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EX-31.01 - EXHIBIT 31.01 - Petron Energy II, Inc.peii0104form10qa930ex3101.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q/A

 

AMENDMENT NO. 1

 

☑ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

 

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ______ to _______

 

Commission File Number 333-160517

 

PETRON ENERGY II, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   26-3121630
(State of incorporation)   (I.R.S. Employer Identification No.)

 

17950 Preston Road, Suite 960

Dallas, Texas 75252

(Address of principal executive offices)

 

(972) 272-8190

(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.

☑ 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 (§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). ☐Yes ☐ No (Not required)

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller 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 ☑

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☑ No

 

As of September 30, 2012, there were 117,869,899 shares of the registrant’s $0.001 par value common stock issued and outstanding.

 

 

 

 


 

 

Explanatory Note

 

This Amendment No. 1 on Form 10-Q/A (this “First Amendment”) amends Petron Energy II, Inc.’s Quarterly Report on Form 10-Q (the “Original Filing”) originally filed on November 13, 2012 with the Securities and Exchange Commission (the “Commission”). We are filing this First Amendment for the purpose of responding to certain comments received from the Staff of the Securities and Exchange Commission.  For convenience and ease of reference, the Company is filing First Amendment in its entirety with all applicable changes and unless otherwise stated, all information contained in this amendment is as of November 13, 2012, the filing date of the Original Filing. Except as stated herein, this First Amendment does not reflect events or transactions occurring after such filing date or modify or update those disclosures in the Original Filing that may have been affected by events or transactions occurring subsequent to such filing date.

 

 


 

 

 
 

 

PETRON ENERGY II, INC.

TABLE OF CONTENTS

 

     
  Page
   
PART I. FINANCIAL INFORMATION  
   
ITEM 1. FINANCIAL STATEMENTS 3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 11
ITEM 4. CONTROLS AND PROCEDURES 11
   
PART II. OTHER INFORMATION  
   
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 1A. RISK FACTORS 11
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 12
ITEM 4. [MINE SAFETY DISCLOSURES] 12
ITEM 5. OTHER INFORMATION 12
ITEM 6. EXHIBITS 13

 

 

Special Note Regarding Forward-Looking Statements

 

Information included in this Form 10-Q/A contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Petron Energy II, Inc. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

 

*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "PEII" refers to Petron Energy II, Inc.

   

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

INDEX F-1
Consolidated Balance Sheet as of September 30, 2012, unaudited and Audited Consolidated Balance Sheet as of December 31, 2011. F-2
Unaudited Consolidated Statement of Operations for the Three Months and Nine Months Ended September 30, 2012, and 2011. F-3
Unaudited Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2012, and 2011. F-4
Unaudited Notes to Condensed Consolidated Financial Statements. F-5

 

 

 

F – 1

 

 

 
 

 

PETRON ENERGY II, INC.

CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 2012 AND DECEMBER 31, 2011

 

 

  September 30, December 31,
  2012 2011
  (unaudited) (audited)
ASSETS    
Current Assets    
     
Cash $                23,421  $             106,850 
Accounts Receivable--Oil & gas sales 23,762  53,466 
Total Current Assets 47,183  160,316 
     
Pipeline, net of accumulated depreciation of $228,689    
     and $179,289 respectively 759,311  808,711 
Producing Oil & Gas Properties, net of accumulated depletion    
     of $700,795 and $628,795, respectively 1,583,992  1,433,068 
Other Depreciable Equipment, net of accumulated    
     depreciation of $53,112 and $31,339, respectively 166,301  180,264 
Other  Assets 31,575  31,575 
     
TOTAL ASSETS $           2,588,362  $          2,613,934 
     
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)    
Current Liabilities    
     
Cash Overdraft $                66,433   $                      - 
Accounts Payable--Trade 727,262  443,114 
Accounts Payable--Related Party 342  50,617 
Accrued Liabilities 166,164  72,158 
Notes Payable--current 63,000                           - 
Total Current Liabilities 1,023,201  565,889 
     
