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 September 30, 2014
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:  000-53499

 

Encompass Energy Services, Inc.
(Exact name of registrant as specified in its charter)

Delaware		74-3252949
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

914 North Broadway Avenue,
Suite 220
P.O. Box 1218
Oklahoma City, OK 73101
(Address of principal executive offices,
including Zip Code)

(405) 815-4041
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  [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 smaller reporting company:  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [_]

Accelerated filer [_]

Non-accelerated filer [_] (Do not check if a smaller reporting company)

Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes [X] No { }

 

As of November 11, 2014, the registrant had 2,056,983 shares of common stock, par value $0.01 per share, issued and outstanding.

 

  

 

 

ENCOMPASS ENERGY SERVICES, INC.
FORM 10-Q

Table of Contents

		Page
PART I – FINANCIAL INFORMATION		1
	Item 1.      Financial Statements	1
	Item 2.      Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
	Item 3.      Quantitative and Qualitative Disclosures About Market Risk	12
	Item 4.      Controls and Procedures	13
PART II – OTHER INFORMATION		13
	Item 1.      Legal Proceedings	13
	Item 1A.   Risk Factors	14
	Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds	14
	Item 3.      Defaults Upon Senior Securities	14
	Item 4.      Mine Safety Disclosures	14
	Item 5.      Other Information	14
	Item 6.      Exhibits	14
SIGNATURES		15

 

 

 

 

-i-

 

 

 

 

  

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

 

ENCOMPASS ENERGY SERVICES, INC.
BALANCE SHEETS

		September 30,				December 31,
		2014				2013
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	89			$	453
Total current assets			89				453
Property and equipment, net			474				880
Total assets		$	563			$	1,333
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	21,487			$	8,196
Related party notes payable			610,902				552,358
Total current liabilities			632,389				560,554
STOCKHOLDERS’ EQUITY
Authorized shares:  180,000,000 shares of common stock and 20,000,000 shares of preferred stock; 2,056,983 shares of common stock were issued and outstanding at December 31, 2013 and September 30, 2014			20,569				20,569
Additional paid-in capital			226,654				226,654
Accumulated deficit			(879,049	)			(806,444	)
Total stockholders’ equity (deficit)			(631,826	)			(559,221	)
Total liabilities and stockholders’ equity (deficit)		$	563			$	1,333

 

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

 

 

 

 

1 

 

 

 

ENCOMPASS ENERGY SERVICES, INC.
STATEMENTS OF OPERATIONS
(unaudited)

 

		Nine months ended September 30,								Three months ended September 30,
		2014				2013				2014				2013
OPERATING COSTS AND EXPENSES:
General and administrative expenses		$	51,967			$	249,621			$	11,379			$	58,562
Total operating costs and expenses			51,967				249,621				11,379				58,562
Operating loss			(51,967	)			(249,621	)			(11,379	)			(58,562	)
Interest expense			(20,638	)			(12,934	)			(7,162	)			(5,602	)
Loss before income taxes			(72,605	)			(262,555	)			(18,541	)			(64,164	)
Income tax expense			—				—				—				—
Net loss		$	(72,605	)		$	(262,555	)		$	(18,541	)		$	(64,164	)
Loss per common share:
Weighted average shares outstanding – basic and diluted			2,056,985				2,056,985				2,056,985				2,056,985
Loss per share - basic and diluted		$	(0.035	)		$	(0.128	)		$	(0.009	)		$	(0.031	)

 

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

 

 

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ENCOMPASS ENERGY SERVICES, INC.
STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)

 

 

		Nine months ended September 30,								Three months ended September 30,
		2014				2013				2014				2013
Net loss		$	(72,605	)		$	(262,555	)		$	(18,541	)		$	(64,164	)
Other comprehensive loss, net of tax:			—				—				—				—
Total comprehensive loss		$	(72,605	)		$	(262,555	)		$	(18,541	)		$	(64,164	)

 

 

 

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

 

 

 

 

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ENCOMPASS ENERGY SERVICES, INC.
STATEMENTS OF CASH FLOWS
(unaudited)

