| | | | | |
Nation Energy, Inc. |
(A Development Stage Company) |
Condensed Statements of Cash Flows |
For the Nine Months Ended December 31, 2013 and 2012 |
and Cumulative Amounts from June 1, 2008 (Inception of the Development Stage) |
to December 31, 2013 |
(Unaudited) |
| | | | | |
| | | | | June 1, 2008 |
| For the Nine Months Ended | | (Inception of |
| December 31 | | December 31 | | Development Stage) |
| 2013 | | 2012 | | to December 31, 2013 |
| | | | | |
Cash flows from operating activities: | | | | | |
Net loss | $(190,621) | | $(154,410) | | $ (1,404,773) |
Adjustments to reconcile net loss to net cash | | | | | |
proived by (used in) operating activities: | | | | | |
Changes in working capital: | | | | | |
Decrease in accounts receivable | - | | - | | 111,596 |
Decrease in prepaid expense | - | | - | | 5,000 |
Increase (decrease) in accounts payable | 18,619 | | (7,422) | | 4,981 |
Increase in accounts payable - related party | 104,025 | | 84,844 | | 323,891 |
Net cash (used in) operating activities | (67,977) | | (76,988) | | (959,305) |
| | | | | |
Cash flows from investing activities: | | | | | |
Proceeds from sale of oil and gas properties | - | | - | | 1,158,710 |
Net cash provided by investing activities | - | | - | | 1,158,710 |
| | | | | |
Cash flows from financing activities: | | | | | |
Proceeds from loan payable - related party | 16,000 | | 77,840 | | 274,158 |
Payments on loan payable - related party | - | | - | | (508,067) |
Net cash provided by (used in) financing activities | 16,000 | | 77,840 | | (233,909) |
| | | | | |
Effect of currency rate change (loss) | 52,210 | | (246) | | (11,659) |
| | | | | |
Net increase (decrease) in cash | 233 | | 606 | | (46,162) |
| | | | | |
Beginning balance, cash | 1,566 | | 10,794 | | 47,961 |
| | | | | |
Ending balance, cash | $ 1,799 | | $ 11,400 | | $ 1,799 |
| | | | | |
Supplemental cash flow information: | | | | | |
Cash paid for interest | $ - | | $ - | | $ 374,718 |
Cash paid for income taxes | $ - | | $ - | | $ - |
| | | | | |
Non-cash investing and financing activities: | | | | | |
Non-cash related party advance | $ - | | $ - | | $ 24,945 |
| | | | | |
The accompanying notes are an integral part of these financial statements |
F-3 |
Nation Energy Inc.
(A Development Stage Company)
Notes to Condensed Unaudited Interim Financial Statements
December 31, 2013
Note 1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. They do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation, have been included in the accompanying unaudited financial statements. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the financial statements and notes thereto, included in the Company’s Form 10-K as of and for the year ended March 31, 2013 (“The Annual Report”).
Effective June 1, 2008, the Company sold all of its oil and gas properties in the Smoky Hill area of Alberta and is currently reviewing other prospects. To implement any new business plan, significant financing will be required and the Company will need to be successful in its efforts to identify, acquire and develop a new business venture.
The Company is currently in the development stage as defined by Accounting Standards Codification subtopic 915-10 “Development Stage Entities” (“ASC 915-10”). Upon the sale of all of its oil and gas assets, the Company re-entered the development stage effective June 1, 2008. Consequently, its operations are subject to all the risks inherent in the establishment of a new business enterprise. For the period from inception through December 31, 2013, the Company has an accumulated (deficit) of ($6,839,714) prior to the development stage and accumulated (deficit) during the development stage of ($1,404,773).
Note 2. Recent Accounting Pronouncements
There have been no recent accounting pronouncements or changes in accounting pronouncements compared to the recent accounting pronouncements described in the Annual Report that are of material significance, or have potential material significance, to the Company.
Note 3. Going Concern
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern. The Company has incurred (losses) from inception through June 1, 2008 of ($6,839,714) and further (losses) of ($1,404,773) during the development stage. The Company has working capital and stockholders’ (deficits) of ($1,552,915) at December 31, 2013, and working capital and stockholders’ (deficits) of ($1,414,502) at March 31, 2013. The Company is reliant on raising capital to initiate its business plan. The Company’s ability to continue as a going concern is contingent upon being able to secure financing and attain profitable operations.
