Firemans Contractors, Inc.
Condensed Notes to Financial Statements
September 30, 2013
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Firemans Contractors, Inc. (“The Company”) was incorporated under the laws of the State of Nevada on August 21, 2009. Firemans Contractors is a full service painting company, focusing on residential, commercial and industrial parking lot striping, and parking lot maintenance services.
On August 19, 2013, the Company filed a Certificate of Change regarding a 1 for 50 shares reverse stock split. The split was effective September 3, 2013. The accompanying financial statements reflect retroactive application of the split.
NOTE 2. BASIS OF PRESENTATION
The Financial Statements are unaudited. As permitted under the Securities and Exchange Commission (“SEC”) requirements for interim reporting, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. We believe that these financial statements include all necessary and recurring adjustments for the fair presentation of the interim period results. These financial statements should be read in conjunction with the Financial Statements and related notes included in our annual report on Form 10-K for the fiscal year ended June 30, 2013. The results of operations for the three months ended September 30, 2013 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2014.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Subsequent actual results may differ from those estimates.
NOTE 3. FAIR VALUE OF FINANCIAL INSTRUMENTS
Carrying amounts of certain of our financial instruments, including accounts receivable, accounts payable and other payables approximate fair value due to their short maturities. Carrying values of notes receivable, convertible notes payable, derivative liabilities and long-term debt approximate fair values as they approximate market rates of interest. None of our financial instruments are held for trading purposes.
Fair value measurements are based upon inputs that market participants use in pricing an asset or liability, which are classified into two categories: observable inputs and unobservable inputs. Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect a company’s own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. These two types of inputs are further prioritized into the following fair value input hierarchy:
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•
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Level 1 — quoted prices for identical assets or liabilities in active markets.
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Firemans Contractors, Inc.
Condensed Notes to Financial Statements
September 30, 2013
NOTE 3. FAIR VALUE OF FINANCIAL INSTRUMENTS - continued
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•
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Level 2 — quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates) and inputs derived principally from or corroborated by observable market data by correlation or other means.
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|
•
|
Level 3 — unobservable inputs for the asset or liability.
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The fair value input hierarchy level to which an asset or liability measurement in its entirety falls is determined based on the lowest level input that is significant to the measurement in its entirety.
Derivative liabilities, described in Note 6, are classified as Level 2.
NOTE 4. NOTES RECEIVABLE
Effective July 1, 2012, the Company sold its first franchise. Of the total $35,000 franchise fee, $28,000 was financed under a note, with a term of 38 months, and annual interest rate of 7%. As of September 30 and June 30, 2013, balances under the Note were $17,546 and $19,711, respectively. Principal received for the three months ended September 30, 2013 and 2012 was $2,164 and $2,018, respectively. Interest income for the same periods was $332 and $478, respectively.
Effective December 15, 2012, the Company sold its second franchise. Of the total $35,000 franchise fee, $34,000 was financed. Under the agreement, franchisee will pay for the first nine months 10% of gross revenue toward the balance, which will not accrue any interest. If any balance will remain at the end of that term, it will be placed into an interest bearing note. As of September 30 and June 30, 2013, balances under the Note were $22,399 and $29,880, respectively.
On January 1, 2013, the Company sold equipment to the second franchisee and financed the total amount of $5,000 under a note, with a term of 36 months, and annual interest rate of 7%. As of September 30 and June 30, 2013, balances under the Note were $3,846 and $4,237, respectively. Principal received for the three months ended September 30, 2013 was $391. Interest income for the same period was $72.
NOTE 5. WARRANTIES
The Company warrants the work for one year after completion of a project. Reserve for warranty work is established in the amount of 1% of sales for the previous twelve months. As of September 30 and June 30, 2013, the balances of warranty liability were $11,609 and $10,096, respectively. Warranty expenses for the three months ended September 30, 2013 and 2012, were $1,513 and a negative $34, respectively, which are included in the Cost of revenues on the Statements of Operations.
NOTE 6. CONVERTIBLE NOTES PAYABLE
In January of 2011, the Company signed a Convertible Note agreement. Under the agreement, the Company can borrow up to $500,000, on an as needed basis. Interest on outstanding balance is due monthly, at a rate of 36% per year. The Holder of the Note has a right to convert part, or the entire outstanding balance into shares of Company’s common stock at 30% discount to market price. Unpaid principal and interest outstanding under the Note, is due on January 1, 2014 (extended term), unless the agreement is further extended, with consent of both parties.
Firemans Contractors, Inc.
