UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the quarterly period ended May 31, 20122013 |
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from __________ to __________ |
000-54243 |
Commission File Number |
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New America Energy Corp. |
(Exact name of registrant as specified in its charter) |
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Nevada | N/A |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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3651 Lindell Rd., Ste D#138, Las Vegas, NV | 89103 |
(Address of principal executive offices) | (Zip Code) |
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(800) 508-6149 |
(Registrant’s telephone number, including area code) |
N/A |
(Former name, former address and former fiscal year, if changed since last report) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | [ ] | Accelerated filer | [ ] |
| | | |
Non-accelerated filer | [ ] | Smaller reporting company | [X] |
(Do not check if a smaller reporting company) | | | |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
APPLICABLE ONLY TO CORPORATE ISSUERS
52,692,13353,312,133 common shares outstanding as of July 10, 2012June 24, 2013 |
(Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.) |
TABLE OF CONTENTS
| | Page |
| PART I – Financial Information | |
Item 1. | | 4 |
Item 2. | | 145 |
Item 3. | | 189 |
Item 4. | | 189 |
| | |
| PART II – Other Information | |
Item 1. | | 1910 |
Item 1A. | | 1910 |
Item 2. | | 1910 |
Item 3. | | 1910 |
Item 4. | | 1910 |
Item 5. | | 1910 |
Item 6. | | 2011 |
| | 2112 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 210 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the nine month period ended May 31, 20122013 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2012.2013. For further information refer to the financial statements and footnotes thereto included in our company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2011.2012.
| Page |
Unaudited Financial Statements | |
| 5F-1 |
| 6F-2 |
| 7F-3 |
| 8F-4 to 13F-12 |
(AN EXPLORATION COMPANY)
BALANCE SHEETS
As of May 31, 20122013 and August 31, 20112012
| | May 31, | | | August 31, | | |
| | 2012 (unaudited) | | | 2011 | | | (unaudited) | | | | |
| | | | | | | | | | | | |
ASSETS | | | | | | | | | | | | |
| | | | | | | | | | | | |
Current Assets | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 170,237 | | | $ | 19,992 | | |
Cash and equivalents | | | $ | 62 | | | $ | 78,416 | |
Deferred financing costs | | | | - | | | | 2,391 | |
TOTAL ASSETS | | $ | 170,237 | | | $ | 19,992 | | | $ | 62 | | | $ | 80,807 | |
| | | | | | | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Current Liabilities | | | | | | | | | | | | | | | | |
Accounts payable | | $ | 5,662 | | | $ | 11,209 | | |
Accounts payable and accrued expenses | | | $ | 23,567 | | | $ | 9,221 | |
Accrued interest | | | | 4,728 | | | | 1,700 | |
Accounts payable – related parties | | | - | | | | 1,000 | | | | 20,681 | | | | - | |
Short term loan | | | 200,000 | | | | - | | | | 202,285 | | | | 200,000 | |
Total Liabilities | | | 205,662 | | | | 12,209 | | |
TOTAL LIABILITIES | | | | 251,261 | | | | 210,921 | |
| | | | | | | | | | | | | | | | |
Stockholders’ Equity | | | | | | | | | | | | | | | | |
Common Stock, $.001 par value, 75,000,000 shares authorized, 51,942,133 and 51,000,000 shares issued and outstanding as at May 31, 2012 and August 31, 2011 respectively | | | 51,942 | | | | 51,000 | | |
Common Stock, $.001 par value, 800,000,000 shares authorized, 53,312,133 and 52,692,133 shares issued and outstanding as at May 31, 2013 and August 31, 2012 respectively | | | | 53,312 | | | | 52,692 | |
Additional paid-in capital | | | 1,053,985 | | | | 747,827 | | | | 1,096,115 | | | | 1,083,235 | |
Deficit accumulated during the exploration stage | | | (1,141,352 | ) | | | (791,044 | ) | | | (1,400,626 | ) | | | (1,266,041 | ) |
Total stockholders’ equity (deficit) | | | (35,425 | ) | | | 7,783 | | | | (251,199 | ) | | | (130,114 | ) |
| | | | | | | | | | | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | | $ | 170,237 | | | $ | 19,992 | | | $ | 62 | | | $ | 80,807 | |
See accompanying notes to the interim financial statements
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF OPERATIONS (unaudited)
For the Three and Nine Months Ended May 31, 20122013 and 20112012
And the Period from May 8, 2006 (Inception) to May 31, 2012
2013
| | | | | | | | | | | | | | | Period from | |
| | | | | | | | | | | | | | Period from | | | | | | | | | | | | | | | May 8, 2006 | |
| | | | | | | | | | | | | | May 8, 2006 | | | Three Months Ended | | | Nine Months Ended | | | (Inception) to | |
| | Three Months Ended | | | Nine Months Ended | | | (Inception) to | | | May 31, | | | May 31, | | | May 31, | |
| | May 31, | | | May 31, | | | May 31, | | | 2013 | | | 2012 | | | 2013 | | | 2012 | | | 2013 | |
| | 2012 | | | 2011 | | | 2012 | | | 2011 | | | 2012 | | | | | | | | | | | | | | | | | | | | | |
REVENUES | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
OPERATING EXPENSES: | | | | | | | | | | | | | | | | | | | | | |
EXPENSES: | | | | | | | | | | | | | | | | | | | | | |
Impairment of mineral properties | | | - | | | | 75,000 | | | | 75,000 | | | | 435,000 | | | | 685,000 | | | | - | | | | - | | | | - | | | | 75,000 | | | | 740,000 | |
Mineral license fees | | | - | | | | - | | | | - | | | | - | | | | 3,466 | | | | - | | | | - | | | | - | | | | - | | | | 3,466 | |
Exploration expenses | | | - | | | | - | | | | 104,823 | | | | - | | | | 104,823 | | | | - | | | | - | | | | - | | | | 104,823 | | | | 122,848 | |
Professional fees | | | 18,653 | | | | 9,938 | | | | 66,669 | | | | 32,073 | | | | 205,365 | | | | 7,177 | | | | 18,653 | | | | 37,973 | | | | 66,669 | | | | 250,778 | |
Management fees | | | 12,000 | | | | 7,500 | | | | 28,500 | | | | 17,500 | | | | 53,500 | | | | 16,500 | | | | 12,000 | | | | 49,500 | | | | 28,500 | | | | 119,500 | |
General and administration | | | 22,010 | | | | 983 | | | | 54,616 | | | | 2,150 | | | | 68,498 | | | | 2,980 | | | | 22,010 | | | | 41,693 | | | | 54,616 | | | | 139,306 | |
Total operating expenses | | | 52,663 | | | | 93,421 | | | | 329,608 | | | | 486,723 | | | | 1,120,652 | | | | 26,657 | | | | 52,663 | | | | 129,166 | | | | 329,608 | | | | 1,375,898 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss from operations | | | (52,663 | ) | | | (93,421 | ) | | | (329,608 | ) | | | (486,723 | ) | | | (1,120,652 | ) | | | (26,657 | ) | | | (52,663 | ) | | | (129,166 | ) | | | (329,608 | ) | | | (1,375,898 | ) |
| | | | | | | | | | | | | | | | | | | | | |
OTHER INCOME (EXPENSES) | | | | | | | | | | | | | | | | | | | | | |
Financing costs | | | | - | | | | (20,000 | ) | | | (2,391 | ) | | | (20,000 | ) | | | (20,000 | ) |
Interest expenses | | | (20,700 | ) | | | - | | | | (20,700 | ) | | | - | | | | (20,700 | ) | | | (1,028 | ) | | | (700 | ) | | | (3,028 | ) | | | (700 | ) | | | (4,728 | ) |
Total other income (expenses) | | | | (1,028 | ) | | | (20,700 | ) | | | (5,419 | ) | | | (20,700 | ) | | | (24,728 | ) |
