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 June 30, 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 Telephone: 318-734-4737
(Address of principal executive offices) (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 81,088,543 shares of common stock issued and outstanding at
August 20, 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
and the six months ended June 30, 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.)
INTERIM BALANCE SHEET
(Stated in US Dollars)
(Unaudited)
June 30, 2012 December 31, 2011
------------- -----------------
ASSETS
Current
Cash $ 232,500 $ 233,085
----------- -----------
Total Assets $ 232,500 $ 233,085
=========== ===========
LIABILITIES
Current Liabilities
Related Party Loan $ 12,577 $ 6,657
Loan Payable 815 815
Deferred Gain 250,000 250,000
Accounts payable and accrued liabilities 77,693 150,404
----------- -----------
Total Current Liabilities 341,085 407,876
Long Term Liabilities
ARO Obligation 120,000 120,000
----------- -----------
Total Long Term Liabilities 120,000 120,000
----------- -----------
Total Liabilities 461,085 527,876
----------- -----------
STOCKHOLDERS' EQUITY
Common Stock, authorized 150,000,000 shares, $0.001 par value,
81,088,543 issued and outstanding at June 30, 2012 and
1,088,543 at December 31, 2011 81,089 1,089
Additional Paid in Capital 3,263,376 1,199,536
Shares payable 20,000 --
Accumulated comprehensive income 2,803 2,803
Deficit (3,595,853) (1,498,219)
----------- -----------
Total Stockholders' Deficit (228,585) (294,791)
----------- -----------
Total Liabilities and Stockholders' Deficit $ 232,500 $ 233,085
=========== ===========
|
The Accompanying notes are integral part of these financial statements.
3
RANGO ENERGY INC.
(Formerly, Avro Energy inc.)
INTERIM STATEMENT OF OPERATIONS
(Stated in US Dollars)
(Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
2012 2011 2012 2011
------------ ------------ ------------ ------------
REVENUES
Oil Revenues $ 104,573 $ 100,317 $ 30,799 $ 39,946
------------ ------------ ------------ ------------
TOTAL REVENUES 104,573 100,317 30,799 39,946
------------ ------------ ------------ ------------
EXPENSES
Operations Expense 108,614 158,056 48,318 42,046
Accounting and Professional Fees 7,726 -- -- --
Office and Administration 2,002,027 10,536 2,000,770 5,367
------------ ------------ ------------ ------------
TOTAL EXPENSES 2,118,367 168,594 2,049,088 47,413
------------ ------------ ------------ ------------
NET INCOME (LOSS) FROM OPERATIONS (2,013,794) (68,277) (2,018,289) (7,467)
OTHER INCOME AND EXPENSES
Gain on sale of working interest -- 50,500 -- 50,500
Interest Expense (83,840) -- (83,840) --
------------ ------------ ------------ ------------
TOTAL OTHER INCOME AND EXPENSES (83,840) 50,500 (83,840) 50,500
------------ ------------ ------------ ------------
NET INCOME (LOSS) (2,097,634) (17,777) (2,102,129) 43,034
Other comprehensive income (loss) -- -- -- --
------------ ------------ ------------ ------------
Total Comprehensive income (loss) $ (2,057,634) $ (342,127) $ (2,102,129) $ 43,034
============ ============ ============ ============
BASIC AND DILUTED LOSS PER SHARE $ (0.10) $ (0.00) $ (0.06) $ 0.00
============ ============ ============ ============
WEIGHTED AVERAGE # OF SHARES OUTSTANDING 21,088,543 40,335,724 41,088,543 40,096,940
============ ============ ============ ============
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The Accompanying notes are integral part of these financial statements
4
RANGO ENERGY INC.
(Formerly, Avro Energy inc.)
INTERIM STATEMENT OF CASH FLOW
(Stated in US Dollars)
(Unaudited)
Six Months Ended June 30,
2012 2011
------------ ------------
OPERATING ACTIVITIES
Net income (loss) for the period $ (2,097,634) $ (17,776)
Adjustment for non-cash expenses
Shares issued for services 2,000,000 --
Amortization of Discount of Convertible Debt 80,000 --
Imputed Interest 3,058 --
Imputed Interest - related party 782 --
Change in:
Accounts Receivable -- 3,789
Accounts payable and accrued liabilities (7,289) 50,000
------------ ------------
CASH USED IN OPERATING ACTIVITIES (6,505) 36,013
FINANCING ACTIVITIES
Loan Payable 5,920 --
------------ ------------
Cash from Financing Activities 5,920 --
------------ ------------
INCREASE (DECREASE) IN CASH FOR PERIOD (585) 36,013
Cash, beginning of period 233,085 1,994
------------ ------------
CASH, END OF PERIOD $ 232,500 $ 38,007
============ ============
Cash paid for interest $ -- $ --
============ ============
Cash paid for income tax $ -- $ --
============ ============
NON-CASH INVESTMENT AND FINANCIAL ACTIVITIES
Transfer of accounts payable to Convertible Debt $ 80,000 $ --
============ ============
Conversion of Debt for Shares $ 80,000 $ --
============ ============
Beneficial Conversion Feature $ (80,000) $ --
============ ============
|
The Accompanying notes are integral part of these financial statements
5
RANGO ENERGY INC.
