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EX-31.1 - EXHIBIT 31.1 SECTION 302 CERTIFICATION - MEDIJANE HOLDINGS INC.f10k022813_ex31z1.htm
EX-32.1 - EXHIBIT 32.1 SECTION 906 CERTIFICATION - MEDIJANE HOLDINGS INC.f10k022813_ex32z1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K


(Mark One)


  X . ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended  February 28, 2013


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

For the transition period from _______________to ______________


Commission file number   333-167275


MOKITA, INC.

(Exact name of registrant as specified in its charter)


Nevada

 

46-0525378

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)


7695 SW 104th St., Suite 210, Miami, FL

 

33156

(Address of principal executive offices)

 

(Zip Code)


Registrant's telephone number, including area code:    (305) 663-7140


Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class

 

Name of Each Exchange On Which Registered

Not Applicable

 

Not Applicable


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


Not Applicable

(Title of class)


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 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 last 90 days. Yes  X . 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-K (§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      .


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter)  is not contained herein, and will not be contained, to the best of 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. See definition 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

      . (Do not check if a smaller reporting company)

Smaller reporting company

  X .


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      . No  X .


The aggregate market value of Common Stock held by non-affiliates of the Registrant on August 31, 2012 was $8,167,500 based on a $2.475 average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.


Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date: 7,800,000 common shares outstanding as of June 11, 2013.


DOCUMENTS INCORPORATED BY REFERENCE

None.






Table of Contents


Item 1.

Business

3

Item 1A.

Risk Factors

4

Item 1B.

Unresolved Staff Comments

9

Item 2.

Properties

9

Item 3.

Legal Proceedings

19

Item 4.

Mine Safety Disclosures

19

Item 5.

Market for our Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

19

Item 6.

Selected Financial Data

20

Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

20

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

25

Item 8.

Financial Statements and Supplementary Data

25

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

27

Item 9A.

Controls and Procedures

27

Item 9B.

Other Information

29

Item 10.

Directors and Executive Officers and Corporate Governance

30

Item 11.

Executive Compensation

31

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

33

Item 13.

Certain Relationships and Related Transactions, and Director Independence

34

Item 14.

Principal Accountant Fees and Services

34

Item 15.

Exhibits, Financial Statement Schedules

35




2




PART I


Item 1.

Business


This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.


Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.


Our financial statements are stated in United States Dollars ($) and are prepared in accordance with United States Generally Accepted Accounting Principles.


In this annual report, unless otherwise specified, all dollar amounts are expressed in United States Dollars and all references to “common shares” refer to the common shares in our capital stock.


Except as otherwise indicated by the context, references in this report to “we”, “us” “our” and “our company” are references to Mokita, Inc. 


General Overview


Our company was incorporated in the State of Nevada on April 21, 2009, under the name Mokita Exploration, Ltd. Our company originally intended to develop its business as a mineral exploration company, however, due to the low supply of potentially profitable mining properties, our company abandoned its original plan and restructured its business strategy.  We then focused our efforts on developing a business as a provider of credit card payment services for Canadian customers.  To reflect our company’s new focus, on February 5, 2010, we filed a Certificate of Amendment to the Articles of Incorporation changing our name to Mokita, Inc.  


Our company is no longer working to develop a business as a provider of credit card payment services and we have changed our business direction towards the acquisition, exploration and development of oil and gas properties.  We decided to enter the oil and gas industry because we were seeking out viable options to create value for our shareholders.  After conducting independent research on the feasibility of discovering and exploiting commercially recoverable amounts of oil and gas, we determined that an investment in oil and gas properties would be an excellent long term strategy that could potentially lead to lucrative business opportunities.  On July 20, 2011, we filed a Certificate of Amendment to the Articles of Incorporation changing our name to Mokita Ventures, Inc., to reflect our company’s new business plan.  The name change to Mokita Ventures, Inc. was subsequently rejected by FINRA and accordingly, on May 30, 2013, we filed a Certificate of Amendment to the Articles of Incorporation to restore our name to Mokita, Inc.


Our Business


We are currently an exploration stage company focused on the acquisition, development and production of oil and gas properties.  As of the date of this Report, we have entered into two Participation Agreements, as discussed below in greater detail, for a percentage working interest in two oil and gas properties.  If the properties are viable and can be developed, we will receive a pro-rata share of any revenues generated from the properties proportionate to our percentage working interests in the properties.  There are leases underlying the wells in which we own working interests; however we are not the holder of these leases and therefore we are not responsible for the payment or evaluation of any obligations under such leases. The leaseholder of the properties is responsible for paying and maintaining the leases.  If we are successful in generating revenues from our working interests in these oil and gas properties, we intend to acquire working interests in additional wells in the project area, subject to obtaining additional financing.  Our business strategy also includes seeking opportunities for mergers or acquisitions with other companies or entities.




3




Although we are currently focused on projects located in certain geographic regions, we continually evaluate attractive resource opportunities in other geographic areas. Our current focus is on acquiring working interests in oil and/or gas wells in the state of Oklahoma.  The oil and gas properties in which we have working interests do have proven reserves of oil or gas, although any proven reserves are limited in nature and the ultimate capacity of the properties remains unknown.  We have a limited operating income and as a result, we depend upon funding from various sources to continue operations and to implement our growth strategy.


To date, we have earned revenues of $12,027, have cash on hand of $1,704 and have incurred a net loss of $612,705 since our inception through February 28, 2013. We do not anticipate earning substantial revenues until such time as the oil and gas properties in which we have working interests enter into commercial production. These factors raise substantial doubt about our company’s ability to continue as a going concern. The continuation of our company as a going concern is dependent upon the continued financial support from our shareholders, the ability of our company to obtain necessary equity financing to achieve our operating objectives, and the attainment of profitable operations from our working interests in our oil and gas properties.


On March 15, 2012, we amended the terms of our convertible note payable to Exchequer Finance Inc.  Under the amended terms of the note, the amount payable of $215,000 is now unsecured, bears interest at 10% per annum, and is payable on demand.  In addition, the loan is convertible into shares of our common stock at a conversion price set at 75% of the average closing prices for the ten trading days immediately preceding the conversion date. As at February 28, 2013 we had accrued $20,603 of interest payable in respect of the note.


REPORTS TO SECURITY HOLDERS


We are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission and our filings are available to the public over the internet at the Securities and Exchange Commission’s website at http://www.sec.gov. The public may read and copy any materials filed by us with the Securities and Exchange Commission at the Securities and Exchange Commission’s Public Reference Room at 100 F Street N.E. Washington D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-732-0330. The SEC also maintains an Internet site that contains reports, proxy and formation statements, and other information regarding issuers that file electronically with the SEC, at http://www.sec.gov.


Item 1A.

Risk Factors


Risks Associated with our Company


We are an exploration stage company with a limited operating history and working interests in wells having no proven reserves; thus, we may not be able to develop commercial operations.


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.  The wells in which we currently own working interests have not been shown to contain any reserves.  If oil or gas reserves in commercially exploitable quantities are discovered on any of the oil and gas properties in which we hold working interests, we will be required to expend a portion of the costs needed to establish the extent of the resource, extract the resource, and develop and process the resources.  If a major reserve is discovered, there can be no assurance that such a reserve will be large enough to justify our operations in which case our business may fail.


We currently do not generate revenues, and as a result, we face a high risk of business failure.


Since changing our business plan to focus on the acquisition, development and production of oil and gas properties, we have primarily focused our efforts on the location and acquisition of our working interests in oil and gas properties.  In order to generate revenues, we will have to incur a portion of the operators’ expenses in the evaluation and development of the oil and gas properties.  To date, we have had insufficient financial resources to contribute to any operators’ expenses in respect of our oil and gas assets and there is no guarantee that we will have timely access to such financial resources in the future, if at all.  Further, there is no history upon which to base any assumption as to the likelihood that we will secure any future financing or generate any operating revenues from our working interests.  We recognize that if we are unable to generate significant revenues, our entire business may fail.




4




Our lack of diversification increases the risk of an investment in our company, and our financial condition and results of operations may deteriorate if we fail to diversify.


We lack diversification, in terms of both the nature and geographic scope of our business.  The business of our company is focused solely on the acquisition, exploration and development of oil and gas properties and to that end we have acquired small percentage working interests in only two wells located in Oklahoma.  As a result, we will likely be impacted more acutely by factors affecting our industry or the regions in which we operate than we would if our business were more diversified.  


We may not effectively manage the growth necessary to execute our business plan.


Our business plan anticipates an increase in the number of our oil and gas interests and in strategic business partnerships.  This growth will place significant strain on our personnel, systems and resources.  We expect that we will be required to hire qualified employees to help us manage our growth effectively.  We believe that we will also be required to improve our management, technical, information and accounting systems, and controls and procedures.  We may not be able to maintain the quality of our operations, control our costs and expand our internal management, technical information and accounting systems to support our desired growth. If we fail to manage our anticipated growth effectively, our business could be adversely affected.


Our Articles of Incorporation exculpate our officers and directors from any liability to our company or our stockholders.


Our Articles of Incorporation contain a provision limiting the liability of our officers and directors for their acts or failures to act, except for acts involving intentional misconduct, fraud or a knowing violation of law. This limitation on liability may reduce the likelihood of derivative litigation against our officers and directors and may discourage or deter our stockholders from suing our officers and directors based upon breaches of their duties to our company.


The loss of key management personnel could have a material adverse effect on our business.


Our ability to develop our business depends in large part, on our ability to attract and maintain qualified key personnel.  Competition for such personnel is intense, and we cannot assure you that we will be able to attract and retain them.  Our development now and in the future will depend on the efforts of key management figures, such as, Irma N. Colón-Alonso, our president, chief executive officer, chief financial officer, secretary, treasurer, and director.   The loss of any key people could have a material adverse effect on our business.  We do not currently maintain life insurance on any of our key employees.


Since our executive officers have very little or no direct experience in the oil and gas industry, our company may never be successful in implementing its business strategy.


Irma N. Colón-Alonso, our president, chief executive officer, chief financial officer, secretary, treasurer, and director, has very little or no direct experience in the development of a business focused on the acquisition, exploration and development of oil and gas properties. As a result, our management may not be fully aware of many of the specific requirements related to the successful operation thereof. Management’s decisions and choices may not accurately account for the prevailing factors guiding others in the industry in their decision making processes. Consequently our operations, earnings and ultimate financial success could suffer irreparable harm due to management’s lack of experience. As a result, we may have to suspend or cease operations.


As our company’s management has other outside business activities, they are not devoting all of their time to our company, which may result in periodic interruptions or business failure.


Irma N. Colón-Alonso, our president, chief executive officer, chief financial officer, secretary, treasurer, and director, has other outside business activities. Ms. Colón-Alonso, devotes approximately 5 hours per week to our company and its operations. Our operations may be sporadic and occur at times which are not convenient to Ms. Colón-Alonso, which may result in periodic interruptions or suspensions of our business plan. If the demands of our company’s business requires her full business time, she is prepared to adjust her timetable to devote more time to our company’s business. However, she may not be able to devote sufficient time to the management of our company’s business, which may result in periodic interruptions in implementing our company’s plans in a timely manner. Such delays could have a significant negative effect on the success of the business.  




5




Risks Associated with our Business


There can be no assurance that oil or gas in any commercially material quantity will be discovered on, or produced from, our oil and gas interests which could cause our business to fail.


Exploration for economic reserves of oil and gas is subject to a number of risks.  Few properties that are explored are ultimately developed into producing oil and/or gas wells.  Moreover, if oil and gas reserves are discovered, they may not be present or produced in material quantities.  Although minimal oil and gas reserves have been proven and produced from the Helen Morrison #1 Well located on our Noble County property, there is no guarantee that economically significant reserves are present or will be produced on the property.  If oil or gas is not discovered on, or produced from, any of our current or future working interests in any economically significant quantity, our business will fail.  In addition, a productive well may become uneconomic in the event water or other deleterious substances are encountered which impair or prevent the production of oil and/or gas from the well.  Production from any well may be unmarketable if it is permeated with water or other deleterious substances.  Also, the marketability of oil and gas which may be acquired or discovered will be affected by numerous related factors, including the proximity and capacity of oil and natural gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental protection, all of which could result in greater expenses than revenue generated by the wells.