Asset Retirement Obligation 25,540  25,540 
Common Stock Issuance Liability 5,904,090 
     
TOTAL LIABILITIES 6,952,831  591,429 
     
STOCKHOLDERS' EQUITY (DEFICIT)    
Preferred Stock, 10,000,000 shares authorized, 5,911,000 designated as follows:    
     Preferred Stock Series B, $0.001 par value,    
          5,910,000 issued and outstanding 5,910                             -
     Preferred Stock Series A, $0.001 par value, 1,000    
           issued and outstanding
Common Stock, $0.001 par value, 1,000,000,000 shares authorized,    
     117,869,899 and 110,727,511 issued and outstanding, respectively 117,869  110,727 
Additional Paid-In Capital 14,362,279  13,406,937 
Accumulated Deficit (18,850,528) (11,495,160)
Total Stockholders' Equity (Deficit) (4,364,469) 2,022,505 
     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $           2,588,362  $          2,613,934 

 

 

The accompanying notes are an integral part of these financial statements.

 

F – 2

 

 
 

 

 

 

PETRON ENERGY II, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

 

  Quarter Ended September 30, Period of Nine Months Ended September 30,
  2012 2011   2012 2011
           
Revenues          
           
     Oil & Gas Sales $         72,690  $        43,917    $                   250,715  $                   85,862 
     Pipeline Revenue 6,118  2,577    23,669  3,641 
          Total Revenue 78,808  46,494    274,384  89,503 
           
Costs and Expenses          
           
     Cost of Revenue 42,287  144,032    189,266  203,390 
     Depletion, Depreciation and Amortization 50,725  42,633    143,174  70,600 
     Impairment                        -                       -   5,903,000                                   -
     General and Administrative 310,221  1,031,245    1,388,514  1,466,600 
          Total Expenses 403,233  1,217,910    7,623,954  1,740,590 
           
     Loss from Operations Before Income Taxes (324,425) (1,171,416)   (7,349,570) (1,651,087)
           
     Interest 5,798                        -   5,798                                   -
     Income Taxes                 -                       -                                      -                                  -
           
     Net Loss $    (330,223) $  (1,171,416)   $              (7,355,368) $            (1,651,087)
           
           
Loss per share--basic and diluted ($0.003) ($0.013)   ($0.064) ($0.019)
Weighted average number of shares--basic and diluted 116,339,587  92,976,752    114,347,341  87,757,049 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

F – 3

 

 

 
 

 

PETRON ENERGY II, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

 

 

  Period of Nine Months Ended September 30,
  2012 2011
     
OPERATING ACTIVITIES    
Net Loss ($7,355,368) ($1,651,962)
Adjustments to reconcile net loss to    
     cash used by operating activities:    
     Depletion and depreciation 143,174  70,600 
     Impairment 5,903,000                                         - 
     Common stock issued for services 149,483                                         - 
Change in other  asset and liabilities:    
     Decrease in oil & gas receivables 29,704  144 
     Increase in accounts payable 284,267  198,235 
     Increase in accrued liabilities 43,612  14,046 
Cash used in operating  activities (802,128) (1,368,937)
     
INVESTING ACTIVITIES    
Investment in oil & gas properties (215,923) (258,820)
Pipeline investment
Purchase of other equipment (7,810) (4,021)
Cash used in investing activities (223,733) (262,841)
     
FINANCING ACTIVITIES    
Cash overdraft 66,433                                         - 
Proceeds from sales of common stock 813,000  1,440,892 
Proceeds from note payable 63,000                                         - 
Capitalized costs from reverse merger                                            -  281,333 
Cash from financing activities 942,433  1,722,225 
     
Increase in cash (83,429) 90,446 
Cash at beginning of the period 106,850  88,742 
     
Cash at end of the period $                                23,421  $                          179,188 
     
     
Supplemental Disclosure of Cash Flow Information    
Non-Cash Investing and Financing Activities:    
     Oil & gas properties $                           5,910,000   $                                    - 
     Preferred Stock (5,910)                                        - 
     Additional Paid-in Capital (5,904,090)                                        - 
     
   $                                        -   $                                    - 

 

 

The accompanying notes are an integral part of these financial statements.

