITY ALTERNATIVE ENERGY CORP.
(Name
of
small business issuer in its charter)
Nevada
|
98-0232018
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
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14
Garrison Inn Lane,
Garrison, NY 10524
(Address
of Principal executive offices) (Zip Code)
Issuer’s
telephone number: (845) 424-4100
_______________
Securities
registered under Section 12(b) of the “Exchange Act”
Common
Share, Par Value,
$.0001
(Title
of
each Class)
Securities
registered under Section 12(g) of the Exchange Act: None
Check
whether the issuer (1) 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 a shorter
period that the registrant was required to file such report(s), and (2) has
been
subject to such filing requirements for the past 90 days. x Yes ¨ No
Check
if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K is not contained in this form, and no disclosure will be
contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part II of this Form 10-KSB
or any amendment to this Form 10-KSB. x
The
issuer’s revenues for its most recent fiscal year (2006):
$2,314,907.
The
aggregate market value of the voting and non-voting common equity held by
non-affiliates based on the average bid and asked price of such common equity,
as of December 13, 2007, was approximately $1,176,260.
The
number of shares of Common Stock outstanding, as of November 26, 2007 was:
2,077,360
Transitional
Small Business Disclosure Format (check one): Yes ¨ No x
HIGH
VELOCITY ALTERNATIVE ENERGY CORP.
and
SUBSIDIARIES
ANNUAL
REPORT ON FORM 10-KSB
For
Fiscal Year Ended December 31, 2006
INDEX
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PART
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High
Velocity Alternative Energy Corp. and Subsidiaries
Part
I
FORWARD
LOOKING
STATEMENTS
Because
we want to provide investors with more meaningful and useful information, this
Annual Report on Form 10-KSB (“Form 10-KSB”) contains, and incorporates by
reference, certain forward-looking statements that reflect our current
expectations regarding its future results of operations, performance and
achievements. We have tried, wherever possible, to identify these
forward-looking statements by using words such as “anticipates,” “believes,”
“estimates,” “expects,” “designs,” “plans,” “intends,” “looks,” “may,” and
similar expressions. These statements reflect our current beliefs and
are based on information currently available to us. Accordingly,
these statements are subject to certain risks, uncertainties and contingencies,
including the factors set forth herein, which could cause our actual results,
performance or achievements for 2006 and beyond to differ materially from those
expressed in, or implied by, any of these statements. You should not
place undue reliance on any forward-looking statements. Except as
otherwise required by federal securities laws, we undertake no obligation to
release publicly the results of any revisions to any such forward-looking
statements that may be made to reflect events or circumstances after the date
of
this prospectus or to reflect the occurrence of unanticipated
events.
OVERVIEW
History
and Organization
High
Velocity Alternative Energy Corp. formerly Triton Petroleum Group, Inc.,
formerly American Petroleum Group, Inc., formerly American Capital Alliance,
Inc. until November 1, 2004 and formerly Prelude Ventures, Inc. (the “Company”)
was incorporated under the laws of the State of Nevada on May 24, 2000, under
the name of Prelude Ventures, Inc. Prior to its acquisition of
American Petroleum Products Company, formally Alliance Petroleum Products
Company, the company had limited business operations and was considered a
development stage enterprise. The activities during that period
principally had been limited to organizational matters, and examining business
and financing opportunities for the company.
Prior
Business Matters and Failed Business Acquisitions
On
March
9, 2001, we acquired a 20-year mining lease from Steve Sutherland, the owner
of
24 unpatented lode-mining claims, sometimes referred to as the Medicine Project,
located in Elko County, Nevada. The lease was terminated at some
point by prior management.
During
the nine months ended December 31, 2003, management of the Company terminated
the mining lease. As the Company terminated the lease, it is required
to pay all federal and state mining claim maintenance fees for the current
year. The Company is required to perform reclamation work on the
property as required by federal, state and local law for disturbances resulting
from the Company’s activities on the property. In the opinion of
management, there will be no continuing liability, due to the time period that
has elapsed since the lease was terminated. We have never received
any claim or communication with respect to this lease, and at this point in
time, do not expect any communication from any party related
thereto. If there was any communication, it would be the position of
the Company that any claim would be time barred.
On
April
1, 2003, the Company entered into an agreement to acquire 100% of the issued
and
outstanding shares of Pascal Energy Inc., a Canadian corporation, by the
issuance of 273,750 post split common shares, restricted under Rule 144 of
the
Securities Act of 1933 and at a later date, issue 273,750 post split common
shares, restricted under Rule 144 subject to the Company paying not less than
$1,000,000 accumulated dividends to its shareholders of
record. Pascal Energy, Inc.’s business was to provide servicing for
the oil and gas industry.
High
Velocity Alternative Energy Corp. and Subsidiaries
The
Company determined that the transaction mentioned above could not be completed
due to the inability to complete a comprehensive due diligence
review. The shares of common stock previously transferred in
anticipation of the completion of the transaction were returned to the treasury
of the Company and canceled.
“TSG”
Acquisition
On
October 9, 2003, the Company acquired an option for $500,000 to purchase the
assets and certain liabilities of Tri-State Stores, Inc., an Illinois
Corporation (“Tri-State”), GMG Partners LLC, and Illinois Limited Liability
Company (“GMG”), and SASCO Springfield Auto Supply Company, a Delaware
Corporation (“SASCO”). Tri-State, GMG and SASCO are collectively
referred to herein as “TSG.” Upon exercise of the option, the Company
was to pay $3,000,000 and assume certain liabilities, not exceeding
$700,000. TSG is involved in the automotive after
market. During the first quarter of 2004, the Company elected not to
continue to pursue this acquisition. The contractual amount of the
option was never fully paid, however, amounts advanced for the option purchase
and associated expenses resulted in an $185,000 charge to operations for the
year ended December 31, 2003 and $10,000 for the year ended December 31,
2004. There have been no further dealings, discussions or
transactions related to this matter.
Motor
Parts Waterhouse, Inc.
The
Company on or about October 9, 2003, issued 500,000 post split shares of common
stock for an option to acquire all the outstanding stock of Motor Parts
Warehouse, Inc. (“MPW”), of St. Louis, Missouri. In order to exercise
the option, the Company was to issue an additional 500,000 post split shares
of
common stock to the shareholders of MPW and pay $2,200,000. This MPW
option can not be exercised until after the refinancing of the TSG debt of
approximately $3,000,000. MPW is also an auto parts
distributor. As a result of the financing not being completed, the
Company elected not to continue to pursue this acquisition and let the option
lapse. There have been no further dealings, discussions or
transactions occurred related to this matter.
Oilmatic
Systems, LLC Transaction
On
December 3, 2004, the Registrant entered into a Letter of Intent, dated December
1, 2004, with Oilmatic Systems LLC of East Orange, New Jersey, whereby the
Registrant would purchase Oilmatic Systems LLC and/or Oilmatic International,
Inc., for shares of common stock of the Registrant.
Oilmatic
is a food service distribution company that supplies a closed loop Bulk Cooking
Oil Supply and Management System. Its patented state of the art
handheld Dipstick® design dispenses and removes cooking oil with the simple push
of a button at the deep fryers. The system also consists of separate
fresh oil and waste oil tanks. A key switch allows management to
control unnecessary oil fills and disposals. This system completely
eliminates the practice of employees manually removing hot used oil which
significantly reduces slips, falls and burns, as well as the hard labor of
unloading and retrieving heavy boxes of oil. Additionally, the system
eliminates hazardous grease spills both inside and outside of the store that
cause grease fires and grease trap build-ups that pollute our
environment. As part of the transaction, Michael Allora, President of
Oilmatic was to assume, after the closing of the transaction the position of
President and Chief Operating Officer of Triton Petroleum as well as
Oilmatic. Effective May 20, 2005, Management of the Registrant no
longer felt that the mutual goals of both parties were attainable and therefore
the proposed transaction with Oilmatic was cancelled between the
parties. There have been no further dealings, discussions or
transactions occurred related to this matter.
Oilmatic
Systems, LLC was advanced, interest free, a total of $300,000 by the
Company. The Letter of Intent stated that in the event that the
proposed transaction did not close, the money advanced was to be considered
a
loan to Oilmatic, and repaid nine months after being advanced. We
have made repeated demands for the repayment of the loan. To date, we
have not been able to collect the money due. Management can not make
any reasonable determination that the advance will ultimately be
collected. Accordingly it has been written off by the Company in the Fiscal
year 2006.
High
Velocity Alternative Energy Corp. and Subsidiaries
American
Petroleum Products Company
On
October 9, 2003, the Company also entered into a Stock Purchase Agreement
(“Alliance Agreement”) with Alliance Petroleum Products Company, now known as
American Petroleum Products Company (“Alliance”), an Illinois Corporation, and a
Rider to the Alliance Agreement (“Rider”). Alliance is in the
business of blending and bottling motor oil and anti-freeze. Under
the Alliance Agreement, the Company issued 1,250,000 shares of common stock
for
100% of the issued and outstanding shares of the common stock for 100% of the
issued and outstanding shares of the common stock of American (757,864 common
shares). An additional 1,250,000 shares of common stock of the
Company was issued to Worldlink International Network, Inc. In
addition, under the terms of the Rider, the Company was required to provide
funding of at least $3,500,000 to pay Harris Bank, a secured creditor of
Alliance, as a condition of the transaction. This was a material
contingency to the transactions and as a result had to be resolved prior to
recognition of a business combination. On June 24, 2004 (effective
date July 1, 2004), the Company (“Prelude”) now known as High Velocity
Alternative Energy Corp., (“AMPE”) and Alliance Petroleum Products Company,
entered into an Amendment to the original Alliance Agreement, dated October
9,
2003, whereby all previous conditions and contingencies were deemed to have
been
completed or waived. Therefore, the Company assumed the operations of
the subsidiary. However, after a change of management took place in
September 2004, the current management refused to recognize the obligation
to
pay certain amounts arising from other non Company obligations and third party
agreements.
The
Company
The
operations of Alliance Petroleum Products Corp., which was later amended to
be
American Petroleum Products Corp. (“APPC”) have been consolidated with the
results of High Velocity Alternative Energy Corp. since July 1,
2004. High Velocity Alternative Energy Corp. which was formerly known
as America Petroleum Group, Inc. (the “Company”) is a Chicago based holding
company with an agenda to acquire, merge, and manage various business
opportunities.
The
company, via its subsidiary (American Petroleum Products Company, or APPC),
is
in the manufacturing and distribution of petroleum and related products for
the
automotive industry. Specifically, APPC is in the business of
blending, bottling, and distributing private label motor oil, transmission
fluid, and related products for the automotive aftermarket. These
products are sold, both direct and through distributors, to retail outlets
that
include oil change shops, automotive aftermarket chains, gas stations,
department stores, and convenience stores. Although most products are
sold in 12-quart cases, some products are sold in bulk. APPC sells to
a wide variety of customers with a low dependence on any one customer (the
largest customer makes up less than 10% of sales year-to-date).
In
order
to make finished motor oil, blenders and bottlers like APPC purchase base oils
and blend them with V.I. Improver and/or Additive Packages to create motor
oil,
which is then sold either Bulk or Bottled. While there are several
major companies with huge markets, this is a highly fragmented market, with
many
smaller players, especially in the private label market. Other major
costs include bottles, caps, labels, corrugated, labor, and transportation
costs. The U.S. market for aftermarket motor oil is approximately
$11.3 billion annually, making APPC a microscopic regional
player. Most retail outlets for motor oil carry a major brand and a
lesser-known, lower-priced brand. APPC primarily competes with those
other, lesser-known brands, which consist of other regional/national motor
oil
blenders and bottlers.
