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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 March 31, 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 number   000-52725

NORTHERN EMPIRE ENERGY CORP.

(Exact name of registrant as specified in its charter)

Nevada
20-4765268
(State of incorporation)
(I.R.S. Employer ID No.)
   
Suite 201 – 55 York Street, Toronto, Ontario, Canada, M5J 1R7
(Address of Principal Executive Offices)
 
(416) 903-0059
(Issuer’s Telephone Number)
 

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 |X|

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 “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one).

Large Accelerated Filer
|_|
Accelerated Filer
|_|
Non-accelerated Filer (Do not check if 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 |X|   No |   |

At March 31, 2013, the Registrant had 20,827,216 common shares and 62,500 preferred shares outstanding.





 
 

 


Table of  Contents
Northern Empire Energy Corp.
Index To Form 10-Q
For the Quarterly Period Ended March 31, 2013
 
   
     
 
 
Page
PART I
FINANCIAL INFORMATION
 
 
   
Item 1
Financial Statements
 
 
   
 
Condensed Balance Sheets as of  March 31, 2013 and December 31, 2012
1
 
   
 
Condensed Statements of  Operations for the three months ended March 31, 2013 and 2012
2
 
   
 
Condensed Statements of Cash Flows for the three months ended March 31, 2013 and 2012
3
 
   
 
Notes to the Condensed Financial Statements
4
 
   
Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operation
9
 
   
Item 3
Quantitative and Qualitative Disclosures About Market Risk
11
 
   
Item 4
Controls and Procedures
12
 
   
PART II
OTHER INFORMATION
 
 
   
Item 1
Legal Proceedings
12
 
   
Item 2
Unregistered Sales of  Equity Securities and Use of Proceeds
12
 
 
 
Item 3
Defaults Upon Senior Securities
13
 
 
 
Item 4
Removed and Reserved
13
 
 
 
Item 5
Other Information
13
 
 
 
Item 6
Exhibits
13
     
Signatures
 
14





 
 

 

PART I.  FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

NORTHERN EMPIRE ENERGY CORP.
 
(A Development Stage Company)
 
Condensed Balance Sheets
 
(Expressed in US Dollars)
 
 
 
 
 
   
As of
   
As of
 
   
March 31, 2013
   
December 31, 2012
 
   
(Unaudited)
   
(Audited)
 
 
           
ASSETS
           
 
           
CURRENT ASSETS
           
Cash and cash equivalents
  $ -     $ -  
 
               
TOTAL CURRENT ASSETS
    -       -  
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
               
 
               
CURRENT LIABILITIES
               
Accounts payable
  $ 35,910     $ 35,056  
Related party loan
    19,830       19,830  
 
               
TOTAL CURRENT LIABILITIES
    55,740       54,886  
 
               
STOCKHOLDERS’ EQUITY (DEFICIT)
               
                 
Preferred Stock, $0.001 par value, 5,000,000 shares authorized,
62,500 shares issued and outstanding as of March 31, 2013 and
December 31, 2012
    63       63  
                 
Common stock; $0.001 par value; 195,000,000 shares authorized;
20,827,216 shares issued and outstanding as of March 31, 2013 and
December 31, 2012
    20,827       20,827  
                 
Stock payable; 615,347 shares
    615       615  
Additional paid-in capital
    756,608       756,608  
Deficit accumulated during development stage
    (833,853 )     (832,999 )
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)
    (55,740 )     (54,886 )
 
               
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
  $ -     $ -  



The accompanying notes are an integral part of these condensed financial statements.




 
1

 

NORTHERN EMPIRE ENERGY CORP.
 
