Attached files
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 July 31, 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 or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3020 Old Ranch Parkway, Suite 300, Seal Beach, CA 90740
(Address of principal executive offices) (Zip Code)
(562) 799-5588
(Registrant's telephone number, including area code)
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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [ ] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
121,804,155 common shares issued and outstanding as of September 18, 2012.
INDEPENDENCE ENERGY CORP.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
Item 4. Controls and Procedures 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 1A. Risk Factors 15
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Mine Safety Disclosures 15
Item 5. Other Information 15
Item 6. Exhibits 16
SIGNATURES 18
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)
July 31, 2012
Index
-----
Condensed Balance Sheets (unaudited)...................................... 5
Condensed Statements of Operations (unaudited)............................ 6
Condensed Statements of Cash Flows (unaudited)............................ 7
Notes to the Condensed Financial Statements (unaudited)................... 8
4
Independence Energy Corp.
(An Exploration Stage Company)
Condensed Balance Sheets
(expressed in U.S. dollars)
July 31, 2012 January 31, 2012
------------- ----------------
(unaudited)
ASSETS
Current Assets
Cash $ 85,644 $ 14,790
Amounts receivable -- 1,607
Prepaid expenses and deposits 13,963 23,063
--------- ---------
Total Current Assets 99,607 39,460
Oil & gas properties 491,487 53,410
--------- ---------
Total Assets $ 591,094 $ 92,870
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable and accrued liabilities $ 16,664 $ 9,349
Due to a related party -- 675
Loans payable 156,697 156,697
--------- ---------
Total Liabilities 173,361 166,721
--------- ---------
Stockholders' Equity (Deficit)
Preferred Stock
Authorized: 10,000,000 preferred shares,
with a par value of $0.001 per share
Issued and outstanding: nil preferred shares -- --
Common Stock
Authorized: 375,000,000 common shares,
with a par value of $0.001 per share
Issued and outstanding: 121,804,155 and 121,000,000
common shares, respectively 121,804 120,000
Additional paid-in capital 518,196 (60,000)
Deficit accumulated during the development stage (222,267) (133,851)
--------- ---------
Total Stockholders' Equity (Deficit) 417,733 (73,851)
--------- ---------
Total Liabilities and Stockholders' Equity (Deficit) $ 591,094 $ 92,870
========= =========
(The accompanying notes are an integral part of these financial statements)
5
Independence Energy Corp.
(An Exploration Stage Company)
Condensed Statements of Operations
(expressed in U.S. dollars)
(unaudited)
Accumulated from
November 30, 2005
For the Three For the Three For the Six For the Six (date of inception)
Months Ended Months Ended Months Ended Months Ended to
July 31, 2012 July 31, 2011 July 31, 2012 July 31, 2011 July 31, 2012
------------- ------------- ------------- ------------- -------------
Revenue $ -- $ -- $ -- $ -- $ --
Operating Expenses
General and administrative 35,285 1,340 50,193 1,940 126,088
Professional fees 20,723 2,000 38,223 6,000 96,179
------------ ------------ ------------ ------------ ------------
Total Operating Expenses 56,008 3,340 88,416 7,940 222,267
------------ ------------ ------------ ------------ ------------
Net Loss for the Period $ (56,008) $ (3,340) $ (88,416) $ (7,940) $ (222,267)
============ ============ ============ ============ ============
Net Loss Per Share, Basic
and Diluted $ -- $ -- $ -- $ --
============ ============ ============ ============
Weighted Average Shares
Outstanding 121,365,534 120,000,000 121,104,356 120,000,000
============ ============ ============ ============
(The accompanying notes are an integral part of these financial statements)
6
Independence Energy Corp.