Given
that the product is a commodity, APPC competes largely by managing a competitive
cost structure so that it can pass through competitive pricing and by carefully
managing customer relationships. By giving our customers fair prices
and providing excellent quality and service, APPC has maintained relatively
long
term relations with its customer base and has had success winning new
customers.
Motor
oil
for late model year automobiles normally utilize the latest formulae established
by the American Petroleum Institute and the society of Automotive
Engineers. The “standard” for current model year automobiles is
referred to as “SM,” which recently replaced “SL.” Only SM and SL
motor oil can currently receive the API “starburst” certification seal, and APPC
must annually renew its API license in order to use the “starburst” seal on its
labels. Motor oil can also be made without the API starburst and sold
as oil with technology prior to SM or SL.
High
Velocity Alternative Energy Corp. and Subsidiaries
This
API-certified oil must include what is referred to as “Group 2 Base Oils” as the
foundation for the oil, as well as an additive package that includes the most
recently approved chemical blend. APPC, like other motor oil
blenders, must purchase Group 2 base oils from select, API-approved suppliers
in
order to make API-certified premium motor oil. APPC primarily
purchases Group 2 base oils from Motiva (Port Arthur, Texas) and from Evergreen
Oil (Irvine, California). Shortages of Group 2 base oils have caused
price increases in recent months, but APPC has temporarily been able to pass
these increases on to the customer.
On
July
1, 2005, TPG acquired the operating assets of Triton Petroleum, LLC (“Triton”).
Triton is operated as a division of TPG. On the Payment Date, which
shall be the one year anniversary of the effectiveness of the Agreement, that
being July 1, 2006, the Registrant shall pay to the Sellers the Purchase Price
equal to three and one half (3.5) times the net earnings of the assets and
operations formerly owned by Triton. The Purchase Price is to be paid
as: (a) twenty-five percent (25%) in cash on the payment date, and (b) with
the
balance of seventy-five percent (75%), payable over the following two years,
in
cash and stock, as agreed to by the parties. In addition, current
loans to Triton, totaling approximately three hundred thousand dollars
($300,000), due and owing to the members of Triton, shall be paid over the
twelve months from the Closing date to the Payment Date. It is
anticipated that the total purchase price will be approximately $300,000, plus
the net book value of the assets acquired in the amount of $230,625 at the
time
of payment, July 1, 2006. The assets purchased include the right to
the name, Triton Petroleum, all operations and assets, including any leases,
or
sub-leases. Triton purchased used oil from various consolidators of
used petroleum such as gear oil, machine oils, etc. that have never been burnt
before. It then transported the un-combusted, but unrefined oils back
to its reclamation facility in Detroit, Michigan, for refining. After
a very detailed reclamation process, all impurities and contaminants are
extrapolated out of the oil, through Triton’s centrifuge operation, thus leaving
it with a renewable petroleum base oil. This base oil can be blended
with new crude and other chemical components and bottled in our Bedford Park,
Illinois facility. The operations have been discontinued
as unprofitable.
Risks
to Consider Regarding our Company
Our
independent registered public accounting firms issued reports for the year
ended
December 31, 2006 and December 31, 2005 that contained a “going concern”
explanatory paragraph.
Our
independent registered public accounting firms issued reports on their audit
of
our financial statements as of and for the years ended December 31, 2006 and
2005. Our notes to the financial statements disclose that The
Registrant’s cash flows have been absorbed in operating activities and have
incurred significant net losses for fiscal 2006 and 2005, and have a working
capital deficiency. In the event that funding from internal sources
or from public or private financing is insufficient to fund the business at
current levels, the Company will have to substantially cut back our level of
spending which could substantially curtail our operations. The
independent registered public accounting firm’s report contains an explanatory
paragraph indicating that these factors raise substantial doubt about the
Company’s ability to continue as a going concern. Our going concern
uncertainty may affect our ability to raise additional capital, and may also
affect our relationships with suppliers and customers. Investors
should carefully read the independent registered public accounting firm’s report
and examine our financial statements before investing in the Registrant’s stock
or any other type of investment.
The
Company Has Substantial Near-Term Capital Needs; The Company May Be Unable
To
Obtain Needed Additional Funding
The
Company will require funding over the next twelve months to develop the business
further. In fact, the Company has minimal capital for operations and
the Company has needs for immediate funding. Our capital requirements
will depend on many factors including, but not limited to, the timing of further
development of our business and the growth of the industry as a
whole. If additional funds are raised through the issuance of equity
securities, the percentage ownership of our current shareholders will be
reduced. Moreover, those equity securities may have rights,
preferences, and privileges senior to those of the holders of our common
stock. There can be no assurance that additional capital will be
available on terms favorable to us or our shareholders.
High
Velocity Alternative Energy Corp. and Subsidiaries
Our
cash
requirements may vary substantially depending on our rate of development,
research results, competitive and technological advances and other
factors. If adequate funds are not available, the Company may be
required to curtail operations or to obtain funds by entering into collaboration
agreements on unattractive terms. Our inability to raise capital
would impair the current and future operations and may cause the Company to
cease business operations entirely.
The
Company Has Substantial Long-Term Capital Needs; The Company May Be
Unable To Obtain Needed Additional Funding
Substantial
expenditures will be required to further develop our business
model. The level of expenditures required for these activities will
depend in part on whether The Company develops and markets our services
independently or with other companies through collaborative
arrangements. Our future capital requirements will also depend on one
or more of the following factors:
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Market
acceptance of our products and
services;
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The
extent and progress of our research and development
programs;
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Competing
technological and market developments;
and
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The
costs of commercializing our products and
services.
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There
can
be no assurance that funding will be available on favorable terms to permit
successful expansion of the business to allow the Company to exceed the break
even point, if at all.
In
addition, the Company has no credit facility or other committed sources of
capital. The Company may be unable to establish credit arrangements
on satisfactory terms, if at all. If capital resources are
insufficient to meet our future capital requirements, the Company may have
to
raise additional funds to continue development of our website. There
can be no assurance that such funds will be available on favorable terms, if
at
all.
To
the
extent that additional capital is raised through the sale of equity and/or
convertible debt securities, the issuance of such securities will likely result
in dilution to our shareholders. If adequate funds are not available,
the Company may be unable to develop our operations to a sufficient level to
generate revenues or become profitable.
We
expect
to issue additional stock in the future to finance our business plan and the
potential dilution caused by the issuance of stock in the future may cause
the
price of our common stock to drop.
The
Company is authorized to issue maximum stock of 100,000,000 common
shares. As of September 15, 2007, there were 17,803,500 issued and
outstanding shares of Common Stock. The Board of Directors has
authority to issue the balance of 82,196,500 shares of our authorized stock
without shareholder consent, on terms and conditions set in the discretion
of
the Board, which may dilute the value of your stock. If and when
additional shares are issued, it may cause dilution in the value of shares
purchased in this offering and may cause the price of our common stock to
drop. These factors could also make it more difficult to raise funds
through future offerings of common stock.
Most
of
our competitors may be able to use their financial strength to dominate the
market, which may affect our ability to generate revenues.
Most
of
our competitors are much larger companies than us and very well
capitalized. They could choose to use their greater resources to
finance their continued participation and penetration of this market, which
may
impede our ability to generate sufficient revenue to cover our
costs. Their better financial resources could allow them to
significantly outspend us on price to our customers, marketing and
production. We might not be able to maintain our ability to compete
in this circumstance.
High
Velocity Alternative Energy Corp. and Subsidiaries
The
Company Has Never Paid Dividends
The
Company has never paid dividends. The Company does not anticipate
declaring or paying dividends in the foreseeable future. Our retained
earnings, if any, will finance the development and expansion of our
business. Our dividends will be at our Board of Directors’ discretion
and contingent upon our financial condition, earnings, capital requirements
and
other factors. Future dividends may also be affected by covenants
contained in loan or other financing documents The Company may
execute. Therefore, there can be no assurance that cash dividends of
any kind will ever be paid.
Reporting
Requirements of a Public Company
As
a
public company, we are required to comply with the reporting obligations of
the
Exchange Act and may be required to comply with Section 404 of the
Sarbanes-Oxley Act for our fiscal year ending December 31, 2007. If
we fail to comply with the reporting obligations of the Exchange Act and Section
404 of the Sarbanes-Oxley Act, or if we fail to achieve and maintain adequate
internal controls over financial reporting, our business, results of operations
and financial condition, and investors’ confidence in use, could be materially
adversely affected. As a public company, we are required to comply
with the periodic reporting obligations of the Exchange Act, including preparing
annual reports, quarterly reports and current reports. Our failure to
prepare and disclose this information in a timely manner could subject us to
penalties under federal securities laws, expose us to lawsuits and restrict
our
ability to access financing. In addition, we are required under
applicable law and regulations to integrate our systems of internal controls
over financial reporting. We plan to evaluate our existing internal
controls with respect to the standards adopted by the Public Company Accounting
oversight Board. During the course of our evaluation, we may identify
areas requiring improvement and may be required to design enhanced processes
and
controls to address issues identified through this review. This could
result in significant delays and cost to us and require us to divert substantial
resources, including management time, from other activities.
It
is
more difficult for our shareholders to sell their shares because we are not,
and
may never be, eligible for NASDAQ or any National Stock Exchange.
We
are
not presently, nor is it likely that for the foreseeable future we will be,
eligible for inclusion in NASDAQ or for listing on any United States national
stock exchange. To be eligible to be included in NASDAQ, a company is
required to have not less than $4,000,000 in net tangible assets, a public
float
with a market value of not less than $5,000,000, and a minimum bid price of
$4.00 per share. At the present time, we are unable to state when, if
ever, we will meet the NASDAQ application standards. Unless we are
able to increase our net worth and market valuation substantially, either
through the accumulation of surplus out of earned income or successful capital
raising financing activities, we will never be able to meet the eligibility
requirements of NASDAQ. As a result, it will be more difficult for
holders of our common stock to resell their shares to third parties or
otherwise, which could have a material adverse effect on the liquidity and
market price of our common stock.
We
must
also obtain additional financing to either purchase our operating assets or
obtain working capital for leasing arrangements.
To
meet
our need for cash, we are attempting to raise debt and equity financings to
complete the acquisitions either described in this document or contemplated
in
the future and fund the Company’s ongoing operations. There is no
assurance that we will be able to raise these funds and stay in
business. If we do not raise the funds required to complete any of
the acquisitions, we will have to find alternate sources of capital such as
a
secondary public offering, private placement of securities, or loans from
officers or others. If we need additional cash and cannot raise it,
we will either have to suspend operations until we do raise the cash or case
operations entirely.
Limited
Operating History
We
cannot
guarantee we will be successful in our business operations. Our
business is subject to the risks inherent in the establishment of a new business
enterprise, including limited capital resources and the ability to find and
finance suitable acquisition candidates. We are seeking equity and
debt financing to provide the capital required to fund additional proposed
acquisitions and our ongoing operations.
We
have
no assurance that future financing will be available to the Company on
acceptable terms. If financing is not available on satisfactory
terms, we may be unable to continue, develop or expand our operations and
possibly cease operations totally. Equity financing could result in
additional dilution to shareholders.
