UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

FORM 10-K

(MARK ONE)

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

FOR THE FISCAL YEAR ENDED DECEMBER 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: 000-51569

STANDARD DRILLING, INC.

(Exact name of registrant as specified in its charter)

NEVADA	84-1598154
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

424 CLAY STREET SAN FRANCISCO, CA	94111
(Address of principal executive offices)	(Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:	(650) 380-8280

Securities registered under Section 12(b) of the Act:

TITLE OF EACH CLASS	NAME OF EACH EXCHANGE ON WHICH REGISTERED
NONE	NOT APPLICABLE

Securities registered under 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

  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 [√] 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 [√] No [  ]

  Indicate by check mark whether the registrant has submitted electronically and posted on its Corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 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

1

  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [√]

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

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer (Do not check if smaller reporting company)	[  ]	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 [√]

  State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. $499,578 on June 30, 2012.

  Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.  93,458,880 shares of common stock are issued and outstanding as of April 1, 2013.

DOCUMENTS INCORPORATED BY REFERENCE

  List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933.  The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).  None.

2

STANDARD DRILLING, INC.

FORM 10-K

TABLE OF CONTENTS

		Page No.
Part I
Item 1.	Business.	5
Item 1A.	Risk Factors.	9
Item 1B.	Unresolved Staff Comments.	10
Item 2.	Properties.	10
Item 3.	Legal Proceedings.	10
Item 4.	Mine Safety Disclosures.	10
Part II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	11
Item 6.	Selected Financial Data.	11
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	12
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	14
Item 8.	Financial Statements and Supplementary Data.	14
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.	27
Item 9A.	Controls and Procedures.	27
Item 9B.	Other Information.	28
Part III
Item 10.	Directors, Executive Officers and Corporate Governance.	29
Item 11.	Executive Compensation.	31
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	34
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	35
Item 14.	Principal Accounting Fees and Services.	36
Part IV
Item 15.	Exhibits, Financial Statement Schedules.	37

3

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This report contains forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements.  These factors include, but are not limited to, our ability to consummate the acquisition of an operating entity and/or assets, our ability to generate revenues and pay our operating expenses, our ability to raise capital as necessary, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors.  Most of these factors are difficult to predict accurately and are generally beyond our control.  You should consider the areas of risk described in connection with any forward-looking statements that may be made herein.  Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this report in its entirety, including the risks described in "Item 1A. - Risk Factors".  Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.  These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

OTHER PERTINENT INFORMATION

Unless specifically set forth to the contrary, when used in this prospectus the terms “Standard Drilling", "we"", "our", the "Company" and similar terms refer to Standard Drilling, Inc., a Nevada corporation.  In addition, when used herein and unless specifically set forth to the contrary, “2010” refers to the year ended December 31, 2010,  “2011” refers to the year ended December 31, 2011 and “2012” refers to the year ending December 31, 2012.

4

PART I

ITEM 1.  BUSINESS.

Overview

Corporate History

We were originally formed as a Nevada corporation on July 27, 2001, under the name Online Holdings, Inc.  Subsequently, on September 1, 2006, pursuant to an Agreement and Plan of Merger dated July 24, 2006 by and among our company, Standard Drilling Acquisition Co., a Delaware corporation (“Standard Drilling Acquisition”), and Standard Drilling, Inc., a Delaware corporation (“Standard Drilling Delaware”), Standard Drilling Acquisition was merged with and into Standard Drilling Delaware, and Standard Drilling Delaware became our wholly-owned subsidiary.  As a result of the merger, our company, which previously had no material operations, acquired the business of Standard Drilling Delaware.  In conjunction with the merger, we changed our name to Standard Drilling, Inc.

Upon the consummation of the merger each outstanding share of common stock of Standard Drilling Delaware was converted into one share of our common stock.  All outstanding options and warrants to purchase common stock of Standard Drilling Delaware were assumed by us and converted into options and warrants to purchase an equal number of shares of our common stock on the same terms and conditions.  The merger resulted in a change of control of our company, with the former security holders of Standard Drilling Delaware owning approximately 91.4% of the our outstanding common stock, or approximately 94% assuming the exercise of all outstanding options and warrants, following the closing of the merger.

In the merger, we exchanged 41,223,000 shares of our common stock for 41,223,000 shares of common stock of Standard Drilling Delaware and reserved for issuance:

•	10,800,300 shares of common stock pursuant to outstanding warrants to purchase common stock of Standard Drilling Delaware that were assumed by us, and
•	8,520,000 shares of common stock pursuant to outstanding options to purchase common stock of Standard Drilling Delaware pursuant to the Standard Drilling, Inc. 2006 Stock Incentive Plan that were assumed by us.

 

In connection with the merger, Standard Drilling Delaware paid us $60,000 as a deposit pursuant to the Merger Agreement. A condition to the merger was an agreement by our then principal stockholder to cancel, immediately prior to the merger, 20,000,000 outstanding shares of our common stock that had been issued to the principal stockholder.  In consideration of such cancellation, we paid the principal stockholder $60,000, and Standard Drilling Delaware recognized recapitalization expense of $60,000. Our then principal stockholder also assumed our net liabilities.

Following this transaction, we were organized to provide contract land drilling services to independent and major oil and gas exploration and production companies.  We constructed, owned and operated land drilling rigs.

On June 5, 2007, we entered into a purchase and sale agreement with Romfor West Africa, a subsidiary of Romfor Supply Company, Inc. ("Romfor") to sell our sole, completed 1,500 horsepower land-drilling rig ("Rig 1") for a gross purchase price of $7,800,000.  At the time of the signing of the purchase and sale agreement, Romfor was our largest individual creditor and Rig 1 represented substantially all of our assets. The purchase and sale agreement for Rig 1 closed on September 24, 2007.

On September 24, 2007, we also entered into an Asset Purchase Agreement with PBT Capital Partners, LLC (“PBT”), a private company whose sole shareholder is Prentis B. Tomlinson, Jr., who was our Chairman and Chief Executive Officer at the time we entered into the agreement.  Under the terms of the Asset Purchase Agreement, PBT assumed substantially all of our assets and associated and contingent liabilities in return for leaving not less than $839,068 in cash in our company and providing us a note payable in the amount of $600,000 which was due on or before December 31, 2007 and guaranteed by Mr. Tomlinson.  In connection with the Asset Purchase Agreement, $833,389 of the amount owed by us under an interim credit agreement was forgiven and we transferred all of the shares of our former wholly-owned subsidiary, Standard E& P, Inc., to PBT.  Additionally, in connection with the Asset Purchase Agreement, PBT assumed our obligations under our office space lease, our employment agreements with our various officers and directors and certain severance agreements we entered into with our former officers and directors.

 

We retained all of the liabilities relating to certain obligations, including:

5

•

the Advisory Consulting Agreement between us and International Capital Advisory, Inc.   Under the terms of this 36 month agreement entered into in June 2006, International Capital Advisory, Inc. was retained to provide certain business advisory services for a monthly fee of $10,000 plus reimbursement of reasonable expenses;

•

the Support Services Agreement between us and Petroleum Financial Inc. which represented a liability of $35,000.  In January 2008 this agreement was mutually terminated upon our payment to Petroleum Financial Inc. of $23,500, and

•

the obligation to continue to provide healthcare benefits to David Wilson, our former Manager of Operations under the terms of his severance agreement until February 2009.  To satisfy this obligation we retained coverage for Mr. Wilson as part of the insurance coverage provided to us under a commercial policy.