We have insufficient financial resources to contribute to the operating costs of the oil and gas property in which we have a working interest, which may cause our business to fail.


On September 14, 2012, we elected not to contribute approximately $6,000 toward a well stimulation proposal by the operator of our Noble County property.  As a result, we were deemed a non-consenting investor pursuant to the operating agreement for the property and we will lose all revenue for the Noble County property for a period of time sufficient to recover 500% of our proportionate share of the total expenses for the stimulation project. Revenues earned from the property were approximately $1,000 for the year ended February 28, 2013. The proportionate expenses for the stimulation project that were charged to our company by the operator were approximately $6,000 for the year ended February 28, 2013. Therefore, approximately $30,000 of future revenue from the project will be paid to the other investors in this project who have consented to the stimulation project and whom paid their allocable share of the approximate $6,000 of expenses that was charged to us, but which the we elected not to pay, before we can earn future revenue from our interest in the property. This elective non-consent by our company and 500% penalty charged pursuant to the operating agreement resulted in a full impairment of the property at February 28, 2013.  As a result of the impairment and other factors, in their report on our audited financial statements for the years ended February 28, 2013 and February 29, 2012, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosure describing the circumstances that lead to this disclosure by our independent auditors.  In the absence of any foreseeable revenue, we are dependent on our ability to raise capital from stockholders or other sources to meet our obligations and repay our liabilities arising from normal business operations when they become due. If we fail to raise sufficient capital, our business will fail.


Our property is held in the form of a working interest in an operating agreement and lease. If the specific requirements of our working interest are not met, our working interest may terminate or expire.


Our oil and gas interest is a working interest in an operating agreement and lease.  If we fail to meet the specific requirements of the operating agreement or lease, especially future drilling and production requirements, our working interest or the underlying lease may be terminated or otherwise expire. We cannot be assured that we will be able to meet our obligations under the operating agreement or lease.  The termination or expiration of our working interest relating to our lease would harm our business, financial condition and results of operations.


The nature of oil and gas exploration makes the estimates of costs uncertain, and our operations may be adversely affected if we underestimate such costs.


We are required share a portion of the ongoing costs of exploration and development of the oil and gas properties in which we have working interests, in a proportion equal to our working interests.  It is difficult to project the operating costs associated with an exploratory drilling program. Complicating factors include the inherent uncertainties of drilling in unknown formations, the costs associated with encountering various drilling conditions, such as over-pressured zones and tools lost in the hole, and changes in drilling plans and locations as a result of prior exploratory wells. If the operators of our oil and gas interests underestimate the costs or potential challenges of such programs, we may be required to seek additional funding or abandon our interests.




6




Oil and gas operations are subject to comprehensive regulation, which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our company.


Oil and gas operations are subject to federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Oil and gas operations are also subject to federal, state, and local laws and regulations, which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits will be received. Environmental standards imposed by federal, provincial, or local authorities may be changed and any such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages, which it may elect not to insure against due to prohibitive premium costs and other reasons. To date we have not been required to spend any material amount on compliance with environmental regulations. However, we may be required to do so in the future and this may affect our ability to expand or maintain our operations.


Exploration and production activities are subject to certain environmental regulations, which may prevent or delay the commencement or continuance of our operations.


In general, our exploration and production activities are subject to certain federal, state and local laws and regulations relating to environmental quality and pollution control. Such laws and regulations increase the costs of these activities and may prevent or delay the commencement or continuance of a given operation. Compliance with these laws and regulations has not had a material effect on our operations or financial condition to date. Specifically, we are subject to legislation regarding emissions into the environment, water discharges and storage and disposition of hazardous wastes. In addition, legislation has been enacted which requires well and facility sites to be abandoned and reclaimed to the satisfaction of state authorities. However, such laws and regulations are frequently changed and we are unable to predict the ultimate cost of compliance. Generally, environmental requirements do not appear to affect us any differently or to any greater or lesser extent than other companies in the industry.


Prices and markets for oil and gas are unpredictable and tend to fluctuate significantly, which could reduce profitability, growth and the value of our business.


Our revenues and earnings, if any, will be highly sensitive to the prices of oil and gas. Prices for oil and gas are subject to large fluctuations in response to relatively minor changes in the supply and demand for oil and gas, market uncertainty and a variety of additional factors beyond our control.  These factors include, without limitation, governmental fixing, pegging, controls or any combination of these and other factors, changes in domestic, international, political, social and economic environments, worldwide economic uncertainty, the availability and cost of funds for exploration and production, the actions of the Organization of Petroleum Exporting Countries, governmental regulations, political stability in the Middle East and elsewhere, war, or the threat of war, in oil producing regions, the foreign supply of oil, the price of foreign imports and the availability of alternate fuel sources. Significant changes in long-term price outlooks for crude oil or natural gas could have a material adverse effect on revenues as well as the value of our interests in the wells.


Any change to government regulation/administrative practices may have a negative impact on our ability to operate and our profitability.


The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the United States, or any other jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally alter the ability of our company to carry on our business.


The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on us. Any or all of these situations may have a negative impact on our ability to operate and/or our profitability.




7




Our business could be impaired if the leaseholders and operators of our oil and gas interests fail to comply with applicable regulations.


Failure to comply with government regulations could subject the leaseholders and operators of our oil and gas interests to civil and criminal penalties and require them to forfeit property rights or licenses, which in effect could cause us to lose our working interests.  They may also be required to take corrective actions for failure to comply with applicable regulations which could require substantial capital expenditures, a portion of which we would be required to bear.  As a result, our business operations and profitability could deteriorate due to regulatory constraints.


We may be unable to establish or maintain strategic relationships with industry participants, which may diminish our ability to conduct our operations.


Our potential to enter into strategic commercial arrangements or partnerships to obtain additional working interests in oil and gas properties and to grow our business depends upon our ability to develop and maintain close working relationships with industry participants and government officials.  We may not be able to establish these strategic relationships, or if established, we may not be able to maintain them due to several factors including the inexperience of our management in the oil and gas industry, our limited number of working interests in oil and gas properties and the limited number of hours our management currently devotes to our business.  In addition, the dynamics of our relationships with strategic partners may require us to incur expenses or undertake activities that we would not otherwise be inclined to undertake.  If strategic relationships are not established or maintained, our business prospects may be limited, which could diminish our ability to conduct our operations.


Risks Associated with our Common Stock


There is no active trading market for our common stock and if a market for our common stock does not develop, our investors will be unable to sell their shares.


There is currently no active trading market for our common stock and such a market may not develop or be sustained. If a public market for our common stock does not develop, then investors may not be able to resell the shares of our common stock that they have purchased and may lose all of their investment. If we establish a trading market for our common stock, the market price of our common stock may be significantly affected by factors such as actual or anticipated fluctuations in our operation results, general market conditions and other factors. In addition, the stock market has from time to time experienced significant price and volume fluctuations that have particularly affected the market prices for the shares of exploration stage companies, which may affect the market price of our common stock in a materially adverse manner.


We do not expect to pay dividends in the foreseeable future.


We do not intend to declare dividends for the foreseeable future, as we anticipate that we will reinvest any future earnings in the development and growth of our business. Therefore, investors will not receive any funds unless they sell their common stock, and stockholders may be unable to sell their shares on favorable terms or at all. We cannot assure you of a positive return on investment or that you will not lose the entire amount of your investment in our common stock.


We may in the future issue additional shares of our common stock which would reduce investors’ ownership interests in our company and which may dilute our share value.


Our Articles of Incorporation authorizes the issuance of 100,000,000 shares of common stock, par value $0.001 per share. The future issuance of all or part of our remaining authorized common stock may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.




8



Our stock is a penny stock. Trading of our stock may be restricted by the Securities and Exchange Commission’s penny stock regulations 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 Securities and Exchange Commission 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, 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 limit a stockholder’s ability to buy and sell our stock.


The Financial Industry Regulatory Authority (“FINRA”) has adopted rules that relate to the application of the SEC’s penny stock rules in trading our securities and require that a broker/dealer have reasonable grounds for believing that the investment is suitable for that customer, prior to recommending the investment. 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’s requirements make it more difficult for broker/dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker/dealers may be willing to make a market in our common stock, reducing a shareholder’s ability to resell shares of our common stock.


Item 1B.

Unresolved Staff Comments


None


Item 2.

Properties


Our property consists of office space located at 7695 SW 104th St., Suite 210, Miami, FL 33156. We use such space for no charge to our company from Irma Colon-Alonso. Currently, this space is sufficient to meet our needs; however, once we expand our business to a significant degree, we will have to find a larger space. We do not currently own any real estate.


On May 12, 2011, our company entered into a participation agreement with Buckeye Exploration Company. Pursuant to the terms and conditions of the Buckeye participation agreement, our company purchased a 6% working interest in that certain well, known as the Helen Morrison #1 Well, which is located in the Southwest Otoe Prospect in Noble County, Oklahoma.  In exchange for the working interest, our company paid a purchase price of $32,670 to Buckeye.


On September 14, 2012, our company was deemed a non-consenting investor, pursuant to the operators agreement, in a proposal to stimulate the Noble County property to increase production. As a result, and per the operating agreement with the property operator, our company will lose its revenue for the Noble County property for a period of time sufficient to recover 500% of our company’s invoiced proportionate share of the total expenses for the stimulation project. Revenues earned from this property were approximately $1,000 for the year ended February 28, 2013. The proportionate expenses for the stimulation project that were charged to our company by the operator were approximately $6,000 for the year ended February 28, 2013. Therefore, approximately $30,000 of future revenue from this project will be paid to the other investors in this project who have consented to the stimulation project and who paid their allocable share of the approximate $6,000 of expenses that was charged to our company, but which our company elected not to pay, before our company can earn future revenue from its interest in this property. This elective non-consent by our company and 500% penalty charged pursuant to the operators agreement results in a full impairment of this property to be recorded at February 28, 2013.


On May 31, 2011, our company, entered into a participation agreement with Premier Operating Company. Pursuant to the terms and conditions of the Premier participation agreement, our company purchased a 1% working interest in that certain West Marlow Hoxbar Unit located in Stephens County, Oklahoma.  In exchange for the working interest, our company paid a purchase price of $49,500 to Premier.



9




On February 1, 2013, our company entered into a Letter of Intent with a third party for the sale of our 1% working interest in the oil and gas properties located in Stephens County, Oklahoma for proceeds of $40,000. We and the purchaser relied on the letter of intent as the final purchase agreement and the sale was consummated pursuant to the Letter of Intent on March 1, 2013 upon payment of the first installment of $20,000.  The sale of our Company’s working interest resulted in a gain of $40,000.


Helen Morrison #1 Well – Noble County, Oklahoma


On May 12, 2011, our company entered into a participation agreement with Buckeye. Pursuant to the terms and conditions of the participation agreement, our company purchased a 6% working interest in that certain well, known as the Helen Morrison #1 Well, which is located in the Southwest Otoe Prospect in Noble County, Oklahoma.  In exchange for the working interest, our company paid a purchase price of $32,670 to Buckeye. In addition, the participation agreement provides that our company shall have the right of first refusal to purchase the same percentage working interest, or more, in any subsequent off-set wells, if any additional interests in the Southwest Otoe Prospect become available in the future.


Buckeye shall serve as the operator of the Helen Well and we will share a portion of the ongoing costs of its exploration and development, in a proportion equal to our working interest.  Pursuant to Buckeye’s operating agreement, Buckeye commenced drilling of the Helen Well on May 16, 2011 and shall continue the drilling of the well to a total depth of 5,000 +/- feet.  


