ITEM 1. DESCRIPTION OF BUSINESS
General
Next Fuel, Inc. was incorporated in Nevada in August 2007 to provide clinical trial investigator services to pharmaceutical companies throughout the Americas. Our principal executive office location and mailing address is 210 Walford Way Cary, NC 27519. Our telephone number is 919-414-1458. Our fiscal year end is September 30.
We were incorporated in Nevada in August 2007 to conduct clinical trials for pharmaceutical companies in dedicated sites throughout the Americas. Initially, we intended to introduce our services in Central America. This was being done primarily because the costs of drug development are significantly lower and the clinical quality is that of the US. The Company had planned to sell its services to Pharmaceutical, Biotech and Medical Device companies that were to be primarily US based.
We planned to establish business relationships with preferred contract research organizations that would source, package and offer our services to their clients. Many pharmaceutical companies prefer large global companies that can provide a one-stop shop approach. Since what we had planned to do is only a sub segment of the client’s total needs we would have been a subcontractor should those CRO’s find opportunities where our services would have benefited their clients.
Due to our inability to obtain adequate financing and our inability to successfully implement our business plan, we feel that it is necessary for us to cease operations and actively pursue a potential reverse merger candidate.
Services
We had planned to offer high-quality dedicated research services for pharmaceutical companies who are doing clinical trials to gain FDA approval for new drugs or a currently marketed drug that the company is applying to the FDA for a different indication.
One of the key features of the dedicated model is the blending of good business practices with good research practices, efficiency and productivity with scholarship and research discipline. Physicians and others who own and run these centers are frequently:
▪ Transplanted academic faculty,
▪ “Key Opinion Leaders” (KOLs are key customers of the pharmaceutical industry who are sought after to provide advice to the industry and medical education to the medical community), and
▪ Possess specialized skills and credentials to conduct clinical trials.
One of the most notable strengths of the dedicated research center model is the singularity of purpose. These centers solely exist to conduct clinical research. There are no students or patients. To be successful, dedicated research centers cannot rely on other activities for income. Our livelihood would have stemmed from conducting clinical research alone.
Industry Trends
Trends Affecting the Drug Discovery and Development Industry
We believe that there are four trends that are affecting the drug discovery and development services industry:
1. Rapid Technological Change and Increased Data
Scientific and technological advancements are rapidly changing the drug discovery and development processes. The technology to understand gene function is dramatically increasing the number of identified potential drug targets within the human body. Pharmaceuticals on the market today have historically targeted no more than an estimated 500 human gene products. With an estimated 20,000 to 25,000 human protein-coding genes, an enormous number of targets for therapeutic intervention remain untapped. Tapping these targets will require more state-of-the-art technology and greater expertise. The more rapidly pharmaceutical research companies adopt advanced technology and expertise, the more rapidly treatment drugs will be introduced to the market.
2. Government-Sponsored Drug R&D
Government agencies continue to be a significant source of funding for new drug and vaccine research and development. The total budget of the National Institutes of Health, for the fiscal year 2007 was an estimated $31 billion, representing a near 10% CAGR since 1998. The full year 2008 NIH budget estimate is approximately $34 billion and includes significant appropriations for drug research and development initiatives in the areas of cancer, vaccines, AIDS and chronic diseases such as diabetes. As a result, drug research and development service providers and contractors, including clinical sites, should continue to benefit from government-sponsored research and development initiatives
3. Increase in Potential New Drug Candidates
A recent increase in potential new drug candidates has caused a bottleneck in the drug development industry, notably in the early stages of drug development. A large number of pharmaceutical and biotechnology companies do not have sufficient internal resources to pursue all of the potential new drug candidates in a timely and economical fashion. The ability of the pharmaceutical and biotechnology companies to find qualified drug discovery and development service companies to assist them in the early stage drug development process will result in a cost-effective, innovative, and rapid means of developing new drugs.
4. Biotechnology Industry Growth
Over the past decade, the U.S. biotechnology industry has grown rapidly. This industry is generating significant numbers of new drug candidates that will require development and regulatory approval. Biotechnology firms do not have the staff nor the expertise to conduct clinical trials on their own, so they rely on outside services. Continued growth in this industry will have a significant direct impact on growth in the overall clinical trial industry.