Inflation
The
amounts presented in the financial statements do not provide for the effect
of
inflation on the Company’s operations or its financial
position. Amounts shown for machinery, equipment and leasehold
improvements and for costs and expenses reflect historical cost and do not
necessarily represent replacement cost. The net operating losses
shown would be greater than reported if the effects of inflation were reflected
either by charging operations with amounts that represent replacement costs
or
by using other inflation adjustments.
Provision
for Income Taxes
The
Company has determined that it will more likely than not use any tax net
operating loss carry forward in the current tax year and therefore has taken
a
valuation amount equal to 100% of any asset.
Employees
As
of
December 31, 2006, we employed approximately 12 persons. None of our
employees are covered by collective bargaining agreements. We believe
that our relations with our employees are good.
The
Company currently occupies space at 14 Garrison Inn Lane, Garrison, New York
10524. We occupy approximately three offices and reception area
totaling approximately 1,000 square feet comprising. Our rent is
$1,100 per month. We have no lease and have an oral month-to-month
agreement with the leaseholder of the office space, which is the former
President of the Company. The space is adequate for the current needs
of the Company. If the month-to-month tenancy was to end, we would be
able to move our operations without a significant disruption of
operations.
The
Company’s wholly-owned subsidiary, American Petroleum Products, Inc., operates
from a manufacturing and distribution facility located at 5841 W. 66th
Street,
Bedford Park, Illinois. The facility is comprised of approximately
36,000 square feet. The facility is sufficient for the needs of the
wholly-owned subsidiary for the foreseeable future. The Company does
not have a formal lease and since March, we have been paying $10,000 per month
at the rate of $2,500. This covers only current rent.. We
are attempting to reach a resolution with the former President and landlord
of
the property, which might include purchasing the building and in which case
the
price would cover all back rent due. If we are not able to
successfully resolve the dispute, and are forced to vacate the facility, it
will
have a substantial material effect on the ability to operate the
subsidiary. We have reached an agreement with respect to all claims
related to the property with the owner, which when executed, will result in
the
Company purchasing the property.
Other
than described below, there is no past, pending or, to our knowledge, threatened
litigation or administrative action which has or is expected by our management
to have a material effect upon our business, financial condition or operations,
including any litigation or action involving our officer, director or other
key
personnel. There have been no changes in the company’s accountants or
disagreements with its accountants since its inception.
High
Velocity Alternative Energy Corp. and Subsidiaries
There
is
a threatened action by the Harris Bank of Chicago, Illinois with respect to
a
defaulted loan agreement. Harris Bank claims to have a lien on the
equipment used by the Registrant in its operations. The Registrant
has had contact with Harris Bank and is attempting to resolve the
matter. We believe that we have reached a resolution with Harris
Bank. The resolution is anticipated to be closed within the second
fiscal quarter of 2008. The exact terms have not yet been
finalized. It is hoped that discussions the Company is involved in
with various funding sources will reach an agreement and conclusion begun within
the fourth fiscal quarter so the company may proceed with the
transactions.
The
Company has paid no rent or compensation of any type to the entities that claim
to have legal title to the operating assets of APPC, up until six months
ago. Although no lease exists, these entities are claiming that the
Company owes a monthly rental amount of approximately $15,000. Based
upon settlement discussions with the owner of the real estate the Company has
accrued approximately $185,000 for past due rental
expense. Since March, we have been paying $10,000 per month at
the rate of $2,500 per week. This covers only current
rent. Management has taken the position that since there was no
contract or agreement to purchase the assets or for the payment of rentals
for
these assets, therefore nothing is owed. The consolidated operations
for the period since APPC was acquired does contain $185,000 of accrued rent
for
compensation for use of the facilities. The owner (and former
President of the Company and shareholder) of the entity that owns the real
estate is claiming a monthly rental amount of $15,000. The Company
has been in discussion with the owner of the real estate and has a tentative
agreement that is not yet fully agreed upon. The terms under
discussion include the purchase of the real estate for approximately $1,900,000
and $185,000 for additional back-rent and other capital debt claimed by the
owner.
The
Company received a letter, dated February 28, 2005, from the Attorney for
Concentric Consumer Marketing, Inc., in connection with certain sums owed by
American Petroleum Products Corporation (“APPC”), a wholly owned subsidiary of
the Company, in the amount of $13,000 per month for the past four (4) months,
for services. There is no way to determine at this time the validity
of the claim, or any possible outcome or if the claim is material to the
Company, or even if litigation will be commenced against the Company and/or
APPC. The Company has reached a settlement with Concentric Consumer
Marketing, Inc., which has been paid.
Clement
Finance & Leasing, Inc. has apparently obtained a judgment against the
Company in the State of Wisconsin, Circuit Court, Waukesha County, case No.
07CV-630, on or about March 5, 2007, for breach of contract involving the lease
of certain Trailers to our subsidiary American Petroleum Group. On
April 25, 2007, a Judgment was granted to Clement Finance & Leasing, Inc. in
the amount of $14,329.00, plus interest at the rate of
9%. Thereafter, the judgment-creditor commenced an action in New York
State Supreme Court, County of Putnam, under the Uniform Enforcement of Foreign
Judgment Act. To date, it is unknown if such judgment has been
granted and entered in New York State.
Indemnification
of Officers and Directors
At
present we have not entered into individual indemnity agreements with our
Officer or Director. However, our By-Laws and Certificate of
Incorporation provide a blanket indemnification that we shall indemnify, to
the
fullest extent under Nevada law, our directors and officers against certain
liabilities incurred with respect to their service in such
capabilities. In addition, the Certificate of Incorporation provides
that the personal liability of our directors and officers and our stockholders
for monetary damages will be limited.
|
Submission
of Matters to a Vote of Security
Holders
|
On
February 15, 2005, the majority of shares entitled to vote approved certain
actions as set forth in the Schedule 14C filed with the SEC on February 24,
2005, consisting of:
|
1.
|
Electing
and appointing the Board of Directors and Officers of High Velocity
Alternative Energy Corp.;
|
|
2.
|
Ratified
the appointment of Brown Smith Wallace LLC as our independent public
accountants for the fiscal year ending December 31, 2003 and
2004;
|
|
3.
|
Adoption
of a Code of Ethics for the Executive Officers of High Velocity
Alternative Energy Corp.; and
|
|
4.
|
Approving
the purchase of all interest in, all assets and stock of Oilmatic
Systems,
LLC (“Oilmatic Transaction” or
“Transaction”).
|
On
May
20, 2005, the Letter of Intent with Oilmatic was terminated by the
Company.
On
or
about June 1, 2006, the Company received written consents in lieu of a meeting
of stockholders from holders of a majority of the shares of Common Stock
representing in excess of 50.1 % of the total issued and outstanding shares
of
voting stock of the Company approving the Certificate of Amendment to the
Certificate of Incorporation of the Company, pursuant to which the Company's
name will change to “APG
Industries Corp.” This change was never completed by the
Registrant however.
On
or
about April 20, 2007, the Company received written consents in lieu of a meeting
of stockholders from holders of a majority of the shares of Common Stock
representing in excess of 50.1 % of the total issued and outstanding shares
of
voting stock of the Company approving the Certificate of Amendment to the
Certificate of Incorporation of the Company, pursuant to which the Company's
name will change to “High
Velocity Alternative Energy Corp.”
On
October 21, 2005, The Board of Directors (the “Board”) by unanimous written
consent and a majority of stockholders (the “Majority Stockholders”), owning a
majority of issued and outstanding capital stock of the Company entitled to
vote, by written consent dated as of October 21, 2005, approved and adopted
resolutions to amend the Company’s Certificate of Incorporation. The
Certificate of Amendment to the Company’s Certificate of Incorporation, already
filed with the Secretary of State of the State of Nevada changed the Company’s
name to “High Velocity Alternative Energy Corp.” or such similar available name,
and will not be effective earlier than 20 days after the mailing of this
Information Statement. The company was not able to complete the name
change due to financial restraints, but expects to do so within the second
fiscal quarter.
High
Velocity Alternative Energy Corp. and Subsidiaries
PART
II
|
Market
for Common Equity and Related Stockholder Matters
|
General
We
are
authorized to issue 100,000,000 shares of Common Stock, at a par value $.001
per
share. As of November 26, 2007, the latest practicable date, there
are 2,077,630 shares of common stock outstanding. The number of
record holders of Common Stock as of September 15, 2007 is approximately
50.
Common
Stock
The
holders of Common Stock are entitled to one vote for each share held of record
on all matters to be voted on by stockholders. There is no cumulative
voting with respect to the election of directors, with the result that the
holders of more than 50% of the shares voting for the election of directors
can
elect all of the directors then up for election. The holders of
Common Stock are entitled to receive ratably such dividends when, as and if
declared by the Board of Directors out of funds legally available
therefore. In the event we have a liquidation, dissolution or winding
up, the holders of common Stock are entitled to share ratably in all assets
remaining which are available for distribution to them after payment of
liabilities and after provision has been made for each class of stock, if any,
having preference over the common Stock. Holders of shares of Common
Stock, as such, have no conversion, preemptive or other subscription rights,
and
there are no redemption provisions applicable to the Common Stock.
Price
Ranges of High Velocity Alternative Energy Corp. Common Stock
Market
Information
The
Company’s Common Stock is traded on the Pink Sheets under the symbol
“HVAG”. Previously, it traded under the symbol “HVAI” until October
31, 2007. “AMPE” and on the NASD operated Over the Country Bulletin Board until
May 31, 2006, after which it was traded on the “Pink Sheets.” It was
previously traded under the symbol “AMAI” until October 29, 2004, “PLUD” until
February 23, 2004, and “PLUV” from September 12, 2002 until December 31,
2002.
There
is
currently a limited trading market for the company’s Common Stock with the price
being very volatile. The following chart lists the high and low
closing bid prices for shares of the company’s Common Stock for each month
within the last two fiscal years. These prices are between dealers
and do not include retail markups, markdowns or other fee and commissions,
and
may not represent actual transactions.
Fiscal
Year 2005:
|
High
Bid
|
Low
Bid
|
High
Ask
|
Low
Ask
|
January
2005
|
0.92
|
0.65
|
1.12
|
0.75
|
February
2005
|
1.03
|
0.65
|
1.10
|
0.80
|
March
2005
|
1.05
|
0.60
|
1.05
|
0.60
|
April
2005
|
0.85
|
0.40
|
0.85
|
0.40
|
May
2005
|
0.75
|
0.35
|
0.85
|
0.78
|
June
2005
|
0.65
|
0.25
|
0.80
|
0.50
|
July
2005
|
0.70
|
0.51
|
0.80
|
0.50
|
August
2005
|
0.90
|
0.35
|
1.20
|
0.45
|
September
2005
|
0.85
|
0.468
|
0.86
|
0.51
|
October
2005
|
0.56
|
0.31
|
0.57
|
0.35
|
November
2005
|
0.42
|
0.16
|
0.45
|
0.17
|
December
2005
|
0.20
|
0.12
|
0.21
|
0.125
|
Fiscal
Year 2006:
|
High
Bid
|
Low
Bid
|
High
Ask
|
Low
Ask
|
January
2006
|
0.19
|
0.11
|
0.20
|
0.115
|
February
2006
|
0.135
|
0.11
|
0.14
|
0.12
|
March
2006
|
0.17
|
0.11
|
0.18
|
0.12
|
April
2006
|
0.17
|
0.101
|
0.185
|
0.13
|
May
2006
|
0.13
|
0.08
|
0.20
|
0.095
|
June
2006
|
0.10
|
0.07
|
0.15
|
0.095
|
July
2006
|
0.07
|
0.04
|
0.10
|
0.05
|
August
2006
|
0.23
|
0.03
|
0.25
|
0.05
|
September
2006
|
0.24
|
0.041
|
0.26
|
0.055
|
October
2006
|
0.11
|
0.04
|
0.13
|
0.06
|
November
2006
|
0.055
|
0.035
|
0.07
|
0.05
|
December
2006
|
0.045
|
0.04
|
0.05
|
0.045
|
Fiscal
Year 2007:
|
High
Bid
|
Low
Bid
|
High
Ask
|
Low
Ask
|
January
2007
|
0.043
|
0.035
|
0.045
|
0.045
|
February
2007
|
0.056
|
0.025
|
0.06
|
0.03
|
March
2007
|
0.061
|
0.0095
|
0.064
|
0.01
|
April
2007
|
0.028
|
0.0075
|
0.03
|
0.008
|
May
2007
|
0.015
|
0.0016
|
0.02
|
0.0018
|
June
2007
|
0.0042
|
0.002
|
0.0047
|
0.0025
|
July
2007
|
0.005
|
0.003
|
0.006
|
0.0034
|
August
2007
|
0.0035
|
0.0016
|
0.0044
|
0.0025
|
September
2007
|
0.011
|
0.002
|
0.015
|
0.003
|
October
2007
|
0.006
|
0.0031
|
0.009
|
0.04
|
November
2007 (1)
|
0.20
|
0.10
|
2.50
|
0.20
|
(1)
|
Taking
into account of the effectiveness of a 50 to 1 reverse split, effective
October 31, 2007
|
Liquidation
In
the
event of a liquidation of the Company, all stockholders are entitled to a pro
rata distribution after payment of any claims.
