Washington D.C. 20549

 

  

(Mark One)

ACT OF 1934

For the fiscal year ended December 31, 20122013

or

 

EXCHANGE ACT OF 1934

  

For the transition period from __________________ to __________________

 

 

 

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

Securities registered pursuant to Section 12(g) of the Act:

 

 

 

DOCUMENTS INCORPORATED BY REFERENCE

 

FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011

INDEX

This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company has based these forward-looking statements on the Company’s current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us and the Company’s subsidiaries that may cause the Company’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a material difference include, but are not limited to, those discussed elsewhere in this Annual Report, including the section entitled “Risks Particular to the Company’s Business” and the risks discussed in the Company’s other Securities and Exchange Commission filings. The following discussion should be read in conjunction with the Company’s audited Consolidated Financial Statements and related Notes thereto included elsewhere in this report.

PART I

ITEM 1 - DESCRIPTION OF BUSINESS

 

 

Mondial Ventures, Inc. (the “Company”, “MNVN”, “Mondial” “we”, “us” or “our”) was incorporated in the state of Nevada on May 29, 2002 as Mondial Ventures, Inc. with 75,000,000 shares of $.001 par value common stock authorized.

In December 22, 2003, the Company was in development stage operations as an exploration stage mineral company engaged in the acquisition, and exploration of mineral properties with a view to exploiting any mineral deposits the Company would discover and that demonstrated economic feasibility.  The Company’s then sole initial mineral property, the Q29, was located in the Nanaimo Mining Division of British Columbia, Canada. The Company owned a 100% interest, subject to a 2% net smelter returns royalty in the four mineral claims comprising the Q29 property. The claims were purchased from Mr. Edward McCrossan of Vancouver, British Columbia for a cash payment of $6,000. The objective was to conduct mineral exploration activities on the Q29 property in order to assess whether it possessed economic reserves of copper and gold. Such proposed exploration program was designed to search for an economic mineral deposit.

Effective December 1, 2010, the Company increased its authorized common shares to 250,000,000 with a par value of $0.001, and authorized 10,000,000 shares of blank check preferred stock, par value $0.001 per share, with such rights and preferences and manner of issuance as permitted by law may be determined by the Board of Directors. The Company’s principal place of business is 6564 Smoke Tree Lane, Scottsdale, AZ 85253.

On December 15, 2010, the claims related to the 100% interests owned in four contiguous mineral claims collectively known as the Q29 property expired and in light of the Company’s then determination and preparation to change its business, the Company did not re-stake the claims.

On December 30, 2010, the Company completed a merger with Legacy Athletic Apparel, LLC, a Virginia limited liability company (“Legacy”) (the “Merger Agreement”) dated as of December 14, 2010, by and between the Company and Legacy.  Pursuant to the Agreement and Plan of Merger, Legacy merged into the Company, with the Company being the surviving entity (the “Merger”).  As a result of the Merger, the Company succeeded to the business and acquired all the assets and assumed all the liabilities of Legacy. This transaction was accounted for using the purchase method of accounting. The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values. Any excess purchase price over the fair value of the net assets acquired is recorded as goodwill with operating results are included in the Consolidated Statement of Operations since the date of the merger.  The cost of the merger was $51,000 and goodwill of $104,272 was recorded. Upon the closing of the merger, each percent of common membership interest of Legacy issued and outstanding was converted automatically into the right to receive 510,000 shares of Mondial common stock, par value $.001 per share, for an aggregate of 51,000,000 shares of common stock. The securities were issued pursuant to an exemption from registration under Rule 506 of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”).

On July 31, 2012 the Company purchased oil and gas assets and interests in the J.B. Tubb Leasehold Estate via a Securities Purchase Agreement (“SPA) and Assignment and Bill of Sale with EGPI Firecreek, Inc. (“EGPI” or “Investor”) The Company issued 14,000,000 shares of common stock to EGPI along with the assumption of $450,000 debt for 37.5% working interest ("WI"), and corresponding 28.125% net revenue interest ("NRI") in the oil and gas interests, and pro rata oil & gas revenue and reserves in the North 40, and additional rights agreement for the South 40 of the J.B. Tubb Leasehold Estate, respectively, and for all depths below the surface to 8500 ft. including all related assets, fixtures, equipment, three well heads and three well bores. Currently, there are three wells in operation on the property. The Company’s principal place of business is 6564 Smoke Tree Lane, Scottsdale, AZ 85253.

