U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ------------ TO
------------.
COMMISSION FILE NUMBER 000-33499
FIDELIS ENERGY, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS
SPECIFIED IN ITS CHARTER)
NEVADA 16-1599721
------ -----------
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2920 N. SWAN RD., SUITE 207, TUCSON, AZ 85712
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(877) 241-6100
ISSUER'S TELEPHONE NUMBER
APPLICABLE ONLY TO CORPORATE ISSUERS
STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON EQUITY, AS OF THE LATEST PRACTICAL DATE: JULY 15, 2004 56,338,000
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE). YES ; NO X
PART I
ITEM 1. FINANCIAL STATEMENTS
FIDELIS ENERGY, INC.
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
June 30, December 31,
2004 2003
------------------ ------------------
ASSETS
Current Assets:
Cash $ 2,207 $ 99,991
Accounts Receivable 2,577 -
------------------ ------------------
Current Assets 4,784 99,991
------------------ ------------------
Oil and Gas Properties, Using Successful Efforts Method
Oil & Gas Leases 505,000 -
Oil & Gas Exploration Costs 655,619 -
------------------ ------------------
1,160,619
------------------ ------------------
Other Property and Equipment
Office Equipment 5,659 -
Leasehold Improvement 61,893 -
Less: Accumulated Depreciation (305) -
------------------ ------------------
Total Property & Equipment, Net of Depreciation 67,247 -
------------------ ------------------
Other Assets:
Deposit 4,603 -
------------------ ------------------
Total Other Assets 4,603 -
------------------ ------------------
TOTAL ASSETS $ 1,237,253 $ 99,991
================== ==================
FIDELIS ENERGY, INC.
(A Development Stage Company)
BALANCE SHEETS
(Continued)
(Unaudited)
June 30, December 31,
2004 2003
------------------ ------------------
LIABILITIES
Current Liabilities:
Accounts Payable $ 105,188 $ 12,543
Accrued Expense 22,568 -
Note Payable 392,371 151,072
Related Party Note Payable 106,534 -
Note Payable to Shareholder 2,901 3,256
------------------ ------------------
TOTAL LIABILITIES 629,562 166,871
------------------ ------------------
STOCKHOLDERS' EQUITY
Common Stock, Par value $.001
Authorized 100,000,000 shares, Issued 56,338,000 and
57,420,000 shares at June 30, 2004 and December 31, 2003 56,338 57,420
Paid-In Capital 1,023,921 80,200
Common Stock to be Issued, 1,361,000 and 0 1,361 -
Retained Deficit (90,452) (90,452)
Deficit Accumulated During the Development Stage (383,477) (114,048)
------------------ ------------------
TOTAL STOCKHOLDERS' EQUITY 607,691 (66,880)
------------------ ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,237,253 $ 99,991
================== ==================
See accompanying notes
FIDELIS ENERGY, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
Cumulative
since
November 6,
2000
For the Three Months Ended For the Six Months Ended Inception of
June 30, June 30, Development
2004 2003 2004 2003 Stage
----------------- ----------------- --------------- ----------------- ----------------
Revenues: $ 2,577 $ - $ 2,577 $ - $ 2,577
Expenses:
Selling & Marketing 29,665 - 29,665 - 29,665
General & Admin. 17,222 3,530 31,921 3,530 135,354
Consulting 31,500 - 48,556 - 48,556
Salaries & Director Fees 141,000 - 154,000 - 154,000
----------------- ----------------- --------------- ----------------- ----------------
Operating Loss (216,810) (3,530) (261,565) (3,530) (364,998)
----------------- ----------------- --------------- ----------------- ----------------
Other Expense
Interest (6,034) (1,275) (7,864) (2,512) (18,479)
----------------- ----------------- --------------- ----------------- ----------------
Net Income (Loss) $ (222,844)$ (4,805) $ (269,429)$ (6,042) $ (383,477)
================= ================= =============== ================= ================
Basic & Diluted Loss $ - $ - $ - $ -
================= ================= =============== =================
Weighted Average Shares 56,450,620 175,636,000 58,111,400 175,028,000
================= ================= =============== =================
See accompanying notes
FIDELIS ENERGY, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
Cumulative
Since
November
6, 2000
For the Six Months Ended Inception of
June 30, Development
2004 2003 Stage
----------------- ----------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (269,429) $ (6,042) $ (383,477)
Adjustments to Reconcile Net Loss to Net
Cash Used in Operating Activities:
Depreciation and Amortization 305 - 12,305
Shares Issued for Services 100,000 40 100,040
Change in Operating Assets and Liabilities:
(Increase) Decrease in Accounts Receivable (2,577) - (2,577)
(Increase) Decrease in Deposits (4,603) - (4,603)
