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EXCEL - IDEA: XBRL DOCUMENT - North Texas Energy, Inc.Financial_Report.xls
EX-31.1 - CERTIFICATE OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - North Texas Energy, Inc.northtexasexh311.htm
EX-32.1 - CERTIFICATE OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - North Texas Energy, Inc.northtexasexh321.htm
EX-31.2 - CERTIFICATE OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - North Texas Energy, Inc.northtexasexh312.htm
EX-32.2 - CERTIFICATE OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - North Texas Energy, Inc.northtexasexh322.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


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

For the quarterly period ended September 30,  2013

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ______________to _____________
 
Commission File Number:  333-178251

NORTH TEXAS ENERGY INC.
  (Exact name of registrant as specified in its charter)
 
Nevada
 
27-4556048
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
     
5057 KELLER SPRINGS ROAD, SUITE 300
 
75001
(Address of principal executive offices)
 
(Zip Code)

469-718-5572
(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No  o

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 r
Accelerated filer  r
Non-accelerated filer  r
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  o
 
As of November 13, 2013, the Company had 6,111,840 shares of its common stock outstanding.
 
 
 

 
 
PART I—FINANCIAL INFORMATION

Item 1.  Financial Statements.
 
NORTH TEXAS ENERGY, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

     
September 30,
 
December 31,
 
     
2013
 
2012
 
Assets
           
Current Assets
           
Cash
  $
124,269
   
$
-
 
  Prepaid insurance expense
   
71,308
       
Total current assets
   
195,577
   
-
 
Oil and gas properties, full cost method
           
Costs not being amortized related to unproved properties
   
2,243,070
     
1,987,657
 
Total assets
  $
2,438,6477
   
$
1,987,657
 
                 
Liabilities and shareholders' equity
               
Current liabilities
               
Accrued expenses
  $
18,100
   
$
28,316
 
Accrued lease liability
   
65,881
     
65,881
 
Common stock payable
   
580,596
     
-
 
Note payable
 
 
57,534
     
-
 
Total current liabilities
   
722,111
     
94,197
 
                 
Asset retirement obligations
   
53,375
     
54,709
 
Total liabilities
   
775,486
     
148,906
 
                 
Commitments and contingencies
               
                 
Shareholders' equity
               
Common stock, $0.00001 par value,100,000,000 shares authorized, 5,831,000 shares issued and outstanding
   
58
     
58
 
Additional paid-in capital
   
1,715,584
     
1,697,133
 
Earnings (deficit) accumulated during exploration stage
   
(52,481)
     
141,560
 
Total shareholders' equity
   
1,663,161
     
1,838,751
 
Total liabilities and shareholders' equity
  $
2,438,647
   
$
1,987,657
 
 
See notes to the unaudited consolidated financial statements.
 
 
2

 
 
NORTH TEXAS ENERGY, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)

   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
   
January 12, 2011
 (Inception) Through
 September 30,
 
   
2013
   
2012
   
2013
   
2012
   
2013
 
Revenues
  $ -     $ -     $ -     $ -     $ -  
                                         
Operating expenses:
                                       
General and administrative
    69,232       2,077       90,923       7,071       132,051  
Engineering
    -       -       -       -       21,102  
Legal and professional fees
    66,332       1,500       102,432       3,250       111,882  
Total operating expenses
    135,564       3,577       193,355       10,321       265,035  
Net operating loss
    (135,564 )     (3,577 )     (193,355 )     (10,321 )     (265,035 )
                                         
Interest expense
    (686 )     -       (686 )     -       (686 )
Bargain purchase gain
    -       -       -       -       213,240  
Net income (loss)
  $ (136,250 )   $ (3,577 )   $ (194,041 )   $ (10,321 )   $ (52,481 )
                                         
Basic and Diluted Loss Per Common Share
  $ (0.02 )   $ (0.00 )   $ (0.03 )   $ (0.00 )        
Weighted Average Number of Common Shares Outstanding - Basic and Diluted
    5,831,000       5,831,000       5,831,000       5,831,000          
 
See notes to unaudited consolidated financial statements.

