UNITED STATES

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):  January 6, 2012

 

NEW WESTERN ENERGY CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

Nevada	0-54343	26-3640580
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

 

20 Truman, Suite 204, Irvine, California	92620
(Address of Principal Executive Offices)	(Zip Code)

 

Registrant’s telephone number, including area code:  (949) 435-0977

 

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

 

 

 

 

 

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Item 9.01          Financial Statements and Exhibits

 

On January 2, 2012, the Registrant completed the acquisition of Royal Texan Energy Co. (“RTE”) by acquiring 100% of the issued and outstanding capital stock of RTE pursuant to a Plan and Agreement of Reorganization dated December 1, 2011, in exchange for 1,000,000 shares of the Registrant’s common stock. As additional consideration the Registrant paid to the stockholders of RTE (a) $35,000 in cash (b) executed a promissory note of $55,000 payable at the rate of $10,000 per month commencing 30 days after the closing of acquisition of RTE, and (c) approximately $50,000 of debt owed to two banks by RTE and guaranteed by the stockholders of RTE. Royal Texan Energy Co. became a wholly-owned subsidiary of the Registrant and will conduct business as a separate operating company.

 

The Registrant filed a report with the Commission on Form 8-K disclosing the transaction on January 6, 2012.

 

The following documents are attached with this amended report:

 

(A) Financial Statements of the business acquired

Audited financial statements of Royal Texan Energy Co. for the years ended

December 31, 2011 and 2010

 

(B) Pro Forma Financial Statements

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this amended report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	New Western Energy Corporation
Date:  March 19, 2012	By:	/s/ Javan Khazali
		Javan Khazali, President

 

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 NEW WESTERN ENERGY CORPORATION

TABLE OF CONTENTS

 

PART A.    FINANCIAL STATEMENTS OF BUSINESS ACQUIRED (ROYAL TEXAN ENERGY CO.)
BALANCE SHEETS AS OF DECEMBER 31, 2011 AND DECEMBER 31, 2010			A-1
STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010			A-2
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010			A-3
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010			A-4
NOTES TO FINANCIAL STATEMENTS			A-5
PART B.    PRO-FORMA FINANCIAL INFORMATION			B-1
PRO FORMA BALANCE SHEET AS OF DECEMBER 31, 2011 (UNAUDITED)			B-2
PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2011 (UNAUDITED)			B-3
SIGNIFICANT NOTES AND ASSUMPTIONS TO PRO-FORMA FINANCIAL STATEMENTS (UNAUDITED)			B-4
STATEMENT OF FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED AT JANUARY 2, 2012 (UNAUDITED)			B-5
PRO-FORMA ADJUSTMENTS FOR THE YEAR ENDED DECEMBER 31, 2011 (UNAUDITED)			B-6

(A)	FINANCIAL STATEMENTS OF BUSINESS ACQUIRED

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders of:

Royal Texan Energy Co.

 

We have audited the accompanying balance sheets of Royal Texan Energy Co. (the “Company”) as of December 31, 2011 and 2010, and the related statements of operations, changes in stockholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated 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 Royal Texan Energy Co. as of December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2011 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 1 to the financial statements, the Company has a net loss and net cash used in operating activities in 2011 of $58,270 and $48,942, respectively, and has working capital deficit and an accumulated deficit of $168,944 and $54,485, respectively at December 31, 2011. These matters raise substantial doubt about the Company's ability to continue as a going concern. Management’s Plan in regards to these matters is also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

/s/ Salberg & Company, P.A.

 

SALBERG & COMPANY, P.A.

Boca Raton, Florida

March 19, 2012

 

 

 

 

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ROYAL TEXAN ENERGY CO
BALANCE SHEETS
ASSETS	December 31, 2011			December 31, 2010
Current Assets
Cash and cash equivalents	$	12,058		$	-
Accounts receivable		18,054			-
Total Current Assets		30,112			-
Property and equipment, net		123,849			79,052
Investment in oil and gas properties, net		49,252			34,915
Total Assets	$	203,213		$	113,967
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Bank overdraft	$	-		$	1,193
Accounts payable		9,439			-
Accrued liabilities		2,205			1,491
Payable to related party		163,094			-
Notes Payable, current portion		24,318			24,538
Total Current Liabilities		199,056			27,222
Notes Payable, long term		27,770			52,088
Total Liabilities		226,826			79,310
Commitment and Contingencies (Note 7)
Stockholders' Equity(Deficit)
Common Stock $1.00 par value, 1,000,000 shares authorized, 1,000 shares issued and outstanding		1,000			1,000
Additional Paid In Capital		29,872			29,872
Retained Earnings (Deficit)		(54,485)			3,785
Total Stockholders' Equity (Deficit)		(23,613)			34,657
Total Liabilities and Stockholders' Equity (Deficit)	$	203,213		$	113,967
The accompanying notes are an integral part of these financial statements

A-1

ROYAL TEXAN ENERGY CO
STATEMENTS OF OPERATIONS
	For The Years Ended December 31,
	2011		2010
Revenues
Oil Sales	$                 102,957		$                    41,934
Gas Sales	2,768		14,616
Total Revenues	105,725		56,550
Operating Expenses
Production Taxes	5,653		3,423
Lease Operating Expenses	69,836		30,955
Intangible Drilling and Completion Costs	40,883		-
Depreciation and Depletion	17,229		9,883
Administrative Expenses	25,749		4,780
Total Operating Expenses	159,350		49,041
Income (Loss) from Operations	(53,625)		7,509
Other Income (Expense)
Interest Expense	(4,645)		(4,465)
Total Other Income (Expense)	(4,645)		(4,465)
Income (Loss) From Continuing Operations Before Taxes	(58,270)		3,044
Provision for Taxes	-		-
Net Income (Loss)	$                 (58,270)		$                      3,044
The accompanying notes are an integral part of these financial statements