The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
Note 4. Earnings Per Share
Basic earnings (loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding.
Note 5. Related Party Transactions
On January 1, 2009 the Company entered into a written agreement revising the previous verbal agreement with Caravel Management Corp (“Caravel”). The agreement provided for administrative services, office rent and supplies for $8,258 per month. On November 1, 2010, the Company revised its written agreement to provide administrative services, office rent and supplies for $3,500 per month. Caravel is wholly owned by the Company’s sole officer and director. Total expenses recognized under this agreement for the nine months ended December 31, 2013 and 2012 were $31,500 and $31,500 for each period, respectively.
On March 31, 2006, we entered into a revised loan agreement with a related party. The loan bears interest at 15% per annum, calculated and compounded monthly and is payable on demand. Any principal amount outstanding under the loan is payable upon demand. The loan payable is in Canadian dollars and is secured by a Promissory Note.
As of December 31, 2013, the principal balance of the loan was US $807,012 and accrued interest payable was US $281,988 included in accrued expenses on the balance sheet as compared to a principal balance of US $739,061 and accrued interest payable of US $263,639 at March 31, 2013.
Note 6. Subsequent Events
Effective January 23, 2014, the Company is authorized to issue 5,000,000,000 shares of common stock with no par value and the number and class of shares which are entitled to receive the net assets upon dissolution is 5,000,000,000 shares of common stock with no par value. The amendment was approved by the shareholders in the manner required by the act and by the articles of incorporation. Management of the Company has evaluated all subsequent transactions through the date the financial statements were available to be issued and has determined that there are no other subsequent events that require disclosure.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
This quarterly report contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management’s plans and objectives for our future operations. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" 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, including the risks in the section entitled "Risk Factors" and the risks set out below, any of which may cause 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. These risks include, by way of example and not in limitation:
·
risks and uncertainties relating to the interpretation of drill results, the geology, range and continuity of mineral deposits;
·
results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with our expectations;
·
mining and development risks, including risks related to accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in production;
·
the potential for delays in exploration or development activities or the completion of feasibility studies;
·
risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses;
·
risks related to commodity price fluctuations;
·
the uncertainty of profitability based upon our history of losses;
·
risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned exploration and development projects;
·
risks related to environmental regulation and liability;
·
risks that the amounts reserved or allocated for environmental compliance, reclamation, post-closure control measures, monitoring and on-going maintenance may not be sufficient to cover such costs;
·
risks related to tax assessments;
·
political and regulatory risks associated with mining development and exploration;
·
other risks and uncertainties related to our prospects, properties and business strategy; and
·
our company is categorized as a “shell company” as that term is used in the Commission’s rules.
This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.
Forward looking statements are made based on management’s beliefs, estimates, and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performances or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with generally accepted accounting principles (“US GAAP”).
As used in this quarterly report, the terms "we", "us", "our", and "Nation Energy" mean Nation Energy Inc., unless otherwise indicated.
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.
Our Current Business
We currently have no business and operate as a shell company. We are in the process of evaluating the merits of joint venture opportunities in the resource sector.
Plan of Operation
The following is a discussion and analysis of our plan of operation and the factors that could affect our future financial condition. This discussion and analysis should be read in conjunction with our unaudited financial statements and the notes thereto included elsewhere in this quarterly report.
The Company entered into a letter agreement dated October 11, 2013 whereby the Company proposes to acquire from Paltar Petroleum Limited (“Paltar”), a privately held Australian company, approximately four exploration and development permits and twenty-nine applications for additional exploration and development permits in respect of land located in northern Australia. Details of the transaction can be found in the Form 8K dated October 15, 2013 filed on EDGAR or in the news release dated October 18, 2013 filed on SEDAR. There is no change in status as of December 31, 2013.
For the next twelve months we plan to continue to evaluate joint venture opportunities and oil and gas development and production opportunities.
