Woodgate Energy 8K/A Completion of Acquisition or Disposition of Assets

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

September 25, 2013

Date of Report

(Date of Earliest Event Reported)

WOODGATE ENERGY CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware	000-54834	46-1874004
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification No.)

2500 Tanglewilde

Suite 260

Houston, TX 77063

(Address of Principal Executive Offices)

(713) 978-6551

(Registrant’s Telephone Number)

ITEM 2.01

Completion of Acquisition or Disposition of Assets

On September 25, 2013, WoodGate Energy Corporation, a Delaware corporation (the “Company”), completed the acquisitions of two entities in separate stock-for stock transactions (collectively, and together, the “Acquisitions): (1) E&P CO, LLC, a Texas limited liability company (“EPCO”) and (2) Prestige O&G, LLC, a Texas limited liability company (“Prestige”). The purpose of the Acquisitions was to facilitate and prepare the Company for a registration statement and/or public offering of securities. The acquisition by the Company of EPCO is referred to herein as the “EPCO Acquisition,” and the acquisition by the Company of Prestige is referred to herein as the “Prestige Acquisition.”

The EPCO Acquisition was effectuated by the Company through the exchange of each of the outstanding membership units of EPCO for 10,000 shares of common stock of the Company. As a result, in the EPCO Acquisition, all of the outstanding membership interests in aggregate of EPCO were exchanged for, and converted into, 13,337,280 shares of common stock of the Company. In addition, as part of the EPCO Acquisition, EPCO’s outstanding debt was converted into shares of common stock of the Company, resulting in 13,296,950 shares of common stock of the Company being issued to holders of EPCO’s debt. Hence, the Company issued a total of 26,634,230 shares of common stock of the Company in the EPCO Acquisition.

The Prestige Acquisition was effectuated by the Company through the exchange of each of the outstanding membership units of Prestige for 10,000 shares of common stock of the Company. As a result, in the Prestige Acquisition, all of the outstanding membership interests in aggregate of Prestige were exchanged for, and converted into, 10,115,770 shares of common stock of the Company.

In sum, a total of 36,750,000 shares of common stock of the Company were issued in the Acquisitions.

EPCO was formed in June 2005 in the State of Texas, and is engaged in the development, drilling and production of coal bed methane (CBM) gas on a concession located in the State of Louisiana. EPCO is engaged in the exploration and development of CBM wells, and it currently holds three producing wells and one salt water disposal well, and is in the process of developing additional wells. The main source of revenue for the Company is sale of CBM gas to Regency Gas Services, LLC. EPCO currently has access to about 10,000 net mineral acres of land (through a lease) which has the potential of developing additional CBM wells.

Prestige was formed in June 2009 in the State of Texas, and invests in and develops oil and gas exploration and production projects in the United States and other countries. As one of its major investments, Prestige formerly held an interest in EPCO (which interest was withdrawn on June 30, 2013 in preparation for the Acquisitions) and is currently a partner with EPCO in its CBM Gas Project in the State of Louisiana.

As a result of the Acquisitions, each of EPCO and Prestige became wholly owned subsidiaries of the Company. The Company, as the sole shareholder of each of EPCO and Prestige, has taken over the operations and business plans of each of EPCO and Prestige.

Relationship with Tiber Creek Corporation

In March 2013 the Company entered into an engagement agreement with Tiber Creek Corporation, a Delaware corporation (“Tiber Creek”), whereby Tiber Creek would provide assistance to the Company in effecting transactions for the Company to combine with a public reporting company, including: transferring control of such reporting company to the Company; preparing the business combination agreement; effecting the business combination; causing the preparation and filing of forms, including a registration statement, with the Securities and Exchange Commission; assist in listing its securities on a trading exchange; and assist in establishing and maintaining relationships with market makers and broker-dealers.

Under the agreement, Tiber Creek is entitled to receive cash fees from the Company. In addition, the Company’s then-current shareholders, Tiber Creek and MB Americus, LLC, a California limited liability company (“MB Americus”), were permitted to retain the aggregate total of 500,000 shares.

In general, Tiber Creek holds interests in inactive Delaware corporations which may be used by issuers (such as the Company) to reincorporate their business in the State of Delaware and capitalize the issuer at a level and in a manner (i.e. the number of authorized shares and rights and preferences of shareholders) that is appropriate for a public company. Otherwise, these corporations, such as Silverwood Acquisition Corporation (the former name of the Company), are inactive, and Tiber Creek does not conduct any business in such corporations.

James Cassidy and James McKillop (who is the sole owner of MB Americus, an affiliate of Tiber Creek) serve only as interim officers and directors of these corporations (such as Woodgate Acquisition Corporation) until such time as the changes of control in such corporations are effectuated to the ultimate registering issuers. As the role of Tiber Creek is essentially limited to preparing the corporate structure and organizing the Company for becoming a public company, the roles of Mr. Cassidy and Mr. McKillop are generally limited to facilitating such change of control and securities registration transactions.

Business

Prior to the Acquisition, the Company had no significant business, operations or plan. Accordingly, the business of the Company below is that of EPCO and Prestige, each of which the Company acquired in the Acquisitions.

The Company isspecialized in the field of operating and managing natural gas projects.

EPCO commenced developing wells and raising funds to finance well development activities and initiated the process of drilling the third gas production well during 2010 and completed lateral drilling of the third well in 2011. Through its efforts to date, EPCO has a complete, fully operational processing facility and three developed and producing wells (although not yet producing in paying capacities) and one saltwater disposal well. The gas process facility is designed to accommodate approximately 30 wells and includes a main connection to the sales pipeline network.

EPCO (with which Prestige is a partner) is the primary owner company of NE Caldwell Gas project in Louisiana. EPCO has completed the development of the first three wells from its own resources where existing wells are operational and producing natural gas. EPCO has successfully conducted directional drilling techniques in its operation where lateral drilling was successfully completed so far. All current production is being sold under an agreement with RegencyGas Services, LLC.

Coal Bed Methane (CBM) Resources

The Company’s business is centered on coal bed methane energy.

CBM gas is a clean source of energy in the form of CH4 composite (methane natural gas). CBM is produced under unconventional means from coal seams. The Company’s management believes that interest in developing CBM projects is increasing in recent years by public and private sectors; accordingly CBM operations and businesses are expected to continue to grow in the future driven by CBM’s importance as an energy source and anticipated to increase in demand for natural gas as a growing source of energy.

In 2011, the Company (through EPCO) engaged Netherland, Sewell & Associates, Inc. (“Netherland Sewell”), worldwide petroleum consultants and specialists in engineering, geology, geophysics and petrophysics, to assess the gross contingent and prospective resources for certain coal bed methane properties located in Caldwell Parish, Louisiana (the area assessed represented only a portion of the acreage in which EPCO holds an interest). The assessment made was prepared in accordance with the definitions and guidelines set forth in the 2007 Petroleum Resources Management System (PRMS) approved by the Society of Petroleum Engineers (SPE).

Netherland Sewell assessed the contingent gas resources, which are those quantities of petroleum which are estimated to be potentially recoverable from known accumulations, but for which the applied project(s) are not yet considered mature enough for commercial development because of one or more contingencies. The contingent resources assessed are considered contingent upon increasing the individual gas production rates for existing wells to sufficiently demonstrate the commerciality of the project(s). The assessment estimated original gas-in-place and gross contingent gas resources, as of March 1, 2011, to be the following (where MMCF represents gas volumes in millions of cubic feet and standard temperature and pressure bases):

Category	Original Gas-in-Place (MMCF)		Gross Contingent Gas Resources (MMCF)

Low Estimate (1C)		6,141		2,149
Best Estimate (2C)		8,139		4,476
High Estimate (3C)		10,362		7,772

Netherland Sewell assessed the prospective gas resources, which are those quantities of petroleum which are estimated to be potentially recoverable from undiscovered accumulations by application of future development projects. The prospective resources indicate exploration opportunities and development potential in the event a petroleum discovery is made and should not be construed as reserves or contingent resources. The assessment estimated undiscovered original gas-in-place and unrisked gross prospective gas resources, as of March 1, 2011, to be the following (where MMCF represents gas volumes in millions of cubic feet and standard temperature and pressure bases):

Category	Undiscovered Original Gas-in-Place (MMCF)		Unrisked Gross Prospective Gas Resources (MMCF)

Low Estimate		24,768		8,669
Best Estimate		32,816		18,049
High Estimate		41,242		30,932

In addition to the Netherland Sewell analysis, the Company has also confirmed these assessments through analysis by Supreme Source Energy Services (SSES, a CBM engineering and drilling specialist firm, and Intertek Westport Technology Center, a consultant and laboratory analyst to the oil and gas exploration and production industry.

Strategic Partners and Suppliers

The Company believes that strategic partnerships will be a major component of the Company’s operating strategy and path to success. The Company hopes to work with several strategic partners in important areas of its business and operations. However, currently, the Company has no such strategic partners.

Customer Agreement

The main source of revenue for the Company (through EPCO) is the sale of CBM gas to Regency Gas Services, LLC (together with all of its affiliates, collectively, “Regency”) through various off-take agreements to sell all produced gas at prevailing market prices. Pursuant to the agreement, which includes Regency Intrastate Gas LP, a tap, valve and metering facility for the receipt of gas by Regency from EPCO was set up by the parties. Pursuant to the agreement, the Company will receive revenues upon sales of gas each month.

EPCO Lease from International Paper Company

On October 2, 2006, EPCO entered into an exploration agreement with coal bed methane lease option east with International Paper Company (“International Paper Agreement”). Under the International Paper Agreement, EPCO has rights to explore for, and otherwise evaluate, deposits of coal containing coal bed methane in certain areas in Caldwell Parish, Louisiana comprising approximately 9,661 acres. Pursuant to the International Paper Agreement, EPCO exercised a lease option in 2008 allowing it to proceed with development and production projects in this area. Since then, EPCO has annually renewed such lease for its project development (the current period, as recently renewed, runs to April 30, 2014). Further, in June 2013, EPCO entered into a participation agreement with Prestige to establish a partnership in this project whereby each of EPCO and Prestige now hold a 50% interest in the project. The International Paper Agreement is being managed for International Paper Company by BRP, LLC, a joint venture owned by International Paper Company and Natural Resource Partners L.P., a publicly traded master limited partnership. Currently, the Company pays approximately $2.00 per acre for the lease each year in addition to the royalty payments upon sales of gas each month. The royalty is determined based on base royalty rate of 12.5% plus a supplemental royalty based on the gross sales price of the CBM.

Governmental Regulations

The Company holds various licenses and permits to drill, operate and conduct such exploration activities in Louisiana

The Company does not need or require any other approval from government authorities or agencies in order to operate its regular business and operations. However, it is possible that any proposed expansion to the Company’s business and operations in the future would require government approvals.

Marketing and Sales

The Company has conducted limited advertising and marketing to date, and currently, EPCO only has one major customer agreement.

The Company has not given substantial attention to constructing a sales or marketing strategy and plans. Rather, the Company is focused on succeeding in its operational activities with respect to exploration and drilling. The Company does not currently anticipate a significant budget or need for sales and marketing activities or campaigns.

Revenues and Losses

The Company has limited revenues from operations. Based solely on combining EPCO and Prestige, the Company would have been deemed to have revenues of $399,131 during the year ending 2011, ($263,204) in the year ended 2012 and ($269,176) for the first half of 2013.

The Company has a record of posting losses. Based solely on combining EPCO and Prestige, the Company would have been deemed to have net losses of $646,916 during the year ending 2011, $591,459 in the year ended 2012 and $880,767 for the first half of 2013.

