UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended April 30, 2012
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 000-54323
Independence Energy Corp.
(Exact name of registrant as specified in its charter)
Nevada 20-3866475
(State of incorporation) (I.R.S. Employer Identification No.)
3020 Old Ranch Parkway, Suite 300, Seal Beach,
CA 90740
(Address of principal executive offices)
(562) 799-5588
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] YES [ ] NO
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). [X] YES [ ] NO
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act [ ] YES [X] NO
As of June 19, 2012, there were 24,360,861 shares of the Registrant's $0.001 par
value common stock issued and outstanding.
INDEPENDENCE ENERGY CORP.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION............................................... 3
Item 1. Financial Statements............................................. 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................ 17
Item 3. Quantitative and Qualitative Disclosures About Market Risk....... 23
Item 4. Controls and Procedures.......................................... 23
PART II - OTHER INFORMATION.................................................. 24
Item 1. Legal Proceedings................................................ 24
Item 1A. Risk Factors..................................................... 24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds...... 24
Item 3. Defaults Upon Senior Securities.................................. 24
Item 4. Mine Safety Disclosures.......................................... 24
Item 5. Other Information................................................ 24
Item 6. Exhibits......................................................... 25
SIGNATURES .................................................................. 26
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with United States Generally Accepted Accounting
Principles.
3
INDEPENDENCE ENERGY CORP.
(An Exploration Stage Company)
Financial Statements
April 30, 2012
Index
-----
Unaudited Balance Sheets................................................. 5
Unaudited Statements of Operations....................................... 6
Unaudited Statements of Cash Flows....................................... 7
Notes to the Financial Statements........................................ 8
4
INDEPENDENCE ENERGY CORP.
(An Exploration Stage Company)
BALANCE SHEETS
April 30, 2012 January 31, 2012
-------------- ----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 39,331 $ 14,790
Amounts receivable 3,080 1,607
Deposits and prepaid expenses 10,588 23,063
--------- ---------
TOTAL CURRENT ASSETS 52,999 39,460
Oil & gas property 255,566 53,410
--------- ---------
TOTAL ASSETS $ 308,565 $ 92,870
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable & accrued liabilities $ 3,128 $ 9,349
Due to related party -- 675
Loans payable 156,697 156,697
Loans payable to director -- --
--------- ---------
TOTAL CURRENT LIABILITIES 159,825 166,721
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $0.001 par value, 10,000,000 shares
authorized, none issued and outstanding -- --
Common stock, $0.001 par value, 75,000,000 shares
authorized, 24,238,888 shares issued and outstanding
at April 30, 2012 and January 31, 2012 24,239 24,000
Additional paid in capital 290,761 36,000
Deficit accumulated during the exploration stage (166,260) (133,851)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 148,740 (73,851)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 308,565 $ 92,870
========= =========
The accompanying notes are an integral part of these financial statements
5
INDEPENDENCE ENERGY CORP.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
For the Period From
November 30, 2005
Three Months Ended Three Months Ended (Inception) through
April 30, 2012 April 30, 2011 April 30, 2012
-------------- -------------- --------------
REVENUES $ -- $ -- $ --
------------ ------------ ------------
TOTAL REVENUES -- -- --
OPERATING EXPENSES:
Professional fees 17,500 4,000 90,901
General and administrative 14,909 600 75,456
------------ ------------ ------------
TOTAL OPERATING EXPENSES 32,409 4,600 166,357
------------ ------------ ------------
Other income (expenses)
INTEREST EXPENSE
Gain from currency exchange -- -- 97
------------ ------------ ------------
TOTAL OTHER INCOME (EXPENSES) -- -- 97
------------ ------------ ------------
Net (loss) $ (32,409) $ (4,600) $ (166,260)
============ ============ ============
Weighted average number of shares outstanding
during the period - basic and diluted 24,142,592 24,000,000
============ ============
Net loss per share - basic and diluted $ (0.00) $ (0.00)
============ ============
The accompanying notes are an integral part of these financial statements
6
INDEPENDENCE ENERGY CORP.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
For the Period From
November 30, 2005
Three Months Ended Three Months Ended (Inception) through
April 30, 2012 April 30, 2011 April 30, 2012
-------------- -------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (32,409) $ (4,600) $(166,260)
Adjustments to reconcile net (loss) to net
cash used in operating activities:
Depreciation and depletion -- -- --
Imputed interest -- -- --
Issuance of common stock for services rendered -- -- --
Changes in operating assets and liabilities: -- --
Amounts receivable (1,473) -- (3,080)
Deposits and prepaid expenses 12,475 -- (10,588)
Accounts payable & accrued liabilities (6,221) (320) 3,128
Due to related party (675) (375) --
--------- --------- ---------
CASH (USED IN) OPERATING ACTIVITIES (28,303) (5,295) (176,800)
--------- --------- ---------
CASH FLOWS TO INVESTING ACTIVITIES
Oil & gas property expenditures (202,156) -- (255,566)
--------- --------- ---------
CASH (USED IN) INVESTING ACTIVITIES (202,156) -- (255,566)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from subscriptions of common stock 239 -- 60,239
Paid in capital 254,761 254,761
Proceeds from loans payable -- -- 156,697
Proceeds from loans payable to director -- 5,000 33,000
Repayment of loans payable to director -- -- (33,000)
--------- --------- ---------
CASH PROVIDED BY FINANCING ACTIVITIES 255,000 5,000 471,697
--------- --------- ---------
INCREASE (DECREASE) IN CASH 24,541 (295) 39,331
CASH AT BEGINNING OF PERIOD 14,790 1,311 --
--------- --------- ---------
CASH AT END OF PERIOD $ 39,331 $ 1,016 $ 39,331
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes $ -- $ -- $ --
========= ========= =========
Cash paid for interest expense $ -- $ -- $ --
========= ========= =========
SUPPLEMENTALNON-CASH FINANCING AND INVESTING ACTIVITIES
Issuance of common stock for services rendered $ -- $ -- $ --
========= ========= =========
The accompanying notes are an integral part of these financial statements
7
INDEPENDENCE ENERGY, CORP.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
For the period ending April 30, 2012 and
For the period of November 30, 2005 (Inception) through April 30, 2012
NOTE 1 - NATURE OF OPERATIONS
Independence Energy, Corp ("Company") was incorporated in the State of Nevada on
November 30, 2005. The Company was organized to explore natural resource
properties, currently in The United States.