A-2

 

 

ROYAL TEXAN ENERGY CO
Statements of Changes in Stockholders' Equity (Deficit)
For the Years Ended December 31, 2011 and 2010
										Retained
							Additional			Earnings/
	Common Stock						Paid			Accumulated
	Quantity			Amount			In Capital			Deficit			Total
Balance December 31, 2009	1,000		$	1,000		$	(1,000)		$	741		$	741
Capital contribution	-			-			30,872			-			30,872
Net income	-			-			-			3,044			3,044
Balance - December 31, 2010	1,000			1,000			29,872			3,785			34,657
Net loss	-			-			-			(58,270)			(58,270)
Balance - December 31, 2011	1,000		$	1,000		$	29,872		$	(54,485)		$	(23,613)
The accompanying notes are an integral part of these financial statements

A-3

 

ROYAL TEXAN ENERGY CO
Statements of Cash Flows
			For the Year Ended December 31,
			2011			2010
Cash Flows from Operating Activities:
Reconciliation of net loss to net cash provided by (used in) operating activities:
Net Income (Loss)		$	(58,270)		$	3,044
Adjustment to reconcile net loss to net cash
used in operating activities:
Depreciation and depletion			17,229			9,883
Changes in operating assets and liabilities:
Accounts receivable			(18,054)			-
Accounts payable			9,439			-
Accrued liabilities			714			1,490
Net cash provided by (used in) operating activities			(48,942)			14,417
Cash Flows From Investing Activities:
Purchase of property and equipment			(61,860)			(78,516)
Purchase and investment in oil and gas properties			(14,503)			(25,334)
Cash received from related party for drilling			163,094			-
Net cash provided by (used in) investing activities			86,731			(103,850)
Cash Flows From Financing Activities:
Cash contribution by stockholders			37,825			38,150
Cash withdrawn by stockholders			(37,825)			(11,861)
Bank overdraft			(1,193)			1,193
Proceeds from notes payable			-			81,000
Payment of notes payable			(24,538)			(19,437)
Net cash provided by (used in)  financing activities			(25,731)			89,045
Net increase (decrease) in cash and cash equivalents during the period			12,058			(388)
Cash and cash equivalents, beginning of the period			-			388
Cash and cash equivalents, end of the period		$	12,058		$	-
Supplemental disclosures of cash flow information:
Cash paid for income taxes		$	-		$	-
Cash paid for interest		$	4,645		$	4,465
The accompanying notes are an integral part of these financial statements

A-4

ROYAL TEXAN ENERGY CO.

Notes to Financial Statements

December 31, 2011 and 2010

 

NOTE 1: NATURE OF OPERATIONS AND GOING CONCERN

 

3M Production, a sole proprietorship, was formed in the State of Texas on December 31, 2009. The Company’s principal business operations were the acquisition, exploration and development of, and production from oil and gas properties located in Texas.

 

On February 22, 2011 the sole shareholders of 3M Production formed an entity named 3M Production Co. (“3M”) incorporated in the State of Texas. The operations of 3M Production merged into the operations of 3M in February 2011, and 3M Production ceased its existence. On September 8, 2011, 3M changed its name to Royal Texas Energy Co. (the “Company”). The reorganization to a corporation from a sole proprietorship is treated as a recapitalization for accounting purposes. Accordingly, all equity amounts have been retroactively restated to reflect the recapitalization.

 

The Company is the owner of several oil and gas leases covering approximately 1,280 acres in Shackelford and Stephens County, Texas. There are 43 wells on the properties of which only three are active at this time. In addition, the Company is overseeing operations on a property in Jones County, Texas where there is currently a producing oil well.

 

On January 2, 2012, pursuant to a Plan and Agreement of Reorganization dated December 1, 2011, the stockholders of the Company sold 100% of the issued and outstanding capital stock of the Company to New Western Energy Corporation (NWE) in exchange for 1,000,000 shares of NWE common stock. As additional consideration, NWE paid to the stockholders of the Company (a) $35,000 in cash (b) executed a promissory note of $55,000 payable at the rate of $10,000 per month commencing 30 days after the closing of acquisition of the Company, and (c) approximately $50,000 of debt owed to two banks by the Company and guaranteed by the two stockholders. Royal Texan Energy Co. became a wholly-owned subsidiary of NWE and will conduct business as a separate operating company.

 

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated significant revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders, the ability of the Company to obtain necessary equity financing to continue operations, and the acquisition of profitable producing oil and gas properties. At December 31, 2011, the Company has negative working capital and an accumulated deficit of $168,944 and  $54,485, respectively, and used cash in operations of $48,942 in 2011 and has a net loss of $58,270 in 2011. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

A-5

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NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

The preparation of financial statements in conformity with US generally accepted accounting principles (U.S. GAAP) 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. The Company regularly evaluates estimates and assumptions related to the valuation of accounts, notes and other receivables, valuation of long-lived assets and oil and gas properties, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

 

Accounts Receivables

 

Accounts receivable represent income earned from sale of oil and gas that the Company has not yet received payment. Accounts receivable are recorded at the invoiced amount and stated at the amount management expects to collect from balances outstanding at period-end. The Company estimates the allowance for doubtful accounts based on an analysis of specific accounts and an assessment of the customer’s ability to pay.

