UNITED STATES

SECURITY AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


(MARK ONE)


þ   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended June 30, 2015


or


o   TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from _________ to _________


Commission File Number: 333-170315


FIRST TITAN CORP.

(Exact name of registrant as specified in its charter)


     Nevada     

 

     27-3480481     

(State or other jurisdiction of Incorporation or organization)

 

(I.R.S. Employer Identification Number)

 

 

 

500 N Rainbow Boulevard, Suite 300

                     Las Vegas, NV                     

 

   89107   

(Address of principal executive offices)

 

(Zip code)


Registrant’s telephone number, including area code: 702-448-8148


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No þ


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


 

Large accelerated filer

o

Accelerated filer

o

 

Non-accelerated filer

o

Smaller reporting company

þ

 

(Do not check is smaller reporting company)

 

 


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes o No þ


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 13, 2015, 7,634,417 shares of common stock are issued and outstanding.




TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION

4

 

 

Item 1. Financial Statements

4

 

 

Consolidated Balance Sheets  (Unaudited)

4

 

 

Consolidated Statements of Operations  (Unaudited)

5

 

 

Consolidated Statements of Comprehensive Income  (Unaudited)

6

 

 

Consolidated Statement of Changes in Stockholders’ Equity (Deficit)  (Unaudited)

7

 

 

Consolidated Statements of Cash Flows  (Unaudited)

8

 

 

Notes to the Unaudited Consolidated Financial Statements

9

 

 

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

17

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

19

 

 

Item 4. Controls and Procedures

19

 

 

PART II — OTHER INFORMATION

20

 

 

Item 1. Legal Proceedings

20

 

 

Item 1A. Risk Factors

20

 

 

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

20

 

 

Item 3. Defaults upon Senior Securities

20

 

 

Item 4. Mine Safety Disclosures

20

 

 

Item 5. Other Information

20

 

 

Item 6. Exhibits

20


- 2 -



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION


Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2014. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.


OTHER PERTINENT INFORMATION


When used in this report, the terms, “we,” the “Company,” “our,” and “us” refers to First Titan Corp., a Nevada corporation.


- 3 -



PART I — FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


FIRST TITAN CORP.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


 

 

June 30, 2015

 

September 30, 2014

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,497

 

$

1,211

 

Accounts receivable and accrued revenue receivable

 

 

11,705

 

 

15,891

 

Prepaid expenses

 

 

 

 

12,160

 

Total current assets

 

 

15,202

 

 

29,262

 

 

 

 

 

 

 

 

 

Available for sale securities

 

 

52,398

 

 

52,379

 

Oil and gas properties

 

 

 

 

 

 

 

Evaluated property, net of accumulated depletion of $111,914 and $90,880 and net of accumulated impairment of $80,141 and $80,141, respectively

 

 

87,885

 

 

95,387

 

Unevaluated property

 

 

200,575

 

 

300,575

 

Total oil and gas properties

 

 

288,460

 

 

395,962

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

356,060

 

$

477,603

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

252,192

 

$

245,876

 

Advances payable

 

 

 

 

48,000

 

Current portion of convertible notes payable, net of discount of $244,432 and $244,752, respectively

 

 

92,655

 

 

247,895

 

Current portion of accrued interest payable

 

 

27,928

 

 

4,319

 

Current portion of asset retirement obligation

 

 

15,000

 

 

14,670

 

Total current liabilities

 

 

387,775

 

 

560,760

 

 

 

 

 

 

 

 

 

Convertible notes payable, net of discount of $200,009 and $267,574, respectively

 

 

33,875

 

 

8,711

 

Convertible note payable to related party

 

 

140,275

 

 

 

Accrued interest payable

 

 

7,108

 

 

6,964

 

Accrued interest payable to related party

 

 

3,459

 

 

 

Asset retirement obligation

 

 

5,845

 

 

5,603

 

TOTAL LIABILITIES

 

 

578,337

 

 

582,038

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

Common stock, $0.001 par value; 480,000,000 shares authorized; 370,702 shares and 256,202 shares issued and outstanding at June 30, 2015 and September 30, 2014, respectively

 

 

371

 

 

256

 

Preferred stock, $0.001 par value; 20,000,000 shares authorized; no shares issued and outstanding at June 30, 2015 and September 30, 2014

 

 

 

 

 

Additional paid-in capital

 

 

3,913,202

 

 

3,234,705

 

Accumulated other comprehensive income

 

 

17,398

 

 

17,379

 

Accumulated deficit

 

 

(4,153,248

)

 

(3,356,775

)

Total stockholders’ deficit

 

 

(222,277

)

 

(104,435

)

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

$

356,060

 

$

477,603

 


On June 30, 2015, we effected a one-for-100 reverse split. All share and per share amounts have been restated to reflect the split.