NOTE 2 - GOING CONCERN
These financial statements are presented on the basis that the Company is a
going concern, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business over a reasonable length of time.
As of April 30, 2012, the Company had $39,331, in cash, working capital deficit
of $106,826 and stockholders' equity of $148,740 and accumulated net losses of
$166,260 since inception. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. Its continuation as
a going concern is dependent upon its ability to generate sufficient cash flow
to meet its obligations on a timely basis, to obtain additional financing or
refinancing as may be required, to develop commercially viable oil and gas
reserves, and ultimately to establish profitable operations.
Management's plans for the continuation of the Company as a going concern
include financing the Company's operations through issuance of its common stock.
If the Company is unable to complete its financing requirements or achieve
revenue as projected, it will then modify its expenditures and plan of
operations to coincide with the actual financing completed and actual operating
revenues. There are no assurances, however, with respect to the future success
of these plans. Unless otherwise indicated, amounts provided in these notes to
the financial statements pertain to continuing operations. The Company is not
currently earning any revenues.
NOTE 3 - SUMMARY OF ACCOUNTING POLICIES
Basis of Presentation
These financial statements and related notes are presented in accordance with
accounting principles generally accepted in the United States and are expressed
in United States (US) dollars. The Company has not produced any revenue from its
principal business and is an exploration stage company as defined by the
Financial Accounting Standard Board (FASB) Accounting Standard Codification
(ASC) 270. "Accounting and Reporting by Development Stage Enterprises".
Use of Estimates
The preparation of financial statements in conformity with Generally Accepted
Accounting Principles (GAAP) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities, at the date of these financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
8
INDEPENDENCE ENERGY, CORP.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
For the period ending April 30, 2012 and
For the period of November 30, 2005 (Inception) through April 30, 2012
NOTE 3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Regulatory Matters
The Company and its oil and gas property interests are subject to a variety of
Federal and State regulations governing land use, health, safety and
environmental matters. The Company's management believes it has been in
substantial compliance with all such regulations, and is unaware of any pending
action or proceeding relating to regulatory matters that would affect the
financial position of the Company.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.
Stock-Based Compensation
The Company accounts for stock options issued to employees in accordance with
the provisions of FASB ASC 718, "Stock Compensation". As such, compensation cost
is measured on the date of grant as the excess of current market price of the
underlying stock over the exercise price. Such compensation amounts are
amortized over the respective vesting periods of the option grant.
The Company adopted the disclosure provisions of FASB ASC 718, "Accounting for
Stock-Based Compensation," and FASB ASC 718, which allows entities to provide
pro forma net Income (loss) and pro forma earnings (loss) per share disclosures
for employee stock option grants as if the fair-valued based method has been
applied.
The Company accounts for stock options or warrants issued to non-employees for
goods or services in accordance with the fair value method of FASB ASC 718.
Under this method, the Company records an expense equal to the fair value of the
options or warrants issued. The fair value is computed using an options pricing
model.
Impaired Asset Policy
The Company periodically reviews its long-lived assets when applicable to
determine if any events or changes in circumstances have transpired which
indicate that the carrying value of its assets may not be recoverable, pursuant
to guidance established in ASC "Property, Plant, and Equipment". The Company
determines impairment by comparing the discounted future cash flows estimated to
be generated by its assets to their respective carrying amounts. If impairment
is deemed to exist, the assets will be written down to fair value.
Start-up Expenses
The Company has adopted Statement of Position (SOP) No. 98-5 ("SOP 98-5"),
"Reporting the Costs of Start-up Activities", which requires that costs
associated with start-up activities be expensed as incurred. Accordingly,
start-up costs associated with the Company's formation have been included in the
Company's general and administrative expenses for the period from inception on
November 30, 2005 to April 30, 2012.
9
INDEPENDENCE ENERGY, CORP.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
For the period ending April 30, 2012 and
For the period of November 30, 2005 (Inception) through April 30, 2012
NOTE 3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Oil and Gas Property Costs
Oil and gas acquisition, exploration and development costs are capitalized as
incurred until such time as economic reserves are quantified. From that time
forward, the Company will capitalize all costs to the extent that future cash
flows from oil and gas revenues equal or exceed the costs deferred. The deferred
costs will be amortized over the recoverable reserves when a property reaches
commercial production. Costs related to site restoration programs will be
accrued over the life of the project.