THE COMPANY

Employees and Organization

The Company presently has four employees. The Company also regularly engages contractors and sub-contracts to directly work in the wells in Louisiana.

The employees receive health insurance benefits. The Company may offer additional fringe and welfare benefits in the future as the Company’s profits grow and/or the Company secures additional outside financing or its profits from operations allow expenditure on such items.

Stephen Spafford, an operational manager, has an employment agreement with EPCO, entered into as of May 2010. Pursuant to this agreement, Mr. Spafford is entitled to a base salary of $200,000, plus eligibility for performance bonuses and other perquisites. The employment agreement with Mr. Spafford has a term of one year, and is subject to annual renewals by mutual consent.

Samta Gupta, an accountant, has an employment agreement with EPCO, entered into as of June 2009. Pursuant to this agreement and further revisions, Ms. Gupta is currently entitled to a salary of $65,000, plus eligibility for certain perquisites.

Property

The Company’s headquarters are located in Houston, Texas. The office location leased from Woodlake Properties consists of approximately 3,000 square feet. The monthly lease cost for the Company is $3,927 at present.

The Company leases the land (almost 10,000 acres) on which its wells are located in Columbia, Louisiana. The total land area can accommodate up to 150 to 200 wells.

Subsidiaries

Currently, the Company has two subsidiaries – EPCO and Prestige (each of which was acquired in the Acquisitions). The Company is the sole owner/member of each of EPCO and Prestige.

Intellectual Property

The Company holds limited intellectual property, and has not applied for any patents. The Company does hold one trademark issued by the U.S. Patent and Trademark Office for “E & Pco, LLC EXPLORATION AND PRODUCTION.” The trademark was registered in March 2012 and covers Class 37 for oil and gas development and related activities.

Summary Financial Information

As the Company had no operations or specific business plan until the Acquisitions, the information presented below is with respect to EPCO and Prestige, respectively, which were each acquired by the Company in September 2013 as a result of the Acquisitions.

The statements of operations data for the six months ended June 30, 2013 and the balance sheet data as of June 30, 2013 are derived from the audited financial statements of EPCO and related notes thereto included herewith (the audit was conducted with respect to the financial statements of EPCO in conformity with accounting principles generally accepted in the United States). The statement of operations data for the year ended December 31, 2012 and the year ended December 31, 2011, respectively, and the balance sheet data as of December 31, 2012 and December 31, 2011, respectively, provided below, is derived from the audited financial statements of EPCO and related notes thereto included herewith (the audit was conducted with respect to the financial statements of EPCO in conformity with accounting principles generally accepted in the United States).

	Six months ended			Year ended			Year ended
	June 30, 2013			December 31, 2012			December 31, 2011
Statement of operations data
Revenue	$	2,141		$	4,420		$	13,046
Gross profit	$	2,141		$	4,420		$	13,046
Income (Loss) from operations	$	(763,026	)	$	(862,003	)	$	(724,205	)
Net income (loss)	$	(763,026	)	$	(620,477	)	$	(683,055	)

	At June 30, 2013		At December 31, 2012		At December 31, 2011
Balance sheet data
Cash	$	34,900	$	47,762	$	(93,821	)
Other assets	$	17,321,203	$	19,097,721	$	19,103,756
Total assets	$	17,356,103	$	19,145,483	$	19,197,577
Total liabilities	$	10,496,454	$	14,477,401	$	15,424,018
Total members’ equity (deficit)	$	6,859,649	$	4,668,082	$	3,773,559

The statements of operations data for the six months ended June 30, 2013 and the balance sheet data as of June 30, 2013 are derived from the audited financial statements of Prestige and related notes thereto included herewith (the audit was conducted with respect to the financial statements of Prestige in conformity with accounting principles generally accepted in the United States). The statement of operations data for the year ended December 31, 2012 and the year ended December 31, 2011, respectively, and the balance sheet data as of December 31, 2012 and December 31, 2011, respectively, provided below, is derived from the audited financial statements of Prestige and related notes thereto included herewith (the audit was conducted with respect to the financial statements of Prestige in conformity with accounting principles generally accepted in the United States).

	Six months ended			Year ended			Year ended
	June 30, 2013			December 31, 2012			December 31, 2011
Statement of operations data
Revenue	$	(271,317	)	$	(267,624	)	$	386,085
Gross profit	$	(271,317	)	$	(267,624	)	$	386,085
Income (Loss) from operations	$	(117,741	)	$	29,018		$	(21,551	)
Net income (loss)	$	(117,741	)	$	29,018		$	36,139

	At June 30, 2013		At December 31, 2012		At December 31, 2011
Balance sheet data
Cash	$	5,338	$	5,338	$	5,338
Other assets	$	10,049,517	$	9,908,442	$	9,858,490
Total assets	$	10,054,855	$	9,913,780	$	9,863,828
Total liabilities	$	0	$	195,626	$	174,692
Total members’ equity (deficit)	$	10,054,855	$	9,718,155	$	9,689,136

Management's Discussion and Analysis of Financial Condition and Results of Operations

References to the financial condition and performance of the Company below in this section “Management’s Discussions and Analysis of Financial Condition and Results of Operation” are to EPCO and Prestige (as the Company did not have business operations of a material nature prior to the consummation of the Acquisitions).

Revenues and Losses

Equipment Financing

The Company has no existing equipment financing arrangements.

Potential Revenue

The Company expects to earn potential revenue from arrangement with Regency. As the Company expands its gas-producing capacity through expansion of its wells in Louisiana, the Company plans to achieve additional revenue.

Alternative Financial Planning

The Company has no alternative financial plans at the moment. If the Company is not able to generate increased revenues and profits and/or successfully raise monies as needed through a private placement or other securities offering (including, but not limited to, a primary public offering of securities), the Company’s ability to expand its business plan or strategy over the next two years will be jeopardized.

Critical Accounting Policies

For the years ending December 31, 2012 and December 31, 2011, respectively, the financial statements of EPCO and Prestige have been prepared and audited in accordance with generally accepted accounting principles in the United States. For the six months ended June 2013, the financial statements of EPCO and Prestige were audited in accordance with generally accepted accounting principles in the United States (preparation of the financial statements for Prestige and EPCO was made under generally accepted accounting principles in the United States (GAAP)).

The financial statements have been prepared under historical cost convention. The preparation of financial statements in conformity with GAAP requires the use of certain critical accounting estimates and management of the Company to exercise its judgment in the process of applying accounting principles. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company makes estimates and assumptions concerning the future.

Capital Resources

As of June 30, 2013, the Company (based on a combination of EPCO and Prestige) had cash available of $40,238.

The Company’s proposed business plans over the next two years will necessitate additional capital and financing. Accordingly, the Company plans to raise some outside funding in the next one year, for the purposes of funding its business development and expansion plans.

There can be no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital, or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company. Accordingly, given the Company’s limited cash and cash equivalents on hand, the Company will be unable to implement its contemplated business plans and operations unless it obtains additional financing or otherwise is able to generate sufficient revenues and profits. The Company may raise additional capital through sales of debt or equity, obtain loan financing or develop and consummate other alternative financial plans.

To date, the Company has not suffered from a significant liquidity issue. However, the Company has been able to avoid such liquidity issues because of a revolving funding arrangement that it has in place with affiliated entities, Rasan Associates, LLC and Rasan Private Equity, Inc. (collectively, “Rasan”). Under this arrangement, the Company receives funding from a commodity sale and purchase agreement with Rasan.

Discussion of Six Months ended June 30, 2013

Based on a combination of EPCO and Prestige the Company generated no revenues during the six months ended June 30, 2013. The Company posted net losses of $880,767 for the six months ended June 30, 2013. The expenses incurred and losses consisted primarily of funds expended to further the Company’s business and operational activities.

Discussion of the Year ended December 31, 2012

Based on a combination of EPCO and Prestige the Company generated revenues of ($263,204) during the year ended December 31, 2012. The Company posted net losses of $591,459 for the year ended December 31, 2012. The expenses incurred and losses consisted primarily of funds expended to further the Company’s business and operational activities.

Discussion of the Year ended December 31, 2011

Based on a combination of EPCO and Prestige the Company generated revenues of $399,131 during the year ended December 31, 2012. The Company posted net losses of $646,916 for the year ended December 31, 2012. The expenses incurred and losses consisted primarily of funds expended to further the Company’s business and operational activities.

Management

The following table sets forth information regarding the members of the Company’s board of directors and its officers:

Name	Age	Position	Year Commenced

Fuad Al-Humoud	50	President andDirector	2013
Osman Kaldirim, Jr.	34	Director	2013
Dr. Osman Kaldirim	61	Director	2013
Mel Bernstein	42	Director	2013

Fuad Al-Humoud

Fuad Al-Humoud serves as the President, Chairman of the Board of Directors of the Company, and is a director of the Company. Mr. Al-Humoud has 22 years of experience in banking, investments and real estate fields with particular emphasis on financial engineering, investment development (private equity, funds and direct investment), Treasury operations, portfolio management and leasing and project financing. Mr. Al-Humoud has extensive entrepreneur experience in activities related to business development and financial structuring for start-up as well as existing investment programs. Mr. Al-Humoud has over 15 years experience in establishing financial institutions in banking, finance, and the investment sector contributing to development of the business plan, and operational, investment and business policies. He currently continues to hold the executive positions as listed with the following companies which he was instrumental in establishing and developing: Chairman and Managing Director, Rasan Holding Co. KSC (Kuwait) (commenced July 2008); Executive Partner, Rasan General Trading & Contributing Co. (commenced July 2005); Chairman, Prestige O&G, LL (Texas) (commenced September 2009); Executive Chairman, E&P Co. LLC (Texas) (commenced February 2009); Chairman, Hoff Centrifuge, Inc. (Nevada)(commenced August 2012). Mr. Al-Humoud received his Bachelor of Science in Industrial Engineering degree in 1988 from The University of Miami.

Osman Kaldirim, Jr.

Osman Kaldirim, Jr. serves as a director of the Company. Mr. Kaldirim is a Petroleum Geologist with a broad background in prospect generation and prospect evaluation together with various operating management functions in oil and gas projects, including both U.S. and International projects. Mr. Kaldirim has over nine years experience in the Oil & Gas sector with main focus on Exploration & Development of unconventional Oil & Gas Projects using conventional and non-conventional drilling techniques, production planning and project management. Since 2005 to the present, Mr. Kaldirim has served as the Vice President and Chief Geologist at E&P Co., LLC and has been managing the drilling, exploration and development of multiple wells in their 10,000 acres, Northeast Caldwell CBM Project in Louisiana. Mr. Kaldirim received Masters Degree in Petroleum/Structural Geology in 2004 from Oklahoma State University and his Bachelor of Science Degree in Geology from Texas A&M University in 2002.

Dr. Osman Kaldirim

Dr. Osman Kaldirim serves as the Vice-Chairman and a director of the Company. Dr. Kaldirim is currently the CEO and President of Delta Oil Company and also the president of Delta Oil Central Asia Company. He is experienced in new project developments, negotiation and implementation of several on-shore and off-shore po; and gas projects. He was also a member of a team for UNOCAL Company for new project development and contracts negotiation in the Central Asia. His work in Azerbaijan contributed towards the negotiation of the first production-sharing contract (PSC) for the Caspian Sea oil field development. The contract intends that over $13 billion US Dollars are to be invested by twelve major oil companies from seven different countries.