(An Exploration Stage Company)
Condensed Statements of Cash Flows
(expressed in U.S. dollars)
(unaudited)
Accumulated from
November 30, 2005
For the Six For the Six (date of inception)
Months Ended Months Ended to
July 31, 2012 July 31, 2011 July 31, 2012
------------ ------------ ------------
Operating Activities
Net loss for the period $ (88,416) $ (7,940) $(222,267)
Changes in operating assets and liabilities:
Amounts receivables 1,607 -- --
Prepaid expense and deposits 9,100 -- (13,963)
Accounts payable and accrued liabilities 7,315 2,645 16,664
Due to related parties (675) -- --
--------- --------- ---------
Net Cash Used in Operating Activities (71,069) (5,295) (219,566)
--------- --------- ---------
Investing Activities
Oil and gas property expenditures (438,077) -- (491,487)
--------- --------- ---------
Net Cash Used by Investing Activities (438,077) -- (491,487)
--------- --------- ---------
Financing activities
Proceeds from the issuance of common stock 580,000 -- 640,000
Proceeds from loans payable -- -- 156,697
Proceeds from loans payable to director -- 5,000 33,000
Repayment of loans payable to director -- -- (33,000)
--------- --------- ---------
Net Cash Provided by Financing Activities 580,000 5,000 796,697
--------- --------- ---------
Increase (decrease) in Cash 70,854 (295) 85,644
Cash, Beginning of Period 14,790 1,311 --
--------- --------- ---------
Cash, End of Period $ 85,644 $ 1,016 $ 85,644
========= ========= =========
Supplemental Disclosures
Interest paid $ -- $ -- $ --
========= ========= =========
Income tax paid $ -- $ -- $ --
========= ========= =========
(The accompanying notes are an integral part of these financial statements)
7
Independence Energy Corp.
(An Exploration Stage Company)
Notes to the Condensed Financial Statements
(expressed in U.S. dollars)
1. NATURE OF OPERATIONS AND CONTINUANCE OF BUSINESS
Independence Energy Corp. (the "Company") was incorporated in the State of
Nevada on November 30, 2005. The Company was organized to explore natural
resource properties in the United States. The Company is an exploration
stage company, as defined by Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") 915, DEVELOPMENT STAGE ENTITIES.
GOING CONCERN
These financial statements have been prepared on a going concern basis,
which implies that the Company will continue to realize its assets and
discharge its liabilities in the normal course of business. The Company has
generated no revenues to date and has never paid any dividends and is
unlikely to pay dividends or generate significant earnings in the immediate
or foreseeable future. As of July 31, 2012, the Company had a working
capital deficit of $73,754 and an accumulated deficit of $222,267. The
continuation of the Company as a going concern is dependent upon the
continued financial support from its shareholders, the ability to raise
equity or debt financing, and the attainment of profitable operations from
the Company's future business. 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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) 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 US dollars. The Company's fiscal year-end
is January 31.
b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States and 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
valuation and impairment of oil and gas properties, asset retirement
obligations, fair value of share-based payments, 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.
c) Basic and Diluted Net Loss Per Share
The Company computes net loss per share in accordance with ASC 260,
EARNINGS PER SHARE, which requires presentation of both basic and
diluted earnings per share (EPS) on the face of the income statement.
Basic EPS is computed by dividing net loss available to common
shareholders (numerator) by the weighted average number of shares
outstanding (denominator) during the period. Diluted EPS gives effect
to all dilutive potential common shares outstanding during the period
using the treasury stock method and convertible preferred stock using
the if-converted method. In computing Diluted EPS, the average stock
price for the period is used in determining the number of shares
assumed to be purchased from the exercise of stock options or
warrants. Diluted EPS excludes all dilutive potential shares if their
effect is anti-dilutive. As of July 31, 2012, the Company did not have
any potentially dilutive shares.
8
Independence Energy Corp.
(An Exploration Stage Company)
Notes to the Condensed Financial Statements
(expressed in U.S. dollars)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
d) Interim Financial Statements
These interim unaudited financial statements have been prepared on the
same basis as the annual financial statements and in the opinion of
management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Company's
financial position, results of operations and cash flows for the
periods shown. The results of operations for such periods are not
necessarily indicative of the results expected for a full year or for
any future period.
e) Oil and Gas Property Costs
The Company utilizes the full-cost method of accounting for petroleum
and natural gas properties. Under this method, the Company capitalizes
all costs associated with acquisition, exploration, and development of
oil and natural gas reserves, including leasehold acquisition costs,
geological and geophysical expenditures, lease rentals on undeveloped
properties and costs of drilling of productive and non-productive
wells into the full cost pool on a country-by-country basis. When the
Company obtains proven oil and gas reserves, capitalized costs,
including estimated future costs to develop the reserves proved and
estimated abandonment costs, net of salvage, will be depleted on the
units-of-production method using estimates of proved reserves. The
costs of unproved properties are not amortized until it is determined
whether or not proved reserves can be assigned to the properties.