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


- 4 -



FIRST TITAN CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


 

Nine months ended
June 30,

 

Three months ended
June 30,

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

OIL AND GAS SALES, net

$

35,530

 

$

82,133

 

$

13,133

 

$

28,064

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expense

 

13,580

 

 

13,489

 

 

2,507

 

 

2,165

 

Depletion, depreciation and amortization

 

21,034

 

 

62,007

 

 

9,316

 

 

31,377

 

Accretion expense

 

1,270

 

 

896

 

 

410

 

 

370

 

Impairment of oil and gas properties

 

100,000

 

 

 

 

100,000

 

 

 

General and administrative expenses

 

354,255

 

 

417,223

 

 

107,433

 

 

140,910

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

(454,609

)

 

(411,482

)

 

(206,533

)

 

(146,758

)

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(341,864

)

 

(618,225

)

 

(60,020

)

 

(355,866

)

Total other income (expense)

 

(341,864

)

 

(618,225

)

 

(60,020

)

 

(355,866

)

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

$

(796,473

)

 

(1,029,707

)

 

(266,553

)

 

(502,624

)

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS PER COMMON SHARE – Basic and diluted

$

(2.57

)

 

(7.20

)

$

(0.76

)

$

(2.88

)

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMON SHARES OUTSTANDING – Basic and diluted

 

309,488

 

 

143,109

 

 

349,279

 

 

174,440

 


On June 30, 2015, we effected a one-for-100 reverse split. All share and per share amounts have been restated to reflect the split.


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


- 5 -



FIRST TITAN CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


 

Nine months ended
June 30,

 

Three months ended
June 30,

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

$

(796,473

)

$

(1,029,707

)

$

(266,553

)

$

(502,624

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of available-for-sale securities

 

19

 

 

21,279

 

 

(2,911

)

 

(1,941

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

$

(796,454

)

 

(1,008,428

)

$

(269,464

)

$

(504,565

)


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


- 6 -



FIRST TITAN CORP.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)


 

 

Common Stock

 

Additional
Paid In

 

Accumulated
Other
Comprehensive

 

Accumulated

 

Total
Equity

 

 

 

Shares

 

Amount

 

Capital

 

Income

 

Deficit

 

(Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE,
September 30, 2014

 

256,202

 

$

256

 

$

3,234,705

 

$

17,379

 

$

(3,356,775

)

$

(104,435

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

(796,473

)

 

(796,473

)

Other comprehensive income

 

 

 

 

 

 

 

19

 

 

 

 

19

 

Comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(796,454

)

Shares issued for conversion of notes payable

 

114,500

 

 

115

 

 

457,885

 

 

 

 

 

 

458,000

 

Discount on issuance of convertible note payable

 

 

 

 

 

217,277

 

 

 

 

 

 

217,277

 

Imputed interest

 

 

 

 

 

3,335

 

 

 

 

 

 

3,335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE,
June 30, 2015

 

370,702

 

$

371

 

$

3,913,202

 

$

17,398

 

$

(4,153,248

)

$

(222,277

)


On June 30, 2015, we effected a one-for-100 reverse split. All share and per share amounts have been restated to reflect the split.


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


- 7 -



FIRST TITAN CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


 

 

Nine months ended June 30,

 

 

 

2015

 

2014

 

 

 

 

 

 

 

 

 

CASH FLOW FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net loss

 

$

(796,473

)

$

(1,029,707

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Depletion and accretion

 

 

22,304

 

 

62,903

 

Amortization of discount on convertible note payable

 

 

285,162

 

 

542,251

 

Imputed interest expense

 

 

3,335

 

 

10,659

 

Impairment of oil and gas properties

 

 

100,000

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable and accrued revenue

 

 

4,186

 

 

(11,323

)

Prepaid expenses

 

 

12,160

 

 

(12,160

)

Accounts payable and accrued liabilities

 

 

146,591

 

 

75,505

 

Accrued interest payable

 

 

49,908

 

 

65,314

 

Accrued interest payable to related party

 

 

3,459

 

 

 

NET CASH USED IN OPERATING ACTIVITIES

 

 

(169,368

)

 

(296,558

)

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

Investment in oil and gas properties

 

 

(14,230

)

 

(54,714

)

Investment in available for sale securities

 

 

 

 

(35,000

)

NET CASH USED IN INVESTING ACTIVITIES

 

 

(14,230

)

 

(89,714

)

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

Proceeds from advances

 

 

185,884

 

 

