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EX-32.1 - Dominovas Energy Corpex32-1.txt
EX-31.1 - Dominovas Energy Corpex31-1.txt

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

                                    FORM 10-Q

(Mark One)

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

                For the quarterly period ended November 30, 2012

                                       or

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

             For the transition period from __________ to __________

                        Commission File Number: 000-51736


                          WESTERN STANDARD ENERGY CORP.
             (Exact name of registrant as specified in its charter)

             Nevada                                              20-5854735
  (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)

  302-1912 Enterprise Way, Kelowna, BC                             V1Y 9S9
(Address of principal executive offices)                         (Zip Code)

                               Tel: (778) 478-7480
              (Registrant's telephone number, including area code)

                      980 Skeena Drive, Kelowna, BC V1V 2K7
              (Former name, former address and former fiscal year,
                          if changed since last report)

           Securities registered pursuant to Section 12(g) of the Act

                    Common Stock, par value $0.001 per share
                                (Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [X] No [ ]

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 [X] 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). Yes [X] No [ ]

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 [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 Act). Yes [X] No [ ]

              APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date: 33,944,068 shares of common
stock outstanding as at January 15, 2013.

                       DOCUMENTS INCORPORATED BY REFERENCE

Not Applicable

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.............................................. 8 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......... 11 ITEM 4T. CONTROLS AND PROCEDURES............................................ 11 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS.................................................. 12 ITEM 1A. RISK FACTORS....................................................... 12 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.................................................................. 19 2
PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Western Standard Energy Corp. (An Exploration Stage Company) BALANCE SHEETS November 30, August 31, 2012 2012 ------------ ------------ (unaudited) ASSETS CURRENT ASSETS Cash $ 36,518 $ -- Prepaids 6,311 -- ------------ ------------ $ 42,829 $ -- ============ ============ LIABILITIES CURRENT LIABILITIES Accounts payable and accrued liabilities $ 47,293 $ 202,800 Notes payable -- 60,000 Convertible debenture 241,340 -- ------------ ------------ 288,633 262,800 ------------ ------------ STOCKHOLDERS' DEFICIT COMMON STOCK Authorized: 200,000,000 common shares with par value of $0.001 Issued and outstanding: 33,944,068 and 192,136 common shares respectively 33,944 192 ADDITIONAL PAID IN CAPITAL 4,808,436 4,670,033 SUBSCRIPTION RECEIVABLE -- (125) DEFICIT ACCUMULATED DURING EXPLORATION STAGE (5,088,182) (4,932,900) ------------ ------------ (245,804) (262,800) ------------ ------------ $ 42,829 $ -- ============ ============ The accompanying notes are an integral part of these financial statements 3
Western Standard Energy Corp. (An Exploration Stage Company) STATEMENTS OF OPERATIONS (unaudited) Cumulative from Three months Three months October 16, 2003 ended ended (Inception) to November 30, November 30, November 30, 2012 2011 2012 ------------ ------------ ------------ EXPENSES Advertising and promotion $ -- $ -- $ 48,670 Audit and accounting fees 11,075 5,333 303,276 Depreciation -- -- 12,280 Consulting fees and expenses 55,000 -- 155,639 Corporate finance fee 47,250 -- 47,250 Foreign exchange loss -- -- 23,786 Gain on disposal of oil and gas properties -- -- (5,810) Gain on settlement of debt -- -- (104,992) Interest expense 2,061 3,793 76,471 Interest income -- -- (3,716) Investor communications and transfer agent 3,187 2,990 516,065 Legal fees 18,804 -- 254,453 Office and general administration 17,907 -- 213,861 Product development -- -- 876,451 Salaries and management fees -- -- 1,283,083 Stock-based compensation -- -- 104,366 Travel and entertainment -- -- 193,807 Web and graphic design -- -- 129,716 Write-down of assets -- -- (34,650) Write-down of oil and gas property -- -- 1,000,551 ------------ ------------ ------------ 155,282 12,116 5,088,182 ------------ ------------ ------------ NET LOSS $ (155,282) $ (12,116) $ (5,088,182) ============ ============ ============ LOSS PER SHARE - BASIC AND DILUTED $ (0.02) $ (0.01) ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON STOCK OUTSTANDING - BASIC AND DILUTED 6,717,108 192,136 ============ ============ The accompanying notes are an integral part of these financial statements 4