		Nine months ended September 30,
		2014				2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(72,605	)		$	(262,555	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense			407				407
Changes in operating assets and liabilities:
Accounts payable			13,291				(40,632	)
Related party notes payable			20,638				12,934
Net cash used in operating activities			(38,269	)			(289,846	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party notes payable			37,905				289,000
Net cash provided by financing activities			37,905				289,000
NET CHANGE IN CASH AND CASH EQUIVALENTS			(364	)			(846	)
CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD			453				4,397
CASH AND CASH EQUIVALENTS, AT END OF PERIOD		$	89			$	3,551

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

 

 

 

4 

 

 

 

 

ENCOMPASS ENERGY SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

Note A. Organization

 

Encompass Energy Services, Inc. (the “Company”) is a Delaware corporation formed on February 12, 2008, under the name Ametrine Capital, Inc. The Company filed an amended and restated Certificate of Incorporation with the Delaware Secretary of State that changed its legal name to New Source Energy Group, Inc. on April 18, 2011. On December 2, 2011, the Company filed another amendment to its Certificate of Incorporation with the Delaware Secretary of State that changed its legal name from New Source Energy Group, Inc. to Encompass Energy Services, Inc. Both the Company’s board of directors and the holder of 1,727,983 shares of the Company’s common stock (approximately 84% of the issued and outstanding shares thereof) at the time approved the amendment to the Company’s Certificate of Incorporation to effectuate the name change on October 31, 2011. The approval of this amendment was described in a Definitive Information Statement on Schedule 14C filed by the Company with the Securities and Exchange Commission and distributed to the Company’s stockholders on November 10, 2011. Currently, the Company is not engaged in any business operation.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered cumulative losses and negative cash flow from operations since inception. Currently, the Company depends on financing provided by its stockholders. The financial statements do not include any adjustments that may result from the outcome of this uncertainty.

Note B. Summary of Significant Accounting Policies

Basis of presentation. The accompanying unaudited financial statements present the financial position at September 30, 2014 and December 31, 2013 and the results of operations for the three and nine months ended September 30, 2014 and 2013, and cash flows for the nine months ended September 30, 2014 and 2013 of Encompass Energy Services, Inc. These financial statements include all adjustments, consisting of normal and recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the financial position and the results of operations for the indicated periods. The results of operations for the nine months ended September 30, 2014 are not necessarily indicative of the results to be expected for the full year ending December 31, 2014. Reference is made to the Company’s financial statements for the year ended December 31, 2013 included in the Company’s Annual Report on Form 10-K for such period for an expanded discussion of the Company’s financial disclosures and accounting policies.

Use of estimates in preparation of financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates.

Fair value of financial instruments. The Company discloses fair value measurements for financial and non-financial assets and liabilities measured at fair value. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

 

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ENCOMPASS ENERGY SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

Financial items carried at fair value as of September 30, 2014, and December 31, 2013, consisted entirely of cash and cash equivalents and are classified as Level 1.

Comprehensive Income. The Company accounts for comprehensive income in accordance with ASC No. 220, “Comprehensive Income.” Comprehensive income generally represents all changes in stockholders’ equity during the period except those resulting from investments by, or distributions to, stockholders.

Recent accounting pronouncements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from contracts with customers (Topic 606): The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply a five step methodology: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. An entity should apply the amendments in this update using one of the following two methods: (1) retrospectively to each prior reporting period presented (along with some practical expedients); or (2) retrospectively with the cumulative effect of initially applying this update recognized at the date of initial application. The amendments in this update will be effective prospectively for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company does not expect a significant impact on the financial statements upon adoption.

In August 2014, the FASB issued ASU No. 2014-15 “Presentation of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern”. The new standard provides guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. ASU 2014-15 applies prospectively to annual periods ending after December 15, 2016, and to annual and interim periods thereafter. Early application is permitted. The Company does not expect material impacts on its financial statements upon adoption.

 

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ENCOMPASS ENERGY SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

 

Note C. Loss per Share

		Nine months ended September 30,								Three months ended September 30,
		2014				2013				2014				2013
1. Numerator:
Net loss		$	(72,605	)		$	(262,555	)		$	(18,541	)		$	(64,164	)
2. Denominator:
Denominator for basic and diluted net loss per share – weighted average of shares outstanding			2,056,983				2,056,983				2,056,983				2,056,983
Basic and diluted loss per share attributable to stockholders		$	(0.035	)		$	(0.128	)		$	(0.009	)		$	(0.031	)

 

 

Note D. Income Taxes

 

Deferred income taxes. Deferred taxes are determined by applying the provisions of enacted tax laws and rates for the jurisdictions in which the Company operates to the estimated future tax effects of the differences between the tax basis of assets and liabilities and their reported amounts in the Company’s financial statements. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized.