| | | | | | | | | | | | | | | | | | | | | |
NET LOSS | | $ | (73,363 | ) | | $ | (93,421 | ) | | $ | (350,308 | ) | | $ | (486,723 | ) | | $ | (1,141,352 | ) | | $ | (27,685 | ) | | $ | (73,363 | ) | | $ | (134,585 | ) | | $ | (350,308 | ) | | $ | (1,400,626 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NET LOSS PER SHARE | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.01 | ) | | $ | (0.01 | ) | | | | | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.01 | ) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
WEIGHTED AVERAGE SHARES OUTSTANDING: BASIC AND DILUTED | | | 51,923,872 | | | | 50,150,000 | | | | 51,558,847 | | | | 51,462,821 | | | | | | | | 53,312,133 | | | | 51,923,872 | | | | 53,241,730 | | | | 51,558,847 | | | | | |
See accompanying notes to the interim financial statements
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF CASH FLOWS (unaudited)
For the Nine Months Ended May 31, 20122013 and 20112012
And the Period from May 8, 2006 (Inception) to May 31, 20122013
| | | | | Period from | | | | | | Period from | |
| | | | | May 8, 2006 | | | | | | May 8, 2006 | |
| | Nine Months Ended | | | (Inception) to | | | Nine Months Ended | | | (Inception) to | |
| | May 31, | | | February 29, | | | May 31, | | | May 31, | |
| | 2012 | | | 2011 | | | 2012 | | | 2013 | | | 2012 | | | 2013 | |
Cash Flows From Operating Activities | | | | | | | | | | | | | | | | | | |
Net loss | | $ | (350,308 | ) | | $ | (486,723 | ) | | $ | (1,141,352 | ) | | $ | (134,585 | ) | | $ | (350,308 | ) | | $ | (1,400,626 | ) |
Impairment on mineral property | | | 75,000 | | | | 435,000 | | | | 685,000 | | | | - | | | | 75,000 | | | | 740,000 | |
Shares issued for consulting services | | | 32,100 | | | | - | | | | 32,100 | | | | - | | | | 32,100 | | | | 32,100 | |
Amortization of financing costs | | | | 2,391 | | | | - | | | | 20,000 | |
Accrued interest | | | 700 | | | | - | | | | 700 | | | | 3,028 | | | | 700 | | | | 4,728 | |
Accounts payable | | | (7,247 | ) | | | 6,464 | | | | 5,804 | | | | 35,027 | | | | (7,247 | ) | | | 45,090 | |
Cash Flows Used by Operating Activities | | | (249,755 | ) | | | (45,259 | ) | | | (417,748 | ) | | | (94,139 | ) | | | (249,755 | ) | | | (558,708 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Cash Flows From Investing Activities | | | | | | | | | | | | | | | | | | | | | | | | |
Purchase of mineral property claims | | | - | | | | (135,000 | ) | | | (135,000 | ) | | | - | | | | - | | | | (160,000 | ) |
Net Cash Used by Investing Activities | | | - | | | | (135,000 | ) | | | (135,000 | ) | | | - | | | | - | | | | (160,000 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Cash Flows From Financing Activities | | | | | | | | | | | | | | | | | | | | | | | | |
Proceeds from related parties | | | | - | | | | - | | | | 54,985 | |
Short term loan | | | 200,000 | | | | - | | | | 200,000 | | | | 2,285 | | | | 200,000 | | | | 202,285 | |
Proceeds from related parties | | | - | | | | - | | | | 54,985 | | |
Proceeds from sales of common stock | | | 200,000 | | | | 195,000 | | | | 468,000 | | |
Financing costs for short term loan | | | | - | | | | - | | | | (20,000 | ) |
Proceeds from sales of common stock, net | | | | 13,500 | | | | 200,000 | | | | 481,500 | |
Cash Flows Provided By Financing Activities | | | 400,000 | | | | 195,000 | | | | 722,985 | | | | 15,785 | | | | 400,000 | | | | 718,770 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net Increase In Cash | | | 150,245 | | | | 14,741 | | | | 170,237 | | | | (78,354 | ) | | | 150,245 | | | | 62 | |
Cash, beginning of period | | | 19,992 | | | | - | | | | - | | | | 78,416 | | | | 19,992 | | | | - | |
Cash, end of period | | $ | 170,237 | | | $ | 14,741 | | | $ | 170,237 | | | $ | 62 | | | $ | 170,237 | | | $ | 62 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Supplemental Cash Flow Information | | | | | | | | | | | | | | | | | | | | | | | | |
Interest paid | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
Income taxes paid | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Supplemental non-cash financing activity: | | | | | | | | | | | | | | | | | | | | | | | | |
Related party loan forgiven as additional paid in capital | | $ | - | | | $ | (54,985 | ) | | $ | (54,985 | ) | | $ | - | | | $ | - | | | $ | (54,985 | ) |
Accrued expense forgiven as additional paid in capital | | | - | | | | - | | | | (842 | ) | | | - | | | | - | | | | (842 | ) |
Shares issued for consulting services | | | 32,100 | | | | - | | | | 32,100 | | | | - | | | | 32,100 | | | | 32,100 | |
Shares issued to acquire option on mineral property | | | 75,000 | | | | 300,000 | | | | 550,000 | | | | - | | | | 75,000 | | | | 580,000 | |
| | $ | 107,100 | | | | 245,015 | | | $ | 526,273 | | | $ | - | | | $ | 107,100 | | | $ | 556,273 | |
See accompanying notes to the interim financial statements
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 20122013
NOTE 1 – SUMMARY OF ACCOUNTING POLICIES
Nature of Business
New America Energy Corp.Corp (formerly “Atheron, Inc.”) was incorporated in Nevada on May 8, 2006 as a development stage company, initially developing a technology for ethanol-methanol gasoline. The Company did not progress the development of this technology.
On November 5, 2010, we underwent a change of control and the Company’s newly appointed sole director and majority shareholder approved a name change to New America Energy Corp. and a twenty-five (25) new for one (1) old forward stock split of the Company’s issued and outstanding shares of common stock, such that its issued and outstanding shares of common stock increased from 2,150,000 to 53,750,000. This forward split did not affect the number ofOn December 23, 2010, the Company’s authorizedsole director cancelled and returned to treasury 5,000,000 post-split common shares, which as of the date of these financial statements remains at 75,000,000.shares.
On November 16, 2010, the Nevada Secretary of State accepted for filing of the Certificate of Amendment to the Company’s Articles of Incorporation to change our name from Atheron, Inc. to New America Energy Corp.
The forward stock split and name change becamehas become effective with the Over-the-Counter Bulletin Board at the opening of trading on December 1, 2010 under the Company’s new symbol “NECA”. Our CUSIP number is 641872 106.
The effect of the stock split has been recognized retroactively in the stockholders’ equity accounts as of May 8, 2006, the date of our inception, and in all shares and per share data in the financial statements.
On February 3, 2011, we entered into property acquisition agreements with First Liberty Power Corp. (“FLPC”), and GeoXplor Corp. wherebyInc. (“GeoXplor”). Pursuant to the terms of the agreements, we acquired an option, as well as exploration rights, in certain unpatented mining claims located in Southern Utah calledwhich we refer to the Uravan Property.“Uravan Property”. On May 31, 2011, we amended the agreement to extend the payment date for an additional 120 days. The Company did not pay the required option payments under the agreements and the property was lost on September 30, 2011.