Foreign Currency Translation
The Company's functional currency is the US dollar as substantially all of the
Company's operations are in the United States. The Company used the United
States dollar as its reporting currency for consistency with registrants of the
Securities and Exchange Commission and in accordance with the ASC 830 "Foreign
Currency Translation".
Assets and liabilities that are denominated in a foreign currency are translated
at the exchange rate in effect at the year end and capital accounts are
translated at historical rates. Income statement accounts are translated at the
average rates of exchange prevailing during the period. Translation adjustments
from the use of different exchange rates from period to period are included in
the Comprehensive Income statement account in stockholders' (deficit) equity, if
applicable. There were no translation adjustments as of April 30, 2012.
Transactions undertaken in currencies other than the functional currency of the
entity are translated using the exchange rate in effect as of the transaction
date. If applicable, exchange gains and losses are included in other items on
the statements of operations. There were no exchange gains or losses as of April
30, 2012.
Basic and Diluted Loss Per Share
The Company computed basic and diluted loss per share amounts pursuant to the
ASC 260 "Earnings per Share." There are no potentially dilutive shares
outstanding and, accordingly, dilutive per share amounts have not been presented
in the accompanying statements of operations.
Fair Value of Financial Instruments
ASC 820, "Fair Value Measurement and Disclosures," requires disclosures of
information regarding the fair value of certain financial instruments for which
it is practicable to estimate the value. For purpose of this disclosure, the
fair value of a financial instrument is the amount at which the instrument could
be exchanged in a current transaction between willing parties, other than in a
forced sale of liquidation.
10
INDEPENDENCE ENERGY, CORP.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
For the period ending April 30, 2012 and
For the period of November 30, 2005 (Inception) through April 30, 2012
NOTE 3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Comprehensive Loss
ASC 220, "Reporting Comprehensive Income," establishes standards for the
reporting and display of comprehensive loss and its components in the financial
statements. As of April 30, 2012, the Company has no items that represent
comprehensive loss and therefore, has not included a schedule of comprehensive
loss in financial statements.
Income Taxes
Income taxes are recognized in accordance with ASC 740, "Income Taxes", whereby
deferred Income tax liabilities or assets at the end of each period are
determined using the tax rate expected to be in effect when the taxes are
actually paid or recovered. A valuation allowance is recognized on deferred tax
assets when it is more likely than not that some or all of these deferred tax
assets will not be realized.
Recent Accounting Pronouncements
In September 2011, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) No. 2011-08, Intangibles - Goodwill and Other
(Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is
intended to reduce complexity and costs by allowing an entity the option to make
a qualitative evaluation about the likelihood of goodwill impairment to
determine whether it should calculate the fair value of a reporting unit. The
amendments also improve previous guidance by expanding upon the examples of
events and circumstances that an entity should consider between annual
impairment tests in determining whether it is more likely than not that the fair
value of a reporting unit is less than its carrying amount. Also, the amendments
improve the examples of events and circumstances that an entity having a
reporting unit with a zero or negative carrying amount should consider in
determining whether to measure an impairment loss, if any, under the second step
of the goodwill impairment test. The amendments in this ASU are effective for
annual and interim goodwill impairment tests performed for fiscal years
beginning after December 15, 2011. Early adoption is permitted, Including for
annual and interim goodwill impairment tests performed as of a date before
September 15, 2011, if an entity's financial statements for the most recent
annual or interim period have not yet been issued. The adoption of this guidance
is not expected to have a material impact on the Company's financial position or
results of operations.
In June 2011, the FASB issued ASU 2011-05, "Comprehensive Income (Topic 220):
Presentation of Comprehensive Income", which is effective for annual reporting
periods beginning after December 15, 2011. ASU 2011-05 will become effective for
the Company on December 1, 2012. This guidance eliminates the option to present
the components of other comprehensive Income as part of the statement of changes
in stockholders' equity. In addition, items of other comprehensive Income that
are reclassified to profit or loss are required to be presented separately on
the face of the financial statements. This guidance is intended to Increase the
prominence of other comprehensive Income in financial statements by requiring
that such amounts be presented either in a single continuous statement of Income
and comprehensive Income or separately in consecutive statements of Income and
comprehensive Income. The adoption of ASU 2011-05 is not expected to have a
material impact on our financial position or results of operations.
11
INDEPENDENCE ENERGY, CORP.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
For the period ending April 30, 2012 and
For the period of November 30, 2005 (Inception) through April 30, 2012
NOTE 3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
In May 2011, the FASB issued ASU 2011-04, "Fair Value Measurement (Topic 820):
Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements
in U.S. GAAP and IFRSs", which is effective for annual reporting periods
beginning after December 15, 2011. This guidance amends certain accounting and
disclosure requirements related to fair value measurements. Additional
disclosure requirements in the update Include: (1) for Level 3 fair value
measurements, quantitative information about unobservable inputs used, a
description of the valuation processes used by the entity, and a qualitative
discussion about the sensitivity of the measurements to changes in the
unobservable inputs; (2) for an entity's use of a nonfinancial asset that is
different from the asset's highest and best use, the reason for the difference;
(3) for financial instruments not measured at fair value but for which
disclosure of fair value is required, the fair value hierarchy level in which
the fair value measurements were determined; and (4) the disclosure of all
transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04
will become effective for the Company on December 1, 2012. We are currently
evaluating ASU 2011-04 and have not yet determined the impact that adoption will
have on our financial statements.