In connection with the Asset Purchase Agreement with PBT, in September 2007 and October 2007, we entered into mutual releases with various of our former officers, directors and parties who we had previously entered into agreements with, including:

•

Romfor West Africa, Ltd.

•

Prentis B. Tomlinson, Jr., our former Chairman and Chief Executive Officer,

•

O. Oliver Pennington, III, our former Vice President and Chief Financial Officer,

•

E.L. Moses, Jr., our former President, Chief Operating Officer and director,

•

W. Richard Andersen, our former director,

•

Peter F. Frey, Treasurer, and

•

Daniel A. Drum, our former Vice President of Finance.

Pursuant to these mutual releases these individuals and entities agreed to release us from any and all known and unknown claims, we agreed to release such parties from any and all known or known claims, and such individuals and entities agreed to cancel an aggregate of 11,000,000 shares of our common stock and options to purchase 5,650,000 shares of our common stock.

In connection with the Asset Purchase Agreement with PBT, Mr. Tomlinson resigned as our Chairman and Chief Executive Officer, and the Board appointed Mr. Edward L. Moses as Interim Chairman.  Subsequently on November 28, 2007, the Board appointed Mr. David S. Rector as our Chairman and principal executive officer.  Also on or around November 28, 2007, Messrs. W. Richard Anderson and Edward L. Moses resigned as directors, leaving Mr. Rector as our sole director.

In October 2008 we entered into a letter agreement with PBT and Mr. Tomlinson pursuant to which PBT was to place $233,425 in escrow on or before December 31, 2008.  These funds were to be applied to the payment of any failure to drill penalties which were accrued by us as of the date of the Asset Purchase Agreement in September 2007 under a lease which was included in the assets acquired by PBT if and to the extent any claim was made against us within 18 months from the date of the letter agreement.  In the event a valid claim was made against us, Mr. Tomlinson agreed to also immediately pay approximately $223,000 on our behalf.  The October 2008 letter agreement also contained representations and warranties from PBT that all failure to drill penalties resulting from another lease which was part of the assets acquired by PBT has been extinguished or released and that all liabilities under various employment agreements have also been extinguished or released together with an affirmative undertaking by PBT to provide us with written evidence of these releases.  Finally, the letter agreement contained an obligation of PBT to pay various property taxes totaling approximately $186,000 on our behalf related to assets acquired by it, as well as paying approximately $4,300 to a third party for other services rendered prior to the closing of the Asset Purchase Agreement and an affirmative undertaking by PBT to provide us with written evidence of these payments.  In consideration of these actions we agreed to cancel the $600,000 promissory note due us by PBT which was then in default.  PBT has not deposited the funds in escrow as required nor have they provided us with any of the releases or evidences of payment as required by the October 2008 letter agreement. Accordingly, PBT is currently in default under the terms of this letter agreement.  During 2008, we wrote-off the $600,000 note payable to us by PBT as the collection of the amount was deemed unlikely.  The accounting treatment for the debt did not impact any legal rights we had against PBT and Mr. Tomlinson.  On July 26, 2010, we initiated suit against Mr. Tomlinson and PBT as described in Item 3 of this report, and we are relying upon legal counsel to advise us as to the effect and enforceability of certain of the above-referenced documents and transactions in light of the conduct alleged in the suit.

On January 24, 2012 the Company consummated a Settlement Agreement with Prentis Tomlinson and PBT Capital Partners (“PBT”) whereby Mr. Tomlinson and PBT agreed to pay the Company a total of $115,000 in the form of seven payments, the last of which is due on July 30, 2012.  The Company received the first payment of $15,000 in January, 2012. No other payments have been received since January 2012.

On March 26, 2012 the Company obtained an Agreed Judgment whereby the District Court of Harris County, Texas, 151st judicial district, ordered and decreed Mr. Tomlinson and PBT to pay the Company the $115,000 pursuant to the Settlement

6

Agreement, and an additional $251,626.  In addition, the judgment ordered Tomlinson and PBT to pay the Company $5,000 for attorney fees incurred and that the entire judgment total should accrue interest at a rate of 5.0% per annum.  Furthermore, the Company is entitled to a total of $15,000 in attorney’s fees incurred in the enforcement and collection of the judgment. Payments of $10,000 were due at the end of each month until July 30, 2012 when $50,000 was due. No payments have been received since the payment received in January 2012.

Reverse Acquisition of EFactor

On February 1, 2013, we entered into an Acquisition and Share Exchange Agreement (the “Exchange Agreement”) by and among (i) Standard Drilling, (ii) EFactor, and (iii) certain shareholders of EFactor, pursuant to which 20 holders of approximately 70% of the outstanding common stock of EFactor transferred to us 6,580,250 of the common stock of EFactor in exchange for the issuance of 50,000,000 shares (the “Shares”) of our common stock and 5,000,000 shares of a yet to be created series of preferred stock to be entitled the “Series A Convertible Preferred Stock” (such transaction, the “Share Exchange”). This transaction closed on February 11, 2013.

As a result of the transaction, (i) EFactor became our majority-owned subsidiary, (ii) our sole officer and director resigned immediately, and we appointed four new directors and retained new executive officers; and (iii) we changed our business focus to owning, operating and administering certain assets related to a social media network, on- and offline content and interest in a subsidiary that conducts business operations as EQMentor and certain other intellectual property.

Subsequent to this filing, it is our intention to complete the acquisitions of MCC International, Ltd and Home Training Initiative, Ltd.  Agreements have been reached between parties but are subject to completion.

Our operations are now conducted through our majority-owned subsidiary, EFactor.  The term “we” as used throughout this document refers to Standard Drilling, Inc. and our wholly-owned subsidiary, The E-Factor Corp.  In accordance with financial reporting for reverse merger transactions the financial reporting contained herein is only that of EFactor and does not include Standard Drilling’s financial results.

Standard Drilling Business Prior to the Reverse Acquisition with EFactor

According to our prior management’s disclosure in our prior annual reports, following September 2007 transactions with Romfor West Africa and PBT Capital Partners, LLC, both of which are described earlier in this section under “Corporate History,” we did not have any business or operations and were considered a "shell" company under Federal securities laws until we closed the above-described transaction with EFactor.  Prior to the transaction with EFactor, we were actively seeking to acquire assets or shares of an entity actively engaged in business that generates revenues, in exchange for our securities.  Our purpose was to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to us by persons or firms who or which desire to seek the perceived advantages our company may offer.  We did not restrict our search to any specific business, industry, or geographical location.  

As of December 31, 2012 we were considered a “shell” company and had limited operations. We did not have any employees.   Mr. Rector, our Chief Executive Officer, provided services to us under the terms of a compensation arrangement with a company that he controls.  Mr. Rector is involved in other business activities and devotes his time and attention to our business on a part-time basis as needed. Our sole purpose at December 31, 2012 was to find a private company with operations that we could acquire in exchange for issuance of our securities.  As noted above, on February 11, 2013, we closed the transaction with EFactor.  As a result we will briefly touch on EFactor’s business in this section rather than focus on the time when we were a shell.