Location of the Helen Well


The Helen Well is situated in S/2 NW/4 and SW/4 of Section 24, Township 22 North, Range 1 West of Noble County, Oklahoma.


[f10k022813_10k001.jpg]


[f10k022813_10k002.jpg]


The above photograph is a picture of the Helen Well.



10




Drilling Operations on the Helen Well   


On June 28, 2011, drilling of the Helen Well commenced and the well was drilled to a total depth of 309 feet.  


On June 29, 2011, the well was drilled to a total depth of 1,757 feet, the pump pressure was 600 pounds per square inch (PSI), and the drill revolutions per minute (RPM) was 100.  At 1,757 feet deep, a deviation survey was conducted and the deviation measured at 1 ¾ degrees off vertical.  The total drill weight was approximately 24,000 – 26,000 lbs.


On June 30, 2011, the well was drilled to a total depth of 3,031 feet, with a maximum pump pressure and drill RPM of 800 PSI and 100, respectively.  A deviation survey at this depth revealed a deviation measurement of 1 degree off vertical.  The total drill weight was approximately 18,000 – 20,000 lbs.


On July 1, 2011, the well was drilled to a total depth of 3,654 feet, with a maximum pump pressure and drill RPM of 900 PSI and 80, respectively.  The total drill weight was approximately 28,000 – 30,000 lbs.  The total dead weight of drill string in the ground was 90,000 lbs.  


On July 2, 2011, the well was drilled to a total depth of 4,200 feet, with a maximum pump pressure and drill RPM of 900 PSI and 65, respectively.  The total drill weight was approximately 32,000 – 36,000 lbs.  The total dead weight of drill string in the ground was 97,000 lbs.  The mud weight was at 9.2+ and the viscosity was 41.


On July 3, 2011, the well was drilled to a total depth of 4,350 feet.  Drilling continued thereafter at a slowed rate.


On July 4, 2011, drilling continued at a slowed rate and the well was drilled to a total depth of 4,720 feet.


Buckeye’s Geological Report dated July 12, 2011 – Drilling Summary of Helen Well


Buckeye prepared a geological report, dated July 12, 2011, of the drilling activities on the Helen Well, summarized as follows:


The Helen Well was drilled over a ten day period that consisted of very hot and dry weather. The actual drilling, along with all phases of the operation, went relatively smooth without any unforeseen surprises.  The results of Buckeye’s findings from the drilling were generally consistent with their original predictions.  


Most notably, the highly anticipated Mississippi Reef formation inside of the Helen Well was present in its entirety in the expected structural position.  Buckeye anticipates perforating the entire 44 feet of gross thickness of the Mississippi in which all of the best samples of oil shows occurred. The bottom 30 feet of the formation appeared to have the best porosity and permeability. The bottom section is expected to produce the most oil, due to those findings. Water saturation for the entire 44 feet of the zone was surprisingly low.


The Avant Lime, found at 3,189 feet below the surface, and the Middle Oswego Lime formation, drilled in at 4,186 feet below the surface, each have a history of natural gas production in the immediate East Polo Field area. However, these natural gas zones, which are secondary in nature to the Mississippi, were not tested at that time. Buckeye intends to explore the oil rich zones for production now while the oil prices are at such a premium and natural gas prices are consistently lagging behind.


Recent Activity


The Helen Well was first put online and placed into production on October 17, 2011.  Initial production for the first twenty four (24) hours was thirty four (34) barrels of oil, with twenty one (21) barrels of saltwater, following a rather small fifteen hundred (1,500) gallon HCL acid breakdown.  Daily oil production then declined to approximately two (2) to three (3) barrels of oil per day (BOPD).  Daily production quickly declined to the five (5) to eight (8) BOPD range for the next three (3) to four (4) months. Since then, a gradual decline has resulted in its present rate, which includes an average of approximately two (2) barrels of saltwater per day, and is mainly due to the relatively low porosity and permeability of the oil productive Mississippi Lime interval of thirty eight (38) net feet from which the well was producing.


Since no large acid frac was originally administered, on May 1, 2012, Buckeye proposed a well stimulation project consisting of an eleven thousand (11,000) gallon frac at a cost of approximately $99,000 to possibly reach out from the wellbore and help to restore daily production back to its original recoveries.  



11




Effective September 14, 2012, we elected not to contribute our approximately $6,000 share of the proposed stimulation project and were deemed a non-consenting investor, pursuant to the operating agreement with Buckeye.  As a result, and per the operating agreement with the property operator, we will lose our revenue for the Noble County property for a period of time sufficient to recover 500% of our invoiced proportionate share of the total expenses for the stimulation project. Revenues earned from this property were approximately $1,000 for the year ended February 28, 2013. The proportionate expenses for the stimulation project that were charged to us by Buckeye were approximately $6,000 for the year ended February 28, 2013. Therefore, approximately $30,000 of future revenue from this project will be paid to the other investors in this project who have consented to the stimulation project and whom paid their allocable share of the approximate $6,000 of expenses that was charged to us, but which we elected not to pay, before we can earn future revenue from its interest in the property. Our elective non-consent and 500% penalty charged pursuant to the operating agreement resulted in a full impairment of the property recorded at February 28, 2013.


West Marlow Hoxbar Unit – Stephens County, Oklahoma


On May 31, 2011, our company entered into a participation agreement with Premier Operating Company. Pursuant to the terms and conditions of the participation agreement, our company shall purchase a 1% working interest in that certain West Marlow Hoxbar Unit located in Stephens County, Oklahoma.  In exchange for the working interest, our company shall pay a purchase price of $49,500 to Premier.   Premier shall serve as the operator of the West Marlow Hoxbar Unit and we will share a portion of the ongoing costs of its exploration and development, in a proportion equal to our working interest.


Location of the West Marlow Hoxbar Unit


The West Marlow Hoxbar Unit is located in Sections 16, 17, 20 and 21 of Township 2 North, Range 8 West of Stephens County, Oklahoma.  


[f10k022813_10k003.jpg]


The above photograph is a picture of the West Marlow Hoxbar Unit.


Drilling Operations on the West Marlow Hoxbar Unit


As of the date of this annual report, we do not have any data on the drilling operations on the West Marlow Hoxbar Unit.


Principal Products and Services


We are currently an exploration stage company focused on the acquisition, development and production of oil and gas properties.  We do not currently offer any products or services for sale.  


Patents, Trademarks and Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts


We presently do not utilize patents, licenses, franchises, concessions, royalty agreements or labor contracts in connection with our business.




12




Future Oil and Gas Interests


If we are successful in generating revenues from our current working interests in oil and gas properties, we intend to acquire working interests in additional wells within the same project area, subject to obtaining additional financing.  Our search for oil and gas leases or working interests in leases will be directed towards small and medium-sized oil and natural gas production companies and properties.

We are looking for low risk interests and properties which have the following qualities:


·

At least developmental drilling in proven producing areas;

·

High performance of other wells in the area;

·

Good geological and engineering reports;

·

Diversified package of wells to be drilled (at least two wells in the project);

·

Significant additional production capacity through developmental drilling, recompletions and workovers;

·

Further developmental potential; and

·

In some cases, ability to assume operatorship or appointment of a known operator with relevant experience in the area.


The Oil and Gas Industry


The United States ranks as the third highest oil producing country in the world and ranks first as the country with the highest consumption of oil. The United States ranks as the second highest natural gas producing country in the world and ranks first as the country with the highest consumption of natural gas.  (U.S. Energy Information Administration. 2011. Retrieved on June  07, 2013 from and publicly available at: http://www.eia.gov/countries/index.cfm?view=production).


Currently, oil and natural gas fuel more than 97 percent of America’s vehicles, whether on land, sea, or in the air.  Oil and natural gas are also key components in the vast majority of all manufactured goods. Whether it’s surgical equipment, fertilizers, phones, CDs, paints or fuels, the oil and natural gas industry supports our day-to-day safety, mobility, health and lifestyle. (Energy Tomorrow. Retrieved on July 22, 2011 from and publicly available at: http://energytomorrow.org/issues/oil-and-gas-101/petroleum-products/).


Further, the demand for oil and gas is expected to significantly rise.  The U.S. will require 21 percent more energy in 2035 than in 2009 with more than half of the energy demand expected to be met by oil and natural gas.  Today, oil accounts for 37 percent of our energy use with the lion’s share of it fueling 94 percent of our transportation energy needs. Although ethanol and other biofuels are expected to grow rapidly in the future and steadily displace some oil use, the U.S. Energy Information Administration forecasts oil will continue to account for the largest share of our energy needs filling 33 percent of total energy demand and 85 percent of our transportation needs in 2035. (“Energizing America.  Facts for Addressing Energy Policy.”  energyAPI.  May 2, 2011.  Retrieved on July 22, 2011 from and publicly available at http://www.api.org/aboutoilgas/upload/truth_primer4.pdf.)


Future U.S. Energy Demand:  The U.S. will require 21 percent more energy in 2035 than in 2009.


(Calculated in Quadrillion British Thermal Units “BTU”).


[f10k022813_10k004.jpg]




13




Source:  “Energizing America.  Facts for Addressing Energy Policy.”  energyAPI.  May 2, 2011.  


Retrieved on July 22, 2011 from and publicly available at http://www.api.org/aboutoilgas/upload/truth_primer4.pdf.


Globally, the demand for energy has also hit all time highs and countries such as China and India are driving this demand.  India and China will account for 45 percent of the increase in global primary energy demand by 2030, with both countries more than doubling their energy use over that period (“The World’s 10 Biggest Oil Consumers.”  Rediff Business.  March 12, 2010. Retrieved on July 22, 2011 from and publicly available at: http://business.rediff.com/slide-show/2010/mar/12/slide-show-1-worlds-10-biggest-oil-consumers.htm#contentTop). As the population density increases, the demand for oil and gas will rise. Of course, the price history of oil and gas is not one of constant increase, and every investor should be aware of this.


Recent forecasts by the U.S. Energy Information Administration estimate that sustaining a 3.2 percent rate of annual growth in the global economy from 2007 to 2035 (measured in purchasing power parity) will require an expansion of about 24.5 million barrels per day in global oil supplies.  That is an increase equivalent to nearly doubling the current consumption of North America. The growth in demand for natural gas worldwide is expected to be even larger, increasing by 45 percent from 2007 to 2035. Despite significant growth of renewables and improvements in energy efficiency, more than half of the world’s energy demand will be met in 2035 by oil and natural gas, as is the case today.  (“Energizing America.  Facts for Addressing Energy Policy.”  energyAPI.  May 2, 2011. Retrieved on July 22, 2011 from and publicly available at http://www.api.org/aboutoilgas/upload/truth_primer4.pdf.)


Future Global Energy Demand:  The World will require 49 percent more energy in 2035 than in 2007.


(Calculated in Quadrillion British Thermal Units “BTU”).


[f10k022813_10k005.jpg]


Source:  “Energizing America.  Facts for Addressing Energy Policy.”  energyAPI.  May 2, 2011.  


Retrieved on July 22, 2011 from and publicly available at http://www.api.org/aboutoilgas/upload/truth_primer4.pdf.


There are significant risks associated with direct investing in oil and gas projects. However, we believe that direct investments in oil & gas can provide high potential returns and cash flow. There have been many new discoveries in oil and gas developmental technology, including faster drilling speeds, greater access to resources, better completion techniques and even turn-key drilling commitments for drilling deeper than 20,000 feet.   Oil and gas prices are now sufficiently high enough to warrant drilling deeper and spending more money to do it. Ten or more years ago, oil drilling was very risky, largely due to the probability of hitting a dry well. However, technology has come a long way since then. The latest techniques include the use of satellite mapping and horizontal drilling. This enables producers to locate and drill more effectively, thus reducing cost.