In April 2011, the FASB issued ASU 2011-02, "Receivables (Topic 310): A
Creditor's Determination of Whether a Restructuring is a Troubled Debt
Restructuring". This amendment explains which modifications constitute troubled
debt restructurings ("TDR"). Under the new guidance, the definition of a
troubled debt restructuring remains essentially unchanged, and for a loan
modification to be considered a TDR, certain basic criteria must still be met.
For public companies, the new guidance is effective for interim and annual
periods beginning on or after June 15, 2011, and applies retrospectively to
restructuring occurring on or after the beginning of the fiscal year of
adoption. ASU 2011-02 has become effective for the Company on September 1, 2012.
The Company does not believe that the guidance will have a material impact on
its financial statements.
In December 2010, the FASB issued ASU 2010-29, "Business Combinations (Topic
805): Disclosure of supplementary pro forma information for business
combinations." This update changes the disclosure of pro forma information for
business combinations. These changes clarify that if a public entity presents
comparative financial statements, the entity should disclose revenue and
earnings of the combined entity as though the business combination that occurred
during the current year had occurred as of the beginning of the comparable prior
annual reporting period only. Also, the existing supplemental pro forma
disclosures were expanded to Include a description of the nature and amount of
material, nonrecurring pro forma adjustments directly attributable to the
business combination Included in the reported pro forma revenue and earnings.
This ASU is effective for fiscal years beginning after December 15, 2010, and
for interim periods within those fiscal years. We are currently evaluating the
impact of this ASU; however, we do not expect the adoption of this ASU to have a
material impact on our financial statements.
In December 2010, the FASB issued ASU 2010-28, "Intangible -Goodwill and Other
(Topic 350): When to perform Step 2 of the goodwill impairment test for
reporting units with zero or negative carrying amounts." This update requires an
entity to perform all steps in the test for a reporting unit whose carrying
value is zero or negative if it is more likely than not (more than 50%) that a
goodwill impairment exists based on qualitative factors, resulting in the
elimination of an entity's ability to assert that such a reporting unit's
goodwill is not impaired and additional testing is not necessary despite the
existence of qualitative factors that indicate otherwise. This ASU is effective
for fiscal years beginning after December 15, 2010, and for interim periods
within those fiscal years. We are currently evaluating the impact of this ASU;
however, we do not expect the adoption of this ASU to have a material impact on
our financial statements.
12
INDEPENDENCE ENERGY, CORP.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
For the period ending April 30, 2012 and
For the period of November 30, 2005 (Inception) through April 30, 2012
NOTE 3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
In January 2010, the FASB has published ASU 2010-02 "Consolidation (Topic 810) -
Accounting and Reporting for Decreases in Ownership of a Subsidiary--a Scope
Clarification," as codified in ASC 810, "Consolidation." ASU No. 2010-02 applies
retrospectively to April 1, 2009, our adoption date for ASC 810-10-65-1 as
previously discussed in this financial note. This ASU clarifies the applicable
scope of ASC 810 for a decrease in ownership in a subsidiary or an exchange of a
group of assets that is a business or nonprofit activity. The ASU also requires
expanded disclosures. The amendments in this Update are effective for interim
and annual periods ending on or after December 15, 2009, and should be applied
on a retrospective basis. The adoption of this ASU did not have a material
impact on our financial statements; however, it may affect future divestitures
of subsidiaries or groups of assets within its scope.
In January 2010, the FASB issued Accounting Standards Update No. 2010-06
applicable to FASB ASC 820-10, IMPROVING DISCLOSURES ABOUT FAIR VALUE
MEASUREMENTS. The guidance requires entities to disclose significant transfers
in and out of fair value hierarchy levels and the reasons for the transfers and
to present information about purchases, sales, issuances and settlements
separately in the reconciliation of fair value measurements using significant
unobservable inputs (Level 3).
Additionally, the guidance clarifies that a reporting entity should provide fair
value measurements for each class of assets and liabilities and disclose the
inputs and valuation techniques used for fair value measurements using
significant other observable inputs (Level 2) and significant unobservable
inputs (Level 3). This guidance is effective for interim and annual periods
beginning after December 15, 2009 except for the disclosures about purchases,
sales, issuances and settlements in the Level 3 reconciliation, which will be
effective for interim and annual periods beginning after December 15, 2010. As
this guidance provides only disclosure requirements, the adoption of this
standard did not impact the Company's results of operations, cash flows or
financial positions.
Other ASUs not effective until after April 30, 2012, are not expected to have a
significant effect on the Company's financial position or results of operations.
NOTE 4 - OIL AND GAS LEASES
On December 15, 2011, we closed the acquisition of a 2.5% interest in the
Quinlan Lease from Wise Oil and Gas LLC, with the option to increase that
interest to 10%. On December 23, 2011 we closed an additional 2.5% for total of
5%. The cost of 1% of interest in the Quinlan Lease is $15,616. The Quinlan
Lease is located in Pottawatomie County, Oklahoma, within the NE Shawnee Field
Township 11 North, Range 4 East. The Quinlan 1, 2, 3 and 4 wells are all located
within Section 19. The four wells lie between the Nemaha ridge to the west and
then on to the west flank of the Seminloe-Cushing ridge (Hunton Uplift) to the
East and North of Pauls Valley.
