Attached files
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| EXCEL - IDEA: XBRL DOCUMENT - SMARTCHASE CORP. | Financial_Report.xls |
| EX-32.1 - SARBANES-OXLEY 906 CERTIFICATION - SMARTCHASE CORP. | exh32-1.htm |
| EX-31.1 - SARBANES-OXLEY 302 CERTIFICATION - SMARTCHASE CORP. | exh31-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2014
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-52725
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NORTHERN EMPIRE ENERGY CORP.
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(Exact name of registrant as specified in its charter)
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Nevada
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20-4765268
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(State of incorporation)
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(I.R.S. Employer ID No.)
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Suite 201 – 55 York Street, Toronto, Ontario, Canada, M5J 1R7
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(Address of Principal Executive Offices)
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(416) 903-0059
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(Issuer's Telephone Number)
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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 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 | |
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.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller Reporting Company
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|X|
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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 October 29, 2014, the Registrant had 33,942,563 common shares and nil preferred shares outstanding.
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Table of Contents
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Northern Empire Energy Corp.
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Index To Form 10-Q
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For the Quarterly Period Ended September 30, 2014
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Page
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PART I
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FINANCIAL INFORMATION
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Item 1
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Financial Statements (Unaudited)
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Unaudited Condensed Balance Sheets as of September 30, 2014 and December 31, 2013
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1
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Unaudited Condensed Statements of Operations for the three and nine months ended
September 30, 2014 and 2013
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2
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Unaudited Condensed Statements of Cash Flows for the nine months ended September
30, 2014 and 2013
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3
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Notes to the Unaudited Condensed Financial Statements
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4
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Item 2
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Management's Discussion and Analysis of Financial Condition and Results of Operation
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9
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Item 3
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Quantitative and Qualitative Disclosures About Market Risk
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12
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Item 4
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Controls and Procedures
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12
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PART II
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OTHER INFORMATION
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Item 1
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Legal Proceedings
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13
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Item 2
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Unregistered Sales of Equity Securities and Use of Proceeds
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13
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Item 3
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Defaults Upon Senior Securities
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13
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Item 4
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Mine Safety Disclosures
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14
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Item 5
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Other Information
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14
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Item 6
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Exhibits
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14
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Signatures
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15
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
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NORTHERN EMPIRE ENERGY CORP.
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Condensed Balance Sheets
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(Expressed in US Dollars)
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As of
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As of
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|||||||
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September 30, 2014
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December 31, 2013
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(Unaudited)
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(Audited)
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ASSETS
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CURRENT ASSETS
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Cash and cash equivalents
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$
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3,929
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$
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18,572
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TOTAL ASSETS
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3,929
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18,572
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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CURRENT LIABILITIES
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Accounts payable
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$
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21,556
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$
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45,133
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Related party loan
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110,352
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60,352
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TOTAL LIABILITIES
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131,908
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105,485
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STOCKHOLDERS' EQUITY (DEFICIT)
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Preferred Stock, $0.001 par value, 5,000,000 shares authorized,
Nil shares issued and outstanding as of September 30, 2014 and
62,500 as of December 31, 2013
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-
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63
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Common stock; $0.001 par value; 195,000,000 shares
authorized; 33,942,563 shares issued and outstanding as of
September 30, 2014 and 21,442,563 as of December 31, 2013
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33,943
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21,443
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Additional paid-in capital
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744,171
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756,608
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Accumulated deficit
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(906,092
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)
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(865,026
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)
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TOTAL STOCKHOLDERS' EQUITY (DEFICIT)
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(127,979
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)
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(86,913
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)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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$
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3,929
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$
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18,572
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The accompanying notes are an integral part of these unaudited condensed financial statements.
F-1
1
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Condensed Statements of Operations
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(Unaudited)
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(Expressed in US Dollars)
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Three Months
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Nine Months
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Ended
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Ended
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Ended
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Ended
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September 30,
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September 30,
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September 30,
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September 30,
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2014
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2013
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2014
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2013
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OPERATING EXPENSES
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General and administrative
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2,474
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106
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19,804
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677
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Professional fees
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10,070
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1,500
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21,900
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4,500
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Total Operating Expenses
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12,544
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1,606
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41,704
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5,177
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Loss From Operations
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(12,544
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)
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(1,606
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(41,704
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)
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(5,177
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)
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OTHER EXPENSES
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Foreign currency translation gain (loss)
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301
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53
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638
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869
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NET (LOSS) GAIN
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(12,243
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(1,553
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(41,066
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)
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(4,308
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)
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NET (LOSS) GAIN PER SHARE –
BASIC AND DILUTED
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$
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(0.00
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$
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(0.00
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$
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(0.00
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$
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(0.00
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)
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WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
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21,877,122
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20,827,216
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22,741,464
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20,827,216
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The accompanying notes are an integral part of these unaudited condensed financial statements.
F-2
2
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NORTHERN EMPIRE ENERGY CORP.
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Condensed Statements of Cash Flows
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(Unaudited)
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(Expressed in US Dollars)
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Nine Months Ended
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September 30,
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September 30,
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2014
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2013
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CASH FLOW FROM OPERATING ACTIVITIES
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Net loss
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$
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(41,066
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$
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(4,308
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Changes in operating assets and liabilities:
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Prepaid expenses
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-
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(2,500
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)
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Increase (decrease) in accounts payable and accrued expenses
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26,423
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15,626
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Net cash used in operating activities
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(14,643
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)
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8,818
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CASH FLOW FROM FINANCING ACTIVITIES
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Common stock issued for cash
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-
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-
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Net cash provided by financing activities
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-
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-
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NET INCREASE (DECREASE) IN CASH
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(14,643
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)
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8,818
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CASH AND CASH EQUIVALENTS, Beginning of period
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18,572
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-
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CASH AND CASH EQUIVALENTS, End of period
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$
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3,929
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$
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8,818
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The accompanying notes are an integral part of these unaudited condensed financial statements.