Significant oil and gas discoveries that are announced today often result from investments begun by companies as far back as a decade or more ago. Since the year 2000, our industry invested over 2 trillion dollars in U.S. capital projects to meet the growing demand for oil and natural gas.  The worldwide economic downturn, along with lower oil and natural gas prices and tight credit markets, caused some oil and natural gas producers to cut their capital budget plans in 2009. However, investments have since rebounded. (“Energizing America.  Facts for Addressing Energy Policy.” energyAPI.  May 2, 2011. Retrieved on July 22, 2011 from and publicly available at http://www.api.org/aboutoilgas/upload/truth_primer4.pdf.)



14




Competition


The oil and gas industry is highly competitive.  We compete with other companies for financing and for the acquisition of new interests in oil and gas properties.  Almost all of the companies with whom we compete have greater financial and technical resources than those available to us. Accordingly, these competitors may be able to spend greater amounts on acquiring interests in oil and gas properties of merit. In addition, they may be able to afford more geological and other technical expertise in the targeting of new oil and gas interests. This competition could result in competitors having working interests in oil and gas properties of greater quality and production potential.


Governmental Regulation


General


The production and sale of oil and gas is subject to regulation by federal, state, and local authorities. In most areas there are statutory provisions regulating the production of oil and natural gas, pursuant to which administrative agencies may promulgate rules in connection with the operation and production of wells, ascertain and determine the reasonable market demand of oil and gas, and adjust allowable rates of production with respect thereto.


The sale of liquid hydrocarbons was subject to federal regulation under the Energy Policy and Conservation Act of 1975, which amended various acts, including the Emergency Petroleum Allocation Act of 1973. These regulations and controls included mandatory restrictions upon the prices at which most domestic crude oil and various petroleum products could be sold. All price controls and restrictions on the sale of crude oil at the wellhead have been withdrawn. It is possible, however, that such controls may be reimposed in the future but when, if ever, such re-imposition might occur and the effect thereof cannot be predicted.


The sale of certain categories of natural gas in interstate commerce is subject to regulation under the Natural Gas Act and the Natural Gas Policy Act of 1978 (“NGPA”). Under the NGPA, a comprehensive set of statutory ceiling prices applies to all first sales of natural gas unless the gas is specifically exempt from regulation (i.e., unless the gas is “deregulated”). Administration and enforcement of the NGPA ceiling prices are delegated to the Federal Energy Regulatory Commission (“FERC”). In June 1986, FERC issued Order No. 451, which, in general, is designed to provide a higher NGPA ceiling price for certain vintages of old gas. It is possible that the leaseholders of our oil and gas properties may in the future acquire significant amounts of natural gas subject to NGPA price regulations and/or FERC Order No. 451.


Legislation affecting the oil and natural gas industry is under constant review for amendment and expansion. Many departments and agencies, both federal and state, are authorized by statute to issue and have issued rules and regulations binding on the oil and natural gas industry and its individual participants. The failure to comply with such rules and regulations can result in large penalties.


The regulatory burden on this industry could increase the operating expenses of the operators of the oil and gas properties in which we have working interests and therefore, affect our profitability. However, we do not believe that these regulations will have a significant negative impact on our limited operations with respect to our oil and gas interests.


Regulation of Drilling and Production


The drilling and production operations of the oil and gas properties in which we have working interests are subject to regulation under a wide range of state and federal statutes, rules, orders and regulations. Among other matters, these statutes and regulations govern:


·

the amounts and types of substances and materials that may be released into the environment;

·

the discharge and disposition of waste materials;

·

the reclamation and abandonment of wells and facility sites; and

·

the remediation of contaminated sites.


In order to comply with these statutes and regulations, the leaseholders of the oil and gas properties in which we hold working interests were required to obtain permits for drilling operations, drilling bonds, and reports concerning operations.  Failure to comply with these statutes and regulations could result in substantial fines or penalties being imposed upon the leaseholders, which in turn could negatively affect our profitability.




15




Environmental Regulations


The drilling and production operations of oil and gas properties are affected by various federal, state and local environmental laws and regulations, including the Oil Pollution Act of 1990, Federal Water Pollution Control Act, and Toxic Substances Control Act. The Comprehensive Environmental, Response, Compensation, and Liability Act (“CERCLA”) and comparable state statutes impose strict, joint and several liability on owners and operators of sites and on persons who dispose of or arrange for the disposal of “hazardous substances” found at such sites. It is not uncommon for neighboring land owners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances released into the environment. The Federal Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes govern the disposal of “solid waste” and “hazardous waste” and authorize the imposition of substantial fines and penalties for noncompliance. Although CERCLA currently excludes petroleum from its definition of “hazardous substance,” state laws affecting our operations may impose clean-up liability relating to petroleum and petroleum related products. In addition, although RCRA classifies certain oil field wastes as “non-hazardous,” such exploration and production wastes could be reclassified as hazardous wastes thereby making such wastes subject to more stringent handling and disposal requirements.


Generally, environmental laws and regulations govern the discharge of materials into the environment or the disposal of waste materials, or otherwise relate to the protection of the environment. In particular, the following activities are subject to stringent environmental regulations:


·

drilling;

·

development and production operations;

·

activities in connection with storage and transportation of oil and other liquid hydrocarbons; and

·

use of facilities for treating, processing or otherwise handling hydrocarbons and wastes.


Violations are subject to reporting requirements, civil penalties and criminal sanctions.  Compliance with existing regulations increases the overall costs of business for the leaseholders and operators of the oil and gas properties as well as for us, as we bear a portion of these expenses.   The increased costs cannot be easily determined. Such areas affected include:


·

unit production expenses primarily related to the control and limitation of air emissions and the disposal of produced water;

·

capital costs to drill exploration and development wells resulting from expenses primarily related to the management and disposal of drilling fluids and other oil and natural gas exploration wastes; and

·

capital costs to construct, maintain and upgrade equipment and facilities and remediate, plug, and abandon inactive well sites and pits.


Environmental regulations historically have been subject to frequent change by regulatory authorities. Therefore, we are unable to predict the ongoing cost of compliance with these laws and regulations or the future impact of such regulations. However, we do not believe that changes to these regulations will have a significant negative effect upon our oil and gas interests.  


Employees


We have no employees, other than Irma N. Colón-Alonso, our president, chief executive officer, chief financial officer, secretary, treasurer, and director.


Productive Wells


See below production data as at February 28, 2013:


 

For the fiscal year

ended

February 28, 2013

For the fiscal year

ended

February 29, 2012

Production Data:

 

 

Natural gas (Mcf)

-

21.4

Oil (Bbls)

21.7

42.8

Average Prices:

 

 

Natural gas (per Mcf)

$2.92

$3.03

Oil (per Bbl)

$90.54

$97.12




16




Productive Wells


The following table summarizes information at February 28, 2013, relating to the productive wells in which we owned a working interest as of that date. Productive wells consist of producing wells and wells capable of production, but specifically exclude wells drilled and cased during the fiscal year that have yet to be tested for completion (e.g., all of the operated wells drilled by our company during this year have been cased in preparation for completion, but no operations have been initiated that would allow these wells to be productive). Gross wells are the total number of producing wells in which we have an interest, and net wells are the sum of our fractional working interests in the gross wells.


  

Gross

 

Net

Location

Oil

Gas

Total

 

Oil

Gas

Total

Oklahoma

6

-

6

 

6

-

6

  

  

  

  

 

  

  

  

Total

6

-

6

 

6

-

6


Supplemental Information on Oil Producing Properties (Unaudited)


Supplemental Reserve Information


The information set forth below on our proved oil reserves is presented pursuant to the disclosure requirements of Accounting Standards Codification Topic 932 –  Extractive Activities – Oil and Gas (“ASC 932”).  Our company emphasizes that reserve estimates are inherently imprecise. Our reserve estimates were generally based upon extrapolation of historical production trends, analogy to similar properties and volumetric calculations. Accordingly, these estimates are expected to change and such changes could be material and occur in the near term as future information becomes available.


The following table sets forth a summary of changes in estimated reserves for 2013 and 2012:


 

 

Years Ended

 

 

February 28,

 

 

February 29,

Change of reserve quantity information (Bbls)

 

2013

 

 

2012

 

 

 

 

 

 

Proved reserves at beginning of year

 

 

1,140

 

 

 

-

Acquisitions of oil and gas producing properties

 

 

-

 

 

 

1,165

Production

 

 

(22)

 

 

 

(25)

Proved reserves at end of year

 

 

1,118

 

 

 

1,140


Standardized Measure of Discounted Future Net Cash Flow Relating to Proved Oil Reserves


The following information has been developed utilizing procedures prescribed by ASC 932 and based on oil reserve and production volumes estimated by our company’s independent reserve engineers. It may be useful for certain comparison purposes but should not be solely relied upon in evaluating our company or its performance. Further, information contained in the following table should not be considered as representative of realistic assessments of future cash flows nor should the Standardized Measure of Discounted Future Net Cash Flows be viewed as representative of the current value of our company.


The future cash flows presented below are computed by applying the average prices for the first day of the twelve months ended February 28, 2013 to year-end quantities of proved oil reserves. Future production and development costs are computed by estimating the expenditures to be incurred in producing our company’s proved reserves based on year-end costs and assuming continuation of existing economic conditions. It is expected that material revisions to some estimates of oil and natural gas reserves may occur in the future, development and production of the reserves may occur in periods other than those assumed, and actual prices realized and costs incurred may vary significantly from those used.


Management does not rely upon the following information in making investment and operating decisions. Such decision are based upon a wide range of factors, including estimates of proved reserves, and varying price and cost assumptions are considered more representative of a range of possible economic conditions that may be anticipated.




17




The following table sets forth our future net cash flows relating to proved oil reserves based on the standardized measure prescribed in ASC 932:


 

 

Years Ended

 

 

February 28,

 

 

February 29,

 

 

2013

 

 

2012

 

 

 

 

 

 

Future cash inflows (1)

 

$

101,225

 

 

$

105,143

Future production costs (2)

 

 

(47,691)

 

 

 

(48,803)

Future income tax expenses (3)

 

 

-

 

 

 

-

Future net cash flows

 

 

53,534

 

 

 

56,340

10% annual discount for estimated timing of cash flows

 

 

(34,734

 

 

(34,746)

Standardized measure of discounted future net cash flows relating to proved oil reserves

 

$

18,800

 

 

$

21,594


1.

Oil revenues are based on average twelve-month prices preceding 2/28/13 ($90.54 per barrel) (2/29/12 - $92.23 per barrel). There is no consideration of risks associated with future production of proved reserves.

2.

Based on economic conditions at year-end, and does not include administrative, general, or financing costs.

3.

The future income tax rate for the period covered under these properties (approximately 12 years) (2012 – 13 years) is assumed to be zero due to tax loss carryforwards.


Capitalized Costs Related to Oil Producing Activities


The following table sets forth the capitalized costs relating to our company’s oil and natural gas producing activities:


 

 

Years Ended

 

 

February 28,

 

 

February 29,

 

 

2013

 

 

2012

 

 

 

 

 

 

Proved properties

 

$

83,340

 

 

$

83,340

Unproved properties

 

 

-

 

 

 

-

Oilfield support equipment

 

 

-

 

 

 

-

Total oil producing properties

 

 

83,340

 

 

 

83,340

Accumulated depreciation, depletion, amortization and impairment

 

 

(83,340)

 

 

 

(61,746)

Oil producing properties, net

 

$

-

 

 

$

21,594


Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities


Costs incurred in connection with crude oil and natural gas acquisition, exploration and development are as follows:


 

 

Years Ended

 

 

February 28,

 

 

February 29,

 

 

2013

 

 

2012

Property acquisition costs:

 

 

 

 

 

Proved properties

 

$

82,170

 

 

$

82,170

Unproved properties

 

 

-

 

 

 

-

Total acquisition costs

 

 

82,170

 

 

 

82,170

Development costs

 

 

1,170

 

 

 

1,170

Total

 

$

83,340

 

 

$

83,340




18



Results of Operations


Our company’s results of operations related to oil activities are set forth below. The following table includes revenues and expenses associated directly with our oil producing activities. It does not include any interest costs, general and administrative costs or provision for income taxes due to the net operating loss carry-forward, and therefore, is not necessarily indicative of the contribution to consolidated net operating results of our oil operations.


 

 

Years Ended

 

 

February 28,

 

 

February 29,

 

 

2013

 

 

2012

Sales of oil

 

$

7,710

 

 

$

4,317

 

 

 

 

 

 

 

 

Lease operating expenses

 

 

(3,007

 

 

(857)

Depreciation, depletion and amortization

 

 

(339

 

 

(720)

Accretion of asset retirement obligation

 

 

(24

 

 

(89)

 

 

 

 

 

 

 

 

Results of producing activities

 

$

4,340

 

 

$

2,651


Item 3.

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 4.

Mine Safety Disclosures


Not applicable.


PART II


Item 5.

Market for our Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities


Our common stock is currently quoted on the OTC Bulletin Board. Our common stock has been quoted on the OTC Bulletin Board since December 28, 2010 under the symbol “MKIT”  


The following table reflects the high and low bid information for our common stock obtained from Stockwatch and reflects inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.


The high and low bid prices of our common stock for the periods indicated below are as follows:


OTC Bulletin Board

Quarter Ended

High

Low

February 28, 2013

$1.50

$1.50

November 30, 2012

$2.45

$1.50

August 31, 2012

$3.10

$2.45

May 31, 2012

$3.07

$3.07

February 29, 2012

$3.10

$3.00

November 30, 2011

$3.10

$2.30

August 31, 2011

N/A(1)

N/A(1)

May 31, 2011

N/A(1)

N/A(1)

February 28, 2011

N/A(1)

N/A(1)


(1)

Our common stock was listed for quotation on December 28, 2010. Our first trade did not occur until September 16, 2011.


As of June 6, 2013, there were approximately 29 holders of record of our common stock. As of such date, 7,800,000 common shares were issued and outstanding.



19




Our common shares are issued in registered form. Clear Trust LLC 16540 Pointe Village Drive, Suite 206, Lutz, Florida 33558 (Telephone: 813. 235-4490) is the registrar and transfer agent for our common shares.


Dividend Policy


We have not paid any cash dividends on our common stock since inception and presently anticipate that all earnings, if any, will be retained for development of our business and that no dividends on our common stock will be declared in the foreseeable future. Any future dividends will be subject to the discretion of our Board of Directors and will depend upon, among other things, future earnings, operating and financial condition, capital requirements, general business conditions and other pertinent facts. Therefore, there can be no assurance that any dividends on our common stock will be paid in the future.


Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities


Other than as disclosed below, we did not sell any equity securities which were not registered under the Securities Act during the year ended February 28, 2013 that were not otherwise disclosed on our quarterly reports on Form 10-Q or our current reports on Form 8-K filed during the year ended February 28, 2013.


Equity Compensation Plan Information


We do not have in effect any compensation plans under which our equity securities are authorized for issuance and we do not have any outstanding stock options.


Purchase of Equity Securities by the Issuer and Affiliated Purchasers


We did not purchase any of our shares of common stock or other securities during our fourth quarter of our fiscal year ended February 28, 2013.


Item 6.

Selected Financial Data


As a “smaller reporting company”, we are not required to provide the information required by this Item.


Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations


The following discussion should be read in conjunction with our audited financial statements and the related notes for the years ended February 28, 2013 and February 29, 2012 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, but are not limited to those discussed below and elsewhere in this annual report, particularly in the section entitled "Risk Factors" beginning on page 4 of this annual report.


Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.


Purchase of Oil and Gas Property Working Interests


We do not intend to purchase any oil and gas property working interest over the next twelve months.


Personnel Plan


We do not expect any material changes in the number of employees over the next 12 month period (although we may enter into employment or consulting agreements with our officers or directors). We do and will continue to outsource contract employment as needed.




20




Working Capital


  

 

February 28,

2013

$

 

 

February 29,

2012

$

Current Assets

$

41,918

 

$

2,355

Current Liabilities

$

543,019

 

$

192,937

Working Capital (Deficit)

$

(501,101)

 

$

(190,582)


Cash Flows


  

 

Year ended

February 28,

2013

$

 

 

Year ended

February 29,

2012

$

Cash Flows from (used in) Operating Activities

$

(63,487)

 

$

(93,280)

Cash Flows from (used in) Investing Activities

$

Nil

 

$

(49,500)

Cash Flows from (used in) Financing Activities

$

65,000

 

$

141,830

Net Increase (decrease) in Cash During Period

$

1,513

 

$

(950)


Operating Revenues


During the year ended February 28, 2013, our company recorded oil and gas production revenue from its oil and gas working interests of $7,710 compared with $4,317 for the year ended February 29, 2012.  The increase is due to an increase in production from oil and gas properties.


Operating Expenses and Net Loss


Operating expenses for the year ended February 28, 2013 was $130,701 compared with $220,069 for the year ended February 29, 2012.  The decrease of $89,368 is attributed to a decrease of general and administrative expenses and less impairment on oil and gas properties this year as the properties were nearly entirely impaired in the prior year.  Furthermore, our company incurred decreases in expenses for accretion expense of $65, depreciation, depletion and amortization of $381, general and administrative expenses of $48,724, impairment of oil and gas properties of $40,807 and a decrease in professional fees for legal, accounting, and audit costs of $1,541.


Overall, net loss for the year ended February 28, 2013 was $331,101 or $0.04 loss per share compared with a net loss of $228,609and a loss per share of $0.03 for the year ended February 29, 2012.


Liquidity and Capital Resources


As at February 28, 2013, our company had a cash balance of $1,704 compared with $191 at February 29, 2012.  The increase in cash was attributed to an increase in convertible debt proceeds.  The total asset balance as at February 28, 2013 was $41,918 compared to $23,949 at February 29, 2012.  The increase in total assets was attributed other receivable related to the sale of our company’s 1% working interest in the Premier property.


As at February 28, 2013, our company had total liabilities of $543,266 compared with $194,196 at February 29, 2012.  The increase in total liabilities was attributed to an increase in accounts payable and accrued liabilities of $7,925, amounts due to related parties of $49,650, convertible debentures of $65,000 and derivative liability of $227,507.


Cashflow from Operating Activities


During the year ended February 28, 2013, our company incurred $63,487 used in cash for operating activities compared to the use of $93,280 used in cash for operating activities during the year ended February 29, 2012. The decrease in cash used for operating activities was attributed to an increase in amounts due to related parties.


Cashflow from Investing Activities


During the year ended February 28, 2013, our company incurred $Nil for investing. During the year ended February 29, 2012, our company incurred $49,500 of cash used in investing activities relating to the acquisition costs of oil and gas property.



21




Cashflow from Financing Activities


During the year ended February 28, 2013, our company received a net amount of $65,000 of cash from financing activities related to proceeds from notes payable from a non-related party which is unsecured, non-interest bearing, and due on demand.  During the year ended February 29, 2012, our company received proceeds of $141,830 of cash from financing activities including $117,330 from a note payable and $44,500 from a related party, offset by $20,000 in repayments to a related party.


Going Concern


We have not attained profitable operations and are dependent upon obtaining financing to pursue any acquisitions or business activities other than holding our present rights to working oil and gas interests. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.


Future Financings


We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.


Off-Balance Sheet Arrangements


We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.


Critical Accounting Policies


Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.


We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.


Use of Estimates


The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. Our company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by our company may differ materially and adversely from our company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.


A significant item that requires management's estimates and assumptions is the estimate of proved oil reserves which are used in the calculation of depletion, impairment of its properties and asset retirement obligations. Other items subject to estimates and assumptions include the carrying amount of property, plant and equipment, valuation allowances for income taxes, valuation of derivatives instruments and accrued liabilities, among others. Although management believes these estimates are reasonable, actual results could differ from these estimates.




22




Financial Instruments


Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:


Level 1- Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.


Level 2 - Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.


Level 3 - Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.


Our company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, amounts due to related parties, and convertible debenture. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.


Assets and liabilities measured at fair value on a recurring basis were presented on our company’s balance sheet as at February 28, 2013 as follows:


 

Fair Value Measurements Using

 

 

 

Quoted

prices in

active markets

for identical

instruments

(Level 1)

$

Significant other

observable Inputs

(Level 2)

$

Significant

Unobservable

inputs

(Level 3)

$

Balance,

February 28,

2013

$

Total Gains and (Losses)

$

 

 

 

 

 

 

Derivative liability

(227,507)

(227,507)

(12,160)


Derivative Financial Instruments


Our company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.


Our company reviews the terms of the common stock, warrants and convertible debt it issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.


Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. Our company uses a Black-Scholes model for valuation of the derivative. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value.


The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense, using the effective interest method.


Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net cash settlement of the derivative instrument could be required within the 12 months of the balance sheet date.



23




Oil and Gas Properties


Our company utilizes the full-cost method of accounting for petroleum and natural gas properties. Under this method, our company capitalizes all costs associated with acquisition, exploration and development of oil and natural gas reserves, including leasehold acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties and costs of drilling of productive and non-productive wells into the full cost pool on a country by country basis. When our company obtains proven oil and gas reserves, capitalized costs, including estimated future costs to develop the reserves proved and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. The costs of unproved properties are not amortized until it is determined whether or not proved reserves can be assigned to the properties. Until such determination is made our company assesses annually whether impairment has occurred, and includes in the amortization base drilling exploratory dry holes associated with unproved properties.


Our company applies a ceiling test to the capitalized cost in the full cost pool. The ceiling test limits such cost to the estimated present value, using a ten percent discount rate, of the future net revenue from proved reserves, based on current economic and operating conditions. Specifically, our company computes the ceiling test so that capitalized cost, less accumulated depletion and related deferred income tax, do not exceed an amount (the ceiling) equal to the sum of: (a) The present value of estimated future net revenue computed by applying constant prices of oil and gas reserves based on an average of prices during the year (with consideration of price changes only to the extent provided by contractual arrangements) to estimated future production of proved oil and gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on current cost) to be incurred in developing and producing the proved reserves computed using a discount factor of ten percent and assuming continuation of existing economic conditions; plus (b) the cost of property not being amortized; plus (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized; less (d) income tax effects related to differences between the book and tax basis of the property.


Management’s assumptions used in calculating oil and gas reserves or regarding the future net cash flows or fair value of our company’s properties are subject to change in the future.  Any change, such as changes in reserves or commodity price forecasts, could cause changes in the fair value estimates of the properties or impairment expense to be recorded, impacting net income or loss of our company.  Any change in reserves directly impacts future cash flows and fair values of the properties.


Estimated reserve quantities and future net cash flows have the most significant impact on our company. These estimates are also used in the quarterly calculations of depletion, depreciation and impairment of our company’s proved properties. Estimating accumulations of gas and oil is complex and is not exact because of the numerous uncertainties inherent in the process. For additional discussion on the process used to estimate oil and gas quantities please refer to Note 9—Supplemental Oil and Gas Reserve Information (Unaudited).


Asset Retirement Obligations


Our company follows the provisions of ASC 410, Asset Retirement and Environmental Obligations, which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets. As at February 28, 2013, our company recorded asset retirement obligations of $247. During the year ended February 28, 2013, our company recorded an accretion expense of $24 (2012 - $89) and decreased the estimated asset retirement obligation by $1,036.


Stock-based Compensation


Our company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505-50 - Equity-Based Payments to Non-Employees. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.


Revenue Recognition


Revenues associated with the sale of oil is accounted for using the sales method, whereby revenue is recognized by the operator of the mineral properties for oil sold to purchasers with our company recognizing  the portion of its share of the revenues.




24




Recent Accounting Pronouncements  


The recent accounting pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and our company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.


Contractual Obligations


As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.


Item 7A.

Quantitative and Qualitative Disclosures About Market Risk


As a “smaller reporting company”, we are not required to provide the information required by this Item.


Item 8.

Financial Statements and Supplementary Data





25






MOKITA, INC.

(An Exploration Stage Company)


Financial Statements


For the Year Ended February 28, 2013










Report of Independent Registered Public Accounting Firm

F-1

Balance Sheets

F-2

Statements of Operations

F-3

Statements of Stockholders’ Deficiency

F-4

Statements of Cash Flows

F-5

Notes to the Financial Statements

F-5





26






To The Board of Directors and Stockholders

Mokita, Inc.

(An Exploration Stage Company)


We have audited the accompanying balance sheets of Mokita, Inc. (an exploration stage company) as of February 28, 2013 and February 29, 2012 and the related statements of operations, changes in stockholders’ deficiency, and cash flows for the years 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 of America). Those standards require that we plan and perform the 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 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 Mokita, Inc. as of February 28, 2013 and February 29, 2012, and the results of its operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements referred to above have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has recurring losses from its planned principal operations. These factors raise substantial doubt that the Company will be able to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



/s/ Goldman Accounting Services CPA, PLLC

Goldman Accounting Services CPA, PLLC

Suffern, NY

June 11, 2013





F-1






MOKITA, INC.

(An Exploration Stage Company)

Balance Sheets



 

 

 February 28,

 2013

 $

 February 29,

 2012

 $

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Cash

 

1,704

191

Accounts receivable

 

214

2,164

Other receivable – sale of oil and gas working interest

 

40,000

 

 

 

 

Current Assets

 

41,918

2,355

 

 

 

 

Oil and gas properties, proved net of accumulated depletion, depreciation and impairment of $32,670 and $61,746, respectively

 

21,594

 

 

 

 

Total Assets

 

41,918

23,949

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

42,362

34,437

Due to related parties

 

58,150

8,500

Convertible debenture

 

215,000

150,000

Derivative liability

 

227,507

 

 

 

 

Current Liabilities

 

 543,019

192,937

 

 

 

 

Asset retirement obligation

 

247

1,259

 

 

 

 

Total Liabilities

 

543,266

194,196

 

 

 

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

Common Stock

Authorized: 100,000,000 common shares, par value of $0.001 per share

Issued and outstanding: 7,800,000 common shares

 

 

 

 

 

 

 

 7,800

 7,800

 

 

 

 

Additional paid-in capital

 

 103,557

 103,557

 

 

 

 

Accumulated deficit

 

 (74,615)

 (74,615)

 

 

 

 

Accumulated deficit during the exploration stage

 

(538,090)

(206,989)

 

 

 

 

Total Stockholders’ Deficit

 

(501,348)

(170,247)

 

 

 

 

Total Liabilities and Stockholders’ Deficit

 

41,918

23,949

 

 

 

 




(The accompanying notes are an integral part of these financial statements)


F-2






MOKITA, INC.

(An Exploration Stage Company)

Statements of Operations



 

 

 

For the

year ended

February 28,

2013

$

For the

year ended

February 29,

2012

$

Accumulated from

April 21, 2009

(Date of Inception) to

February 28, 2013

(Unaudited)

$

 






Revenues

 

 

7,710

4,317

12,027

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Accretion expense

 

 

24

89

113

Depreciation, depletion, and amortization

 

 

339

720

1,059

General and administrative

 

 

61,973

110,697

196,271

Impairment of oil & gas properties

 

 

20,219

61,026

81,245

Lease operating expenses

 

 

3,007

857

3,864

Professional fees

 

 

45,139

46,680

121,213

 

 

 

 

 

 

Total operating expenses

 

 

130,701

220,069

403,765

 

 

 

 

 

 

Loss before other expenses

 

 

(122,991)

(215,752)

(391,738)

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of oil and gas working interest

 

 

40,000

40,000

Interest expense

 

 

(20,603)

(12,857)

(33,460)

Change in fair value of derivative liability

 

 

(12,160)

(12,160)

Loss on debt modification

 

 

(215,347)

(215,347)

 

 

 

 

 

 

Total other expense

 

 

(208,110)

(12,857)

(220,967)

 

 

 

 

 

 

Net loss

 

 

(331,101)

(228,609)

(612,705)

 

 

 

 

 

 

Net loss per share – basic and diluted        

 

 

(0.04)

(0.03)

 

 

 

 

 

 

 

Weighted average shares outstanding – basic and diluted

 

 

7,800,000

6,644,262

 





(The accompanying notes are an integral part of these financial statements)


F-3






MOKITA, INC.

(An Exploration Stage Company)

Statements of Changes in Stockholders’ Deficiency

From April 21, 2009 (Date of Inception) to February 28, 2013



 

 

 

 

 

 

 

Accumulated

 

 

 

Common Stock

 

Stock

Additional

 

 

deficit during the

 

 

 

Shares

 

Par value

 

subscriptions

receivable

paid-in

capital

 

Accumulated

deficit

exploration

 stage

 

Total

 

#

 

$

 

$

$

 

$

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Balance – April 21, 2009 (Date of Inception)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of shares for $0.01 per share

1,500,000

 

1,500

 

12,500

1,000

 

 

15,000

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

 

(2,613)

 

(2,613)

 

 

 

 

 

 

 

 

 

 

 

 

Balance – February 28, 2010

1,500,000

 

1,500

 

13,500

 

(2,613)

 

12,387

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from share subscriptions

 

 

(12,500)

12,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of shares for $0.01 per share

3,300,000

 

3,300

 

29,700

 

 

33,000

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the year

 

 

 

(50,382)

 

(50,382)

 

 

 

 

 

 

 

 

 

 

 

 

Balance – February 28, 2011

4,800,000

 

4,800

 

43,200

 

(52,995)

 

(4,995)

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for services

3,000,000

 

3,000

 

27,000

 

 

30,000

 

 

 

 

 

 

 

 

 

 

 

 

Forgiveness of related party debt

 

 

20,500

 

 

20,500

 

 

 

 

 

 

 

 

 

 

 

 

Imputed interest expense

 

 

12,857

 

 

12,857

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the year

 

 

 

(21,620)

(206,989)

 

(228,609)

 

 

 

 

 

 

 

 

 

 

 

 

Balance – February 29, 2012

7,800,000

 

7,800

 

103,557

 

(74,615)

(206,989)

 

(170,247)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the year

 

 

 

(331,101)

 

(331,101)

 

 

 

 

 

 

 

 

 

 

 

 

Balance – February 28, 2013

7,800,000

 

7,800

 

103,557

 

(74,615)

(538,090)

 

(501,348)

 

 

 

 

 

 

 

 

 

 

 

 





(The accompanying notes are an integral part of these financial statements)


F-4





MOKITA, INC.

(An Exploration Stage Company)

Statements of Cash Flows


 

For the

year ended

February 28,

2013

$

For the

year ended

February 29,

2012

$

Accumulated from

April 21, 2009

(Date of Inception)

February 28,

2013

(Unaudited)

$

 

 

 

 

Operating Activities

 

 

 

 

 

 

 

Net loss

(331,101)

(228,609)

(612,705)

 

 

 

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Accretion expense

24

89

113

Change in fair value of derivative liability

12,160

12,160

Depreciation, depletion, and amortization

339

720

1,059

Impairment of oil & gas properties

20,219

61,026

81,245

Imputed interest

12,857

12,857

Loss on debt modification

215,347

215,347

Shares issued for management bonuses

30,000

30,000

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

1,950

(2,164)

(214)

Other receivable – sale of oil and gas working interest

(40,000)

(40,000)

Prepaid expense and deposits

1,000

Accounts payable

7,925

31,801

42,362

Due to related parties

49,650

49,650

 

 

 

 

Net Cash Used In Operating Activities

(63,487)

(93,280)

(208,126)

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

Purchase of oil and gas property

(49,500)

(49,500)

 

 

 

 

Net Cash Used In Investing Activities

(49,500)

(49,500)

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

Proceeds from issuance of common shares

48,000

Proceeds from notes payable

65,000

117,330

182,330

Proceeds from a related party

44,500

49,000

Repayments to a related party

(20,000)

(20,000)

 

 

 

 

Net Cash Provided By Financing Activities

65,000

141,830

259,330

 

 

 

 

Increase (Decrease) in Cash

1,513

(950)

1,704

 

 

 

 

Cash – Beginning of Period

191

1,141

 

 

 

 

Cash – End of Period

1,704

191

1,704

 

 

 

 

Non-cash investing and financing activities

 

 

 

 

 

 

 

Asset retirement obligation – change in estimate

1,036

1,036

Oil and gas property acquired with note payable

32,670

32,670

Related party debt forgiven

20,500

20,500

Asset retirement obligation assumed on oil and gas properties

1,170

1,170

 

 

 

 

Supplemental disclosures

 

 

 

 

 

 

 

Interest paid

Income tax paid




(The accompanying notes are an integral part of these financial statements)


F-5








(The accompanying notes are an integral part of these financial statements)


F-6



MOKITA, INC.

(An Exploration Stage Company)

Notes to the Financial Statements



1.

Nature of Operations and Continuance of Business


Mokita, Inc. (the “Company”) was incorporated in the State of Nevada on April 21, 2009. The Company is an exploration stage company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities. The Company’s principal operations were to provide credit card payment systems.  In May 2011, the Company acquired working interests in oil and gas properties and changed its’ principal operations to the acquisition and development of oil and gas properties.  


Going Concern


These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at February 28, 2013, the Company has a working capital deficit of $501,101 and an accumulated deficit of $612,705. The Company’s total operating expenditure plan for the following twelve months will require cash of approximately $75,000.  The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.  These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  


2.

Summary of Significant Accounting Policies


a)

Basis of Presentation


The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars.  The Company’s fiscal year end is February 28.


b)

Use of Estimates


The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.


A significant item that requires management's estimates and assumptions is the estimate of proved oil reserves which are used in the calculation of depletion, impairment of its properties and asset retirement obligations. Other items subject to estimates and assumptions include the carrying amount of property, plant and equipment, valuation allowances for income taxes, valuation of derivatives instruments and accrued liabilities, among others. Although management believes these estimates are reasonable, actual results could differ from these estimates.


c)

Cash and cash equivalents


The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As at February 28, 2013 and February 29, 2012, the Company did not hold any cash equivalents.



F-7



MOKITA, INC.

(An Exploration Stage Company)

Notes to the Financial Statements



2.

Summary of Significant Accounting Policies (continued)


d)

Basic and Diluted Net Loss per Share


The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As at February 28, 2013, the Company had 152,786 potentially dilutive shares outstanding (February 29, 2012 – nil).


e)

Financial Instruments


Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:


Level 1


Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.


Level 2


Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.


Level 3


Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.


The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, amounts due to related parties, and convertible debenture. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.



F-8



MOKITA, INC.

(An Exploration Stage Company)

Notes to the Financial Statements



2.

Summary of Significant Accounting Policies (continued)


e)

Financial Instruments (continued)


Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s balance sheet as at February 28, 2013 as follows:


 

Fair Value Measurements Using

 

 

 

Quoted

prices in

active markets

for identical

instruments

(Level 1)

$

Significant other

observable Inputs

(Level 2)

$

Significant

Unobservable

inputs

(Level 3)

$

Balance,

February 28,

2013

$

Total Gains and (Losses)

$

 

 

 

 

 

 

Derivative liability

(227,507)

(227,507)

(12,160)

 

f)

Derivative Financial Instruments


The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.


The Company reviews the terms of the common stock, warrants and convertible debt it issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.


Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. The Company uses a Black-Scholes model for valuation of the derivative. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value.


The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense, using the effective interest method.


Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net cash settlement of the derivative instrument could be required within the 12 months of the balance sheet date.


g)

Comprehensive Loss


ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at February 28, 2013 and February 29, 2012, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.




F-9



MOKITA, INC.

(An Exploration Stage Company)

Notes to the Financial Statements




2.