Dr. Kaldirim has also made an important contribution to oil and gas pipeline projects in Central Asia including Baku- Tiflis- Ceyhan Oil pipeline. Dr. Kaldirim became chairman of the gas pipeline project development (from Turkmenistan to Pakistan) named CentGas Company. This project, currently on hold pending resolution of Afghanistan issues, requires an investment of approximately $4 billion US Dollars. Dr. Kaldirim is one of the founders of one the major oil pipeline project named CentOil pipeline Company (from Kazakistan, Uzbakistan, Turkmensitan, to Arabian Sea port in Pakistan) expected to establish pipelines that will open a market to these Central Asian countries for their products and will create additional alternative sources for oil and gas for the rest of the world. He has been involved in providing his consulting, contracting and representation services to engineering and construction and energy related companies for development and infrastructure projects in Central Asia and Middle East.

Dr. Kaldirim has also been involved in many other types of projects such as the development of the first Arabic/English microcomputers (he was a founder and developer of Research Computer Technology Company in California (RCTC)). He was one of the developers and founders of American Fiber Optic Company in Long Beach California. Dr. Kaldirim played a major role in the development of the high frequency low noise analog optical receiver and transmitter system for the U.S. defense department. He has worked as senior scientist, advisor and consultant for many international companies and countries including the United States at the highest levels.

Dr. Kaldirim has more than 30 classified publications and scientific articles related to electronics, EMP, EMI, Fiber optic and integrated optics. He also holds patents in Biomedical Engineering, specifically, micro-spherical protein movement using electromagnetic force in the body. Dr. Kaldirim also has an associate professorship, awarded by the ministry of higher education in Turkey.

Dr. Kaldirim received his Bachelor’s degree in Electrical Engineering from Yildiz University in Istanbul in 1975 followed by his Master's Degree (MSc) in 1977, Engineering Degree (ED) in 1979, Ph.D. in 1980 and MBA in 1981 from the University of California Los Angeles (UCLA). He holds both US and Turkish citizenship.

Mel Bernstein

Mel Bernstein serves as a director of the Company. Mr. Bernstein has over 20 years of real estate, finance and investment experience at the executive level. Mr. Bernstein has experience in generating, implementing and managing residential and commercial real estate services in sales, leasing, exclusive representation, property management and consulting. He currently holds the position of Vice President with RE/Max Optima, a Florida based real-estate company. From 1996 to 2013 Mr. Bernstein held management executive positions with Mel Bernstein Real Estate and from 1997 to 2010 with All Florida Funding/Real Property Mortgage Investors. In addition to approximately 1800 hours of professional development in real estate education and mortgage finance education, Mr. Bernstein holds multiple real estate licenses and enjoys membership with various professional organizations.

Director Independence

Pursuant to Rule 4200 of The NASDAQ Stock Market one of the definitions of an independent director is a person other than an executive officer or employee of a company. The Company's board of directors has reviewed the materiality of any relationship that each of the directors has with the Company, either directly or indirectly. Based on this review, the board has one independent director – Mel Bernstein.

Committees and Terms

The Board of Directors (the “Board”) has not established any committees.

Legal Proceedings

There are currently no pending, threatened or actual legal proceedings of a material nature in which the Company is a party.

EPCO was a party to the lawsuit entitled Noram Drilling Company v. E&P Co International, LLC and E&P Co., LLC. The case has been pending in Caldwell Parish, Louisiana since originally filed in 2009. EPCO, which was a party to the suit, was dismissed following a motion for summary judgment adjudicated in its favor in 2013. Accordingly, EPCO is no longer a party to this proceeding.

Anticipated Officer and Director Remuneration

The Company pays reduced levels of compensation to certain of its officers and directors at present. The Company intends to pay regular, competitive annual salaries to all its officers and directors and will pay an annual stipend to its directors when, and if, it completes a primary public offering for the sale of securities and/or the Company reaches greater profitability, experiences larger and more sustained positive cash flow and/or obtains additional funding. At such time, the Company anticipates offering additional cash and non-cash compensation to officers and directors. In addition, the Company anticipates that its officers and directors will be provided with additional fringe benefits and perquisites at subsidizes rates, or at the sole expense of the Company, as may be determined on a case-by-case basis by the Company in its sole discretion. In addition, the Company may plan to offer 401(k) matching funds as a retirement benefit at a later time.

Certain Relationships and Related Transactions

James Cassidy, a partner in the law firm which acts as counsel to the Company, is the sole owner and director of Tiber Creek Corporation which owns 250,000 shares of the Company's common stock. Tiber Creek is entitled to receive consulting fees of $100,000 from the Company and also holds shares of common stock in the Company. Tiber Creek and its affiliate, MB Americus LLC, a California limited liability company, each currently hold 250,000 shares in the Company.

James Cassidy and James McKillop, who is the sole officer and owner of MB Americus, LLC, were both formerly officers and directors of the Company. As the organizers and developers of Moosewood, Mr. Cassidy and Mr. McKillop were involved with the Company prior to the Mergers. In particular, Mr. Cassidy provided services to the Company without charge, including preparation and filing of the charter corporate documents and preparation of the registration statement for the Company.

Mr. Fuad Al-Humoud, who is the President, Chairman and a director of the Company, was also a director of EPCO and Chairman of Prestige prior to the Acquisitions.

The Company has entered into loan arrangements from time to time with officers, directors and/or affiliates of the Company, EPCO and/or Prestige.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information as of the date of this regarding the beneficial ownership of the Company’s common stock by each of the Company’s executive officers and directors, individually and as a group and by each person who beneficially owns in excess of five percent of the common stock after giving effect to any exercise of warrants or options held by that person.

		Number of Shares of
Name	Position	Common Stock			Percent of Class (1)

Fuad Al-Humoud	President and Director		2,384,377	(2)		5	%

Osman Kaldirim, Jr.	Director		22,515,993	(3)		48	%

Dr. Osman Kaldirim	Director		25,540,048	(4)		54	%

Dr. Mashhhoor Almadodi	5% shareholder		25,540,038	(5)		54	%

Abdulla Al-Faddagh	5% shareholder		13,584,993	(6)		29	%

Ayedh Al-Hajeri	5% shareholder		2,400,000	(7)		5	%

Total owned by officers and directors			27,924,425			59	%

(1) Based upon 47,295,000 shares outstanding as of the date of this report.

(2)Includes2,374,377 shares held by Rasan Associates, LLC, a Texas limited liability company. Mr. Al-Humoud is a managing member and principal of the entity, and he may be deemed the beneficial owner or the shares held by such entity.

(3) Includes 22,515,993 shares held by E&P Management and Development Co., LLC, a Texas limited liability company. Mr. Kaldirim is a managing member and principal of the entity, and he may be deemed the beneficial owner or the shares held by such entity.

(4) Includes 3,024,045 shares held by Delta O&G, LLC, a Texas limited liability company. Dr. Kaldirim is a member and principal of the entity, and he may be deemed the beneficial owner or the shares held by such entity. Includes also 22,515,993 shares held by E&P Management and Development Co., LLC, a Texas limited liability company. Dr. Kaldirim is a managing member and principal of the entity, and he may be deemed the beneficial owner or the shares held by such entity.

(5) Includes 3,024,045 shares held by Delta O&G, LLC, a Texas limited liability company. Dr. Almadodi is a member and principal of the entity, and he may be deemed the beneficial owner or the shares held by such entity. Includes also 22,515,993 shares held by E&P Management and Development Co., LLC, a Texas limited liability company. Dr. Almadodi is a managing member and principal of the entity, and he may be deemed the beneficial owner or the shares held by such entity.

(6) Includes13,584,993shares held by Caldwell US, Inc., a Delaware corporation. Mr. Al-Faddagh is an officer, director and principal of the entity, and he may be deemed the beneficial owner or the shares held by such entity.

(7) Includes2,400,000 shares held by Rasan Energy. Mr.Al-Hajeri is a principal of the entity, and he may be deemed the beneficial owner or the shares held by such entity.

Risks and Uncertainties facing the Company

The Company has limited revenues to date, including during the recent six months ended June 30, 2013, and the Company may experience losses in the near term. The Company needs to maintain a steady operating structure, ensuring that expenses are contained such that profits are consistently achieved. In order to expand the Company’s business, the Company would likely require additional financing. As a company with limited revenues to date, management of the Company must continually develop and refine its strategies and goals in order to execute the business plan of the Company on a broad scale and expand the business.

One of the biggest challenges facing the Company will be in securing adequate capital to continue to expand its business and build a larger scale and more efficient set of operations. Secondarily, an ongoing challenge remains the maintenance of an efficient operating structure and business model. The Company must keep its expenses and the costs of employees at a minimum in order to generate a profit from the revenues that it receives. Third, in order to expand, the Company will need to continue to identify suitable exploration and development opportunities that can be realized at a reasonable cost.

Due to financial constraints and the current stage of the Company’s life, the Company has to date conducted limited advertising and marketing to reach customers. In addition, the Company has not yet located the sources of funding to develop the Company on a broader scale through acquisitions or other major partnerships. As the Company expands, the Company may need such partnerships and marketing campaigns to better build its business.

Risk Factors

The Company has generated revenues, but limited profits, to date.

The Company has generated limited profits to date. The business model of the Company involves significant costs, resulting in a low margin on revenues. Coupling this fact with operating expenses incurred by the Company, the Company has only generated a small amount of total profits in the past. The Company hopes that as its business expands that the scale of the enterprise would result in a higher gross margin and net margin.

No assurance of success in operations.

There is no assurance that the Company’s exploration or development activities will be successful. Moreover, there is no assurance that any of the Company’s operations will have any ability to realize profits.

The Company is an early-stage company with a limited operating history, and as such, any prospective investor may have difficulty in assessing the Company’s profitability or performance.

Because the Company is an early-stage company with a limited operating history, it could be difficult for any investor to assess the performance of the Company or to determine whether the Company will meet its projected business plan. The Company has limited financial results upon which an investor may judge its potential. As a company still in the early stages of its life, the Company may in the future experience under-capitalization, shortages, setbacks and many of the problems, delays and expenses encountered by any early-stage business. An investor will be required to make an investment decision based solely on the Company management’s history, its projected operations in light of the risks, the limited operations and financial results of the Company to date, and any expenses and uncertainties that may be encountered by one engaging in the Company’s industry.

The Company operates in a sector generally regarded with high risk.

The Company operates in the broader oil and gas exploration and development sector, which is an industry typically characterized by high risk. The success of the Company may vary widely based on the ability to successfully extract natural gas.

The Company expects to incur additional expenses and may ultimately never be profitable.

The Company is an early-stage company and has a limited history of its operations. The Company will need to continue generating revenue in order to maintain sustained profitability. Ultimately, in spite of the Company’s best or reasonable efforts, the Company may have difficulty in generating revenues or remaining profitable.

The Company’s officers and directors beneficially own a majority of the Company’s common stock and, as a result, can exercise control over stockholder and corporate actions.

The officers and directors of the Company currently beneficially own approximately 59% of the Company’s outstanding common stock. As such, they will be able to control most matters requiring approval by stockholders, including the election of directors and approval of significant corporate transactions. This concentration of ownership may also have the effect of delaying or preventing a change in control, which in turn could have a material adverse effect on the market price of the Company’s common stock or prevent stockholders from realizing a premium over the market price for their Shares.

The Company depends on its management team to manage its business effectively.

The Company's future success is dependent in large part upon its ability to understand and develop the business plan and to attract and retain highly skilled management, operational and executive personnel. In particular, due to the relatively early stage of the Company's business, its future success is highly dependent on its officers, to provide the necessary experience and background to execute the Company's business plan. The loss of any officer’s services could impede, particularly initially as the Company builds a record and reputation, its ability to develop its objectives, and as such would negatively impact the Company's possible overall development.