Market
Drug Development Process
The drug development process is often an expensive and lengthy process, averaging over nine years or more and costing an estimated half a billion dollars from preclinical studies through FDA approval.
The first stage in the development process is preclinical testing, which averages around 18 months but can take as long as three years to complete. This stage involves testing on animals to help establish potential in pharmacologic use and boundaries for safe use on testing of human subjects. If data from the preclinical trials supports testing in human subjects, then the sponsor files an Investigational New Drug (IND) application with the FDA to request permission to begin clinical trials.
Clinical trials can be classified into four phases, although in reality the phases overlap and trials in one phase are often conducted simultaneously with trials in other phases.
Phase I: First Stage of Testing in Humans
Phase II: Dose-Finding and Safety Studies
Phase III: Expanded Large-Scale Safety and Efficacy Studies
Phase IV: Post-Marketing Studies
PHASE I:
Phase I consists of the evaluation of clinical pharmacology and toxicity. Highlights of Phase I are:
·
Conducted to establish how a drug is absorbed, distributed, metabolized and eliminated from the body.
·
Conducted to determine the appropriate dose range with regard to safety.
·
Conducted in a limited number of healthy volunteers, typically around 20-80 patients.
·
Usually takes between nine and 18 months to complete.
PHASE II:
Phase II involves the initial evaluation of the trial drug for safety and treatment effect. Highlights of Phase II are:
·
Conducted in a relatively limited number of patients (between 100 and 300) who have the disease or condition to be treated.
·
Focuses on dose-response, dosing schedule, or other issues related to preliminary safety and efficacy.
·
Usually takes anywhere from one to three years to complete.
If studies show that the new drug is safe and useful, testing may proceed to Phase III trials.
PHASE III:
Phase III studies are used for large scale treatment evaluation, and this phase of a study often produces much of the information eventually used for package labeling and the package insert. Highlights of Phase III are:
·
Conducted in larger (several hundred to several thousand) and more diverse patient groups for whom the drug is ultimately intended.
·
Makes comparisons between the new treatment and standard therapy or placebo.
·
Establishes safety and efficacy features of the drug.
·
Usually takes between two and five years to complete.
PHASE IV:
Phase IV includes post-marketing studies. Once a drug treatment has been marketed, additional information may be collected by performing Phase IV trials. These trials may be conducted to provide additional information such as:
·
Testing new doses.
·
Exploring new indicators.
·
Documenting impact on morbidity and mortality.
·
Evaluating patient subgroups (minorities, women, or children)
MARKETING
We had planned to market ourselves through direct contact and sales with pharmaceutical, biotech and medical device companies. We would have also marketed ourselves to CRO’s whom we believe can be a major channel of distribution for the company. Based on the founder’s background we believed that their previous work in the clinical trial area would have been an opportunity on which we could capitalize. We had planned to also develop a website, www.clinicaltrialsoftheamericas.com, to help promote sales and reach out to consumers.
We believed our most effective marketing tool would have been face-to-face discussions where our business development people could engage in a consultative sales process with their client base. We would have focused heavily on this strategy. Our CRO partners are quite comfortable packaging dedicated and non-dedicated clinical research site to meet the needs of their clients. We would have developed sales presentations and collateral material to support this multi level approach.
PUBLIC RELATIONS
In addition to our direct and channel-focused tactics, we would have used traditional public relations to raise awareness and create demand among target customers. Our public relations strategy was designed to build company awareness with a limited cash outlay.
· Product Kit. We would have developed a sales kit that contains information about the Company, its services, key differentiators with our model and contact information. The kit would have included recent press releases, endorsements and awards.
· Paid Product Placements. Where appropriate, we would have paid to have its services mentioned or placed in the print and/or web-based publications of select publications. For example, Advanastar publishes a monthly magazine called R&D Directions.
· Key Exhibits. Where advantageous, we would have entered and paid to set up what is typically a 10x10 booth space at key trade shows and conferences. This has proven to be a highly effective manner to meet and qualify clients. This saves the company on travel and time expense. At select conferences it would not be unusual to meet with over 100 people over a two-day period.