Cash Requirements During the Next Twelve Months
Over the next twelve months, we intend to use funds to evaluate new business acquisitions, as follows:
Estimated Funding Required During the Next Twelve Months
| | | |
General and Administrative | $60,000 |
| |
Professional Fees | 50,000 |
| | |
Total | $110,000 |
We have suffered recurring losses from operations. The continuation of our company as a going concern is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed. Management's plan in this regard is to raise additional capital through a debt or an equity offering. The financial statements do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our company discontinue operations.
Due to the uncertainty of our ability to meet our current operating expenses noted above, in their report on the annual financial statements for the year ended March 31, 2013, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
The continuation of our business is dependent upon obtaining further financing, a successful program of exploration, and, finally achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further funds required for our continued operations. We are pursuing various financing alternatives to meet our immediate and long-term financial requirements. 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. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.
Disclosure of Outstanding Share Data
As at the date of this quarterly report, we had 16,020,000 shares of common stock issued and outstanding. We do not have any warrants, options or shares of any other class issued and outstanding as of the date of this annual report.
RESULTS OF OPERATIONS – Three Months Ended December 31, 2013 and 2012
The following summary of our results of operations should be read in conjunction with our financial statements for the period ended December 31, 2013, which are included herein.
Our operating results for the three months ended December 31, 2013, for the three months ended December 31, 2012 and the changes between those periods for the respective items are summarized as follows:
| | | |
| Three Months Ended December 31, 2013 | Three Months Ended December 31, 2012 | Difference Increase/(Decrease) % |
General and administrative | $41,304 | $17,500 | 136% |
Interest expense | $42,574 | $36,548 | 16% |
Net (loss) | $(83,878) | $(54,048) | 55% |
We generated a net (loss) of $(83,878) for the three months ended December 31, 2013 compared to a net (loss) of $(54,048) for the three months ended December 31, 2012. Net (loss) per common share for the three months ended December 31, 2013 was ($0.007) compared to ($0.003) per common share for the three months ended December 31, 2012. General and administrative expenses increased to $41,304 during the three months ended December 31, 2013 from $17,500 during the three months ended December 31, 2012.
Interest expense for the three months ended December 31, 2013 totaled $42,574 compared to $36,548 for the three months ended December 31, 2012. The increase was primarily due to the foreign exchange revaluation for the three months ended December 31, 2013.
We reported a foreign currency translation loss of $(35,921) for the three months ended December 31, 2013 compared to a gain of $11,213 for the three months ended December 31, 2012. Our loan and accrued interest were incurred and are calculated in Canadian dollars while the reporting currency is the US dollar. The value of the Canadian dollar in the third quarter of fiscal 2014 was C$0.9402 to US$1.00 compared to C$1.0051 to US$1.00 in the third quarter of fiscal 2013.
The major components of our general and administrative expenses for the year are outlined in the table below:
| | | |
| Three Months Ended December 31, 2013 | Three Months Ended December 31, 2012 | Difference Increase/(Decrease) % |
Administration fees | $10,500 | $10,500 | 0% |
Office & MIS | $179 | $124 | 44% |
Legal fees | $23,789 | $nil | 100% |
Transfer Agent & Filing Fees | $ 236 | $nil | 100% |
Accounting | $ 6,600 | $6,876 | (4)% |
Total Expenses | $41,304 | $17,500 | 136% |
General and administrative expenses increased to $41,304 in fiscal 2014 from $17,500 in fiscal 2013. General expenses include administration fees which remained the same as the comparative period. Office expenses and Management Information System fees increased to $179 in fiscal 2014 from $124. Legal fees increased to $23,789 in fiscal 2014 from $nil in the prior fiscal year. The increase in legal fees is primarily due to the letter agreement with Paltar. Filing fees and transfer agent fees increased to $236 fiscal 2014 compared to $nil in fiscal 2013. Accounting fees decreased to $6,600 from $6,876 in the comparative period in fiscal 2013.
RESULTS OF OPERATIONS – Nine Months Ended December 31, 2013 and 2012
The following summary of our results of operations should be read in conjunction with our financial statements for the nine period ended December 31, 2013, which are included herein.