Government regulation could negatively impact the business.

The Company’s business segments may be subject to various government regulations in the jurisdictions in which they operate. Due to the potential wide scope of the Company’s operations, the Company could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. The Company may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. The Company’s operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to its business or industry.

The Company does not maintain certain insurance, including errors and omissions and indemnification insurance.

The Company has limited capital and, therefore, does not currently have a policy of insurance against liabilities arising out of the negligence of its officers and directors and/or deficiencies in any of its business operations. Even assuming that the Company obtained insurance, there is no assurance that such insurance coverage would be adequate to satisfy any potential claims made against the Company, its officers and directors, or its business operations. Any such liability which might arise could be substantial and may exceed the assets of the Company. The certificate of incorporation and by-laws of the Company provide for indemnification of officers and directors to the fullest extent permitted under Delaware law. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons, it is the opinion of the Securities and Exchange Commission that such indemnification is against public policy, as expressed in the Act, and is therefore, unenforceable.

Intellectual property and/or trade secret protection may be inadequate.

The Company has applied for minimal intellectual property and trade secret protection in aspects of its business. There can be no assurance that the Company can obtain effective protection against unauthorized duplication or the introduction of substantially similar solutions and services. Further, there is no guarantee that intellectual property currently in place adequately protects the Company or its business and operations.

Shares of common stock in the Company may be subject to resale restrictions imposed by Rule 144 of the Securities and Exchange Commission

The shares of common stock held by current shareholders are considered “restricted securities” subject to the limitations of Rule 144 under the Securities Act. In general, securities may be sold pursuant to Rule 144 after being fully-paid and held for more than 12 months. Shares purchased in this Offering may be subject to Rule 144 resale restrictions, and accordingly, investors may be subject to such resale limitations.

ITEM 3.02 Unregistered Sales of Equity Securities

Recent Sales of Unregistered Securities

The Company has issued the following securities in the last three (3) years. All such securities were issued pursuant to an exemption from registration of the Securities Act of 1933, as amended, as a transaction by an issuer not involving any public offering, as noted below. Each of these transactions was issued as part of a private placement of securities by the Company in which (i) no general advertising or solicitation was used, and (ii) the investors purchasing securities were acquiring the same for investment purposes only, without a view to resale. Furthermore, no underwriters participated or effectuated any of the transactions specified below. Also, no underwriting discounts or commissions applied to any of the transactions set forth below. All potential investors were contacted personally and possessed at the time of their investment bona fide substantive, pre-existing business relationships with the Company and/or its officers, directors and affiliates. No potential investors were contacted through other means, and no general advertising or general solicitation was used to solicit any investors.

(1) On July 31, 2012, 10,000,000 shares of common stock were issued to Tiber Creek Corporation for total consideration paid of $1,000.00. Subsequently, on May 16, 2013, the Company redeemed an aggregate of 9,750,000 of these shares for the redemption price of $975.00

(2) On July 31, 2012, 10,000,000 shares of common stock were issued to MB Americus, LLC for total consideration paid of $1,000.00. Subsequently, on May 16, 2013, the Company redeemed an aggregate of 9,750,000 of these shares for the redemption price of $975.00

(3)On May 17, 2013, the Company issued 8,750,000 shares of its common stock pursuant to Section 4(2) of the Securities Act of 1933, as amended, as follows:

Names of Shareholders	No. of shares		Consideration

E&P Management and Development Co., LLC		3,821,396	$	382.14
Caldwell US, Inc.		1,774,000	$	177.40
Rasan Associates, LLC		100,000	$	10.00
Delta O&G, LLC		552,604	$	55.26
Rasan Private Equity		100,000	$	10.00
Rasan Energy		2,400,000	$	240.00
Univest		2,000	$	0.20

(4) Beginning in July 2013, shares of common stock were issued by the Company to the shareholders named below pursuant to executed subscription agreements under a Regulation D offering or other private placement of securities.

Names of Shareholders	No. of shares		Consideration

Saad Salah Al-Ghanim		75,000	$	75,000
Ahmad Yousef Al-Khalaf		30,000	$	30,000
Yousef Yakoob Al-Salman		60,000	$	60,000
Al-Rawda Investment for Real Estate Development and Projects Management Co.		500,000	$	500,000
Al Majmow International Trading Est.		100,000	$	100,000
Al Wadi Limited Co.		100,000	$	100,000
Mashhhoor Ali O Almadodi		80,000	$	80,000
Fatmah Abdulgader A Radwan		60,000	$	60,000
Hajar Mashhor A Almadodi		30,000	$	30,000
Zainab Mashhour A Almadodi		30,000	$	30,000
Khawlah Mashhoor A Almadodi		30,000	$	30,000
Aisha Mashhour A Almadodi		30,000	$	30,000
Ali Mashhoor A Almadodi		30,000	$	30,000
Mahmoud Mashhour A Almadodi		30,000	$	30,000

Fuad Hamed Al-Humoud	10,000	$	10,000
Hamad Fuad Al-Humoud	10,000	$	10,000
Abdulaziz Fuad Al-Humoud	10,000	$	10,000
Khaled Rashed Al-Hajeri	10,000	$	10,000
Fakhrieh Muhammad Al-Hajeri	10,000	$	10,000
Munirah Khaled Al-Hajeri	10,000	$	10,000
Rashed Khaled Al-Hajeri	10,000	$	10,000
Sarah Khaled Al-Hajeri	10,000	$	10,000
Muhammad Khaled Al-Hajeri	10,000	$	10,000
Ali Khaled Al-Hajeri	10,000	$	10,000
Abdullah Khaled Al-Hajeri	10,000	$	10,000

(5) On September 25, 2013, the Company issued 13,337,280 shares of common stock to members of EPCO in connection with the EPCO Acquisition, as follows:

Shareholder Name	Number of Shares

Caldwell US, Inc.		6,542,580
Rasan Associates, LLC		274,377
EPMD, LLC		5,057,885
Delta O&G, LLC		1,462,438

(6) On September 25, 2013, the Company issued 13,296,950 shares of common stock to retire debt of EPCO in connection with the EPCO Acquisition, as follows:

Shareholder Name	Number of Shares

Caldwell US, Inc.		210,528
Rasan Associates, LLC		2,000,000
Rasan Private Equity, Inc.		1,498,592
EPMD, LLC		8,578,827
Delta O&G, LLC		1,009,003

(7) On September 25, 2013, the Company issued 10,115,770 shares of common stock to members of Prestige in connection with the Prestige Acquisition, as follows:

Shareholder Name	Number of Shares

Caldwell US, Inc.		5,057,885
EPMD, LLC		5,057,885

ITEM 5.02 Change in Number of Directors; Election of Directors

In connection with the Acquisitions, the Company has expanded its size of the board of directors to four (4) seats. The term of each director shall be three (3) years.

ITEM 5.06 Change in Shell Company Status

The Company has acquired EPCO and Prestige, each of which has a defined business plan, and accordingly, the Company has commenced operations.

ITEM 9.01 Financial Statements and Exhibits

Theaudited financial statements of EPCO, including balance sheets as of June 30, 2013, December 31, 2012 and December 31, 2011, respectively, and the related statements of operations, changes in members’ equity (deficit), and cash flows for the six months ending June 30, 2013, year ending December 31, 2012 and the year ended December 31, 2011, respectively, are included herewith.

Theaudited financial statements of Prestige, including balance sheets as of June 30, 2013, December 31, 2012 and December 31, 2011, respectively, and the related statements of operations, changes in members’ equity (deficit), and cash flows for the six months ending June 30, 2013, year ending December 31, 2012 and the year ended December 31, 2011, respectively, are included herewith.

Exhibits

2.1+		Exchange Agreement
2.2+		Exchange Agreement
10.1+		Coalbed Methane Lease
10.2+		Amendments to Coalbed Methane Lease
10.3+		Agreement with Regency Gas
10.4+		Amendments to Agreement with Regency Field Services

Previously filed with Form 8-K on October 4, 2013 as the same exhibit number as the exhibit number listed here, and incorporated herein by this reference.

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 hereunder duly authorized.

	WOODGATE ENERGY CORPORATION

Date: November 22, 2013	/s/ Fuad Al-Humoud
	President

Clay Thomas, P.C.

Certified Public Accountant

P.O. Box 311195

Houston, Texas 77231

(281) 253-9637 (office)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Members of E & P Co., LLC

I have audited the accompanying statement of financial position of E & P Co., LLC as of June 30, 2013 and December 31, 2012, and the related statements of income, members’ equity and cash flows for each of the periods ending June 30, 2013 and December 31, 2012. E & P Co., LLC’s management is responsible for these financial statements. My responsibility is to express an opinion on these financial statements based on our audits.

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

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of E & P Co., LLC as of June 30, 2013 and December 31, 2012, and the results of its operations and its cash flows for each of the periods ending June 30, 2013 and December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

Houston, Texas

September 10, 2013

E & P Co., LLC

Statement of Financial Position

For the Period Ending June 30, 2013 and December 31, 2012

	June 30,			December 31,
	2013			2012
ASSETS
Current Assets
Cash and Cash Equivalents		34,900			47,762
Accounts Receivable		-			751,231
Total Current Assets		34,900			798,993

Other Current Assets
Accrued Gas Sales Income		655			933
Prepaid Expense		12,500			12,500
Refundable Deposits		11,204			11,204
Total Other Current Assets		24,359			24,637

Total Current Assets		59,259			823,629

Fixed Assets
Intangible Assets		8,157,352			-
Project Under Development		9,137,323			18,318,960
Property and Equipment		33,403			33,403
Furniture and Fixtures		39,236			39,236
Accumulated Depreciation		(70,470	)		(69,746	)
Total Fixed Assets		17,296,844			18,321,853

TOTAL ASSETS		17,356,103			19,145,482

LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable		235,508			690,137
Accrued Expense		360,049			126,563
Payroll Tax Liabilities		10,063			8,274
Total Accounts Payable		605,620			824,973

Other Current Liabilities
Notes Payable		798,367			714,928
Total Other Current Liabilities		798,367			714,928
Total Current Liabilities		1,403,987			1,539,901

Long-Term Liabilities		9,092,467			12,937,500
Total Long-Term Liabilities		9,092,467			12,937,500

Total Liabilities		10,496,454			14,477,401

Equity
Members' Capital Accounts		6,859,649			4,668,081
Total Equity		6,859,649			4,668,081

TOTAL LIABILITIES & EQUITY		17,356,103			19,145,482

E & P Co., LLC

Statement of Operations

For the Period Ending June 30, 2013 and December 31, 2012

	June 30,			December 31,
	2013			2012

Ordinary Income
Income
Income		2,141			4,420
Total Income / (loss)		2,141			4,420
Gross Profit / (loss)		2,141			4,420
Direct Operating Costs
Geographical and Geological		2,212			1,845
Royalty		19,594			589
Total Direct Operating Costs		21,806			2,433

General and Administrative Costs
Bad Debt		107,302			-
Bank charges		453			345
Communication		412			6,395
Depreciation and Amortization		723			2,893
Employee Insurance		4,512			8,731
Insurance		8,708			29,436
License Fees		126			124
Miscellaneous		265			1,187
Office Equipment		930			3,308
Payroll		223,869			581,856
Professional Fees		358,174			149,228
Rent		19,692			29,568
Stationery		1,125			2,076
Taxes		4,028			-
Travel and Accommodations		11,375			47,880
Utilities		1,667			961