Dividend
Policy
The
Company has never declared or paid cash dividends on its common stock and
anticipates that all future earnings will be retained for development of its
business. The payment of any future dividends will be at the
discretion of the Board of Directors and will depend upon, among other things,
future earnings, capital requirements, the financial condition of the Company
and general business conditions.
High
Velocity Alternative Energy Corp. and Subsidiaries
Stock
Transfer Agent
Our
transfer agent and registrar of the Common Stock is Manhattan Transfer Registrar
Co., 57 Westwood Road, Miller Place, NY 11764; 631-928-7655; 631-928-6171
(Fax).
Recent
Sales of Unregistered Securities
The
information concerning the recent sales of unregistered securities required
by
Item 5 is incorporated by reference to the information set forth in Item 12
“Certain Relationships and Related Transactions” set forth
hereafter.
|
Management’s
Discussion and Analysis or Plan of
Operation
|
Forward-Looking
Information
Certain
statements in this document are forward-looking in nature and relate to trends
and events that may affect the Company’s future financial position and operating
results. The words “expect” “anticipate” and similar words or
expressions are to identify forward-looking statements. These
statements speak only as of the date of the document; those statements are
based
on current expectations, are inherently uncertain and should be viewed with
caution. Actual results may differ materially from the
forward-looking statements as a result of many factors, including changes in
economic conditions and other unanticipated events and conditions. It
is not possible to foresee or to identify all such factors. The
Company makes no commitment to update any forward-looking statement or to
disclose any facts, events or circumstances after the date of this document
that
may affect the accuracy of any forward-looking statement.
Plan
of Operations
We
were a
startup, development stage Company prior to the acquisition of American
Petroleum Products Company (“APPC”) beginning with operations as of July 1,
2004, and did not realize any revenues from our business operations until that
time. However, at the time of acquiring APPC, its sales volume was at
a point below its break even point and therefore was losing
money. Management of the company feels that APPC is operating at a
small percentage of its capacity with its major constraint on increasing volume
being that of financing raw materials for manufacturing and some other limited
variable manufacturing costs. In addition, it is currently not
generating profits of sufficient amount to support the other operations of
the
parent Company. Accordingly, we must raise money from sources other
than the operations of this business. Our only other source of cash
at this time is investments by others (primarily from existing shareholders
and
others) in our Company. We must raise additional cash to complete any
future acquisitions and maintain current operations, otherwise the business
will
fail.
Liquidity,
Capital Resources and Operations
Since
the
Company’s inception, the Company raised funds from officer/stockholder advances,
from private sales of its common shares, including approximately $500,000 from
the sale of borrowed stock contributed by the Company’s promoters. We
have repaid this stock borrowing with the issuance of 50,000 shares of common
stock (taking in to account a reverse of the common shares of the Company in
November 2004). This money was utilized for certain start-up costs
and operating capital.
Subsequently,
effective February 21, 2007, the Company converted approximately 1,500,000
worth
of debt due to certain shareholders into an equal number of Series B Cumulative
Preferred Shares (See Item 12; Certain Relationships and Related Transactions
Issuance of Stock).
High
Velocity Alternative Energy Corp. and Subsidiaries
In
this
regard, the Company’s plan of operations for the next 12 months is to continue
to attempt to makes its operations profitable through expanding its sales and
potential acquisitions. Product research and development is expected
to be minimal during the period. Additionally, the company does not
expect any change in number of employees other than through acquisitions, if
any.
Financings
To
meet
our need for cash, we are attempting to raise debt and equity financing to
complete the acquisitions described in this document and fund the company’s
ongoing operations. There is no assurance that we will be able to
raise these funds and stay in business. If we do not raise the funds
required to complete any of the acquisitions mentioned in this document or
any
contemplated acquisition, we will have to find alternate sources such as a
secondary public offering, private placement of securities, or loans from
officers or others. If we need additional cash and cannot raise it,
the company will either have to suspend operations until we do raise the cash
or
cease operations entirely.
On
July
25, 2005, we conducted a Rule 504, Regulating D offering of $1,000,000 worth
of
convertible Debentures of our subsidiary American Petroleum Products Company
(“APPC”), to accredited investors in the State of Texas. The Offering
was amended on October 10, 2005 to include the State of
Pennsylvania. Pursuant to the Offering, APPC issued the convertible
debentures, which were convertible into shares of common stock. As
part of the Offering, APPC was to be merged into the Registrant. This
event did no occur. Upon conversion into shares and merger of APPC
into the Registrant, the offering shares are issuable as shares of High Velocity
Alternative Energy Corp. Pursuant to the amendment to the original
offering, the amount of shares to be offered for sale was raised to a total
of
3,108,000 shares of common stock.
RESULTS
OF
OPERATIONS:
For
the Years Ending December 31, 2006 vs. December 31, 2005
Net
sales
Net
sales
in 2006 were $2,314,907 as compared to $1,965,330 in 2005, which represents
an
increase of $349,577. Product volume delivered is similar and most of the
increase is attributable to higher oil prices in 2006.
Cost
of Goods Sold and Gross Profit
Cost
of
goods sold for 2006 was $1,697,606 compared to $1,440,110 in 2005, an increase
of $257,496 or 18%. This increase is due to the increase in sales. Gross profit
for 2006, was $617,301 or 27% as compared to $525,220 or 27% in 2005.
The consistent gross profit percentage is the result of increasing sales prices
in proportion to higher costs.
Selling,
General and Administrative Expenses
These
expenses for 2006 were $2,429,139 as compared to $7,774,559 in 2005, a decrease
of $5,345,420 or 69%. The decrease was attributable to three contributing
factors, a decrease in non-cash compensation to $277,500 in 2006 from $5,122,500
in 2005, a decrease in payroll and related expense from to $785,967 in 2006
from
$1,122,181 in 2005, and a savings of $164,206 related to a reduction in rents
and office related expenses.
Other
Income (Expense)
Other
expenses increased to $436,361 in 2006 compared to income of $355,039 in 2005.
This was principally due to a forgiveness of debt in 2005 of $492,500, which
did
not occur in 2006, and the write off of $300,000 due to an advance in
connection with an abandoned acquisition in 2006.
Net
Loss from Continuing Operations
The
net
loss was $2,248,199 in 2006 compared to a loss of $6,894,300 in 2005.The
$4,646,101 decrease was a result of three factors namely, the increased gross
profit, the significant reduction on selling, general and administrative
expenses, and the increase in other expense.
Discontinued
Operations
During
2006, the operations of Triton Petroleum, LLC were discontinued and accordingly
it’s operations are reflected as discontinued for all periods presented. In
2005, impairment of goodwill related to this operation was
recorded.
High
Velocity Alternative Energy Corp. and Subsidiaries
Liquidity
and Financial Resources
During
the years ended December 31, 2006 and 2005, net cash provided
by (used in) operating activities was $108,186 and
$(1,716,783). The Company incurred net losses of $(2,501,680) and
$(7,342,210) for the years ended December 31, 2006 and 2005,
respectively. The Company still would have incurred net operating
losses in 2006 and 2005 even if the non-cash stock compensation, financing
expense and goodwill impairment expenses, detailed above did not
occur. Additionally at December 31, 2006 and December 31, 2005,
current liabilities exceeded current assets by $4,645,509 and $2,580,611,
respectively.
These
factors raise substantial doubt about the Company’s ability to continue as a
going concern. The Company anticipates that in order to fulfill its
plan of operation including payment of certain past liabilities of the Company,
it will need to seek financing from outside sources. The Company is
currently pursuing private debt and equity sources. It is the
intention of the Company’s management to also improve profitability by
significantly reducing operating expenses and to increase revenues
significantly, through growth and acquisitions.
The
Company is actively in discussion with on or more potential acquisition or
merger candidates. There is no assurance that the Company will be
successful in raising the necessary funds nor there a guarantee that the Company
can successfully execute any acquisition or merger transaction with any company
or individual or if such transaction is effected, that the Company will be
able
to operate such company profitably or successfully.
The
increases in recurring administrative expenses detailed above in The Results
of
Operations section are due to the start up of the operations, increases in
personnel and professional fees, and a generally higher level of fixed
administrative expenses. It is anticipated by the Registrant that
General and Administrative costs will remain relatively the same, while Revenues
and Gross Profit will increase as a result of the business derived from APPC
and
Triton. This can be achieved only if the Company can obtain financing
from outside sources since additional capital is needed to operate and expand
operations from current levels.
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 are material to investors.
High
Velocity Alternative Energy Corp. and Subsidiaries
Index
to Financial Statements
CONTENTS
See
pages 27 through 41
High
Velocity Alternative Energy Corp. and Subsidiaries
|
Changes
In and Disagreements With Accountants on Accounting and Financial
Disclosure
|
Brown
Smith Wallace LLC. (“BSW”) served as the Company’s independent registered public
accounting firm for the fiscal years ended December 31, 2005 and 2004. On
October 23, 2006, the Company dismissed BSW as the Company’s independent
registered public accounting firm and on November 9, 2006 engaged Paritz
&
Company, P.A. (“Paritz”) as its new independent registered public accounting
firm. As described below, the change in independent public accounting firms
was
not the result of any disagreement with BSW.
The
reports of BSW on the financial statements for the Company’s two most recent
fiscal years ended December 31, 2005 and December 31, 2004, did not contain
an
adverse opinion or disclaimer of opinion, or modified as to audit scope,
or
accounting principles, however the auditors qualified their report as to
the
uncertainty that the Company would continue as a going concern. In connection
with its audits for the years ended December 31, 2005 and December 31, 2004
and
in the subsequent interim period through October 23, 2006 there were (1)
no
disagreements with BSW on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of BSW, would have caused
them to make reference thereto in connection with its reports on the financial
statements for such years or (2) reportable events.
