UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





FORM 10-K





(Mark One)x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2010oro
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from ____________ to ____________





Commission file number l-9224





Metha Energy Solutions Inc.


(Exact Registrant as specified in Its Charter)





DELAWARE

32-0251358(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)





410 Park Avenue, 15th Floor, New York, NY 10022(Address of Principal Executive Offices) (Zip Code)





212-231-8526


(Issuer's Telephone Number, including Area Code)





Inscrutor, Inc.


(Former name or address)





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.


Yes o         No  x





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.


Yes x        No  o





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o  No  ̈





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x        No  o







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





Large accelerated filer  o            Accelerated filer  o             Non-accelerated filer  o            Smaller Reporting Company  x





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


Yes o         No  x





The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant, computed by reference to the last reported price at which the stock was sold on June 30, 2010 (the last business day of the registrant’s most recently completed second quarter) was $0.





Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.





Class

Outstanding at April 14, 2011Common Stock, $.001 par value per share

22,620,030 shares










METHA ENERGY SOLUTIONS INC. (FORMERLY INSCRUTOR, INC.)


(A DEVELOPMENT STAGE COMPANY)


FORM 10-K


YEAR ENDED DECEMBER 31, 2010




TABLE OF CONTENTS





PART I

PageItem 1.
Business
1Item 1A.
Risk Factors
1Item 2.
Properties
3Item 3.
Legal Proceedings
3Item 4.
Removed and Reserved
3PART II

4Item 5.
Market for the Registrant’s Common Stock and Related Stockholder Matters
4Item 6.
Selected Financial Data
4Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
5Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
9Item 8.
Financial Statements and Supplementary Data
9Item 9.
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
9Item 9A.
Controls and Procedures
9Item 9B.
Other InformationPART III

10"Index"Item 10.
Directors, Executive Officers and Corporate Governance
10Item 11.
Executive Compensation
11Item 12.
Security Ownership of Certain Beneficial Owners and Management
13Item 13.
Certain Relationships and Related Transactions, and Director Independence
13Item 14.
Principal Accountant Fees and Services
14PART IV

16Item 15.
Exhibits and Financial Statements Schedules
16










FORWARD-LOOKING STATEMENTS





This report contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control, which may include statements about our:





·
business strategy;





·
financial strategy;





·
uncertainty regarding our future operating results;





·
plans, objectives, expectations and intentions contained in this report that are not historical.





All statements, other than statements of historical fact included in this report, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this report, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this report. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this report are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our actual results to differ materially from our expectations under “Risk Factors” and elsewhere in this report. These cautionary statements qualify all forwar d-looking statements attributable to us or persons acting on our behalf.









Item 1.  Business





General





We are a Delaware Corporation founded in April 2008.  We changed our name to Metha Energy Solutions Inc. (“Metha Energy” or “the Company” or “formerly Inscrutor”) on October 12, 2009.  We focus our business on commercializing advanced fuel cell technology. We plan to expand our product offerings within this area through new agreements with various technology companies.





We were founded  in April 2008 as Inscrutor, Inc.  (“Inscrutor”), a development stage company. The technology that we owned was acquired via a Separation and Distribution Agreement on May 30, 2008 from Visator, Inc. (“Visator”), a Delaware corporation that specializes in on-line media monitoring. Prior to that time, Inscrutor was a wholly-owned subsidiary of Visator. Inscrutor was spun out from Visator with the purpose of ensuring optimal value-creation for the shareholders of both Inscrutor and Visator.  According to the terms of the Separation Agreement, Visator decided to distribute the common stock of Inscrutor on a 1-for-1 basis to the holders of Visator’s common and preferred stock (“the Distribution”). On June 1, 2008 (the "Distribution Date"), Visator transferred its shares of Inscrutor to the shareholders of record of Visator common stock and preferred stock at the close of business on May 30, 2008 (the "Record Date"), without any consideration being paid by such holders. As of October 9, 2008, the stock certificates were delivered to shareholders (See Note 8).  The Company derived revenue from a management services agreement with Visator.  We no longer pursue any commercialization of software/technology nor do we invest in it.





From the end of August, 2009, in connection with entering the agreement with Serenergy the Company decided to cease any further activity in the area of sophisticated data-mining technology.





Marketing





We have sold fuel cell products to a number of different applications to both private companies, universities and other institutions and we will continue our focus in this area.  We communicate mainly through direct customer communication via e-mail and phone.




Competition





There are multiple companies which offer different kinds of fuel cell technologies. These different kinds of fuel cells technologies vary in attractiveness regarding different features.  The fuel cell segment is not a new segment/industry.  This is a highly competitive market.





Item 1A.  Risk Factors





THIS REPORT CONTAINS CERTAIN STATEMENTS RELATING TO FUTURE EVENTS AND THE FUTURE FINANCIAL PERFORMANCE OF OUR COMPANY. PROSPECTIVE INVESTORS ARE CAUTIONED THAT SUCH STATEMENTS ARE ONLY PREDICTIONS, INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY. IN EVALUATING SUCH STATEMENTS, PROSPECTIVE INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS FACTORS IDENTIFIED IN THIS REPORT, INCLUDING THE MATTERS SET FORTH BELOW, WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.





An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. Please note that throughout this prospectus, the words “we”, “our” or “us” refer to the Company and not to the selling stockholders.





1




WE HAVE A LIMITED OPERATING HISTORY THAT YOU CAN USE TO EVALUATE US, AND THE LIKELIHOOD OF OUR SUCCESS MUST BE CONSIDERED IN LIGHT OF THE PROBLEMS, EXPENSES, DIFFICULTIES, COMPLICATIONS AND DELAYS FREQUENTLY ENCOUNTERED BY A SMALL DEVELOPING COMPANY.





We were incorporated in Delaware in April 2008. We have no significant financial resources and only a small amount of revenues to date. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company starting a new business enterprise and the highly competitive environment in which we will operate. Since we have a limited operating history, we cannot assure you that our business will be profitable or that we will ever generate sufficient revenues to meet our expenses and support our anticipated activities.





WE WILL REQUIRE FINANCING TO ACHIEVE OUR CURRENT BUSINESS STRATEGY AND OUR INABILITY TO OBTAIN SUCH FINANCING COULD PROHIBIT US FROM EXECUTING OUR BUSINESS PLAN AND CAUSE US TO SLOW DOWN OUR EXPANSION OF OPERATIONS.





We will need to raise additional funds through public or private debt or sale of equity to achieve our current business strategy. Such financing may not be available when needed. Even if such financing is available, it may be on terms that are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. Our capital requirements to implement our business strategy will be significant. Moreover, in addition to monies needed to continue operations over the next twelve months, we anticipate requiring additional funds in order to execute our plan of operations. No assurance can be given that such funds will be available or, if available, will be on commercially reasonable terms satisfactory to us. There can be no assurance that we will be able to obtain financing if and when it is needed on terms we deem acceptable.





If we are unable to obtain financing on reasonable terms, we could be forced to delay or scale back our plans for expansion. In addition, such inability to obtain financing on reasonable terms could have a material adverse effect on our business, operating results, or financial condition.





OUR AUDITOR HAS EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN.





Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. We are a development stage company. If we cannot obtain sufficient funding, we may have to delay the implementation of our business strategy.





OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICE OF JESPER TOFT. WITHOUT HIS CONTINUED SERVICE, WE MAY BE FORCED TO INTERRUPT OR EVENTUALLY CEASE OUR OPERATIONS.





We are presently dependent to a great extent upon the experience, abilities and continued services of Jesper Toft. We currently have a consulting agreement with Mr. Toft. The loss of his services could have a material adverse effect on our business, financial condition or results of operation.





2




WE HAVE HAD TWO CUSTOMERS WHO HAVE ACCOUNTED FOR 56% AND 36%, RESPECTIVELY, OF OUR TOTAL REVENUES IN 2010.





We currently have two customers, who account for 56%and 36% of total revenues, respectively.  A significant decrease or interruption in business from our customers could have a material adverse effect on our business, financial condition and results of operations. We plan to greatly expand our customer base in the upcoming year to mitigate this risk.





OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH IS SUBJECT TO RESTRICTIONS ON MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES.





If our common stock becomes tradable in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities.





Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The broker-dealer must also 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 requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.





Item 2.  Property





Our business office is located at 410 Park Avenue, 15th Floor, New York, NY 10002.





Item 3.  Legal Proceedings





We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.