Western Standard Energy Corp. (An Exploration Stage Company) STATEMENTS OF CASH FLOWS (unaudited) Cumulative from Three months Three months October 16, 2003 ended ended (Inception) to November 30, November 30, November 30, 2012 2011 2012 ------------ ------------ ------------ CASH FLOW FROM OPERATING ACTIVITIES Net loss $ (155,282) $ (12,116) $ (5,088,182) Non-cash items included in net loss: Interest expense 2,061 -- 2,061 Impairment of oil and gas properties -- -- 960,551 Gain on disposal of oil and gas properties -- -- (5,809) Interest -- 3,793 23,101 Write-down of accounts payable -- -- 30,374 Write-down of assets -- -- (4,276) Write-down of oil and gas properties -- -- 40,000 Depreciation -- -- 12,280 Gain on settlement of debt -- -- (104,992) Stock issued for service -- -- 104,366 Changes in non-cash working capital Receivables -- -- (1,070) Prepaid expenses (6,311) -- 25,339 Accounts payable and accrued liabilities 31,493 8,323 (165,090) ------------ ------------ ------------ NET CASH USED IN OPERATING ACTIVITIES (128,789) -- (3,841,167) ------------ ------------ ------------ INVESTING ACTIVITIES Purchase of equipment -- -- (20,287) Expenditures on oil and gas properties -- -- (703,242) Proceeds on sale of oil and gas properties -- -- 38,500 ------------ ------------ ------------ NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES -- -- (685,029) ------------ ------------ ------------ FINANCING ACTIVITIES Due to related parties -- -- 1,307,771 Notes payable -- -- 60,000 Issuance of common shares for cash 158,307 -- 2,843,307 Bank indebtedness -- -- -- Net cash acquired on recapitalization -- -- 351,636 ------------ ------------ ------------ NET CASH FROM FINANCING ACTIVITIES 158,307 -- 4,562,714 ------------ ------------ ------------ INCREASE IN CASH 36,518 -- 36,518 Cash, beginning -- -- -- ------------ ------------ ------------ CASH, ENDING $ 36,518 $ -- $ 36,518 ============ ============ ============ SUPPLEMENTARY INFORMATION CASH PAID FOR: Interest $ -- $ -- $ 34,382 Income tax $ -- $ -- $ -- ============ ============ ============ NON-CASH FINANCING AND INVESTING ACTIVITIES Forgiveness of debt $ -- $ -- $ 24,000 Loans settled with oil and gas property interest $ -- $ -- $ 214,138 Loans converted to common shares $ -- $ -- $ 879,842 Oil and gas property purchased for common shares $ -- $ -- $ 450,000 ============ ============ ============ The accompanying notes are an integral part of these financial statements 5
Western Standard Energy Corp. (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS November 30, 2012 1. BASIS OF PRESENTATION The following interim unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the rules and regulations of the Securities and Exchange Commission. Accordingly these financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. These interim unaudited financial statements should be read in conjunction with the Company's audited financial statements for the year ended August 31, 2012. In the opinion of management, the interim unaudited financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results of the interim period presented. Operating results for the three-month period ended November 30, 2012 are not necessarily indicative of the results that may be expected for the year ending August 31, 2013. 2. RECENT ACCOUNTING PRONOUNCEMENTS Recent pronouncements with future effective dates are either not applicable or are not expected to be significant to the financial statement of the Company. 3. NOTE PAYABLE On December 22, 2009, the Company entered into a loan agreement with an individual and a corporation (collectively "the Lenders") whereby the Company agreed to issue a note payable in exchange for proceeds of $60,000. The note bears interest at 11% per annum, secured by the assets of the Company and is payable on demand. Between January 1, 2010 and August 31, 2012, the Lenders paid for $75,068 in expenses on behalf of the Company. This amount has the same terms as the note payable and has been included in accounts payable as at August 31, 2012. At August 31, 2012, the Company owed $217,791 to the Lenders and $35,334 in accrued interest. During the three months ended November 30, 2012, the Company converted the $3,125 of the debt owing to the Lenders to 2,500,000 shares of the Company (Note 5). The remaining debt was converted into a convertible debenture (Note 4) 4. CONVERTIBLE DEBENTURE On October 29, 2012, the Company issued to the Lenders a convertible debenture (the "Debenture") in the aggregate principal amount of $250,000 (Note 3). The Debenture is convertible, upon a default, into shares of the Company's common stock equal in number to 50% of the total issued and outstanding Common Stock of the Company at the time of conversion. The Company has also agreed to register the shares that may be convertible under the Debenture. The Debenture matures on the earlier of April 1, 2013 or the 90th day following the Company's receipt of SEC approval of the Registration statement. The Debenture does not bear interest. The fair value of the Debenture as at November 30, 2012 is $241,340 and the effective interest expense associated with the Debenture for the period is $2,061. 5. COMMON STOCK Authorized: 200,000,000 common shares On April 14, 2010, the company adopted a stock option plan allowing the Company's directors to grant up to 5,000,000 stock options pursuant to the terms and conditions of the stock option plan. As at November 30, 2012 no options have been granted. 6
On November 12, 2012, the Company issued 2,500,000 shares of common stock in exchange for the conversion of $3,125 of debt (Note 3). On November 12, 2012, the Company issued 30,769,857 shares of common stock at $0.00125 per share for gross proceeds of $41,587. On November 27, 2012, the Company issued 480,000 common shares at $0.25 per share for gross proceeds of $120,000. 6. RELATED PARTY TRANSACTIONS During the three months ended November 30, 2012, the Company incurred $40,000 (August 31, 2012 - $Nil) in consulting fees to a relative of the President of the Company. As at November 30, 2012, $25,000 (2011 - $Nil) owing to the related party is included in accounts payable. The amount is unsecured, non-interest bearing and due on demand. 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this annual 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 those discussed below and elsewhere in this annual report on Form 10-K. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles. Since we are an exploration stage company, there is no assurance that a commercially viable business will be identified in the near term. Our plan of operation is to seek for opportunities in the oil and gas industry. LIQUIDITY ANTICIPATED CASH REQUIREMENTS For the 3 months ended November 30, 2012, we recorded a net operating loss of $155,282 and have an accumulated deficit of $5,088,182 since inception. As at November 30, 2012, we had cash of $36,518. We do not have sufficient funds for working capital and will need to obtain further financing. Our financial condition for the years ended November 30, 2012 and 2011 and the changes between those periods for the respective items are summarized as follows: WORKING CAPITAL Our working capital position as at November 30, 2012 compared to November 30, 2011 and the cash flows for the three months then ended are summarized below: 3 months Ended November 30, 2012 2011 ---------- ---------- Current Assets $ 42,829 $ -- Current Liabilities (288,633) (153,118) Working Capital (Deficiency) $(245,804) $(153,118) The increase in our working capital deficiency was primarily due to an increase for auditing fees, consulting fees, legal fees, and general and administration costs. CASH FLOWS 3 months Ended November 30, 2012 2011 ---------- ---------- Net cash used in Operating Activities $ (128,789) $ -- Net cash provided by(used in) Investing Activities $ -- $ -- Net cash provided by Financing Activities $ 158,307 $ -- Increase (Decrease) in Cash during the Year $ 36,518 $ -- Cash, Beginning of Year $ -- $ -- Cash, End of Year $ 36,518 $ -- 8
RESULTS OF OPERATIONS The following is a summary of our results of operations for the three months ended November 30, 2012 and 2011: 3 months Ended November 30, 2012 2011 ---------- ---------- Revenue $ Nil $ Nil --------- --------- Expenses Audit and accounting fees 11,075 5,333 Consulting fees and expenses 55,000 -- Interest expense 2,061 3,793 General and office administration 65,155 -- Legal fees 18,804 -- Investor relations, transfer agent and media 3,187 2,990 --------- --------- Total expenses 155,282 12,116 --------- --------- Net Loss $(155,282) $ (12,116) ========= ========= REVENUE We have not earned any revenues since our inception and we do not anticipate earning revenues until such time as we acquire revenue producing assets. EXPENSES Our operating expenses for the three months ended November 30, 2012 compared to the same period