UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-KT
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
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For the
fiscal year ended ___________________
or
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x
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
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For the
Transition Period From October 1, 2010 to December 31,
2010.
Commission file
number 000-52317
ITP Energy
Corporation
(Exact Name of
Registrant as Specified in its Charter)
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Nevada
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98-0438201
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(State or Other
Jurisdiction of Incorporation)
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(IRS Employer
Identification No.)
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Via
Federico Zuccari, 4, Rome, Italy
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00153
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant's
telephone number, including area code: + 39 (06) 5728
8176
Securities
registered pursuant to Section 12(b) of the Act:
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Title of each
class
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Name of
exchange on which registered
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None
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None
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Securities
registered pursuant to section 12(g) of the Act:
Common Shares,
par value $0.001
(Title of
class)
Indicate by
check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes
o No
x
Indicate by
check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes o
No
x
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 x 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
o
Indicate by
check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (§229.405 of this chapter) is
not contained herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. x
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.
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Large accelerated filer
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Accelerated filer
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o
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Non-accelerated
filer
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o (Do not check
if a smaller reporting company)
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Smaller reporting company
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x
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Indicate by
check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes
o No
x
State the
aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and asked price
of such common equity, as of the last business day of the
registrant's most recently completed second fiscal
quarter.
As of March 31,
2011, the aggregate market value of the registrant’s common
stock held by non-affiliates of the registrant was $1,646,150 based
on the price quoted on the inter-dealer electronic quotation and
trading system maintained by Pink OTC Markets Inc.
As of July 27,
2011, there were 36,107,500 shares of common stock
outstanding.
__________________________
DOCUMENTS
INCORPORATED BY REFERENCE
List hereunder
the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the
document is incorporated: (1) Any annual report to security
holders; (2) Any proxy or information statement; and (3) Any
prospectus filed pursuant to Rule 424(b) or (c) under the
Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to
security holders for fiscal year ended December 24,
1980).
None.
ITP ENERGY
CORPORATION
FORM
10-KT
For The
Transition Period From October 1, 2010 to December 31,
2010
INDEX
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Page
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PART
I
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Item 1.
Business
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5
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Item 1A. Risk
Factors
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7
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Item 1B.
Unresolved Staff Comments
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8
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Item 2.
Properties
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8
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Item 3. Legal
Proceedings
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8
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Item 4.
(Removed and Reserved)
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8
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PART
II
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Item 5. Market
for Registrant’s Common Equity, Related Stockholder Matters,
and Issuer Purchases of Equity Securities
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9
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Item 6.
Selected Financial Data
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10
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Item 7.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
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10
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Item 7A.
Quantitative and Qualitative Disclosures about Market
Risk
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13
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Item 8.
Financial Statements and Supplementary Data
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13
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Item 9. Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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13
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Item 9A.
Controls and Procedures
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13
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Item 9B. Other
Information
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15
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PART
III
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Item 10.
Directors, Executive Officers and Corporate Governance
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15
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Item 11.
Executive Compensation
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17
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Item 12.
Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
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18
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Item 13.
Certain Relationships and Related Transactions, and Director
Independence
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19
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Item 14.
Principal Accounting Fees and Services
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19
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PART
IV
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Item 15.
Exhibits and Financial Statement Schedules
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20
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Signatures
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22
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2
EXPLANATORY
NOTE
On April 29,
2011, we consummated a share exchange (or the “Share
Exchange”) pursuant to which we acquired 100% of the issued
and outstanding capital stock of ITP Benelli S.p.A., formerly known
as ITP Impianti e Tecnologie di Processo S.p.A., an Italian
corporation (or “ITP”), together with its subsidiaries,
operating companies and commercial offices based in Italy, the
United States, the Czech Republic, Azerbaijan and Singapore (or the
“ITP Group”), in exchange for 34,000,000 shares of our
common stock par value $0.001 (“Common Stock”) issued
to ITP Oil & Gas International S.A. (or “ITP Lux”),
which represents 94% of our issued and outstanding capital stock as
of and immediately after the consummation of the transactions
contemplated by the Share Exchange Agreement (the “Share
Exchange Agreement”). In accordance with ASC 805-40 and Topic
12 of the Financial Reporting Manual of the SEC’s Division of
Corporate Finance, in the case of this Share Exchange, our
acquisition of the business of ITP has resulted in ITP Lux and its
management acquiring actual voting and operating control of the
combined company. The SEC’s staff considers a
public shell reverse acquisition to be a capital transaction in
substance, rather than a business combination. That is,
the transaction has been considered a reverse recapitalization,
equivalent to the issuance of stock by ITP for our net monetary
assets, accompanied by a recapitalization.