 

A-6

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Property and Equipment

 

Property and equipment consists of lease and well equipment and, is recorded at cost and is being depreciated on a straight-line basis over its estimated useful life of seven years.

 

Oil and Gas Properties

 

The Company uses the successful efforts method of accounting for oil and gas producing activities. Costs to acquire an interest in oil and gas properties, to drill and equip exploratory wells that find proved reserves, to drill and equip development wells and related asset retirement costs are capitalized. Costs to drill exploratory wells, including equipment and facilities are capitalized as part of “Uncompleted Wells, Equipment and Facilities” pending determination of whether the well has found proved reserves. Costs to drill exploratory wells that find proved reserves are reclassified to proved oil and gas properties while costs that do not find proved reserves, geological and geophysical costs, and costs of carrying and retaining undeveloped properties are expensed.

 

Unproved oil and gas properties that are individually significant are periodically assessed for impairment of value, and a loss is recognized at the time of impairment by providing an impairment allowance. Capitalized costs of producing oil and gas properties (proved or unproved), after considering estimated residual salvage values, are depleted by the unit-of-production method. Support equipment and other property and equipment are depreciated over their estimated useful lives.

 

On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation, depletion, and amortization with a resulting gain or loss recognized in income.

 

On the sale of an entire interest in an unproved property for cash or cash equivalents, a gain or loss on the sale is recognized, taking into consideration the amount of any recorded impairment if the property had been assessed individually. If a partial interest in an unproved property is sold, the amount received is treated as a reduction of the cost of the interest retained.

 

Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment.

A-7

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Long-lived Assets

 

In accordance with ASC 360, Property, Plant, and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset compared to the estimated future undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss equal to the excess of the carrying value over the assets fair market value is recognized when the carrying amount exceed the undiscounted cash flows.

 

Asset Retirement Obligations

 

The Company follows the provisions of ASC 410, Asset Retirement and Environmental Obligations, which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets. The Company did not have any asset retirement obligation at December 31, 2011 and 2010.

 

Environmental Matters

 

The Company’s operations are subject to evolving federal, state and local environmental laws and regulations related to the discharge of materials into the environment. This process is not expected to produce harmful levels of emissions or waste by-products. However, these laws and regulations would require the Company to remove or mitigate the environmental effects of the disposal or release of substances at its site should they occur. Compliance with such laws and regulations can be costly. Additionally, governmental authorities may enforce the laws and regulations with a variety of civil and criminal enforcement measures, including monetary penalties and remediation requirements. The management is not aware of any area of non-compliance with federal, state or local environmental laws and regulations as of the date of this report.

A-8

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Fair value of Financial Instruments and Fair Value Measurements

 

ASC 820, Fair Value Measurements and Disclosures, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1

 

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2

 

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3

 

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

The Company’s financial instruments consist principally of cash, amounts receivable, accounts payable, notes payable, and amounts due to related parties. Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, the fair value of our cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the other financial instruments approximate their current fair values because of their nature, market interest rates, and respective maturity dates or durations.

 

Revenue Recognition

 

The Company sells crude oil and gas under short-term agreements at prevailing market prices. Revenue, which is the Company's net revenue interest in the leased property, is recognized at the point of sale, when the crude oil and gas are extracted from our storage units by the customer. This is at the point where the customer has taken title and has assumed the risks and rewards of ownership, the sales price is fixed or determinable and collectability is reasonably assured.

A-9

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Income Taxes

 

Prior to the Company’s reorganization into a corporation on February 22, 2011 (see Note 1), the owners reported any net income or losses on their personal tax returns with no income tax expense or benefit to the Company. Since the reorganization, the Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

 

Comprehensive Loss

 

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive income (loss) and its components in the financial statements. As at December 31, 2011 and 2010, the Company has no items that represent a comprehensive income (loss) and, therefore, has not included a schedule of comprehensive income (loss) in the financial statements.

 

Recent Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

NOTE 3: PROPERTY AND EQUIPMENT

 

Property and equipment consists of:

 

		December 31, 2011			December 31, 2010
Lease and well equipment	$	150,654		$	88,794
Less: accumulated depreciation		(26,805)			(9,742)
Property and equipment, net	$	123,849		$	79,052

 

Depreciation expense for the years ended December 31, 2011 and 2010 was $17,063 and $9,742, respectively.

