UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2012
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ___________ to ___________
Commission File Number: 333-1416686
RANGO ENERGY INC.
(Exact name of Registrant as specified in its charter)
Nevada 20-8387017
(State or other jurisdiction (I.R.S.Employer
of incorporation or organization) Identification No.)
213 E Arkansas Ave
Vivian, LA 71082, USA
(Address of principal executive offices)
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Telephone: 318-734-4737
(Registrant's telephone number, including area code)
Former Name, Address and Fiscal Year, If Changed Since Last Report
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 (ss.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 [ ]
We had a total of 1,088,543 shares of common stock issued and outstanding at
May 16, 2012.
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Transitional Small Business Disclosure Format: Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The interim financial statements included herein are unaudited but reflect, in
management's opinion, all adjustments, consisting only of normal recurring
adjustments that are necessary for a fair presentation of our financial position
and the results of our operations for the interim periods presented. Because of
the nature of our business, the results of operations for the quarterly period
ended March 31, 2012 are not necessarily indicative of the results that may be
expected for the full fiscal year.
2
RANGO ENERGY INC.
(formerly Avro Energy, Inc.)
BALANCE SHEETS
(Unaudited)
March 31, December 31,
2012 2011
------------ ------------
ASSETS
CURRENT
Cash $ 233,063 $ 233,085
Accounts Receivable 8,348 --
------------ ------------
TOTAL ASSETS $ 241,411 $ 233,085
============ ============
LIABILITIES
CURRENT LIABILITIES
Related Party Loan $ 6,657 $ 6,657
Loan Payable 815 815
Accounts payable and accrued liabilities 154,235 150,404
Deferred Gain 250,000 250,000
------------ ------------
TOTAL CURRENT LIABILITIES 411,707 407,876
------------ ------------
LONG TERM LIABILITIES
ARO Obligation 120,000 120,000
------------ ------------
TOTAL LONG TERM LIABILITIES 120,000 120,000
------------ ------------
TOTAL LIABILITIES 531,707 527,87
STOCKHOLDERS' DEFICIT
Common Stock, 100,000,000 authorized $0.001
par value shares 1,088,543 issued and outstanding
as of specified dates 1,089 1,089
Additional Paid in Capital 1,199,536 1,199,536
Accumulated comprehensive income 2,803 2,803
Deficit accumulated (1,493,724) (1,498,219)
------------ ------------
TOTAL STOCKHOLDERS' DEFICIT (290,296) (294,791)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 241,411 $ 233,085
============ ============
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The Accompanying notes are integral part of these financial statements.
3
RANGO ENERGY, INC.
(formerly Avro Energy, Inc.)
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
March 31, March 31,
2012 2011
---------- ----------
REVENUES
Oil Revenues $ 73,774 $ 60,371
---------- ----------
TOTAL REVENUES 73,774 60,371
EXPENSES
Operations Expense 60,296 38,197
Accounting and Professional Fees 7,726 77,815
Office and Administration 1,257 5,169
---------- ----------
TOTAL EXPENSES 69,279 121,181
---------- ----------
NET INCOME (LOSS) 4,495 (60,810)
Other comprehensive income (loss) -- --
---------- ----------
TOTAL COMPREHENSIVE INCOME (LOSS) $ 4,495 $ (60,810)
========== ==========
BASIC AND DILUTED INCOME (LOSS) PER SHARE $ 0.00 $ (0.08)
========== ==========
WEIGHTED AVERAGE # OF SHARES OUTSTANDING
- BASIC AND DILUTED 1,088,543 766,143
========== ==========
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The Accompanying notes are integral part of these financial statements.
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RANGO ENERGY, INC.
(formerly Avro Energy, Inc.)
STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended
March 31, March 31,
2012 2011
---------- ----------
OPERATING ACTIVITIES
Net income (loss) for the period $ 4,495 $ (60,810)
Change in:
Accounts Receivable (8,349) (12,728)
Accounts payable and accrued liabilities 3,832 77,815
---------- ----------
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (22) 4,277
INVESTING ACTIVITIES
CASH USED IN INVESTING ACTIVITIES -- --
---------- ----------
FINANCING ACTIVITIES
CASH FROM FINANCING ACTIVITIES -- --
---------- ----------
INCREASE (DECREASE) IN CASH FOR PERIOD (22) 4,277
Cash, beginning of period 233,085 1,994
---------- ----------
CASH, END OF PERIOD $ 233,063 $ 6,271
========== ==========
Management Fees Paid With Shares $ -- $ --
========== ==========
Cash paid for interest $ -- $ --
========== ==========
Cash paid for income tax $ -- $ --
========== ==========
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The Accompanying notes are integral part of these financial statements
5
RANGO ENERGY, INC.