· Speaking Engagements. We had planned to actively seek to have our management team present at key conferences as a way to build the clinical credibility of the company. Many of these conferences are looking for speakers either as a keynote speaker or to be part of a panel of experts.
· Media Relations. We would have worked to establish relations with key reporters and opinion leaders at trade magazines and newsletters focused on the Americas.
ITEM 1A.
ITEM 1A. RISK FACTORS
None.
ITEM 2.
ITEM 2. DESCRIPTION OF PROPERTY
Our principal office is located at 210 Walford Way, Cary, NC 27519. This location is the home of our president, John Cline, who supplies this office space to us rent free. Our telephone number is 919-414-1458.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
We are not presently parties to any litigation, nor to our knowledge and belief is any litigation threatened or contemplated.
ITEM 4.
ITEM 4. (REMOVED AND RESERVED)
PART II
ITEM 5.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock was approved to trade on the OTC Bulletin Board system under the symbol “CLLL” since June 11, 2008.
The market price of our common stock is subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market, and other factors, over many of which we have little or no control. In addition, broad market fluctuations, as well as general economic, business and political conditions, may adversely affect the market for our common stock, regardless of our actual or projected performance.
Holders of Our Common Stock
As of December 14, 2010, we had 55 shareholders of our common stock.
Stock Option Grants
To date, we have not granted any stock options.
Registration Rights
We have not granted registration rights to the selling shareholders or to any other persons.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Plan of Operation
We are trying to establish business relationships with preferred Clinical Research Organization’s (“CRO’s”) who will source and package our services to their clients. Many pharmaceutical companies prefer large global companies that can provide a one-stop shop approach. Since what we do is only a sub segment of the client’s total needs we will be a subcontractor should those CRO’s find opportunities where our services can be of benefit to their clients.
1. As we raised more than $124,000 in our private placement, we have been trying to implement our plan to provide clinical trial services throughout the Americas.
2. All business functions are being coordinated and managed by the two founders of the Company, including marketing, finance and operations. As we raised more than $124,000 through our private placement, we had intended to hire a part-time employee to facilitate with the acquisition of contracts and assist in targeted marketing implementation. The lack of business has not justified this hire.
3. We intended to launch a targeted marketing campaign focusing on trade show participation, media promotions and public relations. We intended to support these marketing efforts through the development of high quality printed marketing materials and an attractive and informative trade and consumer website, www.clinicaltrialsofamerica.com. We expected the total cost of the marketing program to range from $10,000 to $75,000. During this preliminary launch period, we also expected to invest between $1,000 and $5,000 in accounting and inventory management software. We accomplished some of our goals but because of the economic downturn we were unable to create any real business traction.
To date we have not commenced generating revenues and do not know when we will begin generating revenues. The economic downturn has been particularly difficult for smaller firms in our business.
Due to our inability to obtain adequate financing and our inability to successfully implement our business plan, we feel that it is necessary for us to cease operations and actively pursue a potential reverse merger candidate.
Limited Operating History
We have not previously demonstrated that we will be able to expand our business through an increased investment in our product line and/or marketing efforts. We cannot guarantee that the expansion efforts described in this report will be successful. Our business is subject to risks inherent in growing an enterprise, including limited capital resources and possible rejection of our new products and/or sales methods.
If financing is not available on satisfactory terms, we may be unable to continue expanding our operations. Equity financing will result in a dilution to existing shareholders.
Results of Operations
For the year ended September 30, 2010, we had $0 in revenue. Operating expenses for the period totaled $39,309 consisting of $11,379 for general and administrative expenses and $27,930 for professional fees. Interest expense on the loan payable was imputed at $25,513 for the year ended which resulted in a net loss of $64,822.
For the year ended September 30, 2009, we had $0 in revenue. Operating expenses for the period totaled $165,536 consisting of $18,999 for general and administrative expenses and $146,537 for professional fees. Interest expense on the loan payable was imputed at $16,118 which resulted in a net loss of $181,654.
For the year ended September 30, 2009 operating expenses were significantly higher than the year ended September 30, 2010. Both general and administrative expenses and professional fees were higher in the year ending September 2009 versus September 2010. Increase in 2009 was due to restatements and fees paid to business consulting. In addition, there was incremental increase in interest expense in the year ending September 2010 vs. September 2009 of $9,395.