EFactor Business Overview

EFactor was organized as a Delaware corporation on October 30, 2007.  On March 1, 2008, EFactor launched EFactor.com, which has since become what we believe to be the world’s largest social network for entrepreneurs, with over 1 million members in all 195 countries listed by the United Nations, representing 240 industries. With EFactor.com, entrepreneurs can create new connections that bring value to the entrepreneur’s business or the fledgling entrepreneur’s idea. The core of EFactor’s service is to create these valuable connections that are based on a strong proprietary algorithm that is at the heart of EFactor’s database. In addition to matches between peers, mentors and investors - EFactor offers key support in 4 distinct areas:

1.

Funding: EFactor educates and facilitates entrepreneurs in their search for funding.

2.

Knowledge: EFactor provides key information, articles, webcasts, videos and advice and access to mentors and peers.

3.

Saving costs: EFactor negotiates discounts on real products and services that entrepreneurs need.

4.

Business Development: EFactor connects to relevant people via its unique algorithm and its live events.

7

Although EFactor is a global platform, its marketing effort is focused on five core territories, being:

·

USA

·

UK

·

India

·

China

·

The Netherlands

Additional territories will be developed over time with live events taking place in those geographies where a high concentration of members evolves.

EFactor has created and started to implement a strategy based on acquiring companies that fit with and add value to its core member base of Entrepreneurs. It has initiated research and identified a number of companies that can potentially provide a product or service that is scalable, profitable and easily adapted to accommodate thousands of new clients. Through this “roll-up strategy” EFactor will grow both organically and through acquisition over the next 12-18 months.

EFactor can be classified as a “niche social network” and operates in the generic “social media” industry. In Management’s view, niche social networks in particular are poised for growth in the coming years as people shift from generic platforms to those where they feel they are connecting with likeminded people sharing a common interest.

No direct competitors exist that combine the niche community for entrepreneurs with the real-time events and access to real resources and funding. There are other companies that do one of these aspects (i.e. only funding such as Gust or social networking in general such as Facebook) but not combined in the way such as EFactor. EFactor is unique in that it started out when social networking was in its infancy. There are very few companies as yet that have the expertise and in-depth knowledge that EFactor has built over the past four years of the industry as a whole and social media in detail.

EFactor’s technology platform, Business Network for Entrepreneurs, uses state-of-the-art technologies, such as data engine search and data vector analysis, to broaden the opportunities and to increase success in business relationships. Our data mapping algorithms introduce a new service, a new prospect, a new partner or a new investor to an EFactor member when they are ready to begin building this business relationship. Our business maturity modeling facilitates gap analysis for EFactor members and recommends pathways to accelerate their business maturity. We recognize technology is there to support human beings and our entire platform is conceived to integrate human interaction with technology to benefit the business relationship.

Business Network for Entrepreneurs is a platform for building high impact business relationships. For example, Business Network for Entrepreneurs’ gap analysis may identify the need for an EFactor’s member to improve their business goals.  It will then make recommendations for a well-qualified mentor to mature the member’s skills required to fill this gap.  At the same time the member could seek recommendations for a new business supplier located in a distant city.  Or a member can simply ask for opinions about attending a particular trade show.  Building strong business relationships leads to business success and Business Network for Entrepreneurs is an important tool in achieving those relationships.

8

ITEM 1A.  RISK FACTORS.

Before you invest in our securities, you should be aware that there are various risks. You should consider carefully these risk factors, together with all of the other information included in this annual report before you decide to purchase our securities. If any of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected.

Our auditors have raised substantial doubts as to our ability to continue as a going concern.

Our consolidated financial statements have been prepared assuming we will continue as a going concern. Since inception we have experienced recurring losses from operations, which losses have caused an accumulated deficit of approximately $ 18,823,370 as of December 31, 2012

These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.   We do not have any operations and are considered as “shell” company under Federal securities laws. Our operating expenses associated with maintaining our status as a public company and undertaking efforts to identify a business combination or merger partner are estimated at $200,000 annually. We also expect to incur additional costs associated with pursuing the litigation described elsewhere in this report, and as such might be required to pursue such litigation under a contingency fee arrangement.  We do not presently have sufficient working capital to fund these expenses and anticipate that we will continue to incur losses in future periods until we are successful in completing a business combination with an operating entity.  If for some reason we are not able to consummate a business combination within a reasonable period of time, we may not have sufficient resources to continue meeting our reporting obligations with the Securities and Exchange Commission or other obligations which arise from our minimal operations.  If we were to fail to continue to meet our SEC reporting obligations the attractiveness of our vehicle to an operating company would be severely diminished and our ability to consummate a business combination would be in jeopardy.

 

At December 31, 2012, we did not have an operating business.

At December 31, 2012, we did not have any operating business and we do not presently have sufficient capital to fund our expenses for the next 12 months. Our plans include a business combinations with or investments in other operating companies, or entering into a completely new line of business. At December 31, 2012, we had not yet identified any such opportunities. We cannot assure you that such a strategy will provide you with a positive return on your investment, and it may in fact result in a substantial dilution to your ownership and/or voting power in the Company, including a potential decrease in the value of your stock. These factors will substantially increase the uncertainty, and thus the risk, of investing in our stock.

We have a significant amount of debt.

At December 31, 2012 our balance sheet includes approximately $286,894 of contingent liabilities, including $202,874 in property taxes owed to the state of Texas, relating to the 2007 fiscal year, a related judgment payable in the amount of $8,325 dated June 30, 2009, and related accrued interest.  If one or more of these creditors should attempt to collect the amounts due, it is unlikely that we would be able to continue our operations as they are presently conducted and our ability to consummate a business combination or merger will be adversely impacted.  In that event, it is likely that you would lose your entire investment in our company.

You may find it extremely difficult or impossible to resell our shares. Even if an active public market is established, we cannot guarantee you that there will ever be any liquidity in our common stock.

While our common stock is quoted on the OTCQB Market Tier of the OTC Markets Group (formerly the Pink Sheets), there is not an active market for our common stock and there can be no assurance that an active public market for our common stock will ever be established.  Purchasers of our shares of common stock will face significant obstacles if they wish to resell the shares. Absent an active public market for our common stock, an investment in our shares should be considered illiquid.  Even if an active public market is established, it is unlikely a liquid market will develop. Because of our relatively small size and limited revenues, the investment community may show little or no interest in our securities and investors may not be readily able to liquidate their investment, if at all. Investors seeking liquidity in a security should not purchase our shares of common stock.

9

The tradability of our common stock is limited under the penny stock regulations which may cause the holders of our common stock difficulty should they wish to sell the shares.

Because the quoted price of our common stock is less than $5.00 per share, our common stock is considered a "penny stock," and trading in our common stock is subject to the requirements of Rule 15g-9 under the Securities Exchange Act of 1934 ("Exchange Act").  Under this rule, broker/dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements. The broker/dealer must make an individualized written suitability determination for the purchaser and receive the purchaser's written consent prior to the transaction.

SEC regulations also require additional disclosure in connection with any trades involving a "penny stock," including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated risks. These requirements severely limit the liquidity of securities in the secondary market because few broker or dealers are likely to undertake these compliance activities and this limited liquidity will make it more difficult for an investor to sell his shares of our common stock in the secondary market should the investor wish to liquidate the investment.  In addition to the applicability of the penny stock rules, other risks associated with trading in penny stocks could also be price fluctuations and the lack of a liquid market.