On May 5, 2011
we filed with the Securities and Exchange Commission (the
“SEC”) a current report on Form 8-K reporting the
consummation of the Share Exchange (the “Report”), as
such Report was later amended by amendments number 1 and 2 also
filed with the SEC on June 24, 2011 and July 8, 2011,
respectively. The Report indicated under Item 5.03 that
as a result of the reverse acquisition and Share Exchange, our
fiscal year-end changed from September 30 to December 31. As a
result of this change, this Annual Report on Form 10-KT is a
transition report and includes financial information for the
three-month transition period from October 1, 2010 to December 31,
2010, or the “Transition Period”. References in this
Transition Report (the “Transition Report”) on Form
10-KT to fiscal year 2010 or fiscal 2010 refer to the period of
October 1, 2009 through September 30, 2010 and references to fiscal
year 2009 or fiscal 2009 referred to the period of October 1, 2008
through September 30, 2009. Prior to the consummation of the Share
Exchange, our most recent annual report on Form 10-K included
audited financial statements as of September 30,
2010. The Report included audited consolidated financial
statements of ITP for the years ending December 31, 2010 and 2009.
Subsequent to this Transition Report on Form 10-KT, our reports on
Form 10-K will cover the calendar year from January 1 to December
31.
This Transition
Report includes audited financial statements and discusses the
business of the Registrant as it existed during the Transition
Period, prior to the consummation of the Share Exchange, during the
time that we were a shell company with no business
operations. As a result of the Share Exchange, we are no
longer a shell company and we are currently engaged in active
business operations. For a description of our current business,
investors should refer to the Report and additional disclosures we
make in reports we file with the SEC on Form 10-K, Form 10-Q and
Form 8-K subsequent to April 29, 2011 or the date of the
consummation of the Share Exchange.
As used in this
Transition Report, unless otherwise stated, all references to the
“Company”, “we,” “our”,
“us” and words of similar import, refer to ITP Energy
Corporation or the Registrant.
ENFORCEABILITY OF CIVIL
LIABILITIES
We are a
corporation organized under the laws of the State of Nevada.
Subsequent to the consummation of the Share Exchange Agreement,
our administrative headquarters were moved to and are
presently located in Rome, Italy. We presently own and operate
three equipment production facilities in Italy. A facility
located in Cassina de’ Pecchi (in the vicinity of Milan); a
facility located in Ravenna; and a facility located in Moscazzano
(in the vicinity of Cremona). We also own and operate an equipment
production facility in Kilgore, State of Texas, in the United
States. In addition to our headquarters and production
facilities, we presently have a total of four sales offices located
in Kilgore (Texas), Baku (Azerbaijan), Brno (Czech Republic), and
Ravenna (Italy) which also has a 38,000 square feet yard. As
such, a substantial portion of our assets and the assets
of our directors and executive officers are located
outside the United States. Also, all of our present directors and
executive officers reside outside of the United States. As a
result, except as described below, it may not be possible for
present or future investors in our securities to effect service of
process within the United States upon such persons, or to enforce
against them or against us in United States courts a judgment
obtained in United States courts based upon the civil liability
provisions of the federal securities laws of the United States. No
treaty exists between the United States and Italy for the
reciprocal enforcement of foreign judgments. Italian courts,
however, have enforced judgments
3
rendered by
courts in the United States by virtue of the legal principles of
reciprocity and comity, subject to review in Italy of such judgment
in order to determine whether certain basic principles of due
process and public policy have been respected, without reviewing
the merits of the subject matter of the case. A request for
enforcement in Italy of a foreign judgment may be objected and/or
opposed in Italy in accordance with the provisions of the Italian
Civil Procedural Code. Nevertheless, in the absence of a
treaty, there could be doubt as to the enforceability, in original
actions in Italian courts, of liabilities predicated solely upon
the federal securities laws of the United States and as to the
enforceability in Italian courts of judgments of United States
courts obtained in actions based upon the civil liability
provisions of the federal securities laws of the United States. In
addition, it could be necessary for present or future
investors in our securities to comply with certain procedures
under the Italian Civil Procedural Code, in order to file a lawsuit
in an Italian court.
CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This Transition
Report contains or incorporates by reference some forward-looking
statements. Forward-looking statements give our current
expectations or forecasts of future events. You can identify these
statements by the fact that they do not relate strictly to
historical or current facts. Forward-looking statements are
generally identifiable by use of the words “may,”
“will,” “should,” “anticipate,”
“estimate,” “plans,”
“potential,” “projects,”
“continuing,” “ongoing,”
“expects,” “management believes,” “we
believe,” “we intend,” or the negative of these
words or other variations on these words or comparable terminology.
In particular, these forward-looking statements include statements
relating to future actions, prospective product approvals, future
performance or results of current and anticipated sales efforts,
expenses, the outcome of contingencies such as legal proceedings,
and financial results.
These
forward-looking statements contained in the Report which in part
has been incorporated by reference into this Transition Report,
include, among other things, statements relating:
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our business
being exposed to risks associated with the weakened global economy
and political conditions;
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the illegal
behavior by any of our employees or agents could have a material
adverse impact on our consolidated operating results, cash flows,
and financial position as well as on our reputation and our ability
to do business;
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operations in
emerging markets expose us to risks associated with conditions in
those markets;
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our undertaking
long-term, fixed price or turnkey projects exposes our businesses
to risk of loss should our actual costs exceed our estimated or
budgeted costs;
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our
international operations expose us to the risk of fluctuations in
currency exchange rates;
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our discussions
of accounting policies and estimates;
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increases in
costs or limitation of supplies of raw materials may adversely
affect our financial performance;
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indicated
trends in the level of oil and gas exploration and production and
the effect of such conditions on our results of operations (see
“—Our Industry” in the Report);
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future uses of
and requirements for financial resources (see
“—Liquidity and Working Capital” in the
Report);
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impact of
bookings on future revenues and anticipated backlog levels (see
“—Contracting and Backlog”in the
Report);
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our anticipated
growth strategies and our ability to manage the expansion of our
business operations effectively;
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our ability to
maintain or increase our market share in the competitive markets in
which we do business;
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our ability to
keep up with rapidly changing technologies and evolving industry
standards, including our ability to achieve technological
advances;
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4
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our ability to
diversify our services and product offerings and capture new market
opportunities;
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our ability to
source our needs for skilled labor, machinery and raw materials
economically;
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the loss of key
members of our senior management; and
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uncertainties
with respect to legal and regulatory environment.
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Any or all of
our forward-looking statements in the Report or in this Transition
Report may turn out to be inaccurate, as a result of inaccurate
assumptions we might make or known or unknown risks or
uncertainties. Therefore, although we believe that these statements
are based upon reasonable assumptions, including projections of
operating margins, earnings, cash flows, working capital, capital
expenditures and other projections, no forward-looking statement
can be guaranteed. Our forward-looking statements are not
guarantees of future performance, and actual results or
developments may differ materially from the expectations they
express. You should not place undue reliance on these
forward-looking statements. Actual results may differ materially
from those in the forward-looking statements contained or
incorporated by reference in the Report or in this Transition
Report for reasons including, but not limited to: market factors
such as pricing and demand for petroleum related products, the
level of petroleum industry exploration and production
expenditures, the effects of competition, the availability of a
skilled labor force, world economic conditions, the level of
drilling activity, the legislative environment in the United States
and other countries, energy policies of OPEC, conflict involving
the United States or in major petroleum producing or consuming
regions, acts of war or terrorism, technological advances that
could lower overall finding and development costs for oil and gas,
weather patterns and the overall condition of capital markets in
countries in which we operate.
