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EX-32.1 - RedHawk Holdings Corp.ex32-1.txt

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                  For the quarterly period ended April 30, 2012

                                       or

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    For the transition period from _____________ to _____________

                        Commission File Number 000-54323


                            Independence Energy Corp.
             (Exact name of registrant as specified in its charter)

       Nevada                                           20-3866475
(State of incorporation)                    (I.R.S. Employer Identification No.)

                              3020   Old Ranch Parkway, Suite 300, Seal Beach,
                                    CA 90740
                    (Address of principal executive offices)

                                 (562) 799-5588
                         (Registrant's telephone number)

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. [X] YES [ ] NO

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 (ss.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). [X] YES [ ] NO

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small 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 [ ]                        Accelerated filer [ ]
Non-accelerated filer [ ]                          Smaller reporting company [X]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act [ ] YES [X] NO

As of June 19, 2012, there were 24,360,861 shares of the Registrant's $0.001 par
value common stock issued and outstanding.

INDEPENDENCE ENERGY CORP. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION............................................... 3 Item 1. Financial Statements............................................. 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................ 17 Item 3. Quantitative and Qualitative Disclosures About Market Risk....... 23 Item 4. Controls and Procedures.......................................... 23 PART II - OTHER INFORMATION.................................................. 24 Item 1. Legal Proceedings................................................ 24 Item 1A. Risk Factors..................................................... 24 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds...... 24 Item 3. Defaults Upon Senior Securities.................................. 24 Item 4. Mine Safety Disclosures.......................................... 24 Item 5. Other Information................................................ 24 Item 6. Exhibits......................................................... 25 SIGNATURES .................................................................. 26 2
PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. 3
INDEPENDENCE ENERGY CORP. (An Exploration Stage Company) Financial Statements April 30, 2012 Index ----- Unaudited Balance Sheets................................................. 5 Unaudited Statements of Operations....................................... 6 Unaudited Statements of Cash Flows....................................... 7 Notes to the Financial Statements........................................ 8 4
INDEPENDENCE ENERGY CORP. (An Exploration Stage Company) BALANCE SHEETS April 30, 2012 January 31, 2012 -------------- ---------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 39,331 $ 14,790 Amounts receivable 3,080 1,607 Deposits and prepaid expenses 10,588 23,063 --------- --------- TOTAL CURRENT ASSETS 52,999 39,460 Oil & gas property 255,566 53,410 --------- --------- TOTAL ASSETS $ 308,565 $ 92,870 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable & accrued liabilities $ 3,128 $ 9,349 Due to related party -- 675 Loans payable 156,697 156,697 Loans payable to director -- -- --------- --------- TOTAL CURRENT LIABILITIES 159,825 166,721 STOCKHOLDERS' EQUITY (DEFICIT): Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding -- -- Common stock, $0.001 par value, 75,000,000 shares authorized, 24,238,888 shares issued and outstanding at April 30, 2012 and January 31, 2012 24,239 24,000 Additional paid in capital 290,761 36,000 Deficit accumulated during the exploration stage (166,260) (133,851) --------- --------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 148,740 (73,851) --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 308,565 $ 92,870 ========= ========= The accompanying notes are an integral part of these financial statements 5
INDEPENDENCE ENERGY CORP. (An Exploration Stage Company) STATEMENTS OF OPERATIONS For the Period From November 30, 2005 Three Months Ended Three Months Ended (Inception) through April 30, 2012 April 30, 2011 April 30, 2012 -------------- -------------- -------------- REVENUES $ -- $ -- $ -- ------------ ------------ ------------ TOTAL REVENUES -- -- -- OPERATING EXPENSES: Professional fees 17,500 4,000 90,901 General and administrative 14,909 600 75,456 ------------ ------------ ------------ TOTAL OPERATING EXPENSES 32,409 4,600 166,357 ------------ ------------ ------------ Other income (expenses) INTEREST EXPENSE Gain from currency exchange -- -- 97 ------------ ------------ ------------ TOTAL OTHER INCOME (EXPENSES) -- -- 97 ------------ ------------ ------------ Net (loss) $ (32,409) $ (4,600) $ (166,260) ============ ============ ============ Weighted average number of shares outstanding during the period - basic and diluted 24,142,592 24,000,000 ============ ============ Net loss per share - basic and diluted $ (0.00) $ (0.00) ============ ============ The accompanying notes are an integral part of these financial statements 6