 
3

 
 
NORTH TEXAS ENERGY, INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

   
Nine Months Ended
 September 30,
2013
   
Nine Months Ended
 September 30,
2012
   
For the period
 from January 12,
2011 (Inception)
 to June 30,
2013
 
                   
                   
Cash flows from operating activities:
                 
Net loss
 
$
(194,041
)
 
$
(10,321
)
 
$
(52,481
)
Adjustments to reconcile net loss to net cash from operating activities:
                       
Share-based compensation
   
-
     
-
     
50
 
Accretion expense
   
7,606
     
2,929
     
15,779
 
Bargain purchase gain
   
-
     
-
     
(213,240
)
Changes in operating assets and liabilities:
   
    
                 
Prepaid expenses
   
(71,308
)
   
-
     
(71,308
)
Accrued expenses
   
(9,793
   
2,712
     
18,523
 
Net cash used in operating activities
   
(267,536
)
   
(4,680
)
   
(302,677
)
                         
Cash flows from investing activities
                       
Payments for the purchase of oil and gas properties
   
(264,353
)
   
-
     
(264,353
)
Net cash used in investing activities
   
(264,353
)
   
-
     
(264,353
)
                         
Cash flows from financing activities:
                       
Capital contributions
   
18,351
     
4,680
     
53,492
 
Net proceeds from borrowings of note payable
   
57,211
     
-
     
57,211
 
Proceeds from sale of common stock
   
580,596
     
-
     
580,596
 
Net cash provided by financing activities
   
656,158
     
4,680
     
691,299
 
                         
Net increase in cash
   
124,269
     
-
     
124,269
 
Cash at beginning of period
   
-
     
-
     
-
 
Cash at end of period
 
$
124,269
   
$
-
   
$
124,269
 
                         
Supplemental cash flow information:
                       
Cash paid for interest
 
$
-
   
$
-
   
$
-
 
Cash paid for income taxes
   
-
     
-
     
-
 
Noncash investing and financing activities:
                       
Common stock issued to acquire Remington
   
-
     
-
     
1,662,000
 
Asset retirement cost
   
8,940
     
-
     
30,453
 
Accrued liability to acquire leases
   
-
     
-
     
15,881
 

See notes to the unaudited consolidated financial statements.
 
 
4

 
 
NORTH TEXAS ENERGY, INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


Note 1 – Business and Organization

North Texas Energy, Inc. (“the Company”) was incorporated in the State of Nevada on January 12, 2011. The Company intends to focus on re-entering non-producing oil fields and re-starting production with existing oil and gas wells. On February 25, 2011, the Company entered into a Purchase and Sale Agreement with Remington Oil & Gas, Inc. (“Remington”) to acquire Remington’s interest in an oil and gas lease in Upshur County, Texas along with wellhead equipment and certain lease obligations.

The Company is in the exploration stage in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 915 – Development Stage Entities. Since its inception, the Company has been engaged in acquiring interests in leases in the State of Texas and searching for short-term and long-term sources of liquidity for its producing operations.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim consolidated financial statements of North Texas Energy, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s registration statement on Form S-1 Amendment No. 8 filed on March 12, 2013.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited consolidated financial statements for the most recent fiscal year ended December 31, 2012 have been omitted.   

Cash and Cash Equivalents

Cash equivalents are highly liquid investments with an original maturity of three months or less.

Oil and Gas Properties

The Company uses the full cost method of accounting for exploration and development activities as defined by the SEC. Under this method of accounting, the costs for unsuccessful, as well as successful, exploration and development activities are capitalized as oil and gas properties. Capitalized costs include lease acquisition, geological and geophysical work, delay rentals, costs of drilling, completing and equipping the wells and any internal costs that are directly related to acquisition, exploration and development activities but does not include any costs related to production, general corporate overhead or similar activities. Proceeds from the sale or other disposition of oil and gas properties are generally treated as a reduction in the capitalized costs of oil and gas properties, unless the impact of such a reduction would significantly alter the relationship between capitalized costs and proved reserves of oil and natural gas attributable to a country.