On May 31, 2011, we entered into a property acquisition agreement with GeoXplor Corp. Pursuant to the terms of the agreement. Pursuant to the terms of the agreement, we acquired an option, as well as exploration rights, in certain unpatented mining claims located in Clayton Valley, Nye County, Nevada. Subsequently on October 27, 2011, we entered into an amended property acquisition agreement whereby we acquired additional claims. Further on June 20, 2012, we entered into an amended property acquisition agreement which amended and replaced the May 31, 2011 agreement and the October 27, 2011 agreement. Under the amended agreement we amended and extended the terms for payments to GeoXplor Corp. in exchange for the issuance of additional shares. On May 24, 2013, the Company received a letter of default from GeoXplor which give the Company 30 days to cure such default or the property rights will terminate and the Company will have no further rights or interest in or to the property.
On June 26, 2012, the board of directors of the Company and certain shareholders hold majority voting rights approved the increase of our authorized capital from 75,000,000 to 800,000,000 shares of common stock. On November 14, 2012, the Company filed the articles of amendment with the State of Nevada to effect the increase in authorized share capital.
As a result of thesethe GeoXplor agreements, the Company ishas been focused exclusively on the acquisition and development of mineral resource properties. However, due to the current difficulty in raising exploration funds in the mining industry, the Company is currently seeking other acquisitions that may be easier to raise funds for. The Company is currently in discussion with one such acquisition in the food industry.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2013
NOTE 1 – SUMMARY OF ACCOUNTING POLICIES (continued)
Exploration Stage Company
The Company is an Exploration Stage Company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification ("ASC") 915, Development Stage Entities. The Company's principal business is the acquisition and exploration of mineral resources. The Company has not presently determined whether its properties contain mineral reserves that are economically recoverable.
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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
NEW AMERICA ENERGY CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2012
NOTE 1 – SUMMARY OF ACCOUNTING POLICIES (continued)
Cash and Cash Equivalents
We consider all highly liquid investments with maturities of three months or less to be cash equivalents.
Fair Value of Financial Instruments
OurNew America Energy Corp’s financial instruments consist of cash and cash equivalents and short term loans.loans payable. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Mineral PropertyProperties Costs
Mineral exploration and development costs are accounted for using the successful efforts method of accounting.
Property acquisition costs - Mineral property acquisition costs are capitalized as mineral exploration properties and assessed quarterly for impairment of value as described below.properties. Upon achievement of all conditions necessary for reserves to be classified as proven,proved, the associated acquisition costs which have been capitalized are reclassified to proven properties.prove properties
Exploration costs - Geological and geophysical costs and the costs of carrying and retaining undeveloped properties are expensed as incurred.
Impairment of Mineral Properties
Unproved mineral properties are assessed at each reporting period for impairment of value, and a loss is recognized at the time of the impairment by providing an impairment allowance. An asset would be impaired if the undiscounted cash flows were less than its carrying value. Impairments are measured by the amount by which the carrying value exceeds its fair value. Because the Company uses the successful efforts method, the Company assesses its properties individually for impairment, instead of on an aggregate pool of costs. Impairment of unproved properties is based on the facts and circumstances surrounding each lease and is recognized based on management’s evaluation.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2013
NOTE 1 – SUMMARY OF ACCOUNTING POLICIES (continued)
Impairment of Mineral Properties (continued)
Management’s evaluation follows a two-step process where (1) recoverability of the carrying value of the asset is reviewed to determine if there is sufficient value recoverable to support the capitalized value at the report date; and, (2) If assets fail the recoverability test, impairment testing is conducted, including the evaluation of various criteria such as: prior history of successful operations; production currently in place and/or future projected cash flows (if any); reserve reports or evaluations from which management can prepare future cash flow analyses; the Company’s ability to monetize the asset(s) under evaluation; and, Management’s intent regarding future development.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Basic Loss Per Share
Basic loss per share has been calculated based on the weighted average number of shares of common stock outstanding during the period.
NEW AMERICA ENERGY CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2012
NOTE 1 – SUMMARY OF ACCOUNTING POLICIES (continued)
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
NOTE 2 – LIQUIDITY AND GOING CONCERN
We have negative working capital, and have incurred losses since inception, and have not yet generated revenues. As we are in the exploration stage with our recently acquired mineral claims we do not expect to generate revenues for some period of time, if ever. These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on the Company generating cash from the sale of its common stock and/or obtaining debt financing orand attaining future profitable operations. Management’s plans include selling its equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be successful in these efforts.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2013
NOTE 3 – MINERAL PROPERTY RIGHTS
On February 3, 2011 we entered into and closed property acquisition agreements with First Liberty Power Corp., and GeoXplor Inc. Pursuant to the terms of the agreements, we acquired an option, as well as exploration rights, in certain unpatented mining claims located in Southern Utah which we refer to the Uravan property. The Company failed to make the payments as required and as of September 30, 2011, the option agreement terminated and the Company lost all rights and interest in and to the Uravan property.
B)Clayton Valley Agreement | B) | Clayton Valley Agreement |
On May 31, 2011, we entered into a property acquisition agreement with GeoXplor Corp. (the “Original Agreement”) Pursuant to the terms of the agreement; we acquired an option, as well as exploration rights, in certain unpatented mining claims located in Clayton Valley, Nye County, Nevada. Subsequently on October 27, 2011, we entered into an amended property acquisition agreement which amended and replaced the original agreement. SubsequentlyFurther on June 20, 2012, we entered into an amended property acquisition agreement which amended and replaced the May 31, 2011 agreement and the October 27, 2011 agreement. Under the amended agreement we amended and extended the terms for payments to GeoXplor Corp. in exchange for the issuance of additional shares:
● | $75,000 on May 31, 2011; (paid) |
● | $25,000 on June 22,May 31, 2012; (paid) |
● | $25,000 on March 4, 2013; |
● | $150,000 on May 31, 2013; |
● | $100,000 on May 31, 2014; |
● | 500,000 shares of our common stock on execution of the agreement; (previously issued)(issued) |
● | 250,000 shares of our common stock on execution of the amended agreement; (previously issued)(issued) |
● | 750,000 shares of our common stock on or before June 22, 20122012; (issued); |
● | 500,000 shares of our common stock on or before the date two years from the Effective Datedate of the Original Agreement;agreement; |
● | 500,000 shares of our common stock on or before the date three years from the Effective Datedate of the Original Agreement;agreement; and |
● | A 3.0% net valuesmelter royalty on production of Lithium and other mineralsall net revenue derived from the Property measured by 3% of the gross proceeds less costs associated with production from the Nye County Property. |
NEW AMERICA ENERGY CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2012
NOTE 3 – MINERAL PROPERTY RIGHTS (continued)
B)Clayton Valley Agreement (continued)
We have also committed to a 4 year work program of no less than $1,000,000 with $100,000 to be spent in the first year, $200,000 during the second year, $300,000 during the third year and $400,000 during the fourth year.
If we are unable to make any of the share issuances or payments under the agreements with GeoXplor, the property rights would revert to GeoXplor.
On November 9, 2011,During the fiscal year ended August 31, 2012, the Company made cash payment in the amount of $25,000 (2011-$75,000) to GeoXplor, which amount was capitalized as option costs – mineral properties. At the close of the fiscal year ended August 31, 2012, the Company evaluated the recoverability of the amount paid for the option and determined to impair the amount in full, as the Company is currently in the prospecting phase, with no proven or probable reserves having yet been determined.
During the period ended August 31, 2012, the Company issued 250,0001,000,000 (2011-500,000) shares of common stock to GeoXplor on execution of the amended agreement.GeoXplor. The issuance of 250,0001,000,000 shares of common stock was valued at the market value of the stock on the issuance date, totaling $75,000. or $105,000 (2011-$175,000).
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2013
NOTE 3 – MINERAL PROPERTY RIGHTS (continued)
| B) | Clayton Valley Agreement (continued) |
At November 30, 2011,August 31, 2012, the Company recorded the $75,000amount of $130,000 (2011-$250,000) as an impairment of mineral properties as no proven or probable reserves have yet been determined and the Company is currently in the prospecting phase, with no proven or probable reserves having yet been determined.