INDEPENDENCE ENERGY CORP. (An Exploration Stage Company) STATEMENTS OF CASH FLOWS For the Period From November 30, 2005 Three Months Ended Three Months Ended (Inception) through April 30, 2012 April 30, 2011 April 30, 2012 -------------- -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (32,409) $ (4,600) $(166,260) Adjustments to reconcile net (loss) to net cash used in operating activities: Depreciation and depletion -- -- -- Imputed interest -- -- -- Issuance of common stock for services rendered -- -- -- Changes in operating assets and liabilities: -- -- Amounts receivable (1,473) -- (3,080) Deposits and prepaid expenses 12,475 -- (10,588) Accounts payable & accrued liabilities (6,221) (320) 3,128 Due to related party (675) (375) -- --------- --------- --------- CASH (USED IN) OPERATING ACTIVITIES (28,303) (5,295) (176,800) --------- --------- --------- CASH FLOWS TO INVESTING ACTIVITIES Oil & gas property expenditures (202,156) -- (255,566) --------- --------- --------- CASH (USED IN) INVESTING ACTIVITIES (202,156) -- (255,566) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from subscriptions of common stock 239 -- 60,239 Paid in capital 254,761 254,761 Proceeds from loans payable -- -- 156,697 Proceeds from loans payable to director -- 5,000 33,000 Repayment of loans payable to director -- -- (33,000) --------- --------- --------- CASH PROVIDED BY FINANCING ACTIVITIES 255,000 5,000 471,697 --------- --------- --------- INCREASE (DECREASE) IN CASH 24,541 (295) 39,331 CASH AT BEGINNING OF PERIOD 14,790 1,311 -- --------- --------- --------- CASH AT END OF PERIOD $ 39,331 $ 1,016 $ 39,331 ========= ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for income taxes $ -- $ -- $ -- ========= ========= ========= Cash paid for interest expense $ -- $ -- $ -- ========= ========= ========= SUPPLEMENTALNON-CASH FINANCING AND INVESTING ACTIVITIES Issuance of common stock for services rendered $ -- $ -- $ -- ========= ========= ========= The accompanying notes are an integral part of these financial statements 7
INDEPENDENCE ENERGY, CORP. (An Exploration Stage Company) NOTES TO THE FINANCIAL STATEMENTS For the period ending April 30, 2012 and For the period of November 30, 2005 (Inception) through April 30, 2012 NOTE 1 - NATURE OF OPERATIONS Independence Energy, Corp ("Company") was incorporated in the State of Nevada on November 30, 2005. The Company was organized to explore natural resource properties, currently in The United States. NOTE 2 - GOING CONCERN These financial statements are presented on the basis that the Company is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business over a reasonable length of time. As of April 30, 2012, the Company had $39,331, in cash, working capital deficit of $106,826 and stockholders' equity of $148,740 and accumulated net losses of $166,260 since inception. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Its continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing or refinancing as may be required, to develop commercially viable oil and gas reserves, and ultimately to establish profitable operations. Management's plans for the continuation of the Company as a going concern include financing the Company's operations through issuance of its common stock. If the Company is unable to complete its financing requirements or achieve revenue as projected, it will then modify its expenditures and plan of operations to coincide with the actual financing completed and actual operating revenues. There are no assurances, however, with respect to the future success of these plans. Unless otherwise indicated, amounts provided in these notes to the financial statements pertain to continuing operations. The Company is not currently earning any revenues. NOTE 3 - SUMMARY OF ACCOUNTING POLICIES Basis of Presentation These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in United States (US) dollars. The Company has not produced any revenue from its principal business and is an exploration stage company as defined by the Financial Accounting Standard Board (FASB) Accounting Standard Codification (ASC) 270. "Accounting and Reporting by Development Stage Enterprises". Use of Estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles (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 these financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 8
INDEPENDENCE ENERGY, CORP. (An Exploration Stage Company) NOTES TO THE FINANCIAL STATEMENTS For the period ending April 30, 2012 and For the period of November 30, 2005 (Inception) through April 30, 2012 NOTE 3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED) Regulatory Matters The Company and its oil and gas property interests are subject to a variety of Federal and State regulations governing land use, health, safety and environmental matters. The Company's management believes it has been in substantial compliance with all such regulations, and is unaware of any pending action or proceeding relating to regulatory matters that would affect the financial position of the Company. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Stock-Based Compensation The Company accounts for stock options issued to employees in accordance with the provisions of FASB ASC 718, "Stock Compensation". As such, compensation cost is measured on the date of grant as the excess of current market price of the underlying stock over the exercise price. Such compensation amounts are amortized over the respective vesting periods of the option grant. The Company adopted the disclosure provisions of FASB ASC 718, "Accounting for Stock-Based Compensation," and FASB ASC 718, which allows entities to provide pro forma net Income (loss) and pro forma earnings (loss) per share disclosures for employee stock option grants as if the fair-valued based method has been applied. The Company accounts for stock options or warrants issued to non-employees for goods or services in accordance with the fair value method of FASB ASC 718. Under this method, the Company records an expense equal to the fair value of the options or warrants issued. The fair value is computed using an options pricing model. Impaired Asset Policy The Company periodically reviews its long-lived assets when applicable to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable, pursuant to guidance established in ASC "Property, Plant, and Equipment". The Company determines impairment by comparing the discounted future cash flows estimated to be generated by its assets to their respective carrying amounts. If impairment is deemed to exist, the assets will be written down to fair value. Start-up Expenses The Company has adopted Statement of Position (SOP) No. 98-5 ("SOP 98-5"), "Reporting the Costs of Start-up Activities", which requires that costs associated with start-up activities be expensed as incurred. Accordingly, start-up costs associated with the Company's formation have been included in the Company's general and administrative expenses for the period from inception on November 30, 2005 to April 30, 2012. 9