Information
regarding market and industry statistics contained in the Report is
included based on information available to us which we believe is
accurate. We have not reviewed or included data from all sources,
and cannot assure stockholders of the accuracy or completeness of
this data. Forecasts and other forward-looking information obtained
from these sources are subject to these qualifications and the
additional uncertainties accompanying any estimates of future
market size, revenue and market acceptance of products and
services.
These
statements also represent our estimates and assumptions only as of
the date that they were made and we expressly disclaim any duty to
provide updates to them or the estimates and assumptions associated
with them after the date of this filing to reflect events or
changes in circumstances or changes in expectations or the
occurrence of anticipated events.
We undertake no
obligation to publicly update any predictive statement in the
Report or in this Transition Report, whether as a result of new
information, future events or otherwise. You are
advised, however, to consult any additional disclosures we make in
reports we file with the SEC on Form 10-K, Form 10-Q and Form
8-K.
PART
I
Item 1.
Business.
Corporate
History and Background
ITP Energy
Corporation or the Registrant was originally incorporated under the
laws of the State of Nevada on June 8, 2004 under the name of
Netfone, Inc. From inception of our business to March 7,
2007, we were engaged in the development of communication
technology and services for internet protocol (or
“IP”), telephony and video applications. This business
plan was abandoned due to declining margins and increased
competition in the field. During our 2007 fiscal year, management
determined that the voice over IP market was becoming increasingly
competitive with diminishing margins. In addition, we could not
secure additional financing in order to allow our then subsidiary,
Netfone Services, Inc. (or “Netfone Services”), to
market its products, pay support staff or maintain equipment, nor
did we have the resources to acquire for our Company directly or
for our directors, insurance covering our and their potential
liability arising from 911 emergency calls which were expected to
be handled by the then proposed business. In light of
this determination, on March 8, 2007 we sold all of the shares of
NetFone Services to Portal One Systems, Inc. (or
“Portal”) for $25,000.00 plus CDN $25,662.00 in
liabilities for consulting services which were assumed by Netfone
Services. Thereafter, our Company became dormant and remained a
“shell company” and began actively seeking a business
combination through the acquisition of, or merger with, an
operating business.
5
Significant
Developments during the Transition Period
On December 22,
2010, we entered into the Share Exchange Agreement, with ITP Lux
and Orange Capital Corp. (or “Orange”), pursuant to
which on the closing of such transaction, we agreed to acquire 100%
of the issued and outstanding capital stock of ITP in exchange for
our issuance and delivery of 34,000,000 shares of our Common Stock
to ITP Lux, such Common Stock to represent 94% of our issued and
outstanding capital stock as of and immediately after the
consummation of the transactions contemplated by the Share Exchange
Agreement. On December 22, 2010 we had authorized 100,000,000
shares of Common Stock, and 20,000,000 shares of preferred stock
par value $0.001 (“Preferred Stock”). In addition,
pursuant to the Share Exchange Agreement, we agreed to issue to
Orange the following:
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541,613
warrants to purchase an equal number of shares of our Common Stock,
expiring on April 29, 2015, at an exercise price of $2.08 per share
of Common Stock, and
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541,613
warrants to purchase an equal number of shares of our Common Stock,
expiring on April 29, 2015, at an exercise price of $2.77 per share
of Common Stock.
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Subsequent to
the Transition Period, the terms of the warrants were amended as
described in Item 8.01 of the report on Form 8-K we filed with the
SEC on May 20, 2011.
In addition,
the terms of the Share Exchange Agreement, as amended subsequent to
the Transition Period on March 25, 2011, among other matters, also
required us to:
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Effectuate a
reverse stock split of the Company’s issued and outstanding
shares at a ratio of 1 for 2.4, decrease the number of authorized
shares of Common Stock by the same proportion from 100,000,000 to
41,666,667 shares of Common Stock, and decrease the number of
authorized shares of Preferred Stock by the same proportion from
20,000,000 shares to 8,333,333 shares of Preferred Stock. The
reverse stock split became effective on March 21, 2011 and on such
date every 2.4 shares of the Company’s Common Stock issued
and outstanding immediately prior to the effective time for the
stock split was combined and reclassified into one share of Common
Stock. Fractional shares of Common Stock resulting from
the reverse stock split were rounded up to the next whole
share;
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Cancel
3,166,667 (on a post reverse stock split basis) shares of
restricted Common Stock issued by the Company to Charles El-Moussa,
our former president; and
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Change our
corporate name to “ITP Energy Corporation”.