On
November 9, 2006, the Board of Directors engaged Paritz as the Company’s
independent registered public accounting firm for the fiscal year ending
December 31, 2006, and to perform procedures related to the financial statements
to be included in the Company’s quarterly report on Form 10-QSB, beginning with,
and including, the quarter ending March 31, 2007. The Company had not consulted
with Paritz during its two most recent fiscal years ended December 31, 2005
and
December 31, 2004, or during any subsequent interim period prior to its
appointment as the Company’s auditor regarding (i) the application of accounting
principles to a specified transaction, either completed or proposed or the
type
of audit opinion that might be rendered on the Company’s consolidated financial
statements, and neither a written report was provided to the Company nor
oral
advice was provided that Paritz concluded was an important factor considered
by
the Company in reaching a decision as to the accounting, auditing or financial
reporting issue; or (ii) any matter that was either the subject of disagreement
(as defined in Item 304(a)(1)(iv) of Regulation S-K and the related
instructions) or a reportable event (within the meaning of Item 304(a)(1)(v)
of
Regulation S-K).
Within
the ninety-day period preceding the filing of this report, our management
evaluated the effectiveness of the design and operation of its disclosure
controls and procedures (the “Disclosure Controls”) as of the end of the period
covered by this Form 10-KSB and (ii) any changes in internal controls over
financial reporting that occurred during the last quarter of our fiscal
year. This evaluation (“Controls Evaluation”) was done under the
supervision and with the participation of management, including the Chief
Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), who became CFO in
September 2004, and the Controller, who became CFO in March 2005.
Limitations
on the Effectiveness of Controls
A
control
system, no matter how well conceived and operated, can provide only reasonable,
no absolute, assurance that the objectives of the control systems 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 the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
have
been detected. Because of the inherent limitation in a cost effective
control system, misstatements due to error or fraud may occur and not be
detected. We will conduct periodic evaluations of our internal
controls to enhance, where necessary, our procedures and controls.
Conclusions
Based
upon the Controls Evaluation, the CEO and CFO have concluded that the Disclosure
Controls are effective in reaching a reasonable level of assurance that
management is timely alerted to material information relating to the Company
during the period when its periodic reports are being prepared. In
accord with the U.S. Securities and Exchange Commission’s requirements, the CEO
and CFO conducted an evaluation of the Company’s internal control over financial
reporting (the “Internal Controls”) to determine whether there have been any
changes in Internal Controls that occurred during the quarter which have
materially affected or which are reasonably likely to materially affect Internal
controls. Based on this evaluation, there have been no such changes
in Internal Controls during the last quarter of the period covered by this
report.
High
Velocity Alternative Energy Corp. and Subsidiaries
Part
III
|
Directors,
Executive Officers, Promoters and Control Persons; Compliance with
Section
16(a) of the Exchange Act.
|
The
following were elected to the Board of Directors, effective November 26,
2007:
Ron
Shapss
|
58
|
Chairman
of the Board
|
Michael
Margolies
|
78
|
CEO,
President and Director
|
StanleyChason
|
78
|
Director,
Vice-President of Business Development
|
Elliot
Cole, Esq.
|
71
|
Director
|
James
W. Zimbler
|
42
|
Director
|
Ron
Shapss, 58, Chairman of
the Board
Mr.
Shapss is the founder of Ronald Shapss Corporate Services, Inc., (“SCS”) a
company engaged in consolidating fragmented industries since
1992. RSCS was instrumental in facilitating the roll-up of several
companies into such entities as U.S. Delivery, Inc., Consolidated Delivery
&
Logistics, Inc. Mr. Shapss was also the founder of Coach USA,
Inc. A 1970 graduate of Brooklyn Law School, Mr. Shapss is a member
of the New York bar.
Michael
Margolies, 78, CEO,
President and Director
Michael
Margolies became Vice Chairman and Secretary of Headliners in January 2002,
after having served on the Board of Directors for the prior three
years. Mr. Margolies resigned from his position as Vice Chairman in
March 2005. From 1998 until December 2005, Mr. Margolies was employed
as Chief Executive Officer of Global Concepts, Ltd., a conglomerate primarily
involved in providing transportation services in the United States and
Europe.
StanleyChason,
78, Director,
Vice-President of Business Development
Mr. Chason
retired from Gelco
Corporation, a
New York Stock Exchange
Company, whom he joined in
1968. He
was a member of the
Board of Directors, Executive Vice
President of the Corporation and
Chairman and Chief Executive Officer
of the Fleet and ManagementServices
Division. Mr. Chasonwas
the Chairman of the American
Automobile Leasing Association
at the time of his
retirement. Mr. Chasonwas
deeply involved both in the growth
of the company (present
revenue in the billions) and in
taking the company public in 1969. Mr. Chasonhas
served on various Boards over the
past 15 years. He is a
graduate of New
York University,
and a veteran of the U.S.
Navy. He was
previously a member of the Board of Directors of the Company from August 1, 2006 until
March
19, 2007.
Elliot
Cole, Esq., 71,
Director
Elliot
Cole has practiced corporate law for 40-plus years, more than 30 of which he
has
been a partner at Patton Boggs LLP. He has been a Director of Human
Trans Services Holding Corp (OTC BB “HTSC”) since May 2004. His
expertise is rooted in the representation of early-stage
companies. As a counselor of startups through mezzanine and
later-stage financing, Mr. Cole assists with bringing companies in a wide range
of businesses along to maturity. His broad-based contacts with
financiers and investors have provided capital and have served on the boards
of
several business, community and social organizations. He has been a
trustee of Boston University, his alma mater, for over 20 years, having served
on its Investment Committee and Community Technology Fund.
High
Velocity Alternative Energy Corp. and Subsidiaries
James
W. Zimbler, 42,
Director
James W. Zimbler, has
been a principal of Alpha
Corporate Advisors,
LLC, since its inception
in May
2002. Alpha is involved as a consultant in the mergers and
acquisitions
of public companies and
consultingfor private
companies that wish to
access the public markets. Prior to becoming a founding member
of Alpha, he was involved
in consulting for
capitalraising,
re-capitalization and
mergers and acquisitions for various clients. Mr. Zimbleris
one of the initial shareholders
in Accountabilities, Inc.,
f/k/a
Human Trans Services
Holding Corp (“ACBT”). Mr. Zimblerhas
recently focused his energies
inthe field of turnarounds
of smallemerging private
and public companies. He has served on the
Board
of Directors and/or Officer of several companies since 2000, including, Triton
Petroleum Group, Inc., Universal Media, Inc., and Genio Holdings,
Inc.
For
the
fiscal year ended December 31, 2006, no Officer/Director has been compensated
with salaries or other form of remuneration except as set forth
below:
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
Capacities
in
|
|
|
|
|
|
|
Restricted
|
|
|
|
Which
Remuneration
|
|
|
|
Cash
|
|
|
Share
|
|
Name
|
|
was
Received
|
|
Period
Ended
|
|
Payment
|
|
|
Remuneration
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
Shapss (1)
|
|
Chairman
of the Board
|
|
December
31, 2006
|
|
$ |
-0- |
|
|
$ |
(2 |
) |
James
W. Zimbler
|
|
Interim
President
|
|
December
31, 2006
|
|
$ |
-0- |
|
|
$ |
(2 |
) |
Richard
Carter
|
|
Vice-President
|
|
December
31, 2006
|
|
$ |
-0- |
|
|
$ |
(2 |
) |
George
L. Riggs, III (3)
|
|
Chief
Financial Officer
|
|
December
31, 2006
|
|
$ |
-0- |
|
|
$ |
-0- |
|
Michael
S. Krome, Esq. (4)
|
|
General
Counsel
|
|
December
31, 2006
|
|
$ |
-0- |
|
|
$ |
(2 |
) |
James
J. Carroll (5)
|
|
Chief
Financial Officer
|
|
December
31, 2006
|
|
$ |
-0- |
|
|
$ |
(2 |
) |
George
Campbell (6)
|
|
President
|
|
December
31, 2006
|
|
$ |
-0- |
|
|
$ |
(2 |
) |
Elliot
Cole
|
|
Director
|
|
December
31, 2006
|
|
$ |
-0- |
|
|
$ |
(2 |
) |
|
(1)
|
Mr.
Shapss was elected Chairman of the board on February 15,
2005
|
|
(2)
|
Based
upon shares of restricted common stock of the Company,
discounted
|
|
(3)
|
Mr.
Riggs resigned as CFO on March 17,
2005
|
|
(4)
|
Mr.
Krome resigned from the Board of Directors on August 1,
2006
|
|
(5)
|
Mr.
Carroll was elected Chief Financial Officer on March 17, 2005, and
resigned in January 2007.
|
|
(6)
|
Mr.
Campbell was elected President on August 1, 2005, and resigned on
May 5,
2006.
|
Director
Compensation
Our
directors receive no compensation for their services as director, at this time,
other than what has already been paid by the issuance of shares of common
stock.
Director
and Officer Insurance
The
Company does not have directors and officers (“D & O”) liability insurance
at this time.
High
Velocity Alternative Energy Corp. and Subsidiaries
|
Security
Ownership of Certain Beneficial Owners and
Management
|
The
table
below sets forth information with respect to the beneficial ownership of the
Company's Common Stock by (i) each person who is known to the Company to be
the
beneficial owner of more than five percent (5%) of the Company's common stock,
(ii) all directors and nominees, (iii) each executive officer, and (iv) all
directors and executive officers as a group.
Unless
otherwise indicated, the Company believes that the beneficial owner has sole
voting and investment power over such shares. The Company does not
believe that any other stockholders act as a “group”, as that term is defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended. As of
November 26, 2007, the Company had issued and outstanding 2,077,630 shares
of
Common Stock.
|
|
No.
of Common
|
|
|
%
ownership
|
|
|
No.
of Series B Preferred
(1)
|
|
|
%
Ownership (2)
|
|
Ronald
Shapss (3)
|
|
|
210,000 |
|
|
|
10.1 |
|
|
|
250,000 |
|
|
|
10.8 |
|
Elliot
Cole (3)
|
|
|
44,500 |
|
|
|
* |
|
|
|
-- |
|
|
|
|
|
James
W. Zimbler (3) (4)
|
|
|
448,160 |
|
|
|
21.5 |
|
|
|
18,000 |
|
|
|
* |
|
Stanley
Chason (3)
|
|
|
98,440 |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
Keystone
Capital Resources, LLC (4)
|
|
|
30,000 |
|
|
|
* |
|
|
|
167,585 |
|
|
|
7.2 |
|
1328
Zion Road
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bellefonte,
PA 16823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Malibu
Management Company
|
|
|
-- |
|
|
|
- |
|
|
|
16,000 |
|
|
|
* |
|
Alliance
Financial Networks Inc. (5)
|
|
|
12,000 |
|
|
|
* |
|
|
|
184,000 |
|
|
|
7.9 |
|
2291
Arapahoe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boulder,
CO 80302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
Boussung (5)
|
|
|
10,000 |
|
|
|
* |
|
|
|
-- |
|
|
|
|
|
10300
West Charleston #13-378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Las
Vegas, NV 89135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Margolies Family Trust
|
|
|
100,000 |
|
|
|
4.8 |
|
|
|
-- |
|
|
|
4.3 |
|
Michael
Margolies
|
|
|
-- |
|
|
|
|
|
|
|
100,000 |
|
|
|
6.5 |
|
Richard
Carter
|
|
|
-- |
|
|
|
|
|
|
|
150,000 |
|
|
|
|
|
Michael
Cahr
|
|
|
-- |
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
Michael
S. Krome
|
|
|
213,013 |
|
|
|
10.2 |
|
|
|
-- |
|
|
|
|
|
8
Teak Court
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lake
Grove, NY 11755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officers
and Directors as a Group (5 persons) (3)
|
|
|
901,100 |
|
|
|
43.3 |
|
|
|
451,585 |
(6) |
|
|
19.5 |
|
|
(1)
|
Each
one share of the Series B Cumulative Convertible Preferred Share
(“Preferred Shares”) is convertible at the option of the holder into 45
shares of common stock of the company, and then divided by 50 to
take into
effect the reverse split of October 31,
2007.
|
|
(2)
|
Assuming
conversion of all Series B Preferred shares at a ration of 1 Series
B
Preferred share to 45 common shares and then taking in to account
the
reverse split of 50 to 1 effective October 31,
2007.
|
|
(3)
|
Officer/Director
of the Company
|
|
(4)
|
Keystone
Capital Resources, LLC is controlled by James W. Zimbler, a Director.