Increase (Decrease) in Accounts Payable 92,645 (1,240) 105,188
Increase (Decrease) in Accrued Expenses 29,019 - 29,019
----------------- ----------------- ------------------
Net Cash Used in Operating Activities (54,640) (7,242) (144,105)
----------------- ----------------- ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Office Equipment (5,659) - (5,659)
Payment for Leasehold Improvements (61,893) - (61,893)
Purchase of Oil & Gas Leases (505,000) - (505,000)
Oil & Gas Exploration Costs (655,619) - (655,619)
Purchase of Intangible Assets - - (12,000)
----------------- ----------------- ------------------
Net Cash Used by Investing Activities (1,228,171) - (1,240,171)
----------------- ----------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Shares for Cash 949,000 - 1,093,395
Purchase of Treasury Stock - - (97,362)
Payment of Notes Payable (70,385) - (70,385)
Proceeds from Notes Payable 306,412 4,242 460,740
Capital Contributed by Shareholder - - 95
----------------- ----------------- ------------------
Net Cash Provided by Financing Activities 1,185,027 4,242 1,386,483
----------------- ----------------- ------------------
FIDELIS ENERGY, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
Cumulative
Since
November
6, 2000
For the Six Months Ended Inception of
June 30 Development
2004 2003 Stage
----------------- ----------------- ------------------
Net (Decrease) Increase in Cash $ (97,784) $ (3,000) $ 2,207
Cash at Beginning of Period 99,991 16,024 -
----------------- ----------------- ------------------
Cash at End of Period $ 2,207 $ 13,024 $ 2,207
================= ================= ==================
Cash paid during the year for:
Interest $ 323 $ 534 $ 1,339
Franchise and income taxes $ - $ - $ -
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
On February 25, 2004, the Company purchased 10,500,000 (1,050,000 pre
split) of its common shares for a loan payable of $105,000. These shares were
returned to treasury and cancelled.
See accompanying notes
FIDELIS ENERGY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Fidelis Energy is presented to
assist in understanding the Company's financial statements. The accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
Interim Reporting
The unaudited financial statements as of June 30, 2004, and for the
three and six month period then ended, reflect, in the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary to
fairly state the financial position and results of operations for the three and
six months. Operating results for interim periods are not necessarily indicative
of the results which can be expected for full years.
Nature of Operations and Going Concern
The accompanying financial statements have been prepared on the basis
of accounting principles applicable to a "going concern", which assume that the
Company will continue in operation for at least one year and will be able to
realize its assets and discharge its liabilities in the normal course of
operations.
Several conditions and events cast doubt about the Company's ability to
continue as a "going concern". The Company has incurred net losses of $383,477
for the period from November 6, 2000 (inception) to June 30, 2004 and requires
additional financing in order to finance its business activities on an ongoing
basis. The Company is actively pursuing alternative financing and has had
discussions with various third parties, although no firm commitments have been
obtained.
The Company's future capital requirements will depend on numerous
factors including, but not limited to, acquiring interests in various
exploration and production opportunities and the success of its current oil and
gas operations.
These financial statements do not reflect adjustments that would be
necessary if the Company were unable to continue as a "going concern". While
management believes that the actions already taken or planned, will mitigate the
adverse conditions and events which raise doubt about the validity of the "going
concern" assumption used in preparing these financial statements, there can be
no assurance that these actions will be successful.
FIDELIS ENERGY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of Nevada on
November 6, 2000. Since November 6, 2000, the Company is in the development
stage, and has not commenced planned principal operations. On June 10, 2003, the
Company changed its name to Eagle Star Energy, Inc. to reflect the current
direction of the company. On February 24, 2004, the Company changed its name to
Fidelis Energy, Inc. The Company operated as a development stage company until
the first quarter of 2004, when it began exploration for oil and gas. During the
second quarter of 2004, the Company acquired a proven well field and was setting
up the extraction process.
