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

FORM 10-Q
(Mark One)

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

For the quarterly period ended
June 30, 2013
 
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from
 
to
 

Commission File No.
000-16974

TEXSTAR OIL CORPORATION
(Exact name of registrant as specified in its charter)

Nevada
 
59-2158586
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

3500 Maple Avenue, Suite 1325, Dallas, Texas
75219
(Address of principal executive offices)
(Zip Code)

(214) 855-0808
(Registrant’s telephone number, including area code)

5910 N. Central Expressway, Suite 900, Dallas, Texas 75206-5141
(Former name, former address and former fiscal year if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  x  No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  x  No  ¨
 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨                                                                                     Accelerated filer  ¨

Non-accelerated filer ¨                                                                           Smaller reporting company x

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

The number of shares outstanding of the Registrant’s Common Stock as of August 5, 2013 was 27,634,112.
 
 
 
 

 

TABLE OF CONTENTS
 
     
   
Page
   
PART I –FINANCIAL INFORMATION
1
ITEM 1.
FINANCIAL STATEMENTS
1
 
Balance Sheets as of June 30, 2013 (Unaudited) and December 31, 2012 (Audited)
1
 
Statements of Operations for the Three and Six Months Ended June 30, 2013 and 2012 and for the
Period from Re-entry into Development Stage (June 23, 2011) through June 30, 2013 (Unaudited)
2
 
Statements of Stockholders’ Deficit for the Period from Re-entry into Development Stage
(June 23, 2011) through June 30, 2013
3
     
     
 
Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012 and for the
Period from Re-entry into Development Stage (June 23, 2011) through June 30, 2013 (Unaudited)
4
 
Condensed Notes to Financial Statements
5
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
7
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
8
ITEM 4.
CONTROLS AND PROCEDURES
9
     
PART II – OTHER INFORMATION
9
ITEM 1.
LEGAL PROCEEDINGS
9
ITEM 1A.
RISK FACTORS
10
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
10
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
10
ITEM 4.
MINE SAFETY DISCLOSURES
10
ITEM 5.
OTHER INFORMATION
10
ITEM 6.
EXHIBITS
10
     
SIGNATURES
 
11
 
 
 
 
 

 
 
PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

TEXSTAR OIL CORPORATION
 
(A DEVELOPMENT STAGE COMPANY)
 
BALANCE SHEETS
 
               
               
     
June 30,
       
     
2013
   
December 31,
 
     
(unaudited)
   
2012
 
               
 
ASSETS
           
               
Current Assets:
           
 
Cash
  $ 74     $ -  
                   
 
        Total current assets
  $ 74     $ -  
                   
 
 LIABILITIES AND STOCKHOLDERS' DEFICIT
               
 
 
               
Current Liabilities:
               
 
Accounts payable
  $ 68,636     $ 77,734  
 
Amount due to related parties
    231,935       85,976  
                   
 
     Total current liabilities
    300,571       163,710  
                   
Commitments and Contingencies
               
                   
Stockholders' Deficit:
               
 
Preferred stock - par value $0.001; 50,000,000 shares authorized;
               
 
      5,004,609 shares of Series A issued and outstanding
    5,005       5,005  
 
Common stock - par value $0.001; 500,000,000 shares authorized;
               
 
       27,634,112 shares issued and outstanding
    27,634       27,634  
 
Additional paid in capital
    2,188,671       2,188,671  
 
Prepaid stock based consulting
    (523,971 )     (1,453,766 )
 
Accumulated deficit prior to re-entry into development stage
    (312,409 )     (312,409 )
 
Deficit accumulated during development stage
    (1,685,427 )     (618,845 )
                   
        
     Total stockholders' deficit
    (300,497 )     (163,710 )
                   
    
        Total liabilities and stockholders' deficit
  $ 74     $ -  
 
 
The accompanying condensed footntotes are an integral part of these financial statements.
 
