10-12G 1 alkane_form-10.htm ALKANE FORM 10 alkane_form-10.htm  

 

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 10 

 
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS

Under Section 12(b) or (g) of the Securities Exchange Act of 1934
 
 

ALKANE, INC. 

 (Name of small business issuer in its Charter) 
 

 
Florida
26-4813092
(State or other jurisdiction of
(I.R.S. Employer
Incorporation or organization)
Identification No.)

2205 York Road
Suite 14
Lutherville, MD 21093
 (Address of principal executive offices)

 410-666-7837
 (Issuer's telephone number, including area code)

Securities to be registered pursuant to Section 12(b) of the Act:
 
Title of each class
Name of each exchange on
to be so registered
which each class is to be
 
Registered
   
None.
N/A
 
Securities to be registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value

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,” "non-accelerated filer" and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
x
 

 
1

 

 
 
ALKANE, INC.
   
   
Part I
 
   
Item 1. Description of Business
3
   
Item 2. Management's Discussion and Analysis of Financial Condition
15
   
Item 3. Description of Property
23
   
Item 4. Security Ownership of Certain Beneficial Owners and Management
23
   
Item 5. Directors and Executive Officers, Promoters and Control Persons
24
   
Item 6. Executive Compensation
26
   
Item 7. Certain Relationships and Related Transactions
26
   
Item 8. Description of Securities
27
   
Part II
 
   
Item 1. Market Price and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
28
   
Item 2. Legal Proceedings
29
   
Item 3. Changes in and Disagreements with Accountants
29
   
Item 4. Recent Sales of Unregistered Securities
30
   
Item 5. Indemnification of Directors and Officers
30
   
Part III
 
   
 Item 1. Financial Statements  31
   
Part IV
 
   
Item 1. Index to Exhibits
47
   
Signatures
47







 
2

 


ITEM 1. DESCRIPTION OF BUSINESS:

The Company

Alkane, Inc. has filed this Form 10 on a voluntary basis for the purpose of becoming a fully reporting company.  Alkane, Inc. (“Alkane”, the “Company”, “us”, or “we”) was incorporated under the laws of the state of Florida on January 22, 1988 as All Nations Catering, Inc.  The Company subsequent to incorporation changed its name to Chanaral Resources, Inc.
 
                In Alkane’s June 30, 2009 Financial Statement, the Company has received a “Going Concern Opinion” from its auditors.  The Company’s ability to execute its Business Plan is dependent upon its ability to raise funds for its direct sales and marketing programs.  Management’s plan is to raise capital by borrowing funds from its officers and directors and from accredited investors and/or offering shares of its common stock, $.001 par value, on a “Best Efforts” basis to accredited investors only, pursuant to the exemption from registration contained in Section 4(2) and Regulation D adopted under the Securities Act of 1933 as amended.  Because the outcome or this future event is not susceptible to reasonable estimation by management it was determined that a “Going Concern Opinion” was appropriate.

The Business

We are engaged in the business of manufacturing and distributing high-tech fuel additives and synthetic fuels.  Initially, the Company will produce additives for diesel fuel, with future plans of producing additional additives and synthetic fuels.  The Company’s flagship product, Monster Diesel™, is a multipurpose diesel fuel additive that provides better mileage per gallon and results in lower maintenance costs for on-road and off-road and marine diesel engines.  The major ingredient in the product is a proprietary and patent pending Nitro-Alkane that increases the energy density of the diesel fuel and is the core technology of this and future additives and synthetic fuel products. One quart of Monster Diesel™ when combined with 250 gallons of diesel fuel increases the energy density of the diesel by ten percent, 17,500 to 19,250 BTUs per pound, (see Exhibit 4.2) and overcome the inconsistencies and shortcomings of diesel fuel and diesel engines that have resulted from stretching existing technology to meet exhaust and mileage standards set by local and state governments, as well as the Environmental Protection Agency (“EPA”).  Additional benefits of Monster Diesel™ include:
 
 
1.
Increased miles per gallon to pay for itself several times over;
 
 
2.
Maintenance cost reduction;
 
 
3.
Reduction of exhaust emissions.
 

 
PRODUCTS
 
We have developed the products, Monster Diesel™.  Currently, the Company has its Monster Diesel™ product on the market, which is a multi-functional additive for diesel fuel.  The product is available in quarts, 2.5 gallons, 55 gallon drums, 329 gallon totes, and 5,800 gallon tanks (“Tanker”).  Additionally, an eight ounce bottle is available for convenient use in buses and light-duty trucks.
 
Monster Diesel™
 
Currently in the market there is a demand for a multipurpose diesel fuel additive.  This demand has been created from the changes to diesel engines and diesel fuel which resulted from pressure on the manufacturers to meet tighter EPA mileage and emission standards.  Monster Diesel™ fuel  additive is the “keystone” between diesel engines and diesel fuel because it delivers the benefits of up to 15% more mileage, 23% less exhaust emissions, longer interval between oil drains and engine overhauls, improved fuel injection and engine ignition point, and lower maintenance of fuel pumping and storage systems.
 

 
3

 
 
ITEM 1. DESCRIPTION OF BUSINESS: - continued
 
While other additives provide only a few solutions to the myriad of problems associated with diesel fuel, the Monster Diesel™ additive is  a multipurpose solution that lives up to its tagline, “the only additive you’ll ever need.”  The Monster Diesel™ product is so concentrated that a single quart treats 250 gallons of diesel fuel.  As such, Monster Diesel™ provides significant cost benefits by reducing fuel costs by up to 15% while having the added benefits of lowering emissions and the costs incurred from downtime and engine service.
 
The product’s proprietary and patent-pending technology increases the energy density of fuel. Management believes that the combination of ingredients in Monster Diesel TM, yields an optimal combustion.  By optimizing combustion, the explosion occurs on the power rather than the compression cycle of the engine which eliminates pre-ignition, also known as “engine knocking.”  This engine knocking is one of the main contributors to decreasing miles-per-gallon.  Additionally, by optimizing the fuel spray pattern, exhaust soot is harnessed and burned internally which results in increased mileage and lower exhaust emissions.  The overall result of the Monster Diesel™ product is increased engine performance, which can occur regardless of the fuel’s inconsistency with regards to Cetane number, lubricity, and other characteristics.
 
Monster Diesel™ yields consistent enhanced performance regardless of the equipment used or the source of the fuel.  Such enhanced performance results in a premium fuel when added to #2 Diesel which normally tests to a Cetane number of forty, that is available through pipelines as “rack diesel”.
 
Tests have shown that Monster Diesel™ increases miles per gallon by up to 15%, improves the Cetane number by a up to 6 numbers, improves fuel injection and engine ignition points and lowers maintenance of fuel pumping and storage systems. Furthermore, the tests show that Monster Diesel™ increases fuel stability, controls energy-robbing auto-oxidation, and controls corrosion in fuel systems and fuel injectors associated with low-sulfur, and ultra low-sulfur diesel fuels.
 
We contracted Southwest Research Institute (“SWRI”), a leading chemical testing company headquartered in San Antonio, Texas, to conduct independent tests of Monster Diesel™.  The tests, dated December 22, 2008, SWRI WO # 45814, were supportive and demonstrated particular benefits the Company sought to achieve.
 
Based on the encouraging results from the SWRI report, the Company continued to refine Monster Diesel™.  The following are the results of internal testing of the Monster Diesel™ product.
 
 
1.
Emission Reduction - Monster Diesel™ reduced ignition delay for most speeds and loads and provided an earlier start of combustion.  The reduction in ignition delay and the earlier start of combustion have allowed the post-additive diesel fuel to generate the same power with reduced fuel flow.  This combustion advance is partly responsible for lower hydrocarbon and smoke emission.

 
2.
Maximizing Combustion Efficiency - The test vehicle underwent the Lucas - CAV six-hour test, which comprises six hours of continuous operation at a constant speed of 300-iTm at a constant load of 75% maximum.  The injector nozzle performance changes are assessed by measuring the airflow (ISO 4010) at the start and end of the test. The air flow is measured at 0.2mm lift, a critical lift position in the injector design.  Monster Diesel™ contains an effective detergent/dispersant, which reduced the formation of injector deposits which helps to maintain maximum combustion efficiency.
 
 
3.
Pour Point Improvement - Monster Diesel™ has proven in tests to reduce the pour point of diesel fuel.  The pour point is the temperature at which fuel remains liquid, whether from gelling or freezing.  The pour point of the treated fuel is reduced to minus 27 degrees, as opposed to untreated fuel with a pour point of minus 15 degrees.  The reduction of the pour point allows diesel engines to be operated at sub-zero temperatures without needing to blend #2 diesel fuel with #1 diesel fuel.  Number 1 Diesel fuel costs 30 cents per gallon more than #2 diesel fuel and contains a lower energy measured in British Thermal Units (BTUs).  These factors increase operating costs and lower engine efficiency.  Additionally, #1 Diesel lowers lubricity and decreases engine power.  By incorporating Monster Diesel™, economy and performance can be realized in both winter and summer.
 

 
4

 

ITEM 1. DESCRIPTION OF BUSINESS: - continued
 
 
4.
Lubricity - These assessments of treated fuel demonstrate Monster’s effectiveness in reducing wear to improve the friction characteristics of treated fuel.  Metal to metal contact is minimized, thus protecting the pumps and other parts of the fuel system.
 
 
5.
Crankcase Oil Physical Test - Heavy-duty diesel engines produce soot.  Recent emission reducing design changes, such as retarding engine timing to reduce Nitrous-Oxide (“NOX”), have resulted in greater soot production.  With more efficient compression and oil control rings, more soot is carried with the oil into the crankcase.  Soot can be abrasive and cause valve train wear and cylinder bore polish, resulting in shorter engine life.  Monster Diesel™ reduces fuel related contaminants by keeping the engine running cleaner and more efficiently, preventing soot and other contaminants from entering the oil and shortening engine life.
 
BRANDING
 
We deliberately chose the brand name “Monster Diesel™”with the additional family names for future products of “Monster Fuel™” and “Monster Gas™”.
 
The choice was made based on the following principles:
 
 
1.
Creativity and innovation in branding the product.  The name represents the “Monstrous” task the product performs in overcoming all of the setbacks associated with diesel fuel.
 
 
2.
It also conveys power and fun.  These characteristics will be beneficial in helping the company build brand loyalty.
 
 
3.
Recent diesel fuel pricing changes have led to the demand for this type of branded product.  A product branded with a super hero persona coming to the rescue in the wake of rising and/or unstable fuel prices.
 
 
4.
Brands prioritize knowing their customers and cater to them exclusively, by targeting groups that indentify with their product
 
The brand “Monster Diesel™” when combined with the bold orange and black logo is daring and strong.  Monster Diesel™’s logo and name are recognized by our target markets as a brand that they can identify with. None of the Company’s competitors have established a dominant market presence or a recognizable brand name, a fact which offers Monster Diesel™  a great opportunity in the marketplace to: (1) convey the message that this product is superior to anything currently available, and (2) to build the evangelistic customer base; on-road, on the water and off-road.
 
A large element of the Company’s branding effort will be based on being “Green” and socially responsible.  Today, Monster Diesel™  is known as the product that turns dirty black smoke from trucks, buses, boats and tractors into environmentally-friendly white smoke.  From this positive, almost indulgent experience, the customer who uses the Company’s product is made to feel special when a consumer purchases Monster Diesel™. As such, a consumer contributes to energy independence, by squeezing more miles from a gallon of diesel fuel, and lowers the environmental impact of using his vehicle.  Through this process, the Monster Diesel™ brand develops a following of customers that becomes evangelistic, bringing the good news about Monster Diesel™ ’s great products to anyone they know.
 
SALES & MARKETING
 
The Company’s expenditure on Sales and Marketing from inception (July 15, 2008) to June 30, 2009 was $328,795 (41% of total expense).

Alkane, Inc. plans to implement a multi-strategy product roll-out plan which will target on-road diesel engines such as buses, and light & heavy duty trucks, as well as off-road engines such as those used in marine and farming.  Initially, the Company will target the trucking industry and subsequently execute its roll-out plan in additional markets.

 

 
5

 

ITEM 1. DESCRIPTION OF BUSINESS: - continued
 
The Trucking Industry – Monster Diesel™
 
In response to the multitude of inefficiencies that exist with diesel trucks, Alkane, Inc. is pursuing the trucking industry in its initial roll-out of the Monster Diesel™ product.  Small trucking companies have had a very difficult time coping with the yo-yo and skyrocketing diesel fuel costs and legislation to control exhaust pollution.  Federal guidelines state that new diesel engines in commercial trucks must operate at a minimum of ten miles per gallon (“MPG”).  Truck manufacturers are able to meet these guidelines by using controlled or ideal fuel and operating under ideal conditions during testing.  However, that same truck logs only 7 MPG under the real world conditions.  Furthermore, industry trends project an increase in the price of diesel fuel.  A statement by the Energy Information Administration says, “U.S. diesel fuel prices are more and more affected by competing international demand for refined distillates.  Retail diesel fuel prices are likely to remain elevated as long as crude oil prices and world demand for distillate fuels remain high.”
 
Therefore, U.S. truck fleets must find ways to conserve their operating expenses in order to remain competitive.  The company believes and testing supports the belief that Monster Diesel™ can lower a commercial truck’s overall operating cost more than 10% on average.  Savings come in the form of added mileage per tank, longer oil change intervals, cleaner fuel systems/crankcases, and fewer engine tune-ups.  This is because Monster Diesel™ causes diesel engines to operate more efficiently and burn diesel fuel cleaner.  As a result, black smoke turns to white in under 100 miles of the first Monster Diesel™  treatment.  In other words, Management believes they are entering this market at exactly the right time and can save truck fleets millions of dollars every single year by simply using the Monster Diesel™ additive.  Moreover, the public reaps the environmental benefits of a cleaner diesel exhaust.
 
