Graphene & Solar Technologies Limited (GSTX) 10-Q 14 Aug 14 2014 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Jun. 30, 2014
Document And Entity Information	'
Entity Registrant Name	'Vanguard Energy Corp
Entity Central Index Key	'0001497649
Document Type	'10-Q
Document Period End Date	30-Jun-14
Amendment Flag	'false
Current Fiscal Year End Date	'--09-30
Is Entity a Well-known Seasoned Issuer?	'No
Is Entity a Voluntary Filer?	'No
Is Entity's Reporting Status Current?	'Yes
Entity Filer Category	'Smaller Reporting Company
Entity Common Stock, Shares Outstanding	12,711,440
Document Fiscal Period Focus	'Q3
Document Fiscal Year Focus	'2014

CONSOLIDATED_BALANCE_SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)	Jun. 30, 2014	Sep. 30, 2013
ASSETS	'	'
Cash and cash equivalents	$12,908	$1,334,285
Accounts receivable	157,834	371,765
Other assets	0	16,055
Total current assets	170,742	1,722,105
Property and equipment - Oil and gas, on the basis of full cost accounting	'	'
Proved properties	0	12,994,766
Unproved properties and properties under development, not being amortized	0	61,470
Furniture and equipment	0	26,946
Less: accumulated depreciation, depletion and amortization	0	-6,594,081
Total property and equipment	0	6,489,101
Debt issuance costs	111,538	538,700
Other assets	0	10,808
Total assets	282,280	8,760,714
LIABILITIES AND STOCKHOLDERS' EQUITY	'	'
Accounts payable	30,391	113,314
Accrued interest	590,597	309,544
Other liabilities	0	12,650
Current notes payable, net of discount of $94,677 and $0	2,900,117	0
Total current liabilities	3,521,105	435,508
Notes payable, net of discount of $0 and $542,961	0	7,813,368
Participation liability	0	465,551
Asset retirement obligations	0	177,685
Total liabilities	3,521,105	8,892,112
Stockholders' deficit	'	'
Preferred stock, $0.00001 par value; 5,000,000 shares authorized, none issued or outstanding	0	0
Common stock, $0.00001 par value; 50,000,000 shares authorized,12,711,440 shares issued and outstanding	127	127
Additional paid-in capital	5,522,204	5,522,204
Accumulated deficit	-8,761,156	-5,653,729
Total stockholders' deficit	-3,238,825	-131,398
Total liabilities and stockholders' equity	$282,280	$8,760,714

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Jun. 30, 2014	Sep. 30, 2013
Statement of Financial Position [Abstract]	'	'
Discount on Note Payable Current portion	$94,677	$0
Discount on Note Payable	$0	$542,961
Stockholders' equity	'	'
Preferred stock, par value	$0.00	$0.00
Preferred stock, authorized shares	5,000,000	5,000,000
Preferred stock, issued shares	0	0
Preferred stock, outstanding shares	0	0
Common stock, par value	$0.00	$0.00
Common stock, authorized shares	50,000,000	50,000,000
Common stock, issued shares	12,711,440	12,711,440
Common stock, outstanding shares	12,711,440	12,711,440

CONSOLIDATED_STATEMENT_OF_OPER

CONSOLIDATED STATEMENT OF OPERATIONS (USD $)	3 Months Ended		9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Revenues	'	'	'	'
Oil and gas sales	$154,294	$1,135,938	$1,676,231	$3,700,952
Costs and expenses	'	'	'	'
Lease operating expense	46,408	147,083	544,045	517,600
Production taxes	7,098	52,393	77,253	170,653
Depreciation, depletion and amortization	0	279,940	984,200	931,371
Impairment of O&G properties	-18,634	0	861,579	0
Asset retirement obligation accretion	0	5,299	29,088	14,572
General and administrative	212,959	272,090	765,865	1,095,093
Total costs and expenses	247,831	756,805	3,262,030	2,729,289
Income (loss) from operations	-93,537	379,133	-1,585,799	971,663
Other income (expense)	'	'	'	'
Other income	2,721	0	3,512	0
Interest income	0	294	233	1,152
Gain on settlement of participation liability	171,772	0	171,772	0
Loss on early extinguishment of debt	-380,539	0	-380,539	0
Interest expense	-393,293	-462,057	-1,295,786	-1,452,057
Change in fair value of warrant and conversion feature liabilities	'	54,564	0	652,756
Furniture and equipment write-down	0	0	-20,819	0
Total other income (expense)	-599,339	-407,199	-1,521,626	-798,149
Income (loss) before income taxes	-692,876	-28,066	-3,107,426	173,514
Provision for income taxes	0	0	0	0
Net income (loss)	($692,876)	($28,066)	($3,107,426)	$173,514
Earnings (loss) per share	'	'	'	'
Basic	($0.05)	$0	($0.24)	$0.01
Diluted	($0.05)	$0	($0.24)	$0.01
Weighted average shares outstanding	'	'	'	'
Basic	12,711,440	12,711,440	12,711,440	12,711,440
Diluted	12,711,440	12,711,440	12,711,440	12,711,440