ITEM 1B.  UNRESOLVED STAFF COMMENTS.

Not applicable to a smaller reporting company.

ITEM 2.  DESCRIPTION OF PROPERTY.

As of December 31, 2012, our principal executive office occupies approximately 240 square feet of office space, at 1640 Terrace Way, Walnut Creek, California 94597, which we are provided at the home of Mr. David S. Rector, our sole officer and director, free of charge as well as all related office equipment and communication lines.

ITEM 3.  LEGAL PROCEEDINGS.

On July 26, 2010, we filed a lawsuit against Prentis Tomlinson and PBT Capital Partners (“PBT”) in the 151st Judicial District Court of Harris County, Texas, Case No. 2010-46137, seeking damages for breach of contract, negligent misrepresentation, fraud, unjust enrichment, fiduciary misconduct, exemplary damages, and declaratory judgment with respect to certain agreements entered into between Mr. Tomlinson, PBT and the Company. On January 24, 2012 we consummated a Settlement Agreement with Mr. Tomlinson and PBT whereby Mr. Tomlinson and PBT agreed to resolve a certain liability from Johnson County, Texas and pay us a total of $115,000 in the form of seven payments, the last of which was due on July 30, 2012.  We received only the first payment of $15,000 in January 2012.

 

On April 2, 2012 we obtained a Final Agreed Judgment in the above-entitled matter whereby the District Court of Harris County, Texas, 151^st Judicial District, ordered and decreed Mr. Tomlinson and PBT to pay us $351,626.30, pursuant to the Settlement Agreement.  In addition, the judgment ordered Tomlinson and PBT to pay the Company $5,000 for attorney fees incurred and that the entire judgment total should accrue interest at a rate of 5.0% per annum.  Furthermore, we are entitled to a total of $15,000 in attorney’s fees incurred in the enforcement and collection of the judgment.

ITEM 4.  MINE SAFETY DISCLOSURES.

Not applicable to our company.

10

PART II

ITEM 5.  MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS.

Since December 2007 our common stock has been quoted in the over-the-counter market on the OTCQB Market Tier of the OTC Markets Group (formerly the Pink Sheets) under the symbol STDR and trading in our common stock is extremely limited. The reported high and low bid prices for the common stock as reported on the OTCQB Market Tier are shown below for the periods indicated. The quotations reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not represent actual transactions.

2011	High	Low
First quarter ended March 31, 2011	$0.009	$0.009
Second quarter ended June 30, 2011	$0.023	$0.023
Third quarter ended September 30, 2011	$0.0055	$0.0055
Fourth quarter ended December 31, 2011	$0.0020	$0.0020
2012
First quarter ended March 31, 2012	$0.06	$0.002
Second quarter ended June 30, 2012	$0.06	$0.02
Third quarter ended September 30, 2012	$0.025	$0.020
Fourth quarter ended December 31, 2012	$0.021	$0.0016

The closing price of our common stock as reported on the OTCQB Market Tier of the OTC Markets Group was $0.10 on March 29, 2013. As of March 29,2013, there were approximately 230 record owners of our common stock.

The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock.  The Commission has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to a few exceptions, which we do not meet.  Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated therewith. There have been no cash dividends declared on our common stock, and we do not anticipate paying cash dividends in the foreseeable future.  Dividends are declared at the sole discretion of our Board of Directors.

Transfer Agent and Registrar

Our independent stock transfer agent is Pacific Stock Transfer Company.

 

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

None.

ITEM 6.  SELECTED FINANCIAL DATA.

Not applicable to a smaller reporting company.

11

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of our financial condition and results of operation for 2012 and 2011 should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Item 1A. Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in this Form 10-K.  We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

Change in Company Shell Status

On February 1, 2013, we entered into an Acquisition and Share Exchange Agreement (the “Exchange Agreement”) by and among (i) Standard Drilling, (ii) EFactor, and (iii) the shareholders of EFactor, pursuant to which 20 holders of 70% of the outstanding common stock of EFactor transferred to us 6,580,250 of the common stock of EFactor in exchange for the issuance of 50,000,000 shares (the “Shares”) of our common stock and 5,000,000 shares of a yet to be created series of preferred stock to be entitled the “Series A Convertible Preferred Stock” (such transaction, the “Share Exchange”). This transaction closed on February 11, 2013.  As a result of the Share Exchange, EFactor became our majority-owned subsidiary.  We are now a holding company with all of our operations conducted through EFactor, which primarily consist of owning, operating and administering certain assets related to a social media network, on- and offline content and interests in a subsidiary that conducts business operations as EQMentor and certain other intellectual property, as more fully discussed herein.

As a result of these transactions we acquired assets, and started operations, sufficient to cease being a shell company, as defined in Rule 12b-2.  Additional information regarding these transactions and the assets are contained herein.

Plan of Operation Prior to Reverse Acquisition of EFactor

Our plan of operation prior to the reverse acquisition of EFactor was to acquire a target company or business seeking the perceived advantages of being a publicly held corporation. As of December 31, 2012 we were considered a “shell” company and had limited operations. We did not have any employees. Our sole purpose at December 31, 2012 was to find a private company with operations that we could acquire in exchange for issuance of our securities.  As noted above, on February 11, 2013, we closed the transaction with EFactor.

Results of Operations for 2012 as compared to 2011

General and Administrative Expenses

The bulk of our general and administrative expenses for 2012 and 2011 were legal, accounting and consulting fees incurred to keep our filing status current and to search for new business opportunities. General and administrative expenses decreased to $40,232 for the year ended December 31, 2012, compared to $71,434 for the year ended December 31, 2011.  This decline is primarily attributable to an overall reduction in the activity of the Company’s legal activity associated with the entry of the Settlement Agreement with Prentis Tomlinson and PBT Capital Partners.

Total Other Income (Expenses)

In both 2012 and 2011 we had no interest income due to low amounts of cash.  Our interest expense for 2012 and 2011 was $15,021 and $14,908, respectively, and relates to contingent liabilities associated with a State of Texas tax liability described earlier in this report.  This increase represents the accrual of this liability for an entire calendar year.

 

Net Loss

For 2012, we had a net loss of $40,253.  The net loss is primarily attributable to the operating expenses of $40,232 and interest expense in the amount of $15,021, offset by a $15,000 gain on collection of judgment. During 2011, we had a total net loss of $86,342, which included operating expenses of $71,434 and $14,908 in interest expense.

12

Liquidity and Capital Resources

As of December 31, 2012, we had cash of $851 and a working capital deficit of $316,450 as compared to cash of $520 and a working capital deficit of $276,197 at December 31, 2011. Our operating expenses associated with maintaining our status as a public company and undertaking efforts to identify a business combination or merger partner are estimated at $200,000 annually, exclusive of costs associated with pursuing the litigation against Mr. Tomlinson and PBT described elsewhere in this report.  The amount of legal fees and costs will vary depending upon the course of the litigation, and we may be required to pursue such litigation under a contingency fee arrangement.  In addition, as described earlier in this report, PBT is in default under the terms of the October 2008 agreement with total potential claims of approximately $287,000 as of December 31, 2012. No requests for payment or other claims have been made against us for these amounts and, while it is possible that future claims may be made against us, in that event we would seek to immediately enforce the terms of the agreement with PBT which relieved us from those liabilities.  We do not believe that there is a more than remote likelihood that a third party claim for any of these amounts would be reasonably likely to result in our liquidity increasing or decreasing in any material way.