Sales Team Structure
 
The Monster Diesel™ sales team will consist of 5 salaried company employees, while the remainder will be commission based established Manufacturer’s Representative Agencies and independent representatives.  This will minimize fixed overhead as the Company grows.
 


The Company employees will consist of a National Sales Manager and 4 Regional Managers.  The Regional Managers will begin in the Northeast corridor of the US, then expand to other regions and establish a team in their respective markets.  This approach allows us to duplicate our success in the Northeast to other sections of the country.  We are currently pursuing business nationwide and worldwide, but initially, the Northeast corridor will be the area that the Company will have the deepest sales penetration.  The Regional Managers will be responsible for all sales activities in their markets, including assisting Manufacturer’s Representative Agencies in developing our business.
 
Manufacturer’s Representative Agencies will be utilized nationwide to leverage their overhead and to utilize existing relationships.  Manufacturer’s Representative Agencies generally have 25 to 30 years in the business and have established business in specific markets and with specific customers.  It is Management’s experience that Manufacturer’s Representative Agencies can allow the Company to increase their customer base much faster than attempting to market to customers on their own.  The Monster Diesel™ management team has extensive experience in developing business through utilizing Manufacturer’s Representative Agencies.
 

 
6

 

ITEM 1. DESCRIPTION OF BUSINESS: - continued
 
Independent Representatives will be utilized to forge the grassroots strategy.  In today’s economic climate, it is very difficult for recent college graduates to obtain employment in their chosen field in a salaried position.  By structuring a compensation package that is commission based, along with effective training, the Company can hire recent college graduates to penetrate the marketplace at the grassroots level, calling on small trucking companies, bus fleets, marine fleets and other diesel fuel users to spread the word about us.  These Independent Representatives will also be responsible for event marketing in their respective territories, attending shows, races, boating activities and any occasion where there is an opportunity to inform users about our company.
 
International sales will be developed by choosing a master distributor for a country or a geographic region which will be entirely responsible for developing our business in that assigned area.  These master distributors will have exclusive rights to a territory that remains exclusive as long as established targets are met.
 
Success
 
The customer response to our products has been very positive.  Some of the sales successes to date are outlined as follows:
 
 
1.
National Association Small Trucking Companies (NASTC).
 
 
A.
31 Tests in Progress
 
 
B.
Zero Companies said “no”.
 
 
C.
Expect 20-25 customers from tests.
 
 
2.
Marine
 
 
A.
Achieved Positive tests with Contracted Marine US postal service.
 
 
B.
Gained distributorship in heart of the Chesapeake Bay with EE Distributing, following successful product tests.
 
 
3.
Fuel Suppliers
 
A.      Partnership with Tilghman Oil Company in Salisbury, MD to blend Monster Diesel™  with all of their products.
 
 
4.
Global Tests – Yugoslavia and Baltic Region, Spain, Puerto Rico, Cayman Islands, and Columbia.
 

 
LOCATION & FACILITIES
 
The plan is to sell and deliver in the Boston/Washington DC corridor and later to add additional manufacturing and distribution facilities in other areas of the country.  Our corporate offices are located in Lutherville, Maryland.  The fuel is blended and bottled in Pennsylvania.  The finished product is warehoused and shipped from contract warehousing in Pennsylvania.  Sales, marketing and support operations are currently located in leased office space in Lutherville, Maryland.  Discussions are planned with the Maryland Economic Development office to determine if it is economically advantageous for the Company to purchase or build a dedicated office and distribution center in Aberdeen, Maryland.





 
7

 

ITEM 1. DESCRIPTION OF BUSINESS: - continued
 
Competition
 
There are many diesel additive products already in the market, however Management believes that none of them has as many, or as high quality, of functionality as that of Monster Diesel™.  The main competitors of Monster Diesel™ are:
Company:
Contact:
Lucas Oil Products
Corona, CA 92880, Tel: 951-270-0154
Power Service
Weatherford, TX 76086, Tel: 800-643-9089
Howes Lubricator
North Kingston, RI 02852, Tel: 401-294-5500
Valvoline
Lexington, KY 40509, Tel: 800-TEAM-VAL
FPPF Chemical Company
Buffalo, NY 14201, Tel: 716-856-9607

Each of the various competitive products provide limited benefits to diesel operators, while Monster Diesel™ is considered to be an all-in-one additive that provides many solutions to the myriad of problems associated with diesel fuel and diesel engines.  Below is a chart of the various functions provided by each fuel additive product:
 

 
A
B
C
D
E
F
G
H
I
J
Ratio in Gallons
Monster Diesel™
X
X
X
X
X
X
X
X
X
X
1:1000
Lucas Upper Cylinder Lubricant
X
             
X
X
1:400
Power Service
                     
Fuel Kleen
         
X
X
     
1:200
Diesel Kleen
X
 
X
     
X
X
X
 
1:400
Howes Lubricator
                     
Diesel Conditioner
X
   
X
       
X
 
1:320
Meaner Power Kleaner
X
       
X
   
X
X
N/A
Valvoline Diesel Fuel Injector TR
X
 
X
         
X
 
1:1000
FPPF Fuel Power
X
X
 
X
 
X
X
   
X
1:3840

A.Cleans ejector ports
B.Retards combustion
C.Boosts Cetane Number
D.Low temperature operation
E.Retarding auto-oxidation of fuel
F.Remove water condensate
G.Corrosion inhibition
H.Algaecide
I.Smoke/emissions reduction
J.Increases miles per gallon

The diesel fuel additive industry is highly competitive. Dominant companies, such as, Lubrizol, Infineum, Afton Chemical and Innospec, compete primarily among each other for business from major refineries and terminals, such as Exxon or major air and sea ports.  These companies provide customized blends for a single benefit, i.e., cetane boost, or a combination of benefits, i.e. cetane boost and pour point, on a million gallon basis.  Most of these companies do not have a retail operation.
 
Other market segments are comprised of retail and wholesale customer markets. These customers are individual truckers, small to medium trucking company fleets or smaller terminal and blending companies.  Individual truckers will purchase an additive at a local Wal-Mart or fueling station, while trucking fleets may contract with local blenders or directly with the additive provider.  Companies such as PowerService, FPPF and Stanadyne compete for price and customer benefits.  Most of these companies offer an additive package with small combinations of benefits.  Most of the additives offered by these companies are petroleum based and do not claim to increase the energy measured in British Thermal Units (“BTUs”) of the diesel fuel.

 
8

 

ITEM 1. DESCRIPTION OF BUSINESS: - continued
 
New Product Development        

We have recently introduced Monster Diesel™ for home heating oil to reduce soot, retard auto-oxidation of the fuel that occurs from winter season to the next winter season and improve the spray pattern for more complete combustion.  The home heating oil consumption in the Northeastern US alone was estimated to be 5.4 billion gallons in 2001 according to the Energy Information Administration (EIA) which is in the Office of Energy Statistics for the US Government.

Intellectual Property
 
               Our intellectual property consist of trade secrets for the formulation of the present and future products, copyrights and trademarks in various stages of filing, one US utility patent application filed on May 20, 2009 titled “Nitrated Non-Cyclic N-Alkane Scaffolds With Differentiated-Mean Combustive Equivalent As High Energy Density Fuel Improvers”, a continuation in part to this application and two inventions.  One of the inventions is a process for manufacture of a class of synthetic fuel compounds that directly substitute for conventional fuels and the other is a biological process for conversion of methane gas to liquid methanol.
 
Government Regulation
 
Clean Air Non-road Diesel Rule
 
On May 10, 2004, the Bush Administration in partnership with the United States Environmental Protection Agency (“EPA”) announced the Clean Air Non-road Diesel Rule, which requires stringent pollution controls on diesel engines used in industries that include construction, agriculture and mining. The rule focuses on reducing sulfur content of diesel fuel.
 
The Clean Air Non-road Diesel Rule is the latest in a series of Clean Diesel actions that are designed to reduce emissions from nearly every type of diesel vehicle and equipment.  This non-road diesel program combines cleaner engine technologies with cleaner fuel, which will result in dramatic environmental and public health benefits to the United States.  According to the EPA, the new standards will cut emissions from non-road diesel engines by over 90 percent.  Non-road diesel equipment, as described in this rule, currently accounts for 47 percent of diesel particulate matter (“PM”) and 25 percent of nitrogen oxides (“NOx”) from mobile sources nationwide.
 
Sulfur levels will be reduced in non-road diesel fuel by 99 percent from current levels. The lower sulfur fuel will provide immediate public health benefits by reducing PM from engines in existing non-road equipment. It also makes it possible for engine manufacturers to use advanced clean technologies.
 
Over 650,000 pieces of non-road diesel equipment sold in the United States each year will be covered by this rulemaking. Currently about six million pieces of non-road diesel equipment are in use in the United States.
 
The Locomotive and Marine Diesel Rule
 
In March of 2008, the EPA adopted standards that will dramatically reduce emissions of PM and NOx from locomotives and marine diesel engines.  Under this rule the EPA expects to tighten emissions standards for existing locomotives and large marine diesel engines when they are remanufactured.  The EPA also intends to set near-term engine-out emissions standards—commonly referred to as Tier 3 standards—for newly-built locomotives and marine diesel engines. Furthermore, the EPA also intends to set longer-term standards, commonly referred to as Tier 4 standards, for newly-built locomotives and marine diesel engines that reflect the application of high-efficiency after treatment technology.
 
EPA is working on finalizing new idle reduction requirements for newly-built and remanufactured locomotives and adopting provisions to encourage a new generation of clean switch locomotives, based on clean non-road diesel engine standards.
 

 
9

 

ITEM 1. DESCRIPTION OF BUSINESS: - continued
 
The EPA estimates 90 percent PM reductions and 80 percent NOx reductions from Tier 4 engines meeting these standards, as compared to engines meeting the current Tier 2 standards. According to the EPA, in 2030 this program will reduce annual emissions of NOx by about 800,000 tons and PM emissions by 27,000 tons.
 
Locomotive and marine diesel emissions reductions will particularly benefit those who live, work or recreate in and along coastal areas, rivers, ports and rail lines. Such reductions will also have beneficial impacts on visibility impairment and regional haze, as well as reducing crop damage and acid rain.
 
The Heavy-Duty Highway Engine Rule
 
In December 2000, EPA adopted a rule to establish stringent standards designed to reduce emissions from on-road heavy-duty trucks and buses by up to 95 percent and to cut the allowable levels of sulfur in diesel fuel by 97 percent. This EPA rule is the most significant and far-reaching mobile source initiative since Congress adopted the 1970 Clean Air Act Amendments establishing the U.S. Mobile Source Emission Control Program.
 
Beginning with the 2007 model year, 100 percent of the on-road diesel heavy duty engines (“HDEs”) will require the use of a diesel particulate filter and 50 percent of the engines will require NOx exhaust control technology. Beginning with the 2010 model year, 100 percent of the on-road heavy-duty diesel engines will require NOx exhaust control technology.

Under this establishment, the EPA set a sulfur cap of 15 ppm beginning June 1, 2006 for 80 percent of the diesel fuel sold by major refiners for use in highway vehicles. The number is expected to increase 100 percent after December 31, 2009.  In addition, small refiners, who produce approximately five percent of the on-road diesel fuel, are eligible to sell diesel fuel with 500 ppm sulfur until 2010.
 
The State of California (the only state with an Air Resources Board) established additional regulations.  California state regulations address the sulfur content, the aromatic hydrocarbon content, and the lubricity of diesel fuel.  It is important to note that the Monster Diesel™ additive adjusts the properties of diesel fuel to bring diesel fuels in all applications within compliance of United States and California Air Resource Board regulations.
 
Research and Development
 
 The Company has an ongoing development program to extend the core technology of high energy density molecules, Nitro-Alkanes from the present first generation containing one nitro group in Monster diesel™ product to a third generation molecule that contains three nitro groups to pack more energy into a gallon than the first generation.  The third generation molecule and the process to manufacture the molecule are the subject of a continuation in part to the Company’s utility patent filed in May 2009.
 
The Company’s expenditure on Research and Development in the year ending June 30, 2009 was $245,401 (30% of total expense).
 
The Company is developing fuels based on high energy dense molecules in blends to be direct substitutes for conventional fuels without the need to modify the engines, fuel or ignition systems.
 
The Company is negotiating a one year contract with the Polytech Institute of New York University to aid in the development and commercialization of the company’s technology for a biological process for conversion of methane gas to liquid methanol.
 
Employees
 
Currently the Company has two full-time salaried employees.  The Company also has two individuals including the two officers and directors that work for the Company under consulting arrangements.  These consultants have agreed to provide the company with administrative, financial, and product development services until such time as the Company obtains its necessary funding.

 
10

 

ITEM 1. DESCRIPTION OF BUSINESS: - continued
 
Subsequent Events
 
On May 9, 2009, we signed an operating agreement to form Monster Fuels, LLC (aka Monster Fuels Technologies, LLC), (the “LLC”) to enter into a joint venture with a limited partnership, StormWorks Monster, LLC (“Storm”), that was formed by WorldVest, Inc. (a Florida company) (“World”).  Storm prepared an offering memorandum to raise working capital through the sale of private capital notes.  No notes were sold and as a consequence on August 10, 2009, we proposed the dissolution of the LLC and Storm accepted the dissolution in principal with the details to be worked out.  Two of our vendors were paid a total of $70,000 by World through the LLC.  Mathew Zuckerman, CEO, has assumed full liability to repay the $70,000 to World.  The Company has recorded a $70,000 deposit for future purchase orders and contributed capital for the assumption of liability by the CEO.
 