276,285

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

185,884

 

 

276,285

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH

 

 

2,286

 

 

(109,987

)

 

 

 

 

 

 

 

 

CASH, at the beginning of the period

 

 

1,211

 

 

127,748

 

 

 

 

 

 

 

 

 

CASH, at the end of the period

 

$

3,497

 

$

17,761

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

Interest

 

$

 

$

 

Taxes

 

$

 

$

 

 

 

 

 

 

 

 

 

Noncash investing and financing transaction:

 

 

 

 

 

 

 

Refinance of advances into convertible notes payable

 

$

233,884

 

$

 

Convertible note issued to related party for payment of accounts payable

 

$

140,275

 

$

 

Beneficial conversion feature of convertible note payable

 

$

217,277

 

$

276,285

 

Conversion of convertible notes payable.

 

$

458,000

 

$

395,852

 

Change in fair value of available-for-sale securities

 

$

19

 

$

21,279

 

Change in asset retirement obligation estimate

 

$

697

 

$

 


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


- 8 -



FIRST TITAN CORP.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015


Note 1. General Organization and Business


First Titan Corp., a Nevada corporation, was incorporated on September 16, 2010. The Company’s year-end is September 30. The Company formed to design and manufacture both panel and engineered/tooled custom vacuum formed instrument panels and wiring harnesses, required for the monitoring of any final product that utilizes a gas or diesel engine source. The Company is currently primarily an oil and gas exploration company.


On September 16, 2011, First Titan Corporation created First Titan Energy, LLC to invest in oil and gas properties, greenfield projects and in the development of innovative exploration and production technologies.


On September 16, 2011, we formed a new subsidiary company, First Titan Technical, LLC, to commence business operations designing and marketing automotive electronics custom-designed for heavy-duty vehicles.


On May 15, 2015, the company reincorporated from Florida to Nevada. As a result of the reincorporation, we effected a reverse split on June 30, 2015. Each shareholder in the Florida corporation received one share in the Nevada corporation for each 100 shares they held in the Florida corporation; fractional shares were rounded up to the nearest whole share and each shareholder received at least five shares.


Note 2. Going Concern


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the nine months ended June 30, 2015, the Company had a net loss of $796,473 and negative cash flow from operating activities of $169,368. As of June 30, 2015, the Company had negative working capital of $372,573. Management does not anticipate having positive cash flow from operations in the near future.


These factors raise a substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.


The Company does not have the resources at this time to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.


Management has plans to address the Company’s financial situation as follows:


In the near term, management plans to continue to focus on raising the funds necessary to implement the Company’s business plan. Management will continue to seek out debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders will continue to advance capital to the Company or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raise doubts about the Company’s ability to continue as a going concern.


In the long term, management believes that the Company’s projects and initiatives will be successful and will provide cash flow to the Company, which will be used to finance the Company’s future growth. However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability. The Company’s long-term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations, and the ability of the Company to achieve adequate profitability and cash flows from operations to sustain its operations.


- 9 -



Note 3. Summary of Significant Accounting Policies


Interim Financial Statements


The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements for the fiscal year ended September 30, 2014 and notes thereto and other pertinent information contained in our Form 10-K the Company has filed with the Securities and Exchange Commission (the “SEC”).


The results of operations for the nine month period ended June 30, 2015 are not necessarily indicative of the results to be expected for the full fiscal year ending September 30, 2015.


Consolidated Financial Statements


The consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries, First Titan Energy, LLC and First Titan Technical, LLC from the date of their formations. Significant intercompany transactions have been eliminated in consolidation.


Use of Estimates


The preparation of financial statements in conformity with GAAP 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.


Credit Risk due to Certain Concentrations


We extend credit, primarily in the form of uncollateralized oil and gas sales through the operators of our working interests, to various companies in the oil and gas industry, which results in a concentration of credit risk. The concentration of credit risk may be affected by changes in economic or other conditions within our industry and may accordingly affect our overall credit risk. However, we believe that the risk of these unsecured receivables is mitigated by the nature of the companies to which we extend credit. For the nine months ended June 30, 2015, two operators accounted for 54% and 46% of our oil and gas sales. Those operators account for 22% and 78% of accounts receivable as of June 30, 2015. We did not recognize any credit losses during the nine months ended June 30, 2015. We have not recognized an allowance for doubtful accounts as of June 30, 2015.


Cash and Cash Equivalents


For the purpose of the financial statements, cash equivalents include all highly liquid investments with maturity of three months or less. Cash and cash equivalents were $3,497 and $1,211 at June 30, 2015 and September 30, 2014, respectively.