Until such determination is made, the Company assesses annually
whether impairment has occurred, and includes in the amortization base
drilling exploratory dry holes associated with unproved properties.
The Company applies a ceiling test to the capitalized cost in the full
cost pool. The ceiling test limits such cost to the estimated present
value, using a ten percent discount rate, of the future net revenue
from proved reserves based on current economic and operating
conditions. Specifically, the Company computes the ceiling test so
that capitalized cost, less accumulated depletion and related deferred
income tax, do not exceed an amount (the ceiling) equal to the sum of:
The present value of estimated future net revenue computed by applying
current prices of oil and gas reserves (with consideration of price
changes only to the extent provided by contractual arrangements) to
estimated future production of proved oil and gas reserves as of the
date of the latest balance sheet presented, less estimated future
expenditures (based on current cost) to be incurred in developing and
producing the proved reserves computed using a discount factor of ten
percent and assuming continuation of existing economic conditions;
plus the cost of property not being amortized; plus the lower of cost
or estimated fair value of unproven properties included in the costs
being amortized; less income tax effects related to differences
between the book and tax basis of the property. For unproven
properties, the Company excludes from capitalized costs subject to
depletion, all costs directly associated with the acquisition and
evaluation of the unproved property until it is determined whether or
not proved reserves can be assigned to the property. Until such a
determination is made, the Company assesses the property at least
annually to ascertain whether impairment has occurred. In assessing
impairment the Company considers factors such as historical experience
and other data such as primary lease terms of the property, average
holding periods of unproved property, and geographic and geologic
data. The Company adds the amount of impairment assessed to the cost
to be amortized subject to the ceiling test.
f) Financial Instruments
Pursuant to ASC 820, FAIR VALUE MEASUREMENTS AND DISCLOSURES, an
entity is required 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:
9
Independence Energy Corp.
(An Exploration Stage Company)
Notes to the Condensed Financial Statements
(expressed in U.S. dollars)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
f) Financial Instruments (continued)
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, and
amounts due to related parties. Pursuant to ASC 820 and 825, the fair
value of our cash is determined based on "Level 1" inputs, which
consist of quoted prices in active markets for identical assets. We
believe that the recorded values of all of our other financial
instruments approximate their current fair values because of their
nature and respective maturity dates or durations.
g) Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are
in effect and that may impact its 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 consolidated
financial statements.
3. OIL AND GAS PROPERTIES
a) On December 15, 2011, the Company acquired a 2.5% interest in four
wells in the Quinlan Lease ("Quinlan") from Wise Oil and Gas LLC
("Wise"), with the option to increase the interest to 10%. On December
23, 2011, the Company acquired an additional 2.5% interest in Quinlan.
Quinlan is located in Pottawatomie County, Oklahoma. On March 1, 2012,
the Company acquired an additional 5% interest in Quinlan in exchange
for $78,080, bringing the Company's total interest to 10%.
b) On March 29, 2012, the Company acquired a 5% interest in a 70% net
revenue interest of properties in Coleman County, Texas for $115,000.
On June 28, 2012, the Company amended the original agreement to
acquire a 7% interest in a 75% net revenue interest in the properties
for an additional payment of $47,000, and replaced the terms of the
original agreement.
c) On May 29, 2012, the Company acquired a 2.5% interest in a 70% net
revenue interest in two oil and gas wells and approximately 20 acres
of land surrounding the area in Coleman County, Texas for $82,500.
d) On June 8, 2012, the Company acquired a 12.5% interest, with an option
to acquire an additional 12.5% interest, for $90,785. The properties
comprise an area of 2,421 acres in Coleman County, Texas.
10
Independence Energy Corp.
(An Exploration Stage Company)
Notes to the Condensed Financial Statements
(expressed in U.S. dollars)
4. RELATED PARTY TRANSACTIONS
a) As at July 31, 2012, the Company owes $nil (January 31, 2012 - $675)
to a company controlled by officers and directors of the Company. The
amounts owing are unsecured, non-interest bearing and due on demand.
b) During the period ended July 31, 2012, the Company paid $15,000 (July
31, 2011 - $nil) to the President and CEO of the Company for
management services. As of July 31, 2012, the Company had $10,500 in
prepaid expense for management fees paid to the President and CEO of
the Company.
5. LOAN PAYABLE
As of July 31, 2012, the Company had loan payable of $156,697 (January 31,
2012 - $156,697) owing to an unrelated third party. The amount owing is
non-interest bearing, unsecured and due on demand.