 

In addition, on September 15, 2009 we received via certified mail a copy of a Final Judgment entered against Standard Drilling, Inc. on June 30, 2009 in the District Court in Johnson County, Texas in the matter of Johnson County vs. Standard Drilling, Inc., cause number T200800519.  The court awarded the taxing unit plaintiffs therein, Johnson County, Texas, Joshua Independent School District, Hill County Junior College and City of Cleburne, Texas, a judgment against our company in the aggregate amount of $202,873.70 for taxes, penalties, interest and attorneys fees, including continuing interest, related to four tracts of land.  The court also awarded Romfor West Africa, Ltd. judgment against our company in the amount of $8,325.00, plus additional attorneys’ fees in the conditional event of appeal.  Our balance sheet at December 31, 2012 reflects contingent liabilities of approximately $278,394 related to these judgments.

 

Our ability to continue as a going concern depends on our ability to obtain sources of capital to fund our continuing operations and to seek out potential merger and acquisition partner. As of December 31, 2012, our cash balance is not sufficient to cover our current liabilities, obligations and working capital needs for 2013.  As a result of the Share Exchange with EFactor, EFactor became our majority-owned subsidiary.  We are now a holding company with all of our operations conducted through EFactor. EFactor has generated limited revenues and has minimal cash liquidity or capital resources.  Therefore, our future capital requirements will depend on many factors, including our ability to develop our intellectual property, our ability to generate positive cash flow from operations, and the effect of competing market developments. We will require additional funds to respond to business challenges, including the need to develop new features and products or enhance our existing solutions, improve our operating infrastructure or acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Any debt financing we secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain additional financing on terms favourable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be harmed.

Cash Flow from Operating Activities

 

For 2012, net cash used in operating activities was $1,669, primarily attributed to a net loss of $40,253 and an increase in accounts payable of $15,064 and accrued expenses of $23,520.

Cash Flow from Investing Activities

For 2012, net cash provided by investing activities was $-0-.

Cash Flow from Financing Activities

For 2012, net cash provided by financing activities was $2,000, as a result of a loan from our principal officers and director.

Recent accounting pronouncements

 

While there have been FASB pronouncements made effective subsequent to the issuance of these financial statements, none would have required restatement of the financial statements herein nor have they had any significant effect on future financial statements of the Company.

13

 

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable for a smaller reporting company.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO FINANCIAL STATEMENTS

 

Reports of MaloneBailey, LLP, Independent Registered Public Accounting Firm	15
Report of M&K CPAS, PLLC, Independent Registered Public Accounting Firm	16
Balance Sheets	17
Statements of Operations	18
Statements of Stockholders' Equity (Deficit)	19
Statements of Cash Flows	20
Notes to Financial Statements	21

 

14

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Directors

Standard Drilling, Inc.

Walnut Creek, California

 

We have audited the accompanying balance sheet of Standard Drilling, Inc. (the “Company”), as of December 31, 2012, and the related statement of operations, changes in stockholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the management of the Company. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Standard Drilling, Inc. as of December 31, 2012, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered losses from operations and has deficits in cash flows from operating activities, which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding these matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

/s/ MALONE BAILEY, LLP

www.malonebailey.com

Houston, Texas

 

March 29, 2013

15

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Standard Drilling, Inc.

Walnut Creek, California

 (A Development Stage Company)

We have audited the accompanying balance sheets of Standard Drilling, Inc. (a development stage company) as of December 31, 2011, and the related statements of   operations, changes in stockholders' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Standard Drilling, Inc., as of December 31, 2011 and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations, which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

March 30, 2012

STANDARD DRILLING, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
				December 31,			December 31,
				2012			2011
CURRENT ASSETS
	Cash			$	851		$	520
		Total Current Assets			851			520
		TOTAL ASSETS		$	851		$	520
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
	Accounts payable			$	28,407		$	13,343
	Accrued expenses				286,894			263,374
	Accounts payable - related party				2,000			-
		Total Current Liabilities			317,301			276,717
		TOTAL LIABILITIES			317,301			276,717
STOCKHOLDERS' DEFICIT
	Preferred stock, 10,000,000 shares authorized at
	par value of $0.001, no shares issued and outstanding				-			-
	Common stock, 100,000,000 shares authorized at
	par value of $0.001, 33,458,880  and 33,458,880 shares
	issued and outstanding, respectively				33,459			33,459
	Additional paid-in capital				18,473,461			18,473,461
	Deficit accumulated during the development stage				(18,823,370)			(18,783,117)
		Total Stockholders' Deficit			(316,450)			(276,197)
		TOTAL LIABILITIES AND
		STOCKHOLDERS' DEFICIT		$	851		$	520
The accompanying notes are an integral part of these financial statements.

STANDARD DRILLING, INC.
(A Development Stage Company)
Statements of Operations
										From Inception
				For the Years Ended						on February 14,2006
				December 31,						through December 31,
				2012			2011			2012
											(Unaudited)
OPERATING EXPENSES
	General and administrative				40,232			71,434			2,383,611
	Bad debt expense				-			-			600,000
		Total Operating Expenses			40,232			71,434			2,983,611
LOSS FROM OPERATIONS					(40,232)			(71,434)			(2,983,611)
OTHER EXPENSE
	Interest income							-			4,842
	Gain on collection of judgment				15,000						15,000
	Interest expense				(15,021)			(14,908)			(67,196)
		Total Other Expenses			(21)			(14,908)			(47,354)
LOSS BEFORE DISCONTINUED OPERATIONS					(40,253)			(86,342)			(3,030,965)
DISCONTINUED OPERATIONS					-			-			(15,792,405)
LOSS BEFORE INCOME TAXES					(40,253)			(86,342)			(18,823,370)
PROVISION FOR INCOME TAXES					-			-			-
NET LOSS				$	(40,253)		$	(86,342)		$	(18,823,370)
BASIC AND DILUTED  LOSS PER COMMON SHARE					(0.00)			(0.00)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC AND DILUTED					34,458,880			34,458,880
The accompanying notes are an integral part of these financial statements

20

STANDARD DRILLING, INC.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS

Standard Drilling, a Nevada corporation (“the Company"), was originally formed as a Nevada corporation on July 27, 2001, under the name Online Holdings, Inc.  Subsequently on September 1, 2006, pursuant to an Agreement and Plan of Merger dated July 24, 2006 by and among the Company, Standard Drilling Acquisition Co., a Delaware corporation (“Standard Drilling Acquisition”), and Standard Drilling, Inc., a Delaware corporation (“Standard Drilling Delaware”), Standard Drilling Acquisition was merged with and into Standard Drilling Delaware, and Standard Drilling Delaware became a wholly-owned subsidiary of the Company. As a result of the merger, the Company, which previously had no material operations, acquired the business of Standard Drilling Delaware.  Standard Drilling Delaware had been formed to provide contract land drilling services to independent and major oil and gas exploration and production companies. In conjunction with the merger, the Company changed its name to Standard Drilling, Inc.  As of September 30, 2007, the Company ceased all ongoing operations and is evaluating financing alternatives and strategic options.