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities:	'	'
Net Income (loss)	($3,107,426)	$173,514
Adjustments to reconcile net income (loss) to net cash from operating activities:	'	'
Depreciation, depletion and amortization	941,294	931,371
Impairment of O&G properties	861,579	0
Amortization of debt issuance costs	223,933	241,755
Gain on settlement of participation liability	-171,772	0
Loss on early debt extinguishment	380,539	0
Asset retirement obligation accretion	29,088	14,572
Amortization of debt discount	169,145	220,102
Accretion of participation liability	-63,160	111,451
Furniture and equipment write-down	20,819	0
Change in fair value of warrant and conversion feature liabilities	0	-652,756
Change in operating assets and liabilities:	'	'
Accounts receivable	185,360	91,848
Other assets	26,863	-5,747
Accounts payable	-82,923	-55,497
Other liabilities	268,403	-190,486
Net cash from operating activities	-318,258	880,127
Cash flows from investing activities	'	'
Purchase of furniture and equipment	0	-2,452
Capital expenditures on oil and gas properties	-1,012,794	-2,385,271
Proceeds from sale of O&G properties	5,500,000	0
Net cash from investing activities	4,487,206	-2,387,723
Cash flows from financing activities	'	'
Repayment of note payable	-5,259,706	-325,000
Settlement of participation liability	-230,619	0
Net cash from financing activities	-5,490,325	-325,000
Net change in cash and cash equivalents	-1,321,377	-1,832,596
Cash and cash equivalents Beginning of period	1,334,285	3,090,422
Cash and cash equivalents End of period	$12,908	$1,257,826

1_BASIS_OF_PRESENTATION

1. BASIS OF PRESENTATION	9 Months Ended
	Jun. 30, 2014
Notes to Financial Statements	'
1. BASIS OF PRESENTATION	'
	These consolidated financial statements of Vanguard Energy Corporation (Vanguard or the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). In the opinion of management, these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to Securities and Exchange Commission (SEC) rules and regulations. These financial statements should be read along with Vanguard’s audited financial statements as of September 30, 2013.
	On March 31, 2014 the Company failed to make the scheduled interest payments on its 2012 Convertible Notes. As a result, the note holders were entitled to declare the notes in default, in which case the principal amount of the notes, plus all accrued and unpaid interest would be immediately due and payable.  For this reason, the 2012 Convertible Notes are classified as current obligations within the consolidated balance sheet at June 30, 2014.
	The sale of the Company’s oil and gas properties, as explained in Note 4, raise substantial doubt as to the ability of the Company to continue as a going concern.  The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.

2_SUMMARY_OF_SIGNIFICANT_ACCOU

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Jun. 30, 2014
Notes to Financial Statements	'
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	'
	As of June 30, 2014, Vanguard’s significant accounting policies were consistent with those discussed in the audited financial statements as of September 30, 2013.
	Earnings Per Share – Basic earnings per share have been calculated based upon the weighted-average number of common shares outstanding.  Diluted earnings per share have been calculated based upon the weighted-average number of common and potential common shares. The calculation of diluted weighted-average shares outstanding for the three-month periods ended June 30, 2014 and 2013 excludes 19,261,860 and 16,760,960 shares, respectively, issuable pursuant to outstanding warrants, stock options and debt conversion features because their effect is anti-dilutive.
	Recently Issued Accounting Pronouncements – Various accounting standards updates have been recently issued, most of which represented technical corrections to the accounting literature or were applicable to specific industries.  No new accounting pronouncements have been issued that are likely to have a material impact to the Company's consolidated financial statements.
	In prior periods the Company recognized a participation liability related to a net profits interest granted to persons who purchased the Company’s 2010 Convertible Promissory Notes.  The net profits interest was held by Vanguard Net Profits, LLC and covered some of the Company’s oil