Oil and Gas Properties


The Company follows the full cost method of accounting for its oil and gas properties, whereby all costs incurred in connection with the acquisition, exploration for and development of petroleum and natural gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing, and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil, in which case the gain or loss is recognized in the statement of operations.


- 10 -



Depletion of capitalized oil and gas properties and estimated future development costs, excluding unproved properties, are based on the units-of-production method based on proved reserves. The company recognized $21,034 and $62,007 of depletion during the nine months ended June 30, 2015 and 2014, respectively. Net capitalized costs of oil and gas properties, less related deferred taxes, are limited to the lower of unamortized cost or the cost ceiling, defined as the sum of the present value of estimated future net revenues from proved reserves based on unescalated prices discounted at ten percent, plus the cost of properties not being amortized, if any, plus the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any, less related income taxes. As of June 30, 2015, the Company has oil and gas properties in the amount of $200,575, which are being excluded from amortization because they have not been evaluated to determine whether proved reserves are associated with those properties. Costs in excess of the present value of estimated future net revenues as discussed above are charged to impairment expense. The Company applies the full cost-ceiling test on a quarterly basis on the date of the latest balance sheet presented. As of June 30, 2015, management determined that it was not economically beneficial to continue to develop a parcel of unproved properties with a cost of $100,000. As a result, the Company recognized an expense for impairment of unproved properties of $100,000 during the nine months ended June 30, 2015.


Based on management’s review, 100% of the unproved oil and gas properties balance as of June 30, 2015 are expected to be added to amortization during the year ending September 30, 2015. The table below sets forth the cost of unproved properties excluded from the amortization base as of June 30, 2015 and notes the year in which the associated costs were incurred:


 

 

Year of Acquisition

 

 

 

2012

 

2013

 

2014

 

2015

 

Total

 

Acquisition costs

 

$

153,264

 

$

47,311

 

$

 

$

 

$

200,575

 

Development costs

 

 

 

 

 

 

 

 

 

 

 

Exploration costs

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

153,264

 

$

47,311

 

$

 

$

 

$

200,575

 


Asset retirement costs are recognized when the asset is placed in service, and are included in the amortization base and amortized over proved reserves using the units of production method. Asset retirement costs are estimated by management using existing regulatory requirements and anticipated future inflation rates.


Revenue Recognition


Sales of crude oil are recognized when the delivery to the purchaser has occurred and title has been transferred. This occurs when oil has been delivered to a pipeline or a tank lifting has occurred. Crude oil is priced on the delivery date based upon prevailing prices published by purchasers with certain adjustments related to oil quality and physical location.


Common Stock


The Company records common stock issuances when all of the legal requirements for the issuance of such common stock have been satisfied.


Income Taxes


The Company accounts for income taxes under ASC 740 Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized as of June 30, 2015 or September 30, 2014.


Earnings (Loss) per Common Share


The Company computes basic and diluted earnings per common share amounts in accordance with ASC Topic 260, Earnings per Share. The basic earnings (loss) per common share are calculated by dividing the Company’s net income available to common shareholders by the weighted average number of common shares outstanding during the year. The diluted earnings (loss) per common share are calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. There are no dilutive shares outstanding for any periods reported.


- 11 -



In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation. The Company’s convertible debt is considered anti-dilutive due to the Company’s net loss for the nine months ended June 30, 2015 and 2014. As a result, the Company did not have any potentially dilutive common shares for those periods. At June 30, 2015, the Company had 34,316,160 potentially issuable shares upon the conversion of convertible notes payable and interest.


Financial Instruments


The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period between the origination of these instruments and their expected realization.


FASB Accounting Standards Codification (ASC) 820 Fair Value Measurements and Disclosures (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:


Level 1 -

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

 

 

Level 2 -

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including 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 that are derived principally from or corroborated by observable market data by correlation or other means.

 

 

Level 3 -

Inputs that are both significant to the fair value measurement and unobservable.


Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2015. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, and accrued expenses. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms that is not significantly different from its stated value.