(formerly Avro Energy, Inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
March 31, 2012
(Unaudited)
NOTE 1. DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS AND HISTORY - Rango Energy Inc. (formerly Avro Energy,
Inc.) (hereinafter referred to as the "Company") was incorporated on January 31,
2007 by filing Articles of Incorporation under the Nevada Secretary of State.
The Company was formed to engage in the exploration of resource properties. On
January 31, 2012, the Company changed its name from Avro Energy, Inc. to Rango
Energy, Inc.
The Company is currently engaged in the acquisition, exploration and development
of oil and natural gas properties in the United States ArkLaTex region. The
Company seeks to develop low risk opportunities by itself or with joint venture
partners in the oil and natural gas sectors.
The Company has applied to reverse split its issued and outstanding shares on
the basis of fifty (50) existing shares for one of the post split shares. The
application has been accepted by the SEC and FINRA and is expected to become
effective in mid-May 2012. The shares have been retroactively applied for the
reverse split.
GOING CONCERN - The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern, which contemplates
the realization of assets and the liquidation of liabilities in the normal
course of business. However, the Company has accumulated a loss and is new. This
raises substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from this uncertainty.
As shown in the accompanying financial statements, the Company has incurred an
accumulated net loss of $1,493,724 for the period from January 31, 2007
(inception) to March 31, 2012 and has generated revenues of $439,090 over the
same period. The future of the Company is dependent upon its ability to obtain
financing and upon future profitable operations from the development of
acquisitions. Management has plans to seek additional capital through a private
placement and public offering of its common stock. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts of and classification of liabilities that might
be necessary in the event the Company cannot continue in existence.
YEAR END - The Company's fiscal year end is December 31.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENT - The Company considers all highly liquid instruments
with a maturity of three months or less at the time of issuance to be cash
equivalents. As at March 31, 2012 and December 31, 2011, the Company had no cash
equivalents.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles 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 revenue and expenses during the reporting
period. Actual results could differ from those estimates.
REVENUE RECOGNITION - The Company recognizes revenue from oil in the period of
delivery. Revenue will be recognized only when the price is fixed and
determinable, persuasive evidence of an arrangement exists, the service has been
provided, and collectability is assured. The Company is not exposed to any
credit risks as amounts are prepaid prior to performance of services.
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BASIC AND DILUTED NET LOSS PER SHARE - The Company computes net loss per share
in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of
both basic and diluted earnings per share ("EPS") on the face of the income
statement. Basic EPS is computed by dividing net loss available to common
shareholders (numerator) by the weighted average number of shares outstanding
(denominator) during the period. Diluted EPS gives effect to all dilutive
potential common shares outstanding during the period using the treasury stock
method and convertible preferred stock using the if-converted method. In
computing diluted EPS, the average stock price for the period is used in
determining the number of shares assumed to be purchased from the exercise of
stock options or warrants. Diluted EPS excludes all dilutive potential shares if
their effect is anti dilutive. As at September 30, 2011, the Company had no
potentially dilutive shares.
FINANCIAL INSTRUMENTS - Pursuant to ASC 820, Fair Value Measurements and
Disclosures and ASC 825, Financial Instruments, an entity is required to
maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. ASC 820 and 825 establishes a fair value
hierarchy based on the level of independent, objective evidence surrounding the
inputs used to measure fair value. A financial instrument's categorization
within the fair value hierarchy is based upon the lowest level of input that is
significant to the fair value measurement. ASC 820 and 825 prioritizes the
inputs into three levels that may be used to measure fair value:
LEVEL 1
Level 1 applies to assets or liabilities for which there are quoted prices in
active markets for identical assets or liabilities.
LEVEL 2
Level 2 applies to assets or liabilities for which there are inputs other than
quoted prices that are observable for the asset or liability such as quoted
prices for similar assets or liabilities in active markets; quoted prices for
identical assets or liabilities in markets with insufficient volume or
infrequent transactions (less active markets); or model-derived valuations in
which significant inputs are observable or can be derived principally from, or
corroborated by, observable market data.