3_NET_PROFITS_INTEREST_PARTICI

3. NET PROFITS INTEREST PARTICIPATION LIABILITY	9 Months Ended
	Jun. 30, 2014
Notes to Financial Statements	'
3. NET PROFITS INTEREST PARTICIPATION LIABILITY	'
	In prior periods the Company recognized a participation liability related to a net profits interest granted to persons who purchased the Company’s 2010 Convertible Promissory Notes.  The net profits interest was held by Vanguard Net Profits, LLC and covered some of the Company’s oil and gas properties.  On June 17, 2014 the Company settled the net profits interests for $230,619.  The Company recognized a gain on settlement of the participation liability of $171,772 during the quarter ended June 30, 2014 as a result.
	The Company incurred expense associated with the net profits interest during the nine-month period ended June 30, 2014 of $63,160. This amount is reported as interest expense in the statement of operations. The Company also made a final payment of $84,577 under this arrangement during the nine month period ending June 30, 2014.

4_SALE_OF_OIL_AND_GAS_PROPERTI

4. SALE OF OIL AND GAS PROPERTIES PAYMENT OF CONVERTIBLE NOTES	9 Months Ended
	Jun. 30, 2014
Notes to Financial Statements	'
4. SALE OF OIL AND GAS PROPERTIES/PAYMENT OF CONVERTIBLE NOTES	'
	During 2012, the Company sold $8,254,500 of Convertible Promissory Notes.  On March 31, 2014 the Company failed to make the scheduled interest payments on the notes.  As a result, the note holders were entitled to declare the notes in default, in which case the principal amount of the notes, plus all accrued and unpaid interest would be immediately due and payable.
	The Company’s inability to make the interest payment to the note holders was the result of the expenditure of considerable capital to work over some of the Company’s wells.  The costs of that work far exceeded the Company’s expectations and yet the work was required in order to get the wells back into production.  This depleted the Company’s cash position far below its expectations.  Further, although the initial work on those wells was successful in boosting production momentarily, further complications resulted in lower production than anticipated, which was not adequate to replenish the cash expended and enable the Company to make required interest payments.
	With a view to paying its note holders, the Company, on June 17, 2014, sold its oil and gas properties to Vast Exploration, Inc. for $5,500,000, after obtaining approvals from the holders of a majority of the Company’s outstanding shares of common stock and approvals of a majority of note holders. An impairment charge of $880,213 was recognized during the quarter ended March 31, 2014 for the amount by which the carrying value of the Company’s oil and gas properties exceeded the estimated net proceeds from the planned sale. The Company adjusted the impairment charge by $(18,634) during the quarter ended June 30, 2014 based on final closing of the transaction.
	The Company used the proceeds from the sale to:
	Pay holders of the convertible notes	$	5,259,706
	Purchase the net profits interest held by Vanguard Net Profits, LLC		230,619
	Pay legal and closing costs		9,675
		$	5,500,000
	A loss on early extinguishment of debt totaling $380,539 was recognized during the quarter ended June 30, 2014 for the write-off of a portion of the debt issuance costs and debt issuance discount associated with the debt repayment. After the payment of the $5,259,706, approximately $2,900,000 remains to be paid to the convertible note holders.  As of June 30, 2014, the unamortized discount on the 2012 Convertible Promissory Notes totaled $94,677.  Interest expense for the amortization of debt issuance cost and discount on the notes for the nine-month period ended June 30, 2014 was $393,078.  The effective interest rate of the 2012 Convertible Promissory Notes was 15.76% as of June 30, 2014.  Accrued interest at June 30, 2014 was $590,597 and at September 30, 2013 was $309,544.
	In consideration for  accepting less than the full amount due on their notes, and releasing their lien on the Company’s oil and gas properties, holders of notes in the approximate principal amount of $2,900,117 as a group, have agreed to receive shares in the Company’s stock in payment of the remaining balances on their notes, plus accrued interest.  The shares to be issued to the note holders, when issued, will represent approximately 90% of the Company’s issued and outstanding shares.