Total Professional Fees		743,361			863,989

Total Expense		765,167			866,422

Other Income/Expense
Other Income		-			241,526
Other Expense		-			-
Total Other Income/Expense		-			241,526

Net Ordinary Income / (loss)		(763,026	)		(620,477	)

Net Income / (loss)		(763,026	)		(620,477	)

E & P Co., LLC

Statement of Cash Flows

For the Period Ending June 30, 2013 and December 31, 2012

	June 30,			December 31,
	2013			2012

Operating Activities
Net Income		(763,026	)		(620,477	)
Adjustments to reconcile Net Income to net cash provided by operations:
Accounts Payable		(454,619	)		508,686
Accounts Receivable		751,231			(437,561	)
Accrued Expense		233,486			188,834
Accrued Gas Sales Income		279			(690	)
Accrued Interest Income		-			43,844
Accrued Interest Expense		-			-
Credit Cards		(10	)		(17	)
Deposits		-			(3,928	)
Depreciation		723			2,893
Investments		-			-
Payroll Tax Liabilities		1,789			8,305
Prepaid Expense		-			12,352
Net cash provided / (used) by Operating Activities		(230,147	)		(297,757	)

Investing Activities
Intangible Assets		(8,157,352	)		-
Project Under Development		9,181,637			(965,361	)
Property and Equipment		-			(388	)
Net cash provided / (used) by investing activities:		1,024,284			(965,748	)

Financing Activities
Investment from Members					1,515,000
Notes Payable		(3,761,593	)		(109,912	)
Members' Equity		2,954,595			-
Net cash provided by Financing Activities		(806,998	)		1,405,088
Net cash increase for period		(12,861	)		141,583
Cash at Beginning of Period		47,762			(93,821	)
Cash at end of period		34,900			47,762

E & P Co., LLC

Statement of Members' Equity

For the Period Ending June 30, 2013

	Members' Capital		Accumulated Earnings			Total Members' Equity

Balance January 1, 2010		3,577,344		(2,245,982	)		1,331,362

Net Income / (loss)		-		(874,748	)		(874,748	)

Balance December 31, 2010		3,577,344		(3,120,730	)		456,614

Member Investment		4,000,000		-			4,000,000

Net Income / (loss)		-		(683,055	)		(683,055	)

Balance December 31, 2011		7,577,344		(3,803,785	)		3,773,559

Member Investment		1,515,000		-			1,515,000

Net Income / (loss)		-		(620,477	)		(620,477	)

Balance December 31, 2012		9,092,344		(4,424,262	)		4,668,082

Member Investment		2,954,593		-			2,954,593

Net Income / (loss)		-		(763,026	)		(763,026	)

Balance June 30, 2013		12,046,937		(5,187,288	)		6,859,649

Notes to the financial statements

General information

E & P Co., LLC (the Company) is engaged in the development, drilling and production of coal bed methane gas on a concession located in the State of Louisiana.

The company was formed in Texas in June 2005 as a Texas Limited Liability Company and is registered and domiciled in the State of Texas. Caldwell (US), Inc., E & P Management and Development, LLC (EPMD), Rasan Associates, LLC and Delta O & G, LLC own interest in the company. See Note 7.

The Company commenced developing wells and raising funds to finance well development activities, and initiated the process of drilling the third gas production well during 2010 and completed lateral drilling of the third well in the 2011 fiscal year. The company has gone form an early stage development with on-going concern business in 2008, to an advanced stage development, through the continued capital commitment from the shareholders. On June 25^th 2013, E&P LLC entered into a Participation Agreement with Prestige O&G, LLC to regulate their partnership in current CBM Project where each holds 50% interest in the Project.

With the investment made since 2008 in aggregate of $17 million in the project (mutually held with Prestige O&G, LLC), the company has a complete, fully operational processing facility as per the standards and requirements of Regency main interstate sales line, in addition to three developed and producing wells. The gas processing facility is designed to accommodate roughly 30 wells.

In the course of its development activities, the Company has sustained operating losses and expects such losses to continue through at least the second quarter of 2013 due to the fact that the developed wells will remain under the stabilization phase during this period.

The Company targets to achieve a proven reserve status for its three existing wells during year 2013, with minor developments of its processing facility and addition of a second water disposal well. Also, the Company has obtained permits to drill three more lateral wells. The Company expects to finance its operations primarily through its existing cash and future financing from its members and or through IPO which the shareholders have approved for the company to go public. The shareholders anticipate bringing a Shell Company (a public reporting company) on board and the Company will be acquired by such Shell Company.

The Company’s ability to continue as a going concern will require the Company to obtain additional capital in the future to continue its operations and to fund its debt payments.

Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all of the financial statements presented. This is the sixth financial reporting period.

2.1

Basis of preparation

The financial statements of E & P Co., LLC have been prepared in accordance with International Financial Reporting Standards. The financial statements have been prepared under the historical cost convention.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4.

2.2

Consolidation

(a)

Associates

Associates are all entities over which the group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognized at cost. The company’s investment in associates is accounted for using the equity method of accounting and is initially recognized at cost.

The company’s share of its associate’s post-acquisition profits or losses is recognized in the income statement, and its share of post-acquisition movements in reserves is recognized in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the company’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the company does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealized gains on transactions between the company and its associates are eliminated to the extent of the company’s interest in the associate. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the associate has been changed where necessary to ensure consistency with the policies adopted by the company. Dilution gains and losses arising in investments are recognized in the income statement.

2.3

Financial assets

2.3.1

Classification

The company classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

(a)

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.

(b)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The company’s loans and receivables compromise ‘trade and other receivables’ and cash and cash equivalents in the balance sheet.

(c)

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.

2.3.2

Recognition and measurement

Regular purchases and sales of financial assets are recognized on the trade-date – the date on which the company commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss is initially recognized at fair value, and transaction costs are expensed in the Statement of Income. Financial assets are derecognized when the rights to receive cash flows from investments have expired or have been transferred or the company has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortized cost.

Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ are presented in the Statement of Income within ‘other (losses)/gains – net’ in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognized in the income statement as part of other income when the company’s right to receive payments is established.

2.4

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

2.5

Impairment of financial assets

(a)

Assets carried at amortized cost

The company assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The criteria that the company uses to determine that there is objective evidence of an impairment loss include:

Significant financial difficulty of the issuer or obligor;

A breach of contract, such as a default or delinquency in interest or principal payments;

The company, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider;

It becomes probable that the borrower will enter bankruptcy or other financial reorganization;

The disappearance of an active market for that financial asset because of financial difficulties; or

Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including:

Adverse changes in the payment status of borrowers in the portfolio; and

National or local economic conditions that correlate with defaults on the assets in the portfolio.

The company first assesses whether objective evidence of impairment exists.

The amount of loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit loss that have not been incurred) discounted at the asset’s original effective interest rate. The asset’s carrying amount is reduced and the amount of loss is recognized in the income statement. As a practical expedient, the company may choose to measure impairment on the basis of the instrument’ fair value using an observable market price. Impairment of trade receivables is described in note 2.6.

2.6

Trade receivables

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment.

2.7

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with maturities of three months or less, and bank overdrafts.

2.8

Share capital

Ordinary units are classified as equity. Incremental costs directly attributable to the issue of new units or options are shown in equity as a deduction, net of tax, from the proceeds.

2.9

Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

2.10

Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. To the extent that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a pre-payment for liquidity services and amortized over the period of the facility to which it relates.

2.11

Current and deferred income tax

The company is organized as a Texas Limited Liability Company. For income tax purposes, it reports as a partnership under Title 26 United States Codes. Under partnership rules, the company’s income is taxed to the shareholders and as such, owes no federal income tax.

The company does have to report and file a Texas Margin (Franchise) Tax and information return for its operations in which income has a nexus in the state of Texas.

2.12

Provisions

Provisions for environmental restoration, restructuring costs and legal claims are recognized when: the company has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions compromise lease terminations penalties and employee termination payments. Provisions are not recognized for future operating losses.

When there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of expenditures expected to be required to settle the obligation using a rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as an expense.

2.13

Revenue Recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the company’s activities. Revenue is shown net of tax, returns, rebates and discounts.

The company recognizes revenue when the amount of revenue can be reliably measured. It is probable that future economic benefits will flow to the entity and when the specific criteria have been met for each of the group’s activities as described below. The company bases its estimates on historic results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

2.14

Successful efforts accounting

The company utilizes the successful efforts accounting method, a method commonly used in the oil and gas extractive industries. Expenditures for successful projects are deferred while those for unsuccessful ones are immediately expensed. Capitalized costs applicable to producing properties are amortized based on the reserves produced.

Financial risk management

3.1

Financial risk factors

The company’s operations and earnings are subject to risks from changing conditions in competitive, economic, political, legal, regulatory, social, industry, business and financial fields. Investors should carefully consider these risks. If these risks are not adequately managed, they could have a material adverse effect separately or in combination on the company’s operational performance, earnings, or our financial condition (see details below).

The company’s operating results and financial condition are exposed to fluctuating prices for oil, natural gas, oil products and chemicals.

The company’s future hydrocarbon production depends on the delivery of capital projects as well as the ability to replace oil and gas reserves.

The company’s ability to achieve its strategic objectives depends on the company’s reaction to competitive forces.

An erosion of the company’s business reputation would adversely impact its license to operate, its brand, and its ability to secure new resources and its financial performance.

Rising climate change concerns could lead to additional regulatory measures that may result in project delays and higher cost.

The nature of the company’s operations exposes us to a wide range of significant health, safety, security and environment (HSSE) risks.

The company’s exposure to a wide range of political developments and resulting changes to laws and regulations.

The company’s investment in joint ventures and associated companies may reduce its degree of control as well as its ability to identify and manage risks.

The company’s future performance depends on successful deployment of new technologies.

Skilled employees are essential to the successful delivery of the company’s strategy.

The company is subject to many legal regimes, with different fiscal and regulatory systems, as well as to changes in legislation.

Economic and financial market conditions affect profitability.

There exists no estimation of the reserves of associates as of December 31, 2011. Additionally, reserve estimation is not an exact calculation and involves subjective judgments based on available information.

The company faces property and liability risks and does not insure against all potential losses.

3.2 Capital Risk Management

The company’s objectives when managing capital are to safeguard the company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure and to reduce the cost of capital.

In order to maintain or adjust the capital structure, the company may adjust the amount of draws made by the shareholders, issue new shares or sell assets to reduce debt.

Critical accounting estimates and judgments

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

4.1.

Critical accounting estimates and assumptions

The company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The accounting estimates and assumptions that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

(a)

Franchise taxes

Significant judgment is required in determining the provision for Texas Margin Tax. There are many transactions and calculations for which the ultimate tax determination is uncertain. The company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were originally recorded, such differences will impact the current liabilities in the period in which such determination is made.

Notes Receivable.

5.1.

On June 30, 2013, the members unanimously elected to net the entirety of the outstanding balances of the Notes Receivable against the corresponding outstanding balances the Company owed in Notes Payable.

Intangible Assets

6.1.

On June 30, 2013, the members elected to recognize the value of the proprietary well completion processes developed by the engineers of the Company to be valued at $8,157,352.

Subsequent Events.

7.1.

On September 6, 2013, the Company entered into a Business Combination with Woodgate Energy Corporation, a public reporting company. E&P Co., LLC became fully-owned subsidiary of Woodgate Energy Corporation. Following the business combination, the members unanimously voted to acquire capital stock in Woodgate Energy Corporation utilizing a stock swap for its entire equity interest in the amount of $6,859,649.