Nature of Business
The Company was originally formed to engage primarily in the business
of providing comparative automobile information via the Internet and printed
materials. The Company was not successful in its plans and during the 2nd
quarter of 2003 changed the business plan.
The Company is in the exploration state of the oil and gas industry.
The Company's primary objective is to identify, acquire and develop working
interest percentages in smaller, underdeveloped oil and gas projects in
California and Canada that do not meet the requirements of the larger producers
and developers. The Company intends to acquire smaller, underdeveloped producers
generally under control of small family-owned operators who are interested in
selling out.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
Reclassification
Certain reclassifications have been made in the 2003 financial
statements to conform with the June 30, 2004 presentation.
FIDELIS ENERGY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Concentration of Credit Risk
The Company has no significant off-balance-sheet concentrations of
credit risk such as foreign exchange contracts, options contracts or other
foreign hedging arrangements. The Company maintains the majority of its cash
balances with one financial institution, in the form of demand deposits.
Loss per Share
Basic loss per share has been computed by dividing the loss for the
year applicable to the common stockholders by the weighted average number of
common shares outstanding during the years. The effect of common stock
equivalent shares would be anti-dilutive and thus are not shown.
Stock Options
The Company has adopted SFAS No. 123, "Stock Option and Purchase
Plans", which establishes standards for reporting compensation expense for stock
options that have been issued. The fair value of each grant is equal to the
market price of the Company's stock on the date of grant if an active market
exists or at a value determined in an arms length negotiation between the
Company and the non- employee.
Depreciation
Fixed assets are stated at cost. Depreciation and amortization is
calculated on a straight-line basis over the estimated useful lives of the
assets as follows:
Asset Rate
- ------------------------------------------------ -----------------
Office equipment 5 years
Leasehold improvements Term of lease
Maintenance and repairs are charged to operations; betterments are
capitalized. The cost of property sold or otherwise disposed of and the
accumulated depreciation thereon are eliminated from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.
FIDELIS ENERGY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Oil and Gas Producing Activities
The Company is in the exploration state and has not yet realized any
revenue from its planned operations. It is primarily engaged in the acquisition,
exploration and development of oil and gas properties. The Company uses the
successful efforts method of accounting for these activities. Under this method
of accounting, geological and geophysical costs and the costs of carrying and
retaining undeveloped properties are charged to expense when incurred since they
do not result in the acquisition of assets. Costs incurred to drill exploratory
wells and exploratory-type stratigraphic test wells that do not find proved
reserves are charged to expense when it is determined that the wells have not
found proved reserves. Costs incurred to acquire properties and drill
development wells, development-type stratigraphic test wells, successful
exploratory wells, and successful exploratory-type stratigraphic wells are
capitalized. Capitalized costs of wells and related equipment will be amortized,
depleted, or depreciated using the units-of-production method. Costs of unproved
properties will be assessed periodically to determine if an impairment loss
should be recognized.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2 - INCOME TAXES
As of December 31, 2003, the Company had a net operating loss
carryforward for income tax reporting purposes of approximately $114,000 that
may be offset against future taxable income through 2022. Current tax laws limit
the amount of loss available to be offset against future taxable income when a
substantial change in ownership occurs. Therefore, the amount available to
offset future taxable income may be limited. During 2004, the Company has
realized net operating losses of approximately $385,210 that will be available
to offset income, if any, during the remainder of 2004 and if not used in 2004
any remaining amount will be available to offset future tax able income through
2024. No tax benefit has been reported in the financial statements, because the
Company believes there is a 50% or greater chance the carryforwards will expire
unused. Accordingly, the potential tax benefits of the loss carryforwards are
offset by a valuation allowance of the same amount.