(A Development Stage Company)
 
Condensed Statements of Operations
 
(Unaudited)
 
(Expressed in US Dollars)
 
 
 
 
 
   
Three Months
   
April 24, 2006
 
   
Ended
   
Ended
   
(inception) to
 
   
March 31,
   
March 31,
   
March 31,
 
   
2013
   
2012
   
2013
 
 
                 
REVENUES
  $ -     $ -     $ 19,491  
 
                       
OPERATING EXPENSES
                       
General and administrative
    38       2,012       276,557  
Professional fees
    1,500       11,950       99,946  
TOTAL OPERATING EXPENSES
    1,538       13,962       376,503  
 
                       
LOSS FROM OPERATIONS
    (1,538 )     (13,962 )     (357,012 )
 
                       
OTHER EXPENSES:
                       
Foreign currency translation gain (loss)
    684       2,051       (6,119 )
Loss on impairment of oil and gas rights
    -       -       (471,524 )
Gain on settlement of debt
    -       765       802  
TOTAL OTHER EXPENSES
    684       2,816       (476,841 )
 
                       
NET (LOSS) GAIN
    (854 )     (11,146 )     (833,853 )
 
                       
NET (LOSS) GAIN PER SHARE - BASIC AND DILUTED
  $ (0.00 )   $ (0.00 )        
 
                       
WEIGHTED AVERAGE COMMON EQUIVALENT
                       
SHARES OUTSTANDING - BASIC AND DILUTED
    20,827,216       20,827,216          



The accompanying notes are an integral part of these condensed financial statements.











 
2

 

NORTHERN EMPIRE ENERGY CORP.
 
(A Development Stage Company)
 
Condensed Statements of Cash Flows
 
(Unaudited)
 
(Expressed in US Dollars)
 
 
 
 
 
         
April 24, 2006
 
   
Three Months Ended
   
(inception) to
 
   
March 31,
   
March 31,
   
March 31,
 
   
2013
   
2012
   
2013
 
CASH FLOW FROM OPERATING ACTIVITIES:
                 
Net loss
  $ (854 )   $ (11,146 )   $ (833,853 )
Adjustment to reconcile net loss to net cash
                       
used in operating activities:
                       
Depreciation
    -       -       2,750  
Beneficial conversion feature
    -       -       7,500  
Impairment of asset
    -       -       471,524  
Gain on extinguishment of debt
    -       (765 )     (765 )
Changes in operating assets and liabilities:
                       
Increase (decrease) in accounts payable and accrued expenses
    854       11,737       153,686  
Net cash used in operating activities
    -       (174 )     (199,158 )
 
                       
CASH FLOW FROM INVESTING ACTIVITIES:
                       
Cash paid for prior ownership
    -       -       (50,000 )
Deposits for purchase of oil and gas properties
    -       -       (471,524 )
Net cash used in investing activities
    -       -       (521,524 )
 
                       
CASH FLOW FROM FINANCING ACTIVITIES:
                       
Contributed capital from officer
    -       -       1,425  
Common stock issued for cash
    -       -       719,257  
Purchase of treasury stock
    -       (5,000 )     (5,000 )
Sale of treasury stock
    -       5,000       5,000  
Net cash provided by financing activities
    -       -       720,682  
 
                       
NET INCREASE (DECREASE) IN CASH
    -       (174 )     -  
 
                       
CASH AND CASH EQUIVALENTS, Beginning of period
    -       174       -  
 
                       
CASH AND CASH EQUIVALENTS, End of period
  $ -     $ -     $ -  



The accompanying notes are an integral part of these condensed financial statements.






 
3

 

NORTHERN EMPIRE ENERGY CORP.
(A Development Stage Company)
Notes to the Condensed Financial Statements
March 31, 2013


NOTE 1 – CONDENSED FINANCIAL STATEMENTS

The accompanying condensed financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at March 31, 2013 and for all periods presented have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2012 audited financial statements.  The results of operations for the period ended March 31, 2013 are not necessarily indicative of the operating results for the full year.


NOTE 2 – GOING CONCERN

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As of March 31, 2013, the Company has accumulated operating losses of approximately $833,853 since inception.

At March 31, 2013, the Company has limited cash resources and will likely require new financing, either through loans from officers, debt financing, equity offerings or business combinations to continue the development of its business; however, there can be no assurance that management will be successful in raising the funds necessary to maintain operations, or that a self-supporting level of operations will ever be achieved. The likely outcome of these future events is indeterminable. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations and the attainment of profitable operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.  These financial statements do not include any adjustments that might arise from this uncertainty.


NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

The Company’s financial statements are prepared using the accrual method of accounting.  The Company has elected a December 31 year-end.

Basis of Accounting

The basis is United States generally accepted accounting principles.




 
4

 


NORTHERN EMPIRE ENERGY CORP.
(A Development Stage Company)
Notes to the Condensed Financial Statements
March 31, 2013


NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenue on an accrual basis. Revenue is generally realized or realizable and earned when all of the following criteria are met:  1) persuasive evidence of an arrangement exists between the Company and our customer(s); 2) services have been rendered; 3) our price to our customer is fixed or determinable; and 4) collectability is reasonably assured.

Income taxes

The Company accounts for its income taxes in accordance with FASB ASC Topic 740-10, “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Net Loss Per Common Share

FASB ASC Topic 260-10, “Earnings per Share”, requires presentation of “basic” and “diluted” earnings per share on the face of the statements of operations for all entities with complex capital structures. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.

Stock-Based Compensation

The Company has adopted FASB ASC Topic 718-10, “Compensation- Stock Compensation” (“ASC 718-10”) which requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees and directors. Under the fair value recognition provisions of ASC 718-10, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period.



 
5

 


NORTHERN EMPIRE ENERGY CORP.
(A Development Stage Company)
Notes to the Condensed Financial Statements
March 31, 2013


NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock-Based Compensation (continued)

Determining the fair value of stock-based awards at the grant date requires considerable judgment, including estimating the expected future volatility of our stock price, estimating the expected length of term of granted options and selecting the appropriate risk-free rate. There is no established trading market for our stock.

Financial instruments

The fair value of the Company’s financial assets and financial liabilities approximate their carrying values due to the immediate or short-term maturity of these financial instruments.

Foreign Currency Translation

The Company’s functional and reporting currency is the United States dollar. Occasional transactions may occur in Canadian dollars and management has adopted FASB ASC topic 830 “Foreign Currency Matters”). Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

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. The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. Management does not believe the Company is exposed to significant credit risk. Management, as well, does not believe the Company is exposed to significant interest rate and foreign currency fluctuation risks during the period presented in these financial statements.  As at March 31, 2013 and December 31, 2012, the Company has cash equivalents in the amount of $ nil and $nil that are over the federally insured limit.


NOTE 4 – RELATED PARTY TRANSACTIONS

As of March 31, 2013 the President of the Company is owed $19,830 for loans and payments made directly to vendors on behalf of the Company.  The amount due is unsecured, non-interest bearing and due on demand.

During the twelve months ended December 31, 2012, a company affiliated with a former officer agreed to settle $99,681 of related party debt in consideration for $2,500. This amount of forgiven debt ($97,181) is recorded as contributed capital.



 
6

 


NORTHERN EMPIRE ENERGY CORP.
(A Development Stage Company)
Notes to the Condensed Financial Statements
March 31, 2013


NOTE 5 – OIL AND GAS PROPERTIES

On December 16, 2009, the Company entered into a “Formal option to Purchase and Sale Agreement of Petroleum and Natural Gas Rights” with Angels Exploration Fund, Inc., an Alberta Corporation.  The Company agreed to purchase certain petroleum and natural gas rights within the Province of Alberta for a total purchase price of $471,524 ($500,000 Canadian Dollars).

The Company was unsuccessful in raising additional capital in order to conduct exploration and drill wells on the property, and as of December 31, 2009, the property was written down/impaired to $1 and a loss was recognized in the financial statements in the amount of $471,523.

During the year ended December 31, 2010, the Company terminated the “Formal Option to Purchase and Sale Agreement of Petroleum and Natural Gas Rights” and became a shell corporation whose sole purpose at this time is to locate and consummate a merger and/or acquisition with an operating entity.