 

As of July 31, 2012 through the balance of Fiscal 2012 as a result of the Company’s acquisition of oil and gas leases, and discontinuation of the Legacy business development operations, the focus of the Company has shifted and will be on developing the existing and proposed new oil and gas projects.

For further information related to our history please see information in our Form 10K Reports filed on April 16, 2012 and April 15, 2011, respectively, along with filings on Form 10-Q and Form 8-K, as amended.

 

As of July 31, 2012 we are an oil and gas production company focused on the recovery and development of oil and natural gas.

Our Historical Business

 

Pursuant to an Agreement and Plan of Merger dated as of December 14, 2010, entered into by and between Legacy Athletic Apparel LLC, (“Legacy”) a Virginia limited liability company and Mondial a Nevada corporation, on December 30, 2010, Legacy merged into Mondial, with Mondial being the surviving entity.  Prior to the Plan of Merger Legacy was formed in July 2010 as a Virginia limited liability company.  As a result of the merger, Mondial succeeded to the business and acquired all the assets and assumed all the liabilities of Legacy. Previous business activities related to Legacy operations included the development, design, marketing and distribution of branded performance apparel, footwear and accessories for men, women and youth.  

 

 

Prior to the historical merger with Legacy, the Company was an exploration stage mineral company engaged in the acquisition, and exploration of mineral properties with a view to exploiting any mineral deposits we would discover and that demonstrated economic feasibility.  Prior to December 15, 2010, we owned a 100% interest in four contiguous mineral claims collectively known as the Q29 property.  The claims expired on December 15, 2010, and in light of our determination to change our business as contemplated in the merger, we did not re-stake the claims.

   

On January 28, 2013March 26, 2014 the Company entered into an Agreementa Modification and Extension to further extend option relating to a Participation Agreement (Turnkey Drilling, Re Entry, and Multiple Wells) (““Amended Participation Agreement”) dated July 31, 2012 betweenJanuary 21, 2014. The Modification and Extension updates and extends Exhibit “B” of an Asset Purchase Agreement made and entered into as of January 21, 2014, the Effective Date (“Effective Date”), by and among Shale Corp., a corporation organized under the laws of the Province of Ontario in Canada with its principal place of business located at 365 Bay St, Suite 400, Toronto On, M5H 2V1(the “Company”), and the Investor acting as the Company, and EGPI andalong with approvals from Success Oil Co., Inc. (“Success”). Per, its Operator and Partner, EGPI Firecreek, Inc. via its wholly owned subsidiary Energy Producers, Inc., Partner, and TWL Investments, LLC, investing participants, to amend, modify and extend Section II. Paragraph one thereto, giving extra time to the July 31, 2012 formal SPAParticipation Agreement allowing for six (6) months (through June 30, 2014 unless mutually extended by all parties thereto) for participants to deliver to Operator Participant’s share of the Turnkey Cost to Casing Point for drilling of the first Prospect Well, and Assignment and Bill of Sale Agreement with EGPI, the Company was granted a 6 month optionfirst project for development on a farm in agreement with regards to drillingsuccessful completion of a series of wells on the South Forty (40) acres of the J. B. Tubb Lease, Ward County, Texas. The Agreement to extend option calls for monthly payments of $2,022.76 beginning January 2013, for four months, and effectively increases the expiration date to April 30, 2013, unless modified in writing signed by the parties or there is a default not cured or waived. The Agreement to extend option essentially extends a November 30, 2011 Participation Rights Agreement which allows for the Company’s Participation Agreement (see Current Report on Form 8-K filed by the Company on August 9, 2012, andfinancing. For further information please see Exhibit 10.310.1 to a Current Report on Form 8-K, filed on April 3, 2014, along with additional information contained in our Form 8-K and Exhibits 10.1, 10.2 and 10.3 filed on February 7, 2014.