During the ninetwelve month period ended MayAugust 31, 2012, the Company paid $104,823$122,848 (2011-$104,823) to GeoXplor in respect to the gravity survey on the property and recorded as this amount as an exploration expense.
On the transaction date the Company capitalized the entire amount as option costs – mineral properties. At the close of the fiscal year ended August 31, 2012, the Company evaluated the recoverability of the amounts paid for the option and determined to impair the $130,000 in full, as the Company is currently in the prospecting phase, with no proven or probable reserves having yet been determined.
On May 24, 2013, the Company received a letter of default from GeoXplor which give the Company 30 days to cure such default or the property rights will terminate and the Company will have no further rights or interest in or to the property.
NOTE 4 – COMMITMENT
On January 18, 2012, the Company entered into an agreement with Midsouth Capital Inc. (“Midsouth”), whereby Midsouth was to seek financing for the Company. Midsouth introduced the Company to Fairhills Capital. Midsouth will receive certain commissions for the financings with Fairhills Capital pursuant to an agreement whereby Midsouth is the Company’s non-exclusive financial advisor, investment banker and placement agent for the purpose of assisting the Company to raise capital. Pursuant to the Midsouth Agreement, the Company agreed to: (i) issuance of 80,000 shares of the Company’s common stock; (ii) a success fee of 10% of the amount for any capital raised; (iii) 150,000 restricted shares, with piggy back registration rights, of the Company’s common stock per $1,000,000 of capital raised for a period of two years.
Pursuant to our agreement with MidSouthMidsouth we have issued Midsouth 80,000 shares of our common stock, and paid them a stock fee of 30,000 additional shares of our common stock, and a cash fee of $20,000 based on 10% of the initial $200,000 funded by Fairhills.
The Company recorded the amount of $23,423 as professional feescumulatively valued at $32,100 based on the market value of the common stock on the date of execution of the Midsouth Agreement. Agreement, and have paid a cash fee of $20,000 based on 10% of the initial $200,000 funded by Fairhills in fiscal year ended August 31, 2012.
The Company recorded the amount of $20,000$32,100 as professional fees, and $20,000 paid in cash was recorded as interest expense due todeferred financing costs.costs which were amortized over the period as financing expenses.
During the nine month period ended May 31, 2013, we paid $1,500 to Midsouth in regard to draw down of $15,000 pursuant to the financing agreement described below in Note 6, which amount was recorded as additional paid in capital.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2013
NOTE 5 – RELATED PARTY TRANSACTIONS
On November 1, 2010, the Company entered into a three-year consulting agreement with oneRick Walchuk, a director and officer of the Company’s directors.Company. Under the terms of the agreement, the consultant isMr. Walchuk was paid $2,500 a month, which increased to $4,000 a month commencing June 1, 2012, payable on the 1st1st of each month, pursuant to the services to be rendered by the consultant.Mr. Walchuk. During the nine month period ended May 31, 2012,2013, Mr. Walchuk invoiced the Company $54,428, which included $36,000 as management fees and $18,428 for expenses. The Company made cash payments of $22,500$45,747, leaving amount of $8,681 owing to Mr. Walchuk as at May 31, 2013, which is reflected on the consultant.Company’s balance sheet as, accounts payable – related parties.
On January 30, 2012, Mr. Alexandros Tsingos, was appointed a director and Secretary of the Company. During the nine month period ended May 31, 2012,2013, Mr. Tsingos invoiced the Company $8,000$14,700, which included $6,000$13,500 as management fees and $2,000$1,200 for expenses. The Company made cash payments in the amount of $2,700, leaving the amount of $12,000 owing to pay these amounts in full.
NEW AMERICA ENERGY CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
Mr. Tsingos as at May 31, 20122013 which is reflected on the Company’s balance sheet as, accounts payable – related parties. On May 24, 2013, Mr. Alexandros Tsingos resigned as a director and secretary of the Company.
NOTE 6 – FINANCING AGREEMENT
1. | On November 22, 2011, the Company entered into a financing agreement with one non-US investor pursuant to which, the investor will make available of up to $1,000,000 by way of advances until November 22, 2012 (the “Completion Date”) in accordance with the terms of the financing agreement. The Completion Date may be extended for an additional term of up to twelve months at the option of the Company or the investor upon written notice on or before the Completion Date in accordance with the notice provisions of the Financing Agreement. The Company will issue, within ten (10) Banking Days following the date of the receipt by the Company of any advance under the Financing Agreement, common shares of the Company (each a “Share”) at the Share Price. Upon receipt of an advance from the investor under the terms of the Financing Agreement, the Company will issue to the investor that number of shares of the Company at a price equal 90% of the average of the closing price of the Company’s common stock, for the five (5) Banking Days immediately preceding the date of the advance. As of the nine month period ended May 31, 2012, the Company has1. On November 22, 2011, the Company entered into a financing agreement with one non-US investor pursuant to which, the investor will make available of up to $1,000,000 by way of advances until November 22, 2012 (the “Completion Date”) in accordance with the terms of the financing agreement. The Completion Date may be extended for an additional term of up to twelve months at the option of the Company or the investor upon written notice on or before the Completion Date in accordance with the notice provisions of the Financing Agreement. The Company will issue, within ten (10) Banking Days following the date of the receipt by the Company of any advance under the Financing Agreement, common shares of the Company (each a “Share”) at the Share Price. Upon receipt of an advance from the investor under the terms of the Financing Agreement, the Company will issue to the investor that number of shares of the Company at a price equal 90% of the average of the closing price of the Company’s common stock, for the five (5) Banking Days immediately preceding the date of the advance. As of the twelve month period ended August 31, 2012, the Company had drawn down a total of $200,000 and issued a total of 582,133 shares of common stock to the investor. The investor indicated they are not interested in further funding and therefore the financing agreement has expired and we do not expect to be able to raise any further funds from this investor.
|
2. | On March 28, 2012 we entered into an investment agreement (the “Investment Agreement”) with Fairhills Capital Offshore Ltd., a Cayman Islands exempted company (“Fairhills”). Pursuant to the terms of the Investment Agreement, Fairhills has committed to purchase up to Three Million Dollars ($3,000,000) of our common stock over a period of up to thirty-six (36) months. |
On May 1, 2012, we entered into an amendment to the Investment Agreement (the “Amendment”). Pursuant to the Amendment, the purchase price of the shares shall be equal to a discount of Twenty-Five percent (25%) percent from the lowest volume weighted average price during the ten (10) trading days immediately prior to receipt by Fairhills of a put notice (as defined in the Investment Agreement. In connection with the Investment Agreement, we also entered into a registration rights agreement (the “Registration Rights Agreement”) with Fairhills. Pursuant to the Registration Rights Agreement, we are obligated to file a registration statement with the Securities and Exchange Commission (“SEC”) covering Eighteen Million (18,000,000) shares of the common stock underlying the Investment Agreement within 21 days after the closing of the Investment Agreement. In addition, we are obligated to use all commercially reasonable efforts to have the registration statement declared effective by the SEC within 120 days after the closing of the Investment Agreement and maintain the effectiveness of such registration statement until termination in accordance with the Investment Agreement.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2013
NOTE 6 – FINANCING AGREEMENT (continued)
At an assumed purchase price under the Investment Agreement of $0.04595 (equal to 75% of the closing price of our common stock of $0.0612on May 25, 2012), we will be able to receive up to $436,525in$436,525 in gross proceeds, assuming the sale of the entire 9,500,000 Shares being registered hereunder pursuant to the Investment Agreement. At an assumed purchase price of $0.04595 under the Investment Agreement, we would be required to register 55,788,357 additional shares to obtain the balance of $2,563,475 under the Investment Agreement. We are currently authorized to issue 75,000,000 shares of our common stock; however our management intends to request that our shareholders approve an increase in our authorized capital stock. Fairhills has agreed to refrain from holding an amount of shares which would result in Fairhills from owning more than 4.99% of the then-outstanding shares of our common stock at any one time.