Our operating results for the nine months ended December 31, 2013, for the nine months ended December 31, 2012 and the changes between those periods for the respective items are summarized as follows:
| | | |
| Nine Months Ended December 31, 2013 | Nine Months Ended December 31, 2012 | Difference Increase/(Decrease) % |
General and administrative | $68,103 | $48,802 | 40% |
Interest expense | $122,518 | $105,608 | 16% |
Net (loss) | $(190,621) | $(154,410) | 23% |
We generated a net (loss) of $(190,621) for the nine months ended December 31, 2013 compared to a net (loss) of $(154,410) for the nine months ended December 31, 2012. Net (loss) per common share for the nine months ended December 31, 2013 was ($0.015) compared to ($0.010) per common share for the nine months ended December 31, 2012. General and administrative expenses increased to $68,103 during the nine months ended December 31, 2013 compared to $48,802 during the nine months ended December 31, 2012. The increase was primarily due to the higher amount of legal fees during fiscal 2014.
Interest expense for the nine months ended December 31, 2013 totaled $122,518 compared to $105,608 for the nine months ended December 31, 2012. The increase was primarily due to the foreign exchange revaluation for the nine months ended December 31, 2013.
We reported a foreign currency translation loss of $(52,210) for the nine months ended December 31, 2013 compared to a loss of $(7,135) for the nine months ended December 31, 2012. Our loan and accrued interest were incurred and are calculated in Canadian dollars while the reporting currency is the US dollar. The value of the Canadian dollar in the third quarter of fiscal 2014 was C$0.9402 to US$1.00 compared to C$1.0051 to US$1.00 in the third quarter of fiscal 2013.
The major components of our general and administrative expenses for the year are outlined in the table below:
| | | |
| Nine Months Ended December 31, 2013 | Nine Months Ended December 31, 2012 | Difference Increase/(Decrease) % |
Administration fees | $31,500 | $31,500 | 0% |
Office & MIS | $1,097 | $1,360 | (19)% |
Legal fees | $19,130 | $118 | 16,112% |
Transfer Agent & Filing Fees | $ 276 | $1,325 | ( 79 )% |
Accounting | $ 16,100 | $9,500 | 70% |
Total Expenses | $68,103 | $43,802 | 55% |
General and administrative expenses increased to $68,103 in fiscal 2014 from $43,802 in fiscal 2013. General expenses include administration fees which remained the same as the comparative period. Office expenses and Management Information System fees decreased to $1,097 in fiscal 2014 from $1,360. Legal fees increased to $19,130 in fiscal 2014 from $118 in the prior fiscal year mainly due to the letter agreement with Paltar. Filing fees and transfer agent fees decreased to $276 in fiscal 2014 compared to$1,325 in fiscal 2013. Accounting fees increased to $16,100 from $9,500 in the comparative period in fiscal 2013.
Liquidity and Financial Condition
Working Capital
| | |
| December 31, 2013 | March 31, 2013 |
Current Assets | $1,799 | $1,566 |
Current Liabilities | $1,554,714 | $1,416,068 |
Working Capital (Deficiency) | ($1,552,915) | ($1,414,502) |
Cash Flows
| | |
| Nine Months Ended December 31, 2013 | Nine Months Ended December 31, 2012 |
Cash flows provided by (used in) Operating Activities | $(67,977) | $(76,988) |
Cash flows provided by Investing Activities | $Nil | $Nil |
Cash flows provided by (used in) Financing Activities | $16,000 | $77,840 |
Effect of exchange rate changes on cash | $52,210 | $(246) |
Net increase (decrease) in cash | $233 | $606 |
Operating Activities
Net cash (used in) operating activities was $(67,977) for the nine months ended December 31, 2013 compared with net cash (used in) operating activities of $(76,988) for the same period in 2012. The decrease in cash (used in) operating activities of $9,011 is mainly attributed to a decrease in accounts payable to a related party compared to the same period in fiscal 2013.
Investing Activities
Net cash provided by (used in) investing activities amounted to $Nil for both years.
Financing Activities
Net cash provided by financing activities was $16,000 for the nine months ended December 31, 2013 compared to net cash provided by financing activities of $77,840 for the nine months ended December 31, 2012. All activities derive from a loan from a related party.