6. COMMON STOCK
a) On March 1, 2012, the Company issued 694,440 post-split common shares
for proceeds of $125,000.
b) On March 15, 2012, the Company issued 500,000 post-split common shares
for proceeds of $130,000.
c) On May 15, 2012, the Company issued 250,000 post-split common shares
for proceeds of $125,000.
d) On May 24, 2012, the Company entered into a financing agreement with a
non-related party. Pursuant to the agreement, the Company can borrow
$1,000,000 by way of advances until May 24, 2013, to be payable by
issuance of common shares of the Company at an issuance price equal to
90% of the average share price of the Company for the five banking
days preceding the date of advance. The agreement is subject to
extension of additional terms of twelve months at the option of either
the Company or the lender. On June 6, 2012, the Company issued 359,715
post-split common shares in exchange for an advance of $200,000.
e) On June 22, 2012, the Company and its Board of Directors authorized an
increase in its authorized capital from 75,000,000 common shares to
375,000,000 common shares and effected a 5-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 five post-split shares of common stock. The effect of the forward
split increased the number of issued and outstanding common shares
from 24,360,831 common shares to 121,804,155 common shares, and the
forward split has been applied retroactively to the Company's
inception date.
7. SUBSEQUENT EVENTS
We have evaluated subsequent events through the date of issuance of the
financial statements, and did not have any material recognizable subsequent
events after July 31, 2012.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements that involve known and
unknown risks, significant uncertainties and other factors that may cause our
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 those forward-looking statements. You can
identify forward-looking statements by the use of the words may, will, should,
could, expects, plans, anticipates, believes, estimates, predicts, intends,
potential, proposed, or continue or the negative of those terms. These
statements are only predictions. In evaluating these statements, you should
consider various factors which may cause our actual results to differ materially
from any forward-looking statements. Although we believe that the exceptions
reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements. Therefore,
actual results may differ materially and adversely from those expressed in any
forward-looking statements. We undertake no obligation to revise or update
publicly any forward-looking statements for any reason.
WORKING CAPITAL
July 31, 2012 January 31, 2012
------------- ----------------
Current Assets $ 99,607 $ 39,460
Current Liabilities $ 173,361 $ 166,721
Working Capital (Deficit) $ (73,354) $(127,261)
CASH FLOWS
Six months Six months
ended ended
July 31, 2012 July 31, 2011
------------- -------------
Cash Flows from (used in) Operating Activities $ (71,069) $ (5,295)
Cash Flows from (used in) Investing Activities $(438,077) $ --
Cash Flows from (used in) Financing Activities $ 580,000 $ (5,000)
Net Increase (decrease) in Cash During Period $ 70,854 $ (295)
OPERATING REVENUES
For the period from November 30, 2005 (date of inception) to July 31, 2012,
our company did not earn any operating revenues.
OPERATING EXPENSES AND NET LOSS
Operating expenses and net loss for the six months ended July 31, 2012 was
$88,416 compared with $7,940 for the six months ended July 31, 2011. The
increase in operating expenses was due to the fact that the current year
included the acquisition of oil and gas properties where our company incurred
higher general and administrative costs relating to day-to-day activities and
incurred higher professional fees due to our company's acquisition transactions
and equity transactions.
For the six months ended July 31, 2012 and 2011, our company had a loss per
share of $nil.
12
LIQUIDITY AND CAPITAL RESOURCES
As at July 31, 2012, our company had cash of $85,644 compared with $14,790
at January 31, 2012. The increase in cash was attributed to the fact that our
company obtained additional financing of $580,000 from the issuance of common
shares which were used for acquisition and exploration costs of the oil and gas
properties and for general administrative costs, of which amounts were remaining
at the end of the period.
Total assets at July 31, 2012 were $591,094 compared with $92,870 at
January 31, 2012. The increase in total assets were attributed to capitalization
of $491,487 of oil and gas property costs relating to the acquisition and
exploration costs of the Quinlan properties in Coleman County, Texas.
At July 31, 2012, our company had total liabilities of $173,361 compared
with $166,721 at January 31, 2012. The increase in total liabilities was
attributed to an increase in accounts payable and accrued liabilities of $7,315
due to timing differences between receipt and payment of operating costs.