Summary of Significant Accounting Policies (continued)


h)

Oil and Gas Properties


The Company utilizes the full-cost method of accounting for petroleum and natural gas properties. Under this method, the Company capitalizes all costs associated with acquisition, exploration and development of oil and natural gas reserves, including leasehold acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties and costs of drilling of productive and non-productive wells into the full cost pool on a country by country basis. When the Company obtains proven oil and gas reserves, capitalized costs, including estimated future costs to develop the reserves proved and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. The costs of unproved properties are not amortized until it is determined whether or not proved reserves can be assigned to the properties. Until such determination is made the Company assesses annually whether impairment has occurred, and includes in the amortization base drilling exploratory dry holes associated with unproved properties.


The Company applies a ceiling test to the capitalized cost in the full cost pool. The ceiling test limits such cost to the estimated present value, using a ten percent discount rate, of the future net revenue from proved reserves, based on current economic and operating conditions. Specifically, the Company computes the ceiling test so that capitalized cost, less accumulated depletion and related deferred income tax, do not exceed an amount (the ceiling) equal to the sum of: (a) The present value of estimated future net revenue computed by applying constant prices of oil and gas reserves based on an average of prices during the year (with consideration of price changes only to the extent provided by contractual arrangements) to estimated future production of proved oil and gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on current cost) to be incurred in developing and producing the proved reserves computed using a discount factor of ten percent and assuming continuation of existing economic conditions; plus (b) the cost of property not being amortized; plus (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized; less (d) income tax effects related to differences between the book and tax basis of the property.


Management’s assumptions used in calculating oil and gas reserves or regarding the future net cash flows or fair value of the Company’s properties are subject to change in the future.  Any change, such as changes in reserves or commodity price forecasts, could cause changes in the fair value estimates of the properties or impairment expense to be recorded, impacting net income or loss of the Company.  Any change in reserves directly impacts future cash flows and fair values of the properties.


Estimated reserve quantities and future net cash flows have the most significant impact on the Company. These estimates are also used in the quarterly calculations of depletion, depreciation and impairment of the Company’s proved properties. Estimating accumulations of gas and oil is complex and is not exact because of the numerous uncertainties inherent in the process. Refer to Note 3 – Oil and Gas Properties for estimates recorded relating to the oil and gas properties.


i)

Asset Retirement Obligations


The Company follows the provisions of ASC 410, Asset Retirement and Environmental Obligations, which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets. As at February 28, 2013, the Company recorded asset retirement obligations of $247. During the year ended February 28, 2013, the Company recorded an accretion expense of $24 (2012 - $89) and decreased the estimated asset retirement obligation by $1,036.




F-10



MOKITA, INC.

(An Exploration Stage Company)

Notes to the Financial Statements



2.

Summary of Significant Accounting Policies (continued)


j)

Stock-based Compensation


The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505-50 - Equity-Based Payments to Non-Employees. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.


k)

Revenue Recognition


Revenues associated with the sale of oil is accounted for using the sales method, whereby revenue is recognized by the operator of the mineral properties for oil sold to purchasers with the Company recognizing the portion of its share of the revenues.


l)

Recent Accounting Pronouncements


The recent accounting pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations


3.

Oil and Gas Properties


a)

Capitalized Costs


 

 

Noble County, Oklahoma

$

Stephens County, Oklahoma

$

 

 

 

 

Capitalized costs, February 28, 2011

 

 

 

 

 

Acquisition costs

 

32,670

49,500

Other costs

 

1,170

Depreciation, depletion, and amortization

 

(720)

Impairment

 

(11,526)

(49,500)

 

 

 

 

Capitalized costs, February 29, 2012

 

21,594

 

 

 

 

Revision to asset retirement cost

 

(1,036)

Depreciation, depletion, and amortization

 

(339)

Impairment

 

(20,219)

 

 

 

 

Capitalized costs, February 28, 2013

 


i)

On May 12, 2011, the Company entered into a participation agreement to acquire a 6% working interest in oil and gas properties located in Noble County, Oklahoma for $32,670.  


ii)

On May 31, 2011, the Company entered into a participation agreement to acquire a 1% working interest in oil and gas properties located in Stephens County, Oklahoma for $49,500.


b)

Sale of Working Interest


On February 1, 2013, the Company entered into a Letter of Intent with a third party for the sale of its 1% working interest in the oil and gas properties located in Stephens County, Oklahoma for proceeds of $40,000. The sale of Company’s working interest resulted in a gain of $40,000.



F-11



MOKITA, INC.

(An Exploration Stage Company)

Notes to the Financial Statements



3.

Oil and Gas Properties (continued)


c)

Non-Consent Penalty Charges and Impairment Charge


On September 14, 2012, the Company was deemed a non-consenting investor, pursuant to the Operators Agreement, in a proposal to stimulate the Noble County property to increase production. As a result, and per the operating agreement with the property operator, the Company will lose its revenue for the Noble County property for a period of time sufficient to recover 500% of the Company’s invoiced proportionate share of the total expenses for the stimulation project. Revenues earned from this property were approximately $1,000 for the year ended February 28, 2013. The proportionate expenses for the stimulation project that were charged to the Company by the Operator were approximately $6,000 for the year ended February 28, 2013. Therefore, approximately $30,000 of future revenue from this project will be paid to the other investors in this project who have consented to the stimulation project and who paid their allocable share of the approximate $6,000 of expenses that was charged to the Company, but which the Company elected not to pay, before the Company can earn future revenue from its interest in this property. This elective non-consent by the Company and 500% penalty charged pursuant to the Operators Agreement results in a full impairment of this property to be recorded at February 28, 2013.


4.

Accounts Payable and Accrued Liabilities


 

 

2013

$

 

2012

$

 

 

 

 

 

Trade accounts payable

 

4,009

 

34,287

 

 

 

 

 

Accrued liabilities

 

17,750

 

150

 

 

 

 

 

Accrued interest payable

 

20,603

 

 

 

 

 

 

Total accounts payable and accrued liabilities

 

42,362

 

34,437


5.

Convertible Debenture


As at February 28, 2013, the Company owes $215,000 (2012 - $150,000) to a non-related party for an outstanding note payable. Included in this amount is $32,670 which was paid by the note holder for the acquisition of oil and gas properties.  The amount owing is unsecured, bears interest at 10%, and due on demand.  As at February 28, 2013, the Company accrued $20,603 (2012 - $nil) of interest payable.


On March 15, 2012, the Company amended the terms of the note payable to be convertible at a rate of 75% of the weighted average closing price for the ten trading days immediately preceding the conversion date. During the year ended February 28, 2013, the Company recorded a loss on the debt modification of $215,347 (2012 - $nil).


6.

Derivative Liability


The conversion option of the convertible debenture disclosed in Note 5 is required to record a derivative at its estimated fair value on each balance sheet date with changes in fair value reflected in the statement of operations.


During the year ended February 28, 2013, the Company recorded a gain on the change in fair value of the conversion option derivative liability of $12,160 (2012 - $nil) and as of February 28, 2013, the fair value of the conversion option derivative liability was $227,507 (2012 - $nil).




F-12



MOKITA, INC.

(An Exploration Stage Company)

Notes to the Financial Statements



6.

Derivative Liability (continued)


The fair value of the derivative financial liability was determined using the Black-Scholes option pricing model, using the following assumptions:


 

Expected Volatility

Risk-free Interest Rate

Expected Dividend Yield

Expected Life (in years)

As at issuance date:

 

 

 

 

March 15, 2012 convertible debenture

268%

0.13%

0%

2.00

As at February 28, 2013:

 

 

 

 

March 15, 2012 convertible debenture

231%

0.17%

0%

1.04


7.

Related Party Transactions


a)

As at February 28, 2013, the Company owes $nil (2012 - $4,500) to the former President and Director of the Company for the funding of general operations.  The amount owing is unsecured, non-interest bearing, and due on demand.  


b)

As at February 28, 2013, the Company owes $58,150 (2012 - $4,000) to the President and CEO of the Company for the funding of general operations and management fees. The amount owing is unsecured, non-interest bearing, and due on demand.  


8.

Income Taxes


The Company has $352,305 of net operating losses carried forward to offset taxable income in future years which expire commencing in fiscal 2030.  


The income tax benefit differs from the amount computed by applying the US federal income tax rate of 34% to net loss before income taxes for the years ended February 28, 2013 and February 29, 2012 as a result of the following:


 

 

February 28,

2013

$

February 29,

2012

$

 

 

 

 

Net loss before taxes

 

(331,101)

(228,609)

Statutory rate

 

34%

34%

 

 

 

 

Computed expected tax recovery

 

112,574

77,727

Permanent differences and other

 

(77,000)

Change in valuation allowance

 

(35,574)

(77,727)

 

 

 

 

Income tax provision

 


The significant components of deferred income tax assets and liabilities as at February 28, 2013 and February 29, 2012 after applying enacted corporate income tax rates are as follows:


 

 

February 28,

2013

$

February 29,

2012

$

 

 

 

 

Net operating losses carried forward

 

119,783

74,721

Oil and gas properties

 

11,506

20,994

Valuation allowance

 

(131,289)

(95,715)

 

 

 

 

Net deferred tax asset

 


The Company has no uncertain tax positions, or interest owing as at February 28, 2013.



F-13



MOKITA, INC.

(An Exploration Stage Company)

Notes to the Financial Statements



9.

Subsequent Events


We have evaluated subsequent events through the date of issuance of the financial statements, and did not have any material recognizable subsequent events.





F-14





Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


(a)

Previous independent registered public accounting firm


On May 28, 2013, our company formally informed M&K CPAS, PLLC of their dismissal as our company’s independent registered public accounting firm.


The reports of M&K CPAS, PLLC on our company’s consolidated financial statements as of and for the fiscal years ended February 29, 2012 and 2011 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle except to indicate that there was substantial doubt about our company ability to continue as a going concern.


Our company’s board of directors participated in and approved the decision to change independent registered public accounting firms.


During the fiscal years ended February 29, 2012 and 2011, and through May 28, 2013, there have been no disagreements with M&K CPAS, PLLC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements if not resolved to the satisfaction of M&K CPAS, PLLC would have caused them to make reference thereto in connection with their report on the financial statements for such years.


Our company has requested that M&K CPAS, PLLC furnish it with a letter addressed to the SEC stating whether or not it agrees with the above statements.  The letter of M&K CPAS, PLLC is incorporated into this report as Exhibit 16.1.


(b)

New independent registered public accounting firm


On May 28, 2013, our company engaged Goldman Accounting Services CPA, PLLC as its new independent registered public accounting firm.  During the two most recent fiscal years and through May 28, 2013, our company had not consulted with Goldman Accounting Services CPA, PLLC regarding any of the following:


(i)

The application of accounting principles to a specific transaction, either completed or proposed;


(ii)

The type of audit opinion that might be rendered on our company’s consolidated financial statements, and none of the following was provided to our company:  (a) a written report, or (b) oral advice that Goldman Accounting Services concluded was an important factor considered by our company in reaching a decision as to accounting, auditing or financial reporting issue; or


(iii)

Any matter that was subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K.


Item 9A.

Controls and Procedures


Disclosure Controls and Procedures  


We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), as appropriate to allow timely decisions regarding required disclosure.


We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of February 28, 2013. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective.




27






Management’s Report on Internal Control Over Financial Reporting


Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Our company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.


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 that the degree of compliance with the policies or procedures may deteriorate.


Under the supervision and with the participation of management, including the chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), our company conducted an evaluation of the effectiveness of our company’s internal control over financial reporting as of February 28, 2013 using the criteria established in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").  


A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of February 28, 2013, our company determined that there were control deficiencies that constituted material weaknesses, as described below.


1.

We do not have an Audit Committee – While not being legally obligated to have an audit committee, it is the management’s view that such a committee, including a financial expert member, is an utmost important entity level control over our company’s financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee, and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities.  


2.

We did not maintain appropriate cash controls – As of February 28, 2013, our company has not maintained sufficient internal controls over financial reporting for the cash process, including failure to segregate cash handling and accounting functions, and did not require dual signature on our company’s bank accounts.  Alternatively, the effects of poor cash controls were mitigated by the fact that our company had limited transactions in their bank accounts.


3.

We did not implement appropriate information technology controls – As at February 28, 2013, our company retains copies of all financial data and material agreements; however there is no formal procedure or evidence of normal backup of our company’s data or off-site storage of the data in the event of theft, misplacement, or loss due to unmitigated factors.  


4.

We did not have any internal personnel who have knowledge of United States Generally Accepted Accounting Principles. However, we have hired an outsourced accounting firm to ensure transactions are recorded in accordance with generally accepted accounting principles.


Accordingly, our company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by our company’s internal controls.


As a result of the material weaknesses described above, management has concluded that our company did not maintain effective internal control over financial reporting as of February 28, 2013 based on criteria established in Internal Control—Integrated Framework issued by COSO. 


Changes in Internal Control over Financial Reporting


There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of February 28, 2013, that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  


This annual report does not include an attestation report of our company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by our company’s registered public accounting firm pursuant to rules of the SEC that permit our company to provide only management’s report in this annual report.




28






Continuing Remediation Efforts to address deficiencies in our Company’s Internal Control over Financial Reporting


Once our company is engaged in a business of merit and has sufficient personnel available, then our board of Directors, in particular and in connection with the aforementioned deficiencies, will establish the following remediation measures:


 

1.

Our board of directors will nominate an audit committee or a financial expert on our board of directors in fiscal 2013.

 

 

 

2.

We will appoint additional personnel to assist with the preparation of our company’s monthly financial reporting, including preparation of the monthly bank reconciliations.


Item 9B.

Other Information


None.




29





PART III


Item 10.

Directors and Executive Officers and Corporate Governance


Directors and Executive Officers


All directors of our company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:


Name

Position Held

with our Company

Age

Date First Elected or Appointed

Irma N. Colón-Alonso

President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director

41

March 3, 2011


The board of directors has no nominating, audit or compensation committee at this time.


Business Experience


The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.


Irma N. Colón-Alonso – President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director


Irma N. Colón-Alonso has been our secretary and a member of our company’s board of directors since March 3, 2011.  Ms. Colón-Alonso was appointed as president, chief executive officer, chief financial officer and treasurer of our company on December 14, 2012.


During the past seven years, Ms. Colón-Alonso has gained significant administrative, financial and legal experience as a legal assistant and office manager for the law offices of Howard Hochman, where she was responsible for managing the firm’s billing and business accounts, supervising personnel and providing legal services to the firm. Further, she developed extensive business and marketing knowledge while working as an account executive for Transworld Systems, where she helped generate new clients, market the company’s services, and participate in sales transactions.  Additionally, she has achieved over five years of broad management experience working for MetDisability as a disability claims manager and Oglethorpe University as a territory manager.  Ms. Colón-Alonso was appointed as an officer and director of our company due to her strong business education and many years of experience in marketing and finance.


Identification of Significant Employees


We have no significant employees, other than Irma N. Colón-Alonso, our president, chief executive officer, chief financial officer, secretary, treasurer and director.


Family Relationship


There are no family relationships between any of our directors, executive officers and proposed directors or executive officers.


Involvement in Certain Legal Proceedings


To the best of our knowledge, none of our directors or executive officers has, during the past ten years:


1.

been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);


2.

had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;  



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3.

been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;


4.

been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;


5.

been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or


6.

been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.


Code of Ethics


Our board of directors has not adopted a code of ethics due to the fact that we presently only have one director and we are in the development stage of our operations. We anticipate that we will adopt a code of ethics when we increase either the number of our directors and officers or the number of our employees.


Compliance with Section 16(a) of the Securities Exchange Act of 1934


Our common stock is not registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, our officers, directors, and principal stockholders are not subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act.


Item 11.

Executive Compensation


The particulars of the compensation paid to the following persons:


(a)

principal executive officer;


(b)

each of our two most highly compensated executive officers who were serving as executive officers at the end of the years our ended February 28, 2013 and February 29, 2012; and


(c)

up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended February 28, 2013 and February 29, 2012, who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:




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SUMMARY COMPENSATION TABLE

Name

and Principal

Position

Year

Salary

($)

Bonus

($)

Stock

Awards

($)

Option

Awards

($)

Non-Equity

Incentive

Plan

Compensa-

tion

($)

Change in

Pension

Value and

Nonqualified

Deferred

Compensation

Earnings

($)

All

Other

Compensa-

tion

($)

Total

($)

Irma N. Colón-Alonso (2)

President, CEO, CFO, Secretary, Treasurer and Director

2013

2012


24,000


Nil


Nil


Nil


Nil


Nil


Nil


24,000

Douglas E. Forest (1)

Former President, CEO, CFO, Treasurer and Director

2013

2012


Nil


Nil


Nil


Nil


Nil


Nil


Nil


Nil


(1)

Irma N. Colón-Alonso has been our secretary and director since March 3, 2011. Ms. Colón-Alonso was appointed as president, chief executive officer, chief financial officer and treasurer on December 14, 2012.


(2)

Douglas E. Forrest was removed as our president, chief executive officer, chief financial officer, treasurer and director of our company on December 14, 2012 upon approval of approximately 67% of our shareholders.


Narrative Disclosure to Summary Compensation Table


There are no employment contracts, compensatory plans or arrangements, including payments to be received from our company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with our company, or its subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of our company.


Stock Option Plan


Currently, we do not have a stock option plan in favor of any director, officer, consultant or employee of our company.


Stock Options/SAR Grants


During our fiscal year ended February 28, 2013 there were no options granted to our named officers or directors.


Outstanding Equity Awards at Fiscal Year End


No equity awards were outstanding as of the year ended February 28, 2013.


Option Exercises


During our fiscal year ended February 28, 2013 there were no options exercised by our named officers.




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Compensation of Directors


We do not have any agreements for compensating our directors for their services in their capacity as directors, although such directors are expected in the future to receive stock options to purchase shares of our common stock as awarded by our board of directors.


We have determined that none of our directors are independent directors, as that term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.


Pension, Retirement or Similar Benefit Plans


There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.


Indebtedness of Directors, Senior Officers, Executive Officers and Other Management


None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years, is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.  


Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


Security Ownership of Management


The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of June 6, 2013, by: (i) each of our directors; (ii) each of our named executive officers; and (iii) each person or group known by us to beneficially own more than 5% of our outstanding shares of common stock.  Unless otherwise indicated, the shareholders listed below possess sole voting and investment power with respect to the shares they own.


Name and Address of Beneficial Owner

Amount and Nature of Beneficial

Ownership (1)

(#)

Percent of Class (2)

(%)

 

 

 

Irma N. Colón-Alonso (3)

13230 SW 146 St.

Miami, FL  33186

3,000,000 Common

38.462%

All Officers and Directors as a Group (1 Person)

3,000,000 Common

38.462%

 

 

 

Eric P. Litmann (4)

7695 SW 104 St.

Miami, FL  33156

1,500,000

19.231%

Brown Brothers Harriman & Co.

140 Broadway

New York, NY  10005

708,900

9.088%


(1)

The number and percentage of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table.


(2)

Based on 7,800,000 issued and outstanding shares of common stock as of June 6, 2013.


(3)

Irma N. Colón-Alonso is our company’s president, chief executive officer, chief financial officer, secretary treasurer and a director.  


(4)

Eric P. Litmann was as a director of our company from March 29, 2011 until his resignation on February 14, 2012.



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Changes in Control


Other than as disclosed, we are unaware of any contract or other arrangement or provisions of our Articles or Bylaws the operation of which may at a subsequent date result in a change of control of our company. There are not any provisions in our Articles or Bylaws, the operation of which would delay, defer, or prevent a change in control of our company.


Item 13.

Certain Relationships and Related Transactions, and Director Independence


Related Party Transactions


Except as disclosed herein, no director, executive officer, shareholder holding at least 5% of shares of our common stock, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the year ended February 28, 2013, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last three completed fiscal years.


Director Independence


We currently act with one director, consisting of Irma N. Colón-Alonso. We have determined that our directors are not “independent directors” as defined in NASDAQ Marketplace Rule 4200(a)(15).


We do not have a standing audit, compensation or nominating committee, but our entire board of directors acts in such capacities. We believe that our members of our board of directors are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The board of directors of our company does not believe that it is necessary to have an audit committee because we believe that the functions of an audit committee can be adequately performed by the board of directors. In addition, we believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development.


Item 14.

Principal Accountant Fees and Services


The aggregate fees billed for the most recently completed fiscal years ended February 28, 2013 and 2012 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:   


 

 

Year Ended

February 28, 2013

 

Year Ended

February 29, 2012

Audit fees

$

17,500

$

11,500

Audit-related fees

$

Nil

$

Nil

Tax fees

$

Nil

$

Nil

All other fees

$

Nil

$

Nil

Total

$

17,500

$

11,500


Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.


Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.




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PART IV


Item 15.

Exhibits, Financial Statement Schedules

 

 

 

(a)

Financial Statements

 

 

 

 

(1)

Financial statements for our company are listed in the index under Item 8 of this document

 

 

 

 

(2)

All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the financial statements or notes thereto.


Exhibit Number

Description

(3)

Articles of Incorporation and Bylaws

3.1

Articles of Incorporation (incorporated by reference to our Registration Statement on Form S-1 filed on June 3, 2010)

3.2

Bylaws (incorporated by reference to our Registration Statement on Form S-1 filed on June 3, 2010)

3.3

Certificate of Amendment filed May 2, 2010 (incorporated by reference to our Registration Statement on Form S-1 filed on June 3, 2010)

3.4

Certificate of Amendment filed July 20, 2011 (incorporated by reference to our Current Report on Form 8-K filed on July 22, 2011)

3.5*

Certificate of Amendment filed May 30, 2013 (Incorporated by reference to our Current Report on Form 8-K filed on June 5, 2013)

(10)

Material Contracts

10.1

Form of Subscription Agreement (incorporated by reference to our Amended Registration statement on Form S-1/A filed on July 12, 2010)

10.2

Investor Relations Agreement between our company and LiveCall Investor Relations Company dated April 28, 2011 (incorporated by reference to our Annual Report on Form 10-K filed on June 14, 2011)

10.3

Participation Agreement between our company and Buckeye Exploration Company dated May 12, 2011 (incorporated by reference to our Current Report on Form 8-K filed on May 16, 2011)

10.4

Participation Agreement between our company and Premier Operating Company dated May 31, 2011 (incorporated by reference to our Current Report on Form 8-K filed on June 8, 2011)

10.5

Convertible Note between our company and Exchequer Finance Inc. dated March 15, 2012 (incorporated by reference to our Current Report on Form 8-K filed on March 23, 2012)

(16)

Letter Regarding Change in Certifying Accountant

16.1*

Letter from M&K CPAS, PLLC to the Securities and Exchange Commission

(31)

Rule 13a-14(a) / 15d-14(a) Certifications

31.1*

Certification pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer.

(32)

Section 1350 Certifications

32.1*

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer.

101**

Interactive Data Files

101.INS

101.SCH

101.CAL

101.DEF

101.LAB

101.PRE

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document


*

Filed herewith.


**

Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections.



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SIGNATURES


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.

 

 

 

MOKITA, INC.

 

(Registrant)

 

  

 

  

Dated:  June 12, 2013

/s/ Irma N. Colón-Alonso

 

Irma N. Colón-Alonso

 

President, Chief Executive Officer, Chief Financial Officer,

Secretary, Treasurer and Director

 

(Principal Executive Officer, Principal Financial Officer and

Principal Accounting Officer)



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


 

 

Dated:  June 12, 2013

/s/ Irma N. Colón-Alonso

 

Irma N. Colón-Alonso

 

President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director

 

(Principal Executive Officer,

Principal Financial Officer and Principal Accounting Officer)

 

  




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