On March 26, 2014 the Company entered into a Second Amendment to Modification, Amendment, and Further Extension of the Agreement to Extend Option dated effective on December 31, 2013 between EGPI Firecreek, Inc. on behalf of itself and all of its wholly  owned subsidiaries including, but not limited to, Energy Producers, Inc. (“EPI”), and the Company, which is amended to be by EGPI on August 3, 2012)and through 2301840 Ontario Inc., a wholly owned subsidiary of Boomerang Oil, Inc. (formerly 0922337 BC LTD) (“Boomerang”), now a Majority owned subsidiary of the Company. The parties thereto, as amended, having earlier entered into an Agreement to alsoExtend Option with Success Oil Co., Inc., (“Success”) along with all the parties to wit, agreed summarily to i) further extend the Option Agreement through June 30, 2014 unless further modified or extended by the parties in writing, and ii) in summary, to allow certain past due capital expenditure costs in the total aggregate amount of $200,000 historically held by Success to begin to be extended, and modified and amended accordingly. The material terms modified and amended reflecting the Company’s rights, include thatpaid out of available cash flow on a best effortsmonthly basis reducedfrom the financing requirement overall pursuedJoint Interest Billings, and from only the current producing economic wells and interests, pro rata, not to include future wells, and to begin after April 6, 2014 for Capital Expenditure (CAPEX) to drill a wellthe January 2014 forward billings, until paid, unless otherwise negotiated to the Ellenberg formation on a turnkey basis in the approximate amountsatisfaction of One Million, Five Hundred Seventy Five Thousand ($1,575,000) dollars and to wit Success acknowledges that EGPI and or its assignee shall be able to negotiate and or sell interests and or participation in the development of any additional well(s) and other terms as needed, on approval by Success. For further information please see Current Report on Form 8-K filed by the Company on August 9, 2012, and Exhibit 10.5 and 10.610.1 to a Current Report on Form 8-K, filed by EGPI Auguston April 3, 2012.2014, along with additional information contained in our Form 8-K and Exhibits 10.1, 10.2 and 10.3 filed on February 7, 2014.

 

The Company has been making presentations to asset-based lenders and other financial institutions for the purpose of acquiring additional projects and financing capital expenditures to build upon its infrastructure for its oil and gas operations in 2013. The Company throughout its first quarter of operations for 2013 has been pursuing projects for acquisition and development of select targeted oil and gas proved producing properties with revenues, having upside potential and prospects for enhancement, rehabilitation, and future development. These prospects are primarily located in Eastern Texas, and in other core areas of the Permian Basin.

 

The Company’s goal is to build our revenue base and cash flow; however, the Company makes no guarantees and can provide no assurances that it will be successful in these endeavors.

 

 

We are an independent oil and gas company engaged in the exploration, development and exploitation of crude oil and natural gas properties primarily in the United States. We have focused our activities on projects based in i) the Permian Basin areas of Texas, and ii) surrounding States and regions in the U.S. for activities related to oil and gas production, and related business.

The Company as of July 31, 2012 has commenced building and integrating one line segment of operations and for production and development of oil and gas and its infrastructure which throughout 2013 forward we are currently focused on building domestically.

 

 

The Company’s goal moving forward will seek to operate its assets so it can develop drilling programs that not only replace production, but add value through reserve growth, production growth and future operational synergies. The development program goals are to enable repeatable drilling opportunities to maintain and/or grow cash flow. 

 

On July 31, 2012, we entered into a Stock Purchase Agreement (“SPA”) with EGPI Firecreek, Inc. through its wholly owned subsidiary Energy Producers, Inc. (“Investors” or “EGPI”) whereby the parties delivered an Assignment and Bill of Sale (the “Assignment and Bill of Sale Agreement”) pursuant to whichfor the Investors delivered to the Companyfollowing oil and gas interests and assets of EGPI assummarily described in the Assignment and Bill of Sale summarily as follows: Under the terms of the agreement, effective July 31, 2012, the Companywe  i) acquired a 37.5% Working Interest and 28.125% corresponding Net Revenue Interest in the North 40 acres of the J.B. Tubb Leasehold Estate/Amoco Crawar field and oil and gas interests, including all related assets, fixtures, equipment, three well heads, three well bores, and pro rata oil & gas revenue and reserves for all depths below the surface to at least 8500 ft. The field is located in the Permian Basin and the Crawar Field in Ward County, Texas (12 miles west of Monahans & 30 miles west of Odessa in West Texas), ii) also acquired 37.5% Working Interest and 28.125% corresponding Net Revenue Interest in the Highland Production Company No. 2 well-bore located in the South 40 acres of the J.B. Tubb Leasehold Estate/Amoco Crawar field, oil and gas interests, pro rata oil & gas revenues and reserves with depth of ownership 4700 ft. to 4900 ft in well bore and 3800 ft. to 4000 ft in well bore, and iii) a Participation Agreement (Turnkey Drilling, Re Entry, and Multiple Wells) granting certain rights in and to interests for additional development in the J.B. Tubb Leasehold Estate. For further information please see our Current Report on Form 8-K filed on August 9, 2012.