in 2011 increased by the net amount of $143,166 primarily due to audit and accounting fees, consulting fees, legal fees and general and administration costs. APPLICATION OF CRITICAL ACCOUNTING POLICIES BASIS OF PRESENTATION These financial statements and related notes are presented in accordance with generally accepted accounting principles in the United States of America ("US") and are expressed in US dollars. The Company is an exploration stage company as defined by Statement of Financial Accounting Standard ("SFAS") No. 7, "Accounting and Reporting by Development Stage Enterprises" and has not realized any revenues from its planned operations to date. USE OF ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with generally accepted accounting principles 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 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 readily apparent from other sources. The actual results experienced by the Company may differ materially from the Company's estimates. To the extent there are material differences, future results may be affected. FINANCIAL INSTRUMENTS The Company's financial instruments consist of cash, other receivables, accounts payable and amounts due to related parties. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values due to the relatively short maturity of these instruments. 9
FOREIGN CURRENCY TRANSLATION The functional and reporting currency of the Company is the United States dollar. The Company accounts for foreign currency transactions in accordance with SFAS No. 52, "Foreign Currency Translation" (ASC 830). Monetary assets and liabilities denominated in foreign currencies are translated into United States Dollars at the period-end exchange rates. Non-monetary assets and liabilities are translated at the historical rates in effect when the assets were acquired or obligations incurred. Transactions occurring during the period are translated at rates in effect at the time of the transaction. The resulting foreign exchange gains and losses are included in operations. INCOME TAXES Income taxes are provided for in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), as interpreted by FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" ("FIN 48"). Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities, computed pursuant to FIN 48 and the reported amounts in the consolidated financial statements using the statutory tax rates in effect for the year when the reported amount of the asset or liability is recovered or settled, respectively. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets to the amount that is more likely than not to be realized. For each tax position taken or expected to be taken in a tax return, the Company determine whether it is more likely than not that the position will be sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to recognize. The tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. LOSS PER SHARE The Company computes net loss per share in accordance with SFAS No. 128, "Earnings per Share", which requires presentation of both basic and diluted loss per share ("LPS") on the face of the statement of operations. Basic LPS is computed by dividing the net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted LPS gives effect to all potentially dilutive common shares outstanding during the period, including convertible debt, stock options and warrants, using the treasury stock method. The computation of diluted LPS does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on LPS. STOCK-BASED COMPENSATION The Company has adopted the fair value recognition provisions of SFAS No. 123R, "Share Based Payments", whereby compensation expense is recognized for all share-based payments based on the fair value at monthly vesting dates, estimated in accordance with the provisions of SFAS 123R. All transactions in which goods and services are the consideration received for the issuance of equity instruments are accounted for based on fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to Advisory Board members and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. On April 14, 2010, our shareholders approved our 2010 Equity Compensation Plan. Under the 2010 Plan, options may be granted to our directors, officers, employees and consultants as determined by our board of directors. Pursuant to the 2010 Plan, we reserved for issuance up to 5,000,000 shares of our outstanding common stock under the 2010 plan. However no options have been granted as at November 30, 2012 and therefore no stock-based compensation has been recorded to date for stock options. 10