Loans Payable
On March 31, 2006, we entered into a revised loan agreement with a related party. The loan bears interest at 15% per annum, calculated and compounded monthly and payable quarterly. Any principal amount outstanding under the loan is payable upon demand. The loan payable is in Canadian dollars and is secured by a Promissory Note. As at March 31, 2013 the loan, together with accrued interest totaled US$1,002,700. Together, with accrued interest, the loan balance totaled US$1,088,998 at December 31, 2013.
Going Concern
The unaudited financial statements accompanying this report have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. Our company has incurred losses since inception in excess of $8 million and has only generated modest profitable operations when we commenced gas production in fiscal 2006. We have relied solely on shareholder advances to participate and continue operations.
Our company’s ability to continue as a going concern is contingent upon being able to secure financing and attain profitable operations. Our company is currently evaluating business opportunities and will require financing for acquisition of any new business venture.
Net cash (used in) operating activities in the third quarter of fiscal 2014 totaled $(67,977) versus net cash (used in) operating activities of $(76,988) in fiscal 2013. Cash balances were $1,799 and $11,400 as of December 31, 2013 and December 31, 2012, respectively.
We entered into loan agreements with a related party, in 2003 and 2004 to fund operations. The terms of these loan agreements provided that any principal amount outstanding is payable upon demand and bears interest at 15% per annum, payable quarterly. On March 31, 2006, we consolidated and restructured our loans with the related party. As part of the restructuring, we borrowed an additional CDN $250,000 (US $203,932). The new loan bears interest at 15% per annum, calculated and compounded monthly and is payable quarterly. Any principal amount outstanding under the loan is payable upon demand. The loan is payable in Canadian dollars and is secured by a Promissory Note.
As at March 31, 2013 the loan, together with accrued interest totaled US$1,002,700. Together with accrued interest the loan balance totaled US$1,088,998 at December 31, 2013.
We have limited operating history. We can only estimate the future needs for capital based on the current status of our operations, our current plans and current economic condition. Due to the uncertainties regarding our future activities, we are unable to predict precisely what amount will be used for any particular purpose.
Future Financings
As of December 31, 2013, we had cash of $1,799. We currently do not have sufficient funds to acquire and develop any future joint ventures. We anticipate continuing to rely on shareholder loans or equity sales of our common stock in order to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity or arrange for more debt or other financing to fund any future activities.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
ITEM 4 . CONTROLS AND PROCEDURES
As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and financial officer evaluated our company’s disclosure controls and procedures (as define in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company’s management, including our principal executive officer and financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff:
1.
Lack of a sufficient number of independent directors for our board and audit committee. We currently have no independent director on our board, which is comprised of one director. As a publicly-traded company, we strive to have a majority of our board of directors be independent;
2.
Insufficient segregation of duties in our finance and accounting functions due to limited personnel. During the nine months ended December 31, 2013, we had limited staff that performed nearly all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statement. This creates certain incompatible duties and lack of review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement of our interim or annual financial statements that would not be prevented or detected; and
3.
Insufficient corporate governance policies. Although we have a code of ethics which provides broad guidelines for corporate governance, our corporate governance activities and processes are not always formally documented. Specifically, decisions made by the board to be carried out by management should be documented and communicated on a timely basis to reduce the likelihood of any misunderstandings regarding key decisions affecting our operations and management.
We intend to take appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies. We intend to consider the results of our remediation efforts and related testing as part of our year-end 2013 assessment of the effectiveness of our internal control over financial reporting. Subject to receipt of additional financing, we intend to undertake the below remediation measures to address the material weaknesses described in this annual report. Such remediation activities include the following:
1.
We plan to recruit at least one, preferably two or more, additional independent board members to join our board of directors and audit committee at such time as additional board members are retained; and
2.
We intend to continue to update the documentation of our corporate governance and internal control processes, including formal risk assessment of our financial reporting processes.
It should be noted that a control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of internal control is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
There were no changes in our internal control over financial reporting during the nine month period ended December 31, 2013 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 our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our director and officer or affiliates, or any registered or beneficial stockholder is an adverse party or has a material interest adverse to our interest.