For the six months ended July 31, 2012 and 2011, our company and its Board
of Directors authorized a 5-for-1 forward stock split and an increase in our
company's authorized capital from 75,000,000 common shares to 375,000,000 common
shares. The effect of the forward stock split increased the number of issued and
outstanding common shares from 24,360,831 common shares to 121,805,155 common
shares as at July 31, 2012. In addition, our company issued 1,444,440 post-split
common shares in a private placement for proceeds of $380,000, and 359,715
post-split common shares for $200,000 from an advance from a non-related party.
CASHFLOW FROM OPERATING ACTIVITIES
During the six months ended July 31, 2012, our company used $71,069 of cash
for operating activities compared to the use of $5,295 of cash for operating
activities during the six months ended July 31, 2011. The increase in cash used
for operating activities were attributed to an overall increase in production
costs relating to the production of the oil and gas properties for our company
and due to higher overhead costs relating to our company's various acquisition
transactions and equity transactions.
CASHFLOW FROM INVESTING ACTIVITIES
During the six months ended July 31, 2012, our company incurred $438,077 of
cash for investing activities related to the acquisition and exploration
expenditures of the oil and gas properties. During the six months ended July 31,
2011, our company did not have any investing activities.
CASHFLOW FROM FINANCING ACTIVITIES
During the six months ended July 31, 2012, our company received $580,000 of
financing from the issuance of common shares including $380,000 from the private
placement and $200,000 from an advance from a non-related party. Comparatively,
during the period ended July 31, 2011, our company received $5,000 from a
director.
GOING CONCERN
We have not attained profitable operations and are dependent upon obtaining
financing to pursue any extensive acquisitions and 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.
13
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant 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 are material to
stockholders.
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 our operations and other activities.
CRITICAL ACCOUNTING POLICIES
Our financial statements and accompanying notes have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis. The preparation of financial statements in conformity
with U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to
prepare our financial statements. A complete summary of these policies is
included in the notes to our financial statements. In general, management's
estimates are based on historical experience, on information from third party
professionals, and on various other assumptions that are believed to be
reasonable under the facts and circumstances. Actual results could differ from
those estimates made by management.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Our company has implemented all new accounting pronouncements that are in
effect. These pronouncements did not have any material impact on the financial
statements unless otherwise disclosed, and our company 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.
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
14
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.
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
On May 15, 2012, we issued an aggregate of 50,000 shares of our common
stock at a price of $2.50 per share for aggregate gross proceeds of $125,000 to
one non-U.S. person, in an offshore transaction relying on Regulation S of the
Securities Act of 1933.
On June 6, 2012, we issued 71,943 shares of our common stock at a price of
$2.78 per share pursuant to an advance under our financing agreement with one
investor. All of these shares were issued pursuant to an exemption from
registration relying on Section 4(2) 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.
15
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 our 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 our Current Report on Form 8-K filed on August 14, 2008)
3.05 Certificate of Change filed on June 14, 2012 (incorporated by reference
our Current Report on Form 8-K filed on June 15, 2012)
(10) MATERIAL CONTRACTS
10.1 Share Purchase agreement between Gregory Rotelli and Bruce Thomson
dated January 24, 2012 (incorporated by reference to our Current Report
on Form 8-K filed on January 30, 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 Purchase Agreement and Bill of Sale dated May 29, 2012 between our
company and MontCrest Energy, Inc. (incorporated by reference to our
Current Report on Form 8-K filed on June 1, 2012)
10.4 Joint Development and Operating Agreement dated June 8, 2012 between
our company and MontCrest Energy Properties, Inc., MontCrest Energy,
Inc., and Black Strata, LLC (incorporated by reference to our Current
Report on Form 8-K filed on June 12, 2012)
10.5 Purchaser Agreement and Bill of Sale dated June 18, 2012 between our
company and MontCrest Energy, Inc. (incorporated by reference to our
Current Report on Form 8-K filed on June 19, 2012)
(14) CODE OF ETHICS
14.1 Code of Ethics (incorporated by reference to our Quarterly Report on
Form 10-Q filed on June 19, 2012)
(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.
16
(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.
17
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.
(Registrant)
Dated: September 18, 2012 /s/ Gregory Rotelli
-------------------------------------------------
Gregory Rotelli
Chief Executive Officer, Chief Financial Officer,
Secretary, Treasurer and Director
(Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
1