 

 

On August 31, 2012 the Company entered into a loan agreement in the face amount of $100,000 with a private party (the “Note”). Proceeds thereof in the amount of $80,000 were used in part to finance an Escrow Agreement requirement in behalf of a Turnkey Rework Agreement, exhibits and attachments including Oil and Gas Participation Agreement (Turnkey Drilling, Re Entry, and Multiple Wells) dated July 31, 2012, by and between one or more parties including the Company, Success Oil Co., Inc., EGPI Firecreek, Inc., and EGPI Firecreek, Inc. via its wholly owned subsidiary Energy Producers, Inc. The Escrow for the Turnkey Rework Agreement further provided for Success Oil Co., Inc. (“Success”) of Beverly Hills CA, also a licensed Texas operator, and the Company’s operator and partner, to perform a work program perforating the Glorieta payzone (in the South 40 acres of the J. B. Tubb Leasehold Estate) at intervals ranging from 3,800 feet to 4,000 feet, plus additionally to acidize and swab on the J.B. Tubb Leasehold Estate Crawar #2 well.

 

AsThe following Contemplated Future Development Proposed for J.B Tubb Leasehold Estate interests should note discussion for set up of December 2012,new subsidiary operations in the Section of this Report on “Recent Developments”, and more further described and discussed in our Current Reports on Form 8-K filed on February 7, 2014 and March 31, 2014.

Operations for 2014 have requested the Company to consider a conventional frac to be performed to open up the rock to increase fluid entry and the expectation to increase production levels for oil and gas from the Glorieta formation on the Crawar #2 of the J.B. Tubb Leasehold Estate, and most often a standard procedure required for Devonian rock. The required capital expenditure for this work program AFE turnkey is approximately $150,000 and is ininitially requested for early 2013 planning, to be performed in early 2013and reset for as soon as practicable for 2014 with a good and reasonable expectation to substantially increase production levels and averages for the well formation.

 

As part of the SPA with EGPI, on July 31, 2012 we entered into an Oil and Gas Participation Agreement (Turnkey Drilling, Re Entry, and Multiple Wells) and principally located on the South 40 of the J.G. Tubb Leasehold Estate, whereby Success Oil Co., Inc granted to us, under certain circumstances listed therein the participation agreement, a right of first refusal for certain drilling and development, and recently entered into an Agreement to Extend Option. The Company on a best efforts basis will pursue financing for Capital Expenditure (CAPEX) to drill a minimum of one new Ellenburger Well in the amount one million five hundred seventy five thousand ($1,575,000) dollars and up to three new wells discussed further this section, with reasonablyreasonabe consideration for cost adjustment due to current market conditions, see further this section, and Success acknowledges that the Company and or its assignee shall be able to negotiate and or sell interests and or participation in the development of any additional well(s) under terms of the original Participation Agreement, on a best efforts basis, with such partner sharing an interest equivalent to its proportionate funding of such project(s), and or other terms of negotiation as may be agreeable by the Company and such proposed partner, if any, including any modification of this Agreement or the original participation agreement held by EGPI amended as of June 19, 2012, extended with various amendments and extendedmodifications through AprilDecember 31, 2013, and again most recently thorough June 30, 2013,2014, with a provision for future extension as long as it is formally reviewed and approved in a writing by Success.Success and the Parties thereto (see “Recent Developments”).

Our objective now updated for 20132014 would be to drill the first well in the Ellenburger formation located on the South 40 of the JB Tubb Leasehold estate which geologically is updip. To note, the CRAWAR Field that the JB Tubb Leasehold Estate is a faulted anticline with multiple producing horizons. The Ellenburger formation is good potential as our target for drilling sets along a fault plane increasing viability noted by Certified Geologist below the Wolfcamp at appx 6,200’ and therefore Ellenburger viable at approximately 8,300’-8,400’ feet. The Ellenburger capital expenditure for $1.575 to $1.6 million on a Turnkey basis. The second and third wells located on the South 40 for additional drilling and development would be drilling a well in the Waddel formation to 7,700 -7,900’ foot depth. The CAPEX for the Waddel formation is estimated at $1.0 to $1.475 million Turnkey. Thereafter, we would drill to the Wolfcamp formation at approximately 6,200’ foot depth. The Wolfcamp CAPEX estimate is at $1.0 to $1.21 million Turnkey and under the terms of the Participation Agreement held by the Company and co interests.