The following table presents assets that were measured and recognized at fair value as of June 30, 2015 and September 30, 2014 and the periods then ended on a recurring and nonrecurring basis:


June 30, 2015


Description

 

Level 1

 

Level 2

 

Level 3

 

Total Realized Loss

Asset retirement obligation

 

$

 

$

 

$

20,845

 

$

Available for sale securities

 

 

52,398

 

 

 

 

 

 

Totals

 

$

52,398

 

$

 

$

20,845

 

$


September 30, 2014


Description

 

Level 1

 

Level 2

 

Level 3

 

Total Realized Loss

Asset retirement obligation

 

$

 

$

 

$

20,273

 

$

Available for sale securities

 

 

52,379

 

 

 

 

 

 

Totals

 

$

52,379

 

$

 

$

20,273

 

$


- 12 -



Beneficial Conversion Feature


Beneficial conversion feature is a non-detachable conversion feature that is in the money at the commitment date. The Company follows the guidance of ASC Subtopic 470-20 Debt with Conversion and Other Options to evaluate as to whether beneficial conversion feature exists. Pursuant to Section 470-20-30 an embedded beneficial conversion feature recognized separately under paragraph 470-20-25-5 shall be measured initially at its intrinsic value at the commitment date (see paragraphs 470-20-30-9 through 30-12) as the difference between the conversion price (see paragraph 470-20-30-5) and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible. When the Company issues an debt or equity security that is convertible into common stock at a discount from the fair value of the common stock at the date the debt or equity security counterparty is legally committed to purchase such a security (Commitment Date), a beneficial conversion charge is measured and recorded on the Commitment Date for the difference between the fair value of the Company’s common stock and the effective conversion price of the debt or equity security. If the intrinsic value of the beneficial conversion feature is greater than the proceeds allocated to the debt or equity security, the amount of the discount assigned to the beneficial conversion feature is limited to the amount of the proceeds allocated to the debt or equity security.


Commitments and Contingencies


The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. There are no known commitments or contingencies of June 30, 2015 and September 30, 2014.


Recently Issued Accounting Pronouncements


We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.


Reclassification


Certain reclassifications have been made to the prior period financial statements to conform to the current period presentation.


Subsequent events


The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.


Note 4. Advances


During the nine months ended June 30, 2015, Vista View Ventures, Inc. advanced $185,884 to the Company for working capital. These advances are non-interest bearing and payable on demand. During the same period, the Company refinanced $233,884 of the advances into convertible notes payable to Vista View Ventures, Inc. As of June 30, 2015 and September 30, 2014, advances in the amount of $0 and $48,000, respectively, are included in current liabilities on the consolidated balance sheets.


During the nine months ended June 30, 2015, we recognized $3,335 of imputed interest expense on these advances.


- 13 -



Note 5. Convertible Notes Payable


Convertible notes payable consisted of the following at June 30, 2015 and September 30, 2014:


 

 

June 30, 2015

 

September 30, 2014

 

Convertible note payable dated September 30, 2013 in the original principal amount of $528,434 due on September 30, 2015, bearing interest at 10% per year, convertible into common stock at a rate of $0.04 per share.

 

$

60,802

 

$

492,647

 

Convertible note dated June 30, 2014 payable in the original principal amount of $276,825 due on June 30, 2016, bearing interest at 10% per year, convertible into common stock at a rate of $0.03 per share.

 

 

276,285

 

 

276,285

 

Convertible note payable dated December 31, 2014 in the original principal amount of $118,620 due on December 31, 2016, bearing interest at 10% per year, convertible into common stock at a rate of $0.01 per share.

 

 

118,620

 

 

 

Convertible note payable dated March 31, 2015 in the original principal amount of $49,190 due on March 31, 2017, bearing interest at 10% per year, convertible into common stock at a rate of $0.005 per share

 

 

49,190

 

 

 

Convertible note payable dated June 30, 2015 in the original principal amount of $66,074 due on June 30, 2017, bearing interest at 10% per year, convertible into common stock at a rate of $0.53 per share

 

 

66,074

 

 

 

Total convertible notes payable

 

$

570,971

 

$

768,932

 

 

 

 

 

 

 

 

 

Less: current portion of convertible notes payable

 

 

(337,087

)

 

(492,647

)

Less: discount on noncurrent convertible notes payable

 

 

(200,009

)

 

(267,574

)

Long-term convertible notes payable, net of discount

 

$

33,875

 

$

8,711

 

 

 

 

 

 

 

 

 

Current portion of convertible notes payable

 

 

337,087

 

 

492,647

 

Less: discount on current convertible notes payable

 

 

(244,432

)

 

(244,752

)

Long-term convertible notes payable, net of discount

 

$

92,655

 

$

247,895

 


All principal along with accrued interest is payable on the maturity date. The notes are convertible into common stock at the option of the holder. The holder of the notes cannot convert the notes into shares of common stock if that conversion would result in the holder owning more than 4.9% of the outstanding stock of the Company.


Advances Refinanced into Convertible Promissory Notes


During the nine months ended June 30, 2015, the Company has signed Convertible Promissory Notes that refinance non-interest bearing advances into convertible notes payable. The Convertible Promissory Notes bear interest at 10% per annum and are payable along with accrued interest. The Convertible Promissory Note and unpaid accrued interest are convertible into common stock at the option of the holder.