On September 24, 2007, the Company entered into an Asset Purchase Agreement with PBT Capital Partners, LLC (“PBT”). Under the terms of the Asset Purchase Agreement, PBT assumed substantially all of the Company's assets and associated and contingent liabilities in order to improve the financial position of the Company. As of the effective date of the Asset Purchase Agreement, the Company's existing and contingent liabilities exceeded the value of its assets. The Asset Purchase Agreement was part of a plan of restructuring which the Company anticipated would allow it to raise additional capital and pursue new business opportunities.

On February 1, 2013, we entered into an Acquisition and Share Exchange Agreement by and among (i) Standard Drilling, (ii) EFactor, and (iii) certain shareholders of EFactor, pursuant to which 20 holders of approximately 70% of the outstanding common stock of EFactor transferred to us 6,580,250 of the common stock of EFactor in exchange for the issuance of 50,000,000 shares (the “Shares”) of our common stock and 5,000,000 shares of a yet to be created series of preferred stock to be entitled the “Series A Convertible Preferred Stock. This transaction closed on February 11, 2013. As a result of the Share Exchange, EFactor became our majority-owned subsidiary. We are now a holding company with all of our operations conducted through EFactor, which primarily consist of owning, operating and administering certain assets related to a social media network, on- and offline content and interests in a subsidiary that conducts business operations such as EQMentor and certain other intellectual property.

NOTE 2 – GOING CONCERN

As of December 31, 2012, the Company has negative working capital and has not established an ongoing source of revenues and has generated operating losses since inception. This factor raises substantial doubt about the Company's ability to continue as a going concern. The Company's ability to achieve and maintain profitability and positive cash flow is dependent upon its ability to attain additional financing and/or merge with an existing operating company. The Company’s plan to complete a merger or acquisition of an existing operating company. See Note 1 above.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Share-Based Payments - The Company has adopted the fair value-based method of accounting for stock-based employee compensation in accordance with FASB Pronouncements.  Option expense of $0 and $0 was recognized for the years ended December 31, 2012 and 2011, respectively.

Fair Value of Financial Instruments – Pursuant to ASC No. 820, “Fair Value Measurements and Disclosures”, the Company is required to estimate the fair value of all financial instruments included on its balance sheet as of December 31, 2012. The Company’s financial instruments consist of cash.  The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments.

21

STANDARD DRILLING, INC.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cash and Cash Equivalents - For purposes of financial statement presentation, the Company considers all highly liquid investments with a maturity of three months or less, from the date of purchase, to be cash equivalents. The Company had no cash equivalents at December 31, 2012 or 2011.

 

Concentration of Credit Risk – Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash and trade receivables.  Concentrations of credit risk with respect to trade receivables are limited due to the clients that comprise our customer base and their dispersion across different business and geographic areas.  We estimate and maintain an allowance for potentially uncollectible accounts and such estimates have historically been within management's expectations.  Our cash balances are maintained in accounts held by major banks and financial institutions located in the United States.  The Company occasionally maintains amounts on deposit with a financial institution that are in excess of the federally insured limit of $250,000.  The risk is managed by maintaining all deposits in high quality financial institutions. The Company had no deposits in excess of federally insured limits at December 31, 2012 and 2011.

Basic Loss Per Share - The computation of basic and diluted loss per common share is based on the weighted average number of shares outstanding during each period.

 

		December 31,
		2012				2011
NET LOSS		$	(40,286	)		$	(86,342	)
BASIC LOSS PER COMMON SHARE		$	(0.00	)		$	(0.00	)
BASIC WEIGHTED AVERAGE
NUMBER OF SHARES OUTSTANDING			34,458,880				34,458,880

The computation of basic loss per common share is based on the weighted average number of shares outstanding during the year.  Common stock equivalents are excluded from the computation of fully diluted loss per share because they would have been anti-dilutive.  The Company had 1,000,000 and 1,000,000 common stock equivalents outstanding as of December 31, 2012 and 2011, respectively.

 

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.  Actual results could differ from those estimates.

22

STANDARD DRILLING, INC.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes - The Company accounts for income taxes under the provisions issued by the FASB which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company computes tax asset benefits for net operating losses carried forward. The potential benefit of net operating losses has not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

Net deferred tax assets consist of the following components as of December 31, 2012 and 2011:

 

		2012				2011
Deferred tax assets:
NOL Carryover		$	6,735,542			$	6,719,843
Deferred tax liabilities:			-				-
Valuation allowance			(6,735,542	)			(6,719,843	)
Net deferred tax asset		$	-			$	-

 

The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 39% to pretax income from continuing operations for the years ended December 31, 2012 and 2011 due to the following:

 

		2012				2011
Book Loss from Operations		$	(15,699	)			(33,673	)
Valuation allowance			15,699				33,673
		$	-			$	-

 

At December 31, 2011, the Company had net operating loss carry forwards of approximately $17,270,653 that may be offset against future taxable income from the year 2013 through 2031.  No tax benefit has been reported in the December 31, 2012 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations.  Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.

Recently Issued Accounting Pronouncements

Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.

23

STANDARD DRILLING, INC.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2012 and 2011

NOTE 4 –  STOCKHOLDERS’ EQUITY

Preferred Stock

The Company is authorized to issue up to 10,000,000 of $.001 par value preferred stock, the rights and preferences of which are to be determined by the Board of Directors at or prior to the time of issuance. As of December 31, 2012 and 2011, the Company has zero shares of preferred stock issued and outstanding.

Common Stock

The Company is authorized to issue 100,000,000 shares of common stock, par value of $.001 per share. The founding shareholders were issued 23,000,000 shares of common stock for services rendered. On June 9, 2006, the Company completed a private offering of 9,111,500 units at a price of $2.00 per unit realizing net proceeds after offering costs of $15,868,290. Each unit consisted of two shares of common stock and a warrant to purchase one share of common stock at an exercise price of $1.75 per share for every two shares of common stock the investor purchases in the offering. There were 9,111,500 warrants granted in the offering and the warrants expire two years from purchase. These warrants are valued at $954,815. The Company recognized fees and expenses related to the offering of $1,734,710. The Company also granted 1,688,800 warrants at an exercise price of $1.00 per share with the same terms and conditions as those issued in the private offering to the placement agent. These warrants were valued at $176,973.  As of December 31, 2012 the warrants granted in the private offering are expired.

NOTE 5 –  OPTIONS AND WARRANTS

On June 6, 2008, the Company’s Board of Directors approved the reduction of the purchase price of all warrants issued by the Company to date, totaling warrants to purchase an aggregate of 10,800,300 common shares of the Company from $1.75 per share in connection with 9,111,500 warrants and from $1.00 per share in connection with 1,688,800 warrants to $0.125 per share, while extending the exercise period from June 9, 2008 until June 9, 2010.  The Company also revised the provisions for the acceleration of the termination of the warrants which would lapse in the event the common stock of the Company traded at $0.25 per share for a trading period of 20 days following notice to the warrant holders.  These 10,800,000 warrants expired during the year ended December 31, 2010.