FIDELIS ENERGY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - DEVELOPMENT STAGE COMPANY/ GOING CONCERN
The Company has begun principal operations and as is common with a
company in the development stage of oil and gas extraction, the Company has had
recurring losses. Continuation of the Company as a going concern is dependent
upon obtaining the additional working capital necessary to be successful in its
planned activity, and the management of the Company has developed a strategy,
which it believes will accomplish this objective through additional equity
funding and long term financing, which will enable the Company to operate for
the coming year
NOTE 4 - COMMITMENTS
On January 22, 2004, the Company entered into a lease for office space.
The rental charges are approximately $4,300 per month commencing May 1, 2004.
The lease expires April 30, 2008.
The minimum future lease payments under this leases for the next five
years are:
Ending December 31,
2004 $ 34,028
2005 52,053
2006 53,620
2007 55,233
2008 18,591
-----------------
Total Minimum Lease Payments $ 213,525
=================
The leases generally provides that insurance, maintenance, utilities
and tax expenses are obligations of the Company. It is expected that in the
normal course of business, leases that expire will be renewed or replaced by
leases on other properties.
NOTE 5- NOTE PAYABLE FROM SHAREHOLDER
The Company has borrowed money from a shareholder in order to pay
general and administrative expenses. For purposes of these financial statements,
interest has been calculated at an imputed interest rate of 4 to 10 percent. As
of June 30, 2004 and December 31, 2003, the Company owed $2,901 and $3,256,
respectively, relating to these notes.
NOTE 6 - SHORT-TERM NOTE PAYABLE
On November 17, 2003, the Company repurchased 152,000,000 (400,000 pre
split) shares of its commons stock from the previous president and treasurer. In
connection, with this purchase the Company agreed to pay $150,000 for the common
stock and the outstanding shareholder loan of $52,638 payable on or before March
15, 2004, at an interest rate of 6%. As of June 30, 2004 and December 31, 2003,
the Company owes $84,825 and $151,072 on this loan.
FIDELIS ENERGY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 6 - SHORT-TERM NOTE PAYABLE (Continued)
On April 2, 2004, the Company borrowed $305,000 from a third party. The
loan is due April 2, 2005 and bears interest of 5 percent. As of June 30, 2004,
the Company owes $307,546.
NOTE 7 - RELATED PARTY TRANSACTIONS
On February 25, 2004, the Company purchased 10,500,000 (1,050,000 pre
split) of its common shares for a loan payable of $105,000. These shares were
returned to treasury and cancelled. Interest at a rate of 4.22% has been imputed
on the loan.
NOTE 8 - COMMON STOCK
On June 10, 2003, the Company issued 15,200,000 (40,000 pre split)
common shares to two people for services.
On November 17, 2003, the Company repurchased and subsequently canceled
152,000,000 (400,000 pre split) shares of its common stock from the previous
president and treasurer. Also, on this date the Company approved a 38:1 forward
split. All references to common stock reflect the split.
On December 23, 2003, the Company issued 19,800,000 (1,980,000 pre
split) common shares for cash.
On January 26, 2004, the Company issued 8,800,000 (880,000 pre split)
common shares for cash.
On February 25, 2004, the Company purchased 10,500,000 (1,050,000 pre
split) of its common shares for a loan payable of $105,000. These shares were
returned to treasury and cancelled.
On April 1, 2004, the Company issued 750,000 shares of common stock to
its three directors for services rendered. As a result of this issuance, $60,000
in compensation expense was recorded. Additionally, 500,000 shares of common
stock are pending issuance to two other directors and an additional $40,000 in
compensation was recorded.
On June 22, 2004, 132,000 were returned to treasury for cancellation.
NOTE 9 - STOCK OPTIONS
Pursuant to a 2004 Stock Option and Compensation Plan, grants of shares
can be made to employees, officers, directors, consultants and independent
contractors of non-qualified stock options as well as for the grant of stock
options to employees that qualify as incentive stock options under Section 422
of the Internal Revenue Code of 1986 or as non-qualified stock options. The Plan
is administered
FIDELIS ENERGY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 9 - STOCK OPTIONS (Continued)
by the Board of Directors ("Board"), which has, subject to specified
limitations, the full authority to grant options and establish the terms and
conditions for vesting and exercise thereof.
In order to exercise an option granted under the Plan, the optionee
must pay the full exercise price of the shares being purchased. Payment may be
made either: (i) in cash; or (ii) at the discretion of the Board, by delivering
shares of common stock already owned by the optionee that have a fair market
value equal to the applicable exercise price; or (iii) with the approval of the
Board, with monies borrowed from us.