ITEM 1A. RISK FACTORS
Not applicable for smaller reporting companies.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
Exhibits Required by Item 601 of Regulation S-K
Exhibit Number and Description
(3)
Articles of Incorporation/Bylaws
3.1
Certificate of Merger (Delaware) effective June 12, 2003 (incorporated by reference from our Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on August 19, 2003)
3.2
Certificate of Merger (Wyoming) effective June 13, 2003 (incorporated by reference from our Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on August 19, 2003)
3.3
Amended & Restated Bylaws (Wyoming) (Incorporated by reference from our Quarterly Report on Form 10QSB filed with the Securities and Exchange Commission on November 14, 2003)
3.4
Certificate of Incorporation (incorporated by reference from our Annual Report on Form 10K filed with the Securities and Exchange Commission on August 13, 2010)
(10)
Material Contracts
10.1
1999 Stock Option Plan (incorporated by reference from our Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on March 31, 2000)
10.2
Farm-in Agreement with Olympia Energy Inc., dated November 21, 2001 (incorporated by reference from our Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on February 14, 2002).
10.3
Agreement with Netco Energy Inc. dated January 10, 2005 (incorporated by reference from our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 28, 2005).
10.4
Demand Promissory Note issued to Caravel Management Inc., dated March 31, 2006 (incorporated by reference from our Annual Report on Form 10K filed with the Securities and Exchange Commission on August 13, 2010).
10.5
Petroleum, Natural Gas and Related Rights Conveyance dated September 18, 2008 between Nation Energy Inc., Netco Energy Inc. and EnCana Oil & Gas Partnership (incorporated by reference from our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 24, 2008).
10.6
Termination Agreement dated September 26, 2008 between Nation Energy Inc., and EnCana Oil & Gas Partnership (incorporated by reference from our Annual Report on Form 10K filed with the Securities and Exchange Commission on August 13, 2010).
10.7
Management Services Agreement dated January 1, 2009 between Nation Energy Inc., and Caravel Management Corp. (incorporated by reference from our Annual Report on Form 10K filed with the Securities and Exchange Commission on August 13, 2010).
10.8
Management Services Agreement dated November 1, 2010 between Nation Energy Inc., and Caravel Management Corp. (incorporated by reference from our Annual Report on Form 10K filed with the Securities and Exchange Commission on December 2, 2010)
(14)
Code of Ethics
14.1
Code of Business Conduct and Ethics (incorporated by reference from our Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on July 15, 2004).
(31)
Section 302 Certifications
31.1*
Section 302 Certification under Sarbanes-Oxley Act of 2002
(32)
Section 906 Certifications
32.1*
Section 906 Certification under Sarbanes-Oxley Act of 2002
(99)
Additional Exhibits
99.1
Audit Committee Charter (incorporated by reference from our Annual Report on Form 10K filed with the Securities and Exchange Commission February 9, 2011)
(101)
XBRL-Related Documents
101.INS*
XBRL INSTANCE DOCUMENT
101.SCH*
XBRL TAXONOMY EXTENSION SCHEMA
101.CAL*
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF*
XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB*
XBRL TAXONOMY EXTENSION LABEL LINKBASE
101.PRE*
XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
*Filed herewith
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NATION ENERGY INC.
By:“John R. Hislop”
John Hislop, Chief Executive Officer, and Chief Financial Officer,
Date: February 6, 2014
CERTIFICATIONS
Exhibit 31.1
I, John Hislop, Chief Executive Officer and Chief Financial Officer, certify that:
1)
I have reviewed this Form 10-Q of Nation Energy Inc.
2)
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3)
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4)
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
1)
I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and reporting financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
Date: February 6, 2014
“John R. Hislop”
John Hislop,
Chief Executive Officer and Chief Financial Officer
EXHIBIT 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 OF THE SARBANES-OXLEY ACT OF 2002
I, John Hislop Chief Executive Officer and Chief Financial Officer of Nation Energy Inc.(“the Company”) hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(a)
the quarterly report on Form 10-Q of the Company for the quarterly period ended December 31, 2013 (“the Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(b)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: February 6, 2014
“John R. Hislop”
John Hislop
Chief Executive Officer, and Chief Financial Officer
Nation Energy Inc.
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 960, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