RECENT ACCOUNTING PRONOUNCEMENTS Recent pronouncements with future effective dates are either not applicable or are not expected to be significant to the financial statement of the Company. 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 position, revenues and expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not Applicable. ITEM 4T. CONTROLS AND PROCEDURES DISCLOSURE CONTROLS AND PROCEDURES As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Securities Exchange Act of 1934, as amended, we are required to maintain and our management is required to evaluate the effectiveness of our Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Our management with the participation of our principal executive officer and principal financial officer evaluated the effectiveness of our Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly report on Form 10-Q. Based on this evaluation, our management determined that our Company's disclosure controls and procedures were effective as of November 30, 2012. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our Company's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our Company's reports filed under the Exchange Act is accumulated and communicated to our principal executive officer and our principal accounting officer, as appropriate, to allow timely decisions regarding required disclosure. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING There were no changes in our internal control over financial reporting during our last fiscal quarter that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting. The term internal control over financial reporting is defined as a process designed by, or under the supervision of, our principal executive and principal financial officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: 1. pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; 11
2. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and, 3. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. CERTIFICATIONS Certifications with respect to disclosure controls and procedures and internal control over financial reporting under Rules 13a-14(a) or 15d-14(a) of the Exchange Act are attached to this quarterly report on Form 10-Q. 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 any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest. ITEM 1A. RISK FACTORS In addition to other information in this current report, the following risk factors should be carefully considered in evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial condition. As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements. Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business, operating results, liquidity and financial condition. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, the trading price of our securities could decline, and you may lose all or part of your investment. RISKS ASSOCIATED WITH OUR COMPANY BECAUSE WE MAY NEVER EARN REVENUES FROM OUR OPERATIONS, OUR BUSINESS MAY FAIL AND THEN INVESTORS MAY LOSE ALL OF THEIR INVESTMENT IN OUR COMPANY. We have no history of revenues from operations. We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably. Our company has a limited operating history and is in the exploration stage. The success of our company is significantly dependent on the uncertain events of the acquisition, discovery and exploitation of mineral reserves. If our business plan is not successful and we are not able to operate profitably, then our stock may become worthless and investors may lose all of their investment in our Company. Prior to completion of any exploration stage of our business plan, we anticipate that we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from the exploration of our mineral claims in the future, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide no assurance that we will generate any revenues or ever achieve profitability. If we are unsuccessful in addressing these risks, our business will fail and investors may lose all of their investment in our Company. 12
WE HAVE HAD A HISTORY OF LOSSES AND NO REVENUE, WHICH RAISE SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN. Since inception, we have incurred aggregate net losses of $5,088,182 from operations. We can offer no assurance that we will ever operate profitably or that we will generate positive cash flow in the future. To date, we have not generated any revenues from our operations. Our history of losses and no revenues raise substantial doubt about our ability to continue as a going concern. We will not be able to generate significant revenues in the future. As a result, our management expects the business to continue to experience negative cash flow for the foreseeable future and cannot predict when, if ever, our business might become profitable. We will need to raise