Subject to the foregoing, the Board has broad discretion to describe
the terms and conditions applicable to options granted under the Plan. The Board
may at any time discontinue granting options under the Plan or otherwise
suspend, amend or terminate the Plan and may, with the consent of an optionee,
make such modification of the terms and conditions of such optionee's option as
the Board shall deem advisable.
On March 17, 2004, the Board of Directors approved a stock option plan
whereby 8,000,000 common shares have been set aside for employees, officers,
directors and third party service providers to be distributed at the discretion
of the Board of Directors. As of June 30, 2004, 1,250,000 options have been
granted to the five officers/directors of the Company for an exercise price of
$0.10 per share, increasing annually at 6% per annum from the grant date of
March 17, 2004. The term of the options is 10 years. No compensation expense was
recorded because the Company feels that the exercise price was equal to the fair
value of the stock on the grant date.
The following table sets forth the options and warrants outstanding as
of June 30, 2004 and December 31, 2003:
June 30, December 31,
2004 2003
------------------ --------------------
Options Outstanding, Beginning of year - -
Granted 1,250,000 -
Expired - -
Exercised - -
------------------ --------------------
Options Outstanding, End of year 1,250,000 -
================== ====================
Exercise price for options outstanding, end of year $0.10 -
================== ====================
FIDELIS ENERGY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 10 - OIL AND GAS ACTIVITIES
As of June 30, 2004, the Company has earned $2,577 from its proven
reserves in the Comanche Point property.
On November 5, 2003, the Company executed two farm-in leases for the
purpose of oil and gas exploration. The subject properties are located in the
province of Alberta, Canada and are termed the Buffalo Lake Prospect and the
Lake Island Prospect. In February, the Company forfeited the Buffalo Lake lease
in return for a farm-in lease on a deep-gas well project termed the "Boyne Lake"
field. The Company allowed this lease to expire unused.
On March 16, 2004, the Company entered into a purchase agreement for
participation and acquisition of a 80 percent working interest in the Commanche
Point Producing Company, Tejon Lease. As compensation for its right, title and
interest in the property, the Company paid $305,000 for acquisition rights and
additional $200,000 to be used as working capital. As this is a proven property,
the $505,000 has been capitalized.
As of June 30, 2004, $655,619 has been capitalized in connection with
the exploration of these properties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations in the
Company's annual report on Form 10-KSB for the year ended December 31, 2003.
Plan of Operation
The Company was originally formed to engage primarily in the business
of providing comparative automobile information via the Internet and printed
materials. The Company was not successful in its plans and during the 2nd
quarter of 2003 changed the business plan.
The Company is a development stage company in the oil and gas industry.
The Company's primary objective is to identify, acquire and develop ownership or
working interest percentages in smaller, underdeveloped oil and gas projects
that do not meet the requirements of the larger producers and developers. The
Company has acquired a working interest in the Comanche Point Oil Field lease
and a working interest in the Franklin Natural Gas Field, both located in the
State of California. Through the use of modern development techniques such as
horizontal drilling and 3-D seismic, it is postulated that production from these
under developed and under utilized projects as well as others that the Company
is actively pursuing, can be greatly increased. The Company plans to acquire
projects following due diligence necessary to fully evaluate the projects
potential.
The Company intends to engage primarily in the business of acquiring
and operating, as a working interest partner, smaller oil and gas leases, and
exploratory oil and gas wells.
Normally only those projects that are in close proximity to delivery
systems such as pipelines or refineries will be pursued. Whereas there are large
oil and gas fields that could be aggressively engaged, the management of the
Company believes that the production required to warrant the investment into
such capital intensive infrastructures is of greater risk than the Company is
willing to bear at present, and the necessary capital for such is currently
unavailable to the Company. Hence, in the coming year, the Company will only
pursue those projects that can be tied into pipelines or trucked from onsite
storage facilities to proximate refineries with minimal costs involved.