7.2.

On September 6, 2013, the majority of the holders of outstanding debt converted their holdings into equity into Woodgate Energy Corporation.

Clay Thomas, P.C.

Certified Public Accountant

P.O. Box 311195

Houston, Texas 77231

(281) 253-9637 (office)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Members of E & P Co., LLC

I have audited the accompanying Statement of Financial Position of E & P Co., LLC as of December 31, 2012 and 2011, and the related Statements of Operations, Changes of Members’ Equity and Cash Flows for each of the two years ending December 31, 2012. E & P Co., LLC’s management is responsible for these financial statements. My responsibility is to express an opinion on these financial statements based on my audits.

In my opinion, the financial statements referred to above present fairly, in all material respects, the Statement of Financial Position of E & P Co., LLC as of December 31, 2012 and 2011, and the results of its Statements of Operations, Changes in Members’ Equity and its Cash Flows for each of the two years ending December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

Houston, Texas

February 12, 2013

E & P Co., LLC

Statement of Financial Position

For the Years Ending December 31, 2012 and 2011

	2012			2011
ASSETS
Current Assets
Cash and Cash Equivalents		47,762			(93,821	)
Accounts Receivable		752,164			357,758
Total Current Assets		799,926			263,937

Other Current Assets
Accrued Gas Sales Income		-			-
Prepaid Expense		12,500			24,852
Refundable Deposits		11,204			7,276
Total Other Current Assets		23,704			32,128

Total Current Assets		823,630			296,065

Fixed Assets
Project Under Development		18,318,960			17,353,603
Property, Plant and Equipment		2,893			5,399
Total Fixed Assets		18,321,853			17,359,002

Non-Current Assets
Investment Property		-			1,542,510
Total Non-Current Assets		-			1,542,510

TOTAL ASSETS		19,145,483			19,197,577

LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable		698,410			116,512
Accrued Expense		126,563			415,156
Total Accounts Payable		824,973			531,668
Other Current Liabilities
Notes Payable		714,928			8,892,350
Total Other Current Liabilities		714,928			8,892,350
Total Current Liabilities		1,539,901			9,424,018

Long-Term Liabilities		12,937,500			6,000,000
Total Long-Term Liabilities		12,937,500			6,000,000

Total Liabilities		14,477,401			15,424,018

Equity
Members' Capital Accounts		9,092,344			7,577,344
Retained Earnings		(4,424,262	)		(3,803,785	)
Total Equity		4,668,082			3,773,559
TOTAL LIABILITIES & EQUITY		19,145,483			19,197,577

See accompanying notes to the financial statements.

E & P Co., LLC

Statement of Operations

For the Years Ending December 31, 2012 and 2011

	2012			2011

Ordinary Income
Income
Income		4,420			13,046
Total Income / (loss)		4,420			13,046
Gross Profit / (loss)		4,420			13,046
Direct Operating Costs
Geographical and Geological		1,844			1,752
Royalty		589			2,124
Total Direct Operating Costs		2,433			3,876

General and Administrative Costs
Advertising and Promotion		-			2,187
Bank charges		345			804
Depreciation and Amortization		2,893			4,851
Insurance		29,436			15,227
Legal		133,416			51,737
License Fees		124			2,397
Miscellaneous		1,187			1,863
Payroll		590,587			469,995
Professional Fees		15,481			39,630
Property Tax		332			1,721
Rent		29,568			24,000
Supplies		5,384			7,278
Telephone		6,395			7,927
Travel		47,880			102,642
Utilities		962			1,116
Total General and Administrative Cost		863,990			733,375
Total Expense		866,423			737,251

Other Income/Expense
Other Income		241,526			41,150
Total Other Income/Expense		241,526			41,150

Net Other Income / (loss)		241,526			41,150
Net Income / (loss)		(620,477	)		(683,055	)

See accompanying notes to the financial statements.

E & P Co., LLC

Statement of Cash Flows

For the Years Ending December 31, 2012 and 2011

Increase (Decrease) in Cash and Cash Equivalents

	2012			2011

Operating Activities
Net Income		(620,477	)		(683,055	)
Adjustments to reconcile Net Income to net cash provided by operations:
Accounts Payable		573,616			(243,564	)
Accounts Receivable		(437,561	)		(129,979	)
Accrued Expense		113,226			(4,743	)
Accrued Gas Sales Income		(690	)		-
Accrued Interest Income		43,844			(24,806	)
Accrued Interest Expense		(401,820	)		-
Credit Cards		(17	)		(613	)
Deposits		(3,928	)		(7,276	)
Depreciation		2,893			4,851
Investments		1,542,510			-
Payroll Tax Liabilities		8,305			(24,784	)
Prepaid Expense		12,352			-
Restricted Cash		-			161,000
Net cash provided / (used) by Operating Activities		832,253			(952,969	)

Investing Activities
Purchase of Certificate of Deposit		-			-
Project Under Development		(965,360	)		(5,285,613	)
Property and Equipment		(388	)		(1,337	)
Net cash provided / (used) by investing activities:		(965,748	)		(5,286,950	)

Financing Activities
Investment from Members		1,515,000			4,000,000
Notes Payable		(1,239,922	)		1,537,350
Members' Equity		-			-
Net cash provided by Financing Activities		275,078			5,537,350
Net cash increase for period		141,583			(702,569	)
Cash at Beginning of Period		(93,821	)		608,748
Cash at end of period		47,762			(93,821	)

Supplemental Disclosures

Cash paid during the year for:
Interest (net of amount capitalized)		-			-
Income Taxes		-			-

See accompanying notes to the financial statements.

E & P Co., LLC

Statement of Members' Equity

For the Year Ending December 31, 2012

	Members' Capital		Accumulated Earnings			Total Members' Equity

Balance January 1, 2010		3,577,344		(2,245,982	)		1,331,362

Net Income / (loss)		-		(874,748	)		(874,748	)

Balance December 31, 2010		3,577,344		(3,120,730	)		456,614

Member Investment		4,000,000		-			4,000,000

Net Income / (loss)		-		(683,055	)		(683,055	)

Balance December 31, 2011		7,577,344		(3,803,785	)		3,773,559

Member Investment		1,515,000					1,515,000

Net Income/(loss)				(620,477	)		(620,477	)

Balance December 31, 2012		9,092,344		(4,424,262	)		4,668,082

See accompanying notes to the financial statements.

Notes to Financial Statements

The accompanying financial statements and the supporting and supplemental material are the responsibility of the management of E & P Co., LLC.

The Company’s principal business is energy, involving exploration, production, transportation and sale of crude oil and natural gas.

The preparation of the financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP) requires management to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates.

Summary of Accounting Policies

Revenue Recognition. The Company generally sells crude oil, natural gas and petroleum at prevailing market prices. In some cases (e.g., natural gas), products may be sold under long-term agreements, with periodic price adjustments. Revenues are recognized when the products are delivered, which occurs when the customer has taken title and has assumed the risks and rewards of ownership, process are fixed or determinable and collectability is reasonably assured.

Revenues from the production of natural gas properties in which the Company has an interest with other producers are recognized on the basis of the Company’s net working interest. Difference between actual production and net working interest volumes are not significant.

Purchase and sales of inventory with the same counterparty that are entered in to contemplation of one another are combined and recorded as exchanges measured at the book value of the item sold.

Sales-Based Taxes. The Company reports sales and excise taxes on sales transactions on a gross basis of the Statement of Income (included in both revenues and costs).

Derivative Instruments. The Company does not currently make use of derivative instruments. When such use is enabled, the Company will not engage in speculative derivative activities or derivative trading activities, nor use derivatives with leveraged features. Should the Company enter into derivative transactions, it will be to offset exposures associated with interest rates, foreign currency exchange rates and hydrocarbon prices that arise from existing assets, liabilities and forecasted transactions.

The gains and losses resulting from changes in the fair value of derivatives will be recorded in income. In some cases, the Company may designate derivatives as fair value hedges, in which the gains and losses are offset in income by the gains and losses arising from changes in the fair value of the underlying hedged item.

Fair Value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Hierarchy Levels 1, 2 and 3 are terms for the priority of inputs to valuation techniques used to measure fair value. Hierarchy Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Hierarchy Level 2 inputs are inputs other than quoted prices included within Level 1 that are directly or indirectly observable for the asset or liability. Hierarchy Level 3 inputs are inputs that are not observable in the market.

Inventories. Crude oil, products and merchandise inventories are carried a the lower of current market value or cost (generally determined under the last-in, first-out method – LIFO). Inventory costs include expenditures and other charges (including depreciation) directly and indirectly incurred in bringing inventory to its existing condition and location. Selling expenses and general and administrative expenses are reported as period costs and excluded from inventory costs. Inventories of materials and supplies are valued at cost or less.

Property, Plant and Equipment. Depreciation, depletion, and amortization, based on cost less estimated salvage value of the asset, are primarily determined under either the unit-of-production or the straight-line method, which is based on an estimated asset service life taking obsolescence into consideration. Maintenance and repairs, including planned major maintenance, are expensed as incurred. Major renewals and improvements are capitalized and the assets replaced are retired.

Interest costs incurred to finance expenditures during the construction phase of multi-year projects are capitalized as part of the historical cost of acquiring the constructed assets. The project construction phase commences with the development of the detailed engineering design and ends when the constructed assets are ready for their intended use. Capitalized interest costs are included in property, plant and equipment and are depreciated over the service life of the related assets.

The Company uses the “successful efforts” method to account for its exploration and production activities. Under this method, costs are accumulated on a field-by-field basis with certain exploratory expenditures and exploratory dry holes being expensed as incurred. Costs of productive wells and development dry holes are capitalized and amortized on the unit-of-production method.

The Company carries as an asset exploratory well costs when the well has found a sufficient quantity of reserves to justify its completion as a producing well and where the Company is making sufficient progress assessing the reserves and the economic and operating viability of the project. Other exploratory expenditures, including geophysical costs and annual lease rentals, are expensed as incurred.

Acquisition costs of proved properties are amortized using a unit-of-production method, computed on the basis of total proved oil and gas reserves.

Capitalized exploratory drilling and development costs associated with productive depletable extractive properties are amortized using unit-of-production rates based on the amount of proved reserves of oil, gas and other minerals that are estimated to be recoverable from existing facilities using current operating methods.

Under the unit-of-production method, oil and gas volumes are considered produced once they have been measured through meters at custody transfer or sales transactions points at the outlet valve on the lease or field storage tank.

Production costs are expensed as incurred. Production involves lifting oil and gas to the surface and gathering, treating, field processing and field storage of the oil and gas. The production function normally terminates at the outlet valve on the lease or field production storage tank. Production costs are those incurred to operate and maintain the Company’s wells and related equipment and facilities. They become part of the cost of oil and gas produced. These costs, sometimes referred to as lifting costs, include such items as labor costs to operate the wells and related equipment; repair and maintenance costs on the wells and equipment; materials, supplies, and energy costs required to operate the wells and related equipment; and administrative expenses related to the production activity.

Proved oil and gas properties held by the Company are reviewed for impairment whenever events or changes in circumstances indicate the carrying amounts may not be recoverable. Assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets.

The Company estimates future undiscounted cash flows of the affected properties to judge the recoverability of carrying amounts. Cash flows used in impairment evaluations are developed using annually updated corporate plan investment evaluation assumptions for crude oil commodity prices, refining and chemical margins, and foreign currency exchange rates. Annual volumes are based on field production profiles, which are also updated annually. Prices for natural gas and other products are based on corporate plan assumptions developed annually and also for investment evaluation purposes. Cash flow estimates for impairment testing exclude derivative instruments.