(Formerly, Avro Energy inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
June 30, 2012
(Stated in US Dollars)
(Unaudited)
NOTE 1. DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS AND HISTORY - 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.
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.
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 loss of $3,595,853for the period from January 31, 2007 (inception)
to June 30, 2012 and has generated revenues of $469,889 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.
The accompanying 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 June 30, 2012, and for all periods
presented herein, 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,
2011 audited financial statements. The results of operations for the period
ended June 30, 2012 is not necessarily indicative of the operating results for
the full year.
YEAR END - The Company's fiscal year end is December 31.
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.
6
RANGO ENERGY INC.
(Formerly, Avro Energy inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
June 30, 2012
(Stated in US Dollars)
(Unaudited)
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 June 30, 2012 and December 31, 2011, the Company had no cash
equivalents.
REVENUE RECOGNITION - The Company uses the sales method of accounting for oil
revenues. Under this method, revenues are recognized based on actual volumes of
oil sold to purchasers. The volumes sold may differ from the volumes to which we
are entitled based on our interests in the properties.
BENEFICIAL CONVERSION FEATURES OF DEBENTURES AND CONVERTIBLE NOTE PAYABLE - In
accordance with FASB ASC 470-20, Accounting for Convertible Securities with
Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, we
recognize the advantageous value of conversion rights attached to convertible
debt. Such rights give the debt holder the ability to convert his debt into
common stock at a price per share that is less than the trading price to the
public on the day the loan is made to us. The beneficial value is calculated as
the intrinsic value (the market price of the stock at the commitment date in
excess of the conversion rate) of the beneficial conversion feature of the
debentures and related accruing interest, and is recorded as a discount to the
related debt and an addition to additional paid in capital. The discount is
amortized over the remaining outstanding period of related debt using the
interest method.
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 June 30, 2012 and December 31, 2011,
the ARO $235,000 is included in liabilities.
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 June 30, 2012, 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.
7
RANGO ENERGY INC.
(Formerly, Avro Energy inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
June 30, 2012
(Stated in US Dollars)
(Unaudited)
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.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
NOTE 3. OIL AND GAS PROPERTIES
The value of the oil and gas properties that the company owns been 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.
8
RANGO ENERGY INC.
(Formerly, Avro Energy inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
June 30, 2012
(Stated in US Dollars)
(Unaudited)
FIRST PACIFIC OIL AND GAS LTD. 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 was
recorded as Deferred Gain as of December 31, 2012. As of June 30, 2012 the
outstanding balance of $800,000 remains outstanding.
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.
On February 23, 2010, the Company divested a non-core assets being the Hoss
Holmes, near Hosston Louisiana for $60,000. The sale resulted in a gain on sale
of $60,000 recorded as other income.
NOTE 3. OIL AND GAS PROPERTIES (CONTINUED)
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.
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 to $120,000.
9
RANGO ENERGY INC.
(Formerly, Avro Energy inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
June 30, 2012
(Stated in US Dollars)
(Unaudited)
MUSLOW LEASE
On September 9, 2009, the Company entered into an agreement and acquired four
oil and gas leases in Caddo Parish, Louisiana, from a private oil and gas
operator for $70,000. 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 to $120,000.
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 June 30, 2010 the last payment to complete the purchase for
this property was made.
NOTE 4. RELATED PARTY
The loans are payable to shareholders of $815 and $12,577 as of June 30, 2012.
The loans are unsecured, are payable in five years from August 2009 and bear
interest at 3%. Interest expense is imputed using 15%, as of June 30, 2012, $782
was recorded as and increased to additional paid-in capital.
On December 14, 2011, Donny Fitzgerald, the Company's president advanced the
Company $2,500. There is no repayment terms or interest. On August 23, 2011, the
Company issued to Donny Fitzgerald, 300,000 (15,000,000 pre-reverse split)
shares in exchange for services valued at $75,000. The shares issued were value
based on the fair market value on the date of grant.
On May 16, 2012, 20,000,000 shares were issued to Harpeet Sangha, President;
Craig Alford, Vice-president, and Hermander Rai, Chief Financial Officer. The
market value of the shares at the time of issue was $0.10 per share.
Consequently, consulting fees of $2,000,000 have been charged to expenses during
the most recent quarter.
10
RANGO ENERGY INC.
(Formerly, Avro Energy inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
June 30, 2012
(Stated in US Dollars)
(Unaudited)
NOTE 5. CONVERTIBLE NOTE
On January 15, 2012, a convertible note loan from High Rig Resources Group Ltd.,
was secured for $80,000. The note had a maturity date of April 15, 2012 with no
stated interest rate. The promissory note is convertible into the Company's
common stock at a rate of $0.001 per share. The company imputed interest based
on 15% and recorded a total of $3,058 to additional paid-in capital as of June
30, 2012. The Company evaluated this convertible note for derivative liability
treatment noting that if the shares were converted at a fixed price of $0.001
per share, and the principal value of $80,000, this would result in 80,000,000
shares which is 53% of the authorized share count; therefore, the number of
shares is determinate and the note is not considered a derivative liability. In
addition, the Company evaluated this convertible note for a beneficial
conversion feature noting that the conversion price of $0.001 which is below the
market price on the date of the note. Based on calculation, a total discount of
$80,000 was recorded. During the period, the note was fully converted,
therefore, the total discount of $80,000 was fully amortized as of period ended
June 30, 2012.