For the period from inception through September 30, 2010, we had $0 in revenue. Operating expenses for the period totaled $421,810 consisting of $52,546 for general and administrative expense and $369,264 for professional fees. Interest expense on the loan payable was imputed at $41,631 for the period from August 14, 2007 (inception) to September 30, 2010 resulting in a net loss of $463,441.
Capital Resources and Liquidity
As of September 30, 2010, we had $0 in cash and therefore we have limited capital resources and will rely upon the issuance of common stock and additional capital contributions from shareholders to fund administrative expenses. Cash and cash equivalents from inception to date have been sufficient to cover expenses involved in starting our business. We will require additional funds to continue to implement and expand our business plan during the next twelve months
We currently do not have enough cash to satisfy our minimum cash requirements for the next twelve months. As reflected in the accompanying financial statements, the Company is in the development stage with no operations and has a net loss since inception of $463,441 and negative cash flows from operations of $391,692 from inception. In addition there is a working capital deficiency of $296,540 and stockholders’ deficiency of $294,167 as of September 30, 2010. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
Subsequent Event
On October 14, 2010, the Company issued 50,000 shares of common stock for $5,000 or $0.10 per share.
Recent Accounting Pronouncements
In June 2009, the FASB issued Financial Accounting Standards Codification No. 860 - Transfers and Servicing. FASB ASC No. 860 improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor's continuing involvement, if any, in transferred financial assets. FASB ASC No. 860 is effective as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. The standard will not have any impact on our financial statements.
Critical Accounting Policies
Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Off Balance Sheet Transactions
We have no off-balance sheet arrangements.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required for smaller reporting companies.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of:
Next Fuel, Inc. (A Development Stage Company)
We have audited the accompanying balance sheets of Next Fuel, Inc. (A Development Stage Company) as of September 30, 2010 and 2009, and the related statements of operations, changes in stockholders' deficiency and cash flows for the years ended September 30, 2010 and 2009 and the perio om August 14, 2007 (Inception) to September 30, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Next Fuel, Inc. (A Development Stage Company) as of September 30, 2010 and 2009 and the results of its operations and its cash flow for the years ended September 30, 2010 and 2009 and the period from August 14, 2007 (Inception) to September 30, 2010 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 7 to the financial statements, the Company is in the development stage with no operations and has a net loss since inception of $463,441 and negative cash flows from operations of $391,692 from inception. In addition, there is a working capital deficiency of $296,540 and stockholders' deficiency of $294,167 as of September 30, 2010. This raises substantial doubt about its ability to continue as a going concern. Management's plans concerning this matter are also described in Note 7. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
WEBB & COMPANY, P.A.
Certified Public Accountants
Boynton Beach, Florida
December 7, 2010
See accompanying notes to financial statements.
See accompanying notes to financial statements.
See accompanying notes to financial statements.
See accompanying notes to financial statements.
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2010 AND 2009
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A) Basis of Presentation
Clinical Trials of the Americas, Inc. (a development stage company) (the "Company") was incorporated under the laws of the State of Nevada on August 14, 2007. Clinical Trials of the Americas, Inc. is a service-based firm that will provide clinical trial investigator services to pharmaceutical companies throughout the Americas.
On May 29, 2009, in connection with the letter of intent with Next Fuel, Inc., the Company filed a Certificate of Amendment to the Articles of Incorporation changing the Company’s name to Next Fuel, Inc. (see Note 8).
Activities during the development stage include developing the business plan and raising capital.
(B) Use of Estimates
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.
(C) Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At September 30, 2010 and 2009, respectively, the Company had no cash equivalents.
(D) Loss Per Share
Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by FASB Accounting Standards Codification Topic 260, “Earnings Per Share". As of September 30, 2010 and 2009, respectively, there were no common share equivalents outstanding.
(E) Property and Equipment
The Company values property and equipment at cost and depreciates these assets using the straight-line method over their expected useful life. The Company uses a five year life for computer equipment.