LEVEL 3
Level 3 applies to assets or liabilities for which there are unobservable inputs
to the valuation methodology that are significant to the measurement of the fair
value of the assets or liabilities.
The Company's financial instruments consist principally of cash, accounts
payable, accrued liabilities, and amounts due to related parties. Pursuant to
ASC 820 and 825, the fair value of our cash is determined based on "Level 1"
inputs, which consist of quoted prices in active markets for identical assets.
We believe that the recorded values of all of our other financial instruments
approximate their current fair values because of their nature and respective
maturity dates or durations.
RESOURCE PROPERTIES - Company follows the successful efforts method of
accounting for its oil and gas properties. Unproved oil and gas properties are
periodically assessed and any impairment in value is charged to exploration
expense. The costs of unproved properties, which are determined to be productive
are transferred to proved resource properties and amortized on an equivalent
unit-of-production basis. Exploratory expenses, including geological and
geophysical expenses and delay rentals for unevaluated resource properties, are
charged to expense as incurred. Exploratory drilling costs are initially
capitalized as unproved property but charged to expense if and when the well is
determined not to have found proved oil and gas reserves.
INCOME TAXES - Potential benefits of income tax losses are not recognized in the
accounts until realization is more likely than not. The Company has adopted ASC
740 "Accounting for Income Taxes" as of its inception. Pursuant to ASC 740, the
Company is required to compute tax asset benefits for net operating losses
carried forward. The potential benefits of net operating losses have not been
recognized in this financial statement because the Company cannot be assured it
is more likely than not it will utilize the net operating losses carried forward
in future years.
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ASSET RETIREMENT OBLIGATION (ARO) - The estimated costs of restoration and
removal of facilities are accrued. The fair value of a liability for an asset's
retirement obligation is recorded in the period in which it is incurred and the
corresponding cost capitalized by increasing the carrying amount of the related
long-lived asset. The liability is accreted to its then present value each
period, if the liability is settled for an amount other than the recorded
amount, a gain or loss is recognized. At March 31, 2012 and December 31 2011,
the ARO of $120,000 is included in liabilities.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
In April 2011, the FASB issued ASU 2011-02, "Receivables (Topic 310): A
Creditor's Determination of Whether a Restructuring is a Troubled Debt
Restructuring". This amendment explains which modifications constitute troubled
debt restructurings ("TDR"). Under the new guidance, the definition of a
troubled debt restructuring remains essentially unchanged, and for a loan
modification to be considered a TDR, certain basic criteria must still be met.
For public companies, the new guidance is effective for interim and annual
periods beginning on or after June 15, 2011, and applies retrospectively to
restructuring occurring on or after the beginning of the fiscal year of
adoption. The Company does not expect that the guidance effective in future
periods will have a material impact on its financial statements.
In June 2011, the FASB issued ASU 2011-05, "Comprehensive Income (Topic 220):
Presentation of Comprehensive Income", which is effective for annual reporting
periods beginning after December 15, 2011. ASU 2011-05 will become effective for
the Company on January 1, 2012. This guidance eliminates the option to present
the components of other comprehensive income as part of the statement of changes
in stockholders' equity. In addition, items of other comprehensive income that
are reclassified to profit or loss are required to be presented separately on
the face of the financial statements. This guidance is intended to increase the
prominence of other comprehensive income in financial statements by requiring
that such amounts be presented either in a single continuous statement of income
and comprehensive income or separately in consecutive statements of income and
comprehensive income. The adoption of ASU 2011-05 is not expected to have a
material impact on our financial position or results of operations.
In May 2011, the FASB issued ASU 2011-04, "Fair Value Measurement (Topic 820):
Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements
in U.S. GAAP and IFRSs", which is effective for annual reporting periods
beginning after December 15, 2011. This guidance amends certain accounting and
disclosure requirements related to fair value measurements. Additional
disclosure requirements in the update include: (1) for Level 3 fair value
measurements, quantitative information about unobservable inputs used, a
description of the valuation processes used by the entity, and a qualitative
discussion about the sensitivity of the measurements to changes in the
unobservable inputs; (2) for an entity's use of a nonfinancial asset that is
different from the asset's highest and best use, the reason for the difference;
(3) for financial instruments not measured at fair value but for which
disclosure of fair value is required, the fair value hierarchy level in which
the fair value measurements were determined; and (4) the disclosure of all
transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04
will become effective for the Company on January 1, 2012. We are currently
evaluating ASU 2011-04 and have not yet determined the impact that adoption will
have on our financial statements.