At the time the transaction was negotiated between the parties. The price of the stock was substantially higher than the current trading price and based upon same we believed that we would be able to receive the full amount of the financing. However since such time the market value of our common stock has decreased and we do not believe that we will receive the full amount under the Investment Agreement unless there is an increase in the price of our common stock.
NEW AMERICA ENERGY CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
May 31,On July 5, 2012,
NOTE 6 – FINANCING AGREEMENT (continued) we entered into a second amendment of the investment agreement with Fairhills Capital solely to change the wording of Section 7.7 of the Investment Agreement: to read “unless the SEC's concerns have been addressed and Investor is reasonably satisfied that the SEC no longer is considering or intends to take such action”.
On March 28, 2012, we entered into a debt instrument (the “Loan”) with Fairhills whereby Fairhills Capital provided us with a $200,000 loan which iswas due by September 28, 2012 and carries a 2% annual rate of interest. The note is not convertible into our common stock and we have agreed that we will not use the funds raised in the Fairhills financing to repay this note. The note wasis secured by 3,333,333 shares of our restricted common stock owned by our director and officer, Rick Walchuk. These shares shall be held in escrow by Fairhills Capital’s counsel and will be forfeited to Fairhills if we default on the note.
The Company paid $20,000 in financing fees in respect to the funds advanced by Fairhills (see Note 4 - Commitment).During the three month period ended February 28, 2013, we paid a further $1,500 in fees in regard to a draw-down of $15,000 pursuant to the financing agreement with Fairhills. On September 28, 2012, the Fairhills note was due and payable. The Company does not currently have sufficient funds to pay the note due. The note is not convertible into our common stock and we have agreed that we will not use the funds raised in the Fairhills/Deer Valley financing to repay this note. The note is secured by 3,333,333 shares of the Company’s restricted common stock owned by the Company’s director and officer, Rick Walchuk, which are being held in escrow by Fairhills’s counsel. As the Company is in default of this loan, Fairhills has the right to the shares held in escrow, however, at the current price of the shares, the sale of the escrowed shares will not be sufficient to retire the debt. Under the terms of the Loan, non-payment of the Loan is an event of default and the amount due under the Loan shall become due and payable immediately at the election of the Holder. Upon default of any of the obligations set forth in the Loan, Fairhills may enter judgment for (i) the release of the Security; or (ii) the full amount due plus all costs of collection, including without limitation court costs and reasonable attorney's fees. The Company has received notice of default from Fairhills on June 20, 2013 and therefore it may become subject to a judgment under the Loan should Fairhills not be prepared to negotiate a settlement. To date, no court action has been taken by Fairhills.
On November 6, 2012, Fairhills assigned all of its rights, duties, and obligations under the Investment Agreement, the Registration Rights Agreement, and other associated documents (the “Assignment”), to Deer Valley Management, LLC, a Delaware limited liability company (“Deer Valley”), and the Company consented to the Assignment. Fairhills and Deer Valley share the same ownership and management and there will not be any substantial change to our arrangement under the Investment Agreement as a result of the Assignment.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2013
NOTE 78 – CAPITAL STOCK
On November 9, 2011, the Company issued 250,000 shares of common stock pursuant to the mineral property assignment and acquisition agreement and the mineral property option agreement. (See Note 3(b) – Mineral property rights – Clayton Valley Agreement).
On DecemberOctober 1, 2011,2012, the Company drew down$100,000down $15,000 pursuant to the financing agreement described above in Note 6, and on December 22, 2011 the Company issued a total of 281,294620,000 shares of common stock of the Company at a price of $0.3555$0.02419 per share.
On December 15, 2011,NOTE 9 – INCOME TAXES
The Company provides for income taxes under FASB ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the Company drew down $50,000 pursuantuse of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently.
FASB ASC 740 requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the financing agreement described above in Note 6, and on February 3, 2012deferred tax asset has been recorded. The total deferred tax asset is $454,113, which is calculated by multiplying a 34% estimated tax rate by the Company issued a total of 147,362 shares of common stock ofcumulative net operating loss (NOL) adjusted for the Company at a price of $0.377 per share.following items:
On January 18, 2012, the Company issued 80,000 shares of common stock pursuant to the Midsouth Agreement. (See Note 4 – commitment).For the period ended | | May 31, 2013 | | | August 31, 2012 | |
Book loss for the period | | $ | (134,585 | ) | | $ | (474,997 | ) |
Adjustments: | | | - | | | | - | |
Tax loss for the year | | �� | (134,585 | ) | | | (474,997 | ) |
Estimated effective tax rate | | | 34 | % | | | 34 | % |
Deferred tax asset | | $ | 45,750 | | | $ | 161,500 | |
On February 22, 2012,The total valuation allowance is $476,213. Details for the Company drew down $50,000 and issued a total of 153,477 shares of common stock of the Company at a price of $0.377 per share.last two periods are as follows:
On April 25, 2012, the Company issued 30,000 shares of common stock pursuant to the Midsouth Agreement. (See Note 4 – commitment).For the period ended | | May 31, 2013 | | | August 31, 2012 | |
Deferred tax asset | | $ | 45,750 | | | $ | 161,500 | |
Valuation allowance | | | (45,750 | ) | | | (161,500 | ) |
Current taxes payable | | | - | | | | - | |
Income tax expense | | $ | - | | | $ | - | |
Below is a chart showing the estimated corporate federal net operating loss (NOL) and the year in which it will expire. The total NOL carry forward as of May 31, 2013 was $1,400,626 as itemized below:
Year | | Amount $ | | | Expiration | |
2006 | | | 43,985 | | | | 2026 | |
2007 | | | 25,000 | | | | 2027 | |
2008 | | | 9,000 | | | | 2028 | |
2009 | | | 10,000 | | | | 2029 | |
2010 | | | 10,842 | | | | 2030 | |
2011 | | | 692,217 | | | | 2031 | |
2012 | | | 474,997 | | | | 2032 | |
2013 | | | 134,585 | | | | 2033 | |
| | | 1,400,626 | | | | | |
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2013
NOTE 8 -10- SUBSEQUENT EVENTS
On June 20, 2012,In accordance with ASC Topic 855-10, the Company paid $25,000 in cash and on June 22, 2012 the Company issued 750,000 shares of common stock of the Companyhas analyzed its operations subsequent to GeoXplor pursuantMay 31, 2013 to the amended purchase agreement. (See Note 3(b) – Mineral property rights – Clayton Valley Agreement).
On July 5, 2012, we entered into a second amendment of the investment agreement with Fairhills Capital solely to change the wording of Section 7.7 of the Investment Agreement: to read “unless the SEC's concerns have been addresseddate these financial statements were issued, and Investor is reasonably satisfiedhas determined that the SEC no longer is considering or intends to take such action”. The amendment didit does not have any material subsequent events to disclose in these financial statements other implications tothan the agreement with Fairhills Capitalevents described above under Note 6(2) – Financing Agreement.above.
Item Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "could", "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable laws, including the securities laws of the United States, we do not intend to update any of the forward-looking statements so as to conform these statements to actual results.
Our unaudited financial statements are stated in U.S. dollars and are prepared in accordance with generally accepted accounting principles in the United States. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "common shares" refer to the common shares in our capital stock.
As used in this quarterly report and unless otherwise indicated, the terms "we", "us", "our" “company” and "our company" mean New America Energy Corp., a Nevada corporation, unless otherwise indicated.