As of September 30, 2014, and December 31, 2013, the Company has provided valuation allowances of approximately $312,000 and $284,000, respectively, for deferred tax assets resulting from tax loss carryforwards. Management currently believes that since the Company has a history of losses it is more likely than not that the deferred tax regarding the loss carryforwards and other temporary differences will not be realized in the foreseeable future.

Note E. Related Party Transactions

During 2012, Deylau, LLC, our controlling stockholder, advanced $196,500 to the Company in exchange for a note payable. During 2013, Deylau, LLC, advanced an additional $50,000 to the Company on this note payable. This is a demand loan and accrues interest at 5% per annum. No payments of principal or interest have been made on the 2012 or 2013 loan advances as of September 30, 2014.

During 2013, Torus, LLC, an entity in which Deylau, LLC owns a 50% interest, advanced $284,000 to the Company in exchange for a note payable. This is a demand loan and accrues interest at 5% per annum. No payments of principal or interest have been made on these advances as of September 30, 2014.

 

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ENCOMPASS ENERGY SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

From January 1 through September 30, 2014, Torus, LLC has advanced an additional $37,905 to the Company on its note payable. No payments of principal or interest have been made on the 2014 loan advances as of September 30, 2014.

Note F. Capital Stock

					Number of shares as of September 30,
					2014 and 2013
					Authorized				Issued and outstanding
	Common stock, par value $0.01 per share				180,000,000				2,056,983
	Preferred stock, par value $0.01 per share				20,000,000				—

Common Stock. Common Stock confers upon its holders the rights to receive notice to participate and vote in general meetings of the Company, and the right to receive dividends if declared.

Note G. Changes in Officers and Director / Outstanding Stock Option

On June 30, 2011, Antranik Armoudian was appointed to the Company’s board of directors and also as the Company’s president, chief executive officer, chief financial officer, secretary, and treasurer. There was no arrangement or understanding pursuant to which Mr. Armoudian was appointed as a director or executive officer, except that the Company agreed to pay Mr. Armoudian an annual salary of $25,000, which the Company’s board of directors subsequently increased to $150,000 effective October 1, 2012. Effective January 1, 2014, the Company and Mr. Armoudian mutually agreed to terminate his salary. Mr. Armoudian agreed to remain in his capacities as our president, chief executive officer, chief financial officer, secretary and treasurer while the Company’s board of directors considers possible successors. To date, we have been unable to locate suitable successors for these positions.

Also on June 30, 2011, the Company granted Mr. Armoudian a stock option to acquire 50,000 shares of the Company’s common stock at an exercise price of $0.10 per share and exercisable for a ten year term, expiring June 30, 2021. Ten thousand shares vested upon the Company completing the transfer of the Business Opportunity and Information, and the remaining 40,000 shares will vest when, and if, the Company completes the acquisition of a business opportunity and files a current report on Form 8-K (or other appropriate form) reporting such acquisition or transaction.

During 2011, 50,000 stock options were granted (being the option to Mr. Armoudian described above) with a weighted-average grant date fair value of $0.85824. Assumptions used in the Company’s Black-Scholes valuation model to estimate the grant date fair value were expected volatility of 50%, expected dividends of 0%, expected term of five years, and a risk-free interest rate of 1.75%.

As of September 30, 2014, there was $34,412 of total unrecognized compensation cost related to stock options. That cost is expected to be recognized if an acquisition of a business opportunity is completed within ten years of the grant date.