 
 
1

 
 
TEXSTAR OIL CORPORATION
 
(A DEVELOPMENT STAGE COMPANY)
 
STATEMENTS OF OPERATIONS
 
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2013 AND 2012 AND
 
FOR THE PERIOD FROM RE-ENTRY INTO DEVELOPMENT STAGE (JUNE 23, 2011) THROUGH JUNE 30, 2013
 
(Unaudited)
 
                           
Cumulative from
 
                           
Re-entry into
 
                           
Development Stage
 
   
Three Months Ended
   
Six Months Ended
   
through
 
   
June 30, 2013
   
June 30, 2012
   
June 30, 2013
   
June 30, 2012
   
June 30, 2013
 
                               
                               
Revenue
  $ -     $ -     $ -     $ -     $ -  
                                         
Operating expenses:
                                       
Selling, general and administration
    547,917       19,324       1,066,582       47,221       1,685,427  
                                         
     Total operating expenses
    547,917       19,324       1,066,582       47,221       1,685,427  
                                         
Loss before taxes
    (547,917 )     (19,324 )     (1,066,582 )     (47,221 )     (1,685,427 )
                                         
Provision for income taxes
    -       -       -       -       -  
                                         
Net loss
  $ (547,917 )   $ (19,324 )   $ (1,066,582 )   $ (47,221 )   $ (1,685,427 )
                                         
Loss per share, basic and diluted
  $ (0.02 )   $ (0.14 )   $ (0.04 )   $ (0.35 )        
                                         
Weighted average number of shares outstanding
    27,634,112       134,112       27,634,112       134,112          
 
The accompanying condensed footntotes are an integral part of these financial statements.
 
 
 
2

 
 
TEXSTAR OIL CORPORATION
 
(A DEVELOPMENT STAGE COMPANY)
 
STATEMENTS OF STOCKHOLDERS' DEFICIT
 
FOR THE PERIOD FROM RE-ENTRY INTO DEVELOPMENT STAGE (JUNE 23, 2011) THROUGH JUNE 30, 2013
 
                                                       
                                                       
                                       
Accumulated
             
                                       
Deficit prior to
   
Accumulated
       
                                 
Prepaid
   
Re-entry into
   
Deficit during
       
   
Preferred Stock
         
Common Stock
         
Additional Paid
   
Stock Based
   
Development
   
Development
       
   
Shares
   
Amount
   
Shares
   
Amount
   
in Capital
   
Consulting
   
Stage
   
Stage
   
Total
 
                                                       
Balance, June 23, 2011
    -       -       50,000,000       50,000       261,701       -       (312,409 )     -       (708 )
Effect of reverse stock split
    -       -       (49,865,888 )     (49,866 )     49,866       -       -       -       -  
Net loss during development stage
    -       -       -       -       -       -       -       (44,993 )     (44,993 )
                                                                         
Balance, December 31, 2011
-       -       134,112       134       311,567       -       (312,409 )     (44,993 )     (45,701 )
                                                                         
Shares issued for debt
    4,609       5       -       -       4,604       -       -       -       4,609  
Issuance of shares pursuant to stock
                                                                 
  purchase agreement
    5,000,000       5,000       25,000,000       25,000       -       -       -       -       30,000  
Shares issued for services
    -       -       2,500,000       2,500       1,872,500       (1,453,766 )     -               421,234  
Net loss
    -       -       -       -       -       -       -       (573,852 )     (573,852 )
                                                                         
Balance, December 31, 2012
5,004,609       5,005       27,634,112       27,634       2,188,671       (1,453,766 )     (312,409 )     (618,845 )     (163,710 )
                                                                         
Amortization of prepaid stock
                                                                 
  based consulting
    -       -       -       -       -       929,795       -       -       929,795  
Net loss
    -       -       -       -       -       -       -       (1,066,582 )     (1,066,582 )
                                                                         
Balance, June 30, 2013
    5,004,609     $ 5,005       27,634,112     $ 27,634     $ 2,188,671     $ (523,971 )   $ (312,409 )   $ (1,685,427 )   $ (300,497 )
 
The accompanying condensed footntotes are an integral part of these financial statements.
 