We were incorporated as “Atheron, Inc.” in the State of Nevada on May 8, 2006. On November 5, 2010 we underwent a change of control and on November 15, 2010 we changed our name to New America Energy Corp., and began looking for opportunities to acquire exploration stage oil and gas or mineral properties. Also on November 15, 2010 we effected a split of our issued and outstanding common shares on a 25 for 1 basis. This forward split did not affect the number of our company’s authorized common shares, which remains at 75,000,000. The forward stock split and name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on December 1, 2010 under the symbol “NECA”. Our CUSIP number is 641872 106. Our mailing address is 3651 Lindell Rd., Ste D#138, Las Vegas, NV 89103 and our telephone number is 800-508-6149.
On February 3, 2011 we entered into property acquisition agreements with First Liberty Power Corp., and GeoXplor Corp. Pursuant to the terms of the agreements, we acquired an option, as well as exploration rights, in certain unpatented mining claims located in Southern Utah which we refer to the “Uravan Property”. The property was lost during the three month period covered by these financial statements as our company did not pay the required option payments as they became due.
On May 31, 2011,February 29, 2012, we entered into a property acquisition agreement with GeoXplor Corp. Pursuant to the terms of the agreement we acquired an option, as well as exploration rights, in certain unpatented mining claims located in Clayton Valley, Nye County, Nevada. Subsequently, on October 27, 2011, we entered into an amended property acquisition agreement whereby we acquired additional claims. On June 20, 2012, we entered into an amended purchase agreement whereby we agreed to further amend and entirely replace the Amended Agreement with the new agreement, which modifies the consideration provided to GeoXplor by us for the Original and New Claims. The Company is currently in default of its payment obligations for the GeoXplor claims it currently holds and will forfeit those claims on June 24, 2013 if the default is not cured prior.
AsFunds for exploration are difficult to raise at this time in the current financial climate, therefore the Company is seeking other potential acquisitions where it may acquire a resultcompany with operations or it may find an acquisition more easily financeable. The Company is currently reviewing a potential letter of these agreements, ourintent with a company is focused exclusively onin the acquisition and development of mineral resource properties.
food industry.
Current Business
We are an exploration stage company and have not generated any revenues to date. We are in the initial stages of developing our mineral properties, have very limited cash resources and are in need of substantial additional capital to execute our business plan. For these and other reasons, our independent auditors have raised substantial doubt about our ability to continue as a going concern.
Liquidity & Capital Resources
We are an exploration stage company engaged in the exploration of mineral properties. To date, we have not generated any revenues.
Working Capital
| | May 31, 2013 ($) | | | August 31, 2012 ($) | | | Change between August 31, 2012 and May 31, 2013 ($) | |
Current Assets | | | 62 | | | | 80,807 | | | | (80,745 | ) |
Current Liabilities | | | 251,261 | | | | 210,921 | | | | (40,340 | ) |
Working Capital/(Deficit) | | | (251,199 | ) | | | (130,114 | ) | | | 121,085 | |
| | May 31, 2012 ($) | | | August 31, 2011 ($) | | | Change between August 31, 2011 and May 31, 2012 ($) | |
Current Assets | | | 170,237 | | | | 19,992 | | | | 150,245 | |
Current Liabilities | | | 205,662 | | | | 12,209 | | | | 193,453 | |
Working Capital/(Deficit) | | | (35,425 | ) | | | 7,783 | | | | (43,208 | ) |
Cash Flows
| | Nine Months Ended May 31, 2013 ($) | | | Nine Months Ended May 31, 2012 ($) | | | Period from Inception (May 8, 2006) to May 31, 2013 ($) | |
Cash Flows from Operating Activities | | | (94,139 | ) | | | (249,755 | ) | | | (558,708 | ) |
Cash Flows provided by/(used in) Investing Activities | | | - | | | | - | | | | (160,000 | ) |
Cash Flows from Financing Activities | | | 15,785 | | | | 400,000 | | | | 718,770 | |
Net Increase (Decrease) in Cash During Period | | | (78,354 | ) | | | 150,245 | | | | 62 | |
| | Nine Months Ended May 31, 2012 ($) | | | Nine Months Ended May 31, 2011 ($) | | | Period from Inception (May 8, 2006) to May 31, 2012 ($) | |
Cash Flows from Operating Activities | | | (249,755 | ) | | | (45,259 | ) | | | (417,748 | ) |
Cash Flows provided by/(used in) Investing Activities | | Nil | | | | (135,000 | ) | | | (135,000 | ) |
Cash Flows from Financing Activities | | | 400,000 | | | | 195,000 | | | | 722,985 | |
Net Increase (Decrease) in Cash During Period | | | 150,245 | | | | 14,741 | | | | 170,237 | |
Cash on hand at May 31, 20122013 was $170,237$62 as compared to $19,992$78,416 at August 31, 2011.2012. Our total liabilities at May 31, 20122013 were $205,662$251,199 as compared to $12,209$210,921 at August 31, 2011. The increase in total2012. Total liabilities wasincreased due to a loan undertaken bythat the Company for operating capitaldidn’t have enough cash to paydown operational expenses during the nine months ended May 31, 2012.month period.
Pursuant to the option of certain mineral claims with GeoXplor entered into on May 31,30, 2011, which was amended on October 27, 2011 and subsequently was amended on June 20, 2012, we havehad a contingent liability of $300,000$375,000 to be expended on or before May 31, 2014,November 30, 2013, of which $100,000$175,000 is by way of option paymentpayments with $25,000 due on March 4, 2013 and $150,000 was due on May 31, 2013 and $200,000 is required to be spent on exploration activities. We had satisfied our prior commitmentactivities, of which we have expended approximately $125,000 leaving us with approximately $250,000 to pay $75,000 on May 31, 2011 and expend $100,000 on exploration activitiesbe expended in year one. Our obligation to pay $25,000 to GeoXplor has been met and we are required to expend $175,000 in exploration activities on or before May 31, 2013.
We intend to expend a total of $200,000 on Clayton Ridge property by way of an exploration program on Clayton Ridge of approximately $200,000 and undertake additional costs for staking and property taxes in the amount of $25,000.
In order to meet all of the current commitments and fund operations for the next twelve months assuming we undertake exploration activities priorwith $175,000 in option payments coming due and the requirement to Mayexpend $75,000 on exploration. The Company has received a notice of default on the GeoXplor properties and it will not be able to meet its financial commitments on June 24, 2013 on the property, therefore the property will be forfeited.
The Company is currently reviewing other potential acquisitions and hopes to close on an acquisition during the quarter ended August 31, 2013, and our company estimates2013. The Company cannot at this time determine how much funding will be required to make an acquisition, or if any funding will be required. However, the Company has determined it will require a minimum of $650,000.
We have allocated our cash requirements$100,000 just to meet operations for the next twelve months as follows:months.
· | $25,000 for staking and property taxes on Clayton Ridge; |
· | $200,000 for exploration on the Clayton Ridge claims; |
· | $200,000 repayment of certain loans; |
· | $225,000 for working capital. |
Total requirements are estimated to be $650,000 of which we have received $200,000 by way of a loan finalized on March 28, 2012; therefore, we need to raise an additional $450,000 to meet our planned commitments.
On November 22, 2011, we entered into a financing agreement with one non-US investor pursuant to which, the investor will make available of up to $1,000,000 by way of advances until the completion date of November 22, 2012. The completion date may be extended for an additional term of up to twelve months at the option of our company or the investor upon written notice on or before the completion date. During the nine month period ended May 31, 2012, the CompanyThe investor has drawn down $200,000 againstindicated they are not interested in further funding and therefore the financing agreement.agreement has expired and we do not expect to be able to raise any further funds from this investor.