5_INCOME_TAXES

5. INCOME TAXES	9 Months Ended
	Jun. 30, 2014
Notes to Financial Statements	'
5. INCOME TAXES	'
	The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur. The Company recorded no income tax expense for the six month period ended June 30, 2014 because the Company estimates it will record no income tax expense for the year ended September 30, 2014.  The Company has a valuation allowance that fully offsets net deferred tax assets.

6_COMMITMENTS_AND_CONTINGENCIE

6. COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Jun. 30, 2014
Notes to Financial Statements	'
6. COMMITMENTS AND CONTINGENCIES	'
	The Company’s material future contractual obligations as of June 30, 2014 were as follows:
			Total		2014		2015		2016		Thereafter
	Convertible notes (1)		$	3,490,714	$	3,490,714		-		-		-
	(1)	Includes accrued interest of $590,597 as of June 30, 2014.
	The contractual maturity of the notes is June 30, 2015.  However, on March 31, 2014 the Company failed to make the scheduled interest payments.  As a result, the note holders are entitled to declare the notes in default, in which case the principal amount of the notes, plus all accrued and unpaid interest would be immediately due and payable.

7_FAIR_VALUE_OF_FINANCIAL_INST

7. FAIR VALUE OF FINANCIAL INSTRUMENTS	9 Months Ended
	Jun. 30, 2014
Notes to Financial Statements	'
7. FAIR VALUE OF FINANCIAL INSTRUMENTS	'
	The following table summarizes the financial liabilities measured at fair value on a recurring basis as of June 30, 2014 and September 30, 2013:
		Level			June 30,		September 30,
					2014		2013
	Participation liability	3			$	-	$	465,551
	Total liabilities				$	-	$	465,551
	The following table presents a reconciliation of those liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
		Participation Liability
	Balance at September 30, 2013	$	465,551
	Purchases, issuances and settlements		(293,779	)
	Gain on settlement		(171,772	)
	Balance at June 30, 2014	$	-

8_SUPPLEMENTAL_CASH_FLOW_INFOR

8. SUPPLEMENTAL CASH FLOW INFORMATION	9 Months Ended
	Jun. 30, 2014
Notes to Financial Statements	'
8. SUPPLEMENTAL CASH FLOW INFORMATION	'
		Nine Month ended June 30,
		2014		2013
		(Unaudited)		(Unaudited)
	Interest paid	$	312,111	$	603,088
	Interest capitalized (non-cash)		-		45,935
	Noncash investing and financing activities:
	Capital expenditures included in accounts payable		-		(15,278	)
	Asset retirement obligations incurred		29,088		9,273

2_SUMMARY_OF_SIGNIFICANT_ACCOU1

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Jun. 30, 2014
Notes to Financial Statements	'
Earnings Per Share	'
	Basic earnings per share have been calculated based upon the weighted-average number of common shares outstanding.  Diluted earnings per share have been calculated based upon the weighted-average number of common and potential common shares. The calculation of diluted weighted-average shares outstanding for the three-month periods ended June 30, 2014 and 2013 excludes 19,261,860 and 16,760,960 shares, respectively, issuable pursuant to outstanding warrants, stock options and debt conversion features because their effect is anti-dilutive.
Recently Issued Accounting Pronouncements	'
	Various accounting standards updates have been recently issued, most of which represented technical corrections to the accounting literature or were applicable to specific industries.  No new accounting pronouncements have been issued that are likely to have a material impact to the Company's consolidated financial statements.
	In prior periods the Company recognized a participation liability related to a net profits interest granted to persons who purchased the Company’s 2010 Convertible Promissory Notes.  The net profits interest was held by Vanguard Net Profits, LLC and covered some of the Company’s oil

4_SALE_OF_OIL_AND_GAS_PROPERTI1

4. SALE OF OIL AND GAS PROPERTIES/PAYMENT OF CONVERTIBLE NOTES (tables)	6 Months Ended
	Jun. 30, 2014
Sale Of Oil And Gas Propertiespayment Of Convertible Notes Tables	'
Sale of oil and gas properties/payment of convertible notes	'
	The Company used the proceeds from the sale to:
	Pay holders of the convertible notes	$	5,259,706
	Purchase the net profits interest held by Vanguard Net Profits, LLC		230,619
	Pay legal and closing costs		9,675
		$	5,500,000