In July 2009, a shareholder owning 40,000,000 common shares offered these shares to Mathew Zuckerman, an officer and director of the company who accepted the shares in exchange for his venting into the company inventions for a process for manufacture of a class of synthetic fuel compounds that directly substitute for conventional fuels and a biological process for conversion of methane gas to liquid methanol.  At this time, the Company is unable to determine the value of the transaction.

 
 
 Off Balance Sheet Arrangements

None

RISK FACTORS


INVESTING IN THE SHARES OF COMMON STOCK OFFERED IN THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK.   WE HAVE NOT GENERATED ANY SIGNIFICANT REVENUES AND HAVE NOT MADE A PROFIT SINCE INCEPTION.


We have a limited operating history, which makes it difficult to predict its future operating results.
 
Our limited operating history gives you very little basis upon which to evaluate our ability to accomplish our business objectives. In making an investment decision, you should evaluate the business in light of the risks, expenses and difficulties frequently encountered by companies in the early stages of development. We may not be successful in addressing these risks.  It is difficult to accurately forecast the future revenue and plan expenses accordingly and, therefore, predict the future operating results.
 
Our operating results may fluctuate significantly, which could make our future results difficult to predict and could cause our operating results to fall below investor expectations.
 
Our operating results may fluctuate due to a variety of factors, many of which are outside of our control.  As a result, comparing our operating results on a period-to-period basis may not be meaningful.  Fluctuations in our revenue can lead to even greater fluctuations in our operating results. Our budgeted expense levels depend in part on our expectations of long-term future revenue.

In addition to other risks discussed in this section, factors that may contribute to fluctuations in revenue and operating results include:
 
 
1.
Fluctuations in demand and price for diesel fuel additives
 
 
2.
Competitive price reductions from competitors
 
 
3.
Increase in costs to manufacture the product
 
 
4.
Timeliness of customers’ payments for their purchases
 

 
11

 

RISK FACTORS - continued
 
 
5.
Any significant changes in the competitive dynamics of the market, including any new entrants, technological advances or substantial discounting of products
 
 
6.
General economic conditions in domestic and international markets
 
Our gross margin may fluctuate from quarter to quarter and may be adversely affected by a number of factors, some of which are beyond our control.
 
Our gross margin will fluctuate from period to period and may be adversely affected by a number of factors, including:
 
 
1.
The cost of marketing
 
 
2.
The fluctuating cost of sales leads
 
 
3.
The fluctuating rate of default Accounts Receivable
 
 
4.
Cost of general administrative costs
 
 
5.
Drastic decrease in the price of diesel fuel
 
If we fail to compete successfully against our current and future competitors, or if our current or future competitors continue to expand, or employ aggressive business tactics, including those described above, demand for our products could decline, we could experience delays or cancellations of orders, or we could be required to reduce our prices or increase our expenses for areas such as marketing and advertising.
 
The markets in which the Company competes are highly competitive, many of their competitors are much larger than they are, and they may not be able to compete effectively.
 
Competition in the fuel additives market is based on price, quality, functionality, existing business and customer relationships and scalability. Other companies have, or may have in the future, products or services that are or could be competitive with our services and which could adversely affect our competitive position.
 
Many of our competitors have substantially greater name recognition and technical, financial and marketing resources, greater capacity and better-established relationships with potential customers than we have.  Many of our competitors have more resources to develop or acquire, and more experience in developing or acquiring new products and technologies, and in creating market awareness for those products and technologies.  In addition, many of our competitors have the financial resources to offer competitive products below market pricing levels that could prevent them from competing effectively. Further, many of our competitors have built long-standing relationships with some of their prospective customers and have the ability to provide financing to customers and could, therefore, have an inherent advantage in selling products to those customers.
 
We must respond to evolving industry standards and requirements in order for its products to be competitive and successful.
 
We expect our competitors to continue to improve the performance of their existing services and to introduce new fuel additive products and services. We may not have sufficient resources to make these improvements and may not be able to make the technological advances necessary to be competitive which may limit our ability to effectively sell products to targeted customers who have prior relationships with their competitors.
 
If we lose key personnel or fail to attract and retain additional qualified personnel when needed, our business may be harmed.
 
We are highly dependent upon the efforts of our management team.  The death or departure of any of our key personnel could have a material adverse effect on our business.  In particular, the loss of Mathew Zuckerman, our Chief Executive Officer, could significantly impact our ability to operate and grow the business and could cause performance to differ materially from projected results.  Our success also depends to a significant degree upon the continued contributions of our sales agents and other technical contractor or other personnel, many of whom would not be difficult to replace, but whose loss to the Company could be disruptive to the business for an unspecified period of time.  We believe our future success will depend in large part upon our ability to identify, attract and retain highly skilled managerial, sales, finance and support personnel. Competition for these individuals is intense in their industry.  We may not succeed in identifying, attracting and retaining appropriate personnel. Further, competitors and other entities may attempt to recruit our employees. The loss of the services of any of our personnel, the inability to identify, attract or retain qualified personnel in the future or delays in hiring qualified personnel, particularly engineers, could make it difficult for us to manage our business and meet key objectives, such as timely product introductions.
 

 
12

 

RISK FACTORS - continued
 
If we need additional capital in the future, it may not be available to us on favorable terms, or at all.
 
We may require additional capital from equity or debt financings in the future to fund our operations or respond to competitive pressures or strategic opportunities. We may not be able to secure timely additional financing on favorable terms, or at all.  The terms of any additional financing may place limits on our financial and operating flexibility. If we are unable to obtain adequate financing or financing on terms satisfactory to us, if and when we require it, our ability to grow or support our business and to respond to business challenges could be limited and our business will be harmed.
 
Our success is subject to governmental regulation in the diesel fuel industry.
 
Much of the demand for our high-tech fuel additive products is related to the recent changes in U.S. legislation calling for tighter emission controls with regards to diesel fuel and diesel engine emissions.  As the regulations call for lower emissions from diesel fuel and diesel engines, our position will become stronger in the market.  Should the legislation surrounding diesel emissions change and become more lenient, the demand for our products may decrease, adversely affecting our ability to grow.
 
Failure to Properly Manage Growth and Expansion Could Adversely Affect Our Business and Shareholder’s Equity.
 
We anticipate future growth from existing products and possible growth through newly developed products.   This growth will increase the demands on our management, operating systems and internal controls.  Consequently, our existing management resources and operational, financial, human and management information systems and controls may be inadequate to support its future operations.  We do not know if we will be able to manage our growth successfully.  As a result of these concerns, we may not be able to grow, or, if we do grow we do not know at what growth rate.

Risks Relating to Patents, Copyrights, Trademarks, and Trade names.
 
We believe that trade names, trademarks, and copyrights that we purchased will be increasingly important to us.  Applications will be filed to register additional trade names, trademarks and copyrights for products we will sell.  We will also institute an internal program to have all employees, consultant and vendors sign a Confidential Information and Trade Agreement.  We are in the process of registering for state, federal and foreign protection for trade names, trademarks and copyrights and continue with the Company’s Trade Secret program.  Enforcing trade names, trademarks and copyrights against infringements, or defending against claims of infringement by others, can be time-consuming and expensive. Given our current stage of development, enforcing such claims could be cost-prohibitive to us.
 
If we are Unable to Protect Our Intellectual Property, Our Business Could Suffer.
 
Our future sales and expansion into additional markets will depend heavily upon our products that have been developed and upon products that are currently being developed.  Our Trade Secret program is currently being instituted to protect our proprietary formulas and these formulas are always at risk.  There is no assurance that we can adequately protect this intellectual property.  If we fail to protect our intellectual property, we may lose any competitive advantage over our competitors, and our business could suffer.

 
13

 

RISK FACTORS - continued
 
 To protect the formulas to our products and our products’ sales we may rely on a combination of:
 
Trade secret laws,
Copyright, trademark and trade name laws,

Confidentiality procedures and agreements,
Having unique product formulas.
 
These methods of protection may not be adequate to protect against using our technology and business methods. Accordingly, we cannot assure you that we will be able to maintain the advantage associated with our business methods, services or competitive features.
 
Despite our efforts to formally protect our intellectual property and keep information confidential, we may not be able to protect and use our intellectual property.  We may not be able to protect our formulations because:
 
Even if issued, new patents, trademarks, trade name or copyright registration may be challenged, invalidated or designed around.
We may not be granted adequate protection for our products, formulations and processes and parts of our technology may be found to be unable to be registered.

Time-consuming and costly litigation may be necessary to protect the Company’s proprietary technologies.
Policing unauthorized use of our intellectual property may be difficult and expensive.

Competitors may independently develop similar technology or design around our intellectual property.

 
Third Parties May Prevent Us From Developing or Using Intellectual Property.
 
We may not be able to use the intellectual property or further develop our business because of third parties.  We cannot assure you that third parties will not in the future claim infringement by us with respect to the current or future products.  These claims of infringement, whether successful or not, could seriously harm our business, or results of operations.

Third parties:
 
May bring claims of copyright, trade name or trademark infringement against us,
May obtain patents or other intellectual property rights which may limit our ability to use certain technologies or require us to license or cross license technology, or

May bring costly, time-consuming lawsuits.

We are not aware of any issued patents that cover formulations similar to the formulations in the products we have developed.
 
 Receive a ‘Going Concern Opinion’ from Auditor.

                In our June 30, 2009 Financial Statement, the Company has received a “Going Concern Opinion” from its auditors.  The Company’s ability to execute its Business Plan is dependent upon its ability to raise capital by borrowing funds and/or offering shares of its common stock, $.001 par value, on a “Best Efforts” basis to accredited investors only, pursuant to the exemption from registration contained in Section 4(2) and Regulation D adopted under the Securities Act of 1933 as amended.  Because the outcome or this future event is not susceptible to reasonable estimation by management it was determined that a “Going Concern Opinion” was appropriate.
 


 
14

 

RISK FACTORS - continued
 
Purchasers Must be Willing to Hold the Common Stock Indefinitely, and May Not be Able to Liquidate the Shares.

An investment in the Common Stock could be long-term and non-liquid.  As discussed above, the common stock will not be registered under the Securities Act or any foreign or state securities laws by reason of exemptions from such registration that depend in part on the investment of the investors.  Prospective investors must represent in writing that they are purchasing the Common Stock:

For their own account
For long term investment, and

Not with a view toward resale or distribution.

Earnings Needed for Expansion.

We intend to retain most future earnings, net of dividends that may be paid on common stock, to fund the operation and expansion.  We may not generate profits and that will not permit us to pay cash dividends on our common shares.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
Some of the statements under “Offering Memorandum Summary,” “Risk Factors,” “Management,” “Company,” and elsewhere in this Memorandum constitute forward-looking statements.  These statements involve known and unknown risks, uncertainties, and other factors that may cause our or industry’s actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements.  Such factors include, among others; those listed under “Risk Factors” and elsewhere in this Memorandum.
 
In some cases, forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of such terms or other comparable terminology.


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

The following discussion of our financial condition and results of operation should be read in conjunction with the financial statements and related notes that appear elsewhere in this prospectus. This discussion contains forward-looking statements and information relating to our business that reflect our current views and assumptions with respect to future events and are subject to risks and uncertainties, including the risks in the section entitled Risk Factors beginning on page 9 ,that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
 
These forward-looking statements speak only as of the date of this document. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or achievements. Except as required by applicable law, including the securities laws of the United States, we expressly disclaim any obligation or undertaking to disseminate any update or revisions of any of the forward-looking statements to reflect any change in our expectations with regard thereto or to conform these statements to actual results.
 
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with accounting principles generally accepted in the United States.
 

 
15

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - continued
 
Overview
 
We are a development stage company with limited operations and limited revenues from our business operations.  We were incorporated under the laws of the state of Florida on January 22, 1988 as All Nations Catering, Inc.  The Company subsequent to incorporation changed its name to Chanaral Resources, Inc.
 
On January 29, 2009, Alkane, Inc., formerly known as Chanaral Resources, Inc., entered into an Agreement and Plan of Merger with Monster Diesel, Inc., a Nevada Corporation (incorporation date July 15, 2008), whereby both companies will be merged and Alkane will be the surviving corporation (“Merger Transaction”).  As consideration for the Merger Transaction, Alkane will issue 50,000,000 shares of its common stock to the shareholders of Monster Diesel, Inc. on a one-for-one exchange.  The Merger Transaction of Alkane and Monster Diesel, Inc. represented a change in control of Alkane.  For accounting purposes, this change in control constitutes a recapitalization of Monster Diesel, Inc. and is accounted for as a reverse merger whereby the legal acquirer, Chanaral Resources, Inc. is treated as the acquired entity.  Monster Diesel is treated as the acquiring Company with continuing operations.  Accordingly, the historical financial information of Monster Diesel, Inc. (incorporation date July 15, 2008) constitutes the Company’s historical information prior to January 29, 2009 and combined operations of Monster Diesel, Inc. and Chanaral Resources, Inc. are reported from January 29, 2009 forward.  Chanaral Resources, prior to the reverse merger, held assets totaling $698,909 and liabilities of $734,377 resulting in the assumption of net liabilities totaling $35,428 by Monster Diesel, post merger. The net effect of the $77,575 common stock value issued and the net liability of $35,468 assumed was recorded as an adjustment to accumulated deficit for $113,003 by the Company.  Concurrent with the reverse merger, the Company acquired the Monster Diesel™ product and associated business including an invention titled “Nitrated Non-Cyclic N-Alkane Scaffolds with Differentiated-Mean Combustive Equivalent As High Energy Density Fuel Improvers”.
 
On February 29, 2009, the name of the corporation was changed to Alkane, Inc. in the State of Florida and on March 13, 2009, the trading symbol was changed from CRLR to ALKN by FINRA. On April 3, 2009, shares of the Company started trading under the symbol “ALKN”. On March 3, 2009, we transferred all Chanaral Resources assets to 458549 BC, LTD in exchange for assumptions of all liabilities, accept for a gain of approximately $35,000, associated with the business of Chanaral Resources, Inc. and discontinued the business that the Company was engaged in prior to the merger.
 