Effective March 28, 2012, we entered into a debt instrument with Fairhills Capital Offshore Ltd., whereby Fairhills Capital provided us with a $200,000 loan which iscame due byon September 28, 2012 and carries a 2% annual rate of interest. The note wasis secured by 3,333,333 shares of our restricted common stock owned by our director and officer, Rick Walchuk. TheseThe Company received notification of default from Fairhills on June 20, 2013. Based on the current trading price of the shares shall be held in escrow, byshould Fairhills Capital’s counselliquidate the shares there would not be sufficient funds to pay the loan and the Company will be forfeitedfaced with payments due that it currently does not have sufficient funds to pay. The Company intends to try to renegotiate the terms of the loan with Fairhills, if we defaulthowever, there can be no assurance that it will be successful in doing so. This loan may hamper the ability of the Company to close on the note. We will still be required to raise additional funds in order to meet our commitments and for working capital, including the commitment to repay the $200,000 under this loan.any identified acquisitions.
Also effective March 28, 2012, we entered into a financing agreement with Fairhills Capital whereby Fairhills Capital will provide for a non-brokered financing arrangement of up to $3,000,000. On November 6, 2012, Fairhills assigned all of its rights, duties, and obligations under the Investment Agreement, the Registration Rights Agreement, and other associated documents (the “Assignment”), to Deer Valley Management, LLC, a Delaware limited liability company (“Deer Valley”), and the Company consented to the Assignment. Fairhills and Deer Valley share the same ownership and management and there will not be any substantial change to our arrangement under the Investment Agreement as a result of the Assignment.
The financing allows, but does not require us to issue and sell up to the number of shares of common stock having an aggregate purchase price of $3,000,000 to Fairhills Capital.Deer Valley. Subject to the terms and conditions of the financing agreement and athe registration rights agreement, we may, in our sole discretion, deliver a notice to Fairhills CapitalDeer Valley which states the dollar amount which we intend to sell to Fairhills CapitalDeer Valley on a certain date. The amount that we shall be entitled to sell to Fairhills CapitalDeer Valley shall be equal to two hundred percent (200%) of the average daily volume (U.S. market only) of the common stock for the ten (10) trading days prior to the applicable notice date. Fairhills CapitalDeer Valley will purchase our common stock valued at a 25% discount from the weighted average price for the five (5) trading days before receives our capital request. The shares that we sell to Fairhills CapitalDeer Valley must be registered stock, among other conditions of investment. We have agreed not to use any of the funds raised under this offering to pay down the $200,000 loan to Fairhills and we will be required to raise additional funds outside of the FairhillsDeer Valley agreement in order to meet that commitment.
There can be no assurance that we will raise any additional funds under the FairhillsDeer Valley agreement or that funds pursuant to the financing agreement entered into on November 22, 2011 will be readily available or that we will be able to raise any additional funds to meet our obligations as they become due.
Should we be unable to raise additional capital before September 28, 2012, the loan with Fairhills will be come due and could be placed in default, in which case the pledged shares could be forfeited to Fairhills. Should this occur the price of our shares may be affected and it may be difficult to raise additional capital.
While we believe weWe do not have sufficient funding to meet our next twelve month obligations, ourobligations. Our ability to meet our financial liabilities and commitments is primarily dependent upon the continued issuance of equity pursuant to the financing agreement, the ability of the financier to fund our operations as we request drawdowns on the funding, our ability to borrow funds, the ability of Fairhills to raise funds under the financing arrangement by the sale of additional equity and ultimately upon our ability to achieve and maintain profitable operations. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms.
The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholder. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
Results of Operations
For the three and nine month, periodsperiod ended May 31, 20122013 as compared to the three and nine month periodsperiod ended May 31, 2011:2012:
Our operating results for the nine and three month periods ended May 31, 20122013 and 20112012 and from inception to May 31, 20122013 are summarized as follows:
| | For the three months ended | | | For the nine months ended | | | From Inception | | | For the three months ended | | | For the nine months ended | | | From Inception | |
| | May 31, | | | May 31, | | | to May 31, | | | May 31, | | | May 31, | | | May 31, | | | May 31, | | | to May 31, | |
| | 2012 | | | 2011 | | | 2012 | | | 2011 | | | 2012 | | | 2013 | | | 2012 | | | 2013 | | | 2012 | | | 2013 | |
Revenue | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
Impairment of mineral properties | | $ | - | | | $ | 75,000 | | | $ | 75,000 | | | $ | 435,000 | | | $ | 685,000 | | | $ | - | | | $ | - | | | $ | - | | | $ | 75,000 | | | $ | 740,000 | |
Exploration expenses | | $ | - | | | $ | - | | | $ | 104,823 | | | $ | - | | | $ | 104,823 | | | $ | - | | | $ | - | | | $ | - | | | $ | 104,823 | | | $ | 122,848 | |
Mineral license fee | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 3,466 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 3,466 | |
Professional fees | | $ | 18,653 | | | $ | 9,938 | | | $ | 66,669 | | | $ | 32,073 | | | $ | 205,365 | | | $ | 7,177 | | | $ | 18,653 | | | $ | 37,973 | | | $ | 66,669 | | | $ | 250,778 | |
Management fees | | $ | 12,000 | | | $ | 7,500 | | | $ | 28,500 | | | $ | 17,500 | | | $ | 53,500 | | | $ | 16,500 | | | $ | 12,000 | | | $ | 49,500 | | | $ | 28,500 | | | $ | 119,500 | |
General and administration | | $ | 22,010 | | | $ | 983 | | | $ | 54,616 | | | $ | 2,150 | | | $ | 68,498 | | | $ | 2,980 | | | $ | 22,010 | | | $ | 41,693 | | | $ | 54,616 | | | $ | 139,306 | |
Net operating loss | | $ | (52,663 | ) | | $ | (93,421 | ) | | $ | (329,608 | ) | | $ | (486,723 | ) | | $ | (1,120,652 | ) | |
Net loss | | | $ | (26,657 | ) | | $ | (52,663 | ) | | $ | (129,166 | ) | | $ | (329,608 | ) | | $ | (1,375,898 | ) |
Revenues
We do not have any revenues and have not had any revenue since inception on May 8, 2006.
Operating Expenses
For the three months ended May 31, 20122013 and 2011,2012, we incurred $52,663$26,657 and $93,421,$52,663, respectively, in total operating expenses, a period-to-period decrease of $44,058, which was mainly$26,006, due to the amounta decrease of $75,000 for impairment of mineral properties for the three months ended May 31, 2011 ($nil during the three months ended May 31, 2012), as offset by $8,715 increase$11,476 in professional expensesfees and $21,027 increase$19,030 in general and administration expenses all relating to the fact thatas the Company is actively pursuing its business plan in relationhas had limited due to its mining operations.a lack of available working capital.
For the nine months ended May 31, 20122013 and 2011,2012, we incurred $329,608$129,166 and $486,723,$329,608, respectively, in total operating expenses, a period-to-period decrease of $160,415.$200,442. The decrease in total expense is primarily a result of the fact that during the nine months ended May 31, 2012, the Company took a $75,000 impairment of its mineral properties with no comparable impairment during the nine months ended May 31, 2013, combined with a decrease of $360,000 on impairment of mineral properties from $435,000 to $75,000, which is offset by an increase of $104,823 onfor exploration expenses from $Nil to $104,823, an increase($nil during the nine months ended May 31, 2013), and a decrease of $34,596$28,696 in professional fees and $52,466$12,923 in general and administration expenses, all relatingmainly related to the fact that the Company is actively pursuing its business plan in relationhas not had sufficient capital to pursue its mining operations.project and has merely been funding limited operations for the nine months ended May 31, 2013.
Management fees for the three and nine months ended May 31, 20122013 were $16,500 and $49,500 compared to $12,000 and $28,500 respectively, compared to $7,500 and $17,500 for the comparable three and nine months ended May 31, 2011.2012. This increase is due to the Company’s increase in operations by the appointment of a new officer and director who is investigating other mining prospects.