INDEPENDENCE ENERGY, CORP. (An Exploration Stage Company) NOTES TO THE FINANCIAL STATEMENTS For the period ending April 30, 2012 and For the period of November 30, 2005 (Inception) through April 30, 2012 NOTE 3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED) Oil and Gas Property Costs Oil and gas acquisition, exploration and development costs are capitalized as incurred until such time as economic reserves are quantified. From that time forward, the Company will capitalize all costs to the extent that future cash flows from oil and gas revenues equal or exceed the costs deferred. The deferred costs will be amortized over the recoverable reserves when a property reaches commercial production. Costs related to site restoration programs will be accrued over the life of the project. Foreign Currency Translation The Company's functional currency is the US dollar as substantially all of the Company's operations are in the United States. The Company used the United States dollar as its reporting currency for consistency with registrants of the Securities and Exchange Commission and in accordance with the ASC 830 "Foreign Currency Translation". Assets and liabilities that are denominated in a foreign currency are translated at the exchange rate in effect at the year end and capital accounts are translated at historical rates. Income statement accounts are translated at the average rates of exchange prevailing during the period. Translation adjustments from the use of different exchange rates from period to period are included in the Comprehensive Income statement account in stockholders' (deficit) equity, if applicable. There were no translation adjustments as of April 30, 2012. Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date. If applicable, exchange gains and losses are included in other items on the statements of operations. There were no exchange gains or losses as of April 30, 2012. Basic and Diluted Loss Per Share The Company computed basic and diluted loss per share amounts pursuant to the ASC 260 "Earnings per Share." There are no potentially dilutive shares outstanding and, accordingly, dilutive per share amounts have not been presented in the accompanying statements of operations. Fair Value of Financial Instruments ASC 820, "Fair Value Measurement and Disclosures," requires disclosures of information regarding the fair value of certain financial instruments for which it is practicable to estimate the value. For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale of liquidation. 10
INDEPENDENCE ENERGY, CORP. (An Exploration Stage Company) NOTES TO THE FINANCIAL STATEMENTS For the period ending April 30, 2012 and For the period of November 30, 2005 (Inception) through April 30, 2012 NOTE 3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED) Comprehensive Loss ASC 220, "Reporting Comprehensive Income," establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As of April 30, 2012, the Company has no items that represent comprehensive loss and therefore, has not included a schedule of comprehensive loss in financial statements. Income Taxes Income taxes are recognized in accordance with ASC 740, "Income Taxes", whereby deferred Income tax liabilities or assets at the end of each period are determined using the tax rate expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized. Recent Accounting Pronouncements In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an impairment loss, if any, under the second step of the goodwill impairment test. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, Including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity's financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance is not expected to have a material impact on the Company's financial position or results of operations. In June 2011, the FASB issued ASU 2011-05, "Comprehensive Income (Topic 220): Presentation of Comprehensive Income", which is effective for annual reporting periods beginning after December 15, 2011. ASU 2011-05 will become effective for the Company on December 1, 2012. This guidance eliminates the option to present the components of other comprehensive Income as part of the statement of changes in stockholders' equity. In addition, items of other comprehensive Income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to Increase the prominence of other comprehensive Income in financial statements by requiring that such amounts be presented either in a single continuous statement of Income and comprehensive Income or separately in consecutive statements of Income and comprehensive Income. The adoption of ASU 2011-05 is not expected to have a material impact on our financial position or results of operations. 11
INDEPENDENCE ENERGY, CORP. (An Exploration Stage Company) NOTES TO THE FINANCIAL STATEMENTS For the period ending April 30, 2012 and For the period of November 30, 2005 (Inception) through April 30, 2012 NOTE 3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED) In May 2011, the FASB issued ASU 2011-04, "Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs", which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update Include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity's use of a nonfinancial asset that is different from the asset's highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 will become effective for the Company on December 1, 2012. We are currently evaluating ASU 2011-04 and have not yet determined the impact that adoption will have on our financial statements. In April 2011, the FASB issued ASU 2011-02, "Receivables (Topic 310): A Creditor's Determination of Whether a Restructuring is a Troubled Debt Restructuring". This amendment explains which modifications constitute troubled debt restructurings ("TDR"). Under the new guidance, the definition of a troubled debt restructuring remains essentially unchanged, and for a loan modification to be considered a TDR, certain basic criteria must still be met. For public companies, the new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructuring occurring on or after the beginning of the fiscal year of adoption. ASU 2011-02 has become effective for the Company on September 1, 2012. The Company does not believe that the guidance will have a material impact on its financial statements. In December 2010, the FASB issued ASU 2010-29, "Business Combinations (Topic 805): Disclosure of supplementary pro forma information for business combinations." This update changes the disclosure of pro forma information for business combinations. These changes clarify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. Also, the existing supplemental pro forma disclosures were expanded to Include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination Included in the reported pro forma revenue and earnings. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements. In December 2010, the FASB issued ASU 2010-28, "Intangible -Goodwill and Other (Topic 350): When to perform Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts." This update requires an entity to perform all steps in the test for a reporting unit whose carrying value is zero or negative if it is more likely than not (more than 50%) that a goodwill impairment exists based on qualitative factors, resulting in the elimination of an entity's ability to assert that such a reporting unit's goodwill is not impaired and additional testing is not necessary despite the existence of qualitative factors that indicate otherwise. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our financial statements. 12