There are three grades of gasoline to choose from at almost every one of the estimated 170,000 US gas stations and only one grade of diesel where diesel is sold.  This fact, in the opinion of management, creates an opportunity for a premium grade of diesel that can be serviced by Monster Diesel™.  The US has ten million vehicles/machines, including diesel powered trucks, buses, boats, construction and power generating.  There are a variety of diesel fuel additives to address one or more of the challenges common to diesel powered engines: fuel mileage, engine power, gelling, deicing, corrosion and engine wear.  None however, offers a comprehensive, cost saving solution to boost diesel fuel’s quality to premium levels and addresses all of diesel engine’s challenges, all in one product.  Our product that converts diesel fuel to a premium grade diesel has a worldwide market of $22 billion and it is estimated that half of the total market is in the US.
 
Our goal is to help diesel engine operators upgrade their fuel to a premium grade and pay for our product out of the savings in increased mileage alone.  On an energy density basis the proprietary ingredient in Monster Diesel™, which is 50% of the volume, when mixed with diesel fuel increases the energy of the fuel mixture so that one quart of Monster Diesel™ is equivalent to 25 gallons of diesel. We will generate revenues by selling quarts of Monster Diesel™  to 18-wheel truckers to mix with a 250 gallon fill-up and by selling barrels, totes and tankers to trucking fleets and their suppliers.
 
Our offices are currently located at 2205 York Road, Suite Number 14, Lutherville, MD 21093, which is leased for $1,500 per month and the lease expires on November 30, 2010.
 
From Inception (July 15, 2008) to October 20, 2008 (start of operations) there were minimal costs of organization and these costs are included in the financial statements as general and administrative
 

 
16

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - continued
 
expense for the period of Inception (July 15, 2008) to June 30, 2009 (year end).  For the period Inception (July 15, 2008) to June 30, 2009, the sales were $37,321, gross profit was $25,435 (68%), and accumulated net losses was $749,092.  As of June 30, 2009, we had $145,624 in current assets and current liabilities of $588,291 including $331,250 in accrued salaries, advanced due to officers of $110,901 and total stockholders’ equity of negative $379,070.  Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt as to whether we can continue as an ongoing business for the next twelve months. However, we do anticipate that we will generate additional revenues in the subsequent period to June 30, 2009.
 
Plan of Operation
 
We have concluded the testing period for Monster Diesel™ by completing one full sales cycle of the sale of 1,000 quarts for consumers and one tote containing 329 gallons in a business to business sale.  With proof of concept complete, we spent the first quarter of 2009 developing the Company, and pre-marketing the Company’s products.  The Company anticipates a source of liquidity during the 12 months ending June 30, 2010 will be derived from proceeds generated from the sales of Monster Diesel ™.  Looking forward, Management believes that due to signed distribution contracts and current demand from the market, the company will be able to produce and sell twenty (20) tankers (5,800 gallons/tanker) in its first full year of operation.  Additionally, by producing the product in larger amounts, the Company can benefit from gross margins higher than the historical 68% in the period from Inception (July 15, 2008) to June 30, 2009.
 
We maintain all necessary insurances including product liability with one million dollars / two million dollars limit, officers and directors liability insurance with fifteen thousand dollars / one million dollars limit, general liability with one million dollars / two million dollars limit, and full paid medical and standard coverage for employees. The Company has paid all of their debt except for their current accounts payable (the majority of this item are due to the officers and directors) and notes payable to officers and directors.  The Companys’ two officers and directors will provide the additional funds needed to pay the monthly cash requirement until such time as the Company receives the funding of its business plans.  The Company’s management plans to raise the majority of the capital needed by borrowing funds and/or offering shares of its common stock $.001 par value, on best efforts to accredited investors only, pursuant to the exemptions from registrations in Section 4 (2) and Regulations D adopted under the Securities Act of 1933 as amended.
 
Our business is premised on the theory that small trucking companies have had a very difficult time coping with the skyrocketing diesel fuel costs and legislation to control exhaust pollution.  Federal guidelines state that new diesel engines in commercial trucks must operate at a minimum of ten miles per gallon (“MPG”).  Truck manufacturers are able to meet these guidelines by using premier fuel and operating under ideal conditions during testing.  However, that same truck logs only 7 MPG under the real world conditions.  Furthermore, industry trends project an increase in the price of diesel fuel.  A statement by the Energy Information Administration says, “U.S. diesel fuel prices are more and more affected by competing international demand for refined distillates.  Retail diesel fuel prices are likely to remain elevated as long as crude oil prices and world demand for distillate fuels remain high.”
 
Therefore, U.S. truck fleets must find ways to conserve their operating expenses in order to remain competitive.  The company believes that Monster Diesel™ can lower a commercial truck’s overall operating cost more than 10% on average.  Savings come in the form of added mileage per tank, longer oil change intervals, cleaner fuel systems/crankcases, and fewer engine tune-ups.  This is because Monster Diesel™ causes diesel engines to operate more efficiently and burn diesel fuel cleaner.  As a result, black smoke turns to white in just 100 miles of the first Monster Diesel™ treatment.  In other words, Management believes they are entering this market at exactly the right time and can save truck fleets millions of dollars every single year by simply using the Monster Diesel™ additive.  Moreover, the public reaps the environmental benefits of a cleaner diesel exhaust.
 

 

 
17

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - continued
 
Our current business objectives are:
 
 
·
to execute our marketing plan and to create a market for Monster Diesel™ products in the trucker, home heating oil and marine markets; and
 
 
·
to build and maintain investor confidence in the company through transparency achieved by becoming full reporting and obtain a listing on the Bulletin Board.
 
Our goals over the next 12 months ending June 30, 2010 are to:
 
 
·
build sales by selling Monster DieselTM products to truckers through truck stops and fleets, home heating oil and marine markets to $4,000,000 (20 tankers of 5,800 gallons) while maintaining gross margins at the historical level of 44% which is one third less than the historical level of 68%;
 
 
·
develop an intellectual property portfolio based on filing and prosecuting utility patent applications with the US Patent Office while preserving foreign rights; and
 
 
·
generate sufficient revenue by the April to June 2010 quarter through the sale of Monster Diesel™ products to achieve positive cash flow from operations.
 
 
Activities to Date
 
We were incorporated under the laws of the State of Nevada on July 15, 2008 and became a Florida corporation on January 29, 2009 through a reverse merger. During the period from Inception (July 15, 2008) through June 30, 2009, we incurred a net loss of $749,092. This loss consisted of incorporation costs, research & development and marketing and consulting fees to our directors and officers. Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt as to whether we can continue as an ongoing business for the next twelve months. However, we do anticipate that we will generate additional revenues in the subsequent period to June 30, 2009.
 
Since inception, we have sold 1,000,000 shares of common stock and converted a note in the amount of $172,600 into the issuance of 1,726,000 shares of common stock and issued 50,000,000 shares of common stock on January 29, 2009 in a one to one stock exchange with Monster Diesel, Inc. (a Nevada corporation) to acquire the Monster Diesel™ product and associated business including an invention later titled in a US patent filing as, “Nitrated Non-Cyclic N-Alkane Scaffolds With Differentiated-Mean Combustive Equivalent As High Energy Density Fuel Improvers”.  The invention was subsequently filed as a Utility application with the U.S. Patent Office onMay 20, 2009.
 
Expenditures
 
The following chart provides an overview of our budgeted expenditures by significant area of activity over the next 12 months.  These expenditures are described in detail below under “Milestones.”
 
     Fiscal Year 2010        
Expense, $ 000's
 
2009
   
2010
       
      Q1       Q2       Q3       Q4    
Total
 
   
July - September
   
Oct. - December
   
Jan. - March
   
April – June
       
Sales & Marketing
    100       150       200       250       700  
                                         
Research & Development
    150       150       150       150       600  
                                         
General & Administrative
    50       65       80       100       295  
                                         
                                       Total
    300       365       430       500       1,595  
 

 

 
18

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - continued
 
Milestones
 
 
JULY – SEPTEMBER 2009
 
Main Objectives:
 
 
·
Selling Monster Diesel™ to truck fleets;
 
·
Contracting with The Polytech Institute of New York University for the development of the company’s proprietary process for biological process for conversion of methane gas to liquid methanol;
 
·
File a Utility patent application with the US Patent Office on a biological process for conversion of methane gas to liquid methanol; and
 
·
Completed an audit of the company as of June 30, 2009 and subsequent file of the Form 10.

During this quarter the company expects to focus on selling Monster Diesel™ to truck fleets by selling direct to both small (under 50 units) and large (over 50 units) through an internal sales organization to well-established diesel products distributors:
 
 
1.
31 small trucking companies have agreed to test Monster DieselTM in their fleet trucks after attending the Company’s presentation at the National Association of Small Trucking Companies Conference.  More than a half dozen tests are underway, with more scheduled for this quarter.
 
 
2.
Several large truck fleets in the northeast have expressed interest, which we are arranging to secure orders in this quarter.
 
Lou Petrucci, Vice President of Sales and Marketing, will be in charge of the launch of Monster Diesel™ to truck fleets.
 
Mathew Zuckerman, CEO & President, is responsible for contracting with the PolyTech Institute of New York University, filing the continuation in part to the invention previously filed and the completion of the audit and subsequent filing of the Form 10.
 
The cost of the launch of Monster diesel™ home heating oil product is included in the expenditures budgeted in the quarter for marketing and sales expense.  The cost of the contract with the PolyTech Institute of New York University is $100,000 over a year period and is included in the expenditures budgeted in this quarter and each of the subsequent three quarters for research and development expense.  The cost of filing the continuation in part is included in the expenditures budgeted for this quarter for research and development expense.  The cost for completion of the audit and subsequent filing of the Form 10 is included in the expenditures budgeted in the quarter for general and administrative expense.
 
 
OCTOBER  2009 - DECEMBER 2009
 
Main Objectives:
 
 
·
Launch Monster Diesel™ for the home heating oil market;
 
·
Find a sponsoring Broker Dealer to move the listing of the company’s shares to the bulletin board; and
 
·
File a continuation in part to the invention titled “Nitrated Non-Cyclic N-Alkane Scaffolds With Differentiated-Mean Combustive Equivalent As High Energy Density Fuel Improvers”.

During this quarter, we expect to focus on launching Monster Diesel™ for home heating oil sales to consumers in a quart sufficient to last the winter season and move to a listing on the bulletin board.
 
Home heating oil is a low sulfur diesel fuel, burned primarily in homes in the Northeast for warmth during winter.  When Diesel burns, there are many adverse byproducts such as smell, particulate emission, soot, and black smoke.  When the home heating oil formulation of Monster Diesel™ is added to the homeowner’s tank of home heating oil, it has the following positive effects:
 

 
19

 
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - continued 
 
OCTOBER  2009 - DECEMBER 2009 - continued
 
 
1.
Turns the black smoke to a light gray or white.
 
 
2.
Burns hotter, providing more heat and uses less fuel.
 
 
3
Minimizes particulate emission and soot.
 
Lou Petrucci, vice president of Sales and Marketing, will be in charge of the launch of Monster Diesel™ home heating oil sales to consumers.
 
Mathew Zuckerman, CEO & President, is responsible for filing the utility patent.
 
Assuming the company is successful in obtaining approval of the Form 10: Mathew Zuckerman, CEO & President will be responsible for locating a Broker Dealer as a sponsor and assisting him with the task of obtaining a listing on the Bulletin Board.
 
The cost of the launch of Monster diesel™ home heating oil product is included in the expenditures budgeted in the quarter for marketing and sales expense.  The cost of filing the Utility patent application is included in the expenditures budgeted in the quarter for research and development expense.  The cost for seeking a listing on the Bulletin Board is included in the expenditure budgeted in the quarter for general and administrative expense.
 
 
JANUARY - MARCH 2010
 
Main Objectives:
 
 
·
Selling Monster Diesel™ to Fuel Suppliers;
 
·
File a Utility patent application with the US Patent Office on a process for manufacture of a class of synthetic fuel compounds that directly substitute for conventional fuels; and
 
·
Search for and recruit a chief financial officer and a member for the board of directors with finance and human relations experience to chair the compensation and audit committees.

During this quarter the company expects to focus on selling Monster Diesel™ to truck stops for both on shelf distribution and to blend into their pump stock.
 
 
A.
Management has completed a successful test period with Tilghman Oil Company and anticipated beginning to blend Monster DieselTM into their pump stock in this quarter.
 
B.
Members of the Mid-Atlantic Petroleum Dealers Association (MAPDA) have expressed interest in Monster Diesel™  and we’ll be scheduling sales of product to them in this quarter.

Lou Petrucci, Vice President of Sales and Marketing, will be in charge of the launch of Monster Diesel™ to Fuel Suppliers.
 
Mathew Zuckerman, CEO & President, is responsible for filing the utility patent and the search for and recruit a chief financial officer and a member for the board of directors with finance and human relations experience to chair the compensation and audit committees.
 
The cost of the launch of Monster diesel™ to truck stops is included in the expenditures budgeted in the quarter for marketing and sales expense.  The cost of filing the Utility patent application is included in the expenditures budgeted in the quarter for research and development expense.  The cost for the search for and recruitment of a chief financial officer and a member for the board of director is included in the expenditure budgeted in the quarter for general and administrative expense.
 