 

On October 30, 2012, the Company as the assignee of CUBO Energy PLC entered into a Linear Short Form Agreement with EGPI Firecreek, Inc. through its wholly owned subsidiary Energy Producers, Inc. (“EGPI”) involving evaluation, and preparation for the proposed acquisition of oil and gas interests subject to certain requirements. The interests relating to 50% working interests and corresponding 32% net revenue interests in oil and gas leases representing the aggregate total of 240 acre leases, reserves, three wells, and equipment located in Callahan, Stephens, and Shakelford Counties, West Central Texas.  The parties had until November 6, 2012 to finalize this agreement but did not do so by that date.  Both parties are still interested in pursuing this transaction in the future.future through our new subsidiary operations discussed above in Current Discussion.

On successful seismic testing anticipated AFE for Barnet Horizonal Well program would be estimated to be $1,000,000 per horizontal well to be split between the partners for the AFE costs. Firecreek to come to terms of agreement regarding financing for the proposed drilling and development should the parties agree to further move forward after the Seismic study.

  

For additional information please see our Current Report on Form 8-K, as amended, filed on November 15, 2012. See also additional information listed2012, our Current Report on Form 8-K February 7, 2014, Exhibit 10.1 thereto, in “Notes to the Consolidated Financial Statements” furtherour Report on Form 10-K filed on April 29, 2013, in Reports on Form 10-Q filed during 2013, and elsewhere in this Report.

 

 

The Company has, subject to further change or modification, a standard AAPL form operating agreement with an independent contractor to operate for the proposed activities the subject properties on a contract basis for our share of Working Interests (50%). At the present time Whitt Oil and Gas, Inc. is the independent contractor for EGPI (the “Independent Contractor” or “Operator”) and will be modified or changed to administer the Company’s proposed and pending interests. It will be expected that the operator when in place will furnish the monthly Lease Operation Expense and various activity reports to the Company. Upon successful commencement of production, run checks (payments) expected from future sales of oil and gas are to be sent to the operator from the purchasers for oil and gas produced. The designated gatherer for the oil the natural gas will be established. The independent contractor will be expected to administrate monthly activities, and after payment of management, consulting, and lease-operating expenses (LOE’s), Whitt will collect and compile the Joint Interest Billing (JIB) Statements and prepares those certain reports and financial statements related to production income and expenses for monthly delivery to Company’s accounting for compilation along with its share of the payment to be received according to its interests.

 

The oil and gas industry is highly competitive. As a new independent domestic producer entering the oil and gas business, the Company will not initially own and may never own any refining or retail outlets and may have little control over the price it will receive for planned crude oil production. Although management has established relationships in its proposed acquisition activities, significant competition by individual producers and operators or major oil companies exists. Integrated and independent companies and individual producers and operators are active bidders for desirable oil and gas properties. Many of these competitors have greater financial resources than the Company currently has now or may have in the near future.

 

Any oil undertaking with the State of Texas requires obtaining necessary permits and approvals from the Railroad Commission of Texas (“RRC”). Once a lease is obtained an operator’s agreement must be on file with the RRC. Federal regulations including those governed by the Environmental Protection Agency must also be strictly followed (see additional discussion addressing the regulatory environment governing oil & gas drilling and production found under “Business Risks”; “Governmental Regulation”). We believe our operators through the date of this Report, both previous and current, have obtained and or filed all necessary permits and reports to operate the wells and maintain compliance associated with the Company’s oil and gas interests held in the J.B. Tubb Leasehold Estate.

 

We have not segregated our operations into geographic areas given the fact that all of our proposed production activities for closed transactions to date occur within the Permian Basin of West Central Texas.

 

 

The Company’s entry and eventual stability in the oil and gas business will be dependent largely on the ability to continuously acquire significant financing amounts, and other potential financing providers, to carry out and implement its plans (see “Management Discussion and Analysis”, “Business Risks”, and “Liquidity and Capital Resources” sections).

 

The Company is presently in different stages of review and discussion, gathering data and information, and any available reports on other potential field acquisitions, work over programs, and new drilling projects, located in Texas, and other productive regions and areas in the U.S. However, no assurances can be given by the Company that it will be successful in pursuing these other prospects.

 

Successful negotiations for acquisitions, confidentiality, timing and the Company’s financial capabilities will continue to play a significant role in any success of both current and future operations for the Company activities, including its subsidiary operations, and/or any future planned subsidiary or special purpose entity (SPE) operations which may exist in the future.

 

 

As of March 31, 2013,April 9, 2014, the Company had issued and outstanding 59,000,00013,201,872 shares of its common stock held by approximately 3564 holders of record, noand 100,000 shares of Series C voting only preferred stock outstanding.