In September 2011, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) No. 2011-08, Intangibles - Goodwill and Other
(Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is
intended to reduce complexity and costs by allowing an entity the option to make
a qualitative evaluation about the likelihood of goodwill impairment to
determine whether it should calculate the fair value of a reporting unit. The
amendments also improve previous guidance by expanding upon the examples of
events and circumstances that an entity should consider between annual
impairment tests in determining whether it is more likely than not that the fair
8
value of a reporting unit is less than its carrying amount. Also, the amendments
improve the examples of events and circumstances that an entity having a
reporting unit with a zero or negative carrying amount should consider in
determining whether to measure an impairment loss, if any, under the second step
of the goodwill impairment test. The amendments in this ASU are effective for
annual and interim goodwill impairment tests performed for fiscal years
beginning after December 15, 2011. Early adoption is permitted, including for
annual and interim goodwill impairment tests performed as of a date before
September 15, 2011, if an entity's financial statements for the most recent
annual or interim period have yet been issued. The adoption of this guidance is
not expected to have a material impact on the Company's financial position or
results of operations.
NOTE 3. OIL AND GAS PROPERTIES
The oil and gas properties that the company has have had all costs related to
the properties expensed in accordance with Generally Accepted Accounting
Principles for the industry. Currently the Company does not have proven reserves
confirmed with a geological study and will only be able to capitalize properties
once reserves have been proven. The company performed an impairment analysis at
the end of 2009 and determined that the properties were not economically viable;
at that point the company impaired the properties.
JOINT VENTURE
On May 24, 2011, the Company entered into a Farm-Out Agreement with First
Pacific Oil and Gas Ltd. ("First Pacific"). Under this Agreement First Pacific
has acquired the right to earn 50% of the Company's working interest in its
existing 12 hydrocarbon wells located in Southern Arkansas. Under this Agreement
First Pacific has paid the Company $250,000; and will pay $800,000 on or before
June 30, 2012. The Company retains a 50% working interest. First Pacific will
earn its working interest upon improvements of the existing hydrocarbon wells
being completed with the final $800,000 investment. The $250,000 received has
been recorded as Deferred Gain. The initial $250,000 has been paid, however the
$800,000 has been delayed by mutual verbal agreement until June 30, 2012. None
of the twelve wells are currently producing. Title to 50% ownership does not
vest with First Pacific until the Company receives the $800,000.
HOSS HOLMES LEASE
On August 26, 2009, the Company entered into an agreement to acquire for
$100,000 the Hoss Holmes Lease located near Hosston, Louisiana, from Fredco LLC,
a Louisiana private oil and gas operator. The company closed the acquisition of
the property on September 30, 2009. This purchase was charged as an exploration
expense.
On February 23, 2010 the company divested a non core asset being the Hoss Holmes
Lease, near Hosston Louisiana for $60,000. The sale of the resulted in an gain
on sale of $60,000 recorded as other income.
HERRINGS LEASE
On August 10, 2009, the Company entered into an agreement to acquire various oil
leases near Hosston, Louisiana, from S.A.M., a Louisiana private partnership,
and private oil and gas operator. Under the terms of the agreement, the Company
has agreed to pay a total of ten dollars ($10) plus a one-fifth royalty interest
in exchange for the exclusive grant, lease, and let of the following oil and gas
leases:
One, Two, Three and Four (1-4) inclusive, Block One (1) Town of Hosston,
together with all abandoned alleyways and streets insofar as it covers and
affects the surface of the earth and the base of the Nacatosh Formation together
with wells being Herring No. 1, Serial No 184124, and Herring No. 2, Serial No.
184735.
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On June 30, 2011, the Company's interest in the Herrings Lease and the Muslow
Lease were sold for $33,000 plus a 20% royalty interest in these mineral leases.
The sale resulted in a gain of $148,000 recorded as other income, which includes
gain of $115,000 due to the decrease in ARO from $235,000 as of December 31,
2011.
MUSLOW LEASE
On September 9, 2009, the Company entered into an agreement to acquire four oil
and gas leases in Caddo Parish, Louisiana, from a private oil and gas operator.
The first three leases are the Muslow A, B, and C Leases, which in total
comprise of 8 wells and equipment, of which 2 are currently producing. The
fourth lease is the Caddo Levee Board Lease, comprising of 13 wells and
equipment, of which 4 are currently producing.