A-10

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NOTE 4: OIL AND GAS PROPERTIES AND RELATED OBLIGATIONS

 

The Company’s aggregate capitalized costs related to oil and gas properties consist of the following:

 

Name of Property		Type		December 31, 2011		December 31, 2010
Proved Properties
Lane #1, 2, 3 and Terry Heirs #1		Oil & Gas		$                9,722		$                 9,722
Mrs. W. G. Trice, Trice Methodist 400, and Trice and Methodist Home Lease		Oil & Gas		25,334		25,334
				35,056		35,056
Less: Accumulated depletion				(307)		(141)
Less: Impairment loss				-		-
Total Proved Properties				$              34,749		$               34,915
Unproved Properties
McClellan		Oil		$                2,191		$                          -
Reves Lease		Oil		4,555		-
Swenson Prospect #1		Oil		7,757		-
Total Unproved Properties				14,503		-
Total Investment in Oil and Gas Properties, net				$              49,252		$               34,915

 

PROVED PROPERTIES

 

Mrs. W.G. Trice, Trice and Methodist Home and Trice Methodist “400” Lease, Shackelford County, Texas

A-11

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Mrs. W.G. Trice Lease and Trice and Methodist Home Lease

On April 1, 2010, the Company entered into an assignment of oil and gas lease agreement with Richard Windham, JR., individually and dba Tracker Mineral and Tracker Mineral, LLC (“Assignor”), whereby the Assignor agreed to sell, assign, transfer all of their rights, title and interest in and to the leasehold estates covering one hundred percent (100%) of their rights, title and interest in the Mrs. W. G. Trice and Trice and Methodist Home leases. The W. G. Trice and Methodist Home leases consist of four tracts of 257.75 acres of land in Shackelford County in Texas. The assignment of lease includes from the surface and insofar as covers ground to a depth of one thousand (1,000) feet below the surface and insofar as covers and includes net revenue interests except, that Richard Windham, Jr., individually reserve to himself, his heirs, successors and assigns an overriding royalty interest payable on oil, gas and associated hydrocarbons produced, saved and sold from only the lands described as Trice and Methodist Home Lease equal to the difference between a .80 net revenue interest and all lease royalty burdens. This assignment covers and includes all of Assignor’s interest in all equipment, personal property, and fixtures located on or used in connection with the lease.

 

Trice Methodist “400” Lease

On April 1, 2010, the Company entered into an assignment agreement whereby, the assignor agreed to sell, assign, transfer all of their rights, title and interest in and to the leasehold estates covering one hundred percent (100%) of their rights, title and interest in Trice Methodist “400” lease effective September 1, 2010. Trice Methodist “400” consisted of 273.3 acres of land in Shackelford, Texas. Pursuant to the terms of the assignment of the lease, the Company has a net revenue interest of 77%, and the operator shall pay the assignor, its successors or assigns, based on their division of interest, less taxes required by law to be deducted and remitted by the purchaser for all oil and gas.

 

The Company paid $76,000 of which $25,334 was recorded as investment in oil and gas properties and the remainder was recorded as lease and well equipment. On April 2, 2010, the stockholders of the Company executed a promissory note with a bank and obtained a loan for $76,000 to fund the payment to the Assignor for the sale, assignment and transfer of all of their rights including, the cost of the tangible equipment, personal property and fixtures on the Mrs. W.G. Trice, Trice and Methodist Home and Trice Methodist “400” Lease. The promissory note is secured by the debtor’s interest in and to the Mrs. W.G. Trice lease, Trice Methodist “400” lease and Trice and Methodist Home lease all located in Shackelford County, Texas. The promissory note bears 7% per annum interest, and is payable in 48 monthly payments of $1,820.25 beginning May 2, 2010. The principal balance due on the promissory note at December 31, 2011 and 2010 was $46,929 and $64,805, respectively. The Company recorded an interest expense of $3,967 and $3,367 for the years ended December 31, 2011 and 2010, respectively.

A-12

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Lane #1, 2, 3 and Terry Heirs #1

On October 12, 2009, the Company entered into a Purchase and Sale Agreement and agreed to purchase the right, title and interest in, to and under the oil, gas and mineral leasehold interest in the oil and gas wells on properties located in Schackelford County, Texas. The Company purchased a 75.59667 percent net revenue interest in exchange for a purchase consideration of $20,000. The Company paid $4,583 in cash and executed a promissory note on November 4, 2009 of $15,417, payable on demand, but if no demand is made, then payable in 36 monthly installments of $486.63 bearing an interest rate of 8.5% per annum. The Company recorded an interest expense of $678 and $1,097 for the years ended December 31, 2011 and 2010. The principal balance due on the promissory note amounted to $5,159 and $10,321 as of December 31, 2011 and 2010, respectively. The total purchase price was $20,000 of which $9,722 was recorded as investment in oil and gas properties and the remainder was recorded as lease and well equipment.

 

Cottle lease

On April 23, 2010, the Company entered into a Purchase and Sale Agreement (“Agreement”) with Leonard Brothers Operating Company (“Seller”) whereby, the Company purchased certain oil and gas lease from the Seller who is in possession of letters executed by owners of working interest in the lease agreeing to sell their interest for a purchase price of $10,000. The closing of the purchase and sale transaction took place on or before May 1, 2010. The Company paid cash consideration of $5,000 upon the execution of the Agreement, and remaining balance was agreed to be paid in ten (10) monthly installments of $500 each starting June 1, 2010. The principal balance due at December 31, 2010 amounted to $1,500, and the final payment of $500 was paid on March 1, 2011. The purchase price of $10,000 was recorded as lease and well equipment.

 

UNPROVED PROPERTIES

Swenson Prospect

The Swenson prospect consists of 160 acres of land and is located in the Jones County, Texas. The Swenson #1 initial test well will be drilled to a maximum depth of 2060 feet in order to evaluate the Flippen Sand, Gunsight Lime, and the Swastika Sand formations. The reserves for the Swenson prospect are estimated to be 220,000 barrels of oil remaining from the Swastika Sand formation and possibly the Gunsight Lime formation. On January 28, 2011, the Company purchased .39658855 of net revenue interest in Swenson prospect. The lessor and other mineral owners are entitled to receive .6034115 of all income from sale of oil and gas produced from the leased premises. The Company has recorded $7,757 in investment in oil and gas properties in Swenson prospect as of December 31, 2011.