Effective March 1, 2012, Independence Energy Corp., paid an additional $78,080
to Wise Oil and Gas for an additional 5% participation in the Quinlan 1, 2 and 3
wells located in Pottawatomie County, Oklahoma at a cost of $15,616 per 1%.
Independence Energy Corp. now holds a 10% interest in the Quinlan 1, 2 and 3
wells more fully described in our Current Report on Form 8-K filed on January
30, 2012.
13
INDEPENDENCE ENERGY, CORP.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
For the period ending April 30, 2012 and
For the period of November 30, 2005 (Inception) through April 30, 2012
NOTE 4 - OIL AND GAS LEASES (CONTINUED)
Effective March 29, 2012, Independence Energy Corp., acquired a 5% working
interest, on a seventy percent net revenue interest, in a drilling program in
Coleman County, Texas. The interest was acquired from MontCrest Energy, Corp.
for total consideration of $115,000.
The Company follows the full cost method of accounting for costs of oil and gas
properties. Under this method, only those exploration and development costs that
relate directly to specific oil and gas wells are capitalized; costs that do not
relate directly to specific wells are charged to expense. Producing,
non-producing and unproven properties are assessed annually, or more frequently
as economic events indicate, for potential impairment.
This consists of comparing the carrying value of the asset with the asset's
expected future undiscounted cash flows without interest costs. Estimates of
expected future cash flows represent management's best estimate based on
reasonable and supportable assumptions. Proven oil and gas properties will be
reviewed for impairment. No impairment losses were recognized for the year ended
April 30, 2012 (April 30, 2011 - $nil).
Capitalized costs of oil and gas properties will be depleted using the
unit-of-production method when the property is placed into commercial
production.
Substantially all of the Company's oil and gas activities are conducted jointly
with others. The accounts reflect only the Company's proportionate interest in
such activities.
NOTE 5 - IMPAIRMENT OF LONG LIVED ASSETS
The Company periodically reviews its long-lived assets when applicable to
determine if any events or changes in circumstances have transpired which
indicate that the carrying value of its assets may not be recoverable, pursuant
to guidance established in ASC "Property, Plant, and Equipment". The Company
determines impairment by comparing the discounted future cash flows estimated to
be generated by its assets to their respective carrying amounts. If impairment
is deemed to exist, the assets will be written down to fair value.
NOTE 6 - STOCKHOLDERS' EQUITY
Transactions, other than employees' stock issuance, are in accordance with
paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair
value of the consideration received. Transactions with employees' stock issuance
are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be
accounted for based on the fair value of the consideration received or the fair
value of the equity instruments issued, or whichever is more readily
determinable.
On November 30, 2005 the Company issued a total of 12,000,000 shares of common
stock to one director for cash in the amount of $10,000.
On June 12, 2006 the Company issued 12,000,000 units from the Company's
registered SB-2 offering reflecting 12,000,000 shares of common stock.
On August 12, 2008 the Company effected a 12 for 1 forward split of its issued
and outstanding share capital such that every one share of common stock issued
and outstanding prior to the split was exchanged for twelve post-split shares of
common stock. The number of shares referred to in the previous paragraphs is
post-split number of shares.
14
INDEPENDENCE ENERGY, CORP.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
For the period ending April 30, 2012 and
For the period of November 30, 2005 (Inception) through April 30, 2012
NOTE 6 - STOCKHOLDERS' EQUITY (CONTINUED)
The Company's post-split authorized capital remains unchanged at 75,000,000
shares of common stock with a par value of $0.001 per share. All share amounts
have been retroactively adjusted for all periods.
On March 15, 2012, we issued an aggregate of 100,000 shares of our common stock
at a price of $1.30 per share to one (1) non-U.S. person (as that term is
defined in Regulation S of the Securities Act of 1933), in an offshore
transaction relying on Regulation S of the Securities Act of 1933, for aggregate
gross proceeds of $130,000.
On March 1, 2012, we issued an aggregate of 138,888 shares of our common stock
at a price of $0.90 per share to one (1) non-U.S. person (as that term is
defined in Regulation S of the Securities Act of 1933), in an offshore
transaction relying on Regulation S of the Securities Act of 1933, for aggregate
gross proceeds of $125,000.
Common stock, $ 0.001 par value: 75,000,000 shares authorized; 24,288,888 shares
issued and outstanding.
Preferred stock, $0.001 par value: 10,000,000 shares authorized; none share
issued and outstanding.
As of April 30, 2012 the Company had 24,288,888, shares of common stock issued
and outstanding.
NOTE 7 - LOANS PAYABLE
As of April 30, 2012, the Company had received a loan in the amount of $156,697
from an unrelated third party. The funds are currently non-interest bearing,
unsecured, and do not have any specific repayment terms.
NOTE 8 - SUBSEQUENT EVENTS
During the period ended April 30, 2012 the Company evaluated the potential of
any subsequent events and determined that the following events occurred
subsequent to April 30, 2012.