On June 30, 2011, the Company's interest in the Herrings Lease and the Muslow
Lease were sold for $33,000 plus an option to retain 20% royalty interest in
these mineral leases. The sale resulted in a gain of $148,000, which includes
$115,000 gain on decrease in Assets Retirement Obligation from $235,000 in
December 31, 2011.
ARKANSAS LEASE
On October 24, 2009 the Company signed a letter agreement to acquire eleven
producible deep oil wells north of Hosston, Louisiana, and in Southern Arkansas.
Seven of these wells are in production. The deepest of these wells produce from
the Smackover formation at 7800 feet. Four other wells are capable of production
after work over operation has been completed. Also included with the agreement
are three disposal wells.
The terms of this agreement allowed the Company to pay $385,000, over a seven
month period, with the first payment of $50,000 paid on November 24, 2009. The
terms of the agreement allow the Company to receive production starting from
November 1, 2009. On September 30, 2010 the last payment to complete the
purchase for this property was made.
NOTE 4. LOANS PAYABLE
As of March 31, 2012 and December 31, 2010 the Company owed Mike P. Kurtanjek,
Company's previous president, the amount of $4,157. The loan had no interest and
no fixed repayment date.
As of March 31, 2012 and December 31, 2011 the Company owed Donny Fitzgerald,
the Company's president, a total advance of $2,500. There are no repayment terms
or interest.
As of March 31, 2012, the Company owed a shareholder who owns 264,000
(approximately 1.037% of issued and outstanding) shares a total of $815. The
loan is unsecured, is payable in five years from August 13, 2009 and bears
interest at 3% per annum.
NOTE 5. COMMON STOCK
On March 3, 2011 the Company cancelled 3,000 (150,000 pre-reverse split) share
per SEC order. This was due to a investigation, by the SEC, of an unrelated
party that allegedly touted U.S. microcap companies. All shares owned by the
unrelated party was ordered by the SEC to be returned to their respective
companies. Further, 20,000 (1,000,000 pre-reverse split) shares was cancelled
due to non-performance of service contract.
On August 23, 2011, the Company issued 300,000 (15,000,000 pre-reverse split)
shares to its Director in exchange for services valued at the fair value of the
common stock as quoted on the OTC at the date of grant of $75,000.
NOTE 6. RELATED PARTY TRANSACTIONS
As of March 31, 2012 the company owed Mike P. Kurtanjek, the company's previous
president, the amount of $4,157. The loan had no interest and no fixed repayment
date.
10
As of March 31, 2012 and December 31, 2011 the Company owed Donny Fitzgerald,
the Company's president, a total advance of $2,500. There are no repayment terms
or interest.
NOTE 7. ASSET RETIREMENT OBLIGATION
The Company accounts for asset retirement obligations as required by the
Financial Accounting Standards Board ("FASB") Accounting Standards Codification
("ASC") 410--Asset Retirement and Environmental Obligations. Under these
standards, the fair value of a liability for an asset retirement obligation is
recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made. If a reasonable estimate of fair value cannot be made in
the period the asset retirement obligation is incurred, the liability is
recognized when a reasonable estimate of fair value can be made. If a tangible
long-lived asset with an existing asset retirement obligation is acquired, a
liability for that obligation shall be recognized at the asset's acquisition
date as if that obligation were incurred on that date. In addition, a liability
for the fair value of a conditional asset retirement obligation is recorded if
the fair value of the liability can be reasonably estimated.
As of March 31, 2012, the ARO liability remained the same as of December 31,
2011.
NOTE 8. SUBSEQUENT EVENTS
As of the date of filing, the Company has not entered into any transactions that
would have a material impact on the financial statements.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FORWARD-LOOKING STATEMENTS
The information set forth in this section contains certain "forward-looking
statements," including, among other things, (i) expected changes in our revenues
and profitability, (ii) prospective business opportunities, and (iii) our
strategy for financing our business. Forward-looking statements are statements
other than historical information or statements of current condition. Some
forward-looking statements may be identified by use of terms such as "believes,"
"anticipates," "intends," or "expects." These forward-looking statements relate
to our plans, objectives and expectations for future operations. Although we
believe that our expectations with respect to the forward-looking statements are
based upon reasonable assumptions within the bounds of our knowledge of our
business and operations, in light of the risks and uncertainties inherent in all
future projections, the inclusion of forward-looking statements in this report
should not be regarded as a representation by us or any other person that our
objectives or plans will be achieved.
