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v2.4.0.6
REVERSE MERGER TRANSACTION
12 Months Ended
Dec. 31, 2011
Notes to Financial Statements  
NOTE 3 - REVERSE MERGER TRANSACTION

On August 9, 2011, Petron Energy II, Inc. (“PEII) entered into a stock purchase agreement with three (3) shareholders of Restaurant Concepts of America, Inc. (“RCA”).  The agreement called for PEII to purchase 10,000,000 shares of RCA’s common stock for $232,750 ($0.02375 per share) from the three shareholders.  The shares purchased represented ninety-eight point nine percent (98.9%) of the total outstanding common shares of RCA at August 9, 2011.  Immediately after the purchase, PEII cancelled nine million four hundred thousand (9,400,000) shares of RCA’s common stock resulting in the following stock ownership, which was subsequently effected by a one hundred to one forward stock split:

 

    Pre-Split     Post-Split  
             
Petron Energy II, Inc.     600,000       60,000,000  
                 
Other Shareholders     110,003       11,000,300  
                 
Total RCA Common                
     Shares outstanding     710,003       71,000,300  

 

The 60,000,000 shares of RCA’s common stock owned by PEII were to be exchanged for PEII’s common and preferred shares owned by its shareholders as of August 9, 2011.  The exchange of shares was effected as follows:

 

 

    Outstanding        
    Shares     RCA's Shares  
Type of Shares   PEII     Issued  
             
Preferred Shares     13,629,261       27,258,522  
                 
Common Shares     51,252,956       51,252,956  
                 
      64,882,217       78,511,478  
                 
Other Shareholders             11,000,300  
Total Common Shares outstanding                
          after the exchange             89,511,778  

 

The original stock certificate for 60,000,000 shares of common stock issued to PEII was cancelled upon the issuance of the 78,511,478 shares of common stock reflected above.

 

After the reverse merger, PEII sold 21,215,783 shares of common stock at $0.06 per share, resulting in a total of 110,727,511 outstanding common shares at December 31, 2011.

 

After PEII gained control of RCA, PEII’s name was changed to “Petron Energy Special Corporation” and RCA’s name was changed to “Petron Energy II, Inc.” The two entities were statutorially merged with the surviving entity assuming the name Petron Energy II, Inc. on January 3, 2012.

 

As of the date PEII gained control of RCA, RCA’s balance sheet was as follows (unaudited):

 

Assets   $ -  
         
Current Liabilities        
     Accrued Liabilites   $ 79,399  
     Shareholder Payable     34,675  
      114,074  
Stockholders' Deficit        
     Common Stock, $0.001 par value,        
          1,000,000,000 shares authorized,        
          71,000,300 issued and outstanding     71,000  
     Paid-in Capital     (44,499 )
         
     Retained Deficit at August 31, 2010     (111,307 )
          Operating Loss from Auguts 31, 2010        
          to merger date     (29,268 )
               Total Retained Deficit     (140,575 )
     Total Stockholders' Deficit     (114,074 )
         
Total Liabilities and Stockholders' Deficit   $ -  

 

Included in the Statement of Stockholders’ Equity (Deficit) for the year ended December 31, 2011, is a reduction in paid-in capital related to the reverse merger as follows:

 

Description   Amount  
       
Purchase of Common Stock   $ (232,750 )
Restaurant Concepts of America, Inc.        
     Accumulated Stockholders' Deficit     (114,074 )
Related Party Debt Forgiveness     164,413  
         
    $ (182,411 )

 

The following summarizes, on a pro forma basis, the effect on PEII’s common and preferred stock and additional paid-in capital as of December 31, 2009 giving effect to RCA’s outstanding shares and the conversion of preferred stock to common stock:

 

                            Additional  
    Preferred Stock     Common Stock     Paid-in  
    Number     Amount     Number     Amount     Capital  
                               
Balance as reported on December 31, 2009     10,137,737     $ 101,377       41,557,284     $ 415,573     $ 5,679,928  
                                         
Conversion of Preferred Stock to Common     (10,137,737 )     (101,377 )     20,267,474       202,675       (101,298 )
                                         
Restaurant Concepts of America, Inc. shares     -       -       11,000,300       11,000       (11,000 )
                                         
Change in par value from $0.01 to $0.001     -       -       -       (556,423 )     556,423  
                                         
      (10,137,737 )     (101,377 )     31,267,774       (342,748 )     444,125  
                                         
Balance as restated on December 31, 2009     -     $ -       72,825,058     $ 72,825     $ 6,124,053