INDEPENDENCE ENERGY, CORP. (An Exploration Stage Company) NOTES TO THE FINANCIAL STATEMENTS For the period ending April 30, 2012 and For the period of November 30, 2005 (Inception) through April 30, 2012 NOTE 3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED) In January 2010, the FASB has published ASU 2010-02 "Consolidation (Topic 810) - Accounting and Reporting for Decreases in Ownership of a Subsidiary--a Scope Clarification," as codified in ASC 810, "Consolidation." ASU No. 2010-02 applies retrospectively to April 1, 2009, our adoption date for ASC 810-10-65-1 as previously discussed in this financial note. This ASU clarifies the applicable scope of ASC 810 for a decrease in ownership in a subsidiary or an exchange of a group of assets that is a business or nonprofit activity. The ASU also requires expanded disclosures. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. The adoption of this ASU did not have a material impact on our financial statements; however, it may affect future divestitures of subsidiaries or groups of assets within its scope. In January 2010, the FASB issued Accounting Standards Update No. 2010-06 applicable to FASB ASC 820-10, IMPROVING DISCLOSURES ABOUT FAIR VALUE MEASUREMENTS. The guidance requires entities to disclose significant transfers in and out of fair value hierarchy levels and the reasons for the transfers and to present information about purchases, sales, issuances and settlements separately in the reconciliation of fair value measurements using significant unobservable inputs (Level 3). Additionally, the guidance clarifies that a reporting entity should provide fair value measurements for each class of assets and liabilities and disclose the inputs and valuation techniques used for fair value measurements using significant other observable inputs (Level 2) and significant unobservable inputs (Level 3). This guidance is effective for interim and annual periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances and settlements in the Level 3 reconciliation, which will be effective for interim and annual periods beginning after December 15, 2010. As this guidance provides only disclosure requirements, the adoption of this standard did not impact the Company's results of operations, cash flows or financial positions. Other ASUs not effective until after April 30, 2012, are not expected to have a significant effect on the Company's financial position or results of operations. NOTE 4 - OIL AND GAS LEASES On December 15, 2011, we closed the acquisition of a 2.5% interest in the Quinlan Lease from Wise Oil and Gas LLC, with the option to increase that interest to 10%. On December 23, 2011 we closed an additional 2.5% for total of 5%. The cost of 1% of interest in the Quinlan Lease is $15,616. The Quinlan Lease is located in Pottawatomie County, Oklahoma, within the NE Shawnee Field Township 11 North, Range 4 East. The Quinlan 1, 2, 3 and 4 wells are all located within Section 19. The four wells lie between the Nemaha ridge to the west and then on to the west flank of the Seminloe-Cushing ridge (Hunton Uplift) to the East and North of Pauls Valley. Effective March 1, 2012, Independence Energy Corp., paid an additional $78,080 to Wise Oil and Gas for an additional 5% participation in the Quinlan 1, 2 and 3 wells located in Pottawatomie County, Oklahoma at a cost of $15,616 per 1%. Independence Energy Corp. now holds a 10% interest in the Quinlan 1, 2 and 3 wells more fully described in our Current Report on Form 8-K filed on January 30, 2012. 13
INDEPENDENCE ENERGY, CORP. (An Exploration Stage Company) NOTES TO THE FINANCIAL STATEMENTS For the period ending April 30, 2012 and For the period of November 30, 2005 (Inception) through April 30, 2012 NOTE 4 - OIL AND GAS LEASES (CONTINUED) Effective March 29, 2012, Independence Energy Corp., acquired a 5% working interest, on a seventy percent net revenue interest, in a drilling program in Coleman County, Texas. The interest was acquired from MontCrest Energy, Corp. for total consideration of $115,000. The Company follows the full cost method of accounting for costs of oil and gas properties. Under this method, only those exploration and development costs that relate directly to specific oil and gas wells are capitalized; costs that do not relate directly to specific wells are charged to expense. Producing, non-producing and unproven properties are assessed annually, or more frequently as economic events indicate, for potential impairment. This consists of comparing the carrying value of the asset with the asset's expected future undiscounted cash flows without interest costs. Estimates of expected future cash flows represent management's best estimate based on reasonable and supportable assumptions. Proven oil and gas properties will be reviewed for impairment. No impairment losses were recognized for the year ended April 30, 2012 (April 30, 2011 - $nil). Capitalized costs of oil and gas properties will be depleted using the unit-of-production method when the property is placed into commercial production. Substantially all of the Company's oil and gas activities are conducted jointly with others. The accounts reflect only the Company's proportionate interest in such activities. NOTE 5 - IMPAIRMENT OF LONG LIVED ASSETS The Company periodically reviews its long-lived assets when applicable to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable, pursuant to guidance established in ASC "Property, Plant, and Equipment". The Company determines impairment by comparing the discounted future cash flows estimated to be generated by its assets to their respective carrying amounts. If impairment is deemed to exist, the assets will be written down to fair value. NOTE 6 - STOCKHOLDERS' EQUITY Transactions, other than employees' stock issuance, are in accordance with paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair value of the consideration received. Transactions with employees' stock issuance are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, or whichever is more readily determinable. On November 30, 2005 the Company issued a total of 12,000,000 shares of common stock to one director for cash in the amount of $10,000. On June 12, 2006 the Company issued 12,000,000 units from the Company's registered SB-2 offering reflecting 12,000,000 shares of common stock. On August 12, 2008 the Company effected a 12 for 1 forward split of its issued and outstanding share capital such that every one share of common stock issued and outstanding prior to the split was exchanged for twelve post-split shares of common stock. The number of shares referred to in the previous paragraphs is post-split number of shares. 14