Condensed Notes to Financial Statements
September 30, 2013
NOTE 6. CONVERTIBLE NOTES PAYABLE - continued
On January 18, 2011, the Company received $60,000 as the first advance under the Note.
On April 12, 2011, the Company received $60,000 as the second advance under the Note.
On November 1, 2011, the Company received $100,000 as the third advance under the Note. The Company recorded $42,857 related to the deemed beneficial conversion feature of this advance, of which $14,243 has been amortized to interest expense in the accompanying statements of operations for each of the three months ended September 30, 2012.
On March 27, 2012, the Company received $20,000 as the fourth advance under the Note. The Company recorded $3,148 related to the deemed beneficial conversion feature of this advance, of which $1,049 has been amortized to interest expense in the accompanying statements of operations for the three months ended September 30, 2012.
On May 4, 2012, the Company received $20,000 as the fifth advance under the Note. The Company recorded $1,584 related to the deemed beneficial conversion feature of this advance, of which $594 has been amortized to interest expense in the accompanying statements of operations for the three months ended September 30, 2012.
On August 22, 2012, the Company received $46,000 as the sixth advance under the Note. The Company recorded $36,853 related to the deemed beneficial conversion feature of this advance, of which $12,213 has been amortized to interest expense in the accompanying statements of operations for the three months ended September 30, 2012.
During April and May of 2012, $60,000 outstanding under the Note was converted into 181,529 shares of common stock of the Company, representing $30,348 of principal and $29,652 of interest.
During August and September of 2012, $161,922 outstanding under the Note was converted into 2,730,188 shares of common stock of the Company, representing $131,607 of principal and $30,315 of interest.
During October and November of 2012, $58,657 outstanding under the Note was converted into 2,215,339 shares of common stock of the Company, representing $55,016 of principal and $3,641 of interest.
During February and March of 2013, the Company issued 4,828,290 shares of common stock for the total amount of $18,662, representing $6,367 of principal and $6,340 of interest outstanding under the note; and $5,955 of fees related to conversions.
During September of 2013, the Company issued 2,309,062 shares of common stock for the total amount of $4,002, representing $1,782 of principal and $1,970 of interest outstanding under the note; and $250 of fees related to conversions.
As of September 30 and June 30, 2013, combined principal balances outstanding under the Note were $80,879 and $82,662, respectively. Balances of interest accrued under the Note as of September 30 and June 30, 2013, were $14,245 and $8,280, respectively.
Firemans Contractors, Inc.
Condensed Notes to Financial Statements
September 30, 2013
NOTE 6. CONVERTIBLE NOTES PAYABLE - continued
On April 8, 2012, the Company issued a convertible promissory note in the amount of $25,000, bearing interest at a rate of 20% per annum. The note is unsecured and matured on December 1, 2012. The entire principal and accrued interest on the note are convertible into common stock of the Company at a variable conversion price, with 30% discount to the market price, at the point of conversion. The Company recorded $24,770 related to the deemed beneficial conversion feature of this note, of which $9,289 have been amortized to interest expense in the accompanying statements of operations for the three months ended September 30, 2012. During January and February of 2013, $22,559 of principal outstanding under the note was converted into 3,005,860 shares of common stock of the Company. As of September 30 and June 30, 2013 the principal balance was $2,441, and accrued interest balance was $3,747.
On May 25, 2012, the Company issued a convertible promissory note in the amount of $40,000, bearing interest at a rate of 8% per annum. The note is unsecured and matured on February 21, 2013. The entire principal and accrued interest on the note are convertible into common stock of the Company at a variable conversion price, with 45% discount to the market price, at the point of conversion. The Company determined that the conversion feature of the Note should be accounted for as a convertible note derivative liability, and recorded at its fair value of $32,727. During November and December of 2012, $23,000 of principal balance was converted into 1,110,467 shares of common stock of the Company. During January and February of 2013, remaining $17,000 of principal balance was converted into 1,671,579 shares of common stock of the Company. During April of 2013, $1,600 of accrued interest was converted into 533,333 shares of common stock of the Company. For the three months ended September 30, 2012, amortization of the debt discount was $10,909, reflected on the accompanying statements of operations as interest expense.