On May 15, 2012, we issued an aggregate of 50,000 shares of our common stock at
a price of $2.50 per share to one (1) non-U.S. person (as that term is defined
in Regulation S of the Securities Act of 1933), in an offshore transaction
relying on Regulation S of the Securities Act of 1933, for aggregate gross
proceeds of $125,000.On May 24, 2012 Independence Energy Corp. (the "Company")
entered into a financing agreement (the "Financing Agreement") with one investor
pursuant to which, the investor will make available of up to $1,000,000 by way
of advances until May 24, 2013 (the "Completion Date") in accordance with the
terms of the Financing Agreement. The Completion Date may be extended for an
additional term of up to twelve months at the option of the Company or the
investor upon written notice on or before the Completion Date in accordance with
the notice provisions of the Financing Agreement.
Upon receipt of an advance from the investor under the terms of the Financing
Agreement, the Company will issue to the investor that number of shares of the
Company at a price equal 90% of the average of the closing price of the
Company's common stock, for the five (5) Banking Days immediately preceding the
date of the advance.
15
INDEPENDENCE ENERGY, CORP.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
For the period ending April 30, 2012 and
For the period of November 30, 2005 (Inception) through April 30, 2012
NOTE 8 - SUBSEQUENT EVENTS (CONTINUED)
On June 6, 2012, the Company provided notice pursuant to the terms of the
Financing Agreement for an advance of $200,000. Subsequently, the Company has
issued 71,943 shares of common stock at a price of $2.78 which is the amount
equal to 90% of the average of the closing price of the Company's common stock,
for the five (5) Banking Days immediately preceding the date of the advance. All
of these shares were issued pursuant to an exemption from registration relying
on Section 4(2) of the Securities Act of 1933.
On June 7, 2012, our board of directors approved to effect a 5 new for one (1)
old forward split of our authorized and issued and outstanding shares of common
stock. Upon effect of the forward split, our authorized capital will be
increased from 75,000,000 to 375,000,000 shares of common stock and
correspondingly, our issued and outstanding shares of common stock will be
increased from 24,360,831 to 121,804,155 shares of common stock, all with a par
value of $0.001increased from 24,360,831 to 121,804,155 shares of common stock,
all with a par value of $0.001, subject to any share issuances between now and
the effective date of the forward split.
On May 29, 2012 the Company entered into and closed a purchaser agreement and
bill of sale to acquire a 2.5% working interest (on a 70% net revenue interest)
in two oil and gas wells: the Taylor - MEI # 113 and Taylor - MEI # 115 from
MontCrest Energy, Inc. The wells are located on MontCrest's Taylor Lease in
Coleman County, Texas. The 2.5% interest was acquired for total consideration of
$82,500. The interest includes approximately 20 acres of land surrounding each
well above the measured depth of four thousand feet. The wells are located
within T.&N.O.R.R Survey No. 28, Abstract 1667 in Coleman County, Texas.
16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors that may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States dollars and are
prepared in accordance with United States Generally Accepted Accounting
Principles. The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in this
quarterly report. The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all dollar amounts are
expressed in United States dollars. All references to "common shares" refer to
the common shares in our capital stock. As used in this quarterly report, the
terms "we", "us", "our" and "our company" mean Independence Energy Corp., unless
otherwise stated.
CORPORATE OVERVIEW
We were incorporated in the State of Nevada on November 30, 2005 under the name
"Oliver Creek Resources Inc." At inception, we were an exploration stage company
engaged in the acquisition, exploration and development of natural resource
properties.
Effective August 12, 2008, we effected a 12 for 1 forward stock split of our
issued and outstanding common stock. As a result, our authorized capital remains
at 75,000,000 shares of common stock with a par value of $0.001 and our issued
and outstanding shares increased from 2,000,000 shares of common stock to
24,000,000 shares of common stock. Also effective August 12, 2008, we changed
our name from "Oliver Creek Resources Inc." to "Independence Energy Corp." The
name change and forward stock split became effective with the Over-the-Counter
Bulletin Board at the opening for trading on August 12, 2008 under the new stock
symbol "IDNG".
CURRENT BUSINESS
We are an oil and gas company engaged in the exploration for and production of
oil and natural gas, throughout the United States. On December 15, 2011, we
closed the acquisition of a 2.5% interest in the Quinlan Lease from Wise Oil and
Gas LLC, with the option to increase that interest to 10%. On the closing of the
acquisition on December 15, 2011, we began generating revenue from the operating
well on the property even though the well is in the E&E stage (Exploration and
Evaluation). On December 23, 2011 we closed an additional 2.5% for a total of
5%. The Quinlan Lease is located in Pottawatomie County, Oklahoma.
17
Wise Oil and Gas is the operator of the Quinlan Lease. Wise Oil and Gas has been
a fully licensed oil and gas operator since 1989 in the State of Oklahoma. Wise
Oil and Gas own and operate wells throughout the State of Oklahoma and continue
to do so since 1989. Wise Oil and Gas is the operator of our company's working
interest in the Quinlan project.