Date Issued

 

Maturity Date

 

Interest
Rate

 

Conversion
Rate

 

Amount
of Note

 

Beneficial Conversion Feature

December 31, 2014

 

December 31, 2016

 

10%

 

$

0.01

 

$

118,620

 

$

102,013

March 31, 2015

 

March 31, 2017

 

10%

 

 

0.005

 

 

49,190

 

 

49,190

June 30, 2015

 

June 30, 2017

 

10%

 

 

0.53

 

 

66,074

 

 

66,074

Total

 

 

 

 

 

 

 

 

$

233,884

 

$

217,277


The Company evaluated the terms of this note in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. The Company determined that the conversion feature did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. The Company evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the notes and was deemed to be less than the market value of underlying common stock at the inception of the notes. Therefore, the Company recognized a beneficial conversion feature of $102,013 and $49,190 on December 31, 2014 and March 31, 2015, respectively. The beneficial conversion feature was recognized as an increase in additional paid-in capital and a discount to the Convertible Notes Payable. The discount to the Convertible Notes Payable is being amortized to interest expense over the life of the notes using the effective interest method.


- 14 -



The Company evaluated the application of ASC 470-50-40/55, Debtor’s Accounting for a Modification or Exchange of Debt Instrument as it applies to the note listed above and concluded that the revised terms constituted a debt extinguishment due to the addition of the conversion feature. No gain or loss on the extinguishment was required to be recognized since the carrying amount of the existing debt approximated its fair value.


Conversions to Common Stock


During nine months ended June 30, 2015, the holders of the Convertible Note Payable dated September 30, 2013 elected to convert principal and accrued interest in the amounts show below into share of common stock at a rate of $0.04 per share. On the conversion date, the unamortized discount related to the principal amount converted was immediately amortized to interest expense. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement that provided for conversion.


Date

 

Amount Converted

 

Number of Shares Issued

 

Unamortized Discount

October 15, 2014

 

$

48,000

 

12,000

 

$

21,578

December 3, 2014

 

 

48,000

 

12,000

 

 

17,121

January 15, 2015

 

 

52,000

 

13,000

 

 

17,832

January 30, 2015

 

 

56,000

 

14,000

 

 

19,095

February 16, 2015

 

 

56,000

 

14,000

 

 

17,397

March 16, 2015

 

 

64,000

 

16,000

 

 

15,690

May 12, 2015

 

 

64,000

 

16,000

 

 

June 12, 2015

 

 

70,000

 

17,500

 

 

Total

 

$

458,000

 

114,500

 

$

108,713


Note 6. Convertible Notes Payable to Related Parties


On April 1, 2015, we issued a $140,275 convertible note payable to Eaton Central America, Inc. (“Eaton”), a significant shareholder in the company. On April 1, 2015, Easton owned 47,113 shares of our common stock, which was approximately 14% of our outstanding stock. The lender paid the note proceeds directly to one of the Company’s vendors which reduced accounts payable by the same amount. All principal and accrued interest is due when the note matures on April 1, 2017. This note is unsecured, bears interest at 10%, and is convertible into shares of common stock at a rate of $0.02 per share.


We evaluated the terms of the notes in accordance with ASC Topic No. 815-40, Derivatives and Hedging – Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. We determined that the conversion feature did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. We evaluated the conversion features for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the notes and was deemed to be greater than the market value of underlying common stock at the inception of the note. As a result, we determined that no beneficial conversion feature was necessary on this note.


Note 7. Stockholders’ Equity


Conversion of shares


During the nine months ended June 30, 2015, we issued 114,500 shares of common stock as a result of conversions of principal and accrued interest on convertible notes payable in the total amount of $458,000. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement that provided for conversion.


Reverse Split


On May 15, 2015, the company reincorporated from Florida to Nevada. As a result of the reincorporation, we effected a reverse split on June 30, 2015. Each shareholder in the Florida corporation received one share in the Nevada corporation for each 100 shares they held in the Florida corporation; fractional shares were rounded up to the nearest whole share and each shareholder received at least five shares.


Imputed Interest


During nine months ended June 30, 2015, the Company recognized imputed interest of $3,335 as an increase to shareholders’ equity.


- 15 -



Note 8. Subsequent Events


On July 8, 2015, the holders of the convertible promissory note dated September 30, 2013 elected to convert accrued interest of $400 into 10,000 share of common stock.


On August 1, 2015, Eaton Central America elected to convert all principal and accrued interest on the convertible note payable into 7,248,170 shares of common stock.