The Company categorizes its full cost pools as costs subject to amortization and costs not being amortized. The sum of net capitalized costs subject to amortization, including estimated future development and abandonment costs, are amortized using the unit-of-production method.

Oil and gas properties include costs that are excluded from capitalized costs being amortized. These amounts represent costs of investments in unproved properties. The Company excludes these costs on a country-by-country basis until proved reserves are found or until it is determined that the costs are impaired. All costs excluded are reviewed annually to determine if impairment has occurred. The amount of any impairment is transferred to the costs subject to amortization. The Company currently only owns unproved properties. As of September 30, 2013, management believes that there is no impairment for the Company’s unproved oil and gas properties.
 
 
5

 
 
Ceiling Test

Under the full cost method of accounting, a ceiling test is performed each quarter for proved properties. The full cost ceiling test is an impairment test prescribed by SEC Regulation S-X. The ceiling test determines a limit, on a country-by-country basis, on the book value of oil and gas properties. The capitalized costs of proved oil and gas properties, net of accumulated depreciation, depletion, amortization and impairment(“DD&A”) and the related deferred income taxes, may not exceed the estimated future net cash flows from proved oil and gas reserves, calculated using the average oil and natural gas sales price received by the Company as of the first trading day of each month over the preceding twelve months (such prices are held constant throughout the life of the properties) with consideration of price change only to the extent provided by contractual arrangement, discounted at 10%, net of related tax effects. If capitalized costs exceed this limit, the excess is charged to expense and reflected as additional accumulated DD&A. The Company has no proved properties for the periods presented.

Asset Retirement Obligations

Asset retirement obligations (“ARO”) represent the future abandonment costs of tangible assets such as platforms, wells, service assets, pipelines, and other facilities. The fair value of a liability for an asset's retirement obligation is recorded in the period in which it is incurred if a reasonable estimate of fair value can be made, and that the corresponding cost is capitalized as part of the carrying amount of the related long-lived asset. The liability is accreted to its then present value each period, and the capitalized cost is depreciated over the useful life of the related asset. If the liability is settled for an amount other than the recorded amount, an adjustment is made to the full cost pool, with no gain or loss recognized, unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves. The ARO assets, which are carried on the balance sheet as part of the full cost pool, will be included in our amortization base for the purposes of calculating depreciation, depletion and amortization expense. For the purposes of calculating the ceiling test, the future cash outflows associated with settling the ARO liability is included in the computation of the discounted present value of estimated future net revenues.

Income Taxes

Deferred income taxes are provided on a liability method whereby deferred tax assets and liabilities are established for the difference between the financial reporting and income tax basis of assets and liabilities as well as operating loss and tax credit carry forwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry-forwards are expected to be available to reduce taxable income. At September 30, 2013 and December 31, 2012 the Company has recorded a 100% valuation allowance as management believes it is likely that no deferred tax assets will be realized.

At September 30, 2013, the Company had net operating loss carry forwards of approximately $260,000 that will expire between 2029 through 2033.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing the net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common shareholders by the weighted-average number of common and common equivalent shares outstanding during the period. Common share equivalents included in the diluted computation represent shares issuable upon assumed exercise of stock options and warrants using the treasury stock and “if converted” method. For periods in which net losses are incurred, weighted average shares outstanding is the same for basic and diluted loss per share calculations, as the inclusion of common share equivalents would have an anti-dilutive effect. As of September 30, 2013 and 2012, there are no potentially dilutive shares.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at year-end and the reported amounts of revenues and expenses during the year and the reported amount of proved natural gas and oil reserves. Management bases its estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments that are not readily apparent from other sources. Actual results could differ from these estimates and changes in these estimates are recorded when known.
 
 
6

 
 
Subsequent Events

The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration.