 

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ENCOMPASS ENERGY SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

 

The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2014:

		Nine months ended September 30, 2014
		Number of Options				Weighted-Average Exercise Price
Beginning Balance			50,000			$	0.10
Granted			—				—
Exercised			—				—
Forfeited			—				—
Ending Balance			50,000			$	0.10

 

The following table summarizes information about the Company’s options outstanding and exercisable as of September 30, 2014:

				Options Outstanding										Options Exercisable
							Weighted-Average												Weighted-Average
	Exercise Price			Options Outstanding			Remaining Contractual Life				Exercise Price				Options Exercisable at September 30, 2014				Remaining Contractual Life				Exercise Price
$	0.10			50,000			6.75			$	0.10				10,000				6.75			$	0.10

 

 

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

Forward-Looking Statements

Statements that we make in this Form 10-Q that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions in the federal securities laws and judicial interpretations thereof. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “anticipate,” “estimate,” or “continue,” or the negative thereof. Such forward-looking statements speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to many risks, uncertainties and important facts beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

Background

Encompass Energy Services, Inc. (referred to herein as the “Company,” “we” and correlative terms) has been essentially inactive since its formation. Until November 19, 2010, we were regulated as a business development company under the Investment Company Act of 1940. However, we were not able to raise sufficient capital to execute upon our original business plan and withdrew this election in July 2010.

On November 30, 2010, our largest stockholder sold its entire interest in the Company (approximately 92% of our issued and outstanding shares of common stock) in a private transaction (the “Change of Control Transaction”). Pursuant to the terms of the Change of Control Transaction, our directors and sole executive officer resigned, and new persons were appointed to serve as our directors and executive officers.

Plan of Operations

We are not currently engaged in any business operations. Ultimately, we hope to identify and act upon a business opportunity in the oil and gas or energy production-related industries in the United States, and we currently are considering exploring certain opportunities in the oilfield services industry. However, we have taken no definitive steps to investigate new business opportunities and have not engaged in even preliminary discussions with potential sellers or third parties. There can be no assurance that we will identify an appropriate business opportunity or corporate transaction or, if one is identified, that we will be able to complete any such transaction.

 

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Results of Operations — Three and Nine Months Ended September 30, 2014 and 2013

Revenues. We have not had any revenues from operations since our inception. As of September 30, 2014, we had an accumulated deficit of $879,049.

General and Administrative Expenses. General and administrative expenses for the nine months ended September 30, 2014 decreased 79% to $51,967 compared to the nine months ended September 30, 2013. General and administrative expenses for the three months ended September 30, 2014 decreased 81% to $11,379 compared to the three months ended September 30, 2013. This decrease was primarily attributable to Mr. Armoudian no longer receiving an annual salary from the Company, as described below under “Contractual Obligations.” All of our expenses in the nine months ended September 30, 2014, were general and administrative costs (including accounting and legal fees) incurred to fund our limited operations and to satisfy our disclosure obligations under the federal securities laws.

Net Loss. We recognized a net loss of $18,541 and $72,605 for the quarter and nine months ended September 30, 2014, respectively, as compared to a net loss of $64,164 and $262,555 recognized for the comparable periods in 2013. There were no revenues recorded in either the 2014 or 2013 periods.

We anticipate continued net losses as we continue to evaluate business opportunities. We will pursue these business opportunities to the extent that our management identifies opportunities that it believes are worth pursuing, and to the extent that we have sufficient funds to do so. At the present time, we have no source of revenues from operations, and we can provide no assurance that we will generate a source of revenues from operations, either as a result of a strategic transaction or as a result of developing such a source from within.

Capital Resources and Liquidity

We have been without adequate funds since our inception. At September 30, 2014, we had current assets of $89 and current liabilities of $632,389, resulting in a working capital deficit of $632,300. Assets consist solely of our limited cash on hand and furniture. Cash used in operating activities during the nine months ended September 30, 2014, was $38,269. As a result, there is a substantial doubt if we can continue as an on-going business for the next twelve months unless we obtain additional capital. No substantial revenues are anticipated. Since the Change of Control Transaction, we have funded our operations primarily through loans provided by our majority stockholder, Deylau, LLC, and its affiliates. These loans are repayable by us upon demand and bear interest at 5% per annum. We cannot offer any assurance that Deylau, LLC and its affiliates will be able or willing to continue to advance funds for operations, and if they fail to do so, we may not be able to survive unless we obtain funding in sufficient amounts from other sources.

As of September 30, 2014, we had total liabilities of $632,389. These liabilities were composed primarily of related party notes payable to fund operations.

Our limited assets are not sufficient to fund operations through the remainder of 2014. In the short term, we expect to use our limited cash on hand to pay basic general and administrative costs, and otherwise to rely on our officers, directors and majority stockholder to advance funds to us. In order to be able to pursue and consummate any potential business opportunity, we will need to identify and obtain one or more outside sources of funding. Any business opportunity we pursue will require a significant amount of capital and sources of liquidity. We cannot offer any assurance that we will be able to raise sufficient funds necessary to complete a strategic transaction or fund our planned operations and activities.