INDEPENDENCE ENERGY, CORP. (An Exploration Stage Company) NOTES TO THE FINANCIAL STATEMENTS For the period ending April 30, 2012 and For the period of November 30, 2005 (Inception) through April 30, 2012 NOTE 6 - STOCKHOLDERS' EQUITY (CONTINUED) The Company's post-split authorized capital remains unchanged at 75,000,000 shares of common stock with a par value of $0.001 per share. All share amounts have been retroactively adjusted for all periods. On March 15, 2012, we issued an aggregate of 100,000 shares of our common stock at a price of $1.30 per share to one (1) non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933), in an offshore transaction relying on Regulation S of the Securities Act of 1933, for aggregate gross proceeds of $130,000. On March 1, 2012, we issued an aggregate of 138,888 shares of our common stock at a price of $0.90 per share to one (1) non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933), in an offshore transaction relying on Regulation S of the Securities Act of 1933, for aggregate gross proceeds of $125,000. Common stock, $ 0.001 par value: 75,000,000 shares authorized; 24,288,888 shares issued and outstanding. Preferred stock, $0.001 par value: 10,000,000 shares authorized; none share issued and outstanding. As of April 30, 2012 the Company had 24,288,888, shares of common stock issued and outstanding. NOTE 7 - LOANS PAYABLE As of April 30, 2012, the Company had received a loan in the amount of $156,697 from an unrelated third party. The funds are currently non-interest bearing, unsecured, and do not have any specific repayment terms. NOTE 8 - SUBSEQUENT EVENTS During the period ended April 30, 2012 the Company evaluated the potential of any subsequent events and determined that the following events occurred subsequent to April 30, 2012. On May 15, 2012, we issued an aggregate of 50,000 shares of our common stock at a price of $2.50 per share to one (1) non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933), in an offshore transaction relying on Regulation S of the Securities Act of 1933, for aggregate gross proceeds of $125,000.On May 24, 2012 Independence Energy Corp. (the "Company") entered into a financing agreement (the "Financing Agreement") with one investor pursuant to which, the investor will make available of up to $1,000,000 by way of advances until May 24, 2013 (the "Completion Date") in accordance with the terms of the Financing Agreement. The Completion Date may be extended for an additional term of up to twelve months at the option of the Company or the investor upon written notice on or before the Completion Date in accordance with the notice provisions of the Financing Agreement. Upon receipt of an advance from the investor under the terms of the Financing Agreement, the Company will issue to the investor that number of shares of the Company at a price equal 90% of the average of the closing price of the Company's common stock, for the five (5) Banking Days immediately preceding the date of the advance. 15
INDEPENDENCE ENERGY, CORP. (An Exploration Stage Company) NOTES TO THE FINANCIAL STATEMENTS For the period ending April 30, 2012 and For the period of November 30, 2005 (Inception) through April 30, 2012 NOTE 8 - SUBSEQUENT EVENTS (CONTINUED) On June 6, 2012, the Company provided notice pursuant to the terms of the Financing Agreement for an advance of $200,000. Subsequently, the Company has issued 71,943 shares of common stock at a price of $2.78 which is the amount equal to 90% of the average of the closing price of the Company's common stock, for the five (5) Banking Days immediately preceding the date of the advance. All of these shares were issued pursuant to an exemption from registration relying on Section 4(2) of the Securities Act of 1933. On June 7, 2012, our board of directors approved to effect a 5 new for one (1) old forward split of our authorized and issued and outstanding shares of common stock. Upon effect of the forward split, our authorized capital will be increased from 75,000,000 to 375,000,000 shares of common stock and correspondingly, our issued and outstanding shares of common stock will be increased from 24,360,831 to 121,804,155 shares of common stock, all with a par value of $0.001increased from 24,360,831 to 121,804,155 shares of common stock, all with a par value of $0.001, subject to any share issuances between now and the effective date of the forward split. On May 29, 2012 the Company entered into and closed a purchaser agreement and bill of sale to acquire a 2.5% working interest (on a 70% net revenue interest) in two oil and gas wells: the Taylor - MEI # 113 and Taylor - MEI # 115 from MontCrest Energy, Inc. The wells are located on MontCrest's Taylor Lease in Coleman County, Texas. The 2.5% interest was acquired for total consideration of $82,500. The interest includes approximately 20 acres of land surrounding each well above the measured depth of four thousand feet. The wells are located within T.&N.O.R.R Survey No. 28, Abstract 1667 in Coleman County, Texas. 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our unaudited financial statements are stated in United States dollars and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report. In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "common shares" refer to the common shares in our capital stock. As used in this quarterly report, the terms "we", "us", "our" and "our company" mean Independence Energy Corp., unless otherwise stated. CORPORATE OVERVIEW We were incorporated in the State of Nevada on November 30, 2005 under the name "Oliver Creek Resources Inc." At inception, we were an exploration stage company engaged in the acquisition, exploration and development of natural resource properties. Effective August 12, 2008, we effected a 12 for 1 forward stock split of our issued and outstanding common stock. As a result, our authorized capital remains at 75,000,000 shares of common stock with a par value of $0.001 and our issued and outstanding shares increased from 2,000,000 shares of common stock to 24,000,000 shares of common stock. Also effective August 12, 2008, we changed our name from "Oliver Creek Resources Inc." to "Independence Energy Corp." The name change and forward stock split became effective with the Over-the-Counter Bulletin Board at the opening for trading on August 12, 2008 under the new stock symbol "IDNG". CURRENT BUSINESS We are an oil and gas company engaged in the exploration for and production of oil and natural gas, throughout the United States. On December 15, 2011, we closed the acquisition of a 2.5% interest in the Quinlan Lease from Wise Oil and Gas LLC, with the option to increase that interest to 10%. On the closing of the acquisition on December 15, 2011, we began generating revenue from the operating well on the property even though the well is in the E&E stage (Exploration and Evaluation). On December 23, 2011 we closed an additional 2.5% for a total of 5%. The Quinlan Lease is located in Pottawatomie County, Oklahoma. 17