On July 13, 2012, the Company issued a convertible promissory note in the amount of $32,500, bearing interest at a rate of 8% per annum. The note is unsecured and matured on March 29, 2013. The entire principal and accrued interest on the note are convertible into common stock of the Company at a variable conversion price, with 45% discount to the market price, at the point of conversion. The Company determined that the conversion feature of the note should be accounted for as a convertible note derivative liability, and recorded at its fair value of $26,591. During March of 2013, $3,000 of principal balance was converted into 1,000,000 shares of common stock of the Company. During April of 2013, $2,200 of principal balance was converted into 733,334 shares of common stock of the Company. As of September 30 and June 30, 2013, principal balance of the note was $27,300. As of September 30 and June 30, 2013, the balances of accrued interest were $3,083 and $600, respectively. For the three months ended September 30, 2012, amortization of the debt discount was $8,800, reflected on the accompanying statements of operations as interest expense.
On October 2, 2012, the Company issued a convertible promissory note in the amount of $42,500, bearing interest at a rate of 8% per annum. The note is unsecured and matured on June 13, 2013. The entire principal and accrued interest on the note are convertible into common stock of the Company at a variable conversion price, with 45% discount to the market price, at the point of conversion. The Company determined that the conversion feature of the note should be accounted for as a convertible note derivative liability, and recorded at its fair value of $34,772. As of September 30 and June 30, 2013, principal remained unchanged. As of September 30 and June 30, 2013, the balances of accrued interest were $3,513 and $908, respectively.
Firemans Contractors, Inc.
Condensed Notes to Financial Statements
September 30, 2013
NOTE 6. CONVERTIBLE NOTES PAYABLE - continued
On February 25, 2013, the Company issued a convertible promissory note in the amount of $16,500, bearing interest at a rate of 8% per annum. The note is unsecured and matures on November 22, 2013. The entire principal and accrued interest on the note are convertible into common stock of the Company at a variable conversion price, with 45% discount to the market price, at the point of conversion. The Company determined that the conversion feature of the note should be accounted for as a convertible note derivative liability, and recorded at its fair value of $7,425. As of September 30 and June 30, 2013, balances of the debt discount were $1,625 and $4,100. As of September 30 and June 30, 2013, principal remained unchanged. As of September 30 and June 30, 2013, the balances of accrued interest were $797 and $341, respectively. For the three months ended September 30, 2013, amortization of the debt discount was $2,475, reflected on the accompanying statements of operations as interest expense.
As of September 30 and June 30, 2013, derivative liabilities for the convertible promissory notes totaled $64,533.
On December 5, 2012, the Company issued a convertible promissory note to Kristy D. O’Neal, who resigned from her position of Secretary and from the Board of Directors on the previous day. Principal of the Note - $105,897, represents amount owed to her as of that date, primarily for accrued compensation. This debt was previously included in the Loans payable to shareholders. Note is payable on demand and bears interest at a rate of 5% per annum. The entire principal and accrued interest on the note are convertible into common stock of the Company at a variable conversion price, with 50% discount to the market price, at the point of conversion. The Company recorded $52,949 related to the deemed beneficial conversion feature of this note. In September of 2013, $3,040 of principal balance was converted into 3,800,000 shares of common stock of the Company. As of September 30 and June 30, 2013, principal balances of the note were $102,857 and 105,897, respectively. As of September 30 and June 30, 2013, the balances of accrued interest were $4,417 and $3,062, respectively.
On December 5, 2012, the Company issued a convertible promissory note to Scott O’Neal, who resigned from the Board of Directors on the previous day. Principal of the Note - $210,200, represents amount owed to him as of that date, primarily for accrued compensation. This debt was previously included in the Loans payable to shareholders. Note is payable on demand and bears interest at a rate of 5% per annum. The entire principal and accrued interest on the note are convertible into common stock of the Company at a variable conversion price, with 50% discount to the market price, at the point of conversion. The Company recorded $105,100 related to the deemed beneficial conversion feature of this note. In September of 2013, $1,480 of accrued interest was converted into 1,850,000 shares of common stock of the Company. As of September 30 and June 30, 2013, principal balance of the note was $210,200. As of September 30 and June 30, 2013, the balances of accrued interest were $7,299 and $6,078, respectively.
On December 27, 2012, the Company issued a convertible promissory note in the amount of $5,000, bearing interest at a rate of 20% per annum. The note is unsecured and matured on June 19, 2013. The entire principal and accrued interest on the note are convertible into common stock of the Company at a variable conversion price, with 30% discount to the market price, at the point of conversion. The Company recorded $2,143 related to the deemed beneficial conversion feature of this note. As of September 30 and June 30, 2013, the principal remained unchanged, balances of accrued interest were $815 and $533, respectively.