During July 2015, the Company issued 5,545 shares of common stock as a result of rounding up fractional shares to the nearest whole share and ensuring that each shareholder received at least five shares. This was related to the reincorporation and reverse split.


- 16 -



ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Overview


First Titan Corp., a Nevada corporation, was incorporated on September 16, 2010. The Company’s year-end is September 30. The Company formed to design and manufacture both panel and engineered/tooled custom vacuum formed instrument panels and wiring harnesses, required for the monitoring of any final product that utilizes a gas or diesel engine source. The Company is currently primarily an oil and gas exploration company.


Critical Accounting Policies


We prepare our Consolidated financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends, and other factors that management believes to be important at the time the condensed Consolidated financial statements are prepared. We regularly review our accounting policies, and how they are applied and disclosed in our condensed consolidated financial statements.


While we believe that the historical experience, current trends and other factors considered support the preparation of our condensed consolidated financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.


For a full description of our critical accounting policies, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the year ended September 30, 2014 on Form 10-K.


Results of Operations


Nine months ended June 30, 2015 compared to the nine months ended June 30, 2014.


Oil and Gas Sales


We earned net revenue of $35,530 during the nine months ended June 30, 2015, compared to $82,133 during the comparable period of the previous year. About $33,600 (71%) of the variance is due to lower oil prices in the current year. The remaining difference is due to lower oil production, as some of our wells were temporarily out of service this year.


Lease operating expense


We incurred lease operating expenses of $13,580 and $13,489 during the nine months ended June 30, 2015 and 2014, respectively. The increase is negligible.


Depletion, depreciation & amortization


We incurred depletion expense of $21,034 during the nine months ended June 30, 2015, and $62,007 for the comparable period of the previous year. The decrease in depletion is a lower depletion rate per barrel of oil equivalent (“BOE”) as a result of an increased estimate of reserves as of September 30, 2014 as compared to September 30, 2013.


General and Administrative Expenses


We recognized general and administrative expenses in the amount of $354,255 and $417,223 for the nine months ended June 30, 2015 and ended 2014, respectively. The decrease was due to a small decrease in professional fees during the nine months ended June 30, 2015.


Impairment of Oil and Gas Properties


As of June 30, 2015, management determined that it was not economically beneficial to continue to develop a parcel of unproved properties with a cost of $100,000. As a result, the Company recognized an expense for impairment of unproved properties of $100,000 during the nine months ended June 30, 2015. No such impairment expense was recognized during the comparable period of 2014.


- 17 -



Interest Expense


Interest expense decreased from $618,225 for the nine months ended June 30, 2014 to $341,864 for the nine months ended June 30, 2015. Interest expense for the nine months ended June 30, 2015 included amortization of discount on convertible notes in the amount of $285,162, compared to $542,251 for the comparable period of 2014. This was offset by a $15,406 decline in interest expense accrued on our convertible notes and a $7,323 decline in imputed interest expense on advances we received.


Change in Fair Value of Available-for-Sale Securities


During the nine months ended June 30, 2015, the market value of our available securities declined by $19, as compared to $21,279 during the comparable period in 2014. The $21,620 favorable variance is due to better market performance of shares we hold in Biofuel Power Corporation.


Net Loss


We incurred a net loss of $796,473 for the nine months ended June 30, 2015 as compared to $1,029,707 for the comparable period of 2014. The decrease in the net loss was the result of reduced depletion expense and reductions in interest expense, as discussed above. This is offset by the decline in oil and gas sales, due to declining market prices.


Three months ended June 30, 2015 compared to the three months ended June 30, 2014.


Oil and Gas Sales


We earned net revenue of $13,133 during the three months ended June 30, 2015, compared to $28,064 during the comparable period of the previous year. The decrease is due to the decline in crude oil prices. Our net revenue per barrel of oil declined from $122 in the prior period to $50 in the current period.


Lease operating expense


We incurred lease operating expenses of $2,507 and $2,165 during the three months ended June 30, 2015 and 2014, respectively. During the three months ended June 30, 2014, some our wells were out of production, which was not the case during the comparable period in 2015.


Depletion, depreciation & amortization


We incurred depletion expense of $9,316 during the three months ended June 30, 2015, and $31,377 for the comparable period of the previous year. The decrease in depletion is a lower depletion rate per barrel of oil equivalent (“BOE”) as a result of an increased estimate of reserves as of September 30, 2014 as compared to September 30, 2013.


General and Administrative Expenses


We recognized general and administrative expenses in the amount of $107,433 and $140,910 for the three months ended June 30, 2015 and ended 2014, respectively. The decrease was due to increased professional fees during the three months ended June 30, 2015.