On April 15, 2004, the Company closed escrow on the purchase agreement
for acquisition of a 80% working interest in the Comanche Point Producing
Company, Tejon Lease for lands in Sections 28,29,32 and 33, R18W, S.B.B., Kern
County, California. The Company paid $305,000 in connection with the purchase
and an additional $200,000 to begin the cleanup and redevelopment of the
project. These funds were received in the form of a $305,000 loan bearing 5%
interest, payable on April 2, 2005, and $200,000 in the form of an equity
offering that had not closed as of the quarter ended June 30th.
Results of Operations
As the Company is in the development stage on Comanche Point and has
commenced only limited operations, it has yet to realize any revenue from new
drilling. The Company has realized a net loss from operations of $343,477 since
inception due primarily to development and exploration fees necessary to bring
the Company through the development stage.
The Company had $29,655 and $29,655 in selling and marketing expenses
from continuing operations for the three and six months ended June 2004 and $0
and $0 for the same periods in 2003. General and administrative expenses were
$189,722 and $234,477, which consisted mainly of officer wages, director fees,
overhead, and consulting expense, for the three and six months ended June 30,
2004 and $3,530 and $3,530 for the three and six months ended June 30, 2003. The
increase is attributable to the fact that the Company was mostly dormant in
2003, and during 2004 the Company began its operations and exploration program.
Liquidity and Capital Resources
Cash and cash equivalents from inception to date have been insufficient
to provide the operating capital necessary to operate the Company. The necessary
capital to operate the Company has been provided by private, unaffiliated
investors, the principals and founders of the Company in the form of both debt
and capital stock issuances as set forth in the financial statements
incorporated herein. In summary, there has been, and will continue to be, an
absence of liquidity and capital resources to operate the Company
self-sufficiently until an offering of the Company's stock can be made to
provide the necessary cash for operations, or the income from the Company's
projects has begun, which is postulated to be in the fourth quarter of 2004. The
current cash position of the Company is insufficient to provide for the needs of
the Company. Therefore, management of the Company has committed to providing the
necessary funding for the Company until the Company can generate ample revenues
to offset the expenses or until an appropriate offering of the Company's capital
stock or via third party bridge loans can be made to raise cash.
The Company recorded a net loss from operations of $222,844and $269,429
for the three and six months ended June 30, 2004 compared to a net loss of
$4,805 and $6,042 for the same periods in 2003. Increase in the net loss is
attributable to the increase in the development tempo of the Company which
includes additional salary expense, travel, public relations and contract
execution.
Employees
As of June 30, 2004, the Company had two employees, the President and
Secretary/Treasurer.
ITEM 3. CONTROLS AND PROCEDURES
The Company's Chief Executive Officer has concluded, based on an
evaluation conducted within 90 days prior to the filing date of this Quarterly
Report on Form 10-QSB/A, that the Company's disclosure controls and procedures
have functioned effectively so as to provide those officers the information
necessary whether:
(i) this Quarterly Report on Form 10-QSB/A contains any untrue statement
of a material fact or omits to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this Quarterly Report on Form 10-QSB/A, and
(ii) the financial statements, and other financial information included
in this Quarterly Report on Form 10-QSB/A, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Company as of, and for, the periods presented in this
Quarterly Report on Form 10-QSB/A.
There have been no significant changes in the Company's internal
controls or in other factors since the date of the Chief Executive Officer's
evaluation that could significantly affect these internal controls, including
any corrective actions with regards to significant deficiencies and material
weaknesses.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
On April 1, 2004, the Company issued 750,000 shares of common stock to its three
directors for services rendered. As a result of this issuance, $60,000 in
compensation expense was recorded.
On June 22, 2004, 132,000 were returned to treasury for cancellation.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Title of Document
3i Articles of Incorporation (1)
3ii Bylaws (1)
31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
32.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
32.2 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
Incorporated by reference to the Registrant's registration statement on Form
10-SB filed on January 14, 2002.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned.
Fidelis Energy, Inc.
(Registrant)
DATE: November 10, 2004 By: /s/ Daniel Hodges
------------------------------ -------------------------------------
Daniel Hodges
President and Chairman of Board
(Principal Executive Officer)
DATE: November 10, 2004 By: /s/ Sterling Klein
------------------------------ -------------------------------------
Sterling Klein
Secretary / Treasurer
(Principal Financial Officer)