On February 28, 2013, the Company issued a convertible promissory note in the amount of $12,500, bearing interest at a rate of 20% per annum. The note is unsecured and matures on November 27, 2013. The entire principal and accrued interest on the note are convertible into common stock of the Company at a variable conversion price, with 50% discount to the market price, at the point of conversion. The Company recorded $12,500 related to the deemed beneficial conversion feature of this note, of which $4,170 has been amortized to interest expense in the accompanying statements of operations for the three months ended September 30, 2013. As of September 30 and June 30, 2013, principal balances of the note were $9,730 and $5,560, respectively, net of corresponding beneficial conversion discounts of $2,770 and $6,940, respectively. As of September 30 and June 30, 2013, the balances of accrued interest were $1,533 and $854, respectively.
Firemans Contractors, Inc.
Condensed Notes to Financial Statements
September 30, 2013
NOTE 7. RELATED PARTY TRANSACTIONS
For the three months ended September 30, 2013 and 2012, the Company accrued $39,000 and $39,000, respectively, in salaries payable to its officers and major shareholders, which are reflected in Loans payable to shareholders. For the same periods, the Company accrued $0 and $30,000, respectively, to the officers and directors who resigned in December of 2012. As of March 31, 2013, these individuals are no longer considered insiders, and balances of their shareholder notes were transferred to convertible notes payable.
As of September 30 and June 30, 2013, the balances of shareholder notes were $487,957 and $448,289, respectively. The balance included accrued salaries, along with various advances to and from the Company. The notes are unsecured, due upon demand and accrue interest at the end of each month on the then outstanding balance at the rate of 5.00% per annum. As of September 30 and June 30, 2013, accrued interest payable on the notes was $15,624 and $12,191, respectively. Interest paid during the three months ended September 30, 2013 and 2012, was $2,521 and $2,391, respectively. These notes payable do not approximate fair value, as they are with related parties, and do not bear market rates of interest.
NOTE 8. COMMITMENTS AND CONTINGENCIES
On December 14, 2012, the Company re-negotiated its office lease and moved to a smaller location. Current lease is for $1,625 a month, and will expire on September 30, 2014. For the fiscal years following September 30, 2013, future rents under this agreement are as follows:
2014
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|
$ |
14,625 |
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2015
|
|
|
4,875 |
|
|
|
|
|
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Total
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$ |
19,500 |
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|
|
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|
Rent expenses for the three months ended September 30, 2013 and 2012, were $4,918 and $6,748, respectively.
NOTE 9. OPERATING SEGMENTS
During the period from inception through June 30, 2012, the Company operated as a single business segment. Starting July 1, 2012 the franchise segment was added. Table below reflects segment information for the three months ended September 30, 2013 and 2012:
Firemans Contractors, Inc.
Condensed Notes to Financial Statements
September 30, 2013
NOTE 9. OPERATING SEGMENTS - continued
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Operations
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Franchise
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Total
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Three Months Ended September 30, 2013
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|
|
|
|
|
|
|
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Revenues
|
|
$ |
337,137 |
|
|
$ |
- |
|
|
$ |
337,137 |
|
Franchise fees
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Royalties
|
|
|
- |
|
|
|
14,048 |
|
|
|
14,048 |
|
Total Revenues
|
|
$ |
337,137 |
|
|
$ |
14,048 |
|
|
$ |
351,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
$ |
268,637 |
|
|
$ |
- |
|
|
$ |
268,637 |
|
Sales and marketing expenses
|
|
|
22,608 |
|
|
|
10,000 |
|
|
|
32,608 |
|
General and administrative expenses
|
|
|
86,198 |
|
|
|
10,640 |
|
|
|
96,838 |
|
Depreciation and amortization
|
|
|
2,540 |
|
|
|
- |
|
|
|
2,540 |
|
Interest income
|
|
|
- |
|
|
|
405 |
|
|
|
405 |
|
Net income/(loss)
|
|
$ |
(73,053 |
) |
|
$ |
(6,189 |
) |
|
$ |
(79,242 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2012
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|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
185,795 |
|
|
$ |
- |
|
|
$ |
185,795 |
|
Franchise fees
|
|
|
|
|
|
|
35,000 |
|
|
|
35,000 |
|
Royalties
|
|
|
|
|
|
|