Professional fees forduring the threenine months ended May 31, 2012 increased by $8,715 to $18,653 as compared to $9,938 for the three months ended May 31, 2011and increased by $34,596 to $66,6692013.
Financing costs for the nine months ended May 31, 20122013 were $2,391 as compared to $32,073as compared to financing costs of $20,000 for the nine months ended May 31, 2011.2012. The increase is result of legal and professional feescosts during May 31, 2012 were related to services provided with respect to the financing agreement.
Interest expensefees for the threeFairhills equity line. Interest expenses increased from $700 during the nine months ended May 31, 2012 to $3,028 for the nine months ended May 31, 2013 as the Company borrowed additional capital for operations and was $20,700. $20,000 was relatedrequired to certainfinancing costs paid under terms of aaccrue interest on the loan agreement with Fairhills Capital (See note 6 to the Financial Statements contained herein).. $700 was accrued interest.Capital.
Net Loss
Our net loss for the three and nine months ended May 31, 20122013 was ($27,685) and ($134,585) as compared to ($73,363) and $(353,308), respectively, as compared to a net loss of $(93,421) and $(486,723), respectively,($350,308) for the comparable three month and nine month periodsmonths ended May 31, 2011.2012, respectively. Losses decreased due to decreased operations.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.
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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Basic loss per share has been calculated based on the weighted average number of shares of common stock outstanding during the period.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
A smaller reporting company is not required to provide the information required by this Item.
Item 4. Controls and Procedures
Management’s Report on 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 chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.
As of the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report.
Changes in Internal Control over Financial Reporting
During the period covered by this report, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.
Item 1A. Risk Factors
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no unregistered securities to report which were sold or issued by the Company without the registration of these securities under the Securities Act of 1933 in reliance on exemptions from such registration requirements, within the period covered by this report, which have not been previously included in an annual report on Form 10-K, a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mining Safety Disclosures
None.
Item 5. Other Information
None.
On May 24, 2013, the Company received the resignation of Alexander Tsingos as a director and secretary of the Company.
Item 6. ExhibitsExhibits:
Exhibit Number | Description |
| Articles of Incorporation and Bylaws |
3.1 | Articles of Incorporation, as amended (Incorporated | Incorporated by reference to the Registration Statement on Form SB-2 filed on October 25, 2006)2006. |
3.23.1 (i) | Certificate of Amendment to the Articles of Incorporation as filed with the State of Nevada on November 15, 2010 (Incorporated | Incorporated by reference to the Current Report on Form 8-K filed on November 16, 2010)2010. |
3.33.2 | Bylaws, as amended (Incorporated | Incorporated by reference to the Registration Statement on Form SB-2 filed on October 25, 2006) |
(10) | Material Contracts2006. |
10.1 | Release entered into by Susanna Hilario with our company dated November 5, 2010 (Incorporated | Incorporated by reference to the Current Report on Form 8-K filed on November 8, 2010)2010. |
10.2 | Release entered into by Rey V. Supera with our company dated November 5, 2010 (Incorporated | Incorporated by reference to the Current Report on Form 8-K filed on November 8, 2010)2010. |
10.3 | Share Cancellation Agreement betweenwith Rick Walchuk and our company dated December 23, 2010 (Incorporated | Incorporated by reference to the Current Report on Form 8-K filed on January 19, 2011)2011. |
10.4 | Consulting Agreement betweenwith Rick Walchuk and our company dated January 14, 2011 (Incorporated | Incorporated by reference to the Current Report on Form 8-K filed on January 19, 2011)2011. |
10.5 | Property assignment and acquisition agreement, dated February 3, 2011 (Incorporated | Incorporated by reference to the Current Report on Form 8-K filed on February 4, 2011)2011. |
10.6 | Property option agreement dated February 3, 2011 | Incorporated by reference to the Current Report on Form 8-K filed on February 4, 2011. |
10.7 | Property option agreement between GeoXplor and our companythe Company dated effective May 31, 2011 (IncorporatedFebruary 29, 2012 | Incorporated by reference to the Current Report on Form 8-K filed on June 7, 2011)2011. |
10.710.8 | Extension Agreement between First Liberty Power Corp., GeoXplor Corp. and our company (Incorporatedthe Company | Incorporated by reference to the Current Report on Form 8-K filed on August 4, 2011)2011. |
10.810.9 | Amended Property Purchase Agreement betweenwith GeoXplor Corp. and our companythe Company dated October 27, 2011 (Incorporated | Incorporated by reference to the Current Report on Form 8-K filed on October 31, 2011)2011. |
10.910.10 | Form of Financing Agreement (Incorporated | Incorporated by reference to the Current Report on Form 8-K filed on November 25, 2011) |
10.10 | Investment Agreement (Incorporated by reference to the Current Report on Form 8-K filed on April 2, 2012)2011. |
10.11 | Registration Rights Agreement (Incorporated by reference to the Current Report on Form 8-K filed on April 2, 2012) |
10.12 | First Amendment to the Investment Agreement with Fairhills Capital Offshore Ltd. ( | Incorporated by reference to the Current Report on Form 8-K filed on April 2, 2012)2012. |
10.1310.12 | 2% Secured Note dated March 28, 2012 (IncorporatedRegistration Rights Agreement with Fairhills Capital Offshore Ltd. | Incorporated by reference to the Current Report on Form 8-K filed on April 2, 2012)2012. |
10.13 | First Amendment to the Investment Agreement with Fairhills Capital Offshore Ltd. | Incorporated by reference to our Form S-1 filed on July 25, 2012. |
10.14 | 2% Secured Note dated March 28, 2012 with Fairhills Capital Offshore Ltd. | Incorporated by reference to the Current Report on Form 8-K filed on April 2, 2012. |
10.15 | Amended Property Purchase Agreement with GeoXplor Corp. and the Company dated June 20, 2012 (Incorporated | Incorporated by reference to the Current Report on Form 8-K filed on June 20, 2012)2012. |
10.1510.16 | Second Amendment to the Investment Agreement with Fairhills Capital Offshore Ltd. (Incorporated | Incorporated by reference to theour Form S-1/AS-1 filed on July 6, 2012)25, 2012. |
(31)*10.17 | Rule 13a-14(a)/15d-14(a) CertificationsAssignment and Assumption Agreement between Fairhills Capital Offshore LLC, Deer Valley Management LLC and the Company. | Incorporated by reference to our Form 10-Q filed on January 22, 2013. |
31.1 | Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 Certification Pursuant toof the Sarbanes-Oxley Act of 2002 of Principal Executive OfficerPrincipal Financial Officer and Principal Accounting Officer | Filed Herewith |
31.2 | Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 Certification Pursuant toof the Sarbanes-Oxley Act of 2002 of Principal Financial Officer and Principal Accounting Officer |
(32)* | Section 1350 CertificationsFiled Herewith |
32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 Certification pursuant toof the Sarbanes-Oxley Act of 2002 of Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer |
101** | Interactive Data FileFiled Herewith |
101.INS | XBRL Instance DocumentDocument** | Filed Herewith |
101.SCH | XBRL Taxonomy Extension Schema DocumentSchema** | Filed Herewith |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase DocumentLinkbase** | Filed Herewith |
101.DEF | XBRL Taxonomy Extension Definition Linkbase DocumentLinkbase** | Filed Herewith |
101.LAB | XBRL Taxonomy Extension Label Linkbase DocumentLinkbase** | Filed Herewith |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase DocumentLinkbase** | Filed Herewith |
* Filed herewith.*Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.
** | Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | NEW AMERICA ENERGY CORP. |
| | | |
Date: | July 13, 201215, 2013 | By: | /s/ Rick Walchuk |
| | Name: | Rick Walchuk |
| | Title: | Chief Executive Officer, Chief Financial Officer, President, Treasurer and Director (Principal Executive Officer, Principal Financial and Principal Accounting Officer) |