F-3
3
NORTHERN EMPIRE ENERGY CORP.
Notes to the Condensed Financial Statements
September 30, 2014
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 September 30, 2014 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, 2013 audited financial statements. The results of operations for the period ended September 30, 2014 are not necessarily indicative of the operating results for the full year.
NOTE 2 - GOING CONCERN
These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of September 30, 2014, the Company has accumulated operating losses of approximately $(906,092) since inception.
At September 30, 2014, 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.
Notes to the Condensed Financial Statements
September 30, 2014
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
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.
Notes to the Condensed Financial Statements
September 30, 2014
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 September 30, 2014 and December 31, 2013, 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 September 30, 2014 the President of the Company is owed $110,352 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.
6
NORTHERN EMPIRE ENERGY CORP.
Notes to the Condensed Financial Statements
September 30, 2014
NOTE 5 – STOCKHOLDER'S EQUITY
As of September 30, 2014 there were 33,942,563 shares of common stock issued and outstanding and nil 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.
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.
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.
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.
7
NORTHERN EMPIRE ENERGY CORP.
Notes to the Condensed Financial Statements
September 30, 2014
NOTE 5 – STOCKHOLDER'S EQUITY (continued)
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.
During the period ended September 30, 2014, an aggregate of 62,500 preferred shares of stock were converted into 12,500,000 shares of common stock at a conversion rate of 200 to 1.
NOTE 6 – RECENT ACCOUNTING PRONOUNCEMENTS
In the quarter ending September 30, 2014, the Company has elected to early adopt Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the Company to remove the inception to date information and all references to development stage.
NOTE 7 – 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 and purchased certain petroleum and natural gas rights within the Province of Alberta for a total purchase price of $471,524 ($500,000.00 Canadian Dollars). The Company was unable to secure additional financing to conduct exploration and drill wells on its oil and gas properties and consequently, during the year ended December 31, 2010, 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
We did not generate any revenues during the nine month periods ended September 30, 2014 and 2013.
During the nine month periods ended September 30, 2014 and 2013, much of the Company's resources were directed at maintaining the Company in good standing and identifying new business opportunities.
For the three months ended September 30, 2014 and 2013
We had a net loss of $(12,243) during the three months ended September 30, 2014 compared to a net loss of $(1,553) during the same period ended September 30, 2013. The change is explained below.
Operating expenses for the three months ended September 30, 2014 totaled $12,544 compared to $1,606 for the same period in 2013. Details are as follows:
During the quarter ended September 30, 2014 we incurred expenses of $99 in general office expenses (2013 - $106), transfer agent fees were $925 (2013 - $nil), filing fees associated with the filing of our periodic reports on Form 10Q and were $1,120 (2013 -$nil) accounting and administrative fees were $4,500 (2013 - nil) legal fees were $4,400 (2013 – Nil) and audit fees incurred during the quarter were $1,500 (2013 - $1,500).
During the quarter ended September 30, 2014 the Company recorded $301 from foreign currency translation (2013 - $53).
10
For the nine months ended September 30, 2014 and 2013
We had a net loss of $(41,066) during the nine months ended September 30, 2014 compared to a net loss of $(4,308) during the same period ended September 30, 2013. The change is explained below.
Operating expenses for the nine months ended September 30, 2014 totaled $41,704 compared to $5,177 for the same period in 2013. During the nine months ended September 30, 2014 operating expenses increased by $36,527 primarily as a result of additional expenses paid to prepare and Edgar file all of the Company's outstanding public reports with the Securities and Exchange Commission.
During the quarter ended September 30, 2014 we incurred expenses of $599 in general office expenses (2013 - $677), transfer agent fees were $1,255 (2013 - $nil), Edgar fees associated with the filing of our outstanding reports on Form 10Q and 10K filing fees were $17,950 (2013 -$nil), accounting and administrative fees were $14,500 (2013 - $nil) legal fees were $4,400 (2013 - $nil) and audit fees incurred during the quarter were $3,000 (2013 - $4,500).
During the quarter ended September 30, 2014 the Company received $638 (2013 - $869) from foreign currency translation gains.
We did not generate any revenues during the nine month periods ended September 30, 2014 and 2013. 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.
Liquidity and Capital Resources
At September 30, 2014, we had total assets of $3,929 comprised solely of cash. Our liabilities were $131,908 resulting in a working capital deficit of $(127,979) compared to $(86,913) at December 31, 2013. Net cash from (used in) operating activities was $(14,643) and $8,818 for the nine months ending September 30, 2014 and 2013 respectively.
We generated no revenue during the nine months ended September 30, 2014. 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. We did not receive any cash from the sale of shares during the period ended September 30, 2014.
At September 30, 2014 our President has advanced a total of $110,352 to us for working capital. This advance will need to be repaid once funds are available. There can be no assurance that he will continue to advance funds as required or that methods of financing will be available or accessible on reasonable terms.
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
11
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 2013 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.
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 September 30, 2014.
Based on that evaluation, our Principal Executive Officer and our Principal Financial Officer has concluded that, as of September 30, 2014, 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 disclosure controls and procedures resulting in material weaknesses.
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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 September 30, 2014 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 September 30, 2014, 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 September 30, 2014, 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.
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.
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ITEM 4. MINE SAFETY DISCLOSURES.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
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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.
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NORTHERN EMPIRE ENERGY CORP.
|
||
|
Registrant
|
||
|
BY:
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/s/ RANIERO CORSINI
|
|
|
Raniero Corsini, Chief Executive & Chief Financial Officer
|
||
|
DATED:
|
October 29, 2014
|
|
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