6_COMMITMENTS_AND_CONTINGENCIE1

6. COMMITMENTS AND CONTINGENCIES (Tables)	9 Months Ended
	Jun. 30, 2014
Notes to Financial Statements	'
Schedule of Contractual Obligations	'
	The Company’s material future contractual obligations as of June 30, 2014 were as follows:
			Total		2014		2015		2016		Thereafter
	Convertible notes (1)		$	3,490,714	$	3,490,714		-		-		-
	(1)	Includes accrued interest of $590,597 as of June 30, 2014.

7_FAIR_VALUE_OF_FINANCIAL_INST1

7. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	9 Months Ended
	Jun. 30, 2014
Notes to Financial Statements	'
Financial Liabilities	'
	The following table summarizes the financial liabilities measured at fair value on a recurring basis as of June 30, 2014 and September 30, 2013:
		Level			June 30,		September 30,
					2014		2013
	Participation liability	3			$	-	$	465,551
	Total liabilities				$	-	$	465,551
Liabilities Using Signigicant Unobservable Inputs	'
	The following table presents a reconciliation of those liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
		Participation Liability
	Balance at September 30, 2013	$	465,551
	Purchases, issuances and settlements		(293,779	)
	Gain on settlement		(171,772	)
	Balance at June 30, 2014	$	-

8_SUPPLEMENTAL_CASH_FLOW_INFOR1

8. SUPPLEMENTAL CASH FLOW INFORMATION (Tables)	9 Months Ended
	Jun. 30, 2014
Notes to Financial Statements	'
Supplemental Cash Flow Information	'
		Nine Month ended June 30,
		2014		2013
		(Unaudited)		(Unaudited)
	Interest paid	$	312,111	$	603,088
	Interest capitalized (non-cash)		-		45,935
	Noncash investing and financing activities:
	Capital expenditures included in accounts payable		-		(15,278	)
	Asset retirement obligations incurred		29,088		9,273

2_SUMMARY_OF_SIGNIFICANT_ACCOU2

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Summary Of Significant Accounting Policies Details Narrative	'	'
Anti-dilutive shares	49,261,860	16,760,960

4_SALE_OF_OIL_AND_GAS_PROPERTI2

4. SALE OF OIL AND GAS PROPERTIES/PAYMENT OF CONVERTIBLE NOTES (details) (USD $)	6 Months Ended
	Jun. 30, 2014
Proceeds from sale used to:	'
Pay holders of the convertible notes	$5,259,706
Purchase the net profits interest held by Vanguard Net Profits, LLC	230,619
Pay legal and closing costs	9,675
Total	$5,500,000

6_COMMITMENTS_AND_CONTINGENCIE2

6. COMMITMENTS AND CONTINGENCIES (Details) (USD $)	Jun. 30, 2014
Notes to Financial Statements	'
Convertible notes, 2014	$3,490,714
Convertible notes, 2015	3,490,714
Convertible notes, 2016	0
Convertible notes, thereafter	0
Total convertible notes due	$0

7_FAIR_VALUE_OF_FINANCIAL_INST2

7. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $)	Jun. 30, 2014	Sep. 30, 2013
Notes to Financial Statements	'	'
Participation liability (Level 3)	$0	$465,551
Total liabilities (Level 3)	$0	$465,551

7_FAIR_VALUE_OF_FINANCIAL_INST3

7. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 1) (USD $)	Jun. 30, 2014	Sep. 30, 2013	Jun. 30, 2014
			Participation Liability
Balance at September 30,2013	$0	$465,551	$465,551
Purchases, issuances and settlements	'	'	-293,779
Gain on settlement	'	'	-171,772
Balance at June 30, 2014	$0	$465,551	$0

8_SUPPLEMENTAL_CASH_FLOW_INFOR2

8. SUPPLEMENTAL CASH FLOW INFORMATION (Details) (USD $)	9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Supplemental cash flow information:	'	'
Interest paid	$312,111	$603,088
Interest capitalized (non-cash)	0	45,935
Noncash investing and financing activities:	'	'
Capital expenditures included in accounts payable	0	-15,278
Asset retirement obligations incurred	$29,088	$9,273