 

F – 4

 

 

 
 

 

 

PETRON ENERGY II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PERIOD ENDING SEPTEMBER 30, 2012 AND 2011

(Unaudited)

   

 NOTE 1 - INCORPORATION AND NATURE OF OPERATIONS

Petron Energy II, Inc. (“Petron Energy” or the “Company”) was formerly known as Restaurant Concepts of America, Inc. and was incorporated in June 2007 under the laws of the State of Texas; and on April 2011, was reincorporated in the State of Nevada.

The Company is engaged primarily in the acquisition, development, production, exploration for and the sale of oil, gas and gas liquids in the United States. As of December 31, 2011 the Company is operating in the states of Texas and Oklahoma. In addition, the Company operates two gas gathering systems located in Tulsa, Wagoner, Rogers and Mayes counties of Oklahoma. The pipeline consists of approximately 132 miles of steel and poly pipe, a gas processing plant and other ancillary equipment. The Company sells its oil and gas products primarily to a domestic pipeline and to another oil company.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries:

 Subsidiary Name       Organization Date
 Petron Energy II Pipeline, Inc.    April 2008
 Petron Energy II Well Service, Inc.   July 2008

 

The interim consolidated financial statements as of September 30, 2012, and 2011, have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, these consolidated financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. These interim unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2011. In the opinion of management, the interim unaudited consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim periods presented.

 

The consolidated statements of operations reflect the results of operations of the Company for the three and nine month periods ended September 30, 2012, and 2011, and the statements of cash flows reflect the activity for the nine month periods ended September 30, 2012, and 2011. Operating results for the nine month period ended September 30, 2012, are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

 

Going concern uncertainty

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has incurred a net loss of $7,355,368 for the nine months ended September 30, 2012, (2011 - $1,651,087) and at September 30, 2012, had an accumulated deficit of $18,850,528 (2011 – $11,495,160). While the Company has recognized revenues from operations, the revenues generated are not sufficient to sustain operations. The Company does not have sufficient funds to acquire new business assets or maintain its existing operations at this time. Management’s plan is to raise equity and/or debt financing as required but there is no certainty that such financing will be available or that it will be available at acceptable terms. The outcome of these matters cannot be predicted at this time.

These financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

NOTE 3 - ASSET IMPAIRMENT

On August 8, 2011, the Company entered into an “Asset Purchase Agreement” with ONE Energy Capital Corp. (“ONE Energy”). The Company purchased producing oil and gas wells owned by ONE Energy by issuing 5,910,000 shares of the Company’s Series B Preferred Stock. ONE Energy has the right to convert such Series B Preferred Shares into the number of common shares having a total value of $5,910,000 based on the trading price of the Company’s common stock on the date of such conversion. The purchase transaction was completed and the convertible preferred shares issued on February 9, 2012. Upon completion of the purchase the Company recorded the $5,910 par value of the preferred shares and a common stock issuance liability of $5,904,090 which will be recognize as additional paid-in capital at the time the preferred shares are converted to common stock.

 

The Company’s investment in the ONE Energy properties was as follows:

 

Cash payment to ONE Energy  $ 106,000
Other cost associated with purchase    119,000
Preferred stock conversion value      5,910,000
Total investment  $ 6,135,000

 

This investment was reviewed by management to determine if there was impairment. The facts considered by management in the impairment review included among other items the following:

 

During the three year period ended December 31, 2011 the operating expenses of the purchased wells exceeded revenues by approximately $500,000.

 

ONE Energy’s reserve report related to the well sold estimated the discounted cash inflows of $132,000.

 

The Company had a reserve report for these wells prepared as of March 31, 2012 reported discounted cash inflows of $232,000.

 

Management concluded that an impairment had occurred and that the investment in the purchased wells should be reduced to $232,000 at March 31, 2012, resulting in an impairment charge of $5,903,000.