On or about June 19, 2008, the Board of Directors of the Company approved the issuance of options to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.125 per share for (5) five years to the Company’s President and Chief Executive Officer, David S. Rector.  The Company issued the options as consideration for services rendered to the Company by Mr. Rector.  These options were valued at $112,442.

24

STANDARD DRILLING, INC.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2012 and 2011

Common Stock Options

 

Changes in stock options and warrants issued for the years ended December 31, 2012 and 2011are as follows:

						Weighted
		Number				Average
		Of				Exercise
		Options				Price
Outstanding, December 31, 2010			1,000,000			$	0.13
Granted			-				-
Exercised			-				-
Expired			-				-
Outstanding, December 31, 2011			1,000,000			$	0.13
Granted			-				-
Exercised			-				-
Expired			-				-
Outstanding, December 31, 2012			1,000,000			$	0.13
Exercisable, December 31, 2012			1,000,000			$	0.13

 

The following table summarizes information about stock options and warrants outstanding at December 31, 2012:

Options/Warrants Outstanding

Options/Warrants Exercisable

Weighted

Weighted Average

Weighted

Range of

Number

Average

Remaining Life

Average

Prices

Outstanding

Exercise Price

(in years)

Options

Exercise Price

$

0.13

1,000,000

$

0.13

0.50

1,000,000

0.13

NOTE 6 – CONTINGENCIES

In conjunction with the Asset Purchase Agreement with PBT certain liabilities and obligations of the Company were assumed by the PBT. The Company has not received formal releases from the liabilities assumed by PBT; however, no claims have been made against the Company for the liabilities and obligations. The Company would make a corresponding claim against PBT if any claims were made against the Company.

 

 On July 26, 2010, the Company initiated suit against a former officer, Prentis B. Tomlinson and his privately-held entity PBT, seeking damages for breach of contract, negligent misrepresentation, fraud, unjust enrichment, fiduciary misconduct, exemplary damages, and declaratory judgment with respect to certain agreements entered into between Mr. Tomlinson, PBT and the Company.  A trial date has not been scheduled.  The Company is vigorously prosecuting these claims.  However, no assurance can be given as to the outcome of any pending legal proceedings. 

25

STANDARD DRILLING, INC.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2012 and 2011

In July 2009 the Company received notification of $202,874 in property taxes owed to the state of Texas, relating to the 2007 fiscal year, and a related judgment payable in the amount of $8,325 dated June 30, 2009.  Accordingly, the Company has recorded contingent liabilities for these amounts, due to the fact that the Company believes these liabilities fall under the definition of those liabilities to have been legally assumed by Mr. Tomlinson pursuant to his agreement with the Company.  The Company has recorded interest on these contingent liabilities at a rate of 6.0% per annum.  Total accrued interest on these liabilities totaled $67,196 at December 31, 2012.

On January 24, 2012 the Company consummated a Settlement Agreement with Prentis Tomlinson and PBT Capital Partners (“PBT”) whereby Mr. Tomlinson and PBT agreed to pay the Company a total of $115,000 in the form of seven payments, the last of which is due on July 30, 2012.  The Company received the first payment of $15,000 in January, 2012. No other payments have been received since January 2012.

On March 26, 2012 the Company obtained an Agreed Judgment whereby the District Court of Harris County, Texas, 151st judicial district, ordered and decreed Mr. Tomlinson and PBT to pay the Company the $115,000 pursuant to the Settlement Agreement, and an additional $251,626.  In addition, the judgment ordered Tomlinson and PBT to pay the Company $5,000 for attorney fees incurred and that the entire judgment total should accrue interest at a rate of 5.0% per annum.  Furthermore, the Company is entitled to a total of $15,000 in attorney’s fees incurred in the enforcement and collection of the judgment. Payments of $10,000 were due at the end of each month until July 30, 2012 when $50,000 was due. No payments have been received since the payment received in January 2012.

NOTE 7 – RELATED PARTY TRANSACTIONS

During 2011 the Company paid $11,500, in consulting fees to David Stephen Group, an entity owned by the Company’s CEO, David Rector, as compensation for his services to the Company as sole officer and director.

On July 31, 2012 the Company received $2,000 proceeds from a related party in the form of an advance payable.  The advance payable is unsecured, bears no interest, and is due on demand.

NOTE 8 - SUBSEQUENT EVENTS

On February 1, 2013, we entered into an Acquisition and Share Exchange Agreement by and among (i) Standard Drilling, (ii) EFactor, and (iii) certain shareholders of EFactor, pursuant to which 20 holders of approximately 70% of the outstanding common stock of EFactor transferred to us 6,580,250 of the common stock of EFactor in exchange for the issuance of 50,000,000 shares of our common stock and 5,000,000 shares of a yet to be created series of preferred stock to be entitled the “Series A Convertible Preferred Stock. This transaction closed on February 11, 2013.

As a result of the transaction, (i) EFactor became our majority-owned subsidiary, (ii) our sole officer and director resigned immediately, and we appointed four new directors and retained new executive officers; and (iii) we changed our business focus to owning, operating and administering certain assets related to a social media network, on- and offline content and interest in a subsidiary that conducts business operations as EQMentor and certain other intellectual property.

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

(a) We dismissed M&K CPAS, PLLC. (“M&K”) as our independent registered public accounting firm. The decision to dismiss M&K was approved by our board of directors on February 11, 2013 and we notified M&K of their dismissal on February 12, 2013.

During the time of M&K’s engagement (September 16, 2009 to February 12, 2013) as our independent registered public accounting firm, (i) there were no disagreements between the Registrant and M&K on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of M&K, would have caused M&K to make reference to the matter in a report on our financial statements; and (ii) there were no reportable events as the term described in Item 304(a)(1)(v) of Regulation S-K. Neither the audit report of M&K for the year December 31, 2010 or December 31, 2011, contained an adverse opinion or a disclaimer of opinion or was qualified or modified as to uncertainty, audit scope or accounting principles, except that it raised substantial doubt about our ability to continue as a going concern.

We have requested M&K to furnish us with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the statement made above by us.  A copy of such letter is filed herewith as Exhibit 16.1 and incorporated herein by reference.

(b) Prior to our entry into the Acquisition and Exchange Agreement with The E-Factor Corp. (“EFactor”), the private company acquired in the transaction, Malone Bailey, LLP (“MaloneBailey”) was engaged to audit EFactor. Upon the closing of the reverse merger on February 11, 2013, we dismissed M&K as our independent registered public accounting firm, and MaloneBailey will continue as our independent registered public accounting firm for the year ending December 31, 2012.

ITEM 9A.  CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.  We maintain "disclosure controls and procedures" as such term is defined in Rule 13a-15(e) under the Exchange Act.  In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met.  Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.  The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Based on his evaluation as of the end of the period covered by this Annual Report on Form 10-K, our Chief Executive Officer who also serves as our Chief Financial Officer has concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure. Our management concluded that our disclosure controls and procedures were not effective as a result of material weaknesses in our internal control over financial reporting. We are a small organization with only one employee. Under these circumstances it is impossible to segregate duties. We do not expect our internal controls to be effective until such time as we complete an acquisition of an operating company and even then there are no assurances that our disclosure controls will be adequate in future periods.