Impairment analyses are generally based on proved reserves. Where probable reserves exist, an approximately risk-adjusted amount of these reserves may be included in the impairment evaluation. An asset group would be impaired if the undiscounted cash flows were less than its carrying value. Impairments are measured by the amount the carrying value exceeds fair value.

Significant unproved properties are assessed for impairment individually, and valuation allowances against the capitalized costs are recorded based on the estimated economic chance of success and the length of time that the Company expects to hold the properties. Properties that are not individually significant are aggregated by groups and amortized based on development risk and average holding period. The valuation allowances are reviewed at least annually.

Gains on sales of proved and unproved property are only recognized when there is neither uncertainty about the recovery of costs applicable to any interest retained nor any substantial obligation for future performance by the Company.

Losses on properties sold are recognized when incurred or when the properties are held for sale and the fair value of the properties is less than the carrying value.

Asset Retirement Obligations and Environmental Liabilities. The Company incurs retirement obligations for certain assets. The fair values of these obligations are recorded as liabilities on a discounted basis, which is typically at the time the assets are installed. The costs associated with these liabilities are capitalized as part of the related assets and depreciated. Over time, the liabilities are accreted for the change in their present value.

Liabilities for environmental costs are recorded when it is probable that obligations have been incurred and the amounts can be reasonably estimated. These liabilities are not reduced by possible recoveries from third parties and projected cash expenditures are not discounted.

Accounting Changes

The Company did not adopt authoritative guidance in 2012 that had a material impact on the Company’s financial statements.

Cash Flow Information

The Statement of Cash Flows provides information about changes in cash and cash equivalents. Highly liquid investments with maturities of three months or less when acquired are classified as cash equivalents.

Long-Term Debt

At December 31, 2012, long-term debt consisted of $12,937,500 due in U.S. dollars. This amount excludes that portion of long-term debt which matures within one year and is included in current liabilities.

Summarized long-term debt at year end 2012 and 2011 are shown in the table below:

	2012		2011
E & P Management and Development, LLC		6,000,000		6,000,000
Prestige O & G, LLC		4,537,500		4,125,000
Caldwell (US) Inc.		-		400,000
Rasan Private Equity		2,400,000		2,000,000
Total		12,937,500		12,525,000

Related Party Transactions

Summarized transactions involving related parties at year end 2012 and 2011 are shown in the table below:

Accounts Receivable

	2012			2011
Balance at January 1		357,515			200,390
E & P Co. International, LLC		401,925			95,029
Caldwell (US) Inc.		6,270			6,899
E & P Management and Development, LLC		5,900			7,274
Prestige O & G, LLC		20,934			23,052
Delta O & G, LLC		400			308
Rasan Private Equity		2,132			-
Accrued Interest Income		(43,844	)		24,563

At December 31		751,232			357,515

Notes Payable

	2012			2011
Balance at January 1		14,892,350			13,355,000
Rasan Private Equity		(1,317,350	)		112,350
Prestige O & G, LLC		412,500			375,000
Mashhoor Almadodi		-			500,000
Osman Kaldirim, Sr.		-			150,000
Rasan Associates, LLC		39,928
Rasan Energy		25,000			400,000
Caldwell (US) Inc.		(400,000	)		-
At December 31		13,652,428			14,892,350

Investments, Advances and Long-Term Receivables

The balance of investments at year end 2012 and 2011 was $0 and $1,542,510, respectively. The investments were held with Univest, Inc., an entity located in the Cayman Islands, for the purpose of participating in investment transactions in compliance with Islamic Sharia’s principles. The investment agreement is subject to the laws of the State of New York to the extent they do not conflict with the provisions of Islamic Sharia principles. Venue for any dispute as to the terms of the agreement is subject to arbitration with a duly authorized representative of the American Arbitration Association.

In 2012, Rasan Private Equity assumed ownership and possession of the investment in the Univest account in satisfaction of its outstanding loan.

Litigation and other Contingencies

A variety of claims have been made against E & P Co., LLC in a currently pending lawsuit. Management has regular litigation reviews, including updates from corporate and outside counsel, to assess the need for accounting recognition or disclosure of these contingencies. The Company accrues an undiscounted liability for those contingencies where the incurrence of loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For purposes of our contingency disclosures, “significant” includes material matters as well as other matters which management believes should be disclosed. E & P Co., LLC will continue to defend itself vigorously in these matters. Based on a consideration of all relevant facts and circumstances, the Company does not believe the ultimate outcome of any currently pending lawsuit against E & P Co., LLC will have a material adverse effect upon the Company’s operations, financial condition, or financial statements taken as a whole.

On April 16, 2009, Noram Drilling Company filed an original complaint against E & P Co. International, LLC and E & P Co., LLC in the 37^th District Court of Louisiana, arguing E & P Co., LLC was liable for breach of contract by E & P Co., LLC under the theory of single enterprise liability. The Company argues no such single enterprise liability exists as the contract is to be construed under Texas law.

Income, Sales-Based and Other Taxes

The Company is organized as a Limited Liability Company under the laws of the State of Texas. For federal income tax purposes, the Company is treated as a partnership with all income and expense flowing through to the members. As such, the Company has no federal income tax liability.

The Company has not been subjected to severance tax for sales of gas from its Louisiana project. This severance tax is paid by the buyer and withheld from the settlement amount on the sale.

Supplemental Information on Oil and Gas Exploration and Production

The results of operations for producing activities shown below do not include earnings from nonoperating activities.

Results of Operations	2012		2011
Revenue
Sales to third parties		4,420		13,046

Production costs excluding taxes		2,433		3,876
Exploration expenses		-		-
Depreciation and depletion		-		-
Taxes other than income		-		-
Related income tax		-		-
Results of producing activities		1,987		9,170

Capitalized Costs	2012		2011
Property (acreage)
Unproved		29,322		19,322
Total property costs		29,322		19,322
Producing assets		18,289,638		17,334,277
Incomplete construction		-		-
Total capitalized		-		-
Accumulated depreciation and depletion		-		-
Net capitalized costs		18,318,960		17,353,599

10.

Subsequent Events

On January 16, 2013, the 37^th District Court in the Parish of Caldwell, Louisiana, the court granted E & P Co., LLC’s Motion for Summary Judgment, holding the Company not to be a party to the drilling contract. The Court further denied NorAm’s Motion for Summary Judgment for damages.

Clay Thomas, P.C.

Certified Public Accountant

8302 Hausman Road

No. 518

San Antonio, Texas 78249

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Members of E & P Co., LLC

I have audited the accompanying Statement of Financial Position of E & P Co., LLC as of December 31, 2011 and 2010, and the related Statements of Operations, Changes of Members’ Equity and Cash Flows for each of the two years ending December 31, 2011. E & P Co., LLC’s management is responsible for these financial statements. My responsibility is to express an opinion on these financial statements based on my audits.

In my opinion, the financial statements referred to above present fairly, in all material respects, the Statement of Financial Position of E & P Co., LLC as of December 31, 2011 and 2010, and the results of its Statements of Operations, Changes in Members’ Equity and its Cash Flows for each of the two years ending December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.

San Antonio, Texas

April 11, 2012

E & P Co., LLC

Statement of Financial Position

For the Years Ending December 31, 2011 and 2010

	2011			2010
ASSETS
Current Assets
Cash and Cash Equivalents		(93,821	)		769,749
Accounts Receivable		357,758			202,971
Total Current Assets		263,937			972,720

Other Current Assets
Prepaid Expense		24,852			24,852
Refundable Deposits		7,276			-
Total Other Current Assets		32,128			24,852

Total Current Assets		296,065			997,572

Fixed Assets
Project Under Development		17,353,603			12,067,986
Property, Plant and Equipment		5,399			8,913
Total Fixed Assets		17,359,002			12,076,899

Non-Current Assets
Investment Property		1,542,510			1,542,510
Total Non-Current Assets		1,542,510			1,542,510

TOTAL ASSETS		19,197,577			14,616,981

LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable		116,512			360,076
Accrued Expense		415,156			445,291
Total Accounts Payable		531,668			805,367

Other Current Liabilities
Notes Payable		2,367,350			1,605,000
Total Other Current Liabilities		2,367,350			1,605,000
Total Current Liabilities		2,899,018			2,410,367

Long-Term Liabilities		12,525,000			11,750,000
Total Long-Term Liabilities		12,525,000			11,750,000

Total Liabilities		15,424,018			14,160,367

Equity
Members' Capital Accounts		7,577,344			3,577,344
Retained Earnings		(3,803,785	)		(3,120,730	)
Total Equity		3,773,559			456,614
TOTAL LIABILITIES & EQUITY		19,197,577			14,616,981

E & P Co., LLC

Statement of Operations

For the Years Ending December 31, 2011 and 2010

	2011			2010

Ordinary Income
Income
Income		13,046			2,582
Total Income / (loss)		13,046			2,582
Gross Profit / (loss)		13,046			2,582
Direct Operating Costs
Geographical and Geological		1,752			3,135
Royalty		2,124			413
Total Direct Operating Costs		3,876			3,548

General and Administrative Costs
Advertising and Promotion		2,187			1,656
Bad Debt		-			108,265
Bank charges		804			630
Depreciation and Amortization		4,851			7,663
Insurance		15,227			18,775
Legal		51,737			56,658
License Fees		2,397			9,676
Miscellaneous		1,863			1,491
Payroll		469,995			398,319
Professional Fees		39,630			157,807
Property Tax		1,721			-
Rent		24,000			24,000
Supplies		7,278			13,188
Telephone		7,927			8,076
Travel		102,642			116,582
Utilities		1,116			837
Total General and Administrative Cost		733,375			923,623

Total Expense		737,251			927,171

Other Income/Expense
Other Income		41,150			49,841
Total Other Income/Expense		41,150			49,841

Net Other Income / (loss)		41,150			49,841

Net Income / (loss)		(683,055	)		(874,748	)

E & P Co., LLC

Statement of Cash Flows

For the Years Ending December 31, 2011 and 2010

Increase (Decrease) in Cash and Cash Equivalents

	2011			2010

Operating Activities
Net Income		(683,055	)		(874,748	)
Adjustments to reconcile Net Income to net cash provided by operations:
Accounts Payable		(243,564	)		(729,367	)
Accounts Receivable		(129,979	)		49,840
Accrued Expense		(4,743	)		487,730
Accrued Interest Income		(24,806	)		(6,640	)
Credit Cards		(613	)		(235	)
Deposits		(7,276	)		-
Depreciation		4,851			7,663
Payroll Tax Liabilities		(24,784	)		11,855
Prepaid Expense		-			654
Restricted Cash		161,000			(161,000	)
Net cash provided / (used) by Operating Activities		(952,969	)		(1,214,248	)

Investing Activities
Purchase of Certificate of Deposit		-			(200	)
Project Under Development		(5,285,613	)		(3,544,207	)
Property and Equipment		(1,337	)		(3,583	)
Net cash provided / (used) by investing activities:		(5,286,950	)		(3,547,990	)

Financing Activities
Investment from Members		4,000,000			-
Notes Payable		1,537,350			5,000,000
Members' Equity		-			-
Net cash provided by Financing Activities		5,537,350			5,000,000
Net cash increase for period		(702,569	)		237,762
Cash at Beginning of Period		608,748			370,987
Cash at end of period		(93,821	)		608,749

Supplemental Disclosures

Cash paid during the year for:
Interest (net of amount capitalized)		-			-
Income Taxes		-			-

E & P Co., LLC

Statement of Members' Equity

For the Year Ending December 31, 2011

	Members' Capital		Accumulated Earnings			Total Members' Equity

Balance January 1, 2010		3,577,344		(2,245,982	)		1,331,362

Net Income / (loss)		-		(874,748	)		(874,748	)

Balance December 31, 2010		3,577,344		(3,120,730	)		456,614

Member Investment		4,000,000		-			4,000,000

Net Income / (loss)		-		(683,055	)		(683,055	)

Balance December 31, 2011		7,577,344		(3,803,785	)		3,773,559

Notes to Financial Statements

The accompanying financial statements and the supporting and supplemental material are the responsibility of the management of E & P Co., LLC.