We have acquired a percentage working interest in an oil and gas property. If
the property is viable and can be developed, we will receive a pro-rata share of
any revenues generated from the property, equivalent to our percentage working
interest. If the property is not viable, we expect the operator to plug the
wells; however, we will not be responsible for any portion of the costs related
to the plugging of the wells. There are leases underlying the wells in which we
own working interests; however we are not the holder of these leases and
therefore we are not responsible for the payment or evaluation of any
obligations under such leases. The leaseholder of the property is responsible
for paying and maintaining the leases. If we are successful in generating
revenues from our working interests in this oil and gas property, we intend to
acquire working interests in additional wells in the project area, subject to
obtaining additional financing. Our business strategy also includes seeking
opportunities for mergers or acquisitions with other companies or entities.
Effective March 1, 2012, our company, paid an additional $78,080 to Wise Oil and
Gas for an additional 5% participation in the Quinlan 1, 2 and 3 wells located
in Pottawatomie County, Oklahoma at a cost of $15,616 per 1%.Our company, now
holds a 10% interest in the Quinlan 1, 2 and 3 wells.
Effective March 29, 2012, our company, acquired a 5% working interest, on a 70%
net revenue interest, in a drilling program in Coleman County, Texas. The
interest was acquired from MontCrest Energy, Inc. for total consideration of
$115,000.
The drilling program consists of two wells: the Vaughn-MEI #106 and the
Shields-MEI #105-H prospect wells. The program operations are to take place
approximately two and three miles west of the town site of Novice, Texas in
Section 29, of Block 2 of the T. & N.O. Railroad Company Survey, and Section 30,
of Block 2 of the T. & N.O. Railroad Company Survey. It is expected by MontCrest
Energy, Inc., that the Vaughn-MEI #106 Prospect Well will be drilled to an
estimated depth of 4,650' and the Shields-MEI #105-H will be drilled as a
horizontal well. Neither the Vaughn-MEI #106, nor the Shields-MEI #105-H are
currently producing, but MontCrest Energy, Inc., has a history of successful
operations in the region.
If the property is viable and can be developed, we will receive a pro-rata share
of any revenues generated from the property, equivalent to our percentage
working interest. If the property is not viable, we expect the operator to plug
the wells; however, we will not be responsible for any portion of the costs
related to the plugging of the wells. There are leases underlying the wells in
which we own working interests; however we are not the holder of these leases
and therefore we are not responsible for the payment or evaluation of any
obligations under such leases. The leaseholder of the property is responsible
for paying and maintaining the leases. If we are successful in generating
revenues from our working interests in these oil and gas properties, we intend
to acquire working interests in additional wells in the project area, subject to
obtaining additional financing. Our business strategy also includes seeking
opportunities for mergers or acquisitions with other companies or entities.
On May 24, 2012 we entered into a financing agreement with one investor pursuant
to which, the investor will make available of up to $1,000,000 by way of
advances until May 24, 2013 (the "Completion Date") in accordance with the terms
of the financing agreement. The Completion Date may be extended for an
additional term of up to twelve months at the option of our company or the
investor upon written notice on or before the Completion Date in accordance with
the notice provisions of the financing agreement. Upon receipt of an advance
from the investor, our company will issue to the investor that number of shares
of our company's common stock at a price equal 90% of the average of the closing
price of our company's common stock, for the five (5) banking days immediately
preceding the date of the advance.
18
On May 29, 2012 we entered into and closed a purchaser agreement and bill of
sale to acquire a 2.5% working interest (on a 70% net revenue interest) in two
oil and gas wells: the Taylor - MEI # 113 and Taylor - MEI # 115 from MontCrest
Energy, Inc. The wells are located on MontCrest's Taylor Lease in Coleman
County, Texas. The 2.5% interest was acquired for total consideration of
$82,500. The interest includes approximately 20 acres of land surrounding each
well above the measured depth of four thousand feet. The wells are located
within T.&N.O.R.R Survey No. 28, Abstract 1667 in Coleman County, Texas.
RESULTS OF OPERATIONS
THREE MONTH SUMMARY ENDING APRIL 30, 2012 AND 2011
Period from
Three months Three months November 30, 2005
ended ended (Inception) to
April 30, April 30, April 30,
2012 2011 2012
---------- ---------- ----------
Revenue $ Nil $ Nil $ Nil
Operating expenses $ 32,409 $ 4,600 $ 166,357
Gain from currency exchange $ Nil $ Nil $ 97
Net income (loss) $ (32,409) $ (4,600) $ (166,260)
EXPENSES
Our operating expenses for the three month periods ended April 30, 2012 and 2011
are outlined in the table below:
Period from
Three months Three months November 30, 2005
ended ended (Inception) to
April 30, April 30, April 30,
2012 2011 2012
---------- ---------- ----------
Professional fees $ 17,500 $ 4,000 $ 90,901
Administrative expenses $ 14,909 $ 600 $ 75,456
REVENUE
We have not earned any revenues since our inception and we do not anticipate
earning revenues in the upcoming quarter.
OPERATING REVENUES
We have not generated any revenues since inception.
OPERATING EXPENSES AND NET LOSS
Operating expenses for the period ended April 30, 2012 was $32,409 compared with
$4,600for the period ended April 30, 2011. The increase in operating
expenditures was attributed to higher amounts of professional fees relating to
our company's filings.
Net loss for the period ended April 30, 2012 was $32,409 compared with $4,600
for the period ended April 30, 2011. The overall increase in net loss of $27,809
was attributed higher professional services incurred with our company's SEC
filings including, consulting, accounting, audit, and legal services.