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Our Present
Business
On April 29,
2011, we consummated the Share Exchange pursuant to which we
acquired 100% of the issued and outstanding capital stock of ITP in
exchange for 34,000,000 shares of our Common Stock issued to ITP
Lux, which represents 94% of our issued and outstanding capital
stock as of and immediately after the consummation of the
transactions contemplated by the Share Exchange Agreement. In
accordance with ASC 805-40 and Topic 12 of the Financial Reporting
Manual of the SEC’s Division of Corporate Finance, in the
case of this Share Exchange, our acquisition of the business of ITP
has resulted in ITP Lux and its management acquiring actual voting
and operating control of the combined company. The
SEC’s staff considers a public shell reverse acquisition to
be a capital transaction in substance, rather than a business
combination. That is, the transaction has been
considered a reverse recapitalization, equivalent to the issuance
of stock by ITP for our net monetary assets, accompanied by a
recapitalization.
For accounting
purposes, subsequent to the Share Exchange, which is accounted for
as either a reverse acquisition or reverse recapitalization, the
legal acquiree – ITP – will be treated as the
continuing reporting entity that acquired us (the legal
acquirer). Furthermore, reports that should be filed by
us after the reverse acquisition or reverse recapitalization will
parallel the financial reporting required under GAAP—as if
ITP - the accounting acquirer – were our legal successor in
connection with our reporting obligation – as registrant - as
of the date of the acquisition. ITP, as the accounting acquirer, is
considered, as of the date of and for the period following the
closing of the Share Exchange Agreement, to be our predecessor as a
registrant. The assets and liabilities of ITP have been
brought forward at their book value and no goodwill has been
recognized.
6
As a result of
our reverse acquisition of ITP, we are no longer a shell company
and we are currently engaged in active business operations.
However, as a result of the reverse acquisition and Share Exchange,
our fiscal year-end changed from September 30 to December 31. As a
result of this change, this Annual Report on Form 10-KT is a
transition report and includes financial information for the
three-month transition period from October 1, 2010 to December 31,
2010, or the Transition Period. References in this Transition
Report on Form 10-KT to fiscal year 2010 or fiscal 2010 refer to
the period of October 1, 2009 through September 30, 2010 and
references to fiscal year 2009 or fiscal 2009 referred to the
period of October 1, 2008 through September 30, 2009. Prior to the
consummation of the Share Exchange, our most recent annual report
on Form 10-K included audited financial statements as of September
30, 2010. The Report included audited consolidated
financial statements of ITP for the years ending December 31, 2010
and 2009. Subsequent to this Transition Report on Form 10-KT, our
reports on Form 10-K will cover the calendar year from January 1 to
December 31.
This Transition
Report includes audited financial statements and discusses the
business of the Registrant as it existed during the Transition
Period, prior to the consummation of the Share Exchange, during the
time that we were a shell company with no business
operations. As a result of the Share Exchange, we are no
longer a shell company and we are currently engaged in active
business operations. For a description of our current business,
investors should refer to the Report and additional disclosures we
make in reports we file with the SEC on Form 10-K, Form 10-Q and
Form 8-K subsequent to April 29, 2011 or the date of the
consummation of the Share Exchange.
Available
Information and Required Certifications
We are a
reporting company under the Securities Exchange Act of 1934, as
amended and file reports, proxy statements and other information
with the SEC. Copies of these reports, proxy statements and other
information may be inspected and copied at the SEC’s Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
You may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. You may also access our
filings on the SEC’s website at www.sec.gov. Commencing with
our Annual Report on Form 10-KT for the Transition Period, and with
our Quarterly Report on Form 10-Q for the fiscal quarter
endi