NOTE 6. INCOME TAXES
Deferred income taxes may arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or non-current,
depending on the classification of assets and liabilities to which they relate.
Deferred taxes arising from temporary differences that are not related to an
asset or liability are classified as current or non-current depending on the
periods in which the temporary differences are expected to reverse. The company
does not have any uncertain tax positions.
The Company currently has net operating loss carry forwards aggregating
$3,595,853 and $1,498,219 as at June 30, 2012 and December 31, 2011,
respectively, which expire through 2029. The deferred tax asset of $1,086,612
related to the carry forwards has been fully reserved.
NOTE 7. COMMON STOCK
On March 3, 2011 the Company cancelled 3,000 (150,000 pre-reverse split) share
per SEC order. This was due to an 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.
On May 16, 2012, the Company was to issue 80,000,000 shares to repay an $80,000
promissory note. Only 60,000,000 of these shares had been issued as of June 30,
2012, $20,000 is included as common shares payable. Also on May 16, 2012, the
Company issued 20,000,000 shares to management for services rendered. The fair
market value of the Company shares at the time of issue was $0.10 per share.
Consequently, value attributed to these shares was as follows:
11
RANGO ENERGY INC.
(Formerly, Avro Energy inc.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
June 30, 2012
(Stated in US Dollars)
(Unaudited)
Name # of Shares Value Attributed
---- ----------- ----------------
Harpeet Sangha 10,000,000 $1,000,000
Craig Alford 6,500,000 $ 650,000
Hermander Rai 3,500,000 $ 350,000
---------- ----------
Total 10,000,000 $2,000,000
========== ==========
|
On May 15, 2012, the Company increased its authorized capital from 100,000,000
shares of $0.001 common stock to 150,000,000 shares of $0.001 common stock.
NOTE 8. 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.
During the year ended December 31, 2010 the company incurred an accretion
expense of $235,000 for the net present value cost of plugging all its oil wells
upon the ending of the useful life of the wells. Due to the sale of some of the
company's mineral leases and oil wells during 2011, the company was able to
reduce its ARO liability to $120,000.
NOTE 9. SUBSEQUENT EVENTS
During July 2012, 20,000,000 shares of common stock was issued as Common Shares
payable of $20,000. There are no other subsequent events through the date of the
issuance of the financial statements that would warrant further disclosures.
12
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
Rango Energy Inc. 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. Avro'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, Avro 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
Rango Energy Inc. 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.
Since the date of our inception, January 31, 2007, we have generated $469,889 in
oil revenues and $343,000 in the sale of a non-core property. Over the three
months ending June 30, 2012 and June 30, 2012 we have generated $30,799 and
$39,946, respectively, in oil and gas revenue. Over the same period of time we
incurred $2,049,088 and $47,413 respectively in expenses giving the company a
net income (loss) in operations for the three months ended 2012 and 2011 of
($2,018,289) and $43,034, respectively. $2 million of the operating expenses was
due to the value attributed to shares which were issued to management. The bulk
of our other operating expenses were incurred in connection with the
improvement, expenses, and maintenance of our oil producing properties.
Over the six months ending June 30, 2012 and June 30, 2012 we have generated
$104,573 and $100,317, respectively in oil and gas revenue. Over the same period
of time we incurred $2,118,367 and $168,594 in expenses giving the company a net
loss of $2,097,634 and $17,777 respectively. $2 million of the operating
expenses was due to the value attributed to shares which were issued to
management. The bulk of our other operating expenses were incurred in connection
with the improvement, expenses, and maintenance of our oil producing properties.
SELECTED FINANCIAL INFORMATION
30-Jun-12 31-Dec-11
--------- ---------
Current Assets $232,500 $233,085
Total Assets $232,500 $233,085
Current Liabilities $ 91,084 $157,875
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13
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2012, we had cash in the bank of approximately $232,500. 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.
During the three or six months ended June 30, 2012 we issued 80,000,000 shares
to settle $80,000 in indebtedness and 20,000,000 shares valued at $2 million to
new management.
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 June 30, 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.
14
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit Number Description of Exhibit
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.
31.1 Certification by Chief Executive 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
31.2 Certification by 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
32.1 Certification by Chief Executive 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
32.2 Certification by 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
----------
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* To be filed by amendment
15
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/ Harp Sangha Chief Executive Officer and August 20, 2012
------------------------- Director
Harp Sangha
By: /s/ Hermander Rai Chief Financial Officer and August 20, 2012
------------------------- Director
Hermander Rai
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16
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