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2010 AND 2009
(F) Income Taxes
The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement 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. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
As of September 30, 2010 and 2009 the Company has a net operating loss carryforward of approximately $404,978 per S-1 and $370,862, respectively, available to offset future taxable income through 2030. The valuation allowance at September 30, 2010 was $155,628. The valuation allowance at September 30, 2009 was $142,477. The net change in the valuation allowance for the year ended September 30, 2010 was an increase of $13,151.
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2010 AND 2009
(G) Business Segments
The Company operates in one segment and therefore segment information is not presented.
(H) Revenue Recognition
The Company will recognize revenue on arrangements in accordance with FASB ASC No. 605, “Revenue Recognition”. In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.
(I) Fair Value of Financial Instruments
The carrying amounts reported in the balance sheet for accounts payable and loan payable approximate fair value based on the short-term maturity of these instruments.
NOTE 2
PROPERTY AND EQUIPMENT
At September 30, 2010 and September 30, 2009 property and equipment is as follows:
Depreciation expense for the year ended September 30, 2010 and 2009 and the period from August 14, 2007 to September 30, 2010 was $982, $982 and $2,535 respectively.
NOTE 3
STOCKHOLDERS’ DEFICIT
(A) Common Stock Issued for Cash
On August 10, 2010, the Company issued 50,000 shares of common stock for $5,000 ($0.10/share).
On July 20, 2010, the Company issued 50,000 shares of common stock for $5,000 ($0.10/share).
On April 13, 2010, the Company issued 75,000 shares of common stock for $7,500 ($0.10/share).
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2010 AND 2009
On February 17, 2010, the Company issued 50,000 shares of common stock for $5,000 ($0.10/share).
On November 4, 2009, the Company issued 100,000 shares of common stock for $10,000 ($0.10/share).
During March and April 2009, the Company issued 275,000 shares of common stock for $27,500 ($0.10/share).
During October and November 2007, the Company issued 197,500 shares of common stock for $19,750 ($0.10/share).
During October 2007, the Company collected $85,000 ($0.10/share) for the sale of 850,000 shares of common stock made during the period from August 14, 2007 (inception) through September 30, 2007.
For the year ended September 30, 2007 the Company issued 390,000 shares of common stock for $39,000 ($0.10/share).
(B) In-Kind Contribution
For the year ended September 30, 2010, a shareholder of the Company contributed services having a fair value of $5,200 (See Note 6).
For the year ended September 30, 2010, the Company recorded contributed interest expense having a fair value of $25,506 (See Note 4).
For the year ended September 30, 2009, the Company recorded contributed interest expense having a fair value of $16,118 (See Note 4).
For the year ended September 30, 2009 a shareholder of the Company contributed services having a fair value of $5,200 (See Note 6).
For the year ended September 30, 2008 a shareholder of the Company contributed services having a fair value of $5,200 (See Note 6).
For the period from August 14, 2007 (Inception) through September 30, 2007 a shareholder of the Company contributed services having a fair value of $700 (See Note 6).
For the period from August 14, 2007 (Inception) through September 30, 2007 a principal stockholder of the Company contributed cash of $100 (See Note 6).
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2010 AND 2009
(C) Stock Issued for Services
On August 14, 2007, the Company issued 5,000,000 shares of common stock to its founders having a fair value of $500 ($0.0001/share) in exchange for services provided (See Note 6).
(D) Treasury Shares
During the year ended September 30, 2009, the Company re-purchased 1,424,731 shares of common stock for $53,000.
During the year ended September 30, 2008, the Company re-purchased 1,075,269 shares of common stock for $40,000.
NOTE 4
LOAN PAYABLE
Through September 30, 2009, the Company received $325,750 of advances to fund operations of which $40,000 was repaid in 2009. The loans were made pursuant to the Letter of Intent (See Note 8). The remaining loan balance at September 30, 2010 is $285,750. For the year ended September 30, 2010 the Company recorded $25,506 as an in kind contribution of interest. The advances are unsecured, non interest bearing and due on demand (See Note 3(B)).
NOTE 5
COMMITMENTS
On October 12, 2007 the Company entered into a consulting agreement to receive administrative and other miscellaneous services. The Company is required to pay $5,000 a month. The agreement will remain in effect unless either party desires to cancel the agreement. This agreement has been terminated effective October 1, 2008.