Item 4.  Removed and Reserved




3





PART II





Item 5.  Market for Common Equity and Related Stockholder Matters





Our common stock is quoted on the OTC Bulletin Board, a service provided by the Nasdaq Stock Market Inc., under the symbol “MGYS”.  The following table sets forth the high and low bid prices for our common stock as reported each quarterly period since inception.





Fiscal year ended December 31, 2010

High


LowQuarter EndedDecember 31, 2010

$
0


$
0September 30, 2010

$
0


$
0June 30, 2010

$
0


$
0March 31, 2010

$
0


$
0Fiscal year ended December 31, 2009

Quarter EndedDecember 31, 2009

$
0


$
0September 30, 2009

$
0


$
0June 30, 2009

$
0


$
0March 31, 2009

$
0


$
0





Holders of Our Common Stock





As of the date of this annual report, we had 60 shareholders of our common stock.





Stock Option Grants





To date, we have not granted any stock options.





Item 6.  Selected Financial Data





Twelve months ended December 31, 2010


Twelve months ended December 31, 2009


April 18, 2008 (Inception) - December 31, 2010Statement of Operations Data:Revenue

$
221,702


$
65,000


$
286,702Revenue-Related Party


-



15,000



36,000221,702



101,000



322,702Cost of goods sold


206,616



61,750



276,416Gross profit

$
15,086


$
18,250


$
46,286Gross margin


7%



18%



14%Selling, general & administrative expenses


482,659



290,903



916,441Loss from operations

$
(467,573
)

$
(272,653
)

$
(870,155
)Operating expense (as % of revenue)


218%



288%



288%Total other expense


(24,869
)


(7,048
)


(33,186
)Net loss before provision for income taxes


(492,442
)


(279,701
)


(903,341
)Provision for income taxes


-



-



-Net loss

$
(492,442
)

$
(279,701
)

$
(903,341
)Net loss per share

$
(0.02
)

$
(0.02
)





Balance Sheet Data:

December 31, 2010


December 31, 2009Total assets

$
404,883


$
476,070Total liabilities


618,216



215,741Working capital deficiency


(617,793
)


(144,956
)Stockholders' equity (deficit)


(213,333)



260,329





4





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





The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements. Please see “Forward-Looking Statements” and "Risk Factors" for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.





The following discussion and analysis of the Company’s financial condition and results of operations are based on the Company’s financial statements, which the Company has prepared in accordance with U.S. generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.




Plan of Operation





We will put in place product agreements to get new products in the area of alternative energy technology and related opportunities.  As soon as we have new product agreements in place, we plan to acquire relevant financing.





Results of Operations.





Years Ended December 31, 2010 and December 31, 2009





For the year ended December 31, 2010, we had revenue of $221,702 as compared to $80,000 for the year ended December 31, 2009. The increase in revenue in 2010 versus 2009 was partially due to $221,702 of sales of the fuel cell technology in 2010 versus $65,000 in 2009.  The cost of goods related to revenue was $206,616 for the year ended December 31, 2010 as compared to $61,750 for the year ended December 31, 2009, which consisted of $56,000 for fuel cell products and $5,750 for consulting labor. The increase in 2010 versus 2009 was partially due to $206,616 of equipment costs incurred related to the sale of the fuel cell technology in 2010 versus $56,000 in 2009.




For the year ended December 31, 2010, operating expenses totaled $482,659 compared to $290,903 for the year ended December 31, 2009. The increase in operating expenses were mainly due to the accounting, audit, consulting, finance consulting and legal expenses  of $217,609 that the Company incurred in 2010 versus $180,731 for to the year ended December 31, 2009.  The increase in operating expenses in 2010 versus 2009 also included board members fees of $44,079 in 2010 versus $3,158 in 2009 for they were were members for most of 2010 versus only two months in 2009.  The increase in operating expenses was also due to consulting fee related party expenses of $144,000 that we incurred for the year ended December 31, 2010 versus $56,000 for the same period in 2009. This amount was due to Jesper Toft’s consulting services rising to $12,000 per month starting from September 2009 which was an increase from $1,000 per month. The net loss was $492,442 for the year ended December 31, 2010 as compared to $279,701 for the year ended December 31, 2009. The increase in net loss was mainly due to the increase in operating expenses due to consulting fees and services related party, professional fees and board member fees.




5




For the year ended December 31, 2010 we also had interest expense of $24,284 related to in-kind contribution of interest on non-interest bearing loans payable-related party. For the year ended December 31, 2009, we had interest expense of $2,701. The increase in interest expense in 2010 versus 2009 is due interest on loan and notes payable, interest on a loan extension, and due to the loans and notes payable that were entered into in the year ended December 31, 2010.





Capital Resources and Liquidity





As of December 31, 2010, we had cash of $423.  As of December 31, 2009, we had cash of $5,785.  While we are attempting to commence operations and produce revenues, our cash position may not be significant enough to support our daily operations. Management intends to raise additional funds through debt or equity.





However, if we are unable to satisfy our cash requirements we may be unable to proceed with our plan of operations.  We do not anticipate the purchase or sale of any significant equipment. We also do not expect any significant additions to the number of employees. The foregoing represents our best estimate of our cash needs based on current planning and business conditions.  In the event we are not successful in reaching our initial revenue targets, additional funds may be required, and we may not be able to proceed with our business plan for the development and marketing of our core services. Should this occur, we will suspend or cease operations.





We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.  We do not have enough cash to continue operations for twelve months without receiving additional debt or equity financing or increasing our revenues.





Operating Activities





Operating activities used $284,024, $167,517 and $497,556, respectively of cash during the years ended December 31, 2010, December 31, 2009 and the period from April 18, 2008 (Inception) through December 31, 2010. We had a net loss of $492,442, $279,701 and $903,341 during the years ended December 31, 2010, December 31, 2009 and the period from April 18, 2008 (Inception) through December 31, 2010, respectively. We had a decrease and an increase in accounts receivable of $65,000, 56,000 and $0, an increase in accounts receivable-related party of $0, $7,000 and $7,000 and in other assets of $0, $0 and $465, respectively offset by an increase in accounts payable and accrued expenses  of $45,235, $118,747 and $181,600, and an increase in accounts payable and accrued expenses-related party of $78,577, $26,743 and $108,320, respectively.  In addition, we had $0, $0 and $50,000 of series A convertible preferred stock issued for services – related party, $16,079, $19,358 and $57,937 of stock issued for consulting fees and services – related party, professional and board fees, in-kind contribution of interest for loans payable – related party of $2,701, $2,701 and $6,671, bad debt expense of $0, $7,000 and $7,000 and depreciation and amortization expense of $826, $635 and $1,722, respectively.





Investing Activities





We used $0, $403,927 and $405,716, respectively, of cash in our investing activities during the years ended December 31, 2010, December 31, 2009 and the period from April 18, 2008 (Inception) through December 31, 2010.  We used $0, $402,780 and $402,780, respectively, of cash for our Serenergy equity investment and $0, $1,147 and $2,936, respectively, for the purchase of property, plant and equipment during the years ended December 31 2010, December 31, 2009 and the period from April 18, 2008 (Inception) through December 31, 2010.





Financing Activities





We had $278,662, $577,180 and $903,695, respectively, of cash provided by our financing activities during the years ended December 31, 2010, December 31, 2009 and the period from April 18, 2008 (Inception) through December 31, 2010. We had $0, $575,400 and $575,400, respectively, of proceeds from sale of common stock and series B preferred stock, $6,242 $0 and $10,875, respectively, of proceeds of loans payable to related party and $26,895, $1,780 and $71,895, respectively, of proceeds of notes payable to related parties. We had $45,525, none and $45,425, respectively, of proceeds from loans payable and $200,000, none and $200,000, respectively, of proceeds from convertible notes payable.




6


Critical Accounting Policies





Going concern





The accompanying financial statements have been prepared under a going concern basis which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, we have incurred net losses from inception of $903,341.  In addition at December 31, 2010 current liabilities exceed current assets by $617,793 and net cash used in operations is $284,024 for the year ending December 31, 2010. These factors raise substantial doubt about our ability to continue as a going concern.





Management is pursuing other business relationships and believes that the actions presently being taken and the success of future operations will be sufficient to enable the Company to continue as a going concern.





In March 2011, the Company entered into a settlement agreement with Serenergy that terminated all previous agreements between Metha Energy and Serenergy. The agreement compensated the Company because Serenergy did not honor the original merger agreement.  The agreement also included that Serenergy bought back their shares held by the Company.