A-13

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Reves Lease

On March 3, 2011, the Company entered into a Paid Up Oil and Gas Lease agreement with Ray Reves and Yvonne Reves to acquire 84.4 acres of land for the purpose of exploring for developing, producing and marketing oil and gas, along with all hydrocarbon and non-hydrocarbon substances produced in association therewith. The Company agreed to pay royalties to the lessors on oil and gas production at the rate of 17.5% of all income from the sale of any and all oil and gas produced from the said acreage covered in this lease. The Company agreed to pay to lessor upon execution of the lease by lessor, $2,215 as consideration for leasing this acreage at the rate of $52.50 per acre. In addition, the Company agreed to pay to the lessor before the commencement of drilling or construction operations, $2,000 for damages to the surface of said acreage for the drill site and road of each well drilled and $1,000 for tank battery location built on said acreage. The Company has recorded $4,555 in leasehold costs on Reves lease as of December 31, 2011 and has a commitment for the remaining $660.

 

McLellan Lease

On August 8, 2011, the Company entered into a Paid Up Oil and Gas Lease agreement with Michael L. McLellan and Paula McLellan to acquire 160 acres of land for the purpose of exploring for developing, producing and marketing oil and gas, along with all hydrocarbon and non-hydrocarbon substances produced in association therewith. The Company agreed to pay royalties to the lessors on oil and gas production at the rate of 17.5% of all income from the sale of any and all oil and gas produced from the said acreage covered in this lease. The Company agreed to pay to lessor upon execution of the lease by lessor, $4,000 as the consideration for leasing such acreage at the rate of $50 per acre. In addition, the Company agreed to pay to the lessor before the commencement of drilling or construction operations, $2,000 for damages to the surface of said acreage for the drill site and road of each well drilled and $1,500 for tank battery location built on said acreage. The Company has recorded $2,191 in leasehold costs on McLellan lease as of December 31, 2011 and has a commitment for the remaining $1,309.

A-14

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NOTE 5: NOTES PAYABLE

 

Notes payable consist of the following:
		December 31, 2011		December 31, 2010
M. Lane #1, 2, 3 and T. Heirs Lease
Note payable to First National Bank, principal balance of $15,416.69 payable on demand, interest bearing at 8.5% per annum, due on November 4, 2012, but if no demand is made, then 36 monthly payments of $486.63 beginning December 4, 2009		$               5,159		$            10,321
Mrs. M. G. Trice Lease, Trice Methodist "400" Lease and The Trice and Methodist Home Lease
Note payable to First National Bank, principal balance of $76,000, secured by oil and gas deed of trust, and all of debtor's interest in M. Lane # 1, 2, 3 and T. Heirs # 1, bearing interest at 7% per annum, due April 2, 2014, payable in 48 monthly installments of $1,820.25 beginning May 2, 2010		46,929		64,805
Cottle Lease
Note payable to a third party, principal balance of $5,000, unsecured, non-interest bearing, to be paid in ten (10) equal and monthly installments of $500 with the 1st installment due by June 1, 2010 and final installment due by April 1, 2011		-		1,500
		$            52,088		$            76,626
Notes payable - Current portion		(24,318)		(24,538)
Notes payable		$             27,770		$            52,088

 

The Company recorded an interest expense of $4,645 and $4,465 for the years ended December 31, 2011 and 2010, respectively.

A-15

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NOTE 6: DUE TO RELATED PARTY

 

As of December 31, 2011, the closing of the acquisition of the Company by NWE was imminent (See Note 1), and the acquisition completed on January 2, 2012. NWE had advanced the Company short term funding for drilling and exploration of oil and gas properties. The amounts advanced are due on demand, unsecured and non-interest bearing. The principal balance due to NWE as of December 31, 2011 and 2010 amounted to $163,094 and $0, respectively.

 

NOTE 7: COMMITMENTS AND CONTINGENCIES

 

Legal Costs and Contingencies

 

In the normal course of business, the Company incurs costs to hire and retain external legal counsel to advise it on regulatory, litigation and other matters. The Company expenses these costs as the related services are received.

 

If a loss is considered probable and the amount can be reasonable estimated, the Company recognizes an expense for the estimated loss.  If the Company has the potential to recover a portion of the estimated loss from a third party, the Company makes a separate assessment of recoverability and reduces the estimated loss if recovery is also deemed probable.

 

NOTE 8: STOCKHOLDERS’ EQUITY

 

The Company’s capitalization at December 31, 2011 consists of 1,000,000 authorized common shares with a par value of $1.00 per share, of which 1,000 shares are issued and outstanding, held by two (2) shareholders who are currently residents of the State of Texas. All such outstanding shares are validly issued, paid and non-assessable. There are no other outstanding securities including options and warrants outstanding as of December 31, 2011 (See Note 1 for recapitalization).

 

NOTE 9: INCOME TAXES

 

For the year ended December 31, 2010, the taxable income of 3M is recognized by the two shareholders as the income (loss) flows through the stockholders personal tax returns. Accordingly, no provision for federal or state income taxes has been made in the accompanying financial statements for the year ended December 31, 2010.