Impairment of Oil and Gas Properties


As of June 30, 2015, management determined that it was not economically beneficial to continue to develop a parcel of unproved properties with a cost of $100,000. As a result, the Company recognized an expense for impairment of unproved properties of $100,000 during the three months ended June 30, 2015. No such impairment expense was recognized during the comparable period of 2014.


Interest Expense


Interest expense decreased from $355,866 for the three months ended June 30, 2014 to $60,020 for the three months ended June 30, 2015. Interest expense for the three months ended June 30, 2015 included amortization of discount on convertible notes in the amount of $41,025, compared to $225,340 for the comparable period of 2014. The remainder was due to interest on convertible notes payable and imputed interest expense.


- 18 -



Net Loss


We incurred a net loss of $266,553 for the three months ended June 30, 2015 as compared to $502,624 for the comparable period of 2014. The decrease in the net loss was the result of the decreased general and administrative expenses discussed above.


Liquidity and Capital Resources


At June 30, 2015, we had cash on hand of $3,497. The company has negative working capital of $372,573. Net cash used in operating activities for the nine months ended June 30, 2015 was $169,368. Cash on hand is adequate to fund our operations for less than one month. We do not expect to achieve positive cash flow from operating activities in the near future. We will require additional cash in order to implement our business plan. There is no guarantee that we will be able to attain fund when we need them or that funds will be available on terms that are acceptable to the Company. We have no material commitments for capital expenditures as of June 30, 2015.


Additional Financing


Additional financing is required to continue operations. Although actively searching for available capital, the Company does not have any current arrangements for additional outside sources of financing and cannot provide any assurance that such financing will be available.


Off Balance Sheet Arrangements


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


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Not applicable to a smaller reporting company.


ITEM 4. CONTROLS AND PROCEDURES


Management’s Report on Internal Control over Financial Reporting


We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2015. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2015, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.


 

1.

As of June 30, 2015, we did not maintain effective controls over the control environment. Specifically we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

 

 

 

 

2.

As of June 30, 2015, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.


Our management, including our principal executive officer and principal financial officer, who is the same person, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to 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.


- 19 -



Change in Internal Controls Over Financial Reporting


There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.


PART II — OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.


ITEM 1A. RISK FACTORS


Not applicable to a smaller reporting company.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


There were no sales of unregistered equity securities during the nine months ended June 30, 2015.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES


The Company has not defaulted upon senior securities.


ITEM 4. MINE SAFETY DISCLOSURES


This item is not applicable to smaller reporting companies.


ITEM 5. OTHER INFORMATION


None.


ITEM 6. EXHIBITS


3.1

Articles of Incorporation (1)

3.2

Bylaws (1)

14.1

Code of Ethics (1)

21

Subsidiaries of the Registrant (2)

31.1

Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer and principal financial and account officer. (2)

32.1

Section 1350 Certification of principal executive officer and principal financial accounting officer. (2)

101

XBRL data files of Financial Statement and Notes contained in this Quarterly Report on Form 10-Q. (3)


(1)

Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on November 3, 2010.

(2)

Filed or furnished herewith.

(3)

To be submitted by amendment.


- 20 -



SIGNATURES


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


 

First Titan Corp.

 

 

 

 

Date: August 17, 2015

BY: /s/ Sydney Jim

 

Sydney Jim

 

Chief Executive Officer, President, Secretary, Treasurer, Principal Executive Officer, Principal Finance and Accounting Officer and Sole Director


- 21 -





Exhibit 21


SUBSIDIARIES OF THE REGISTRANT


First Titan Energy, LLC, a Nevada corporation, is a wholly owned subsidiary of First Titan Corp.


First Titan Technical, LLC, a Nevada corporation, is a wholly owned subsidiary of First Titan Corp.






Exhibit 31.1


RULE 13A-14(A)/15D-14(A) CERTIFICATION


I, Sydney Jim, certify that:


1. I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2015 of First Titan Corp..


2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:


a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 17, 2015

BY: /s/ Sydney Jim

 

Sydney Jim

 

Chief Executive Officer, President, Secretary, Treasurer, Principal Executive Officer, Principal Finance and Accounting Officer and Sole Director






Exhibit 32.1


SECTION 1350 CERTIFICATION


In connection with the quarterly report of First Titan Corp. (the “Company”) on Form 10-Q for the period ended June 30, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, Sydney Jim, President of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

 

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.


Date: August 17, 2015

BY: /s/ Sydney Jim

 

Sydney Jim

 

Chief Executive Officer, President, Secretary, Treasurer, Principal Executive Officer, Principal Finance and Accounting Officer and Sole Director


A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.