 
APRIL – JUNE  2010
 
Main Objectives:
 
·
Selling Monster Diesel™ to the marine industry;
 
·
generate sufficient revenue through the sale of Monster Diesel™ products to achieve positive cash flow from operations; and

 
20

 
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - continued
 
APRIL – JUNE  2010 - continued
 
 
·
Complete testing of synthetic fuel compounds that directly substitute for conventional fuel for 2-cycle house engines used in marine, power tools and recreation vehicles and scooters.
The largest off-road consumer of diesel fuel is the marine industry, which Monster Diesel™   is pursuing in the following two-tiered approach:
 
 
1.
Selling directly to the Port of Baltimore, which is scheduling testing for the third quarter 2009.
 
 
2.
Selling to the largest distributor of diesel to fishing fleets in the Chesapeake Bay area.
 
Lou Petrucci, Vice President of Sales and Marketing, will be in charge of the launch of Monster Diesel™ to the marine industry.
 
The cost of the launch of Monster diesel™ to the marine industry is included in the expenditures budgeted in the quarter for marketing and sales expense.
 
 
Results of Operations
 
During the period from Inception (July 15, 2008) through June 30, 2009, we incurred a net loss of $749,092. This loss consisted of expenses ($809,955) less gross profit ($25,435) and a gain on sale of assets of ($35,428).  The expenses were 43% sales and marketing ($328,795), 33% research & development ($245,401) and 31% general and administrative ($235,759),. Since inception, July 15, 2008, we have sold 1,000,000 shares of common stock and converted a note in the amount of $172,600 into 1,726,000 shares of common stock and issued 50,000,000 shares of common stock on January 29, 2009 in a one for one stock exchange with Monster Diesel, Inc. (a Nevada corporation) to acquire the Monster Diesel™ product and associated business including an invention later titled in a US patent application as, “Nitrated Non-Cyclic N-Alkane Scaffolds With Differentiated-Mean Combustive Equivalent As High Energy Density Fuel Improvers”.  The invention was subsequently filed as a Utility application with the U.S. Patent Office of May 20, 2009.
 
There is no assurance that additional financing, if required, will be available on reasonable terms or at all.  The Company intends to use its working capital principally to: purchase product for sale, execute a sales and marketing plan, fund our research & development and the Company’s overhead and operating costs.
 
Purchase or Sale of Equipment
 
We have purchased $2,205 of equipment as of June 30, 2009 with a book value of $1,985 after depreciation.  We have not sold any equipment in the period from Inception (July 15, 2008) to June 30, 2009.  We do not expect to purchase or sell any plants or significant equipment over the twelve months ending June 30, 2010.
 
Revenues
 
We had revenues of $37,321 for the period from Inception (July 15, 2008) through June 30, 2009.  We believe that we will start receiving additional orders for Monster Diesel™ in the July to September 2009 period and be able to commence the commercial launch and execute our marketing plan and that that we will be in a position to begin generating revenues forecasted to be approximately $4,000,000 in the twelve month period ending June 30, 2010.
 
Liquidity and Capital Resources
 
 
As previously noted, we have raised $100,000 from the sale of stock and $172,600 in a loan that was later converted to stock.  Our officers and directors have contributed $207,013 in cash as $96,112 in accounts payable officer and $110,901 advances due to officers, which appear on the balance sheet as of
 

 
21

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - continued
 
 
June 30, 2009.  At June 30, 2009, we had bank overdrafts of $220. We also have $16,121 in accounts receivable, $79,503 in prepaid expenses and a note receivable in the amount of $50,000 that is expected to be paid to the Company in the period of July to September of 2009.  Twenty-five thousand dollars ($25,000) of the $50,000 note payable has been received by the Company during the month of August 2009.
 
 
As of July 24, 2009, we had $79,588.27 in cash of which we anticipate needing none for expenses associated with filing this Form 10 or raising additional capital. Our budgeted expenditures for expenses in the twelve months ending June 30, 2010 is $1,595,000. Additionally we will need funds for materials and inventory equal to 56% of sales if the rate of cost of goods sold which is forecasted for conservative purposes to be one third less gross profit compare to the rate demonstrated in the early sales of product in the period from October 20, 2008 (start of operations) to June 30, 2009.  We have forecasted that the expenditure for sales and marketing will grow at a much faster rate than expenditure on research and development and general and administrative expense.  The budgeted expenditure for sales and marketing is designed, although no assurance can be given, to generate $4,000,000 in sales.  This sales level will require $2,224,000 of materials assuming no cost for unsold inventory.  The expenditure adjusted for the cost of sales is $3,835,000. Therefore, we presently have a budgeted surplus of approximately $165,000 at a $4,000,000 sales level.  The officers and directors are prepared to accrue salaries and provide additional capital through notes payable within reason to support the company to attain breakeven on a cash basis.  Management plans to pace the growth in expenditure for marketing and sales to the actual rate of receipt of orders to manage cash flow.  At this time we have no plans to raise additional cash through the sale of stock.
 
 
How long we will be able to satisfy our cash requirements depends on how quickly our Company can generate increased revenue over the present low levels of and how much revenue can be generated. We estimated that we will have to be supplemented our present cash balance with the payment of the $50,000 note due us and by officers and directors continuing the practices of accruing salaries and providing additional capital through notes payable so that our cash balance will not be extinguished prior to the end of June 2010, provided we do not have any unanticipated expenses. Although there can be no assurance at present, we plan to generate $4,000,000 of revenues in the year ending June 30, 2010.  We must generate at least $3,625,000 in revenues in order to fund all expenditures under our twelve month budget.  If we are not to rely on the payment of the $50,000 note receivable and officers and directors continuing the practice of accruing salaries and providing additional capital through notes payable.  If we fail to generate sufficient revenues, we will need to raise additional funds for the future development of our business, or to respond to unanticipated requirements or expenses. We do not currently have any arrangements for financing and we can provide no assurance to investors we will be able to find such financing. There can be no assurance that additional financing will be available to us, or on terms that are acceptable. Consequently, we may not be able to proceed with our intended business plans for the present product or for future products.
 
Management’s plan is to raise capital by borrowing funds and/or offering shares of its common stock, $.001 par value, on a “Best Efforts” basis to accredited investors only, pursuant to the exemption from registration contained in Section 4(2) and Regulation D adopted under the Securities Act of 1933 as amended.  Because the outcome or this future event is not susceptible to reasonable estimation by management it was determined that a “Going Concern Opinion” was appropriate.
 
There are also no plans or expectations to purchase or sell any significant equipment for operations or any other purpose in the twelve months ending June 30, 2010.
 
Going Concern Consideration
 
Our independent auditors included an explanatory paragraph in their report on the accompanying financial statements expressing concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
 

 
22

 

ITEM 3. DESCRIPTION OF PROPERTY

 Our offices are currently located at 2205 York Road, Suite Number 14, Lutherville, MD 21093, which is leased for $1,500 per month and the lease expires on November 30, 2010.
 
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
The following tables set forth the ownership, as of August 30, 2009, of our common stock (a) by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, and (b) by each of our directors, by all executive officers and our directors as a group. To the best of our knowledge, all persons named have sole voting and investment power with respect to such shares, except as otherwise noted.

Security Ownership of Certain Beneficial Owners

Name and Address of Beneficial Owner
Amount & Type of Stock (1)(2)
 
Percentage of Class
 
Matthew M. Zuckerman                    
 10080 Valley Springs Lane, 
Toluca Lake, CA 91602
72,150,000 common (3)
    55.37 %
             
Louis O. Petrucci                               
1429 Martin Meadows Drive,
Fallston, MD 21047
   8,326,000 common (4)
    6.39 %
             
All directors and officers as a group
 
         80,476,000  common
    61.76 %
Total Outstanding
 
       130,300,680 common
    100 %

Notes to the table:
 
    (1)  
Pursuant to Rule 13-d-3 under the Securities Exchange Act of 1934, as amended, beneficial ownership of a security consists of sole or shared voting power (including the power to vote or direct the voting) and/or sole or shared investment power (including the power to dispose or direct the disposition) with respect to a security whether through a contract, arrangement, understanding, relationship or otherwise. Unless otherwise indicated, each person indicated above has sole power to vote, or dispose or direct the disposition of all shares beneficially owned.
 
    (2)
This table is based upon information obtained from our stock records. We believe that each shareholder named in the above table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned.
 
    (3)
Includes 6,000,000 common shares held by each of the following entities for a total of 18,000,000 common shares:  Intermountain Marketing and Finance, Inc., Treya, Inc. and Mathew Mark Zuckerman Trust, DTE December 20, 2004.
 
    (4)
Includes  the receipt of 726,000 shares of common stock in Alkane, Inc. obtained from the settlement of an agreement entered into with Alkane, Inc. Wyoming (unrelated entity).
 

 
 

 
23

 

ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
 
Our Bylaws provide that we must have at least one director. Each director will serve until our next annual shareholder meeting, to be held sixty days after the close of the fiscal year, or until a successor is elected who accepts the position. Directors are elected for one-year terms. Our Board of Directors may elect our officers at any regular or special meeting of the Board of Directors.

Vacancies may be filled by a majority vote of the remaining directors then in office. Our directors and executive officers are as follows:

 Name
Age
Position
Matthew M. Zuckerman, Ph.D.
65
Director/CEO & President
Louis O. Petrucci
49
Director/Vice President

Family Relationships.

Mathew Zuckerman’s wife and Louis Petrucci’s wife are both employees of the Company.  Sandra Zuckerman’s start date was June 1, 2009 at a salary of $2,000 a month and Patricia Petrucci’s start date was July 1, 2009 at a salary of $2,000 a month.
 
Legal Proceedings.

No officer, director, or persons nominated for such positions and no promoter or significant employee of our Company has been involved in legal proceedings that would be material to an evaluation of our management.
 
Mathew Zuckerman, Ph.D. – Chief Executive Officer, President and Director
 
Mathew Zuckerman has over 40 years experience in growing high tech public and private companies.
 
 
His previous position was with Green Earth Technologies, Inc., (GETG) where he served as Chief Operating Officer, President and Director from November 17, 2008 to January 31, 2009.  Prior to that, he served as Chief Technical Officer and Chairman from February 3, 2008 to November 17, 2008, and as Chief Executive Officer and President from Inception (June 5, 2007) to February 3, 2008.  Dr. Zuckerman built Green Earth Technologies to a viable company with products available at all 2,200 Home Depots, along with other mass retailers. When tested under racing conditions, the company’s cornerstone product, G-Oil, a bio-degradable motor oil made from animal fat, was reported to outperform all synthetic oils previously used in the racing edition of BMW, as of January 8, 2009.  G-Oil became the first biodegradable oil to be awarded the American Petroleum Institute license for use in automobile engines on March 10, 2009, and is believed to be the first “green” product that offers both lower cost and better performance than the conventional products in its category.
 
Before his time at Green Earth Technologies, Dr. Zuckerman served as President of U.S. Sustainable Energy, Inc. (USSE), a biodiesel and process manufacturing company, without receiving any compensation for a brief period in May 2007.  Prior to that, his position was with Nano Chemical Systems Holdings, Inc., (NCSH), where he served as Chief Technical Officer from April 2, 2007 to April 27, 2007.  Prior to that, at NCSH, he was Chief Executive Officer, President and Director from November 8, 2006 to April 2, 2007.  In this role, he was tasked with the commercialization of nanotechnologies, research and development projects, and managing operations of a manufacturing plant that produced consumer and industrial products under its own brands and as a contract manufacturer.  Prior to that, he served NCSH as the inventor of nanotechnology from September 2, 2004 to November 8, 2006.  Prior to that, his position was with NanoSensor, Inc. (NCSH), where he served as Inventor and Consultant from December 11, 2003 to July, 2006, working on the development of sensors technology for detection of explosives, chemicals and biological agents.
 

 
24

 

ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS - continued
 
In years prior to 2003, Dr. Zuckerman served a dozen years as President and Co-Founder of Advanced Transducer Devices, Inc. (ATD), a computer peripherals manufacturer of consumer products based on proprietary Application Specific Circuits, and sold under the ZuckerBoard brand.   Dr. Zuckerman continued with ATD after it was sold to Televideo Systems, Inc., a NASDAQ traded computer products company.  There, he served as a division President and Director of the parent company.  Prior to his work with ATD/Televideo, Dr. Zuckerman served as Chief Executive Officer, President and Director of CrystalVision, a venture capital funded company that prototyped flat panel information displays in the 1980’s.  And before his work with Crystal Vision, he served as a Founder, Officer and Director of two privately held venture capital funded companies: Sierra Labs, a gas sensor and instrument manufacturer, and Enviro Development Company, a manufacturer of low energy process equipment for treatment of municipal and industrial water and wastewater. Dr. Zuckerman also served as president of Priority One Computer, a public company, from November 1988 to April 1989.
 
Dr. Zuckerman began his career as the Co-Inventor of the Z-M Process for deriving high quality water from wastewater.  He served as Director of Development for the enterprise that was formed to commercialize the process:  Ecolotech Research, Inc.  The company was sold to Envirotech, Inc., a Fortune 500 company, where he became the General Manager of a division that designed, manufactured, and launched industrial and municipal wastewater treatment plants using the process technology.
 
Dr. Zuckerman received his Bachelor, Master, and Doctoral degrees in Environmental Engineering from the School of Engineering and Science at New York University and was an Alfred P. Sloan Executive Fellow at the Graduate School of Business at Stanford University.
 
Lou Petrucci Vice President, Sales and Marketing and Director
 
With over 25 years of comprehensive experience in sales and marketing, Lou has extensive experience in profitably driving sales growth with large customers that include Home Depot, Lowe’s, Wal-Mart and Target.  Mr. Petrucci spent a large portion of his career with Black & Decker where he was involved with the creation and execution of several new divisions, as well as launching new products and brands to America’s largest retailers. He was an integral part of the successful new product launches of Dewalt Compact Power, Black & Decker Power Tool Accessories, Black & Decker Outdoor Products and the Black & Decker Snakelight.
 