When
the holdings of Mr. Zimbler and Keystone Capital Resources, LLC are
combined, the total of 2,658,000 common shares equals 5.6%, including
the
preferred shares, the total is
24.7%
|
|
(5)
|
Alliance
Financial Networks, Inc. is controlled by William Boussung. Combined,
the
total number of common shares and preferred shares, is 22,000, equaling
0.01%. Of common stock, plus the conversion of the Preferred Shares
would
equal approximately 8%.
|
|
(6)
|
The
451,585 of Series B Cumulative Convertible Preferred shares converts
into
406,427 shares of common stock (451,585 X 45 = 20,321,325, divided
by 50 =
406,427 shares of common stock. If this amount is added to the
number of issued and outstanding as of November 26, 2007, it would
result
in 16.3% of the total issued and outstanding. When combined
with the current common owned by the Officers and Directors, which
would
total 1,307,527 which would be equal to 52.6% of the total issued
and
outstanding common stock).
|
High
Velocity Alternative Energy Corp. and Subsidiaries
|
Certain
Relationships and Related Transactions Issuance of Stock
|
We
issued
a total of 48,275,000 shares of the Company, as set forth on the Form 8-K filed
September 20, 2004, and incorporated by reference, in connection with the change
of control of the Company. In November 2004, we executed a 20 to one
reverse split of our common shares.
We
issued
75,000 shares of common stock, and 150,000 shares of Series A preferred stock,
to Ronald Shapss as part of his compensation for accepting the position of
Chairman of the Board of Directors, January 2005. We issued 500,000
shares of common stock, and 1,000,000 shares of Series A preferred stock, to
Ronald Shapss as part of his compensation for accepting the position of Chairman
of the Board of Directors, on February 15, 2005.
On
September 22, 2005, we issued the following shares to various employees,
Officers and/or Directors, of the Company and others, as follows:
James
W. Zimbler
|
500,000
|
Ronald
Shapss
|
500,000
|
Richard
Carter
|
500,000
|
Elliot
Cole
|
75,000
|
Michael
S. Krome
|
150,000
|
Alpha
Advisors, LLC
|
113,750
|
George
Campbell
|
250,000
|
James
Carroll
|
150,000
|
Rose
Tarasiuk
|
50,000
|
Jeff
Neiman
|
50,000
|
Michael
Cahr
|
100,000
|
Subsequent
Events
On
May
18, 2006, with the appointment of Michael Margolies as CEO, President and
Director of the Company, as part of his compensation, we will issue a total
of
1,500,000 shares of common stock. This issuance has not taken place
as of this date.
The
Registrant, effective February 21, 2007, and with the agreement of all debt
holders, converted the debt of the Registrant into shares of Preferred Stock
and
authorized the filing of a Certificate of Designation with the Secretary of
State of the State of Nevada, establishing a “Series B Cumulative Convertible
Preferred Stock” (the “Series B shares”) of no more than 1,500,000 shares. The
Series B shares will be issued to the holders of certain debt of the Registrant,
as listed herein on a $1.00 for One (1) share basis. A total of
1,490,585 Series B Shares were issued as follows:
Name
|
Date
of Loan or
Compensation
Due
|
|
Dollar
Amount
|
|
|
No.
of Shares
|
|
Richard
Carter
|
December
25, 2006
|
|
$ |
150,000 |
|
|
|
150,000 |
|
James
W. Zimbler
|
September
9, 2004
|
|
$ |
16,000 |
|
|
|
16,000 |
|
James
W. Zimbler
|
April
26, 2006
|
|
$ |
2,000 |
|
|
|
2,000 |
|
James
W. Zimbler
|
August
1, 2005
|
|
$ |
100,000 |
|
|
|
100,000 |
|
Michael
S. Krome, Esq.
|
September
20, 2005
|
|
$ |
20,000 |
|
|
|
20,000 |
|
Michael
S. Krome, Esq.
|
May
1, 2006
|
|
$ |
30,000 |
|
|
|
30,000 |
|
Michael
S. Krome, Esq.
|
July
28, 2005
|
|
$ |
15,000 |
|
|
|
15,000 |
|
Ronald
Shapss
|
May
24, 2005
|
|
$ |
350,000 |
|
|
|
350,000 |
|
Keystone
Capital Resources, LLC
|
January
3, 2006
|
|
$ |
167,585 |
|
|
|
167,585 |
|
Malibu
Management Company LLC
|
various
dates
|
|
$ |
16,000 |
|
|
|
16,000 |
|
Warren
Field
|
August
25, 2004
|
|
$ |
50,000 |
|
|
|
50,000 |
|
John
Niestrom
|
February
17, 2005
|
|
$ |
20,000 |
|
|
|
20,000 |
|
Jeff
Neimen
|
February
8, 2005
|
|
$ |
50,000 |
|
|
|
50,000 |
|
Michael
Cahr
|
November
5, 2004
|
|
$ |
100,000 |
|
|
|
100,000 |
|
William
Palla
|
May
5, 2006
|
|
$ |
25,000 |
|
|
|
25,000 |
|
Ronald
Ruble
|
May
22, 2006
|
|
$ |
55,000 |
|
|
|
55,000 |
|
Reich
Bros.
|
May
31, 2006
|
|
$ |
40,000 |
|
|
|
40,000 |
|
Alliance
Financial Network, Inc.
|
June
30, 2005
|
|
$ |
184,000 |
|
|
|
184,000 |
|
Michael
Margolies
|
February
28, 2007
|
|
$ |
100,000 |
|
|
|
100,000 |
|
31,500,000
shares of common stock, were issued as followed on August 31, 2007, in exchange
for services, compensation due and/or moneys advanced to the
Registrant.
Name
|
Date
of
Service/Expense/Loan
|
Shares
|
James W. Zimbler
|
May
2007
|
14,500,000
|
Michael S. Krome
|
May
2007
|
7,000,000
|
Cheryl Krome
|
May
2007
|
2,000,000
|
Ronald Shapss
|
May
2007
|
2,000,000
|
Elliot Cole
|
May
2007
|
2,000,000
|
Michael Margolies
|
August
2007
|
2,000,000
|
Stanley Chosen
|
September
2007
|
2,000,000
|
Item
13. Exhibits
Index
to Exhibits
SEC
Reference
|
|
Number
|
Title
of Document
|
|
|
3.1
|
Articles
of Incorporation of the Registrant, as amended (1)
|
|
|
3.2
|
By-laws
of the Registrant, as amended (1)
|
|
|
|
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. (2)
|
|
|
|
Certification
of Chief Executive and Financial Officer pursuant to 18 U.S.C.
Section 1350, as Adopted, pursuant to section 906 of the Sarbanes-Oxley
act of 2002 (2)
|
|
(1)
|
Previously
filed as an exhibit to the Company’s Form 10-SB filed on June 26, 2001,
and subsequent filings
|
High
Velocity Alternative Energy Corp. and Subsidiaries
|
Principal
Accounting Fees and Services
|
During
the fiscal year ended December 31, 2006, we paid a total of $74,800 in audit,
audit-related, tax or other fees paid for professional services rendered by
the
independent certified public accountant who audited the financial statements
of
the Nevada corporation that are filed herewith as those of the
Company. See Item 7, “Financial Statements”, above.
During
the fiscal year ended December 31, 2006, the Registrant did not have an audit
committee.
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, High Velocity Alternative Energy Corp. has duly caused this Report to
be
signed on behalf of the undersigned thereunto duly authorized on June 23,
2006.
High
Velocity Alternative Energy Corp.
By:
/s/ Michael Margolies
Michael
Margolies, President and CEO
Pursuant
to the requirements of the Securities Exchange Act of 1934, this Report has
been
signed by the following persons in the capacities indicated and on December
27,
2007.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Ronald Shapss
|
|
Chairman
|
|
December
27, 2007
|
Ronald
Shapss
|
|
|
|
|
|
|
|
|
|
/s/
Michael Margolies
|
|
CEO,
President, Director
|
|
December
27, 2007
|
Michael
Margolies
|
|
|
|
|
|
|
|
|
|
/s/
James W. Zimbler
|
|
Director
|
|
December
27, 2007
|
James
W. Zimbler
|
|
|
|
|
|
|
|
|
|
/s/
Stanley Chason
|
|
Director
|
|
December
27, 2007
|
Stanley
Chason
|
|
|
|
|
|
|
|
|
|
/s/
Elliot Cole
|
|
Director
|
|
December
27, 2007
|
Elliot
Cole
|
|
|
|
|
High
Velocity Alternative Energy Corp. and Subsidiaries
Consolidated
Financial Statements
with
Independent
Auditors' Report
December
31, 2006
High
Velocity Alternative Energy Corp. and Subsidiaries
Index
to the Consolidated Financial Statements
December
31, 2006
|
Page
|
|
|
Report
of Independent Registered Public Accounting Firm
|
1
|
|
|
Consolidated
Financial Statements
|
|
|
|
Consolidated
Balance Sheet
|
2
|
|
|
Consolidated
Statements of Operations
|
3
|
|
|
Consolidated
Statements of Stockholders' Equity (Deficit)
|
4
|
|
|
Consolidated
Statements of Cash Flows
|
5
|
|
|
Notes
to Consolidated Financial Statements
|
6
|
Report
of
Independent Registered Public Accounting Firm
To
the
Board of Directors and Stockholders
High
Velocity Alternative Energy Corp.
We
have
audited the accompanying consolidated statement of operations (as restated
for
discontinued operation), stockholders' equity (deficit), and cash flows (as
restated for discontinued operation) of High Velocity Alternative Energy Corp.,
f/k/a/ American Petroleum Group, Inc. and Subsidiaries for the year
ended of December 31, 2005. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit.
We
conducted our audit in accordance with auditing standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation,
we believe that our audit provide a reasonable basis for our
opinions.
In
our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the results of their operations and their cash flows
of High Velocity Alternative Energy Corp. and Subsidiaries for the year
ended of December 31, 2005, in conformity with accounting principles
generally accepted in the United States of America.
The
accompanying consolidated financial statements have been prepared assuming
that
the Company will continue as a going concern. As discussed in Note B
to the consolidated financial statements, the Company is dependent on its
ability to obtain the necessary financing to meet its obligations and pay its
liabilities arising from normal business operations when they come
due. These factors, along with other matters set forth in Note B,
raise substantial doubt that the Company will be able to continue as a going
concern. Management's plan regarding those matters is also described
in note B. The consolidated financials do not include any adjustments
that might result from the outcome of these uncertainties.
Brown
Smith Wallace,
LLC
St.