We have never declared dividends or paid cash dividends on our common stock and our board of directors does not intend to distribute dividends in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend.

 

 

The following information is provided for the period ended December 31, 2012,2013, with respect to compensation plans (including individual compensation arrangements) under which equity securities of the issuer are authorized for issuance, aggregated as follows:

 

 

 

 

 

During the last three years, the registrant has issued unregistered securities to the persons, as described below. None of these transactions involved any underwriters, underwriting discounts or commissions, except as specified below, or any public offering, and the registrant believes that each transaction was exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof and/or Regulation D promulgated thereunder. All recipients had adequate access, though their relationships with the registrant, to information about the registrant.

 

Required information has been furnished in current Report(s) on Form 8-K filings and other reports, as amended, during the period covered by this Report and additionally as listed and following:

 

Please see information contained in our Current ReportReports on Form 8-K filed on August 9, 2012, January 15, 2014, and April 3, 2014, incorporated herein by reference. Please note all amounts reflected in this section are shown and reflected on a post 1:1500 reverse stock split which became effective on January 31, 2014.

IV. (i)(ii) On February 10, 2014, by consent of the Board of Directors, the Registrant approved the following issuances of its restricted common stock, par value $0.001 per share, to the following person for services rendered.

 

(*) Issuances are approved, subject to such persons agreeing in writing to i) comply with applicable securities laws and regulations and make required disclosures; and ii) be solely and entirely responsible for their own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.

 

(**) $750,000 worth of common stock in the immediately preceding table was used primarily in consideration of services rendered to the Company.

 

(****) The shares are to be included for registration in a registration statement on a best efforts basis by the Registrant in accordance with the terms of agreement.

 

 

(iii) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.

ITEM 6. SELECTED FINANCIAL DATA

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

You should read the following discussion and analysis in conjunction with the audited Consolidated Financial Statements and Notes thereto, and the other financial data appearing elsewhere in this Annual Report.

 

The information set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including, among others (i) expected changes in the Company’s revenues and profitability, (ii) prospective business opportunities and (iii) the Company’s strategy for financing its 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 the plans, objectives and expectations of the Company for future operations. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of its knowledge of its 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 the Company or any other person that the objectives or plans of the Company will be achieved. In light of these risks and uncertainties, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. The foregoing review of important factors should not be construed as exhaustive. The Company undertakes no obligation to release publicly the results of any future revisions it may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Mondial Ventures, Inc. was incorporated in the State of Nevada on May 29, 2002, initially an exploration stage mineral company engaged in the acquisition, and exploration of mineral properties with a view to exploiting any mineral deposits we would discover and that demonstrated economic feasibility.  

The Company’s then sole initial mineral property, the Q29, was located in the Nanaimo Mining Division of British Columbia, Canada. The Company owned a 100% interest, subject to a 2% net smelter returns royalty in the four mineral claims comprising the Q29 property. The claims were purchased from Mr. Edward McCrossan of Vancouver, British Columbia for a cash payment of $6,000. The objective was to conduct mineral exploration activities on the Q29 property in order to assess whether it possessed economic reserves of copper and gold. Such proposed exploration program was designed to search for an economic mineral deposit.

For several years our plan of operation had been to conduct exploration work on the Q29 property in order to ascertain whether it possessed economic quantities of copper or gold with no assurance that economic mineral deposits or reserves existed on the Q29 property until appropriate exploration work could be done.

Pursuant to an Agreement and Plan of Merger dated as of December 14, 2010, entered into by and between Legacy Athletic Apparel LLC, a Virginia limited liability company and Mondial Ventures, Inc., a Nevada corporation, on December 30, 2010, Legacy merged into Mondial, with Mondial being the surviving entity.  As a result of the merger, Mondial succeeded to the business and acquired all the assets and assumed all the liabilities of Legacy.

The Company has been focused on oil and gas activities for development of interests held that were acquired in Texas for the production of oil and natural gas since July 31, 2012, discontinuing the Legacy operations for retail clothing.

On July 31, 2012, the Company as the assignee of CUBO Energy PLC entered into and completed the closing of an Assignment and Bill of Sale and Stock Purchase Agreement (“SPA”) and a Participation Agreement (Turnkey Drilling, Re Entry, and Multiple Wells) with EGPI Firecreek Inc. through its wholly owned subsidiary Energy Producers, Inc. (“EGPI”). The interests acquired from EGPI were oil and gas interests in the J.B. Tubb Leasehold Estate located outside of Odessa Texas in Ward and Jones County. The field is located in the Permian Basin and the Crawar Field, directly adjacent to property operated by Chevron Corporation in Ward County, Texas (12 miles southeast of Monahans and 30 miles west of Odessa in West Texas). For further information see the section on the “Business” and “Description of Properties” and further listed in this Report.