 

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Contractual Obligations

Effective January 1, 2014, we and Mr. Armoudian mutually agreed to terminate his salary. Mr. Armoudian agreed to remain in his capacities as our president, chief executive officer, chief financial officer, secretary and treasurer while our board of directors considers possible successors. To date, we have been unable to locate suitable successors for these positions.

As described above, we are obligated to repay our majority stockholder and its affiliates for the amounts they have advanced to us (with interest) upon demand. Apart from the foregoing, we do not presently have any other contractual obligations.

Off Balance Sheet Arrangements

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

Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make a variety of estimates and assumptions that affect (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and (ii) the reported amounts of expenses during the reporting periods covered by the financial statements. Our management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increase, these judgments become even more subjective and complex. Although we believe that our estimates and assumptions are reasonable, actual results may differ significantly from these estimates. Changes in estimates and assumptions based upon actual results may have a material impact on results of operations and/or financial condition.

Our significant accounting policies are disclosed in Note B to the Financial Statements included in Part I, Item 1 of this Form 10-Q.

Recently Issued Accounting Pronouncements

Information relating to this subject is disclosed in Note B to the Financial Statements included in Part I, Item 1 of this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required.

 

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Item 4. Controls and Procedures 

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered in this Quarterly Report. “Disclosure controls and procedures” are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. These include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officer, as appropriate to allow timely decisions regarding required disclosure.

This evaluation was carried out under the supervision and with the participation of our principal executive and financial officer, who concluded that, because of the material weaknesses in our internal control over financial reporting described in our Annual Report on Form 10-K for the year ended December 31, 2013, our disclosure controls and procedures were not effective as of September 30, 2014. A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting such that there is not a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

However, notwithstanding this conclusion, our management believes that the financial statements included in this Quarterly Report present fairly, in all material respects, our consolidated financial position, results of operations and cash flows for the periods presented. Due to our limited personnel we are not able, and do not intend to take any immediate action to remediate the material weaknesses our management has identified. However, if we are able to secure funding and execute upon a business opportunity, we expect to take steps to attempt to remediate these material weaknesses.

Changes in Internal Control over Financial Reporting

During the third quarter of 2014, no change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) promulgated under the Exchange Act) that materially affected, or is likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings 

We are not a party to any legal proceedings, and no such proceedings are known to be contemplated.

 

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Item 1A. Risk Factors

Not required.

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

Sales of Unregistered Equity Securities

We did not make any unregistered sales of equity securities during the quarter ended September 30, 2014.

Repurchases of Equity Securities

We did not repurchase any of our equity securities during the third quarter of 2014.

Item 3. Defaults Upon Senior Securities 

None.

Item 4. Mine Safety Disclosures 

Not applicable.

Item 4. Other Information 

None.

Item 6. Exhibits 

For a list of documents filed or furnished as exhibits to this Quarterly Report, see the Exhibit Index immediately preceding the exhibits to this Quarterly Report.

 

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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.

	ENCOMPASS ENERGY SERVICES, INC. /s/  Antranik Armoudian
November 14, 2014	Antranik Armoudian, President and Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer)

 

 

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Exhibit Index

		Incorporated by Reference
Exhibit No.	Exhibit Description	Form	SEC File No.	Exhibit	Filing Date	Filed Herewith	Furnished Herewith
3.1(a)	Amended and Restated Certificate of Incorporation of Encompass Energy Services, Inc.*	8-K	000-53499	3.1.2	04/19/2011
3.1(b)	Certificate of Amendment to the Certificate of Incorporation of Encompass Energy Services, Inc.	8-K	000-53499	3.1	12/05/2011
3.2	Amended and Restated By-Laws of Encompass Energy Services, Inc.*	8-K	000-53499	3.1	12/14/2010
31.1	Rule 13a-14(a) Certification of Chief Executive Officer					X
31.2	Rule 13a-14(a) Certification of Chief Financial Officer					X
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350						X
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350						X

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* Encompass Energy Services, Inc. was previously known both as New Source Energy Group, Inc. and as Ametrine Capital, Inc.