His previous position was with Green Earth Technologies, Inc., (GETG) where he served as Chief Operating Officer and Vice President of Sales from Inception (June 5, 2007) to December 29, 2007 and as a Consultant to the Company from December 29, 2007 to March 31, 2008. He was one of a 3 person Executive team responsible for setting total future direction of company.  He was responsible for  customer acquisition, developing strategic partnerships, product acquisition process and leading sales and operations efforts.    He worked with multiple vendors to develop total product plan that utilized intellectual property owned by company.  He was successful in meeting with investors and raising capital as well as forging new partnerships that benefitted the business.  He was solely responsible for establishing a profitable revenue foundation and profitability path for the company.  In 2008, he sold his interest in the company.

Before his time at Green Earth Technologies, Mr. Petrucci served as Vice President of Sales at Nano Chemical Systems Holdings, Inc., (NCSH), from January 28, 2007 to May 25, 2007.   In this role, he was tasked with the sales of nanotechnology based consumer and industrial products under its own brands and as a contract manufacturer.

Mr. Petrucci was The Big Box Sales Manager for JLG Industries from September 2004 to July 2006.  In this role he was responsible for leading all sales and marketing activities with The Home Depot, Lowe’s, Grainger, Sears, Petsmart, Publix, Cabela’s and other “Big Box” retailers.   He was part of a nine member team that launched successful new division of JLG Industries.

Mr. Petrucci has a Bachelors in Business Administration from Bloomsburg University in Bloomsburg, Pennsylvania.

 
25

 

ITEM 6. EXECUTIVE COMPENSATION
 
SUMMARY COMPENSATION TABLE
Name and Principal Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
Non-Equity
Incentive
Plan
Compensation
($)
Nonqualified
Deferred
Compensation
Earnings
($)
All
Other
Compensation
($)
Total
($)
Mathew M. Zuckerman CEO, President & Director
2008
2009
   34,000
 180,000
         0
         0
          0
          0
          0
          0
            0
            0
            0
            0
             0
             0
         34,000
       180,000
Louis O. Petrucci
Vice President & Director
2008
2009
 
    31,250
  120,000
 
          0
          0
           0
           0
          0
          0
             0
             0
             0
             0
             0
             0
         31,250
       120,000

Notes:  2008 is the period from Inception (July 15, 2008) to December 31, 2008 and 2009 is from January 1, 2009 to June 30, 2009.

 
               Mathew M. Zuckerman’s salary in 2009 was accrued and not paid and Louis O. Petrucci’s salary in 2008 & 2009 was accrued and not paid.

 
 
COMMON STOCK
 
Mathew M. Zuckerman
10080 Valley Spring Lane
Toluca Lake, CA 91602
    72,150,000       55.37 %
 
Louis O. Petrucci
1429 Martin Meadow Drive, Fallston, MD 21047
    8,326,000       6.39 %



ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 

We have a policy in place whereby we require the board of directors’ approval for material related party transactions. We believe that all of our related party transactions were done on terms that would have been similar if we conducted them with unrelated third parties.

On July 15, 2008, Mathew Zuckerman incorporated Alkane, Inc. (later known as Monster Diesel, Inc.) in Nevada and vended in intellectual property on January 29, 2009 described below in exchange for 50,000,000 common shares at par value of $0.001 per share.  The value of the Intellectual property at cost equaled the par value of the shares which in aggregate is $50,000.  The intellectual property consists of trade secrets for the formulation of the present and future products, copyrights and trademarks in various stages of filing and one US utility patent application filed on May 20, 2009 titled “Nitrated Non-Cyclic N-Alkane Scaffolds With Differentiated-Mean Combustive Equivalent As High Energy Density Fuel Improvers”.  Mathew Zuckerman, concurrently with the issuance of the 50,000,000 shares, gifted 35,850,620 common shares to 17 individuals or entities.  Of the 17 individual or entities, 8 received a total of 12,850,000 as payment for consulting services rendered to the Company or as incentives to join the Company.  The Company recorded $12,850 as contributed capital to recognize the value of the expense incurred by the Company.  As a consequence of gifting and transferring, personal shares to various individuals, a total of 14,150,000 shares of Monster Diesel’s common stock remained  in the possession of Mathew M. Zuckerman, President, CEO and Director.
 

 
26

 

ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - continued
 
Of the 35,850,620 common shares gifted, Matthew Zuckerman transferred 18,000,000 of personal common shares held from Monster Diesel, Inc. to the following entities under his control:  Intermountain Marketing and Finance, Inc. (6,000,000), Treya, Inc. (6,000,000) and Mathew Mark Zuckerman Trust DTE December 20, 2004 (6,000,000).  Additionally, Vice President and Director, Louis O. Petrucci received 7,600,000 shares of Monster Diesel, Inc. from Mathew Zuckerman’s personal shares as incentive to join the Company.

On January 29, 2009, all of the shareholders of Alkane, Inc. (now know as Monster Diesel, Inc.) a Nevada corporation exchanged their shares on a one to one basis for shares in Chanaral Resources, Inc. (later know as Alkane, Inc. a Florida corporation).

In July 2009, a shareholder owning 40,000,000 common shares at $0.001par value offered Mathew Zuckerman, and he accepted the shares in exchange for venting into the company inventions for a process for manufacture of a class of synthetic fuel compounds that directly substitute for conventional fuels and a biological process for conversion of methane gas to liquid methanol.  The value of this transaction has not yet been determined.

On October 27, 2008, Louis Petrucci executed a purchase agreement with Alkane, Inc. (Wyoming), an unrelated entity.  In an event subsequent to June 30, 2009, Louis O. Petrucci exchanged the obligation of Alkane, Inc. (Wyoming) for 726,000 common shares of Alkane, Inc.

ITEM 8. DESCRIPTION OF SECURITIES

The following description is a summary and is qualified in its entirety by the provisions of our Articles of Incorporation and Bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus is a part.

Common Stock

Our authorized capital stock consists of 1,000,000,000 shares of common stock having a par value of $.001 per share.  As of August 30, 2009 there were 130,300,680 shares issued and outstanding.  There is only one class of stock: common.
 
(i) Voting Rights
 
Each outstanding share of common stock entitles the holder thereof to one (1) vote per share on all matters.   The Articles of Incorporation do not permit cumulative voting for the election of directors which means that the holders of more than fifty percent (50%) of such outstanding shares voting for the election of directors can elect all of the directors to be elected, if they so choose; in such event, the holders of the remaining shares will not be able to elect any of the directors.  Shareholders do not have preemptive rights to purchase shares in any future issuance of our common stock.

(ii) Dividends
 
The holders of shares of common stock are entitled to dividends out of funds legally available when, and if, declared by the Board of Directors. The Board of Directors has never declared a dividend and does not anticipate declaring a dividend in the foreseeable future.  In the event of liquidation, dissolution or winding up of the affairs of the company, holders are entitled to receive, ratably, the net assets available to shareholders after payment of all creditors.

 
27

 
 

PART II
 
ITEM 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock is quoted on the Pink Sheets Electronic Quotation System under the symbol (“ALKN.PK”). We plan to seek quotation on the over-the-counter Bulletin Board. We do not know if we will obtain a quotation. There is currently not an active trading market in our securities, and we do not know if a regular trading market for our common stock will ever be developed, or if developed, will be sustained.

A shareholder in all likelihood, therefore, will not be able to resell their securities should he or she desire to do so when eligible for public resale. Furthermore, it is unlikely that a lending institution will accept our securities as pledged collateral for loans unless a regular trading market develops.

Holders
 
As of August 30, 2009, there were 195 holders of record of our common stock.
 
Shares Eligible for Future Sale
 
In general, under Rule 144 as currently in effect, a person who is not one of our affiliates and who is not deemed to have been one of our affiliates at any time during the three months preceding a sale and who has beneficially owned shares of our common stock that are deemed restricted securities for at least six months would be entitled after such six-month holding period to sell the common stock held by such person, subject to the continued availability of current public information about us (which current public information requirement is eliminated after a one-year holding period).
 
A person who is one of our affiliates, or has been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned shares of our common stock that are deemed restricted securities for at least six months would be entitled after such six-month holding period to sell his or her securities, provided that he or she sells an amount that does not exceed 1% of the number of shares of our common stock then outstanding (or, if our common stock is listed on a national securities exchange, the average weekly trading volume of the shares during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale), subject to the continued availability of current public information about us, compliance with certain manner of sale provisions, and the filing of a Form 144 notice of sale if the sale is for an amount in excess of 5,000 shares or for an aggregate sale price of more than $50,000 in a three-month period.
 
Rule 144 is not available for resale of restricted securities of shell companies or former shell companies until one year elapses from the time that such company is no longer considered a shell company.
 



Dividends

We have not declared any cash dividends on our common stock since our inception and do not anticipate paying such dividends in the foreseeable future. We plan to retain any future earnings for use in our business. Any decisions as to future payment of dividends will depend on our earnings and financial position and such other factors, as the Board of Directors deems relevant.

 
28

 

ITEM 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS - continued

Dividend Policy

All shares of common stock are entitled to participate proportionally in dividends if our Board of Directors declares them out of funds legally available. These dividends may be paid in cash, property or additional shares of common stock. We have not paid any dividends since our inception and presently anticipate that all earnings, if any, will be retained to develop our business. Any future dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements, and other factors.

Our Shares are "Penny Stocks" within the Meaning of the Securities Exchange Act of 1934

Our common shares are "penny stocks" within the definition of that term as contained in the Securities Exchange Act of 1934, which generally refers to equity securities with a price of less than $5.00. Our shares will therefore be subject to rules that impose sales practice and disclosure requirements on certain broker-dealers who engage in certain transactions involving a penny stock.

Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or "accredited investor" must make a special suitability determination for the purchaser and must receive the purchaser's written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth in excess of $250,000 or annual income exceeding $200,000 individually or $300,000 together with his or her spouse is considered an accredited investor. In addition, unless the broker-dealer or the transaction is otherwise exempt, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the Registered Representative and current bids and offers quotations for the securities. In addition a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account, the account’s value and information regarding the limited market in penny stocks. As a result of these regulations, the ability of broker-dealers to sell our stock may affect the ability of Selling Security Holders or other holders to sell their shares in the secondary market. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction.

These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. These additional sales practice and disclosure requirements could impede the sale of the Company's securities, if our securities become publicly traded. In addition, the liquidity for the Company's securities may be adversely affected, with concomitant adverse affects on the price of the Company's securities. Our shares may someday be subject to such penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities.

ITEM 2. LEGAL PROCEEDINGS

There are neither legal proceedings nor threatened legal proceedings.
 
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
 
               Not Applicable.
 
 
29

 
 
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES

Since inception, we have issued unregistered securities to the persons, as described below. None of these transactions involved any underwriters, underwriting discounts or commissions or any public offering, and we believe that each transaction was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) by virtue of Section 4(2) thereof, or Regulation D promulgated there under. All recipients had adequate access, through their relationships with us, to information about us.
 
On January 29, 2009, we issued 50,000,000 shares of our common stock to the shareholders of Monster Diesel, Inc., a Nevada corporation in connection with a one for one stock exchange by which we acquired 100% of the capital stock of Monster Diesel, Inc.

On March 2, 2009, we issued 1,726,000 shares of our common stock to Alkane, Inc., a Wyoming corporation, in settlement of an assumed liability of $172,600.

Pursuant to a Subscription Agreement dated March 26, 2009, we issued 500,000 shares of our common stock to Lazy River Shadows, LLC at an aggregate price of 50,000, or $0.10 per share.

Pursuant to a Subscription Agreement dated May 6, 2009, we issued 500,000 shares of our common stock to Lazy River Shadows, LLC at an aggregate price of 50,000, or $0.10 per share.

 
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Registrant and its affiliates may not be liable to its shareholders for errors in judgment or other acts or omissions not amounting to intentional misconduct, fraud, or a knowing violation of the law, since provisions have been made in the Articles of Incorporation and By-laws limiting such liability. The Articles of Incorporation and By-laws also provide for indemnification of the officers and directors of the Registrant in most cases for any liability suffered by them or arising from their activities as officers and directors of the Registrant if they were not engaged in intentional misconduct, fraud, or a knowing violation of the law. Therefore, purchasers of these securities may have a more limited right of action than they would have except for this limitation in the Articles of Incorporation and By-laws.
 
The officers and directors of the Registrant are accountable to the Registrant as fiduciaries, which means such officers and directors are required to exercise good faith and integrity in handling the Registrant's affairs. A shareholder may be able to institute, legal action on behalf of such shareholder and all other similarly stated shareholders to recover damages where the Registrant has failed or refused to observe the law.
 
 
Shareholders may, subject to applicable rules of civil procedure, be able to bring a class action or derivative suit to enforce their rights, including rights under certain federal and state securities laws and regulations. Shareholders who have suffered losses in connection with the purchase or sale of their interest in the Registrant in connection with such sale or purchase, including the misapplication by any such officer or director of the proceeds from the sale of these securities, may be able to recover such losses from the Registrant.
 
 
 
 
 
 
30

 
 
PART III
ITEM 1. FINANCIAL STATEMENTS.

ALKANE, INC.

Financial Statements

As of June 30, 2009

And

Report of Independent Registered Public Accounting Firm






















 
31

 


ALKANE, INC.

TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2009



 
Page
   
Report of Independent Registered Public Accounting Firm
33
   
Financial Statements
 
   
     Balance Sheet
34
   
     Statement of Operations
35
   
     Statement of Stockholders ’ Deficit
36
   
     Statement of Cash Flows
37
   
     Notes to Financial Statements
38























 
32

 


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the Board of Directors and Stockholders
Alkane, Inc.
2205 York Road, Suite 14
Lutherville, MD 21093
 

 
We have audited the accompanying balance sheets of Alkane, Inc. (A Development Stage Enterprise) as of June 30, 2009 and the related statements of operations, stockholders’ (deficit) and cash flows from inception (July 15, 2008) through June 30, 2009. 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 audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Alkane, Inc. (A Development Stage Enterprise) as of June 30, 2009 and the results of its operations and cash flows from inception (July 15, 2008) through June 30, 2009 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 the financial statements, the Company has suffered losses from operations and the Company has an accumulated deficit of ($862,095), all of which raise substantial doubt about its ability to continue as a going concern. Management’s plan in regards to these matters is also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 
/s/ De Joya Griffith & Company, LLC
Henderson, Nevada

September 22, 2009




 
33

 

ALKANE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
(AUDITED)

   
As of
June 30, 2009
 
ASSETS
 
Current Assets
     
Accounts receivable
  $ 16,121  
Prepaid expense and deposits
    79,503  
Note receivable
    50,000  
             Total current assets
    145,624  
         
Fixed Assets
       
    Property and equipment  (net of depreciation) (Notes 4)
    1,985  
 
       
Other Assets
       
Other intellectual property (net of amortization)  (Note 5)
    48,612  
Deposits
    13,000  
         
             Total assets
  $ 209,221  
         
LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
Current Liabilities
       
Bank overdraft
  $ 220  
Accounts payable (Note 6)
    49,808  
Accounts payable- related party (Note 11)
    96,112  
Accrued salaries
    331,250  
Advances due to officers (Note 6)
    110,901  
              Total current liabilities
    588,291  
         
               Total liabilities
    588,291  
         
Stockholders’ Deficit
       
Common stock, $0.001 par value, 1,000,000,000 shares authorized,  130,300,680 common shares issued and outstanding (Note 9)
    130,301  
Additional paid-in capital
    352,724  
Deficit accumulated during development stage
    (862,095 )
              Total stockholders’ deficit
    (379,070 )
         
Total liabilities and stockholders’ deficit
  $ 209,221  





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

 
34

 





ALKANE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
(AUDITED)

   
From Inception
 (July 15, 2008) to
June 30, 2009
 
       
Sales
  $ 37,321  
         
Cost of sales
    11,886  
         
Gross profit
    25,435  
         
Expense
       
Sales and marketing
    328,795  
Research and development
    245,401  
General and administrative
    235,759  
         
                                     Total Expenses
    809,955  
         
Net operating loss
    (784,520 )
         
Other income
       
Gain on sale of  assets (Note 7)
    35,428  
         
Net loss
  $ (749,092 )
         
Net loss per share: Basic
  $ (0.01 )
         
Weighted average number of shares outstanding : Basic
    128,548,171  
         

 

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


 
35

 




ALKANE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS’ DEFICIT
FROM INCEPTION (JULY 15, 2008) TO JUNE 30, 2009
(AUDITED)

   
Common Stock
   
Additional
   
Deficit Accumulated during development
       
   
Shares
   
Amount
   
Paid in Capital
   
stage
   
Total
 
                               
Balance, inception July 15, 2008
    -     $ -     $ -     $ -     $ -  
                                         
Issuance, January 29, 2009
for Pending Patent & Monster Diesel business
    50,000,000       50,000       -       -       50,000  
                                         
Issuance, January 31, 2009 related to reverse merger
    77,574,680       77,575       -       (113,003 )     (35,428 )
                                         
Issuance, March 2, 2009 for conversion of note payable
    1,726,000       1,726       170,874       -       172,600  
                                         
Issuance, March 26, 2009 for cash
    500,000       500       49,500       -       50,000  
                                         
Issuance,  May 6, 2009 for cash
    500,000       500       49,500       -       50,000  
                                         
Consulting expense paid by C.E.O
    -       -       12,850       -       12,850  
                                         
Contributed capital
    -       -       70,000       -       70,000  
                                         
Net loss
    -       -       -       (749,092 )     (749,092 )
                                         
Balance at June 30, 2009
    130,300,680     $ 130,301     $ 352,724     $ (862,095 )   $ (379,070 )

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

 
36

 

ALKANE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
 (AUDITED)

   
From inception (July 15, 2008) to
June 30, 2009
 
Cash flows from operating activities
     
     Net loss
  $ (749,092 )
     Adjustments to reconcile net loss to net cash used in operating activities
       
          Depreciation and amortization
    1,608  
          Gain on sale of assets
    (35,428 )
          Non cash consulting expense
    12,850  
     Changes in assets and liabilities
       
(Increase) in accounts receivable
    (16,121 )
(Increase) in prepaid expense
    (9,503 )
Increase in accrued salaries
    331,250  
Increase in accounts payable
    49,808  
Increase in accounts payable-related party
    96,112  
         Net cash used in operating activities
    (318,516 )
 
       
Cash flows from investing activities
       
     Deposit for website design
    (13,000 )
     Acquisition of equipment
    (2,205 )
     Receipt of note receivable
    (50,000 )
                     Net cash used in investing activities
    (65,205 )
         
Cash flows from financing activities
       
     Bank overdrafts
    220  
     Proceeds from issuance of common stock
    100,000  
     Proceeds from note payable
    172,600  
     Advances due to officers
    110,901  
                    Net cash provided by financing activities
    383,721  
         
Net increase in cash or cash equivalents
    -  
         
     Cash, beginning of year
    -  
     Cash, end of year
  $  -  
         
Supplementary information:
       
Interest paid
    -  
Income taxes paid
    -  
Non-cash activities:
       
Shares issued for intellectual property
  $ 50,000  
Deposit to vendors, liability assumed by CEO
  $ 70,000  
Shares issued for reverse merger
  $ 77,575  
Shares issued to settle debt
  $ 172,600  


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


 
37

 

ALKANE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS

1.  DESCRIPTION OF BUSINESS

Alkane, Inc. (the “Company”) is engaged in the business of manufacturing and distributing high-tech fuel additives and synthetic fuels.  Initially, the Company will produce additives for diesel fuel, with future plans of producing additional additives and synthetic fuels.  The Company’s flagship product, Monster Diesel™, is a multipurpose diesel fuel additive that provides better mileage per gallon and results in lower maintenance costs for on-road and off-road and marine diesel engines.  The major ingredient in the product is a proprietary and patent pending Nitro-Alkane that increases the energy density of the diesel fuel and is the core technology of this and future additives and synthetic fuel products. One quart of Monster Diesel™ combined with 250 gallons of diesel fuel increases the energy density of the diesel by ten percent (17,500 to 19,250 BTUs per pound) and overcomes the inconsistencies and shortcomings of diesel fuel and diesel engines that have resulted from stretching existing technology to meet exhaust and mileage standards set by local governments, as well as the Environmental Protection Agency (“EPA”).  Additional benefits of Monster Diesel™ include: increased miles per gallon to pay for itself several times over; maintenance cost reduction, and; reduction of exhaust emissions.
 
The Company has recently introduced Monster Diesel™ for home heating oil to reduce soot, retard auto-oxidation of the fuel that occurs from winter season to the next winter season and improve the spray pattern for more complete combustion.
 
The Company sells to retail and wholesale customer markets. These customers are individual truckers, small to medium trucking company fleets or smaller terminal and blending companies.  Individual truckers will purchase an additive at a local Wal-Mart or fueling station, while trucking fleets may contract with local blenders or directly with the additive provider.

Alkane was incorporated under the laws of the state of Florida on January 22, 1988 as All Nations Catering, Inc.  The Company subsequent to incorporation changed its name to  Chanaral Resources, Inc.
 
On January 29, 2009, Alkane, Inc., formerly known as Chanaral Resources, Inc., entered into an Agreement and Plan of Merger with Monster Diesel, Inc., a Nevada Corporation (incorporation date July 15, 2008), whereby both companies will be merged and Alkane will be the surviving corporation (“Merger Transaction”).  As consideration for the Merger Transaction, Alkane will issue 50,000,000 shares of its common stock to the shareholders of Monster Diesel, Inc. on a one-for-one exchange.  The Merger Transaction of Alkane and Monster Diesel, Inc. represented a change in control of Alkane.  For accounting purposes, this change in control constitutes a recapitalization of Monster Diesel, Inc. and is accounted for as a reverse merger whereby the legal acquirer, Chanaral Resources, Inc. is treated as the acquired entity.  Monster Diesel is treated as the acquiring Company with continuing operations.  Accordingly, the historical financial information of Monster Diesel, Inc. (incorporation date July 15, 2008) constitutes the Company’s historical information prior to January 29, 2009 and combined operations of Monster Diesel, Inc. and Chanaral Resources, Inc. are reported from January 29, 2009 forward.  Chanaral Resources, prior to the reverse merger, held assets totaling $698,909 and liabilities of $734,377 resulting in the assumption of net liabilities totaling $35,428 by Monster Diesel, post merger. The net effect of the $77,575 common stock value issued and the net liability of $35,468 assumed was recorded as an adjustment to accumulated deficit for $113,003 by the Company.  Concurrent with the reverse merger, the Company acquired the Monster Diesel™ product and associated business including an invention titled “Nitrated Non-Cyclic N-Alkane Scaffolds with Differentiated-Mean Combustive Equivalent As High Energy Density Fuel Improvers”.
 
On February 29, 2009, the name of the corporation was changed from Chanaral Resources, Inc. to Alkane, Inc. in the state of Florida and on April 3, 2009 the trading symbol was changed from CRLR to ALKN by FINRA. On March 3, 2009, the corporation transferred all Chanaral Resources assets prior to the Merger Transaction to 458549 BC, LTD in exchange for 458549 BC, Ltd assuming all liabilities associated with the business of Chanaral Resources, Inc. and discontinued the business that the company was engaged in prior to the merger. The Company’s financial statements include activity from inception to June 30, 2009

 
38

 

ALKANE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS

2.  GOING CONCERN

Due to the Company’s limited amount of additional committed capital, recurring losses, negative cash flows from operations and its inability to pay outstanding liabilities, there is substantial doubt about its ability to continue as a going concern. The Company’s financial statements as at June 30, 2009 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business

The Company has historically suffered recurring operating losses and negative cash flows from operations.  As of June 30, 2009, the Company has an accumulated deficit of $862,095 with total stockholders’ deficit of $379,070.  The Company incurred an operating loss totaling $784,520 excluding a gain on sale of Chanaral assets of $35,428 for the year ended June 30, 2009 (see Note 7).  These financial statements have been prepared in accordance with U.S. generally accepted accounting principles, assuming that the Company will continue as a going concern.

The Company needs additional capital in order to survive.  Additional capital will be needed to fund current working capital requirements.  The Company’s primary sources of liquidity are cash flows from various financing activities.  The Company plans to increase revenues in order to reduce, and/or eliminate, its operating losses.  Additionally, the Company will seek equity and debt financing in order to enable it to continue to meet its financial obligations until the Company achieves profitability.  There can be no assurances that any such funding will be available to the Company on favorable terms, or at all.  Failure to obtain sufficient equity financing would have substantial negative ramifications to the Company.  The Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty.

3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to development stage enterprises, and are expressed in U.S. dollars.  The Company’s fiscal year end is June 30.

Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period.  Actual results could differ from these estimates.

Revenue Recognition - The Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”) 104, “Revenue Recognition” and SFAS No. 48, “Revenue Recognition when Right of Return Exists”.  Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the fee is fixed and determinable and collectability is reasonably assured.  The Company’s revenue is comprised of the sale of its products to retailers and distributors.

Income Taxes - The Company accounts for income taxes using the asset and liability method prescribed in SFAS No. 109, “Accounting for Income Taxes” (“SFAS 109”).  SFAS 109 requires recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the recognition of tax effects for financial statement and income tax reporting purposes by applying enacted income tax rates applicable to future years to differences between the financial statement carrying amounts and tax bases of existing assets and liabilities.  A valuation allowance is recorded to reduce net deferred tax assets to only that portion that is judged more likely than not to be realized.

Cash and Cash Equivalents - Cash and cash equivalents consist of cash and highly liquid investments with original maturities of three months or less. The Company maintains cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation subject to certain limitations.

 
39

 


ALKANE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS

3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Trade Accounts Receivable - The Company evaluates the collectability of Trade Accounts Receivable and based on a combination of the age of individual account balances and historical collection results, an Allowance for Doubtful Accounts was not needed.

Inventories - Inventories are valued at the lower of cost or market. Cost is determined principally by the first-in, first-out method.  The costs of finished goods and work-in-process inventories include material, manufacturing labor and overhead components.  The Company periodically reviews the net realizable value of the inventory and, if necessary, records a reserve to reflect the net realizable value of the inventory.

Fair Value of Financial Instruments- The carrying value of the Company’s financial instruments approximates their fair value because of the short maturity of these instruments.

Depreciation - For financial reporting purposes, depreciation of property and equipment has been computed over estimated useful lives of five years using the straight-line method.  Depreciation charges totaled $220 from inception (July 15, 2008) to June 30, 2009.

Intellectual Property – Intellectual property, including purchased technology are carried at cost less accumulated amortization.  For financial reporting purposes, amortization of intangibles has been computed over an estimated useful life of fifteen years using the straight-line method.  Amortization charges totaled $1,388 from inception (July 15, 2008) to June 30, 2009.

Advertising and Promotional Costs - Advertising and promotion costs are expensed as incurred.  From inception (July 15, 2008) to June 30, 2009, advertising and promotion costs totaled $68,174.

Net Loss Per Share - Net loss per share is calculated in accordance with Statement of Financial Accounting Standards 128, “Earnings Per Share” (“SFAS 128”).  Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised.  Dilution is computed by applying the treasury stock method.  Since the Company has incurred losses from all periods presented, the dilutive per share calculation is the same as the basic calculation.

Recent Accounting Pronouncements - The following is a summary of recent authoritative pronouncements that affect accounting, reporting and disclosure of financial information by the Company.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Financial Statements— an amendment of Accounting Research Bulletin No. 51” (“SFAS No. 160”).  SFAS No. 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated.  SFAS No. 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners.  SFAS No. 160 is effective for fiscal years beginning after December 15, 2008.  The Company is currently evaluating the potential impact, if any, of the adoption of SFAS No. 160 on its results of operations and financial condition.