additional funds, and such funds may not be available on commercially acceptable terms, if at all. If we are unable to raise funds on acceptable terms, we may not be able to execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated requirements. This may seriously harm our business, financial condition and results of operations. The current ongoing global economic crisis could lead to an extended recession in the U.S. and around the world. An extended slowdown in economic activity caused by a recession would reduce national and worldwide demand for oil and natural gas and result in lower commodity prices for long periods of time. We have no exploration programs or revenue producing assets, which is having a material adverse impact on our business, financial condition and results of operations which puts our investors at risk. Capital and credit markets continue to be unpredictable and the availability of funds from those markets is extremely uncertain. Further, arising from concerns about the stability of financial markets generally and the solvency of borrowers specifically, the cost of accessing the credit markets has increased as many lenders have raised interest rates, enacted tighter lending standards or altogether ceased to provide funding to borrowers. Due to these capital and credit market conditions, we cannot be certain that funding will be available to us in amounts or on terms that we believe are acceptable. RISKS RELATING TO OUR BUSINESS We are an exploration stage company with only a limited operating history upon which to base an evaluation of our current business and future prospects. And, currently we have no interest in mineral rights to conduct exploration activities. OUR BUSINESS MAY SUFFER IF WE DO NOT ATTRACT AND RETAIN TALENTED PERSONNEL. Our success will depend in large measure on the abilities, expertise, judgment, discretion, integrity and good faith of our management and other personnel in conducting the business of our company. We have a small management team, and the loss of a key individual or inability attract suitably qualified staff could materially adversely impact our business. Our success depends on the ability of our management and employees to interpret market and geological data correctly and to interpret and respond to economic market and other conditions in order to locate and adopt appropriate investment opportunities, monitor such investments, and ultimately, if required, to successfully divest such investments. Further, no assurance can be given that our key personnel will continue their association or employment with us or that replacement personnel with comparable skills can be found. We have sought to and will continue to ensure that management and any key employees are appropriately compensated; however, their services cannot be guaranteed. If we are unable to attract and retain key personnel, our business may be adversely affected. OUR MANAGEMENT TEAM DOES NOT HAVE EXTENSIVE EXPERIENCE IN PUBLIC COMPANY MATTERS, WHICH COULD IMPAIR OUR ABILITY TO COMPLY WITH LEGAL AND REGULATORY REQUIREMENTS. 13
Our management team has had limited public company management experience or responsibilities, which could impair our ability to comply with legal and regulatory requirements such as the SARBANES-OXLEY ACT OF 2002 and applicable federal securities laws, including filing required reports and other information required on a timely basis. It may be expensive to implement and effect programs and policies in an effective and timely manner that adequately respond to increased legal, regulatory compliance and reporting requirements imposed by such laws and regulations, and we may not have the resources to do so. Our failure to comply with such laws and regulations could lead to the imposition of fines and penalties and further result in the deterioration of our business. RISKS ASSOCIATED WITH OUR COMMON STOCK IF WE ISSUE ADDITIONAL SHARES IN THE FUTURE, IT WILL RESULT IN THE DILUTION OF OUR EXISTING SHAREHOLDERS. Our certificate of incorporation authorizes the issuance of up to 200,000,000 shares of common stock with a par value of $0.001. Our board of directors may choose to issue some or all of such shares to acquire one or more businesses or to provide additional financing in the future. The issuance of any such shares will result in a reduction of the book value and market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will cause a reduction in the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation. TRADING ON THE OTC BULLETIN BOARD MAY BE VOLATILE AND SPORADIC, WHICH COULD DEPRESS THE MARKET PRICE OF OUR COMMON STOCK AND MAKE IT DIFFICULT FOR OUR STOCKHOLDERS TO RESELL THEIR SHARES. Our common stock is quoted on the OTC Bulletin Board service of the Financial Industry Regulatory Authority ("FINRA"). Trading in stock quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like Nasdaq or a stock exchange like the American Stock Exchange. Accordingly, our shareholders may have difficulty reselling any of their shares. OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S PENNY STOCK REGULATIONS AND FINRA'S SALES PRACTICE REQUIREMENTS, WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK. Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, 14