The Company’s principal business is energy, involving exploration, production, transportation and sale of crude oil and natural gas.

Summary of Accounting Policies

Purchase and sales of inventory with the same counterparty that are entered in to contemplation of one another are combined and recorded as exchanges measured at the book value of the item sold.

Sales-Based Taxes. The Company reports sales and excise taxes on sales transactions on a gross basis of the Statement of Income (included in both revenues and costs).

Acquisition costs of proved properties are amortized using a unit-of-production method, computed on the basis of total proved oil and gas reserves.

Losses on properties sold are recognized when incurred or when the properties are held for sale and the fair value of the properties is less than the carrying value.

Accounting Changes

The Company did not adopt authoritative guidance in 2011 that had a material impact on the Company’s financial statements.

Cash Flow Information

Long-Term Debt

At December 31, 2011, long-term debt consisted of $6 million due in U.S. dollars. This amount excludes that portion of long-term debt which matures within one year and is included in current liabilities.

Summarized long-term debt at year end 2011 and 2010 are shown in the table below:

	2011		2010
E & P Management and Development, LLC		6,000,000		6,000,000
Prestige O & G, LLC		4,125,000		3,750,000
Caldwell (US) Inc.		400,000		-
Rasan Private Equity		2,000,000		2,000,000
Total		12,525,000		11,750,000

Related Party Transactions

Summarized transactions involving related parties at year end 2011 and 2010 are shown in the table below:

Accounts Receivable

	2011		2010
Balance at January 1		200,390		246,170
E & P Co. International, LLC		95,029		(93,047	)
Caldwell (US) Inc.		6,899		6,298
E & P Management and Development, LLC		7,274		16,088
Prestige O & G, LLC		23,052		18,240
Delta O & G, LLC		308		-
Accrued Interest Income		24,563		6,641

At December 31		357,515		200,390

Notes Payable

	2011		2010
Balance at January 1		13,355,000		8,250,000
Rasan Private Equity		112,350		2,105,000
Prestige O & G, LLC		375,000		3,000,000
Mashhoor Almadodi		500,000		-
Osman Kaldirim, Sr.		150,000		-
Rasan Energy		400,000		-

At December 31		14,892,350		13,355,000

Investments, Advances and Long-Term Receivables

The balance of investments at year end 2011 and 2010 was $1,542,510 and $1,542,510, respectively. The investments were held with Univest, Inc., an entity located in the Cayman Islands, for the purpose of participating in investment transactions in compliance with Islamic Sharia’s principles. The investment agreement is subject to the laws of the State of New York to the extent they do not conflict with the provisions of Islamic Sharia principles. Venue for any dispute as to the terms of the agreement is subject to arbitration with a duly authorized representative of the American Arbitration Association.

Litigation and other Contingencies

Income, Sales-Based and Other Taxes

The Company has not been subjected to severance tax for sales of gas from its Louisiana project. This severance tax is paid by the buyer and withheld from the settlement amount on the sale.

Supplemental Information on Oil and Gas Exploration and Production

The results of operations for producing activities shown below do not include earnings from nonoperating activities.

Results of Operations	2011		2010
Revenue
Sales to third parties		13,046		2,582

Production costs excluding taxes		3,876		3,548
Exploration expenses		-		-
Depreciation and depletion		-		-
Taxes other than income		-		-
Related income tax		-		-
Results of producing activities		9,170		(966	)

Capitalized Costs	2011		2010
Property (acreage)
Unproved		19,322		19,322
Total property costs		19,322		19,322
Producing assets		17,334,281		12,048,664
Incomplete construction		-		-
Total capitalized		-		-
Accumulated depreciation and depletion		-		-
Net capitalized costs		17,353,603		12,067,986

10.

Subsequent Events

None noted.

Clay Thomas, P.C.

Certified Public Accountant

P.O. Box 311195

Houston, Texas 77231

(281) 253-9637 (office)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Members of Prestige O & G, LLC

I have audited the accompanying statement of financial position of Prestige O & G, LLC as of June 30, 2013 and December 31, 2012, and the related statements of income, members’ equity and cash flows for each of the periods ending June 30, 2013 and December 31, 2012. Prestige O & G, LLC’s management is responsible for these financial statements. My responsibility is to express an opinion on these financial statements based on our audits.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Prestige O & G, LLC as of June 30, 2013 and December 31, 2012, and the results of its operations and its cash flows for each of the periods ending June 30, 2013 and December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

Houston, Texas

September 10, 2013

Prestige O & G, LLC

Statement of Financial Position

For the Period Ending June 30, 2013 and December 31, 2012

	June 30,		December 31,
	2013		2012
ASSETS
Current Assets
Cash and Cash Equivalents		5,338		5,338
Notes Receivable		-		4,537,500
Total Current Assets		5,338		4,542,838

Other Current Assets
Accrued Gas Sales Income		-		-
Prepaid Expense		-		1,309
Refundable Deposits		-		-
Total Other Current Assets		-		1,309

Total Current Assets		5,338		4,544,147

Fixed Assets
Investment in E & P Co.		-		5,019,633
Project Under Development		10,049,517		350,000
Property and Equipment		-		-
Furniture and Fixtures		-		-
Accumulated Depreciation		-		-
Total Fixed Assets		10,049,517		5,369,633

TOTAL ASSETS		10,054,855		9,913,780

LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable		-		189,726
Accrued Expense		-		5,900
Payroll Tax Liabilities		-		-
Total Accounts Payable		-		195,626

Other Current Liabilities
Notes Payable		-		-
Total Other Current Liabilities		-		-
Total Current Liabilities		-		195,626

Long-Term Liabilities		-		-
Total Long-Term Liabilities		-		-

Total Liabilities		-		195,626

Equity
Members' Capital Accounts		10,054,855		9,718,155
Total Equity		10,054,855		9,718,155

TOTAL LIABILITIES & EQUITY		10,054,855		9,913,780

See accompanying notes to the financial statements.

Prestige O & G, LLC

Statement of Operations

For the Period Ending June 30, 2013 and December 31, 2012

	June 30,			December 31,
	2013			2012

Ordinary Income
Income
Share of Results in Associate		(271,317	)		(267,624	)
Total Income / (loss)		(271,317	)		(267,624	)
Gross Profit / (loss)		(271,317	)		(267,624	)

General and Administrative Costs
Miscellaneous		-			250
Professional Fees		-			5,900
Rent		5,237			14,475

Total G & A Costs		5,237			20,625
Total Expense		5,237			20,625

Other Income/Expense
Other Income		158,813			317,267
Other Expense		-			-
Total Other Income/Expense		158,813			317,267

Net Ordinary Income / (loss)		(117,741	)		29,018

Net Income / (loss)		(117,741	)		29,018

See accompanying notes to the financial statements.

Prestige O & G, LLC

Statement of Cash Flows

For the Period Ending June 30, 2013 and December 31, 2012

	June 30,			December 31,
	2013			2012

Operating Activities
Net Income		(117,741	)		29,018
Adjustments to reconcile Net Income to net cash provided by operations:
Accounts Payable		(189,726	)		20,934
Accrued Expense		(5,900	)		-
Accrued Interest Income		-			95,233
Notes Receivable		4,537,500			(412,500	)
Prepaid Expense		1,309			(309	)
Net cash provided / (used) by Operating Activities		4,225,442			(267,624	)

Investing Activities
Investment in E & P Co., LLC		-			267,624
Project Under Development		(9,699,517	)		-
Net cash provided / (used) by investing activities:		(9,699,517	)		267,624

Financing Activities
Shareholders' Equity		5,474,075			-
Net cash provided by Financing Activities		5,474,075			-
Net cash increase for period		-			-
Cash at Beginning of Period		5,338			5,338
Cash at end of period		5,338			5,338

See accompanying notes to the financial statements.

Prestige O & G, LLC

Statement of Members' Equity

For the Period Ending June 30, 2013

	Members' Capital		Accumulated Earnings			Total Members' Equity

Balance January 1, 2010		6,058,788		968,075			7,026,863

Member Investment		3,000,000		-			3,000,000

Net Income / (loss)		-		(373,867	)		(373,867	)

Balance December 31, 2010		9,058,788		594,208			9,652,996

Net Income / (loss)		-		36,139			36,139

Balance December 31, 2011		9,058,788		630,347			9,689,135

Net Income / (loss)		-		29,018			29,018

Balance December 31, 2012		9,058,788		659,365			9,718,154

		454,442		-			454,442

Net Income / (loss)		-		(117,741	)		(117,741	)

Balance June 30, 2013		9,513,230		541,624			10,054,855

See accompanying notes to the financial statements.

Prestige O & G, LLC

Notes to the financial statements

General information

Prestige O & G, LLC invests in and develops oil and gas exploration and production projects in the United States and other countries.

The company is a Texas Limited Liability Company and is registered and domiciled in the state of Texas.

Summary of Significant Accounting Policies

2.1

Basis of preparation

The financial statements of Prestige O & G, LLC have been prepared in accordance with U.S. GAAP. The financial statements have been prepared under the historical cost convention.

2.2

Consolidation

(a)

Associates

2.3

Financial assets

2.3.1 Classification

(a)

Financial assets at fair value through profit or loss

(b)

Loans and receivables

(c)

Available-for-sale financial assets

2.3.2 Recognition and measurement

2.4

Offsetting financial instruments

2.5

Impairment of financial assets

(a)

Assets carried at amortized cost

The criteria that the company uses to determine that there is objective evidence of an impairment loss include:

Significant financial difficulty of the issuer or obligor;

A breach of contract, such as a default or delinquency in interest or principal payments;

The company, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider;

It becomes probable that the borrower will enter bankruptcy or other financial reorganization;

The disappearance of an active market for that financial asset because of financial difficulties; or

Adverse changes in the payment status of borrowers in the portfolio; and

National or local economic conditions that correlate with defaults on the assets in the portfolio.

The company first assesses whether objective evidence of impairment exists.

The amount of loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit loss that have not been incurred) discounted at the asset’s original effective interest rate. The asset’s carrying amount is reduced and the amount of loss is recognized in the income statement. As a practical expedient, the company may measure impairment on the basis of the instrument’ fair value using an observable market price.

Impairment of trade receivables is described in note 2.6.

2.6

Trade receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment.

2.7

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with maturities of three months or less, and bank overdrafts.

2.8

Share capital

Ordinary units are classified as equity. Incremental costs directly attributable to the issue of new units or options are shown in equity as a deduction, net of tax, from the proceeds.

2.9

Trade payables

Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

2.10

Borrowings

2.11

Current and deferred income tax

The company is organized as a Texas Limited Liability Company. For income tax purposes, it reports as a partnership under Title 26 United States Codes. Under partnership rules the company’s income is taxed to the shareholders and as such, owes no federal income tax.