However, there can be no assurance that the raising of debt or equity will be successful and that our anticipated financing will be available in the future, at terms satisfactory to the Company. Failure to achieve the equity and financing at satisfactory terms and amounts could have a material adverse effect on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.





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 the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.





Revenue recognition





The Company’s revenues are derived from sales of fuel cell technology. The Company follows the guidance of the Securities and Exchange Commission’s FASB Accounting Standards Codification No. 605 for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement that the services have been rendered to the customer, the sales price is fixed or determinable, the item has been shipped and collectability is reasonably assured.





Investments





Equity investments in companies over which the Company has no ability to exercise significant influence are accounted for under the cost method. The Company’s holds approximately 11% of Serenergy’s issued and outstanding shares as of December 31, 2010 and December 31, 2009.  The Company’s investment in Serenergy is accounted for based on the cost method.




7




Income taxes





We follow FASB Accounting Standards Codification No. 740, Income Taxes. Under the asset and liability method of FASB Accounting Standards Codification No. 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance has been provided for the Company's net deferred tax asset, due to uncertainty of realization.





Net loss per common share





Net loss per common share is computed pursuant to FASB Accounting Standards Codification No. 260, Earnings Per Share.  Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There were 100,000 Series A and 100,000 Series B convertible Preferred shares that were omitted from the calculation of diluted earnings per share as their inclusion is anti-dilutive as of December 31, 2010 and December 31, 2009.





Off-Balance sheet arrangements





At December 31, 2010 and December 31, 2009, we had no off-balance sheet arrangements.





Inflation





We believe that inflation does not significantly impact our current operations.





Spin Out





In May 2008, Visator, Inc. spun out, pro rata, all of its shares of our common stock held by it to their 42 shareholders.  These shares were not registered under the Securities Act of 1933 and may not have been appropriately exempt from registration under the Act. Based upon same, if it is determined that the shares issued pursuant to this spin out do not qualify for this exemption we may be subject remedial sanctions. Such sanctions could include the payment of disgorgement, prejudgment interest and civil penalties. We may also be subject to prejudgment interest on such amount as well as civil penalties in amount that would have to be determined by the court.





We are not aware of any pending claims for sanctions against us based upon the failure to properly register such shares under the Securities Act of 1933. Nevertheless, it is possible that it could be determined that such shares may not have been exempt from registration and that we may be subject to sanctions and possible civil penalties.  In the event that a shareholder brings a claim against us for failure to properly register these shares it could have an adverse affect on our results of operations and financial condition since we would need to pay fees to defend such claim or pay damages if the shareholder is successful in their claim against us.





8




Item 7A. Quantitative and Qualitative Disclosures About Market Risk.





Not required for smaller reporting companies.





Item 8. Financial Statements and Supplementary Data





The financial statements of the Company, together with the Reports of Independent Registered Public Accounting Firm thereon of Webb & Company, P.A., appear herein. See Index to Financial Statements, appearing on page F-1.





Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure





There have been no changes in or disagreements with accountants on accounting or financial disclosure matters.





Item 9A.   Controls and Procedures.





a)   Evaluation of Disclosure Controls. Jesper Toft, our Chief Executive Officer and Principal Accounting Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of our fourth fiscal quarter 2010 pursuant to Rule 13a-15(b) of the Securities and Exchange Act. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, as appropriate to allow timely decisions regarding required disclosure. Based on their evaluations, Jesper Toft concluded that our disclosure controls and procedures were effective as of December 31, 2010.





It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions





(b)  Management’s Annual Report on Internal Control over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statement for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.





Any system of internal control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected in a timely manner. Also, because of changes in conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation. In addition, the design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Therefore, any current evaluation of controls can not and should not be projected to future periods.




9




Based on management's assessment, management has concluded that the Company's internal control over financial reporting was effective as of December 31, 2010 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.





This Report does not include an attestation report of registered public accounting firm, regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this  Report.





It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.





(c)   Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





Item 9B.   Other Information.





On March 19, 2011, Robert J. Lynch Jr resigned from the Board of Directors effective immediately. This resignation is not the result of any disagreement with the Company on any matter relating to the Company's operations, policies or practices.








PART III





Item 10.  Directors, Executive Officers and Corporate Governance





Our executive officer’s and director’s and their respective ages as of April 14, 2011 are as follows:





NAME

AGE

POSITIONJesper Toft


40

Chairman of the Board of Directors, Chief Executive Officer, Chief Financial OfficerRobert J. Lynch, Jr.


77

Former Member of the Board of Directors





Set forth below is a brief description of the background and business experience of our sole executive officer and our directors for the past five years.





Jesper Toft, Chairman, CEO, CFO





Mr. Toft has been the owner of Toft ApS since May 2003, a Denmark-based company, which provides business development for companies.  Mr. Toft has extensive management experience from several start-up companies. His core competence is business development, strategy, building sales and marketing and financing. Mr. Toft has been advising large enterprises regarding strategic development and participated in contract negotiations since 1997.




10




Term of Office





Our sole executive officer and director, Jesper Toft, was appointed to the offices of Chief Executive Officer, Chief Financial Officer and Chairman on April 18, 2008 until the first board meeting of the board of directors ensuing after the next annual meeting of shareholders and until their respective successors in said offices are duly elected and qualified or until his earlier resignation or removal by the board.




Robert J. Lynch, Jr., Former Member of the Board of Directors





Mr. Lynch has developed strong and lasting business relationships and experience over more than thirty years covering the U.S., Europe and Latin America - particularly in the fields of business development, M&A, finance and marketing. He has served on public and private corporate boards and their special committees. Robert Lynch has also acted as advisor/ strategist for many of the boards he has served on. Among these boards have been prominent engineering and contracting firms in the US and Europe as well as the boards of industrial development banks in Latin America and in Washington, DC.





Term of Office





One of our former directors, Robert J. Lynch, Jr., was appointed to the office of board member on October 30, 2009 for a three year term. Robert J. Lynch, Jr. resigned on March 19, 2011.





Item 11.  Executive Compensation





Summary Compensation Table; Compensation of Executive Officers





The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers earned by us for the years ended December 31, 2010  and December 31, 2009 in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO):





SUMMARY COMPENSATION TABLE





Name and Principal Position
Year

Salary

($)


Bonus

($)


Stock Awards

($)


Option Awards

($)


Non-Equity Incentive Plan Compensation ($)


Non-Qualified Deferred Compensation Earnings

($)


All Other Compensation

($)


Totals

($)Jesper Toft:CEO, CFO,
2010


144,000



0



0



0



0



0



0



144,000Chairman
2009


56,000



0



0



0



0



0



0



56,000





Option Grants Table.There were no individual grants of stock options to purchase our common stock made to the executive officers named in the Summary Compensation Table through December 31, 2010.





Aggregated Option Exercises and Fiscal Year-End Option Value Table.There were no stock options exercised during the years ended December 31, 2010 and 2009 by the executive officers named in the Summary Compensation Table.





11




Long-Term Incentive Plan (“LTIP”) Awards Table.There were no awards made to the named executive officer in the last two completed fiscal years under any LTIP.





Compensation of Directors





Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors.  The directors were paid a total of $44,079 and $3,158 in the years ending December 31, 2010 and December 31, 2009, respectively.





Name and Principal Position
Year

Stock Awards

($)


Cash

($)


Totals

($)Jesper Toft:
2010


-



-



-CEO, CFO, Chairman
2009


-



-



-David J.P. Meachin
2010


7,105



5,000



12,105Director (1)
2009


1,579



-



1,579Robert J. Lynch, Jr.
2010


9,474



22,500



31,974Director (2)
2009


1,579



-



1,579


(1) David J.P. Meachin was apponted as a director of the Company on October 30, 2009. He resigned from the Board of Directors on October 19, 2010.
 
 (2) Robert J. Lynch, Jr. was appointed as a director of the Company on October 30, 2009. He resigned from the Board of Directors on March 19, 2011.


Employment Agreements





As of December 31, 2010, we do not have an employment agreement in place with our sole officer and chairman of our board of directors.





Consulting Agreements





Effective May 1, 2008, the Company entered into a consulting agreement with Jesper Toft, CEO, to provide consulting services from May 2008 to August 2009 at a rate of $1,000 per month.  On September 1, 2009, the Company amended the consulting agreement starting in September 2009 to a rate of $12,000 per month on a month to month basis.  As of December 31, 2010, the Company has recorded a related party liability of $108,320 under these agreements and for the years ended December 31, 2010 and December 31, 2009 expenses of $144,000 and $56,000, respectively.




Board of Director Agreements





On October 30, 2009, the Company entered into two Board of Director Agreements, with Robert J. Lynch Jr. and David J.P. Meachin, respectively, that lasts until December 31, 2012.  During October 2009, the Company issued 1,000,000 in total to these two Board of Directors for services through December 31, 2012.  The common stock has a fair value of $60,000 based on the fair value on the date of grant and will be amortized over the life of the services ($0.06 per share).  For the year ended December 31, 2010, the Company has recognized board compensation expense in total of $44,079 under the agreements.  On October 19, 2010, David J.P. Meachin resigned from the Board of Directors.  On March 19, 2011, Robert J. Lynch Jr resigned from the Board of Directors.




12





Item 12. Security Ownership of Certain Beneficial Owners and Management





The following table provides the names and addresses of each person known to us to own more than 5% of our shares to be issued of common stock as of April 14, 2011 and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly.





Title of Class
Name and Address

of Beneficial Owner
Amount and Nature

of Beneficial Owner
Percent

of ClassCommon Stock
Toft ApS

Roennegade 9,

2100 Copenhagen Oe,

Denmark
10,000,000
44.21% (1)Common Stock
All executive officers and directors as a group
10,000,000
44.21% (1)Common Stock
ViMachel

Londegaardsvei 9

2900 Hellerup,

Denmark
10,000,000
44.21% (1)Series A Convertible

Preferred Stock
Jesper Toft

Frisersvej 22 C

2920 Copenhagen Oe,

Denmark
100,000
100.00%Series  Convertible  B

Preferred Stock
ViMachel

Londegaardsvei 9

2900 Hellerup,

Denmark
100,000
100.00%





(1)  Based upon 22,620,030 common shares issued and outstanding as of April 14, 2011.





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





The agreement with Visator regarding the Separation and Distribution Agreement is no longer relevant as our prior activities have been stopped.  On May 30, 2008, pursuant to a Separation and Distribution Agreement, we were spun out from Visator, Inc., ceasing to be their wholly owned subsidiary.  Visator was one of two customers.  The agreement with Visator expired on June 1, 2009 and was not renewed.





Our sole officer and director, Jesper Toft, is also the sole officer and director of Visator, Inc.





13


Item 14. Principal Accountant Fees and Services





Audit Fees





Audit fees for 2010 were $20,588.  Audit fees for 2009 were $13,238.  All services provided by independent accountants were approved by the audit committee.  Audit Fees consist of fees billed for professional services rendered for the audit of the Company’s registration and annual statements, for review of interim financial statements included in quarterly reports and services that are normally provided by Webb & Company P.A. in connection with statutory and regulatory filings or engagements.





Audit Related Fees





The Company did not incur non audit related fees from Webb & Company P.A. in 2010 or 2009.  Audit-Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit Fees.”





Tax Fees





The Company did not incur tax fees from Webb & Company P.A. in 2010 or 2009.  Tax Fees consist of fees billed for professional services rendered for tax compliance. These services include assistance regarding federal, state and local tax compliance.





14




All Other Fees





The Company did not incur any other fees from Webb & Company P.A. in 2010 or 2009.





Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:





-approved by our audit committee; or





-entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular  service,  the  audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.





We do not have an audit committee.  Our entire board of directors pre-approves all services provided by our independent auditors.





The pre-approval process has just been implemented in response to the new rules. Therefore, our board of directors does not have records of  what percentage of the above fees were pre-approved.  However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.




15




PART IV








Item 15.  Exhibits and Financial Statement Schedules





(a)      Exhibits and Financial Statements





(1)      Financial Statements.  See Index to Financial Statements





(2)      Financial Statement Schedules. See pages 19 through 30, attached





(3)       Exhibits








16




METHA ENERGY SOLUTIONS INC.


(FORMERLY INSCRUTOR, INC.)


(A DEVELOPMENT STAGE COMPANY)


FORM 10-K


YEAR ENDED DECEMBER 31, 2010








TABLE OF CONTENTS





PagePART I - FINANCIAL INFORMATIONReport of Independent Registered Public Accounting Firm
18Balance Sheets at December 31, 2010 and December 31, 2009
19Statements of Operations for the Years ended December 31, 2010, December 31, 2009 and the Period from April 18, 2008 (Inception) through December 31, 2010
20Statement of Changes in Stockholders' Equity (Deficit) for the period from April 18, 2008 (Inception) through December 31, 2010
21Statements of Cash Flows for the Years ended December 31, 2010, December 31, 2009 and the Period from April 18, 2008 (Inception) through December 31, 2010
22Notes to the Financial Statements
23-32






17











REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To the Board of Directors of:


Metha Energy Solutions Inc.(f/k/a Inscrutor, Inc.)


(A Development Stage Company)





We have audited the accompanying balance sheets of Metha Energy Solutions Inc. (f/k/a Inscrutor, Inc.) (a Development Stage Company) (the “Company”) as of December 31, 2010 and 2009 and the related statements of operations, changes in stockholders’ equity (deficit) and cash flows for the years ended December 31, 2010 and December 31, 2009 and the period April 18, 2008 (Inception) to December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.





We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.





In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Metha Energy Solutions Inc. (f/k/a Inscrutor, Inc.) (a Development Stage Company) as of December 31, 2010 and 2009 and the related statement of operations and cash flows for the years ended December 31, 2010 and December 31, 2009 and the period April 18, 2008 (Inception) to December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.





The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company is in the development stage with a net loss since inception of $903,341, a working capital deficiency of $617,793, stockholders' deficit of $213,333 as of December 31, 2010 and net cash used in operations since inception of $497,556. These factors raise substantial doubt about the Company's ability to continue as a going concern.  Management's plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.








WEBB & COMPANY, P.A.


Certified Public Accountants





Boynton Beach, Florida


April 15, 2011





18








METHA ENERGY SOLUTIONS INC. (FORMERLY INSCRUTOR, INC.)


(A DEVELOPMENT STAGE COMPANY)





Balance Sheets at December 31, 2010 and December 31, 2009





December 31, 2010


December 31, 2009ASSETSCurrent Assets:Cash

$
423


$
5,785Accounts receivable, net of allowance of $3,236 and $0, respectively


-



65,000Total Current Assets


423



70,785Property, Plant & Equipment:Website costs, net of accumulated amortization of $1,454 and $858,respectively


335



931Computer equipment, net of accumulated depreciation of $268 and $38,respectively


880



1,1091,215



2,040Other Assets:Security deposit


465



465Investment in Serenergy


402,780



402,780TOTAL ASSETS

$
404,883


$
476,070LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)Current Liabilities:Accounts payable and accrued expenses

$
181,601


$
136,365Accrued expenses - related party


108,320



29,743Loans payable - related party


10,875



4,633Notes payable - related party


71,895



45,000Notes payable


45,525



-Convertible notes payable


200,000



-Total Current Liabilities


618,216



215,741TOTAL LIABILITIES


618,216



215,741COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS' EQUITY (DEFICIT)Series A Convertible Preferred stock - $.001 par value; 100,000 sharesauthorized; 100,000 and 100,000 to be issued


100



100Series B Convertible Preferred stock - $.001 par value; 100,000 sharesauthorized; 100,000 and 100,000 to be issued


100



100Preferred stock - $.001 par value; 9,800,000 shares authorized;none and none issued and outstanding, respectively


-



-Common stock - $.001 par value; 100,000,000 shares authorized;22,620,030 and 22,620,030 shares issued and 21,955,559 and 21,672,662 outstanding, respectively


22,271



22,620Additional paid-in capital


698,684



716,555Deferred Compensation


(19,842
)


(56,842
)Accumulated deficit during the development stage


(914,646
)


(422,204
)TOTAL STOCKHOLDERS' EQUITY (DEFICIT)


(213,333
)


260,329TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

$
404,883


$
476,070





See accompanying notes to the financial statements.





19




METHA ENERGY SOLUTIONS INC. (FORMERLY INSCRUTOR, INC.)


(A DEVELOPMENT STAGE COMPANY)





Statements of Operations


For the Years ended December 31, 2010,  December 31, 2009 and Period from April 18, 2008 (Inception) through December 31, 2010





For the

year ended

December 31, 2010


For the

year ended

December 31, 2009


For the period

April 18, 2008 (Inception) - December 31, 2010REVENUE

$
221,702


$
65,000


$
286,702REVENUE - Related Party


-



15,000



36,000221,702



80,000



322,702COST OF GOODS SOLD


206,616



61,750



276,416GROSS PROFIT


15,086



18,250



46,286Selling, general & administrative expenses:Consulting fees and services - related party


144,000



56,000



258,000Professional fees


217,609



180,731



477,514Board member fees


44,079



3,158



47,237Other general & administrative expenses


76,971



51,014



133,690Total operating expenses


482,659



290,903



916,441Loss from operations


(467,573
)


(272,653
)


(870,155
)Other expense:Gain (Loss) on Foreign Currency


(585
)


2,628



2,043Other income


3,236



-



3,236Interest income


-



25



25Interest expense


(24,284
)


(2,701
)


(28,254
)Bad debt expense-related party


(3,236
)


(7,000
)


(10,236
)Total other expense


(24,869
)


(7,048
)


(33,186
)NET LOSS BEFORE PROVISION FOR INCOME TAXES


(492,442
)


(279,701
)


(903,341
)Provision for income taxes


-



-



-NET LOSS

$
(492,442
)

$
(279,701
)

$
(903,341
)Basic and diluted net loss per weighted-average shares common stock

$
(0.02
)

$
(0.02
)Basic and diluted weighted-average number of shares of common stock


21,815,868



14,899,336to be issued





See accompanying notes to the financial statements.




20




METHA ENERGY SOLUTIONS INC. (FORMERLY INSCRUTOR, INC.)


(A DEVELOPMENT STAGE COMPANY)





Statement of Changes in Stockholders' Equity (Deficit)


For the Period from April 18, 2008 (Inception) through December 31, 2010





AccumulatedCommon Stock


Series A Convertible

Preferred Stock


Series B Convertible

Preferred Stock


Additional





Deficit

during theShares


Par Value


Shares


Par Value


Shares


Par Value


Paid-in

Capital


Deferred

Compensation


development stage


TotalBalance April 18, 2008 (Inception)


11,305,030


$
11,305



-


$
-



-


$
-


$
-


$


$
(11,305
)

$
-Series A Preferred stock issued for consulting services - related party


-



-



100,000



100



-



-



49,900






-



50,000Common stock issued for professional services


45,000



45



-



-



-



-



22,455






-



22,500In-kind contribution of interest expense


-



-



-



-



-



-



1,269






-



1,269Net loss for the period from April 18, 2008 (inception) to December 31, 2008


-



-



-



-



-



-



-






(131,198
)


(131,198
)Balance December 31, 2008


11,350,030



11,350



100,000



100



-



-



73,624



-



(142,503
)


(57,429
)Series B Preferred stock and Common stock sold for cash


10,000,000



10,000



-



-



100,000



100



565,300







-



575,400Common stock issued for professional services


1,270,000



1,270



-



-



-



-



74,930



(56,842
)


-



19,358In-kind contribution of interest expense


-



-



-



-



-



-



2,701







-



2,701Net loss for the year ended December 31, 2009


































(279,701
)


(279,701
)Balance December 31, 2009


22,620,030


$
22,620



100,000


$
100



100,000


$
100


$
716,555


$
(56,842
)

$
(422,204
)

$
260,329Series B Preferred stock and Common stock sold for cash


-



-



-



-



-



-



-







-



-Common stock issued for professional services


-



-



-



-



-



-



-



16,079



-



16,079Common stock to be returned for professional services


(348,684
)


(349
)


-



-



-



-



(20,572
)


20,921



-



-In-kind contribution of interest expense


-



-



-



-



-



-



2,701







-



2,701Net loss for the year ended December 31, 2010


































(492,442
)


(492,442
)Balance December 31, 2010


22,271,346


$
22,271



100,000


$
100



100,000


$
100


$
698,684


$
(19,842
)

$
(914,646
)

$
(213,333
)




See accompanying notes to the financial statements.





21





METHA ENERGY SOLUTIONS INC. (FORMERLY INSCRUTOR, INC.)


(A DEVELOPMENT STAGE COMPANY)





Statements of Cash Flows


For the Years ended December 31, 2010, December 31, 2009 and the Period from April 18, 2008 (Inception) through December 31, 2010





Twelve months ended December 31,

2010


Twelve months ended December 31,

2009


For the Period

April 18, 2008 (Inception) - December 31,

2010CASH FLOWS FROM OPERATING ACTIVITIESNet loss

$
(492,442
)

$
(279,701
)

$
(903,341
)Adjustments to reconcile net loss to cash used in operating activities:Series A Convertible Preferred Stock issued for services - related party


-



-



50,000Common stock Issued for services - related party, professional and board fees


16,079



19,358



57,937In-kind contribution of interest expense


2,701



2,701



6,671Bad debt expense-related party


3,236



7,000



10,236Depreciation and Amortization expense


826



635



1,722Changes in operating assets and liabilities:Decrease (Increase) in accounts receivable


65,000



(56,000
)


-Increase in accounts receivable-related party


(3,236
)


(7,000
)


(10,236
)Increase in other assets


-



-



(465
)Increase in accounts payable and accrued expenses


45,235



118,747



181,600Increase in accounts payable and accrued expenses-related party


78,577



26,743



108,320NET CASH USED IN OPERATING ACTIVITIES


(284,024
)


(167,517
)


(497,556
)CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant & equipment


-



(1,147
)


(2,936
)Serenergy  Equity investment


-



(402,780
)


(402,780
)NET CASH USED IN INVESTING ACTIVITIES


-



(403,927
)


(405,716
)CASH FLOWS FROM FINANCING ACTIVITIESProceeds from sale of common stock and series B preferred stock


-



575,400



575,400Proceeds from loans payable -related party


6,242



-



10,875Proceeds from notes payable - related party


26,895



1,780



71,895Proceeds from notes payable


45,525



-



45,525Proceeds from convertible notes payable


200,000



-



200,000NET CASH PROVIDED BY FINANCING ACTIVITIES


278,662



577,180



903,695NET INCREASE (DECREASE) IN CASH


(5,362
)


5,736



423Cash, beginning of period


5,785



49



-Cash, END OF PERIOD

$
423


$
5,785


$
423Supplementary disclosures of cash flow informationCash paid during the period forIncome taxes

$
-


$
-


$
-Interest paid

$
10,700


$
-


$
10,700


See accompanying notes to the financial statements.





22




METHA ENERGY SOLUTIONS INC. (FORMERLY INSCRUTOR, INC.)


(A DEVELOPMENT STAGE COMPANY)


NOTES TO THE FINANCIAL STATEMENTS





NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION








The Company was founded as Inscrutor, Inc.  (“Inscrutor”), a development stage company, that was incorporated on April 18, 2008 under the laws of the State of Delaware.  The technology that the Company owned was acquired via a Separation and Distribution Agreement on May 30, 2008 from Visator, Inc. (“Visator”), a Delaware corporation that specializes in on-line media monitoring. Prior to that time, Inscrutor was a wholly-owned subsidiary of Visator. Inscrutor was spun out from Visator with the purpose of ensuring optimal value-creation for the shareholders of both Inscrutor and Visator.  According to the terms of the Separation Agreement, Visator decided to distribute the common stock of Inscrutor on a 1-for-1 basis to the holders of Visator’s common and preferred stock (“the Distribution”). On June 1, 2008 (the "Distribution Date"), Visator transferred its shares of Inscrutor to the shareholders of record of Visator common stock and preferred stock at the close of business on May 30, 2008 (the "Record Date"), without any consideration being paid by such holders. As of October 9, 2008, the stock certificates were delivered to shareholders.  The Company derived revenue from a management services agreement with Visator.  The agreement with Visator expired on June 1, 2009 and was not renewed. As of September 30, 2009 the Company wrote off the $7,000 receivable balance from Visator as the balance was deemed uncollectible. We no longer pursue any commercialization of software/technology nor do we invest in what we acquired from the Separation and Distribution agreement on May 30, 2008.





From the end of August, 2009, in connection with entering the agreement with Serenergy the Company decided to cease any further activity in the area of sophisticated data-mining technology.


Effective October 12, 2009, the Company changed their name to Metha Energy Solutions Inc.  (“Metha Energy” or “the Company” or “formerly Inscrutor”) (OTCBB: MGYS).  Metha Energy focuses the business on commercializing advanced fuel cell technology.   The Company has secured the rights to distribute for such patent pending products and represent these products in the North American market and within the global vehicle segment.  Activities during the development stage involve developing the business plan and raising capital.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Going concern





The accompanying financial statements have been prepared under a going concern basis which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company is in the development stage with a net loss since inception of $903,341, a working capital deficiency of $617,793, stockholder’s deficiency of $213,333 as of December 31, 2010 and net cash used in operations since inception of $497,556. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company does not have enough cash to continue operations for twelve months without receiving additional debt or equity financing or increasing our revenues.





Management believes that the actions presently being taken and the success of future operations will be sufficient to enable the Company to continue as a going concern.





However, there can be no assurance that the raising of equity will be successful and that the Company’s anticipated financing will be available in the future, at terms satisfactory to the Company. Failure to achieve the equity and financing at satisfactory terms and amounts could have a material adverse effect on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.





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 the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.





Revenue recognition





The Company’s revenues are derived from sales of fuel cell technology. The Company follows the guidance of the Securities and Exchange Commission’s Commission’s FASB Accounting Standards Codification No. 605 for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement that the services have been rendered to the customer, the sales price is fixed or determinable, the item has been shipped and collectability is reasonably assured.





The payment terms for the sale of fuel cell technology is 50% of the payment (“first payment”) is due when the order is placed.  Items are shipped and revenue is recognized once the first payment is received. The remaining 50% is due 30 days after the delivery of the fuel cell technology.





23





NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED





Cash and cash equivalents





For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.





Property, Plant and Equipment





Property, plant and equipment is stated at cost and depreciated over its estimated useful lives ranging from three to five years using the straight-line method.   Maintenance and repairs are charged to expense as incurred.





Website Development Costs





The Company has adopted the provisions of FASB Accounting Standards Codification No. 350 Intangible-Goodwills and Other. Costs incurred in the planning stage of a website are expensed, while costs incurred in the development state are capitalized and amortized over the estimated three year life of the asset. For the years ended December 31, 2010 and December 31, 2009, the Company paid $0 and $0, respectively to develop its website.





Investments





Equity investments in companies over which the Company has no ability to exercise significant influence are accounted for under the cost method.  The Company’s holds approximately 11% of Serenergy’s issued and outstanding shares as of December 31, 2010 and 2009. The Company’s investment in Serenergy is accounted for based on the cost method.





Income taxes





The Company follows FASB Accounting Standards Codification No. 740, Income Taxes. Under the asset and liability method of FASB Accounting Standards Codification No. 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance can be provided for a net deferred tax asset, due to uncertainty of realization. As of December 31, 2010, the Company has a net operating loss carryforward of approximately $892,000 available to offset future taxable income through 2030. The valuation allowance at December 31, 2009 was approximately $94,000.  The net change in valuation allowance for the year ending December 31, 2010 was an increase of approximately $165,000.





2010


2009Expected income tax recovery (expense) at the statutory rate of 34%

$
(167,430
)

$
(95,098
)Tax effect of expenses that are not deductible for income tax purposes (net of other amounts deductible for tax purposes)


2,102



1,308Tax effect of differences in the timing of deductibility of items for income tax purposes


-



-Change in valuation allowance


165,328



93,790Provision for income taxes

$
-


$
-





The components of deferred income taxes are as follows:





2010



2009Deferred income tax asset:Net operating loss carryforwards

$
(303,293
)

$
(137,965
)Valuation allowance


303,293



137,965Deferred income taxes

$
-


$
-





Net loss per common share





Net loss per common share is computed pursuant to FASB Accounting Standards Codification No. 260, Earnings Per Share.  Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. 100,000 Series A convertible and 100,000 Series B convertible preferred shares were omitted from the calculation of earnings per share- diluted as their inclusion is anti-dilutive as of December 31, 2010 and 2009.




Segments


The Company operates in one segment and therefore segment information is not presented.




Fair Value of Financial Instruments





The carrying amounts reported in the balance sheet for the accounts receivable, accounts receivable-related party, accounts payable and accrued expenses, accrued expenses - related party, loans payable – related party and notes payable – related party approximate fair value based on the short-term maturity of these instruments.





Reclassification


Certain amounts in the 2009 information have been reclassified to conform to the 2010 presentation. These reclassifications have no impact on the Company’s financial statements.





24





NOTE 3 – PROPERTY AND EQUIPMENT





At December 31, 2010 and December 31, 2009, property and equipment is as follows:





2010


2009Website costs

$
1,789


$
1,789Computer equipment


1,147



1,1472,936



2,936Less accumulated depreciation and amortization


1,722



896$
1,214


$
2,040





Depreciation and Amortization expense for the years ended December 31, 2010, December 31, 2009 and for the period April 18, 2008 (inception) to December 31, 2010 was $826, $635 and $1,722, respectively.





NOTE 4 – INVESTMENT AGREEMENT





On August 27, 2009, the Company entered into an exclusive distribution agreement (the “Agreement”) with Serenergy A/S (“Serenergy”) where the Company was appointed by Serenergy as its exclusive distributor of Serenergy’s products in the United States, Canada, Israel and the United Nations (“The Territory”) for 72 months. As of December 31, 2010, the agreement has lapsed.





On August 27, 2009 the Company entered into an exclusive distribution and manufacturing license agreement - vehicles (the “License Agreement”) with Serenergy where the Company was appointed by Serenergy as its exclusive distributor of Serenergy’s fuel cell related products to the segment of vehicles (the “Segment”) for 72 months. As of December 31, 2010, the agreement has lapsed.





On August 27, 2009 the Company made an investment in Serenergy for 84,000 shares of Serenergy stock, or approximately 11% of the issued and outstanding shares, for approximately $402,000. The Company recognized the investment under the cost method of accounting. As of December 31, 2010, the Company owns approximately 11% of the issued and outstanding shares of Serenergy.





On May 3, 2010, the Company entered into a merger agreement with two shareholders of Serenergy to acquire a majority of their outstanding shares of Serenergy. On October 15, 2010 the Company entered in to a revised merger agreement. The agreement requires the Company to raise $2,000,000 in financing. If the financing is not raised, the agreement will lapse. The merger will be through an exchange of shares whereby the existing majority shareholders of Serenergy will receive 35 common shares of the Company for each share held by them. Post-merger, Serenergy would be a subsidiary of the Company.





In March 2011, the Company entered into a settlement agreement with Serenergy that terminated all previous agreements between Metha Energy and Serenergy. The agreement compensated the Company due to Serenergy’s breach of contract during the original merger agreement.  The agreement also required the Company to sell back its investment in Serenergy. The Company received compensation which fundamentally reflects the Company's operating losses until today, the cash amount invested in the company by our investors and an amount securing the Company's ability to remain a going concern in this area of business - approximately $1,900,000. As of March 31, 2011, the Company owns 0% of the issued and outstanding shares of Serenergy.





NOTE 5 – CONCENTRATION RISK





Cash





The Company maintains cash balances at several financial institutions. Accounts at these institutions are insured by the Federal Deposit Insurance Corporation in the aggregate up to $250,000 at December 31, 2010 and 2009.  The Company also maintains cash balances at financial institutions in Denmark and accounts at these institutions are not insured by the Federal Deposit Insurance Corporation.  At December 31, 2010, the Company had a cash balance of approximately $18 at a financial institution in Denmark.





Major Customers





For the years ended December 31, 2010 and December 31, 2009 the Company had two customers who accounted for 92% and 100%  of total revenues in the amount of $205,632 and $80,000, respectively. One customer, Visator contributed $0 and $15,000, respectively. This customer is a related party.  The agreement with Visator expired on June 1, 2009 and was not renewed.  Customer B contributed  $125,000 and $0, respectively, which is 56% of sales for the year ended December 31, 2010.  Customer C contributed $79,000 and $0, respectively, which is 35% of sales for the year ended December 31, 2010.  The Company plans to greatly expand their customer base in the upcoming year to mitigate this risk.





25





Accounts Receivable





As of December 31, 2010 and 2009, the Company had one customer each year that represented 100% of the accounts receivable balance.





NOTE 6 – NOTES PAYABLE





In February 2010 In February 2010, the Company executed a note payable to IT Ventures Aps in exchange for $45,525 for funding the Company’s operating expenses.  The note was due on August 31, 2010 and bears monthly interest of 2.5%.  The Company has the option to extend the note up to four months, with an interest rate of 3% for each additional month.  The Company renewed the note for four months therefore the note is due on December 31, 2010.  For the years ended December 31, 2010 and December 31, 2009, the Company recorded $1,366 and none, respectively of interest expense for extending the note.  For the year ended December 31, 2010 and December 31, 2009, the Company recorded $10,455 respectively of interest expense on the loan.





As of December 31, 2010, the note was in default. On March 24, 2011, the note was settled in full.





NOTE 7 – CONVERTIBLE NOTES PAYABLE





In June 16, 2010, the Company executed a convertible promissory note to an individual in exchange for $100,000 for funding the Company’s operating expenses.  The note is due on December 31, 2011 with a 9% interest rate annually.  For the year ended December 31, 2010, the Company recorded $4,881 of interest expense on the loan.  If the Company completes an equity financing for a sale of Company common stock of at least $1,750,000 prior to the maturity date of the note, the note and any unpaid accrued interest will automatically convert into common stock of the Company at a 20% discount of the price paid by the investors for the equity financing. (See Note 12)





In June 16, 2010, the Company executed a convertible promissory note to an individual in exchange for $100,000 for funding the Company’s operating expenses.  The note is due on December 31, 2011 with a 9% interest rate annually.  For the year ended December 31, 2010 the Company recorded $4,881 and none, respectively of interest expense on the loan.  If the Company completes an equity financing for a sale of Company common stock of at least $1,750,000 prior to the maturity date of the note, the note and any unpaid accrued interest will automatically convert into common stock of the Company at a 20% discount of the price paid by the investors for the equity financing. (See Note 12)





NOTE 8 – LOANS PAYABLE – RELATED PARTY





On June 30, 2008, the Company received a loan from Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $1,000 to pay for incorporation filing fees of the Company. The loan is due on demand, unsecured and bears no interest (See Note 13).





On July 24, 2008, the Company received a loan from Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $1,789 to pay for the Company’s website and design. The loan is due on demand, unsecured and bears no interest (See Note 13).





On July 23, 2008, the Company received a loan from Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $64 to pay for incorporation filing fees of the Company. The loan is due on demand, unsecured and bears no interest (See Note 13).





On June 8, 2009, the Company received a loan from Toft ApS, a wholly owned company of Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $627 for funding the Company’s tax expense.  The loan is due on demand, unsecured and bears no interest (See Note 13).





During the year ended December 31, 2009, the Company received a loan from J. Toft ApS, a wholly owned company of Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $1,153 for funding the Company’s operating expenses.  The loan is due on demand, unsecured and bears no interest (See Note 13).




26




During the year ended December 31, 2010, the Company received a loan from Toft ApS, a wholly owned company of Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $6,242 for funding the Company’s operating expenses.  The loan is due on demand, unsecured and bears no interest (See Note 13).





NOTE 9 – NOTES PAYABLE – RELATED PARTY





On July 2, 2008, the Company executed a $35,000 promissory note to Toft ApS, a wholly owned company of Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in exchange for $35,000 cash.  The note is due on demand, unsecured and bears no interest (See Note 9).





On August 18, 2008, the Company issued a promissory note to Toft ApS, a wholly owned company of Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $10,000 for funding the Company’s operating expenses.  The note is due on demand, unsecured and bears no interest (See Note 13).





In the second quarter of 2010, the Company received a note payable of $25,823 from a related party stockholder.  The stockholder, through an entity that he is an owner of, owns 100,000 Class B shares of the Company as of December 31, 2010.  The note is due on demand, unsecured and bears no interest.





In first quarter of 2010, the Company received a note payable of $1,072 from Toft ApS, a wholly owned company of Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer & Chief Financial Officer of the Company, in the amount of $1,072 for funding the Company’s operating expenses. The note is due on demand, unsecured and bears no interest (See Note 13).





NOTE 10 – STOCKHOLDERS’ EQUITY





The Company was incorporated on April 18, 2008. The Company authorized 100,000,000 shares of common stock with a par value of $.001 and 10,000,000 shares of preferred stock with a par value of $.001, of which 100,000 shares are designated as Series A Convertible Preferred Stock.  Per the Distribution agreement, as of June 1, 2008, the Company is committed to issuing 11,305,030 shares of common stock, par value $.001, to the shareholders of Visator.  As of October 9, 2008, the shares were issued (See Note 1).





On July 2, 2008, the Company authorized the issuance of 20,000 shares of common stock to Anslow & Jaclin LLP for legal services related to the registration of the Company.  As of December 31, 2008, the Company has recorded the fair value of $10,000 in legal fees for the share issuance.





On July 2, 2008, the Company authorized the issuance of 25,000 shares of common stock to Profit Planners, Inc. for accounting services related to the registration of the Company.  As of December 31, 2008, the Company has recorded the fair value of $12,500 in consulting fees.





On July 16, 2008, the Company authorized the issuance of 100,000 Series A Convertible Preferred Stock to Jesper Toft, the Chief Executive Officer.  This compensation for services is contingent upon the filing of the Company’s registration statement, which became effective on October 21, 2008.  As of December 31, 2008, the Company has recorded the fair value of $50,000 in consulting fees to Jesper Toft.





The Series A Convertible Preferred stockholders are entitled to receive, when and if declared by the Board of Directors out of funds readily available for the purpose, dividends payable in cash (the “dividend payment date”). The aggregate amount of dividends paid to Series A Convertible Preferred stock shall be capped at $1,000,000.  After the Series A Convertible Preferred stock dividends have been paid out, they will have no preference on dividends, but they will maintain their voting rights. The Series A Convertible Preferred stockholders are entitled to 1,000 votes per each share they hold on all matters submitted to a vote of the stockholders of the Company. At any time on or after the issuance date, the holders of Series A Convertible Preferred shares may convert a portion or all of their shares into Common stock only on a one to one basis.





27




On August 27, 2009, of the 10,000,000 shares of preferred stock authorized with a par value of $.001, the Company designated 100,000 shares as Series B Convertible Preferred Stock (See Note 4).





The Series B Convertible Preferred stockholders are entitled to receive, when and if declared by the Board of Directors out of funds readily available for the purpose, dividends payable in cash (the “dividend payment date”).  The aggregate amount of dividends paid to Series B Convertible Preferred stock shall be capped at $570,000. The Series B Convertible Preferred stockholders are entitled to 1 vote per each share they hold on all matters submitted to a vote of the stockholders of the Company.  At any time on or after the issuance date, the holders of Series B Convertible Preferred shares may convert a portion or all of their shares into Common stock only on a one to one basis.





On August 27, 2009 the Company sold an investor 10,000,000 shares of common stock with a par value of $.001 and 100,000 shares of Series B Convertible Preferred stock with a par value of $.001, for $575,400 ($0.06 per share).





On August 27, 2009, the Company authorized the issuance of 40,000 shares of common stock to Soren Bansholt from IT Ventures for finance consulting services.  For the period from August 27, 2009  to December 31, 2009, the Company has recorded the fair value of $2,400 in consulting fees ($0.06 per share).





On August 27, 2009, the Company authorized the issuance of 210,000 shares of common stock to a consultant for consulting services. For the period from August 27, 2009 to December 31, 2009, the Company has recorded the fair value of $12,500 in consulting fees ($0.06 per share).





On October 29, 2009, the Company authorized the issuance of 20,000 shares of common stock to a consultant for consulting services performed for the Company.  For the period from April 18, 2008 (inception) to December 31, 2009 the Company has recorded the fair value of $1,200 in consulting fees ($0.06 per share).





During October 2009, the Company authorized the issuance of 1,000,000 shares of common stock (500,000 each respectively) to two members of the Board of Directors for services through December 31, 2012.  The common stock has a fair value of $60,000 based on the fair value on the date of grant and will be amortized over the life of the services ($0.06 per share).  For the years ended December 31, 2010 and 2009, the Company has recognized board compensation expense of $16,079 and $3,258 under the agreement.  On October 19, 2010, David J.P. Meachin resigned from the Board of Directors and 348,684 shares are to be cancelled.





For the years ended December 31, 2010 and  December 31, 2009,  and for the period April 18, 2008 (inception) to December 31 2010, the Company recorded $2,701,$ 2,701and $6,671,respectively as an in kind contribution of interest on related party notes (See Notes 6 and 7).





NOTE 11– MANAGEMENT AGREEMENT





As part of the terms of the Separation Agreement described in Note 1, on June 1, 2008, Visator entered into a twelve month Management Services Agreement with the Company for consulting services pertaining to software maintenance provided to Visator’s management. The agreement provides for a management fee of $3,000 per month to be paid to the Company. For the years ended December 31, 2010 and December 31, 2009 of $0 and $15,000, respectively to reflect zero and five months, respectively, worth of revenue. The agreement expired on June 1, 2009 and was not renewed.