 

Management's Report on Internal Control Over Financial Reporting.  Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

27

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2012.  In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework.  Based on the assessment using those criteria, our management concluded our internal control over financial reporting was not effective at December 31, 2012.  As set forth above, we are a small organization with only one employee. Under these circumstances it is impossible to segregate duties and our management has concluded that this lack of segregation of duties represents a material weakness in our internal control over financial reporting at December 31, 2012.  

 

Changes in Internal Control over Financial Reporting.  There have been no changes in our internal control over financial reporting during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.  OTHER INFORMATION.

None.

28

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

As of December 31, 2012, our executive officers were as follows:

Executive officers and directors

Name	Age	Positions
David S. Rector	65	Chief Executive Officer, President, Chief Financial Officer, Secretary, Treasurer and director

Mr. Rector has served as our Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Director since November 2007.  Mr. Rector previously served as a member of the Board of Directors, the Chief Executive Officer, President, principal accounting officer, Secretary, and Treasurer of Nevada Gold Holdings, Inc. (OTCBB: NGHI) from April 2004 until December 2008.  Mr. Rector previously served as President, Chief Executive Officer and Chief Operating Officer of Nanoscience Technologies, Inc. from June 2004 to December 2006.  Since June 1985, Mr. Rector has been the principal of the David Stephen Group, which provides enterprise consulting services to emerging and developing companies in a variety of industries.  From January 1995 until June 1995, Mr. Rector served as the General Manger of the Consumer Products Division of Bemis-Jason Corporation.  Mr. Rector was employed by Sunset Designs Inc., a manufacturer and marketer of consumer product craft kits from June 1980 until June 1985. From June 1983 until June 1985, Mr. Rector served as President and General Manager of Sunset, from August 1981 until May 1985, Mr. Rector served as an Administrative and International Director of Sunset, and from June 1980 until August 1981, Mr. Rector served as Group Product Manager for Sunset.  Mr. Rector received a Bachelor’s degree in Business Administration from Murray State University in 1969.  

Mr. Rector currently serves, or has served during the last five years, on the Board of Directors of each of the following public companies for the respective tenures indicated below.

Public Company Name		Tenure as Director
Senesco Technologies, Inc. (NYSE AMEX:SNT)		February 2002-present
Dallas Gold & Silver Exchange (NYSE AMEX:DSG)		May 2003-present
Nevada Gold Holdings, Inc. (OTCBB: NGHI)		April 2004-present
US Uranium, Inc. (OTCBB: USUI)		June 2007-March 2009
California Gold Corp. (OTCBB:)		June 2007-present
Li3 Energy, Inc. (OTCBB: LIEG)		June 2008 – present
Universal Gold Mining Corp. (OTC Markets Grou:FEDS)		September 2008-November 2010
RxElite, Inc. (OTCBB: RXEI)		September 2007-February 2009
Nanoscience Technologies, Inc. (NANS.OB)		June 2004 - December 2006

Mr. Rector devoted approximately 40% of his time and attention to our company.

Each director is elected at our annual meeting of stockholders and holds office until the next annual meeting of stockholders, or until his successor is elected and qualified.

Director Qualifications, Board Leadership Structure and Risk Management

Mr. Rector’s significant experience in providing enterprise level consulting services, together with his experience as a member of Boards of Directors of publicly traded companies provides the specific experience, qualifications, attributes or skills that led our Board to conclude that he should be serving as a director.

29

Mr. Rector serves as both our Chief Executive Officer and our sole director.  The business and operations of our company are managed by Mr. Rector as our sole officer and director, including oversight of various risks, such as operational and liquidity risks, that our company faces.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively.  Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file.  Based on our review of the copies of such forms received by us, and to the best of our knowledge, all executive officers, directors and persons holding greater than 10% of our issued and outstanding stock have filed the required reports in a timely manner during 2012.

 

Code of Ethics and Business Conduct

In 2002 we adopted a Code of Ethics and Business Conduct which applies to our officers, directors and employees.  The Code of Ethics and Business Conduct are written standards that are reasonably designed to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us, compliance with applicable governmental laws, rules and regulations, the prompt internal reporting of violations of the code to an appropriate person or persons identified in the code, and accountability for adherence to the code.  We will provide a copy, without charge, to any person desiring a copy of the Code of Ethics and Business Conduct, by written request to, 1640 Terrace Way, Walnut Creek, California  94597, Attention: Corporate Secretary.

Committees of our Board of Directors

Our Board of Directors has not established any committees, including an Audit Committee, a Compensation Committee or a Nominating Committee, any committee performing a similar function. The functions of those committees are being undertaken by our sole director.

We do not have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed.  Our Board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors.  Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees.

Our sole director is not an "audit committee financial expert" within the meaning of Item 401(e) of Regulation S-K. In general, an "audit committee financial expert" is an individual member of the audit committee or Board of Directors who:

•	understands generally accepted accounting principles and financial statements,
•	is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,
•	has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,
•	understands internal controls over financial reporting, and
•	understands audit committee functions.

Our securities are not quoted on an exchange, however, that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include "independent" directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.

 

ITEM 11.  EXECUTIVE COMPENSATION.

The following table summarizes all compensation recorded by us in the last completed fiscal year for our principal executive officer, each other named executive officer serving as such whose annual compensation exceeded $100,000, and up to two additional individuals for whom disclosure would have been made in this table but for the fact that the individual was not serving as an executive officer of our company at December 31, 2012.

 

SUMMARY COMPENSATION TABLE
Name and principal position (a)	Year (b)	Salary ($) (c)	Bonus ($) (d)	Stock Awards ($) (e)	Option Awards ($) (f)	Non-Equity Incentive Plan Compen-sation ($) (g)	Non-qualified Deferred Compen-sation Earnings ($) (h)	All Other Compen-sation ($) (i)	Total ($) (j)
David S. Rector 1	2012	0	0	0	0	0	0	0	0
	2011	0	0	0	0	0	0	11,500	11,500
	2010	0	0	0	0	0	0	105,000	105,000

	1	Mr. Rector’s compensation includes$11,500 and  $105,000 for the years 2011 and 2010 respectively in consulting fees to an entity owned by Mr. Rector under the terms of an oral agreement as compensation for his services to us for 2011 and 2010, respectively.  There were no further payments due Mr. Rector after June 2011.

  

How Mr. Rector’s Compensation is Determined

Mr. Rector is not a party to an employment agreement with our company.  Under the terms of an oral agreement, we make periodic payments to an entity owned by Mr. Rector (The David Stephen Group) as compensation for his services to us as our sole officer and director.  The amount of this compensation is determined from time to time by our Board of Directors, of which he is the sole member.  The Company had paid Mr. Rector (through the David Stephen Group) $5,000 per month for his services.  This arrangement was terminated in June of 2011. The amount of compensation paid was arbitrary and such compensation is not tied to any performance goals or other traditional measurements.  The Board has also, from time to time, awarded Mr. Rector with stock option grants as compensation for his services.  The number and terms of the options granted to Mr. Rector is arbitrarily determined and relies on no specific formula.  The amount of compensation to be paid to Mr. Rector’s company may be increased or decreased from time to time at the sole discretion of our Board.  Mr. Rector provides various corporate and administrative services for the Company, including managing all accounting, auditing, banking, legal, and SEC-reporting matters, overseeing public relations / investor relations, state certifications, and transfer agent