 

 

One of the ways our plans for growth could be altered if current opportunities now available become unavailable:

 

The Company would need to identify, locate, or address replacing current potential acquisitions or strategic alliances with new prospects or initiate other existing available projects that may have been planned for later stages of growth and the Company may therefore not be ready to activate. This process can place a strain on the Company. New acquisitions, business opportunities, and alliances, take time for review, analysis, inspections and negotiations. The time taken in the review activities is an unknown factor, including the business structuring of the project and related specific due diligence factors.

 

 

As of July 31, 2012 we are an oil and gas production company focused on the recovery and development of oil and natural gas.

Our Historical Business

 

Pursuant to an Agreement and Plan of Merger dated as of December 14, 2010, entered into by and between Legacy Athletic Apparel LLC, (“Legacy”) a Virginia limited liability company and Mondial a Nevada corporation, on December 30, 2010, Legacy merged into Mondial, with Mondial being the surviving entity.  Prior to the Plan of Merger Legacy was formed in July 2010 as a Virginia limited liability company.  As a result of the merger, Mondial succeeded to the business and acquired all the assets and assumed all the liabilities of Legacy. Previous business activities related to Legacy operations included the development, design, marketing and distribution of branded performance apparel, footwear and accessories for men, women and youth.  

 

 

We account for or have accounted for Legacy in discontinued operations in the consolidated statements of operations for the related fiscal year.

On July 31, 2012, the Company as the assignee of CUBO Energy PLC entered into and completed the closing of an Assignment and Bill of Sale and Stock Purchase Agreement (“SPA”) with EGPI Firecreek Inc. through its wholly owned subsidiary Energy Producers, Inc. (“EGPI”). The interests acquired from EGPI were oil and gas interests in the J.B. Tubb Leasehold Estate located outside of Odessa Texas in Ward and Jones County. The Agreement included our entering into a Participation Agreement (Turnkey Drilling, Re Entry, and Multiple Wells) granting certain rights in and to interests for additional development on the J.B. Tubb Leasehold Estate. The Company presently owns 37.5% working interest ("WI"), 28.125% net revenue interest ("NRI") in the oil and gas interests, and pro rata oil & gas revenue and reserves for all depths below the surface to at least 8500 ft. including all related assets, fixtures, equipment, three well heads and three well bores. The field is located in the Permian Basin and the Crawar Field, directly adjacent to property operated by Chevron Corporation in Ward County, Texas (12 miles southeast of Monahans and 30 miles west of Odessa in West Texas). For further information see the section on the “Business” and “Description of Properties” listed in this Report.

On October 30, 2012, the Company as the assignee of CUBO Energy PLC entered into a Linear Short Form Agreement with EGPI Firecreek, Inc. through its wholly owned subsidiary Energy Producers, Inc. (“EGPI”) involving the development and acquisition of oil and gas interests subject to certain requirements. The interests relating to 50% working interests and corresponding 32% net revenue interests in oil and gas leases representing the aggregate total of 240 acre leases, reserves, three wells, and equipment located in Callahan, Stephens, and Shakelford Counties, West Central Texas. For further information see the section on the “Business” listed in this Report.

 

Total revenues from oil and gas production were $133,369 and $ 87,309 in fiscalfor the year 2012. There was no revenue in 2011 as the Company did not begin operations until 2012.ended December 31, 2013 and 2012, respectively.

 

General administrative expenses used in calculating income from continuing operations were $ 1.804,666$1,043,680 in 20122013 compared to $ 653,380$1,998,092 in 2011.2012.

 

Following is a breakdown of general and administrative costs for this period versus a year ago: 

 

 

 

Advertising and Promotion cost of $934 and $1,427 were used for investor relations and market awareness.awareness for the year ended December 31, 2013 and 2012, respectively.

 

Administration Costs of $68,917$253,277 and $45,221 were used for office and general operating expenses.expenses for the year ended December 31, 2013 and 2012, respectively.

 

Professional Fees of $1,617,047,were$682,031 and $1,675,681were incurred in regards to legal costs, audit costs, securing financing, and the acquisition of leads and contacts with regard to possible new business ventures and includes data acquisition costs, technical work, and engineering reports..reports, for the year ended December 31, 2013 and 2012, respectively.