 

The following is a reconciliation of the provision for income taxes at the U.S. federal income tax rate to the income taxes reflected in the Statements of Operations for the year ended December 31, 2011:

A-16

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		December 31, 2011
Tax expense (credit) at statutory rate - federal		(34%)
State tax expense net of federal tax		-
Valuation allowance		34%
Tax expense at actual rate		-

 

The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at December 31, 2011 are as follows:

 

			December 31, 2011
Deferred tax assets:
Net operating loss carry forward		$	(18,525)
Total gross deferred tax assets			18,525
Less - valuation allowance			(18,525)
Net deferred tax assets		$	-

 

Deferred income taxes are provided for the tax effects of transactions reported in the financial statements and consist of deferred taxes related primarily to differences between the bases of certain assets and liabilities for financial and tax reporting. The deferred taxes represent the future tax return consequences of those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled.

 

The Company’s provision for income taxes differs from applying the statutory U.S. Federal income tax rate to income before income taxes. The primary differences result from deducting certain expenses for financial statement purposes but not for federal income tax purposes.

 

At December 31, 2011, the Company had net operating loss carry-forwards of approximately $54,000 for U.S. federal income tax purposes available to offset future taxable income expiring on various dates through 2031. The Company has recorded a 100% valuation allowance on the deferred tax assets due to the uncertainty of its realization. The net change in the valuation allowance during the year ended December 31, 2011 was an increase of $18,525.

 

In the normal course of business, the Company’s income tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessment by these taxing authorities. Accordingly, the Company believes that it is more likely than not that it will realize the benefits of tax positions it has taken in its tax returns or for the amount of any tax benefit that exceeds the cumulative probability threshold in accordance with FASB ASC 740-10-15. Differences between the estimated and actual amounts determined upon ultimate resolution, individually or in the aggregate, are not expected to have a material adverse effect on the company’s financial position. The Company is not under examination for any open tax years , and tax year 2011 remains open for audit.

A-17

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NOTE 10: CONCENTRATIONS

 

Concentration of Customer

 

The Company sells its oil product to one customer and gas to another customer.

 

Concentration of Credit Risk

 

The Company’s financial instruments that are potentially exposed to credit risk consist primarily of cash and cash equivalents. At certain times, the demand deposits held in banks may exceed the federally insured limits. No amounts exceeded federally insured limits as of December 31, 2011 and 2010, respectively. The Company has not experienced any losses related to these deposits.

 

NOTE 11: SUBSEQUENT EVENT

 

On January 2, 2012, NWE completed the acquisition of 100% of the issued and outstanding capital stock of the Company pursuant to a Plan and Agreement of Reorganization dated December 1, 2011, in exchange for 1,000,000 shares of NWE stock. As additional consideration, NWE paid to the two stockholders a) $35,000 in cash, (b) executed a Promissory Note of $55,000 payable to the two stockholders of the Company, payable at the rate of $10,000 per month commencing 30 days after closing of the acquisition, and (c) approximately $50,000 of debts owed to a bank by the Company guaranteed by the two stockholders of the Company. The parties further agreed that after the completion of the acquisition, the Company will become a wholly-owned subsidiary of NWE and will be run as an operating company.

 

SUPPLEMENTAL OIL AND GAS DATA (UNAUDITED)

 

The following tables set forth supplementary disclosures for oil and gas producing activities in accordance with ASC 932 (SFAS No. 69), Extractive Activities - Oil and Gas.

A-18

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Capitalized Costs Relating to Oil and Gas Producing Activities

 

		December 31,
		2011			2010
Proved oil and gas properties	$	35,056		$	35,056
Unproved oil and gas properties		14,503			-
Accumulated depletion		(307)			(141)
Net capitalized costs	$	49,252		$	34,915

 

Costs Incurred

 

A summary of costs incurred in oil and gas property acquisition, development, and exploration activities (both capitalized and charged to expense) for the year ended December 31, 2011 and 2010 are as follows:

 

		December 31, 2011			December 31, 2010
Acquisition of unproved properties	$	14,503		$	-
Acquisition of proved properties	$	-		$	35,056
Development costs	$	40,883		$	-
Exploration costs	$	-		$	-

 

Results of Operations for Oil and Gas Producing Activities

 

The following table presents the results of operations for the Company’s oil and gas producing activities for the years ended December 31, 2011 and 2010:

 

		December 31, 2011			December 31, 2010
Revenues, net of royalties	$	105,725		$	56,550
Production costs		(75,489)			(34,378)
Depletion, depreciation, and valuation allowance		(166)			(141)
Exploration costs		-			-
Income tax expense		-			-
Results of operations for producing activities (excluding corporate overhead and interest costs)	$	30,070		$	22,031

A-19

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Reserve Quantity Information

 

The following table presents the Company’s estimate of its proved oil and gas reserves all of which are located in the United States.  The Company emphasizes that reserve estimates are inherently imprecise and that estimates of reserves related to new discoveries are more imprecise than those for producing oil and gas properties.  Accordingly, the estimates are expected to change as future information becomes available.  The estimates have been prepared with the assistance of an independent petroleum reservoir engineering firm.  Oil reserves, which include condensate and natural gas liquids, are stated in barrels and gas reserves are stated in thousands of cubic feet.