these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in, and limit the marketability of, our common stock. FINRA SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK. In addition to the "penny stock" rules promulgated by the Securities and Exchange Commission (see above for a discussion of penny stock rules), FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS On November 12, 2012, the Company issued 2,500,000 shares of common stock in exchange for conversion of $3,125 of debt. On November 12, 2012, the Company issued 30,769,857 shares of common stock at $0.00125 per share for gross proceeds of $41,587 which was used for general working capital. On November 27, 2012, the Company issued 480,000 common shares at $0.25 per share for gross proceeds of $120,000 which was used for general working capital. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. MINE SAFETY DISCLOSURES None ITEM 5. OTHER INFORMATION During 2010, the Company adopted a stock option plan known as the 2010 Equity Compensation Plan, where up to 5,000,000 options may be granted. The plan was approved by the shareholders of the Company at special meeting of the shareholders held on April 14, 2010. We have not granted any stock options under the plan as at November 30, 2012. Effective October 1, 2012, Steve Cook resigned as our President, Chief Executive Officer, Chief Financial Officer, Secretary and Director. As a result of the resignation, we appointed Dallas Gray to the Board of Directors and as our new President, Chief Executive Officer, Chief Financial Officer and Secretary. Dallas Gray is now our sole officer and director. 15
ITEM 6. EXHIBITS Exhibits required by Item 601 of Regulation S-K: Exhibit No. Description ------- ----------- (3) ARTICLES OF INCORPORATION AND BY-LAWS 3.1 Articles of Incorporation (attached as an exhibit to our Registration Statement on Form SB-2, filed on November 2, 2005) 3.2 Bylaws (attached as an exhibit to our Registration Statement on Form SB-2, filed on November 2, 2005) 3.3 Articles of Merger (attached as an exhibit to our current report on Form 8-K filed on June 28, 2006) 3.4 Certificate of Change (attached as an exhibit to our current report on Form 8-K filed on June 28, 2006) 3.5 Certificate of Change (attached as an exhibit to our current report on Form 8-K filed on July 7, 2007) 3.6 Articles of Merger (attached as an exhibit to our current report on Form 8-K filed on July 7, 2007) 3.7 Articles of Merger (attached as an exhibit to our annual report on Form 10-KSB filed on December 14, 2007) (4) INSTRUMENTS DEFINING RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES 4.1 Specimen ordinary share certificate (attached as an exhibit to our Registration Statement on Form SB-2, filed on November 2, 2005) (10) MATERIAL CONTRACTS 10.1 Form of Subscription Agreement (attached as an exhibit to our current report on Form 8-K filed on September 26, 2006) 10.2 Promissory Note (attached as an exhibit to our current report on Form 8-K filed on October 3, 2006) 10.3 Lease Agreement (attached as an exhibit to our current report on Form 8-K filed on November 29, 2006) 10.4 Form of Subscription Agreement (attached as an exhibit to our current report on Form 8-K filed on November 29, 2006) 10.5 Share Exchange Agreement (attached as an exhibit to our current report on Form 8-K filed on November 29, 2006) 10.6 Share Issuance Agreement with Global (attached as an exhibit to our current report on Form 8- K filed on May 15, 2007) 10.7 Letter of Intent (attached as an exhibit to our current report on Form 8-K filed on May 17, 2007) 10.8 Private Placement Subscription Agreement (attached as an exhibit to our current report on Form 8-K filed on May 23, 2007) 16