3,143 |
|
|
|
3,143 |
|
Total Revenues
|
|
$ |
185,795 |
|
|
$ |
38,143 |
|
|
$ |
223,938 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
$ |
143,760 |
|
|
$ |
- |
|
|
$ |
143,760 |
|
Sales and marketing expenses
|
|
|
18,267 |
|
|
|
17,540 |
|
|
|
35,807 |
|
General and administrative expenses
|
|
|
209,680 |
|
|
|
16,703 |
|
|
|
226,383 |
|
Depreciation and amortization
|
|
|
3,162 |
|
|
|
- |
|
|
|
3,162 |
|
Interest income
|
|
|
- |
|
|
|
478 |
|
|
|
478 |
|
Net income/(loss)
|
|
$ |
(280,974 |
) |
|
$ |
4,376 |
|
|
$ |
(276,598 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
$ |
22,129 |
|
|
$ |
- |
|
|
$ |
22,129 |
|
Total assets
|
|
$ |
176,449 |
|
|
$ |
43,791 |
|
|
$ |
220,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
$ |
24,669 |
|
|
$ |
- |
|
|
$ |
24,669 |
|
Total assets
|
|
$ |
161,721 |
|
|
$ |
53,828 |
|
|
$ |
215,519 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 10. PREFERRED STOCK
Effective August 16, 2011, the Company filed an amendment with the Nevada Secretary of State to authorize Class A convertible preferred stock in the amount of 250,000 shares at $1.00 par value. Class A shares have no dividend rights, except as may be declared by the Board of Directors in its sole discretion. Class A stock is ranked senior and prior to the Corporation’s common stock as to dividends and upon liquidation. Class A shares have liquidation rights of $10 per share, and are entitled to 1,000 votes each, on any matters requiring shareholders’ vote. Five shares of Class A stock can be converted into one share of common stock at any time, upon demand from the holder.
On August 16, 2011, Renee Gilmore, our President, CEO and Director, and Danielle O’Neal, our Secretary and Director, acquired 100,000 shares each of Class A convertible preferred stock, in exchange for $12,500, each, as part of payment of accrued salaries.
Firemans Contractors, Inc.
Condensed Notes to Financial Statements
September 30, 2013
NOTE 10. PREFERRED STOCK - continued
On March 12, 2013, Renee Gilmore, our President, CEO and Director, acquired 50,000 shares of Class A convertible preferred stock, and 1,165,500 shares of Class B convertible preferred stock in exchange for $1,216 owed to her, based on the market price of equivalent number of shares of common stock of the Company.
Effective August 22, 2013, the Company filed an amendment with the Nevada Secretary of State to increase authorized Class A stock from 250,000 to 350,000 shares.
Effective July 6, 2012, the Company filed an amendment with the Nevada Secretary of State to authorize Class B convertible preferred stock in the amount of 5,000,000 shares at $0.001 par value. Class B shares have no dividend rights, except as may be declared by the Board of Directors in its sole discretion. Class B stock is ranked junior and subsequent to Class A convertible preferred stock, but senior and prior to the Corporation’s common stock as to dividends and upon liquidation. Class B shares have liquidation rights of $0.10 per share, and are entitled to 100 votes each, on any matters requiring shareholders’ vote. Five shares of Class B stock can be converted into one share of common stock at any time, upon demand from the holder.
On July 6, 2012, Renee Gilmore, our President, CEO and Director, and Danielle O’Neal, our Secretary and Director, each, exchanged 200,000 shares of common stock for 1,000,000 shares of Class B convertible preferred stock, based on the conversion ratio designated for Class B shares.
On October 9, 2012, Renee Gilmore, our President, CEO and Director, exchanged 189,100 shares of common stock for 945,500 shares of Class B convertible preferred stock, based on the conversion ratio designated for Class B shares.
On October 9, 2012, Danielle O’Neal, our Secretary and Director, exchanged 177,800 shares of common stock for 889,000 shares of Class B convertible preferred stock, based on the conversion ratio designated for Class B shares.
Effective August 22, 2013, the Company filed an amendment with the Nevada Secretary of State to increase authorized Class B stock from 5,000,000 to 40,000,000 shares.
NOTE 11. COMMON STOCK
Effective August 3, 2012, the Company filed an amendment with the Nevada Secretary of State to increase the number of authorized Common Stock from 4,000,000 to 8,000,000 shares.
During July and August of 2012, the Company issued 120,000 shares of common stock for consulting services, valued at $34,200.
During August and September of 2012, the Company issued 2,730,188 shares of common stock in partial satisfaction of principal and accrued interest balance outstanding under the convertible note payable, originated on January 1, 2011, in the amount of $161,922.
Effective November 19, 2012, the Company filed an amendment with the Nevada Secretary of State to increase the number of authorized Common Stock from 8,000,000 to 19,000,000 shares.