Wise Oil and Gas is the operator of the Quinlan Lease. Wise Oil and Gas has been a fully licensed oil and gas operator since 1989 in the State of Oklahoma. Wise Oil and Gas own and operate wells throughout the State of Oklahoma and continue to do so since 1989. Wise Oil and Gas is the operator of our company's working interest in the Quinlan project. We have acquired a percentage working interest in an oil and gas property. If the property is viable and can be developed, we will receive a pro-rata share of any revenues generated from the property, equivalent to our percentage working interest. If the property is not viable, we expect the operator to plug the wells; however, we will not be responsible for any portion of the costs related to the plugging of the wells. There are leases underlying the wells in which we own working interests; however we are not the holder of these leases and therefore we are not responsible for the payment or evaluation of any obligations under such leases. The leaseholder of the property is responsible for paying and maintaining the leases. If we are successful in generating revenues from our working interests in this oil and gas property, we intend to acquire working interests in additional wells in the project area, subject to obtaining additional financing. Our business strategy also includes seeking opportunities for mergers or acquisitions with other companies or entities. Effective March 1, 2012, our company, paid an additional $78,080 to Wise Oil and Gas for an additional 5% participation in the Quinlan 1, 2 and 3 wells located in Pottawatomie County, Oklahoma at a cost of $15,616 per 1%.Our company, now holds a 10% interest in the Quinlan 1, 2 and 3 wells. Effective March 29, 2012, our company, acquired a 5% working interest, on a 70% net revenue interest, in a drilling program in Coleman County, Texas. The interest was acquired from MontCrest Energy, Inc. for total consideration of $115,000. The drilling program consists of two wells: the Vaughn-MEI #106 and the Shields-MEI #105-H prospect wells. The program operations are to take place approximately two and three miles west of the town site of Novice, Texas in Section 29, of Block 2 of the T. & N.O. Railroad Company Survey, and Section 30, of Block 2 of the T. & N.O. Railroad Company Survey. It is expected by MontCrest Energy, Inc., that the Vaughn-MEI #106 Prospect Well will be drilled to an estimated depth of 4,650' and the Shields-MEI #105-H will be drilled as a horizontal well. Neither the Vaughn-MEI #106, nor the Shields-MEI #105-H are currently producing, but MontCrest Energy, Inc., has a history of successful operations in the region. If the property is viable and can be developed, we will receive a pro-rata share of any revenues generated from the property, equivalent to our percentage working interest. If the property is not viable, we expect the operator to plug the wells; however, we will not be responsible for any portion of the costs related to the plugging of the wells. There are leases underlying the wells in which we own working interests; however we are not the holder of these leases and therefore we are not responsible for the payment or evaluation of any obligations under such leases. The leaseholder of the property is responsible for paying and maintaining the leases. If we are successful in generating revenues from our working interests in these oil and gas properties, we intend to acquire working interests in additional wells in the project area, subject to obtaining additional financing. Our business strategy also includes seeking opportunities for mergers or acquisitions with other companies or entities. On May 24, 2012 we entered into a financing agreement with one investor pursuant to which, the investor will make available of up to $1,000,000 by way of advances until May 24, 2013 (the "Completion Date") in accordance with the terms of the financing agreement. The Completion Date may be extended for an additional term of up to twelve months at the option of our company or the investor upon written notice on or before the Completion Date in accordance with the notice provisions of the financing agreement. Upon receipt of an advance from the investor, our company will issue to the investor that number of shares of our company's common stock at a price equal 90% of the average of the closing price of our company's common stock, for the five (5) banking days immediately preceding the date of the advance. 18
On May 29, 2012 we entered into and closed a purchaser agreement and bill of sale to acquire a 2.5% working interest (on a 70% net revenue interest) in two oil and gas wells: the Taylor - MEI # 113 and Taylor - MEI # 115 from MontCrest Energy, Inc. The wells are located on MontCrest's Taylor Lease in Coleman County, Texas. The 2.5% interest was acquired for total consideration of $82,500. The interest includes approximately 20 acres of land surrounding each well above the measured depth of four thousand feet. The wells are located within T.