 
 
3

 
 
TEXSTAR OIL CORPORATION
 
(A DEVELOPMENT STAGE COMPANY)
 
STATEMENTS OF CASH FLOWS
 
FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND 2012 AND
 
FOR THE PERIOD FROM RE-ENTRY INTO DEVELOPMENT STAGE (JUNE 23, 2011) 
THROUGH JUNE 30, 2013
 
(Unaudited)
 
               
Cumulative from
 
               
Re-entry into
 
               
Development Stage
 
   
Six Months Ended
   
through
 
   
June 30, 2013
   
June 30, 2012
   
June 30, 2013
 
                   
                   
CASH FLOWS FROM OPERATING ACTIVITIES
                 
  Net loss
  $ (1,066,582 )   $ (47,221 )   $ (1,685,427 )
     Adjustments to reconcile net loss to net cash flows
                       
       provided by (used in) operating activities:
                       
             Amortization of prepaid stock based consulting
    929,795       -       1,351,029  
             Change in operating assets and liabilities:
                       
               Prepaid expense
    -       1,925       -  
               Accounts payable
    (9,098 )     9,183       67,928  
               Amount due to related parties
    145,959       36,113       241,544  
                         
                         
Net cash flows provided by (used in) operating activities
    74       -       (24,926 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES
    -       -       -  
                         
CASH FLOWS FROM FINANCING ACTIVITIES
                       
  Proceeds from sale of preferred stock
    -       -       25,000  
                      -  
                         
Net cash flows provided by financing activities
    -       -       25,000  
                         
Increase in cash
    74       -       74  
Cash, beginning of period
    -       -       -  
Cash, end of period
  $ 74     $ -     $ 74  
                         
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
                 
                         
Interest paid
  $ -     $ -     $ -  
                         
Income taxes paid
  $ -     $ -     $ -  
                         
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
         
                         
Issuance of preferred stock in exchange for related party debt
  $ -     $ 4,609     $ 9,609  
                         
Issuance of common stock for services
  $ -     $ -     $ 1,875,000  
 
The accompanying condensed footntotes are an integral part of these financial statements.
 
 
 
4

 
 
 
 
TEXSTAR OIL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED NOTES TO FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Interim Financial Reporting

While the information presented in the accompanying interim financial statements is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance with generally accepted accounting principles in the United States of America ("GAAP").  These interim financial statements follow the same accounting policies and methods of application as used in the December 31, 2012 audited financial statements of TexStar Oil Corporation (the “Company”).  All adjustments are of a normal, recurring nature. Interim financial statements and the notes thereto do not contain all of the disclosures normally found in year-end audited financial statements and these Notes to Financial Statements are abbreviated and contain only certain disclosures related to the six month periods ended June 30, 2013 and 2012.  It is suggested that these interim financial statements be read in conjunction with the Company’s audited financial statements and related notes for the year ended December 31, 2012 included in our Form 10-K, filed with the Securities Exchange Commission on May 16, 2013. Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results that can be expected for the year ending December 31, 2013.

Development Stage Activities

The Company is presently in the development stage with no significant revenues from operations.  Accordingly, all of the Company’s operating results and cash flows reported in the accompanying financial statements are considered to be those related to development stage activities and represent the cumulative from inception amounts from its development stage activities reported pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 915-10-05, Development Stage Entities.

Recent Accounting Pronouncements

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow.

NOTE 2 -- GOING CONCERN

The financial statements of the Company have been prepared in conformity with GAAP, and assume that the Company will continue as a going concern.  The Company expects to incur losses as it expands.  To date, the Company's cash flow requirements have been met through the sale of its common stock and cash advances from related parties.  There is no assurance that additional funds will be available for the Company to finance its operations should the Company be unable to realize profitable operations. These conditions, among others, give rise to substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation.
 
 
 
5

 
 
TEXSTAR OIL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED NOTES TO FINANCIAL STATEMENTS

NOTE 3 – RELATED PARTIES

During the six months ended June 30, 2013, Nathan Halsey, the Company’s President, Chief Executive Officer and Chief Financial Officer and TexStar Oil Co., Ltd., a corporation owned and controlled by Mr. Halsey, through cash advances and direct payments to certain vendors on the Company’s behalf, advanced the Company $34,043.  During the period from February 2012 through December 31, 2012, Mr. Halsey and Bonamour Asia, LLC, a limited liability company owned and controlled by Mr. Halsey, also made direct payments to certain vendors on the Company’s behalf.  As of June 30, 2013, the Company owed Mr. Halsey $75,235.