NOTE 6 – STOCKHOLDER’S EQUITY

As of March 31, 2013 there were 20,827,216 shares of common stock issued and outstanding, 615,347 shares of common stock payable and 62,500 shares of preferred stock issued and outstanding.

On April 24, 2006 (inception), the Company issued 361,900 shares of its common stock at $0.01 per share to its sole shareholder for $3,619.

On April 24, 2006, the Company issued 75,000 shares of its preferred stock in exchange for telephone calling equipment valued at $7,500.  Each share of the Convertible Preferred Stock can be exchanged for two hundred (200) shares of Common Stock of the corporation.  This Series A preferred stock was issued with a beneficial conversion feature totaling $7,500. If the preferred stock were to be converted into common stock, the common stock would be increased by 15,000,000 shares.

On December 31, 2006, the Company issued 61,200 shares of its common stock at $0.10 per share pursuant to a regulation 504 offering for $6,120.

On November 17, 2008, the Company issued 18,000,000 shares of its common stock at $0.01 per share for $180,000 in cash to the CEO of the Company.

On January 30, 2008, the Company initiated a ten-for-one reverse stock split for its issued and outstanding common and preferred stock.  This reverse stock split had no effect on the authorized number of common shares or preferred shares, and did not affect the par value of the stock. The financial statements reflect the reverse stock split on a retroactive basis.





 
7

 


NORTHERN EMPIRE ENERGY CORP.
(A Development Stage Company)
Notes to the Condensed Financial Statements
March 31, 2013


NOTE 6 – STOCKHOLDER’S EQUITY (continued)

On November 17, 2008, David Gallagher, a former officer and director of the Company, returned his 361,900 restricted shares of common stock to the corporate treasury in exchange for $50,000 and the Company’s specialized phone equipment with a book value of $4,750.  The shares were then cancelled by the Company’s transfer agent.

On February 27, 2009, 8,000 preferred shares of stock were converted into 1,600,000 shares of common stock at a conversion rate of 200 to 1.

On September 10, 2009, the Company conducted a private placement of 615,347 shares of common stock at $0.60 per share for a total of $369,208. As of March 31, 2013, the shares had not yet been issued by the transfer agent and are recorded as stock payable on the Statement of Stockholder’s Equity.

On October 2, 2009, 4,500 preferred shares of stock were converted into 900,000 shares of common stock at a conversion rate of 200 to 1.

In December 2009, the Company conducted a private placement of 266,016 shares of common stock at $0.60 per share for a total of $160,310.

On March 21, 2012, a former officer and director of the Company returned his 18,000,000 restricted shares of common stock to the corporate treasury in exchange for $5,000.

On March 21, 2012, the Company sold 18,000,000 shares of its treasury stock at cost for $5,000 cash.

During the fiscal year ended December 31, 2012, a company affiliated with a former officer agreed to settle $99,681 of related party debt in consideration for $2,500. This amount of forgiven debt ($97,181) is recorded as contributed capital.


NOTE 7 – RECENT ACCOUNTING PRONOUNCEMENTS

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.


NOTE 8 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date the financial statements are issued and believes there are no events to disclose.




 
8

 

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

Forward-Looking Information

This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  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 that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from 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 (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.  In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars.  All references to “common shares” refer to the common shares in our capital stock.

In this Form 10-Q references to “Northern Empire”, “the Company”, “we”, “us” and “our” refer to Northern Empire Energy Corp.

Limited Operating History
 
There is limited historical financial information about our company upon which to base an evaluation of our future performance.  We are a development stage corporation and have generated limited revenues from operations.  We cannot guarantee that we will be successful in our business operations.  We are subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible delays in the exploitation of business opportunities.  We may fail to adopt a business model and strategize effectively or fail to revise our business model and strategy should industry conditions and competition change.

We have limited resources and there is no assurance that future financing will be available to us on acceptable terms. Additional equity financing could result in dilution to existing shareholders.