Recently Issued Accounting Pronouncements

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

Note 3 - Going Concern

As shown in the accompanying financial statements, the Company has incurred losses from operations and has not generated any revenue at this time. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. In addition to the offering of securities for sale to the public, the Company currently is diligently searching for other short-term and long-term sources of liquidity for its producing operations. During the nine months ended September 30, 2013, the Company received proceeds of $580,596 from investors. These shares have not been issued as of September 30, 2013 and $580,596 was recorded as common stock payable on the balance sheet at September 30, 2013. The sale of the securities has provided the Company with short-term working capital to be used in the commencement of its oil and gas producing activities.

Note 4 – Unproved Oil and Gas Properties

The Company’s unproved oil and gas properties at September 30, 2013 and December 31, 2012 are located in the State of Texas in the United States. The table below summarizes the Company’s capitalized costs related to oil and gas producing activities which were not subject to amortization:
 
   
September 30,
2013
   
December 31,
2012
 
             
Unproved oil and gas properties
 
$
2,243,070
   
$
1,987,657
 
Accumulated depreciation, depletion, amortization and valuation adjustments
   
-
     
-
 
Net capitalized costs
 
$
2,243,070
   
$
1,987,657
 
 
The unproved oil and gas properties increased by $255,413 for the nine months ended September 30, 2013 as a result of the Company's investment in the development of its oil and gas infrastructure and wells of $264,353, offset by a $8,940 decrease of the Company’s estimate of the asset retirement obligations.

Note 5 – Accrued Lease Liabilities

The Company has an accrued lease liability to KADs Oil, Inc., the lessor of the leases in both Upshur and Milam County, Texas which the Company currently owns. As a result of the Purchase and Sale Agreement with Remington, the Company assumed the leasehold obligation of $50,000. Payments are to be made when oil and gas is recovered and delivered to market at the rate of 25% of the sale price after all operating expenses.

On May 10, 2011, the Company entered into an oil, gas and mineral lease agreement for its oil and gas properties located in Milam County, Texas. Pursuant to the lease agreement, the Company will pay the lessor $15,881 for the lease which is recorded as an accrued leasehold liability on the Company’s balance sheets at September 30, 2013 and December 31, 2012.

 
7

 
 
Note 6 – Asset Retirement Obligations

The following table provides a reconciliation of the changes in the estimated present value of asset retirement obligations.

Asset retirement obligation at December 31, 2012
 
$
54,709
 
Change of estimate
   
(8,940
)
Accretion expense
   
7,606
 
Asset retirement obligation at September 30, 2013
 
$
53,375
 
 
Note 7 – Note Payable

On July 29, 2013, the Company entered into a premium finance agreement to pay a $85,571 premium for its commercial general liability insurance policy. Pursuant to the agreement, the Company paid a down payment of $21,392 in August 2013 and has to pay $7,330 in monthly installment for nine months. As of September 30, 2013, the outstanding balance related to the premium finance agreement was $57,534.

Note 8 – Related Party Transactions

During the nine months ended September 30, 2013 and 2012, the Company’s Chief Executive Officer, Mr. Kevin Jones, contributed $18,351 and $4,680, respectively, to the Company.

Note 9 – Subsequent event

Subsequent to September 30, 2013, the Company has issued 273,340 common shares for $546,680 proceeds previously received and 7,500 common shares for $15,000 proceeds received after September 30, 2013.
 
 
8

 
 