NOTE 6
RELATED PARTY TRANSACTIONS
For the year ended September 30, 2010 a shareholder of the Company contributed services having a fair value of $5,200 (See Note 3(B)).
For the year ended September 30, 2009 a shareholder of the Company contributed services having a fair value of $5,200 (See Note 3(B)).
For the year ended September 30, 2008 the shareholder of the Company contributed services having a fair value of $5,200 (See Note 3(B)).
For the period from August 14, 2007 (Inception) through September 30, 2007, the Company received $100 from a principal stockholder. Proceeds have been recorded as an in-kind contribution (See Note 3(B)).
NEXT FUEL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2010 AND 2009
For the period from August 14, 2007 (Inception) through September 30, 2007 the shareholder of the Company contributed services having a fair value of $700 (See Note 3(B)).
On August 14, 2007, the Company issued 5,000,000 shares of common stock to its founders having a fair value of $500 ($0.0001/share) in exchange for services provided (See Note 3(C)).
NOTE 7
GOING CONCERN
As reflected in the accompanying financial statements, the Company is in the development stage with no operations and has a net loss since inception of $463,441 and negative cash flows from operations of $391,692 from inception. In addition there is a working capital deficiency of $296,540 and stockholders’ deficiency of $294,167 as of September 30, 2010. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
NOTE 8
BINDING LETTER OF INTENT
On April 6, 2009 the Company entered into a binding letter of intent with Next Fuel, Inc. Pursuant to the letter of intent, the Company will issue to Next Fuel approximately 75% of the Company’s outstanding shares for total consideration of $300,000. As of September 30, 2010, the terms of the agreement have not been completed (See Note 4).
On May 29, 2009, in connection with the letter of intent with Next Fuel, Inc., the Company filed a Certificate of Amendment to the Articles of Incorporation changing the Company’s name to Next Fuel, Inc. (See Note 1(A))
NOTE 9
SUBSEQUENT EVENT
On October 14, 2010, the Company issued 50,000 shares of common stock for $5,000 ($0.10/share).
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Our accountant is Webb & Company. P.A, independent certified public accountants. We do not presently intend to change accountants. At no time have there been any disagreements with such accountants regarding any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.
ITEM 9A(T):
ITEM 9A(T): CONTROLS AND PROCEDURES
a) Evaluation of Disclosure Controls. Our Chief Executive Officer and Chief Financial and Accounting Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of our fiscal year ended September 30, 2009 pursuant to Rule 13a-15(b) of the Securities and Exchange Act. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, as appropriate to allow timely decisions regarding required disclosure. Based on his evaluation, the CEO and CFO concluded that our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules based on the material weakness described below:
1.
The Company did not have adequate monthly closing procedures to ensure all non-cash transactions are properly recorded in the financial statements;
2.
The Company did not have the proper support for is note payable agreement and treasury stock transaction; and
3.
The Company did not have approval from its Board of Directors prior to entering into the note payable agreement and treasury stock transaction.
It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
(b) Changes in internal control over financial reporting. In order to rectify our ineffective disclosure controls and procedures, we are developing a plan to ensure that all information will be recorded, processed, summarized and reported accurately, and as of the date of this report, we have taken the following steps to address the above-referenced material weaknesses in our internal control over financial reporting:
1.
We will continue to educate our management personnel to comply with the disclosure requirements of Securities Exchange Act of 1934 and Regulation S-K;
2.
We will increase management oversight of accounting and reporting functions in the future; and
3. We will insure that our board of Directors approve all material agreements prior to entering into such transactions.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS: COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
We have two Directors and Officers as follows:
John Cline, 53, President. Mr. Cline has been president, chief executive officer and a member of Etrials' board of directors since March 2000. Mr. Cline was the Vice President of Sales and Marketing of MiniDoc AB, a publicly held Swedish corporation, from September 1997 until December 1999, when he founded and became the president, chief executive officer and a member of the Board of Directors of Expidata, Inc., which was acquired by Etrials in March 2000. Mr. Cline received his BA degree from the University of Georgia
Beverly W. Cline, 53, Secretary. Beverly W. Cline was a cofounder of Exipidata, which through numerous transactions became Etrials worldwide a NASDAQ Global Market company. Mrs. Cline was instrumental in the planning, developing and execution of the company’s early business plan. She is also active in various investments and business ventures. She holds a Bachelor of Science degree from West Virginia University.