During the six months ended June 30, 2013, Bon Amour International, LLC (“BAI”), a Texas limited liability company for which Mr. Halsey serves as a principal, provided services to the Company, including office space (see below) and personnel, valued at $17,376. BAI also made cash advances and direct payments to certain vendors on the Company’s behalf totaling $106,154.  During the period from June 2011 through December 31, 2012, BAI also made direct payments to certain vendors on the Company’s behalf.  As of June 30, 2013, the Company owed BAI $156,700.

BAI provides office space for the Company.  The fair value of this office space was estimated to be $1,000 per month, and this amount is recorded as occupancy costs in the accompanying financial statements.  Management considers the Company’s current office space arrangement adequate.

NOTE 4 – INCOME TAXES

Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company does not expect to pay any significant federal or state income tax for 2013 as a result of the losses recorded during the six months ended June 30, 2013 and net operating loss carry forwards from prior years.  Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is "more likely than not" that some component or all of the benefits of deferred tax assets will not be realized.  As of June 30, 2013, the Company maintains a full valuation allowance for all deferred tax assets. Based on these requirements, no provision or benefit for income taxes has been recorded.  There were no recorded unrecognized tax benefits at the end of the reporting period.
 
 
 
6

 

ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We urge you to read the following discussion in conjunction with management’s discussion and analysis contained in our Annual Report on Form 10-K for the year ended December 31, 2012, as well as with our condensed financial statements and the notes thereto included elsewhere herein.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Our prospects are subject to uncertainties and risks. In this Quarterly Report on Form 10-Q, we make forward-looking statements in this Item 2 and elsewhere that also involve substantial uncertainties and risks. These forward-looking statements are based upon our current expectations, estimates and projections about our business, and reflect our beliefs and assumptions based upon information available to us at the date of this report. In some cases, you can identify these statements by words such as “if,” “may,” “might,” “will, “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” and other similar terms. These forward-looking statements include, among other things, plans for proposed operations, descriptions of our strategies, our development plans, and other objectives, expectations and intentions, the trends we anticipate in our business and the markets in which we operate, and the competitive nature and anticipated growth of those markets.

We caution readers that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements as a result of a number of factors including, but not limited to, the risks and uncertainties discussed in our other filings with the Securities Exchange Commission (“SEC”). We undertake no obligation to revise or update any forward-looking statement for any reason.

Overview

In October 2012, the Company changed its business opertaions to focus upon oil and gas exploration projects, and on December 3, 2012, changed its name to TexStar Oil Corporation.

Our principal office is located at 3500 Maple Avenue, Suite 1325, Dallas, Texas 75219 and our telephone number is (214) 855-0808.  Our Common Stock is quoted on the OTC Market Groups, Inc. OTCQB under the symbol "TEXS."  We do not currently have a corporate website.

Basis of Presentation of Financial Information

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern, which is dependent upon the Company's ability to obtain sufficient financing or establish itself as a profitable business.  At June 30, 2013, the Company had an accumulated deficit since re-entry into the development stage of $1,685,427 and for the six months ended June 30, 2013, the Company incurred losses of $1,066,582.   Management expects that the Company will need to raise additional capital through sales of equity or debt securities to sustain operations until such time as the Company can achieve profitability. However, there can be no assurance that management will be successful in obtaining additional funding or in attaining profitable operations.  The financial statements do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation.

Critical Accounting Policies

There have been no changes from the Critical Accounting Policies described in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 16, 2013.
 