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

North Texas Energy, Inc. is in its exploration stage. The results of operations show how capital intensive and profitless the oil and gas production business is at start up. The progress so far has been limited by severely limited access to working capital. One of the most important economic factors in the U.S economy is the successful exploration and production of crude oil and natural gas. North Texas Energy, Inc. is committing its business and resources to the production of crude oil and natural gas that remains in geological formations in oil fields that have been previously explored and have produced significant amounts of crude oil already. Data and research produced by the Department of Energy indicates that additional significant reserves of crude oil and natural gas remain in fields that were once productive in the past. In recent years and with the price of crude oil steady at about seventy-four dollars per barrel (since 2008), new production methods have emerged as cost-effective in recovering the substantial remaining oil that has not been recovered using standard methods. North Texas Energy, Inc. entered into the business of recovering oil in previously drilled and producing fields in 2009 by acquiring oil and natural gas leases in north Texas. NTE’s predecessor operated in year 2010 for a short period of time. During that time, the Company had access to private capital from sales of common stock to shareholders. The capital from investment by private shareholders was limited and sales were terminated late in 2010. The funds invested at that time were used mainly to begin the process of refurbishing wells and preparing well head installations for re-use. The short operations history shows that without on-going sources of working capital, the initial cost of getting wells and drill bores functional to begin the process of recovering oil that remains in the geological formation will not be met and significant delays in recovering the remaining oil would occur.

Results of Operations

For the three months ended September 30, 2013 and 2012, the Company had net losses of $136,250 and $3,577, respectively. For the nine months ended September 30, 2013 and 2012, the Company had net losses of $194,041 and $10,321, respectively.

Revenues

We have had no revenues since our inception. However, crude oil production has begun in four of the eighteen wells the company operates in its Balch Field. The Company anticipates revenue from this production in the fourth quarter of 2013.

Expenses

The Company had operating expenses of $135,564 for the three months ended September 30, 2013 compared to $3,577 for the three months ended September 30, 2012. The increase was mainly resulted from the increase of accounting and professional fees related to the Company’s ongoing reporting and compliance requirements related to its registration statement that became effective on March 29, 2013. Additionally, the Company incurred insurance expense, payroll expenses and travel expenses as a result of its operation during the three months ended September 30, 2013 while there were no such expenses during the comparable period of prior year.

The Company had operating expenses of $193,355 for the nine months ended September 30, 2013 compared to $10,321 for the nine months ended September 30, 2012. The increase was mainly resulted from the increase of accounting and professional fees related to the Company’s ongoing reporting and compliance requirements related to its registration statement that became effective on March 29, 2013. Additionally, the Company incurred insurance expense, payroll expenses and travel expenses as a result of its operation during the nine months ended September 30, 2013 while there were no such expenses during the comparable period of prior year.

Liquidity

The Company’s S-1 Registration Statement became effective on March 29, 2013. The offering of the Company’s shares is being completed without an underwriter. The Company is currently working diligently to complete the sale of the shares as soon as possible. In that regard, the Company has continued to plan its implementation of its producing activities based on management’s belief that the shares will be sold. The Company however still does not have sufficient liquidity to implement its producing activities and is also continuing to explore other financially attractive relationships that may provide additional liquidity in the near future. The Company has no significant capital demands that it must meet in order to continue operations until it can fund its current offering or develop other sources of financial liquidity.

The Company has no immediate sources of debt or equity funding that is not related to the offering of its shares. The Company believes it can avoid accumulating debt or using other non-traditional forms of financing to provide liquidity.

At September 30, 2013, our cash and cash equivalents balance was $124,269.

Net cash used in operating activities was $267,536 for the nine months ended September 30, 2013, compared to $4,680 for the nine months ended September 30, 2012. The increase was mainly due to increase of payments for legal and professional services and insurance policy.

Net cash used in investing activities was $264,353 for the nine months ended September 30, 2013, compared to $0 for the nine months ended September 30, 2012. The Company had expenditures related to the operation permit and the investment in the infrastructure of its oil and gas properties during 2013.
 
Net cash provided by financing activities during the nine months ended September 30, 2013 was $656,158 compared to $4,680 for the nine months ended September, 30 2012. During the nine months ended September 30, 2013, the Company received $580,596 proceeds from sale of common stock and $57,211 from borrowing of debt.

Without additional investment capital from shareholders or other sources, the Company has no short term source of liquidity. In order to bring wells on-line and produce crude oil and natural gas to bring to market, significant amounts of working capital will be needed to continue. Accordingly, the Company plans to systematically bring wells on-line that have the greatest initial production possibility as capital is available. The Company’s illiquid financial position could cause it to not be able to start producing oil in the near future unless working capital from the offering or some other source of short term liquidity is developed.
 
Management does not believe that the Company’s current capital resources will be sufficient to fund its operating activity and other capital resource demands during the next year. Our ability to continue as a going concern is contingent upon our ability to obtain capital through the sale of equity or issuance of debt, and ultimately attaining profitable operations. There is no assurance that we will be able to successfully complete any one of these activities.
 
 
9

 
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a smaller reporting company, we are not required to provide disclosure under this Item 3.
 
Item 4.Controls and Procedures.

Evaluation of Effectiveness of disclosure controls and procedures

The management of the Company (CEO/CFO) have undertaken to establish a system of internal controls that are designed to assure that the Company prepares financial reports or statements that are published are prepared by applying the highest standard of compliance to the rules and regulations that guide their preparation in accordance with generally accepted accounting principles in the United States. Specifically, the management has implemented and enforces controls that:

Provide that a system of record keeping is maintained and used to accurately and in sufficient detail record the transactions and assets of the Company and any disposition of the Company’s assets.
 
A.
Provide for the accurate and timely recording of the transactions that are necessary for the preparation of financial statements in accordance with Generally Accepted Accounting Principles in the United States. Further, in place are systems that assure that the Company makes expenditures and collects receipts in accordance with the directives and authorization of management.
 

B.
Provide that a system is in place to detect or disclose to management in a timely manner any misuse or un-authorized use or disposition of the Company’s assets that could have a material effect on the financial statements issued by the Company.

As of the end of the period covered by this report (the “Evaluation Date”), the Company carried out an evaluation, under the supervision and with the participation of the Company's Principal Executive Officer and Principal Financial Officer (the “Certifying Officers”) of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e)) under the Exchange Act.  Based on that evaluation, the Certifying Officers have concluded that, as of the Evaluation Date, the disclosure controls and procedures in place were not effective as of the end of and for the period covered by this report.  

Changes in internal control over financial reporting

The Certifying Officers reviewed our internal control over financial reporting (as defined in rules 13a-15(f) and 15d-15(f)) under the Exchange Act as of the Evaluation Date and concluded that no changes occurred in such control or in other factors during the quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 
 
 
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PART II—OTHER INFORMATION

Item 1.  Legal Proceedings.

The Company is not currently enjoined in any legal proceeding and no previous legal proceedings exist.

Item 1A.   Risk Factors

As a smaller reporting company, we are not required to provide disclosure under this Item 1A.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

The Company made no sales of not-registered securities during the period from January 1, 2013 to September 30, 2013.

Item 3.   Defaults Upon Senior Securities.

No default on any senior, subordinated or other debt has occurred.

Item 4.   Mine Safety Disclosures

None.

Item 5.  Other Information.

None.

Item 6.  Exhibits.

Number
Exhibit Description
   
2.2
Purchase and Sales Agreement (Previously filed 2/23/2012)
   
3.1
Articles of Incorporation of North Texas Energy, Inc. (Previously filed 12/30/2011)
   
3.2
By-Laws of North Texas Energy, Inc. (Previously filed 12/30/2011)
   
31.1
Certificate of principal executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002
   
31.2
Certificate of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
32.1
Certificate of principal executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002
   
32.2
Certificate of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
   
101.INS
XBRL Instance Document
   
101.SCH
XBRL Schema Document
   
101.CAL
XBRL Calculation Linkbase Document
   
101.DEF
XBRL Definition Linkbase Document
   
101.LAB
XBRL Label Linkbase Document
   
101.PRE
XBRL Presentation Linkbase Document
 
 
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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.

 
North Texas Energy, Inc.
Date: November 14, 2013
 
 
By: /s/ Kevin Jones
 
Kevin Jones
 
Chief Executive Officer (Principal Executive Officer)
   
 
North Texas Energy, Inc.
Date: November 14, 2013
By: /s/ Sanah Marah, Jr.
 
Sanah Marah, Jr.
 
Chief Financial Officer (Principal Financial Officer)
 
 


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