We will not enter into a business combination, or acquire any assets of any kind for its securities, in which our management or any affiliates or associates have any interest, direct or indirect.
There are no binding guidelines or procedures for resolving potential conflicts of interest. Failure by management to resolve conflicts of interest in favor of the Company could result in liability of management to the Company. However, any attempt by shareholders to enforce a liability of management to the Company would most likely be prohibitively expensive and time consuming.
Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
Audit Committee
We do not have a standing audit committee of the Board of Directors. Management has determined not to establish an audit committee at present because of our limited resources and limited operating activities do not warrant the formation of an audit committee or the expense of doing so. We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Item 401(e) of Regulation S-X is beyond its limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in its financial statements at this stage of its development.
Certain Legal Proceedings
No director, nominee for director, or executive officer of the Company has appeared as a party in any legal proceeding material to an evaluation of his ability or integrity during the past five years.
Compliance With Section 16(A) Of The Exchange Act.
Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and are required to furnish copies to the Company. To the best of the Company’s knowledge, any reports required to be filed were timely filed in fiscal year ended September 30, 2010.
Code of Ethics
The company has adopted a Code of Ethics applicable to its Chief Executive Officer and Chief Financial Officer. This Code of Ethics was previously filed as an exhibit to the Form 10K/A filed with the SEC on August 21, 2009.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Compensation of Executive Officers
The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the fiscal years ended September 30, 2010 and 2009 in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO):
SUMMARY COMPENSATION TABLE
Employment Agreements
We do not have any employment agreements in place with our sole officer and director.
Compensation of Directors
Directors do not receive any compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth each person known by us to be the beneficial owner of five percent or more of the Company's Common Stock, all directors individually and all directors and officers of the Company as a group. Except as noted, each person has sole voting and investment power with respect to the shares shown.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION, AND DIRECTOR INDEPENDENCE
For the year ended September 30, 2010 a shareholder of the Company contributed services having a fair value of $5,200.
For the year ended September 30, 2009 the shareholder of the Company contributed services having a fair value of $5,200.
For the year ended September 30, 2008 the shareholder of the Company contributed services having a fair value of $5,200.
For the period from August 14, 2007 (Inception) through September 30, 2007, the Company received $100 from a principal stockholder. Proceeds have been recorded as an in-kind contribution.
For the period from August 14, 2007 (Inception) through September 30, 2007 the shareholder of the Company contributed services having a fair value of $700.
On August 14, 2007, the Company issued 5,000,000 shares of common stock to its founders having a fair value of $500 ($0.0001/share) in exchange for services provided.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
For the Company’s fiscal year ended September 30, 2010 and 2009, we were billed approximately $14,675 and $14,050 for professional services rendered for the audit and review of our financial statements.
Audit Related Fees
There were no fees for audit related services for the year ended September 30, 2010 and 2009.
Tax Fees
For the Company’s fiscal year ended September 30, 2010 and 2009, we were not billed for professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees
The Company did not incur any other fees related to services rendered by our principal accountant for the fiscal years ended September 30, 2010 and 2009.
Pursuant to the requirements of Section 13 or 15(d) 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.
Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us or our subsidiaries to render any auditing or permitted non-audit related service, the engagement be:
-approved by our audit committee; or
-entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.
We do not have an audit committee. Our entire board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.
PART IV
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
a) Documents filed as part of this Annual Report
1. Financial Statements
2. Financial Statement Schedules
3. Exhibits
Exhibits # Title
14 The Code of Ethics was previously filed on August 21, 2009 as an exhibit to the Form 10K/A.
31.1 Certification of President, Chief Executive Officer, Chief Financial Officer, Chairman of the Board of Directors Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of President, Chief Executive Officer, Chief Financial Officer, Chairman of the Board of Directors Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
NEXT FUEL, INC.
By:
/s/John Cline
President, Chief Executive Officer,
Chief Financial Officer,
Chairman of the Board of Directors
Dated
December 23, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ John Cline
President, Chief Executive Officer,
December 23, 2010
John Cline
Chief Financial Officer,
Chairman of the Board of Directors