Firemans Contractors, Inc.
Condensed Notes to Financial Statements
September 30, 2013
NOTE 11. COMMON STOCK - continued
During October and November of 2012, the Company issued 2,215,339 shares of common stock in partial satisfaction of principal and accrued interest balance outstanding under the convertible note payable, originated on January 1, 2011, in the amount of $58,657.
During November and December of 2012, the Company issued 1,110,467 shares of common stock in partial satisfaction of principal balance outstanding under the convertible note payable, originated on May 25, 2012, in the amount of $23,000.
During January and February of 2013, the Company issued 1,671,579 shares of common stock in complete satisfaction of principal balance outstanding under the convertible note payable, originated on May 25, 2012, in the amount of $17,000.
During January and February of 2013, the Company issued 3,005,860 shares of common stock in partial satisfaction of principal balance outstanding under the convertible note payable, originated on April 8, 2012, in the amount of $22,559.
During February and March of 2013, the Company issued 4,828,290 shares of common stock in partial satisfaction of principal balance outstanding under the convertible note payable, originated on January 1, 2011, in the amount of $12,707, and fees of $5,955.
During March of 2013, the Company issued 1,000,000 shares of common stock in partial satisfaction of principal balance outstanding under the convertible note payable, originated on July 13, 2012, in the amount of $3,000.
During April of 2013, the Company issued 533,333 shares of common stock in satisfaction of accrued interest balance outstanding under the convertible note payable, originated on May 25, 2012, in the amount of $1,600.
During April of 2013, the Company issued 733,334 shares of common stock in partial satisfaction of principal balance outstanding under the convertible note payable, originated on July 13, 2012, in the amount of $2,200.
On August 19, 2013, the Company filed a Certificate of Change regarding a 1 for 50 shares reverse stock split. The split was effective September 3, 2013. Corresponding change resulted in 19,000,000 shares of Common Stock being authorized.
Effective August 22, 2013, the Company filed an amendment with the Nevada Secretary of State to increase authorized Common stock from 19,000,000 to 600,000,000 shares.
During September of 2013, the Company issued 2,309,062 shares of common stock in partial satisfaction of principal balance outstanding under the convertible note payable, originated on January 1, 2011, in the amount of $4,002.
During September of 2013, the Company issued 1,850,000 shares of common stock in partial satisfaction of principal balance outstanding under the convertible note payable, originated on December 5, 2012, in the amount of $1,480.
During September of 2013, the Company issued 3,800,000 shares of common stock in partial satisfaction of principal balance outstanding under the convertible note payable, originated on December 5, 2012, in the amount of $3,040.
On September 30, 2013, the Company issued 46 shares of common stock to make correction relating to processing of the reverse stock split.
Firemans Contractors, Inc.
Condensed Notes to Financial Statements
September 30, 2013
NOTE 16. GOING CONCERN
The financial statements of the Company have been prepared on the basis of accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company had negative working capital of $1,265,370 and an accumulated deficit of $2,472,523 at September 30, 2013, and a net loss of $79,242 and negative operating cash flows of $13,779 for the three months ended September 30, 2013. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts, or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
The Company has primarily funded its operations through the net proceeds received from the Company's issuance of stock to investors. Based on the Company’s current liquidity position, the Company plans to raise additional capital through debt or equity funding within the next twelve months. There is no assurance that any such financing will be available on acceptable terms or at all. Should continuing funding requirements not be met, the Company’s operations may cease to exist.
NOTE 17. SUBSEQUENT EVENTS
During October and November of 2013, the Company issued 19,725,813 shares of common stock in partial satisfaction of principal balance outstanding under the convertible note payable, originated on January 1, 2011, in the amount of $11,388.
During October and November of 2013, the Company issued 2,999,700 shares of common stock in partial satisfaction of principal balance outstanding under the convertible note payable, originated on April 8, 2012, in the amount of $1,723.
During October and November of 2013, the Company issued 13,683,115 shares of common stock in partial satisfaction of principal balance outstanding under the convertible note payable, originated on July 13, 2012, in the amount of $9,364.
During October of 2013, the Company issued 3,500,000 shares of common stock in partial satisfaction of principal balance outstanding under the convertible note payable, originated on December 5, 2012, in the amount of $2,100.
During October of 2013, the Company issued 7,436,364 shares of common stock in partial satisfaction of principal balance outstanding under the convertible note payable, originated on December 5, 2012, in the amount of $4,090.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS