SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 7, 2011
COLOMBIA ENERGY RESOURCES, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware | 000-32735 | 87-0567033 |
(State or Other Jurisdiction of Incorporation) | Commission File Number | (IRS Employer Identification No.) |
One Embarcadero Center, Suite 500, San Francisco, CA | 94901 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (415) 460-1165
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
£ Written communications pursuant to Rule 425 under the Securities Act
£ Soliciting material pursuant to Rule 14a-12 under the Exchange Act
£ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
£ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
Item 9.01 | Financial Statements and Exhibits |
a) Financial statements of business acquired.
In our report on Form 8-K filed with the Commission on February 10, 2012, we announced the completion of the acquisition of 70% of the rights associated with the Ruku mining concessions. Pursuant to Rule 8-04 of Regulation S-X, we are providing audited financial statements for Milton Hawerd Cubides Botia, the prior owner of Ruku, for the fiscal year ended December 31, 2010 and audited interim statements for the nine-month periods ended September 30, 2011 and 2010 prior to when we took operating control. The financial statements as presented are not indicative of the financial condition or results of the operation due to changes in the business.
Based upon these financial statements, the value of the investment is between 20% and 40% of the Company’s total assets as of December 31, 2010, and total assets and net income (loss) of the Ruku operations less than 20% of our total assets and net loss for the year ending December 31, 2010; accordingly, only one year of historical financial statements are being furnished.
MILTON HAWERD CUBIDES BOTIA |
cc: 19.417.029 |
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - US$ |
For the Nine | For the Nine | |||||||||||
Months Ended | Months Ended | Year ended | ||||||||||
Sept 30, 2011 | Sept 30, 2010 | Dec 30, 2010 | ||||||||||
Audited | Audited | Audited | ||||||||||
Revenue | $ | 766,443 | $ | 487,284 | $ | 680,407 | ||||||
Direct Cost | ||||||||||||
Purchases | 333,002 | 233,897 | 324,820 | |||||||||
Net Operating | $ | 433,441 | $ | 253,387 | $ | 355,587 | ||||||
Administrative Expenses | ||||||||||||
Payroll expenses | 74,731 | 41,000 | 57,370 | |||||||||
Rent | 25,027 | 13,813 | 19,213 | |||||||||
Fees | 9,879 | 5,452 | 7,584 | |||||||||
Utilities | 43,065 | 23,768 | 33,061 | |||||||||
Maintenance and Repairs | 8,103 | 4,472 | 6,220 | |||||||||
Freights | 70,604 | 38,967 | 54,202 | |||||||||
Cleaning, Cafeteria | 18,645 | 10,291 | 14,314 | |||||||||
Miscelaneous | 6,443 | 3,754 | 4,947 | |||||||||
Total administrative expenses | $ | 256,497 | 141,517 | $ | 196,911 | |||||||
Net profit before income tax | $ | 176,944 | $ | 111,870 | $ | 158,675 |
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MILTON HAWERD CUBIDES BOTIA |
cc: 19.417.029 |
CONDENSED BALANCE SHEETS - US$ |
Sept 30, 2011 | Sept 30, 2010 | December 31, 2010 | ||||||||||
Audited | Audited | Audited | ||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Property and equipment, net: | ||||||||||||
Land | 783,290 | 655,702 | 697,265 | |||||||||
Equipment | 43,949 | 32,588 | 34,654 | |||||||||
Total | 827,239 | 688,290 | 731,919 | |||||||||
Property and equipment, net | 827,239 | 688,290 | 731,919 | |||||||||
TOTAL ASSETS | $ | 827,239 | $ | 688,290 | $ | 731,919 | ||||||
LIABILITIES AND EQUITY | ||||||||||||
Liabilities | ||||||||||||
Current liabilities: | ||||||||||||
Income Tax to be paid | $ | 674 | $ | 674 | $ | 717 | ||||||
Total current liabilities | 674 | 674 | 717 | |||||||||
Total liabilities | 674 | 674 | 717 | |||||||||
Equity | ||||||||||||
Personal Equity | 826,565 | 687,616 | 731,202 | |||||||||
Total equity | 826,565 | 687,616 | 731,202 | |||||||||
TOTAL LIABILITIES AND EQUITY | $ | 827,239 | $ | 688,290 | $ | 731,919 |
Note 1: The Properties and Basis of Presentation
On October 19, 2011, Colombia Energy Resources, Inc. (the “Company”) finalized an agreement to purchase and assume full operating control of a 70% interest in four coal mining concessions known as the Ruku Mining Complex (“Ruku”) located in the Republic of Colombia from Hawerd Milton Cubides Botia (“Seller”). At that time, the Company began operations which included creating a safer working environment for our employees and coal production.
The statement of revenues and direct operating expenses for the years ended December 31, 2010 has been derived from the Seller’s historical financial records. Revenues and direct operating expenses included in the accompanying statement represent the Company’s acquired interest in the Property and are prepared on an accrual basis of accounting. The Seller maintained its books and records using a calendar year. Accordingly, the accompanying statements of revenues and direct expenses are presented using a calendar year.
During the periods presented, the properties were not accounted for or operated as a stand-alone entity and separate financial statements of Ruku have never been prepared. Certain costs, such as general and administrative expenses and interest were not allocated to the individual property.
The accompanying statements were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and are not intended to represent a complete set of financial statements. Pursuant to Rule 3-05 of Regulation S-X, the financial statements of Ruku are limited to historical statements of revenues and direct operating expenses, together with unaudited disclosures of reserve quantities and the standardized measure. Historical financial statements, reflecting financial position, results of operations and cash flows required by accounting principles generally accepted in the United States of America are not presented as such information is not available on an individual property basis, nor is it practicable to obtain such information in these circumstances. The statements presented are not indicative of the results for Ruku going forward.
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Note 2: Summary of significant accounting policies
Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the respective reporting periods. We base our estimates and judgments on historical experience and on various other assumptions and information that we believe to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes.
Revenue Recognition
We recognize revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured. Operating costs and taxes are recognized in the same period in which revenue is earned.
Direct operating expenses
Direct operating expenses are recognized when incurred and consist of operating expenses directly related to revenue producing activities of Ruku. Direct operating expenses consist of all costs relating to production activities, and do not include accretion of an asset retirement obligation, and depreciation, depletion and amortization.
Note 3: Property and Equipment, Net
Property and equipment are carried at cost. Major additions and improvements are capitalized, while maintenance and repairs which do not extend the lives of the assets are expensed as incurred. Gain or loss on the disposition of property and equipment is recognized in operations when realized. Depreciation of equipment is recognized on a straight-line basis over an estimated useful life of 3 to 5 years.
Note 4: Contingencies and commitments
Legal
We are subject to legal proceedings, claims and liabilities which arise in the ordinary course of business. We accrue for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred.
Environmental
We accrue for losses associated with environmental remediation obligations when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change.
Note 5: Subsequent Events
The Company evaluated subsequent events through the date on which the financial statements were released, and determined that no other subsequent events had occurred which required adjustment or disclosure within these financial statements.
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b) Pro forma financial information
Set forth below is the pro forma financial information required by this item for the Ruku acquisition. This includes the unaudited pro forma consolidated financial statements of Colombia Energy Resources, Inc. (the “Company”) as of September 30, 2011, and for the year nine months ending then. The unaudited pro forma consolidated financial statements give effect to the Company’s acquisition of 70% of the Ruku operations. The unaudited pro forma condensed consolidated balance sheet assumes that the transactions occurred as of September 30, 2011. The unaudited pro forma condensed consolidated statements for the nine months ended September 30, 2011 assume that the transaction occurred on January 1, 2011. There were no significant adjustments related to the transaction which need to be reflected in the pro-forma financial statements.
The unaudited pro forma condensed consolidated financial statements and accompanying notes should be read together with the Company’s related historical consolidated financial statements and notes thereto included on Form 10-K for the year ended December 31, 2010 and the quarterly reports on Form 10-Q for the periods ended March 31, June 30, and September 30, 2011, as filed with the Securities and Exchange Commission. The unaudited pro forma condensed consolidated balance sheet and the unaudited pro forma condensed consolidated statements of operations were derived by adjusting the historical consolidated financial statements of the Company and Ruku. These adjustments are based on currently available information and certain estimates and assumptions and, therefore, the actual effects of the transaction may differ from the effects reflected in the unaudited pro forma consolidated financial statements. However, management believes that the assumptions provide a reasonable basis for presenting the significant effects of the transaction as contemplated and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited condensed consolidated pro forma financial statements.
The unaudited pro forma consolidated financial statements are not necessarily indicative of the consolidated financial condition or results of operations of the Company had the transaction actually been completed at the beginning of the period. Moreover, the unaudited pro forma consolidated financial statements do not project consolidated financial position or results of operations of the Company for any future period or at any future date.
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COLOMBIA ENERGY RESOURCES, INC. |
(AN EXPLORATION STAGE COMPANY) |
PRO-FORMA CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) |
For the Nine | RUKU ACQUISITION | For the Nine | ||||||||||
Months Ended | Months Ended | Months Ended | ||||||||||
September 30, | September 30, | September 30, | ||||||||||
(Unaudited) | Audited | (Unaudited) | ||||||||||
2011 | 2011 | 2011 | ||||||||||
Revenue | $ | - | $ | 766,443 | $ | 766,443 | ||||||
Expenses: | ||||||||||||
General and administrative | 7,071,009 | 589,499 | 7,660,508 | |||||||||
Loss before other income (expenses) | (7,071,009 | ) | 176,944 | (6,894,065 | ) | |||||||
Other income (expenses): | ||||||||||||
Change in fair value of derivative liability-embedded conversion feature | (15,560 | ) | - | (15,560 | ) | |||||||
Inducement expense | (682,753 | ) | - | (682,753 | ) | |||||||
Interest expense, net | (2,158,195 | ) | - | (2,158,195 | ) | |||||||
Total other expenses, net | (2,856,508 | ) | - | (2,856,508 | ) | |||||||
Loss before income tax | (9,927,517 | ) | 176,944 | (9,750,573 | ) | |||||||
Provision for income tax | - | - | - | |||||||||
Net loss | (9,927,517 | ) | 176,944 | (9,750,573 | ) | |||||||
- | ||||||||||||
Preferred stock deemed dividend | (9,134,754 | ) | - | (9,134,754 | ) | |||||||
Preferred stock dividend paid | (550,533 | ) | - | (550,533 | ) | |||||||
Net loss attributable to common shareholders | (19,612,804 | ) | 176,944 | (19,435,860 | ) | |||||||
Other comprehensive income (loss): | 0 | |||||||||||
Foreign currency translation adjustment | (79,394 | ) | - | (79,394 | ) | |||||||
Total comprehensive loss | $ | (19,692,198 | ) | $ | 176,944 | $ | (19,515,254 | ) |
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COLOMBIA ENERGY RESOURCES, INC |
(AN EXPLORATION STAGE COMPANY) |
PRO FORMA - CONDENSED CONSOLIDATED BALANCE SHEETS |
September 30, 2011 | RUKU ACQUISITION September 30 2011 | September 30, 2011 | ||||||||||
ASSETS | (Unaudited) | Audited | (Unaudited) | |||||||||
Current assets: | ||||||||||||
Cash | $ | 16,060,950 | $ | 16,060,950 | ||||||||
Prepaid expenses and other current assets | 700,474 | 700,474 | ||||||||||
Total current assets | 16,761,424 | - | 16,761,424 | |||||||||
Property and equipment, net: | ||||||||||||
Land | 783,290 | 783,290 | ||||||||||
Mining concessions | 4,535,138 | 4,535,138 | ||||||||||
Equipment | 473,509 | 43,949 | 517,458 | |||||||||
Construction in progress | 832,288 | - | 832,288 | |||||||||
Total | 5,840,934 | 827,239 | 6,668,173 | |||||||||
less- accumulated depreciation | (33,084 | ) | - | (33,084 | ) | |||||||
Property and equipment, net | 5,807,850 | 827,239 | 6,635,089 | |||||||||
Other assets | 499,379 | - | 499,379 | |||||||||
TOTAL ASSETS | $ | 23,068,653 | $ | 827,239 | $ | 23,895,892 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
Liabilities | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable and accrued liabilities | $ | 1,704,881 | $ | 674 | $ | 1,705,555 | ||||||
Convertible notes payable; net of discount | 556,947 | - | 556,947 | |||||||||
Derivative liability - embedded conversion feature | 261,000 | - | 261,000 | |||||||||
Total current liabilities | 2,522,828 | 674 | 2,523,502 | |||||||||
Long term liabilities: | ||||||||||||
Convertible notes - related party | - | - | - | |||||||||
Convertible notes payable (net of discount) | - | - | - | |||||||||
Interest Payable | - | - | - | |||||||||
Long-term portion of mining concession payable | 1,762,237 | - | 1,762,237 | |||||||||
Derivative liability - embedded conversion feature | - | - | - | |||||||||
Total long term liabilities | 1,762,237 | - | 1,762,237 | |||||||||
Total liabilities | 4,285,065 | 674 | 4,285,739 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Colombia Energy Resources, Inc. | ||
Date: March 8, 2012 | By: | /s/ Ronald G. Stovash |
Ronald G. Stovash, Chief Executive
Officer |
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