Louis. Missouri
May
24, 2006
Consent
of Independent Registered Public Accounting Firm
We
hereby
consent to the incorporation by reference in this Annual Report on Form 10-KSB
of High Velocity Alternative Energy Corp. for the year ended December 31, 2005
of our report dated May 24, 2006 relating to the financial statements and
financial statement schedules for the year ended December 31, 2005 listed in
the
accompanying index.
Brown
Smith Wallace, LLC
St.
Louis, Missouri
December
27, 2007
Report
of
Independent Registered Public Accounting Firm
To
the
Board of Directors and Stockholders
High
Velocity Alternative Energy Corp.
We
have
audited the accompanying consolidated balance sheet of High Velocity Alternative
Energy Corp., f/k/a/ American Petroleum Group, Inc. and Subsidiaries as of
December 31, 2006, and the related consolidated statement of operations,
stockholders' equity (deficit), and cash flows for the year then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We
conducted our audit in accordance with auditing standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform an audit to obtain reasonable assurance whether
the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation,
We believe that our audits provide a reasonable basis for our
opinions.
In
our
opinion, the consolidated financial statements referred to above present
fairly,
in all material respects, the financial position of High Velocity Alternative
Energy Corp. and Subsidiaries as of December 31, 2006, and the results of
their
operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of
America.
The
accompanying consolidated financial statements have been prepared assuming
that
the Company will continue as a going concern. As discussed in Note B
to the consolidated financial statements, the Company is dependent on its
ability to obtain the necessary financing to meet its obligations and pay
its
liabilities arising from normal business operations when they come
due. These factors, along with other matters set forth in Note B,
raise substantial doubt that the Company will be able to continue as a going
concern. Management's plan regarding those matters is also described
in note B. The consolidated financials do not include any adjustments
that might result from the outcome of these uncertainties.
Paritz
&
Company
P.A.
Hackensack,
New Jersey
November
6, 2007
Triton
Petroleum Group, Inc. and Subsidiaries
Consolidated
Balance Sheet
December
31, 2006
ASSETS
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
Cash
and cash equivalents
|
|
$ |
31,019 |
|
Trade
accounts receivable, net of allowance for doubtful accounts
of $22,000
|
|
|
183,154 |
|
Inventory
|
|
|
402,916 |
|
Prepaid
expenses and sundry current assets
|
|
|
14,788 |
|
Total
Current Assets
|
|
|
631,877 |
|
|
|
|
|
|
Equipment,
net of accumulated depreciation and amortization of $5,535
|
|
|
533 |
|
|
|
|
|
|
Other
assets
|
|
|
14,700 |
|
TOTAL
ASSETS
|
|
$ |
647,110 |
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIENCY
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Book
overdraft
|
|
$ |
238,463 |
|
Trade
accounts payable
|
|
|
2,251,497 |
|
Accrued
interest
|
|
|
277,737 |
|
Accrued
expenses
|
|
|
5,799 |
|
Advances
from former president
|
|
|
327,915 |
|
Convertible
notes payable
|
|
|
550,000 |
|
Loans
payable to officers/stockholders
|
|
|
1,625,975 |
|
Total
Current Liabilities
|
|
|
5,277,386 |
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
Stockholders'
Deficiency
|
|
|
|
|
|
|
|
|
|
Common
stock, $.001 par value; 100,000,000 shares authorized;
23,353,500 shares issued and outstanding
|
|
|
23,354 |
|
Additional
paid-in capital
|
|
|
18,027,878 |
|
Accumulated
deficit
|
|
|
(22,681,508 |
) |
|
|
|
(4,630,276 |
) |
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
|
|
$ |
647,110 |
|
Triton
Petroleum Group, Inc. and Subsidiaries
Consolidated
Statements of Operations
Years
Ended December 31, 2006 and 2005
|
|
2006
|
|
|
2005
(Restated)
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
2,314,907 |
|
|
$ |
1,965,330 |
|
Cost
of goods sold
|
|
|
1,697,606 |
|
|
|
1,440,110 |
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
617,301 |
|
|
|
525,220 |
|
|
|
|
|
|
|
|
|
|
Total
selling, general and administrative expenses
|
|
|
2,429,139 |
|
|
|
7,774,559 |
|
|
|
|
|
|
|
|
|
|
Loss
from continuing operations before other income and expense
|
|
|
(1,811,838 |
) |
|
|
(7,249,339 |
) |
|
|
|
|
|
|
|
|
|
Other
Income (Expense)
|
|
|
|
|
|
|
|
|
Write
off and forgiveness of debts
|
|
|
(300,000 |
) |
|
|
492,500 |
|
Other
income
|
|
|
- |
|
|
|
13,056 |
|
Interest
expense
|
|
|
(136,361 |
) |
|
|
(150,517 |
) |
Total
Other Income (Expense)
|
|
|
(436,361 |
) |
|
|
355,039 |
|
|
|
|
|
|
|
|
|
|
Net
loss from continuing operations
|
|
|
(2,248,199 |
) |
|
|
(6,894,300 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations
|
|
|
|
|
|
|
|
|
Loss
from the operation of the discontinued component
|
|
|
(98,036 |
) |
|
|
(135,103 |
) |
Impairment
of goodwill relating to the discontinued component
|
|
|
- |
|
|
|
(312,807 |
) |
Loss
on disposal
|
|
|
(155,445 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net
loss from discontinued operations
|
|
|
(253,481 |
) |
|
|
(447,910 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$ |
(2,501,680 |
)
|
|
$ |
(7,342,210 |
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
Per Share
|
|
|
|
|
|
|
|
|
From
continuing operations
|
|
$ |
(0.11 |
)
|
|
$ |
(0.61 |
)
|
From
discontinued operations
|
|
$ |
(0.01 |
)
|
|
$ |
(0.04 |
)
|
Triton
Petroleum Group, Inc. and Subsidiaries
Consolidated
Statements of Stockholders' Deficiency
Years
Ended December 31, 2006 and 2005
|
|
Preferred
Stock
|
|
|
Common
Stock
|
|
|
Additional
Paid-In
|
|
|
Accumulated
|
|
|
|
|
|
|
Number
|
|
|
Par
Value
|
|
|
Number
|
|
|
Par
Value
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of December 31, 2004
|
|
|
2,527,500 |
|
|
$ |
25,275 |
|
|
|
3,740,000 |
|
|
$ |
3,740 |
|
|
$ |
11,523,435 |
|
|
$ |
(12,837,618 |
)
|
|
$ |
(1,285,168 |
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(7,342,210 |
) |
|
|
(7,342,210 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued
|
|
|
1,150,000 |
|
|
|
11,500 |
|
|
|
12,224,750 |
|
|
|
12,225 |
|
|
|
6,197,557 |
|
|
|
- |
|
|
|
6,221,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
shares exchanged for common stock
|
|
|
(3,677,500 |
) |
|
|
(36,775 |
) |
|
|
1,838,750 |
|
|
|
1,839 |
|
|
|
34,936 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of December 31, 2005
|
|
|
- |
|
|
|
- |
|
|
|
17,803,500 |
|
|
|
17,804 |
|
|
|
17,755,928 |
|
|
|
(20,179,828 |
) |
|
|
(2,406,096 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,501,680 |
) |
|
|
(2,501,680 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
based compensation
|
|
|
- |
|
|
|
- |
|
|
|
5,550,000 |
|
|
|
5,550 |
|
|
|
271,950 |
|
|
|
- |
|
|
|
277,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of December 31, 2006
|
|
|
- |
|
|
$ |
- |
|
|
|
23,353,500 |
|
|
$ |
23,354 |
|
|
$ |
18,027,878 |
|
|
$ |
(22,681,508 |
)
|
|
$ |
(4,630,276 |
)
|
Triton
Petroleum Group, Inc. and Subsidiaries
Consolidated
Statements of Cash Flows
Years
Ended December 31, 2006 and 2005
|
|
2006
|
|
|
2005
(Restated)
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
Net
loss from continuing operations
|
|
$ |
(2,248,199 |
)
|
|
$ |
(6,894,300 |
)
|
Cash
used in operating activities of discontinued operations
|
|
|
(253,481 |
) |
|
|
(447,910 |
) |
Impairment
of goodwill relating to discontinued operations
|
|
|
- |
|
|
|
312,807 |
|
Loss
upon deconsolidation of subsidiary
|
|
|
155,445 |
|
|
|
- |
|
Compensation,
consulting and termination expenses in exchange for shares
|
|
|
277,500 |
|
|
|
5,122,500 |
|
Adjustments
to reconcile net loss to net cash used in
|
|
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
|
|
|
Bad
debts
|
|
|
44,395 |
|
|
|
549,642 |
|
Increase
in loans and advances payable to related parties
|
|
|
266,935 |
|
|
|
- |
|
Write
off and forgiveness of advances and debt
|
|
|
300,000 |
|
|
|
(492,500 |
) |
Depreciation
|
|
|
1,512 |
|
|
|
9,720 |
|
(Increase)
decrease in operating assets:
|
|
|
|
|
|
|
|
|
Trade
accounts receivable
|
|
|
96,134 |
|
|
|
(31,837 |
) |
Advances
to others
|
|
|
1,900 |
|
|
|
(204,200 |
) |
Inventory
|
|
|
124,584 |
|
|
|
(262,503 |
) |
Prepaid
expenses
|
|
|
16,091 |
|
|
|
(28,579 |
) |
Other
assets
|
|
|
|
|
|
|
(14,700 |
) |
Increase
(decrease) in operating liabilities:
|
|
|
|
|
|
|
|
|
Book
overdraft
|
|
|
140,751 |
|
|
|
92,383 |
|
Trade
accounts payable
|
|
|
1,262,787 |
|
|
|
427,701 |
|
Accrued
expenses
|
|
|
(78,168 |
) |
|
|
144,993 |
|
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities
|
|
|
108,186 |
|
|
|
(1,716,783 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Acquisition
of division
|
|
|
- |
|
|
|
(530,625 |
) |
Purchases
of equipment
|
|
|
- |
|
|
|
(3,251 |
) |
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
- |
|
|
|
(533,876 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Issuance
of common stock
|
|
|
- |
|
|
|
3,826 |
|
Increase
in additional paid-in capital
|
|
|
- |
|
|
|
1,008,946 |
|
Proceeds
from loans payable
|
|
|
- |
|
|
|
1,239,181 |
|
Payments
on loans payable
|
|
|
(77,167 |
) |
|
|
(2,095 |
) |
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
(77,167 |
) |
|
|
2,249,858 |
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash and cash equivalents
|
|
|
31,019 |
|
|
|
(801 |
) |
Cash
and cash equivalents, beginning of year
|
|
|
- |
|
|
|
801 |
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, end of year
|
|
$ |
31,019 |
|
|
$ |
- |
|
Triton
Petroleum Group, Inc. and Subsidiary
Notes
to Consolidated Financial Statements
Note
A – Nature of Operations
The
Company was incorporated in the State of Nevada in May, 2000 as Prelude
Ventures, Inc. and changed its name to American Capital Alliance, Inc. in
November, 2003. In November, 2004, the Company’s name was changed to
American Petroleum Group, Inc. and in 2005 it was changed to Triton Petroleum
Group, Inc. (“The Company”). See note H.
The
Company’s currently manufactures and distributes petroleum and related products
for the automotive industry.