 
 
7

 

Liquidity and Capital Resources

We are a development stage company and have not achieved any revenues as a result of our current business operations.  Since our inception, we have not attained a level of operations that allows us to meet our current overhead.  We do not contemplate attaining profitable operations until we obtain financing and execute plans to acquire interests in oil and gas exploration projects. Nevertheless, there can be no assurance that management will be able to successfully implement such plans, and if executed, there can be no assurance that operating levels sufficient to sustain profitability can ever be achieved.  We expect to be dependent upon obtaining additional financing in order to adequately fund working capital, infrastructure and expenses in order to execute plans for future operations, so that we can achieve a level of revenue adequate to support our cost structure, none of which can be assured. These factors raise substantial doubt about our ability to continue as a going concern and the accompanying financial statements do not include any adjustments related to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should we be unable to continue as a going concern.

As of June 30, 2013, the Company’s cash balance was $74 and we had liabilities totaling $300,571, which include $231,935 of related party debt.  At June 30, 2013 the Company’s working capital deficit was $300,497.

Since the change in control of the Company that occurred in 2011, Bon Amour International, LLC (“BAI”), a Texas limited liability company for which Nathan Halsey, a director and the Company’s President, Chief Executive Officer and Chief Finanical Officer, serves as  a principal, Mr. Halsey, Bonamour Asia, LLC (“Bonamour Asia”), a limited liability company owned and controlled by Mr. Halsey, and TexStar Oil Co., Ltd (“TexStar Ltd.”), a corporation owned and controlled by Mr. Halsey, have advanced funds to and on behalf of the Company to satisfy current legal, accounting and administrative obligations and have made available certain office space and personnel for the Company’s use.  During the six months ended June 30, 2013, Mr. Halsey and TexStar Ltd, through cash advances and direct payments to certain vendors on the Company’s behalf, advanced the Company $34,043.  During the period from February 2012 through December 31, 2012, Mr. Halsey and Bonamour Asia also made direct payments to certain vendors on the Company’s behalf and as of June 30, 2013, the Company owed Mr. Halsey $75,235.  During the six months ended June 30, 2013, BAI provided services to the Company, including the use of office space and personnel, valued at $17,376, BAI also made cash advances and direct payments to certain vendors on the Company’s behalf totaling $106,154.  During the period from June 2011 through December 31, 2012, BAI also made direct payments to certain vendors on the Company’s behalf.  As of June 30, 2013, the Company owed BAI $156,700.

The Company will need to raise additional capital to commence and sustain operations until such time as the Company can fully implement its plan of future operation and achieve profitability. The terms of financing that may be raised may not be on terms acceptable by the Company. If adequate funds cannot be raised outside of the Company, the Company’s current stockholders may need to contribute additional funds to sustain operations.

Results of Operations

Comparison of Three Months Ended June 30, 2013 and 2012

For the three months ended June 30, 2013 and 2012, the Company had no revenue.

For the three months ended June 30, 2013, the Company had operating expenses totaling $547,971 compared to $19,324 for the same period in 2012, an increase of $528,647.  This change is primarily a result of an increase in consulting expenses of $495,703. In addition, audit fees increased by $7,530, legal fees inceased by $11,137 and other general and administrative expenses increased by $14,277 in the three months ended June 30, 2013 as compared to the same period in 2012.

Comparison of Six Months Ended June 30, 2013 and 2012

For the six months ended June 30, 2013 and 2012, the Company had no revenue.

For the six months ended June 30, 2013, the Company had operating expenses totaling $1,066,582 compared to $47,221 for the same period in 2012, an increase of $1,019,361.  This change is primarily a result of an increase in consulting expenses of $988,032. In addition, audit fees increased by $3,430, legal fees inceased by $6,579 and other general and administrative expenses increased by $21,320 in the six months ended June 30, 2013 as compared to the same period in 2012.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements.
 
 
 
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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our Company is a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, and as such, is not required to provide the information required under this Item.

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Nathan W. Halsey, our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of June 30, 2013, pursuant to Exchange Act Rule 13a-15. Such disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company is accumulated and communicated to the appropriate management on a basis that permits timely decisions regarding disclosure. Based upon that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures as of June 30, 2013 were not effective to provide reasonable assurance that information required to be disclosed in the Company’s periodic filings under the Exchange Act is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting during the quarter ended June 30, 2013 that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

Limitations on the Effectiveness of Controls

Our disclosure controls and procedures provide our principal executive officer and principal financial officer with reasonable assurances that our disclosure controls and procedures will achieve their objectives. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting can or will prevent all human error. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are internal resource constraints, and the benefit of controls must be weighed relative to their corresponding costs. Because of the limitations in all control systems, no evaluation of controls can provide complete assurance that all control issues and instances of error, if any, within our company are detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur due to human error or mistake. Additionally, controls, no matter how well designed, could be circumvented by the individual acts of specific persons within the organization. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all potential future conditions.

Management is aware that there is a lack of segregation of duties at the Company due to the fact that the Company only has one executive officer/director dealing with general administrative and financial matters. This may constitute a significant deficiency in the internal controls. Management has decided that considering the officer/director involved, the control procedures in place, and the outsourcing of certain financial functions, the risks associated with such lack of segregation were low and the potential benefits of adding additional employees to clearly segregate duties did not justify the expenses associated with such increases. Management periodically reevaluates this situation periodically. In light of the Company’s current cash flow situation, the Company does not intend to increase staffing to mitigate the current lack of segregation of duties within the general administrative and financial functions.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

On October 31, 2012, Pam J. Halter, a minority stockholder, filed a lawsuit in the 162nd Judicial District Court of Dallas County, Texas, individually and derivatively on behalf of Bonamour Pacific, Inc. (the Company), against Nathan Halsey, who serves as a Director of the Company as well as our Chief Executive Officer and Secretary, and Bonamour Pacific, Inc., as a nominal defendant. The plaintiffs’ petition alleges that actions taken by the Company and Mr. Halsey constitute a breach of fiduciary
 
 
 
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duty and resulted in unjust enrichment. Specifically, plaintiff alleges that actions taken by Mr. Halsey (and/or an entity purportedly controlled by Mr. Halsey) to (1) effect a 1-1000 reverse stock split, (2) issue additional shares to holders of purported “fractional shares” resulting from the reverse stock split, (3) create and issue preferred shares and (4) sell common and preferred shares to himself were improper. Plaintiff seeks damages resulting from the alleged improper acts in an unspecified amount, attorneys’ fees, costs and such other relief as may be proper. The Company and Mr. Halsey have filed an answer generally denying the allegations.

On December 12, 2012, Mullin Hoard & Brown, LLP (“MHB”) filed a lawsuit styled Mullin Hoard & Brown, LLP v. Reunion Sports Group, LLC, John Bryant, Janet Bryant, Byron Pierce, and Millenia, Inc.; In the 251st Judicial District Court of Potter County, Texas; Cause No. 101083C, asserting claims for breach of contract.  MHB is a law firm that was engaged to provide legal services to Reunion Sports Group, LLC. MHB alleges that Millennia, Inc. (the Company) and the other defendants executed an amended payment and guaranty agreement pursuant to which they agreed to remain liable for the fees and expenses owed at that time by Reunion and those incurred in the future.  MHB claims it is owed $133,528.95 in unpaid legal fees.  On July 23, 2013 MHB took a nonsuit as to the Company without predjudice to its claims against the remaining defendants.

ITEM 1A.  RISK FACTORS

Our Company is a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, and as such, is not required to provide the information required under this Item.

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

There are no unreported sales of unregistered securities during the quarter ended June 30, 2013.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.  OTHER INFORMATION

None.

ITEM 6.  EXHIBITS

The following exhibits are filed with this Quarterly Report on Form 10-Q or are incorporated by reference as described below.

Exhibit
Description
31.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14a/Rule 14d-14(a)*
32.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350*
101.1
Interactive data files pursuant to Rule 405 of Regulation S-T*
*Filed herewith.
 
 
 
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
     
August 14, 2013
TEXSTAR OIL CORPORATION
     
 
By:
/s/ Nathan Halsey
 
Nathan Halsey
 
President and Chief Executive Officer (Principal Executive Officer, Principal Financial and Accounting Officer and Authorized Signatory)
 
 
 
 
 
 
 
 
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