&N.O.R.R Survey No. 28, Abstract 1667 in Coleman County, Texas. RESULTS OF OPERATIONS THREE MONTH SUMMARY ENDING APRIL 30, 2012 AND 2011 Period from Three months Three months November 30, 2005 ended ended (Inception) to April 30, April 30, April 30, 2012 2011 2012 ---------- ---------- ---------- Revenue $ Nil $ Nil $ Nil Operating expenses $ 32,409 $ 4,600 $ 166,357 Gain from currency exchange $ Nil $ Nil $ 97 Net income (loss) $ (32,409) $ (4,600) $ (166,260) EXPENSES Our operating expenses for the three month periods ended April 30, 2012 and 2011 are outlined in the table below: Period from Three months Three months November 30, 2005 ended ended (Inception) to April 30, April 30, April 30, 2012 2011 2012 ---------- ---------- ---------- Professional fees $ 17,500 $ 4,000 $ 90,901 Administrative expenses $ 14,909 $ 600 $ 75,456 REVENUE We have not earned any revenues since our inception and we do not anticipate earning revenues in the upcoming quarter. OPERATING REVENUES We have not generated any revenues since inception. OPERATING EXPENSES AND NET LOSS Operating expenses for the period ended April 30, 2012 was $32,409 compared with $4,600for the period ended April 30, 2011. The increase in operating expenditures was attributed to higher amounts of professional fees relating to our company's filings. Net loss for the period ended April 30, 2012 was $32,409 compared with $4,600 for the period ended April 30, 2011. The overall increase in net loss of $27,809 was attributed higher professional services incurred with our company's SEC filings including, consulting, accounting, audit, and legal services. 19
LIQUIDITY AND CAPITAL RESOURCES WORKING CAPITAL At April 30, At January 31, 2012 2012 ---------- ---------- Current Assets $ 52,999 $ 39,460 Current Liabilities $ 159,825 $ 166,721 ---------- ---------- Working Capital (Deficit) $ 106,826 $ 127,261 ========== ========== CASH FLOWS Three Months Three Months Ended Ended April 30, April 30, 2012 2011 ---------- ---------- Cash Flows from (used in) Operating Activities $ (28,303) $ (5,295) Cash Flows from (used in) Investing Activities $ (202,156) $ Nil Cash Flows from (used in) Financing Activities $ 255,000 $ 5,000 ---------- ---------- Net Increase (decrease) in Cash During Period $ 24,541 $ 295 ========== ========== The increase in our working capital at April 30, 2012 from the period ended January 31, 2012 is reflective of the current state of our business development, primarily due to our ability secure funding, which allowed for the increase in our exploration activities and professional fees paid in connection with expenses associated with our continuing reporting obligations under the Securities and Exchange Act of 1934. As of April 30, 2012, we had cash on hand of $39,331. Since our inception, we have used our common stock to raise money for our operations and for our property acquisitions. We have not attained profitable operations and are dependent upon obtaining financing to pursue our plan of operation. As at April 30, 2012, our company's cash balance was $39,331 compared to $1,016 as at April 30, 2011 and its total assets were $308,565 compared with $1,016 as at April 30, 2011. The increase in total assets is attributed to the acquisition of oil and gas properties that have been capitalized. As at April 30, 2012, our company had total liabilities of $159,825 compared with total liabilities of $28,050 as at April 30, 2011. The increase in total liabilities was attributed to decreases in accounts payable and accrued liabilities of $3,128 and increases in loans payable of 156,697. As at April 30, 2012, our company had a working capital deficit of $106,826 compared with a working capital deficit of $27,034 as at April 30, 2011. The increase in working capital deficit was attributed to the increase in loans payable and accrued liabilities of $159,697 CASHFLOW FROM OPERATING ACTIVITIES During the period ended April 30, 2012, our company used $28,303 of cash for operating activities compared to the use of $5,295 of cash for operating activities during the period ended April 30, 2011. The increase in cashflows used for operating activities is attributed to professional services incurred with our company's SEC filings including, consulting, accounting, audit, and legal services. CASHFLOW FROM INVESTING ACTIVITIES During the periods ended April 30, 2012 had cash transactions related to investing activities in the amount of $202,156. During the periods ended April 30, 2011, our company did not have any cash transactions related to investing activities. 20
CASHFLOW FROM FINANCING ACTIVITIES During the period ended April 30, 2012, our company received $255,000 of cash from financing activities compared to $5,000 for the period ended April 30, 2011. The increase in cashflows provided from financing activities is based on the fact that our company received $255,000 of financing from a unrelated third-party and $0 from related parties to settle outstanding obligations of our company during the day-to-day operations as compared to $5,000 in 2011. OFF-BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders. GOING CONCERN We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing. FUTURE FINANCINGS We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities. CRITICAL ACCOUNTING POLICIES The preparation of financial statements in conformity with United States generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount 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. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations. Our significant accounting policies are disclosed in the notes to the financial statements included in this Quarterly Report. USE OF ESTIMATES The preparation of financial statements in conformity with Generally Accepted Accounting Principles (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 these financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. REGULATORY MATTERS Our company and its oil and gas property interests are subject to a variety of Federal and State regulations governing land use, health, safety and environmental matters. Our company's management believes it has been in substantial compliance with all such regulations, and is unaware of any pending action or proceeding relating to regulatory matters that would affect the financial position of our company. 21