 

Note 4 - CONVERTIBLE DEBT

 

On July 26, 2012, the Company borrowed $63,000 pursuant to a convertible debt agreement. The maturity date of the note is April 30, 2013, and it bears interest at 8% per year. After 180 days from the date of the note, at the option of the holder, the debt can be converted to the Company’s common stock at an exercise price that is 58% of the market price of the common stock at the date of conversion.

 

 

F-5

 

[End Notes to Financial Statements]

 

 

 
 

 

  

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

 

FORWARD-LOOKING STATEMENTS

 

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) 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.

 

Results of Operations

 

For the Three Month Period Ended September 30, 2012, versus September 30, 2011

 

Revenue for the period ended September 30, 2012, was $78,808 compared to $46,494 for the period ended September 30, 2011. This was an increase of $32,314.

 

Net loss for the period ended September 30, 2012, was $330,223 compared to $1,171,416 net loss for the period ended September 30, 2011.

 

General and Administrative costs for the period ended September 30, 2012, were $310,221 compared to $1,031,245 for the period ended September 30, 2011.

 

Liquidity and Capital Resources

 

As of September 30, 2012, the total liabilities were $1,048,741, excluding the common stock issuance liability, compared to $591,429 for the period ended December 31, 2011, and the Company’s assets were $2,588,362 compared to $2,613,934 for the period ended December 31, 2011.

 

Cash Requirements

 

Our cash on hand as of September 30, 2012, was $23,421 compared to $106,850 for the period ended December 31, 2011. For the period ended September 30, 2012, and at September 30, 2012, the Company had an accumulated deficit of $18,850,528 as compared to $11,495,160 in 2011. While the Company has recognized revenues from operations, the revenues generated are not sufficient to sustain operations. The Company does not have sufficient funds to acquire new business assets or maintain its existing operations at this time. Management’s plan is to raise equity and/or debt financing as required but there is no certainty that such financing will be available or that it will be available at acceptable terms. The outcome of these matters cannot be predicted at this time.

 

For the Nine Month Period Ended September 30, 2012, versus September 30, 2011

 

Revenue for the period ended September 30, 2012, was $274,384 compared to $89,503 for the period ended September 30, 2011. This was increase of $184,881.

 

Net loss for the period ended September 30, 2012, was $7,355,368 compared to $1,651,087 net loss for the period ended September 30, 2011.

 

General and Administrative costs for the period ended September 30, 2012, were $1,388,514 compared to $1,466,600 for the period ended September 30, 2011.

 

Liquidity and Capital Resources

 

As of September 30, 2012, the total liabilities were $1,048,741, excluding gthe common stock issuance liability, compared to $591,429 for the period ended December 31, 2011, and the Company’s assets were $2,588,362 compared to $2,613,934 for the period ended December 31, 2011.

 

Cash Requirements

 

Our cash on hand as of September 30, 2012, was $23,421 compared to $106,850 for the period ended December 31, 2011. The Company has incurred a net loss of $7,355,368 for the period ended September 30, 2012, compared to a net loss of $1,651,087 for the period ended September 30, 2011, and at September 30, 2012, had an accumulated deficit of $18,850,528 as compared to $11,495,160 in 2011. While the Company has recognized revenues from operations, the revenues generated are not sufficient to sustain operations. The Company does not have sufficient funds to acquire new business assets or maintain its existing operations at this time. Management’s plan is to raise equity and/or debt financing as required but there is no certainty that such financing will be available or that it will be available at acceptable terms. The outcome of these matters cannot be predicted at this time.

 

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.