 

	Oil (Bbls)
Proved reserves at:	December 31, 2011		December 31, 2010
Beginning of period	495,490		497,490
Production	(2,364)		(2,000)
Revisions of previous estimates	-		-
End of the period	493,126		495,490

 

Standardized Measure of Discounted Future Net Cash Flow and Changes Therein Relating to Proved Oil and Gas Reserves

 

The following information is based on the Company’s best estimate of the required data for the Standardized Measure of Discounted Future Net Cash Flows as of December 31, 2011 and 2010 in accordance with ASC 932, which requires the use of a 10% discount rate. This information is not the fair market value, nor does it represent the expected present value of future cash flows of the Company’s proved oil and gas reserves.

 

	December 31, 2011			December 31, 2010
Future cash inflow	$	22,190,670		$	22,297,065
Future production costs (1)		17,752,536			17,837,652
Future development costs		1,000,000			1,000,000
Future income tax expenses		1,775,254			1,783,765
Future net cash flows		1,662,880			1,675,648
10% annual discount for estimated timing of cash flows		633,266			646,034
Standardized measure of discounted future net cash flows at the end of the year	$	1,029,614		$	1,029,614

 

(1)  Production costs include oil and gas operations expense, production ad valorem taxes, transportation costs and general and administrative expense supporting the Company’s oil and gas operations.

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(B)	PRO-FORMA FINANCIAL INFORMATION

  

 

NEW WESTERN ENERGY CORPORATION AND SUBSIDIARIES

UNAUDITED PRO-FORMA FINANCIAL INFORMATION

 

The following presents our unaudited pro-forma financial information. The pro-forma adjustments to the balance sheet give effect to the acquisitions of Royal Texan Energy Co. (“RTE”) by New Western Energy Corporation (“NWE”) as if the transaction occurred on December 31, 2011. The pro-forma statements of operations give effect to the business acquisition of RTE as if the acquisition had occurred on January 1, 2011. The pro-forma adjustments are based upon available information and certain assumptions that we believe are reasonable.

 

The unaudited pro-forma financial information is for informational purposes only, and does not purport to present what our results would actually have been had this transaction actually occurred on the date presented or to project our results of operations or financial position for any future period. The information set forth below should be read together with the unaudited significant notes and assumptions to the pro-forma statements, and the Registrant’s General Form for Registration of Securities pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2010, and the audited financial statements of RTE for the years ended December 31, 2011 and 2010, including the notes thereto, included in this Form 8-K/A.

 

 

 

B-1

 

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NEW WESTERN ENERGY CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA BALANCE SHEET

DECEMBER 31, 2011

 

		Historical
		Acquirer			Acquiree				Pro-forma Adjustments						Combined
		NWEC			ROYAL TEXAN				Debit				Credit		Pro-Forma
ASSETS
Current Assets:
	Cash & cash equivalents	$	16,403		$	12,058					A1		12,058		$	18,461
									12,058		A2
											B1		10,000
	Accounts receivable, net		25,504			18,054					A1		18,054			43,558
									18,054		A2
	Note receivable		30,000			-										30,000
	Earnest deposit for acquisitions		50,000			-										50,000
	Prepaid expenses and other current assets		158,968			-										158,968
	Total current assets		280,875			30,112										300,987
Property and equipment, net			902			123,849					A1		123,849			124,751
									123,849		A2
Oil and gas properties, net			394,120			49,252					A1		49,252			443,372
									49,252		A2
Mineral properties			103,530			-										103,530
Goodwill									150,518		A2					150,518
Other assets			1,450			-										1,450
Total Assets		$	780,877		$	203,213			353,732				213,213		$	1,124,608
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
	Accounts payable	$	20,379		$	9,439			9,439		A1				$	29,818
											A2		9,439
	Accrued expenses		10,550			2,205			2,205		A1					12,755
											A2		2,205
	Notes payable - current portion		100,000			24,318			24,318		A1					124,318
											A2		24,318
	Note payable and consideration payable to stockholders		-			-					A2		90,000			90,000
	Payable to related party		143,252			163,094			163,094		A1					143,252
	Total current liabilities		274,181			199,056										400,143
Note payable			-			27,770			27,770		A1					27,770
											A2		27,770
	Total liabilities		274,181			226,826										427,913
Stockholders' Equity:
	Common stock, $0.0001 par value, 100,000,000 shares authorized, 64,226,867 shares issued and outstanding at December 31, 2011, 65,226,867 shares issued and outstanding as effected for acquisition		6,422			-					A2		100			6,522
	Common stock, $1.00 par value, 1,000,000 shares authorized, 1,000 shares issued and outstanding		-			1,000			1,000		A1					-
	Additional paid in capital		1,911,161			29,872			29,872		A1					2,111,061
											A2		199,900
	Retained earnings (deficit)		(1,410,887)			(54,485)					A1		54,485			(1,420,887)
									10,000		B1
	Total stockholders' equity (deficit)		506,696			(23,613)										696,696
Total Liabilities and Stockholders' Equity(Deficit)		$	780,877		$	203,213		$	267,698			$	408,217		$	1,124,608

See Unaudited Significant Notes and Assumptions to Pro Forma Financial Statements.