PLAN OF OPERATION
The Company is an independent energy company engaged in the acquisition,
exploration and development of oil and natural gas properties in North America,
with current operations in the ArkLaTex region. The Company's objective is to
seek out and develop opportunities in the oil and natural gas sectors that
represent low risk opportunities for the Company and its shareholders. In
addition, the Company aims to seek larger projects that can be developed and
produced with Joint Venture partners.
The ArkLaTex is a U.S. socio-economic region where Arkansas, Louisiana, Texas,
and Oklahoma intersect. The region is centered on the Shreveport/Bossier
metropolitan area in Northwest Louisiana. The region's history is heavily linked
with the oil industry. The geology associated with the deposition of sediments
from the Mississippi River, in particular, makes this area an abundant source
for the oil and gas industries, which leads to the high levels of oil production
within the region.
RESULTS OF OPERATIONS
The Company has acquired oil and natural gas properties in the ArkLaTex region.
Specifically the company has acquired the Hoss Holmes Lease and the Herrings
Lease and has begun work on these properties.
Over the three months ending March 31, 2012 and March 31, 2011 we have generated
$73,774 and $60,371, respectively, in oil and gas revenue. Over the same period
of time we incurred $69,279 and $121,181 respectively in expenses giving the
company a net income (loss) for the three months ended 2012 and 2011 of $4,495
and ($60,810) respectively. The bulk of our operating expenses were incurred in
connection with the improvement, expenses, and maintenance of our oil producing
properties.
SELECTED FINANCIAL INFORMATION
March 31, December 31,
2012 2011
-------- --------
Current Assets $241,811 $233,085
Total Assets $241,811 $233,085
Current Liabilities $411,707 $407,876
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LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2012, we had unrestricted cash held in trust by the attorney of
$233,063. We are contemplating raising additional capital to finance our
exploration programs. No final decisions regarding the program or financing have
been made at this time.
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OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
CRITICAL ACCOUNTING POLICIES
We have not changed our accounting policies since December 31, 2007.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934 , as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to our management, including our president (also our principal
executive officer) and our secretary, treasurer and chief financial officer
(also our principal financial and accounting officer) to allow for timely
decisions regarding required disclosure.
As of March 31, 2012, we carried out an evaluation, under the supervision and
with the participation of our president (also our principal executive officer),
and our chief financial officer (also our principal financial and accounting
officer) of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on the foregoing, our President and Chief
Financial Officer concluded that our disclosure controls and procedures were not
effective in providing reasonable assurance in the reliability of our corporate
reporting as of the end of the period covered by this Quarterly Report due to
certain deficiencies that existed in the design or operation of our internal
controls over financial reporting as disclosed below and that may be considered
to be material weaknesses.
CHANGES IN INTERNAL CONTROLS.
There was no change in our internal controls or in other factors that could
affect these controls during our last fiscal quarter that has materially
affected, or is reasonably 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 material legal proceedings and to our knowledge, no
such proceedings are threatened or contemplated.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
3.1 Articles of Incorporation - Filed by Form SB-1 on March 30, 2007
3.2 Bylaws - - Filed by Form SB-1 on March 30, 2007
10.1 Lease Acquisition Agreement between the Company and Fredco LLC filed on
August 26, 2009, and has been incorporated herein by reference.
10-2 Lease Acquisition Agreement filed on September 9, 2009 and has been
incorporated herein by reference.
10-3 Farmout and Acquisition Agreement filed on May 17, 2011 and has been
incorporated herein by reference.
32-1 Certification by Chief Executive Officer and Chief Financial Officer
required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act,
promulgated pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
filed herewith
32.2 Certification by Chief Executive Officer and Chief Financial Officer,
required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and
Section 1350 of Chapter 63 of Title 18 of the United States Cod of the
Sarbanes-Oxley Act of 2002 filed herewith
101 Interactive data files pursuant to Rule 405 of Regulation S-T filed
herewith
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14
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Signature Title Date
--------- ----- ----
By: /s/ Donald Fitzgerald Chief Executive Officer, May 16, 2012
--------------------------- Chief Financial Officer,
Donald Fitzgerald President, Secretary,
Treasurer and Director
(Principal Executive Officer
and Principal Accounting Officer)
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15
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