 
40

 


ALKANE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS

3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

In May 2008, the FASB issued FSP APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement), which specifies that issuers of convertible debt instruments that may be settled in cash upon conversion should separately account for the liability and equity components in a manner reflecting their nonconvertible debt borrowing rate when interest costs are recognized in subsequent periods.  FSP APB 14-1 is effective for interim periods and fiscal years beginning after December 15, 2008.  The Company will adopt FSP APB 14-1 effective February 28, 2009.  The Company is currently assessing the impact of FSP APB 14-1 on its financial statements.

In June 2008, the FASB ratified Emerging Issues Task Force Issue No. (“EITF”) 07-5, “Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity’s Own Stock” (EITF 07-5). EITF 07-5 provides that an entity should use a two step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions.  It also clarifies the impact of foreign currency denominated strike prices and market-based employee stock option valuation instruments on the evaluation.  EITF 07-5 is effective for fiscal years beginning after December 15, 2008. The Company is currently assessing the impact of EITF 07-5 on its financial position and results of operations.

In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts – an interpretation of FASB Statement No. 60”.  SFAS 163 requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation.  This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements.  SFAS 163 will be effective for financial statements issued for fiscal years beginning after December 15, 2008.  The Company does not expect the adoption of SFAS 163 will have a material impact on its financial condition or results of operation.
 
In June 2009, the FASB issued Statement of Financial Accounting Standards No. 165, “Subsequent Events,” (“SFAS No. 165”). SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 applies to both interim financial statements and annual financial statements. SFAS 165 is effective for interim or annual financial periods ending after June 15, 2009. SFAS 165 does not have a material impact on our financial statements.
 
In June 2009, the FASB issued Statement of Financial Accounting Standards No. 166, “Accounting for Transfers of Financial Assets, an amendment to SFAS No. 140,” (“SFAS 166”). SFAS 166 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company will adopt SFAS 166 in fiscal 2010. The Company does not expect that the adoption of SFAS 166 will have a material impact on the financial statements.
 





 
41

 


ALKANE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS

3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 167, “Amendments to FASB Interpretation No. 46(R),” (“SFAS 167”). The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. SFAS 167 is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. The Company will adopt SFAS 167 in fiscal 2010. The Company does not expect that the adoption of SFAS 167 will have a material impact on the financial statements.

 In June 2009, the FASB issued Statement of Financial Accounting Standards No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles,” (“SFAS 168”). SFAS 168 replaces FASB Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles”, and establishes the FASB Accounting Standards Codification (“Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”). SFAS 168 is effective for interim and annual periods ending after September 15, 2009. The Company will begin to use the new Codification when referring to GAAP in its annual report on Form 10-K for the fiscal year ending June 30, 2010. This will not have an impact on the results of the Company.

4.  EQUIPMENT

The equipment consists of furniture, fixtures and office equipment with a cost of $2,205.  Depreciation of equipment has been computed over estimated useful lives of five years using the straight-line method.  Depreciation charges totaled $220 from inception (July 15, 2008) to June 30, 2009..

5.  INTELLECTUAL PROPERTY

On July 15, 2008, Mathew Zuckerman, CEO, incorporated Alkane, Inc. (later known as Monster Diesel, Inc.) in Nevada and vended in intellectual property on January 29, 2009 as described below in exchange for 50,000,000 common shares at par value of $0.001 per share. The intellectual property is known as the Monster Diesel™ product and the associated business including an invention titled “Nitrated Non-Cyclic N-Alkane Scaffolds With Differentiated-Mean Combustive Equivalent As High Energy Density Fuel Improvers”.  The invention was subsequently filed as a Utility application with the U.S. Patent Office on May 20, 2009.

The value of the Intellectual property at cost equaled the par value of the shares which in aggregate is $50,000.  Amortization of intangibles has been computed over an estimated useful life of fifteen years using the straight-line method.  Amortization charges were $1,388 from inception (July 15, 2008) to June 30, 2009.













 
42

 


ALKANE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS

5.  INTELLECTUAL PROPERTY (continued)

Expected amortization of intellectual property over the balance of the useful life of fifteen years is as follows:

Year Ending June 30,
     
2010
  $ 3,333  
2011
    3,333  
2012
    3,333  
2014
    3,333  
2015
    3,333  
Thereafter
    31,947  
Total
  $ 48,612  

The Company utilized the intellectual property starting on February 1, 2009, therefore five months of amortization expense, $1,388, was recorded as of June 30, 2009.

6.  ACCOUNTS PAYABLE & ADVNCES DUE TO OFFICERS

As of year end June 30, 2009, the Company had $145,920 of  the total accounts payable of which $96,112 was due to officers for expenses incurred by the officers on behalf of the Company. The officers have agreed that the accounts payable will not be paid until the Company has sufficient cash to sustain operations.

Advances due to officers as of year end June 30, 2009 totaled $110, 901.  The advances due to officers are non interest bearing, unsecured, and due on demand.  The officers have agreed that amounts will not be paid until the Company has sufficient cash to sustain operations.

7.  GAIN ON SALE OF ASSETS

On March 3, 2009, the corporation transferred all Chanaral Resources assets to 458549 BC, LTD in exchange for assumption of all liabilities associated with the business of Chanaral Resources, Inc. and discontinued the business that the company was engaged in prior to the merger.  The assumption of the liabilities resulted in the realization of a gain of $35,428 by the Company.  This sum is the difference between the liability of $734,377 and assets of $698,909 transferred. (See Note1 for additional information.)
 
8.  STOCKHOLDERS’ DEFICIT

The Company’s authorized capital stock consists of 1,000,000,000 shares of common stock having a par value of $0.001 per share.  As of June 30, 2009, there are 130,300,680 common shares issued and outstanding.  There is only one class of stock: common.
 
During the year ending June 30, 2009, the Company issued an aggregate of 130,300,680 shares of unregistered common stock in connection with the following transactions:





 
43

 

ALKANE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS

8.  STOCKHOLDERS’ DEFICIT (continued)

Issuance of Common Stock in connection with intellectual property

On January 29, 2009, Mathew Zuckerman, CEO, vended in intellectual property in exchange for 50,000,000 common shares at par value of $0.001 per share.  The value of the Intellectual property at cost equaled the par value of the shares which in aggregate is $50,000. (See Note 5 for additional information.)

Issuance of Common Stock in connection with reverse merger

On January 30, 2009, the Company issued 77,574,680 shares of its common stock related to the reverse merger with Monster Diesel, Inc.  The issuance of shares was considered a recapitalization.  As part of the reverse merger, the Company had acquired $698,909 in assets and $7347,377 in liabilities held by Chanaral Resources resulting in the assumption of net liabilities totaling $35,428 by Monster Diesel, post merger. The net effect of the $77,575 common stock value issued and the net liability of $35,468 assumed was recorded as an adjustment to accumulated deficit for $113,003 by the Company. ( See Note 1 for additional information.)

Issuance of Common Stock in connection with conversion of debt

On March 2, 2009, we issued 1,726,000 shares of restricted common stock to Alkane, Inc., a Wyoming corporation, in settlement of an assumed liability of $172,600.  The Company has filed a Form D with the SEC covering this sale of unregistered common shares.

Private Placements of Common Stock

Pursuant to a Subscription Agreement dated March 26, 2009, we issued 500,000 shares of our common stock to Lazy River Shadows, LLC at an aggregate price of $50,000, or $0.10 per share.  In addition, pursuant to a Subscription Agreement dated May 6, 2009, we issued 500,000 shares of our common stock to Lazy River Shadows, LLC at an aggregate price of $50,000, or $0.10 per share.  The Company has filed a Form D with the SEC covering this sale of unregistered common shares.

None of these transactions involved any underwriters, underwriting discounts or commissions or any public offering, and we believe that each transaction was exempt from the registration requirements of the Securities Act of
1933, as amended (the “Securities Act”) by virtue of Section 4(2) thereof, or Regulation D promulgated there under. All recipients had adequate access, through their relationships with us, to information about us.

Contributed Capital

Mathew Zuckerman, CEO, gifted 12,850,000 personal shares to various individuals as incentives and as settlement of consulting services rendered to the Company.  The shares transferred were valued at par and recorded as contributed capital.

On May 9, 2009, we signed a operating agreement to form Monster Fuels, LLC (aka Monster Fuels Technologies, LLC), (the “LLC”) to enter into a joint venture with a limited partnership, StormWorks Monster, LLC (“Storm”), that was formed by WorldVest, Inc. (a Florida company) (“World”).  Storm prepared an offering memorandum to raise working capital through the sale of private capital notes.  No notes were sold under the offering memorandum; however, two of our vendors were paid a total of $70,000 by World through the LLC.  Mathew Zuckerman, CEO, has assumed full liability to repay the $70,000 to World.  The Company has recorded a $70,000 deposit for future purchase orders and contributed capital for the assumption of liability by the CEO.



 
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ALKANE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS


9.  COMMITMENTS AND CONTINGENCIES

Lease Commitments
The Company leases office facilities under an operating lease which commenced on December 1, 2008 and expires on November 30, 2009.  The future minimum lease payments under the operating lease is $7,500 in the year ending June 30, 2010.  Rent expense was $10,500 from inception (July 15, 2008) to June 30, 2009.

10.  INCOME TAX

The Company’s effective tax (benefit) rate differs from the federal statutory rate of 35% as follows:

 Statutory Federal Tax (Benefit) Rate
    (35 )%
 State and Local Taxes, Net of Federal Benefit
    (6 )%
 Valuation Allowance
    41 %
      Effective Tax Rate
    0 %

The tax effects of temporary differences that give rise to deferred tax assets consist of the following at June 30, 2009:

Net Operating Loss Carry Forward
  $ 320,778  
   Total Deferred Tax Assets
    320,778  
   Valuation Allowance
    (320,778 )
Net
  $ 0  

As of June 30, 2009, the Company had federal net operating loss carry forwards (“NOL’s”) of $782,384 expiring at various dates from fiscal 2024 to fiscal 2029.

As described in Note 3, the Company maintains a valuation allowance in accordance with SFAS 109 of $320,778 on its net deferred tax assets.  The Company plans to maintain a valuation allowance on its net deferred tax assets on a fully reserved basis unless it achieves and sustains an appropriate level of profitability.

The Company is currently in the process of electing with the IRS and State tax authorities to change the tax year end from December 31st to June 30th.  The Company is also in the process of determining the status of filings and preparing tax returns for the prior years and will plan to file current and any prior returns to fully comply with the IRS and State tax authorities in the year ending June 30, 2010 and the year ending June 30, 2011.  At June 30, 2009, the Company has no accrued interest or penalties related to these filings.

11.  RELATED PARTY TRANSACTIONS

On July 15, 2008, Mathew Zuckerman incorporated Alkane, Inc. (later known as Monster Diesel, Inc.) in Nevada and on January 29, 2009, vended in intellectual property described below in exchange for 50,000,000 common shares at par value of $0.001 per share.  The value of the Intellectual property at cost equaled the par value of the shares which in aggregate is $50,000.  Mathew Zuckerman did concurrent with the issuance of the 50,000,000 shares gift 12,850,000 common shares to 8 persons as incentive to the individuals and settlement for consulting services rendered to the Company.



 
45

 

ALKANE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS

11.  RELATED PARTY TRANSACTIONS (continued)

The  intellectual property consists of trade secrets for the formulation of the present and future products, copyrights and trademarks in various stages of filing, and one US utility patent application filed on May 20, 2009 titled “Nitrated Non-Cyclic N-Alkane Scaffolds With Differentiated-Mean Combustive Equivalent As High Energy Density Fuel Improvers”.
 
Mathew Zuckerman, CEO and Louis O. Petrucci, VP of Sales, advanced funds to the Company and paid for various Company related expenses.  Total advances as of June 30, 2009 were $110,901, and total expenses paid as of June 30, 2009 were $96,112.
 
12.  SUBSEQUENT EVENTS

In July 2009, a shareholder owning 40,000,000 common shares offered these shares to Mathew Zuckerman, an officer and director of the company who accepted the shares in exchange for his venting into the company inventions for a process for manufacture of a class of synthetic fuel compounds that directly substitute for conventional fuels and a biological process for conversion of methane gas to liquid methanol.  At this time, the Company is unable to determine the value of the transaction.

On May 9, 2009, we signed an operating agreement to form Monster Fuels, LLC (aka Monster Fuels Technologies, LLC), (the “LLC”) to enter into a joint venture with a limited partnership, StormWorks Monster, LLC (“Storm”), that was formed by WorldVest, Inc. (a Florida company) (“World”).  Storm prepared an offering memorandum to raise working capital through the sale of private capital notes.  No notes were sold and as a consequence on August 10, 2009, we proposed the dissolution of the LLC and Storm accepted the dissolution in principal with the details to be worked out.  Two of our vendors were paid a total of $70,000 by World through the LLC.  Mathew Zuckerman, CEO, has assumed full liability to repay the $70,000 to World.  The Company has recorded a $70,000 deposit for future purchase orders and contributed capital for the assumption of liability by the CEO.

Mathew Zuckerman’s wife and Louis Petrucci’s wife are both employees of the Company.  Sandra Zuckerman’s start date was June 15, 2009 at a salary of $2,000 a month and Patricia Petrucci’s start date was July 15, 2009 at a salary of $2,000 a month.
 
 
 
 
 

 

 
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PART IV
 
 
ITEM 1. INDEX TO EXHIBITS

 
 
SIGNATURES
 
In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant caused this registration statement to be signed on its behalf the undersigned thereto duly authorized.
 
 
ALKANE, INC.
 
       
Dated: October 1, 2009
By:
/s/ Mathew Zuckerman
 
   
Mathew Zuckerman, CEO & President
 
       
 
 
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