 

B-2

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NEW WESTERN ENERGY CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2011

				Historical						Pro Forma
				Acquirer			Acquiree			Adjustments							Combined
				NWEC			ROYAL TEXAN			Debit				Credit			Pro Forma
Revenues			$	97,690		$	105,725									$	203,415
Operating expenses
	Depreciation and depletion			1,704			17,229										18,933
	General & administrative			270,959			25,749			10,000		B1					306,708
	Intangible drilling and completion			40,541			40,883										81,424
	Oil and gas production			58,647			75,489										134,136
		Total operating expenses		371,851			159,350										541,201
Income (loss) from operations				(274,161)			(53,625)										(337,786)
Non-operating income (expense):
	Interest expense			(3,750)			(4,645)										(8,395)
	Loss on sale of assets			(95,000)			-										(95,000)
		Total non-operating income (expense)		(98,750)			(4,645)										(103,395)
Income (loss) from continuing operations before income tax				(372,911)			(58,270)										(441,181)
Provision for income tax				829			-										829
Net loss allocable to common shareholders				(373,740)			(58,270)			10,000				-			(442,010)
Net loss per common share and equivalents -
basic and diluted loss from operations																$	(0.01)
Weighted average shares of share capital outstanding
- basic & diluted				64,174,026													65,174,026
Weighted average number of shares used to compute basic and diluted loss per share for the year ended December 31, 2011 is the same since the effect of dilutive securities is anti-dilutive

See Unaudited Significant Notes and Assumptions to Pro Forma Financial Statements.

 

B-3

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NEW WESTERN ENERGY CORPORATION AND SUBSIDIARIES

UNAUDITED SIGNIFICANT NOTES AND ASSUMPTIONS TO PRO-FORMA FINANCIAL STATEMENTS

 

On December 1, 2011, we entered into a Plan and Agreement of Reorganization to acquire 100% of the issued and outstanding capital stock of Royal Texan Energy Co. in exchange for in exchange for 1,000,000 shares of the Registrant’s common stock issued equally to Brent Hatchett and Brook Hatchett, the stockholders of RTE. As additional consideration, the Registrant paid to the RTE stockholders (a) $35,000 in cash (b) executed a promissory note of $55,000 payable at the rate of $10,000 per month commencing 30 days after the closing of acquisition of RTE, and (c) approximately $50,000 of debt owed to two banks by RTE and guaranteed by the two stockholders. After the completion of acquisition, RTE became a wholly-owned subsidiary of the Registrant and will conduct business as a separate operating company.

 

The common shares issued by the Registrant to Brent Hatchett and Brook Hatchett have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

 

The accompanying unaudited pro-forma financial information reflects the financial statements of New Western Energy Corporation, and its wholly-owned subsidiary New Western Texas Oil and Gas Corp. The pro-forma adjustments to the balance sheet give effect to the acquisition of RTE as if the transaction occurred on December 31, 2011. The pro-forma adjustments to the statements of operations give effect to the acquisition as if the transaction occurred on January 1, 2011.

 

Significant assumptions include:

 

The shares issued to the owners of RTE were calculated contractually valued at $200,000 based on issuance of 1,000,000 shares of our common stock valued at $0.20 per share, based on the closing price per share on the date of closing of the transaction.

 

We incurred a non-recurring $10,000 charge of professional fees for legal and accounting related to the acquisition which is reflected as adjustments to accumulated deficit at December 31, 2011.

 

B-4

 

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The purchase price was allocated first to record identifiable assets and liabilities at their fair value and the remainder to goodwill based upon management’s experience. The purchase price was allocated as follows:

 

NEW WESTERN ENERGY CORPORATION AND SUBSIDIARIES
FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
JANUARY 2, 2012
Assets acquired:
Cash and cash equivalents	$	12,058
Accounts receivable		18,054
Property and equipment, net		123,849
Investment in oil and gas properties, net		49,252
Goodwill		150,518
Total assets acquired	$	353,731
Liabilities assumed:
Accounts payable	$	(9,439)
Accrued expenses		(2,205)
Notes payable		(52,087)
Total liabilities assumed		(63,731)
Net assets acquired	$	290,000
Purchase consideration:
Common stock - 1,000,000 shares	$	200,000
Cash consideration		35,000
Note payable to stockholders		55,000
Total Consideration Paid	$	290,000

 

B-5

 

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The following reflect the pro-forma adjustments at December 31, 2011:

 

NEW WESTERN ENERGY CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA ADJUSTMENTS FOR THE YEAR ENDED DECEMBER 31, 2011
A. Royal Texan Energy Co. (Acquiree)				Debit			Credit
A1		Cash and cash equivalents				$	12,058
		Accounts receivable					18,054
		Property and equipment					123,849
		Oil and gas properties					49,252
		Accounts payable	$	9,439
		Accrued expenses		2,205
		Payable to related party		163,094
		Notes payable		52,088
		Common stock		1,000
		Additional paid-in capital		29,872
		Retained earnings					54,485
		To remove the book value of assets and liabilities of the acquiree
A2		Cash and cash equivalents	$	12,058
		Accounts receivable		18,054
		Property and equipment, net		123,849
		Oil and gas properties, net		49,252
		Goodwill		150,518
		Accounts payable				$	9,439
		Accrued expenses					2,205
		Notes payable					52,087
		Note payable and consideration payable to stockholders					90,000
		Common stock					200,000
		To record at fair value of assets acquired and liabilities assumed pursuant to the purchase agreement and to record purchase consideration at fair value.
B.  New Western Energy Corporation (Acquiror)
B1		Accumulated deficit	$	10,000
		Cash				$	10,000
		To record non-recurring professional fees (acquirer expense) incurred in the acquisitions
		Total	$	621,429		$	621,429
See Unaudited Significant Notes and Assumptions to Pro Forma Financial Statements

 

B-6

 

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