10.9 Office Lease and Services Agreement (attached as an exhibit to our quarterly report on Form 10- QSB filed on July 16, 2007) 10.10 Assignment Agreement between Power Energy Enterprises SA and Lusora Healthcare Systems Inc. (attached as an exhibit to our current report on Form 8-K filed on September 4, 2007) 10.11 Farmout Agreement between Coastal Petroleum Company and Lusora Healthcare Systems Inc. (attached as an exhibit to our current report on Form 8-K filed on September 4, 2007) 10.12 Private Placement Subscription Agreement (attached as an exhibit to our current report on Form 8-K filed on October 16, 2007) 10.13 Warrant Certificate (attached as an exhibit to our current report on Form 8-K filed on October 16, 2007) 10.14 Private Placement Subscription Agreement (attached as an exhibit to our current report on Form 8-K filed on November 11, 2007) 10.15 Warrant Certificate (attached as an exhibit to our current report on Form 8-K filed on November 11, 2007) 10.16 Memorandum of Understanding with Coastal Petroleum, dated November 29, 2007, signed December 4 (attached as an exhibit to our current report on Form 8-K filed on December 11, 2007) 10.17 Letter from Western Standard Energy Corp. to Coastal Petroleum Company, dated November 28, 2007 (attached as an exhibit to our current report on Form 8-K filed on December 11, 2007) 10.18 Assignment Agreement between Coastal Petroleum Company and Western Standard Energy Corp., dated November 7, 2007 (attached as an exhibit to our current report on Form 8-K filed on December 11, 2007) 10.19 Farmout Agreement between Oil For America and Western Standard Energy Corp., dated November 9, 2007 (attached as an exhibit to our current report on Form 8-K filed on December 11, 2007) 10.20 Assignment Agreement between Oil For America and Western Standard Energy Corp., dated November 7, 2007 (attached as an exhibit to our current report on Form 8-K filed on December 11, 2007) 10.21 Farmout Agreement between Coastal Petroleum Company and Western Standard Energy Corp., dated December 11, 2007 (attached as an exhibit to our annual report on Form 10-KSB filed on December 14, 2007) 10.22 Assignment Agreement between Coastal Petroleum Company and Western Standard Energy Corp., dated December 12, 2007 (attached as an exhibit to our annual report on Form 10-KSB filed on December 14, 2007) 10.23 Form of Subscription Agreement dated December 24, 2007 (attached as an exhibit to our quarterly report on Form 10-QSB filed on February 4, 2008) 10.24 Memorandum of Understanding dated January 24, 2008 between Western Standard Energy Corp. and F Cross Resources, LLC (attached as an exhibit to our quarterly report on Form 10-QSB filed on February 4, 2008) 17
10.25 Memorandum of Intent with Oil For America dated April 17, 2008 (attached as an exhibit to our current report on Form 8-K filed on April 21, 2008) 10.26 Share Issuance Agreement dated May 6, 2008 with Infinity Energy Investments Limited (attached as an exhibit to our current report on Form 8-K filed on May 8, 2008) 10.27 Memorandum of Intent dated May 6, 2008 with Oil for America (attached as an exhibit to our quarterly report on Form 10-QSB filed on July 15, 2008) 10.28 Letter of Intent with East Dickinson Oil and Gas Co. dated October 31, 2008 (attached as an exhibit to our current report on Form 8-K filed on November 10, 2008) 10.29 Assignment Agreement with East Dickinson Oil and Gas Co., dated November 3, 2008 (attached as an exhibit to our annual report on Form 10-K filed on December 15, 2008) 10.30 Assignment Agreement with Stark County Oil & Gas Co., dated November 3, 2008 (attached as an exhibit to our annual report on Form 10-K filed on December 15, 2008) 10.31 Assignment Agreement with East Dickinson Oil & Gas Co., dated September 18, 2009 (attached as an exhibit to our annual report on Form 10-K filed on December 14, 2009) 10.32 Assignment Agreement with Oil For America LLC., dated November 15, 2009 (attached as an exhibit to our annual report on Form 10-K filed on December 14, 2009) 10.33 Loan Agreement dated December 22, 2009 (attached as an exhibit to our current report on Form 8-K filed on December 29, 2009) (31) SECTION 302 CERTIFICATION 31.1 Certification Statement pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (32) SECTION 906 CERTIFICATION 32.1 Certification Statement pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002 99.1 Great Northern Gas Company - Starbuck East Prospect Valley Co., Montana Geological Report dated February 2, 2005 (attached as an exhibit to our current report on Form 8-K filed on May 15, 2008) 99.2 Letter from Richard Robertson dated September 25, 2007 verifying the contents of the February 2, 2005 Geological Report (attached as an exhibit to our current report on Form 8-K filed on May 15, 2008) 101 Interactive Data Files pursuant to Rule 405 of Regulation S-T. 18
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WESTERN STANDARD ENERGY CORP. /s/ Dallas Gray -------------------------------------------------- Dallas Gray President, Secretary, Treasurer and Director Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer Dated: January 15, 201