Note
B – Going Concern
The
financial statements have been prepared using accounting principles generally
accepted in the United States of America applicable for a going concern which
assumes that the Company will realize its assets and discharge its liabilities
in the ordinary course of business. At December 31, 2006, the Company
had accumulated losses of $22,681,508 since its inception. The
Company’s ability to continue as a going concern is dependent upon, among other
things, its ability to achieve profitable operations, to maintain its existing
financing and to obtain additional financing to meet its obligations and pay
its
liabilities when they come due. The Company is currently pursuing new
debt and equity financing in conjunction with proposed future acquisitions
and
operations.
The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts and
classification of liabilities that might be necessary should the Company be
unable to continue in existence.
The
Company has incurred, and continues to incur, losses from
operations. For the years ended December 31, 2006 and 2005, the
Company incurred net losses of $2,248,199 and $6,894,300, from continuing
operations respectively. During these years the Company began
implementing strategies to reduce its cash used in operating
activities. The Company’s strategy included a targeted reduction of
the employee workforce, increasing the efficiency of the Company’s processes,
focusing development efforts on products with a greater probability of
commercial sales, reducing professional fees and discretionary expenditures,
and
negotiating favorable payment arrangements with suppliers and service
providers.
To
date,
the Company had financed its operations primarily through private equity
(primarily through existing stockholders) and debt financing. The
Company believes that it does not have sufficient funds to operate its business
through the end of 2007.
Note
C – Summary of Significant Accounting Policies
Principles
of Consolidation
The
consolidated financial statements include the accounts of Triton Petroleum
Group, Inc. and its wholly owned subsidiary, American Petroleum Products Company
(“APPC”). The accounts of Triton Petroleum LLC (“Triton”) have been
included as discontinued operations for the period from July 1, 2005 to December
31, 2006. All intercompany transactions and accounts have been eliminated upon
consolidation.
Revenue
Revenue
is earned and recognized when the product title passes from the Company to
the
buyer. Depending on the shipping contract (FOB shipping point/FOB
destination), revenue is recognized and earned when the product is delivered
and
accepted by the buyer.
Trade
Receivables
Concentration
of credit risk with respect to receivables, which are unsecured, is generally
limited due to the wide variety of customers and markets using the Company’s
products, as well as their dispersion across many geographic
areas. The Company maintains allowances for potential credit losses,
and such losses have been minimal and within management’s
expectations. The allowance for doubtful accounts is estimated based
on various factors including revenue, historical credit losses and current
trends.
Inventory
Inventory
consisted of primarily raw materials (oil, additives and packaging material)
and
is valued at the lower of cost or market applied on a first-in, first-out
basis.
Use
of Estimates in Financial Statement Preparation
The
preparation of financial statements, in conformity 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 reported amounts of revenues and expenses
during the reporting period. Actual results could vary from the
estimates that were used.
Cash
and Cash Equivalents
For
purposes of reporting cash flows, the Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.
Depreciation
Depreciation
of equipment is computed using the straight-line method over 3 to 10 years
for
financial statements and income tax reporting purposes.
Advertising
Costs
Advertising
costs are expensed as incurred. There were no advertising costs
during 2006 and 2005.
Income
Taxes
The
Company uses the liability method of accounting for income taxes pursuant to
Statement of Financial Accounting Standards, No. 109, “Accounting for Income
Taxes”. Under this method, deferred taxes are determined based on the
estimated future tax effects of differences between the financial statement
and
tax basis of assets and liabilities given the provisions of the enacted tax
laws. Valuation allowances are recorded to reduce deferred tax assets
when it is more likely than not that a tax benefit will not be
realized.
Loss
Per Share
The
Company reports basic loss per share in accordance with the Statement of
Financial Accounting Standards No. 128, “Earnings Per Share”. Basic
loss per share is computed using the weighted average number of shares
outstanding during the period. Diluted loss per share is excluded if
the potential effect is anti-dilutive. As such, no diluted loss per
share amount have been included in the financial statements.
Stock-Based
Compensation
The
Company utilizes the fair value method of recording stock-based compensation
of
employees and others for services rendered, applied on the prospective
method. The prospective method requires expense to be recognized for
all awards granted and vested during the period.
New
Accounting Pronouncements
In
June
2005, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 154
“Accounting Changes and Error Corrections” (“SFAS No. 154”),
which requires entities that make a change in accounting principle to
apply that change retrospectively to prior periods’ financial statements, unless
such retrospective application would be impracticable. SFAS No. 154
supersedes Accounting Principles Board Opinion No. 20, Accounting changes (“APB
No. 20”), which previously required that most voluntary changes in accounting
principle be recognized by including in the current period’s net income the
cumulative effect of changing to the new accounting principle. SFAS
No. 154 also makes a distinction between “retrospective application” of an
accounting principle and the “restatement” of financial statements to reflect
the correction of an error.
In
September 2006, the Securities and Exchange Commission (“SEC”) issued Staff
Accounting Bulletin No. 108, (“SAB 108”) Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial
Statements. SAB 108 requires analysis of misstatements using both the
income statement and balance sheet approach in assessing materiality and
provides for a one-time cumulative effect transition adjustment.
In
the
opinion of management, adoption of the above pronouncements will not have a
material effect on the Company.
Impairment
of Long Lived Assets
The
Company evaluates whether events and circumstances have occurred that indicate
the remaining estimated useful life of long lived assets may warrant revision
or
that the remaining balance of an asset may not be recoverable. The
measurement of possible impairment is based on the ability to recover the
balance of assets from expected future operating cash flows on an undiscounted
basis. In the opinion of management, no such impairment existed at
December 31, 2006.
Reclassifications
Certain
prior period amounts have been reclassified to conform to the current year
presentation.
Note
D – Income Taxes
At
December 31, 2006, the Company has net operating loss carryforwards (“NOL’s”),
which expire commencing in 2022, totaling approximately
$20,000,000.
The
Company has a deferred tax asset of approximately $6,800,000 resulting from
available NOL’s for which a 100% valuation allowance has been
applied.
Note
E – Business Combinations, Abandoned Combinations and Discontinued
Operations
Triton
Petroleum, LLC
On
July
1, 2005, TPG acquired the operating assets of Triton Petroleum, LLC
(“Triton”). Triton purchases used oil from various
consolidators of used petroleum such as gear oil, machine oils, and transports
the un-combusted, but unrefined oils back to its reclamation facility in
Detroit, Michigan, for refining where it undergoes a detailed reclamation
process which extrapolates all impurities and contaminants from the oil leaving
renewable petroleum base oil which can be blended with new crude and other
chemical components.
During
2006 the acquisition was cancelled and Triton’s operations were
discontinued. The results of operations for Triton have been
reclassified as discontinued operations for all periods presented.
The
results of operations from July 1, 2005 thru December 31, 2006 are included
in
the consolidated financial statements as discontinued operations and are
summarized as follows.
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
Sales
|
|
$ |
-0- |
|
|
$ |
-0- |
|
|
|
|
|
|
|
|
|
|
Costs
and expenses
|
|
|
98,036 |
|
|
|
135,103 |
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(98,036 |
)
|
|
$ |
(135,103 |
)
|
Because
the plant has been significantly idle since acquisition, no pro forma or prior
period financial statements have been included.
The
Company has not been able to operate the assets acquired and was unable to
demonstrate the ability to do so, therefore goodwill was recorded as impaired
during the year ended December 31, 2005.
Oilmatic
Systems, LLC
During
2004, the Company entered into a Letter of Intent to purchase Oilmatic Systems
LLC and Oilmatic International, Inc., (collectively “Oilmatic”) in exchange for
shares of Company’s common stock. It was anticipated that the
transaction would close after the end of the first fiscal quarter of
2005. Effective May 20, 2005, management of the Company felt that the
mutual goals of both parties were not attainable and cancelled the proposed
acquisition.
In
connection with the proposed acquisition, the Company advanced Oilmatic an
interest free loan of $300,000. Despite repeated demands for the
re-payment of the loan, which was due nine months after issuance, the Company
has not been able to collect the amount due. Accordingly, the entire
balance was written off in 2006.
Note
F – Related Party Transactions
Advances
from Former President
This
obligation is non interest bearing, unsecured, has no specific terms of
repayment and consists of the following:
Amounts
previously advanced to a subsidiary of the Company acquired in
2003
|
|
$ |
142,915 |
|
|
|
|
|
|
Accrued
rent payable
|
|
|
185,000 |
|
|
|
|
|
|
Total
|
|
$ |
327,915 |
|
Certain
entities owned or controlled by the former president of a subsidiary purport
to
have legal title to the operating assets of a subsidiary acquired in
2003. Although no lease exists, these entities are claiming
that the Company owes a monthly rental amount of approximately
$15,000. Based upon settlement discussions with the owner of the real
estate the Company has accrued approximately $185,000 for past due rental
expense.
Loans
from Officers and Stockholders
These
notes are unsecured, due on demand, and bear interest of 8% per
annum.
The
Company also entered into a stock borrowing arrangement whereby several of
the
above stockholders and officers of the Company transferred approximately
1,000,000 shares pre-split or 50,000 shares on a post split basis of common
stock into an escrow account. The shares were subsequently sold with
the proceeds of $500,000 being transferred to the Company. The
Company was obligated to return the shares to the original holders by April
2005. This obligation was subsequently extended and the shares were
returned on December 30, 2005. 50,000 post-reverse split shares were
issued with a value of $7,500 ($0.15 per share).
Note
G – Convertible Notes Payable
Convertible
notes payable consist of the following:
Note
convertible into 588,235 shares of common stock, bearing interest
at 7%
per annum, was due on December 31, 2005. This obligation
is collateralized a first security interest in substantially all
assets of
the company. See note I
|
|
$ |
500,000 |
|
|
|
|
|
|
Other,
bearing interest at 9% per annum (1)
|
|
|
50,000 |
|
|
|
$ |
550,000 |
|
(1) Principal
and any accrued interest is convertible into common stock of the Company based
upon a formula equal to 40% below the closing bid price of the stock starting
after six months from execution of this agreement (150,000 shares at December
31, 2005). Additionally, the agreement contains certain
covenants prohibiting the payment of dividends, retirements or
redemptions of capital stock, or the transfer of material assets of the
Company. On October 18, 2004, the Company received notice from the
lender that, in its opinion, the Company was in default on the arrangement
as a
result of distributions to classes of equity holders and possibly transfer
of
material assets. The lender has made assertions about
misappropriation of corporate funds. Management of the company finds
these assertions as unfounded and the Company is in compliance with the terms
of
the agreement. Discussions regarding the resolution are
continuing.
NOTE
H – CONTINGENCIES
The
Company is subject to legal proceedings and claims which have arisen in the
ordinary course of business and have not yet been finally
adjudicated. These actions when ultimately concluded and determined
will not, in the opinion of management, have a material adverse effect on the
results of operations or the financial condition of the Company.
NOTE
I – SUBSEQUENT EVENTS
On
August
21, 2007 the Company changed its name to High Velocity Alternative Energy
Corp.
On
June
19, 2007 the terms of the secured convertible notes referred to in
Note G were amended to extend the maturity date to December 31, 2008
and to entitle the holder of the note to convert all of the outstanding balance
of the obligation plus accrued interest and liquidated damages (aggregating
approximately $890,000 at June 19, 2007) into shares of the Company’s common
stock at a price per share equal to the lower of $.85 per share or 80% of the
volume weighted average price, as defined, of the Company’s common stock for the
thirty trading days immediately preceding the conversion
date.
Effective
February 21, 2007 the company converted approximately $1,500,000 of loans
due to
stockholders and officers of the company to an equal number of Series B
Cumulative Preferred Shares of stock.
10