Overview of Operations

We were incorporated in the State of Nevada on April 24, 2006, as Political Calls, Inc.   Our common stock is quoted for trading on the OTC Bulletin Board under the symbol NOEE.  Our principal executive offices are located at Suite 201 – 55 York Street, Toronto, Ontario, Canada, M5J 1R7.

The original business plan of the Company consisted of marketing telephone broadcasting messages for political campaigns.  On November 23, 2008, the Board of Directors and the majority vote of the Company’s shareholders voted and approved a name change of the Company from Political Calls, Inc. to Northern Empire Energy Corp., to better reflect the Company’s new business direction in oil and gas exploration.



 
9

 

In December 2009 we entered into a “Formal Option to Purchase and Sale Agreement of Petroleum and Natural Gas Rights” with Angels Exploration Fund, Inc., an Alberta Corporation.  We agreed to purchase from Angels Exploration Fund Inc. certain petroleum and natural gas rights within the Province of Alberta for a total purchase price of $471,524 ($500,000.00 Canadian Dollars).  In January 2010, the Company announced it had acquired 100% of the Petroleum and Natural Gas lease rights on nine sections in the Redwater Region, north-east of Edmonton,  Alberta; the “Waskatenau Prospect”.

The Company was unable to secure additional financing to conduct exploration and drill wells on its oil and gas properties and consequently, decided to forfeit the Petroleum and Natural Gas lease rights on the Waskatenau Prospect.  During the year ended December 31, 2010, the Company terminated the “Formal Option to Purchase and Sale Agreement of Petroleum and Natural Gas Rights” and became a shell corporation whose sole purpose at this time is to locate and consummate a merger and/or acquisition with an operating entity. We have no employees and own no property. We do not intend to perform any further operations until a merger or acquisition candidate is located and a merger or acquisition consummated.

Plan of Operation

Currently, we are a development stage corporation.  A development stage corporation is one engaged in the search of business opportunities, successful negotiation and closing of a business acquisition and furthering its business plan.

Our plan of operation for the next twelve months will be to: (i) consider guidelines of industries in which we may have an interest; (ii) adopt a business plan regarding engaging in business in any selected industry; and (iii) to commence such operations through funding and/or the acquisition of an operating entity engaged in any industry selected.

Results of Operations

Results of Operations for the three months ended March 31, 2013 and 2012

During the three months ended March 31, 2013, the Company had a net loss of $(854) compared to a net loss of $(11,146) during the same period ended March 31, 2012.  Operating expenses for the period ended March 31, 2013 totaled $1,538 (2012- $13,962) consisting of $38 in general and administrative expenses and audit fees of $1,500 for the review of our interim financial statements. During the quarter ended March 31, 2013 the Company received $684 from foreign currency translation gains.

For the period since inception through March 31, 2013, we generated limited revenues of $19,491.  As a result, we have generated significant operating losses since our formation and expect to incur substantial losses and negative operating cash flows for the foreseeable future as we attempt to expand our infrastructure and development activities. Our ability to continue may prove more expensive than we currently anticipate and we may incur significant additional costs and expenses.

We are subject to risks inherent in the establishment of a new business enterprise.  We may fail to adopt a business model and strategize effectively or fail to revise our business model and strategy should industry conditions and competition change. We have limited resources and there is no assurance that future financing will be available to our Company on acceptable terms. These conditions could further impact our business and have an adverse effect on our financial position, results of operations and/or cash flows.




 
10

 


Liquidity and Capital Resources

At March 31, 2013, we had total assets of $nil and total liabilities of $55,740 compared to total assets of $nil and total liabilities of $54,886 at December 31, 2012.  Net working capital was $(55,740) compared to $(54,886) at December 31, 2012.  We incurred a net loss of $(854) for the three months ended March 31, 2013 and an aggregate deficit since inception of $(833,853).

We earned $19,491 in revenues since our inception on April 24, 2006 through March 31, 2013. We generated no revenue during the three months ended March 31, 2013.  We do not anticipate generating any revenues for the foreseeable future.   Since inception, we have used our common stock to raise money to fund our business operations, for corporate expenses and to repay outstanding indebtedness.  Net cash provided by the sale of shares from inception to March 31, 2013 was $719,257.

