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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 
 

FORM 10-KT

 

o

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended ___________________

or

x

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

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)

 

Nevada

 

98-0438201

(State or Other Jurisdiction of Incorporation)

 

(IRS Employer Identification No.)

 

 

 

  Via Federico Zuccari, 4, Rome, Italy

 

  00153

  (Address of Principal Executive Offices)

 

  (Zip Code)

 

Registrant's telephone number, including area code: + 39 (06) 5728 8176

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Name of exchange on which registered

None

 

None

 

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.

 

Large accelerated filer

 

o

 

Accelerated filer

 

o

Non-accelerated filer

 

o   (Do not check if a smaller reporting company)

 

Smaller reporting company

 

x

 

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

 

 

 

Page

 

 

PART I

 

 

 

Item 1. Business

5

 

 

Item 1A. Risk Factors

7

 

 

Item 1B. Unresolved Staff Comments

8

 

 

Item 2. Properties

8

 

 

Item 3. Legal Proceedings

8

 

 

Item 4. (Removed and Reserved)

 8

 

 

PART II

 

 

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

9

 

 

Item 6. Selected Financial Data

10

 

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

10

 

 

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

13

 

 

Item 8. Financial Statements and Supplementary Data

13

 

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

13

 

 

Item 9A. Controls and Procedures

13

 

 

Item 9B. Other Information

15

 

 

PART III

 

 

 

Item 10. Directors, Executive Officers and Corporate Governance

15

 

 

Item 11. Executive Compensation

17

 

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

18

 

 

Item 13. Certain Relationships and Related Transactions, and Director Independence

19

 

 

Item 14. Principal Accounting Fees and Services

19

 

 

PART IV

 

 

 

Item 15. Exhibits and Financial Statement Schedules

20

 

 

Signatures

22

 

 

 

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:

 

 

·

our business being exposed to risks associated with the weakened global economy and political conditions;

 

 

·

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;

 

 

·

operations in emerging markets expose us to risks associated with conditions in those markets;

 

 

·

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;

 

 

·

our international operations expose us to the risk of fluctuations in currency exchange rates;

 

 

·

our discussions of accounting policies and estimates;

 

 

·

increases in costs or limitation of supplies of raw materials may adversely affect our financial performance;

 

 

·

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);

 

 

·

future uses of and requirements for financial resources (see “—Liquidity and Working Capital” in the Report);

 

 

·

impact of bookings on future revenues and anticipated backlog levels (see “—Contracting and Backlog”in the Report);

 

 

·

our anticipated growth strategies and our ability to manage the expansion of our business operations effectively;

 

 

·

our ability to maintain or increase our market share in the competitive markets in which we do business;

 

 

·

our ability to keep up with rapidly changing technologies and evolving industry standards, including our ability to achieve technological advances;

 

 

4

 

 

 

 

 

·

our ability to diversify our services and product offerings and capture new market opportunities;

 

 

·

our ability to source our needs for skilled labor, machinery and raw materials economically;

 

 

·

the loss of key members of our senior management; and

 

 

·

uncertainties with respect to legal and regulatory environment.

 

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:

 

 

·

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

 

 

·

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.

 

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:

 

 

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;

 

 

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

 

 

Change our corporate name to “ITP Energy Corporation”.

 

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 end


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