 

Contractual Obligations

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

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 Note 2 of the notes to our financial statements. In general, management's estimates are based on historical experience, information from third party professionals, and 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

 

The adoption of these accounting standards had the following impact on the Company’s statements of income and financial condition:

 

The FASB established the FASB Accounting Standards Codification (“Codification”) as the source of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements issued for interim and annual periods ending after September 15, 2009. The codification has changed the manner in which U.S. GAAP guidance is referenced, but did not have an impact on the consolidated financial position, results of operations or cash flows of the Company

 

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-06, “Fair Value Measurements and Disclosures (Topic 820) — Improving Disclosures about Fair Value Measurements.” This ASU requires some new disclosures and clarifies some existing disclosure requirements about fair value measurement as set forth in Accounting Standards Codification (“ASC”) 820. ASU 2010-06 amends ASC 820 to now require: (1) a reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; and (2) in the reconciliation for fair value measurements using significant unobservable inputs, a reporting entity should present separately information about purchases, sales, issuances, and settlements. In addition, ASU 2010-06 clarifies the requirements of existing disclosures. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Early application is permitted. The Company will comply with the additional disclosures required by this guidance upon its adoption in January 2010.

 

Also in January 2010, the FASB issued Accounting Standards Update No. 2010-03, “Extractive Activities—Oil and Gas—Oil and Gas Reserve Estimation and Disclosures.” This ASU amends the “Extractive Industries—Oil and Gas” Topic of the Codification to align the oil and gas reserve estimation and disclosure requirements in this Topic with the SEC’s Release No. 33-8995, “Modernization of Oil and Gas Reporting Requirements (Final Rule),” discussed below. The amendments are effective for annual reporting periods ending on or after December 31, 2009, and the adoption of these provisions on December 31, 2009, did not have a material impact on our consolidated financial statements.

 

On December 31, 2008, the Securities and Exchange Commission, referred to in this report as the SEC, issued Release No. 33-8995, “Modernization of Oil and Gas Reporting Requirements (Final Rule),” which revises the disclosures required by oil and gas companies. The SEC disclosure requirements for oil and gas companies have been updated to include expanded disclosure for oil and gas activities, and certain definitions have also been changed that will impact the determination of oil and gas reserve quantities. The provisions of this final rule are effective for registration statements filed on or after January 1, 2010, and for annual reports for fiscal years ending on or after December 31, 2009.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of disclosure controls and procedures.

 

Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934, as amended (“Exchange Act”) Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report (the "Evaluation Date"), has concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

Based on this evaluation, our principal executive and principal financial and accounting officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were not effective as previously disclosed on our Annual Report on Form 10-K

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

     There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

1. Quarterly Issuances:

 

We did not issue any unregistered securities other than as previously disclosed.

 

2. Subsequent Issuances:

 

Subsequent to the quarter, we did not issue any unregistered securities other than as previously disclosed.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

NONE.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

NONE

 

ITEM 5. OTHER INFORMATION

 

  Quarterly Events

 

 

  Subsequent Events

 

 

  ITEM 6. EXHIBITS

Exhibit    
Number Description of Exhibit Filing
3.01 Certificate of Incorporation Filed with the SEC on Form S-1 Registration Statement July 07, 2009
3.01a Certificate of Incorporation Filed with the SEC on Form 8-K February 17, 2012
3.02 By-Laws of the Company Filed with the SEC on Form S-1 Registration Statement July 07, 2009
31.01 Certification of Principal Executive Officer Pursuant to Rule 13a-14 Filed herewith.
31.02 Certification of Principal Financial Officer Pursuant to Rule 13a-14 Filed herewith.
32.01 CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act Filed herewith.
32.02 CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act Filed herewith.
101.INS* XBRL Instance Document Filed herewith.
101.SCH* XBRL Taxonomy Extension Schema Document Filed herewith.
101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith.
101.LAB* XBRL Taxonomy Extension Labels Linkbase Document Filed herewith.
101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith.
101.DEF* XBRL Taxonomy Extension Definition Linkbase Document Filed herewith.

 

 

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

PETRON ENERGY II, INC.

 

 

Dated: January 4, 2013

 

/s/ Floyd L. Smith

By: Floyd L. Smith

Its: CEO and CFO, President, Treasurer and Director

 

 

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

Dated: January 4, 2013

/s/ Floyd L. Smith

By: Floyd L. Smith

Chief Executive Officer

Principal Accounting Officer and

Chief Financial Officer,

President, Treasurer and Director

 

 

 

Dated: January 4, 2013

/s/ David Knepper

By: David Knepper

Director