We do not have enough money to meet our cash requirements for the next twelve months, as we have yet to commence operations, have not generated any revenues and there can be no assurance that we can generate significant revenues from operations.

The Company’s management is exploring a variety of options to meet the Company’s cash requirements and future capital requirements, including the possibility of equity offerings, debt financing and business combinations. There can be no assurance that the Company will be able to raise additional capital, and if the Company is unable to raise additional capital, it will unlikely be able to continue as a going concern.

Going Concern

As of the date of this report, there is substantial doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow to fund our business operations.    The financial statements included in this report have been prepared on the going concern basis, which assumes that we will be able to realize our assets and discharge our obligations in the normal course of business.  If we are not to continue as a going concern, we would likely not be able to realize our assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the financial statements.

Our future success and viability, therefore, are dependent upon our ability to generate capital financing.  The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon us and our shareholders.

Off-Balance Sheet Arrangements

We do not have any 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 or operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies

There have been no material changes in our existing accounting policies and estimates from the disclosures included in our 2012 Form 10-K, except for the newly adopted accounting policies as disclosed in the interim financial statements.


ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Pursuant to Item 305(e) of Regulation S-K, the Company, as a smaller reporting company, is not required to provide the information required by this item.

 
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ITEM 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by our management, with the participation of our Principal Executive Officer who also serves as our Principal Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of March 31, 2013.

Based on that evaluation, our Principal Executive Officer and our Principal Financial Officer has concluded that, as of March 31, 2013, our disclosure controls and procedures were not effective to detect the inappropriate application of US GAAP rules. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

Such material weaknesses include: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the  establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; and (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

As of March 31, 2013 the deficiencies have not been remedied due to our lack of sufficient capital resources.  We are working to remedy our deficiencies.

Changes in Internal Control Over Financial Reporting

As of March 31, 2013, there have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period ended March 31, 2013, that materially affected, or are reasonably likely to materially affect, our company’s internal control over financial reporting.


PART II. OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business.  However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.


ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

On March 21, 2012, a former officer and director of the Company returned his 18,000,000 restricted shares of common stock to the corporate treasury in exchange for $5,000.


 
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Recent Sales of Unregistered Securities

On March 21, 2012, the Company sold 18,000,000 shares of its treasury stock at cost for $5,000 cash.

The shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933 on the grounds that the transaction did not involve a public offering and the purchaser was furnished with the same information that could be found in a Form S-1 registration statement and was determined to be “sophisticated” as that term is defined in administration decisions of the SEC.


ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None.


ITEM 4 – MINE SAFETY DISCLOSURES

None.


ITEM 5 – OTHER INFORMATION

None.


ITEM 6 – EXHIBITS

   
Incorporated by reference
 
Exhibit
Document Description
Form
Date
Number
Filed
herewith
           
3.1
Articles of Incorporation, as currently in effect
SB-2
02/21/2007
3.1
 
           
3.2
Bylaws as currently in effect
SB-2
02/21/2007
3.2
 
           
3.3
Amended Articles of Incorporation
SB-2
02/21/2007
3.3
 
           
3.4
Amended Articles of Incorporation
8-K
11/19/2008
3.4
 
           
10.1
Option Agreement dated November 17, 2008
8-K
11/19/2008
10.2
 
           
31.1
Certification of Principal Executive Officer and Principal
Financial Officer pursuant to 15d-15(e), promulgated
under the Securities and Exchange Act of 1934, as amended
     
X
           
32.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Chief Executive Officer and Chief Financial Officer)
     
X




 
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SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned, hereunto duly authorized.


 
NORTHERN EMPIRE ENERGY CORP.
 
Registrant
 
   
 
BY:
/s/ RANIERO CORSINI
   
Raniero Corsini, Chief Executive & Chief Financial Officer
 
DATED:
April 22, 2014








 
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