 

After deducting general and administrative expense, and interest expenses,impairment losses, the Company experienced a loss from continuing operations of $2,043,365 in 2012$1,039,351 for the year ended December 31, 2013 as compared to a loss from continuing operations of $698,002$2,043,365 in fiscal 2011.2012.

 

Interest expense for fiscalthe year 2012ended December 31, 2013 was $100,362$722,794 as compared to$44,622100,362 in fiscal year 2011.2012.

 

The Company incurred a net loss of $2,139,867 in fiscal$2,453,568 for the year 2012ended December 31, 2013 as compared to net loss of $698,002,$2,139,867 in fiscal year 2011.2012.

 

Fully diluted income (loss) per share was ($0.03)22.92) loss per share in fiscal year 20122013 as compared to loss of ($0.01)39.37) per share in fiscal 2011.2012.  Loss per shares was adjusted for 1:1500 stock splits effective on January 31, 2014.

 

 

Cash on hand at December 31, 20122013 was $23,518$3,508 compared to $1,573$23,518 at the beginning of the year. The Company had working capital deficit of $933,716$1,363,383 at December 31, 20122013 compared to a working capital deficit of $751,975$933,716 at December 31, 2011.

 

Cash used byin operating activities was $20,237$458,790 for the year ended December 31, 2012,2013, compared with $168,480$20,237 used for the year ended December 31, 2011.2012.

 

The Company received new loanscash from financing activities in the amount of $438,780 for the year ended December 31, 2013as compared to $122,182 received in fiscal year 2012 of $117,500 compared to $170,000 in fiscal year 2011 by issuing promissory notes.2012.

 

Total assets increaseddecreased to $951,412$844,536 at December 31, 20122013 compared to $105,845$951,412 at the beginning of the year mainly as a result of the acquisitionimpairment of thelong-lived assets, depreciation and depletion of Tubb lease oil and gas leases.properties, and cash used in operating activities.

 

Shareholders’ equity decreaseddeficit increased to a deficit of$528,136 at December 31, 2013 from $10,936 at December 31, 2012 from $647,703 at December 31, 2011.2012.

 

For financing activities in 2012,2013, management obtained $117,500$450,780 cash proceeds by issuing Promissory Notes.promissory notes. Proceeds were used for working capital.

Management has estimated that cost for initially paying down certain of the Company’s recent debt, providing necessary working capital, and activating development of its current plans for domestic oil and gas segment operations, alternative energy division, acquisition and developments, will initially require a very minimum of $3,500,000 to $7,500,000 to a maximum of $8,000,000 to $10 million during the first six to twelve months of fiscal 2013.2014.

 

Financing our full expansion and development plans for our oil and gas operations could require up to $50,000,000 or more. The Company may elect to reduce or increase its requirement as circumstances dictate. We may elect to revise these plans and requirements for funds depending on factors including; changes in acquisition and development estimates; interim corporate and project finance requirements; unexpected timing of markets as to cyclical aspects as a whole; currency and exchange rates; project availability with respect to interest and timing factors indicated from parties representing potential sources of capital; structure and status of our strategic alliances, potential joint venture partners, and or our targeted acquisitions and or interests.

 

The Company cannot predict that it will be successful in obtaining funding for its plans or that it will achieve profitability in fiscal 2013.2014.

 

Not applicable.

 

 

 

DECEMBER 31, 20122013 AND DECEMBER 31, 20112012

Index to Financial Statements

                 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Mondial Ventures, Inc.

 

 

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control overov21er financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit providesaudits provide a reasonable basis for our opinion.

In our opinion, the financial statements present fairly, in all material respects, the financial position of Mondial Ventures, Inc. (the “Company”) as of December 31, 2013 and December 31, 2012, and the results of its operations, cash flows, and changes in shareholders’ deficit for the yearyears then ended described above in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company has suffered recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern.  Management’s plans in regard to these matters are also discussed in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

April 26, 201215, 2014

As of December 31, 20122013 and December 31, 20112012

 

The accompanying notes are an integral part of these statements.

 

Consolidated Statements of Operations

For the Years Ended December 31, 20122013 and December 31, 20112012

The accompanying notes are an integral part of these statements.

 

 

Mondial Ventures, Inc.

Consolidated Statements of Cash Flows

For the Years Ended December 31, 20122013 and December 31, 20112012

The accompanying notes are an integral part of these statements.

 

Mondial Ventures, Inc.

Consolidated Statement of Changes in Shareholders’ Deficit