28




NOTE 12 – COMMITMENTS AND CONTINGENCIES





Operating lease





The Company does not currently have an operating lease for their office located in New York City.  Office expense fees of approximately $200 are paid on a month to month basis for basic office services.





Consulting agreement- Related party





Effective May 1, 2008, the Company entered into a consulting agreement with Jesper Toft, CEO, to provide consulting services from May 2008 to August 2009 at a rate of $1,000 per month.  On September 1, 2009, the Company amended the consulting agreement starting in September 2009 to a rate of $12,000 per month on a month to month basis.  As of December 31, 2010, the Company has recorded a related party liability of $108,320 under these agreements and for the years ended December 31, 2010 and December 31, 2009 expenses of $144,000 and $56,000, respectively. (See Note 11)




During October 2009, the Company entered into agreements with its two members of the Board of Directors to pay directors fees of $60,000 per year beginning the first period after the Company receives $2,000,000 in funding.  As of December 31, 2010, the Company has not received $2,000,000 in funding and no fees have been paid.  In addition, the agreement calls for the payment of additional directors fees of 1% per director based on the total capital up to $50,000,000 each upon receiving the additional financing.  On October 19, 2010, David J.P. Meachin resigned from the Board of Directors and his board of directors agreement was terminated.  On March 19, 2011, Robert J. Lynch Jr resigned from the Board of Directors and his board of directors agreement was terminated. (See Note 13)





The Company has paid one independent director a fee of $5,000 as of the year ended December 31, 2010. Also, the Company has paid one independent director a fee of $23,000 as of the year ended December 31, 2010. (See Note 13)





Distribution agreements





On August 27, 2009, the Company entered into an exclusive distribution agreement (the “Agreement”) with Serenergy A/S (“Serenergy”) where the Company was appointed by Serenergy as its exclusive distributor of Serenergy’s products in the United States, Canada, Israel and the United Nations (“The Territory”) for 72 months.  As of December 31, 2010, the agreement has lapsed.





On August 27, 2009, the Company entered into an exclusive distribution and manufacturing license agreement - vehicles (the “License Agreement”) with Serenergy where the Company was appointed by Serenergy as its exclusive distributor of Serenergy’s fuel cell related products to the segment of vehicles (the “Segment”) for 72 months.  As of December 31, 2010, the agreement has lapsed.





NOTE 13 – RELATED PARTY TRANSACTIONS





During the year ended December 31, 2010, the Company paid $206,616 for materials and services to Serenergy which is included in cost of goods sold.





Effective May 1, 2008, the Company entered into a consulting agreement with Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, to provide consulting services from May 2008 to August 2009 at a rate of $1,000 per month.  On September 1, 2009, the Company amended the consulting agreement starting in September 2009 to a rate of $12,000 per month.  As of December 31, 2010, the Company has recorded a related party liability of $108,320 under these agreements and for the years ended December 31, 2010 and December 31, 2009 expenses of $144,000 and $56,000, respectively (See Note 12).





On June 30, 2008, the Company received a loan from Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $1,000 to pay for incorporation filing fees of the Company. The loan is due on demand, unsecured and bears no interest (See Note 8).





On July 24, 2008, the Company received a loan from Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $1,789 to pay for the Company’s website and design. The loan is due on demand, unsecured and bears no interest (See Note 8).





On July 23, 2008, the Company received a loan from Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $64 to pay for incorporation filing fees of the Company. The loan is due on demand, unsecured and bears no interest (See Note 8).





29





NOTE 13 – RELATED PARTY TRANSACTIONS CONTINUED





On July 2, 2008, the Company executed a $35,000 promissory note to Toft ApS, a wholly owned company of Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in exchange for $35,000 cash.  The note is due on demand, unsecured and bears no interest (See Note 9).





On August 18, 2008, the Company executed a promissory note to Toft ApS, a wholly owned company of Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in exchange for $10,000 for funding the Company’s operating expenses.  The note is due on demand, unsecured and bears no interest (See Note 9).





On June 8, 2009, the Company received a loan from Toft ApS, a wholly owned company of Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $627 for funding the Company’s tax expense.  The note is due on demand, unsecured and bears no interest (See Note 8).





For the years ended December 31, 2010, December 31, 2009, and for the period April 18, 2008 (inception) to December 31, 2010, $2,701,  $2,701 and $6,671, respectively were recorded as an in kind contribution of interest on related party notes.




During October 2009, the Company entered into agreements with its two members of the Board of Directors to pay directors fees of $60,000 per year beginning the first period after the Company receives $2,000,000 in funding.  As of December 31, 2010, the Company has not received $2,000,000 in funding and no fees have been paid.  In addition, the agreement calls for the payment of additional directors fees of 1% per director based on the total capital up to $50,000,000 each upon receiving the additional financing.  On October 19, 2010, David J.P. Meachin resigned from the Board of Directors and his board of directors agreement was terminated.  On March 19, 2011, Robert J. Lynch Jr resigned from the Board of Directors and his board of directors agreement was terminated. (See Note 12)





The Company has paid one independent director a fee of $5,000 as of the year ended December 31, 2010. Also, the Company has paid one independent director a fee of $23,000 as of the year ended December 31, 2010. (See Note 12)





On January 13, 2010, the Company received a loan from Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $1,072 for the purpose of funding operating expenses.  The loan is due on demand, unsecured and bears no interest (See Note 8).





On May 20, 2010, the Company received a loan from Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $1,074 for the purpose of funding operating expenses.  The loan is due on demand, unsecured and bears no interest (See Note 8).





In the second quarter of 2010, the Company received a note payable of $25,823 from a related party stockholder.  The stockholder, through an entity that he is an owner of, owns 100,000 Class B shares of the Company as of December 31, 2010.  The note is due on demand, unsecured and bears no interest.





In the third quarter of 2010, the Company received a note payable of $1,709 from Toft ApS, a wholly owned company of Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $1,709 for funding the Company’s operating expenses.  The note is due on demand, unsecured and bears no interest.




NOTE 14 – SUBSEQUENT EVENTS





In February 2010, the Company executed a note payable to IT Ventures Aps in exchange for $45,525 for funding the Company’s operating expenses.  The note was due on August 31, 2010 and bears monthly interest of 2.5%.


As of December 31, 2010, the note was in default. On March 24, 2011, the note was settled in full.





In March 2011, the Company entered into a settlement agreement with Serenergy that terminated all previous agreements between Metha Energy and Serenergy. The agreement compensated the Company due to Serenergy’s breach of contract during the original merger agreement.  The agreement also required the Company to sell back its investment in Serenergy. The Company received compensation which fundamentally reflects the Company's operating losses until today, the cash amount invested in the company by our investors and an amount securing the Company's ability to remain a going concern in this area of business - approximately $1,900,000.  As of March 31, 2011, the Company owns 0% of the issued and outstanding shares of Serenergy.








In the second quarter of 2010, the Company received a note payable of $25,823 from a related party stockholder.  The stockholder, through an entity that he is an owner of, owns 100,000 Class B shares of the Company as of December 31, 2010.  The note is due on demand, unsecured and bears no interest. On March 24, 2011, the note was settled in full.





During the period from January 1, 2011 to April 14, 2011, the Company received a $2,490 loan from Toft ApS, a wholly owned company of Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, for funding the Company’s operation.  During the same period, the Company repaid $18,828 to Toft ApS, a wholly owned company of Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company.





On January 5, 2011, the Company received a loan from Vistator in the amount of $1,000. The amount is due on demand, unsecured and bears no interest.





30




Exhibits





Exhibit No.





14.1
Code of Ethics*31.1
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer





31.2
Rule 13a-14(a)/15d-14(a) Certification of the Principal Accounting Officer





32.1
Certification Pursuant to 18 U.S.C. §1350 of Chief Executive Officer





32.2
Certification Pursuant to 18 U.S.C. §1350 of the Principal Accounting Officer







* Previously filed




31





SIGNATURES








In accordance with Section 13(a) or 15(d) of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





METHA ENERGY SOLUTIONS INC.Dated: April 15, 2011
By:
/S/ JESPER TOFTJesper Toft

Chief Executive Officer,

Chief Financial Officer,

Chief Accounting Officer

Chairman of the Board of Directors














32