CASH AND CASH EQUIVALENTS Our company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. STOCK-BASED COMPENSATION Our company accounts for stock options issued to employees in accordance with the provisions of FASB ASC 718, "Stock Compensation". As such, compensation cost is measured on the date of grant as the excess of current market price of the underlying stock over the exercise price. Such compensation amounts are amortized over the respective vesting periods of the option grant. Our company adopted the disclosure provisions of FASB ASC 718, "Accounting for Stock-Based Compensation," and FASB ASC 718, which allows entities to provide pro forma net Income (loss) and pro forma earnings (loss) per share disclosures for employee stock option grants as if the fair-valued based method has been applied. Our company accounts for stock options or warrants issued to non-employees for goods or services in accordance with the fair value method of FASB ASC 718. Under this method, our company records an expense equal to the fair value of the options or warrants issued. The fair value is computed using an options pricing model. IMPAIRED ASSET POLICY Our company periodically reviews its long-lived assets when applicable to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable, pursuant to guidance established in ASC "Property, Plant, and Equipment". Our company determines impairment by comparing the discounted future cash flows estimated to be generated by its assets to their respective carrying amounts. If impairment is deemed to exist, the assets will be written down to fair value. START-UP EXPENSES Our company has adopted Statement of Position (SOP) No. 98-5 ("SOP 98-5"), "Reporting the Costs of Start-up Activities", which requires that costs associated with start-up activities be expensed as incurred. Accordingly, start-up costs associated with our company's formation have been included in our company's general and administrative expenses for the period from inception on November 30, 2005 to April 30, 2012. OIL AND GAS PROPERTY COSTS Oil and gas acquisition, exploration and development costs are capitalized as incurred until such time as economic reserves are quantified. From that time forward, our company will capitalize all costs to the extent that future cash flows from oil and gas revenues equal or exceed the costs deferred. The deferred costs will be amortized over the recoverable reserves when a property reaches commercial production. Costs related to site restoration programs will be accrued over the life of the project. FOREIGN CURRENCY TRANSLATION Our company's functional currency is the US dollar as substantially all of our company's operations are in the United States. Our company used the United States dollar as its reporting currency for consistency with registrants of the Securities and Exchange Commission and in accordance with the ASC 830 "Foreign Currency Translation". Assets and liabilities that are denominated in a foreign currency are translated at the exchange rate in effect at the year end and capital accounts are translated at historical rates. Income statement accounts are translated at the average rates of exchange prevailing during the period. Translation adjustments from the use of different exchange rates from period to period are included in the Comprehensive Income statement account in stockholders' (deficit) equity, if applicable. There were no translation adjustments as of April 30, 2012. 22
Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date. If applicable, exchange gains and losses are included in other items on the statements of operations. There were no exchange gains or losses as of April 30, 2012. BASIC AND DILUTED LOSS PER SHARE Our company computed basic and diluted loss per share amounts pursuant to the ASC 260 "Earnings per Share." There are no potentially dilutive shares outstanding and, accordingly, dilutive per share amounts have not been presented in the accompanying statements of operations. FAIR VALUE OF FINANCIAL INSTRUMENTS ASC 820, "Fair Value Measurement and Disclosures," requires disclosures of information regarding the fair value of certain financial instruments for which it is practicable to estimate the value. For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale of liquidation. COMPREHENSIVE LOSS ASC 220, "Reporting Comprehensive Income," establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As of April 30, 2012, our company has no items that represent comprehensive loss and therefore, has not included a schedule of comprehensive loss in financial statements. INCOME TAXES Income taxes are recognized in accordance with ASC 740, "Income Taxes", whereby deferred Income tax liabilities or assets at the end of each period are determined using the tax rate expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company we are not required to provide the information under this Item. ITEM 4. CONTROLS AND PROCEDURES MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure. As of the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report. 23
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. ITEM 1A. RISK FACTORS As a smaller reporting company we are not required to provide the information under this Item. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS During the quarter ended April 30, 2012, we issued an aggregate of 238,888 common shares of unregistered securities to one non-U.S. person, in an offshore transaction relying on Regulation S of the Securities Act of 1933. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ITEM 5. OTHER INFORMATION None. 24
ITEM 6. EXHIBITS Exhibit Number Description of Exhibit ------ ---------------------- (3) ARTICLES OF INCORPORATION AND BYLAWS 3.01 Articles of Incorporation (incorporated by reference to our Registration Statement on Form SB-2 filed on March 7, 2006) 3.02 Bylaws (incorporated by reference to our Registration Statement on Form SB-2 filed on March 7, 2006) 3.03 Certificate of Amendment filed on July 23, 2008 (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on August 14, 2008) 3.04 Certificate of Change filed on July 23, 2008 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on August 14, 2008) (10) MATERIAL CONTRACTS 10.1 Share Purchase agreement between Gregory Rotelli and Bruce Thomson dated January 24, 2012 10.2 Form of Financing Agreement dated May 24, 2012 (incorporated by reference to our Current Report on Form 8-K filed on May 24, 2012) 10.3 Purchaser Agreement and Bill of Sale dated May 25, 2012 between our company and MontCrest Energy, Inc. (incorporated by reference to our Current Report on Form 8-K filed on June 1, 2012) (14) CODE OF ETHICS 14.1* Code of Ethics (31) RULE 13A-14(A) / 15D-14(A) CERTIFICATIONS 31.1* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. (32) SECTION 1350 CERTIFICATIONS 32.1* Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. 101 INTERACTIVE DATA FILE 101** Interactive Data File (Form 10-Q for the period ended April 30, 2012 furnished in XBRL). 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document ---------- * Filed herewith. ** Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under these sections. 25
SIGNATURES In accordance with Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INDEPENDENCE ENERGY CORP. Dated June 19, 2012 By: /s/ Gregory Rotelli ------------------------------------------------- Gregory Rotelli Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer 2