19
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL
At April 30, At January 31,
2012 2012
---------- ----------
Current Assets $ 52,999 $ 39,460
Current Liabilities $ 159,825 $ 166,721
---------- ----------
Working Capital (Deficit) $ 106,826 $ 127,261
========== ==========
CASH FLOWS
Three Months Three Months
Ended Ended
April 30, April 30,
2012 2011
---------- ----------
Cash Flows from (used in) Operating Activities $ (28,303) $ (5,295)
Cash Flows from (used in) Investing Activities $ (202,156) $ Nil
Cash Flows from (used in) Financing Activities $ 255,000 $ 5,000
---------- ----------
Net Increase (decrease) in Cash During Period $ 24,541 $ 295
========== ==========
The increase in our working capital at April 30, 2012 from the period ended
January 31, 2012 is reflective of the current state of our business development,
primarily due to our ability secure funding, which allowed for the increase in
our exploration activities and professional fees paid in connection with
expenses associated with our continuing reporting obligations under the
Securities and Exchange Act of 1934.
As of April 30, 2012, we had cash on hand of $39,331. Since our inception, we
have used our common stock to raise money for our operations and for our
property acquisitions. We have not attained profitable operations and are
dependent upon obtaining financing to pursue our plan of operation.
As at April 30, 2012, our company's cash balance was $39,331 compared to $1,016
as at April 30, 2011 and its total assets were $308,565 compared with $1,016 as
at April 30, 2011. The increase in total assets is attributed to the acquisition
of oil and gas properties that have been capitalized.
As at April 30, 2012, our company had total liabilities of $159,825 compared
with total liabilities of $28,050 as at April 30, 2011. The increase in total
liabilities was attributed to decreases in accounts payable and accrued
liabilities of $3,128 and increases in loans payable of 156,697.
As at April 30, 2012, our company had a working capital deficit of $106,826
compared with a working capital deficit of $27,034 as at April 30, 2011. The
increase in working capital deficit was attributed to the increase in loans
payable and accrued liabilities of $159,697
CASHFLOW FROM OPERATING ACTIVITIES
During the period ended April 30, 2012, our company used $28,303 of cash for
operating activities compared to the use of $5,295 of cash for operating
activities during the period ended April 30, 2011. The increase in cashflows
used for operating activities is attributed to professional services incurred
with our company's SEC filings including, consulting, accounting, audit, and
legal services.
CASHFLOW FROM INVESTING ACTIVITIES
During the periods ended April 30, 2012 had cash transactions related to
investing activities in the amount of $202,156. During the periods ended April
30, 2011, our company did not have any cash transactions related to investing
activities.
20
CASHFLOW FROM FINANCING ACTIVITIES
During the period ended April 30, 2012, our company received $255,000 of cash
from financing activities compared to $5,000 for the period ended April 30,
2011. The increase in cashflows provided from financing activities is based on
the fact that our company received $255,000 of financing from a unrelated
third-party and $0 from related parties to settle outstanding obligations of our
company during the day-to-day operations as compared to $5,000 in 2011.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to stockholders.
GOING CONCERN
We have not attained profitable operations and are dependent upon obtaining
financing to pursue any extensive activities. For these reasons, our auditors
stated in their report on our audited financial statements that they have
substantial doubt that we will be able to continue as a going concern without
further financing.
FUTURE FINANCINGS
We will continue to rely on equity sales of our common shares in order to
continue to fund our business operations. Issuances of additional shares will
result in dilution to existing stockholders. There is no assurance that we will
achieve any additional sales of the equity securities or arrange for debt or
other financing to fund planned acquisitions and exploration activities.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with United States
generally accepted accounting principles requires our management to make
estimates and assumptions that affect the reported amount 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.
Our management routinely makes judgments and estimates about the effects of
matters that are inherently uncertain.
We have identified certain accounting policies, described below, that are most
important to the portrayal of our current financial condition and results of
operations. Our significant accounting policies are disclosed in the notes to
the financial statements included in this Quarterly Report.
USE OF ESTIMATES
The preparation of financial statements in conformity with Generally Accepted
Accounting Principles (GAAP) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities, at the date of these financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REGULATORY MATTERS
Our company and its oil and gas property interests are subject to a variety of
Federal and State regulations governing land use, health, safety and
environmental matters. Our company's management believes it has been in
substantial compliance with all such regulations, and is unaware of any pending
action or proceeding relating to regulatory matters that would affect the
financial position of our company.
21
CASH AND CASH EQUIVALENTS
Our company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.
STOCK-BASED COMPENSATION
Our company accounts for stock options issued to employees in accordance with
the provisions of FASB ASC 718, "Stock Compensation". As such, compensation cost
is measured on the date of grant as the excess of current market price of the
underlying stock over the exercise price. Such compensation amounts are
amortized over the respective vesting periods of the option grant. Our company
adopted the disclosure provisions of FASB ASC 718, "Accounting for Stock-Based
Compensation," and FASB ASC 718, which allows entities to provide pro forma net
Income (loss) and pro forma earnings (loss) per share disclosures for employee
stock option grants as if the fair-valued based method has been applied.
Our company accounts for stock options or warrants issued to non-employees for
goods or services in accordance with the fair value method of FASB ASC 718.
Under this method, our company records an expense equal to the fair value of the
options or warrants issued. The fair value is computed using an options pricing
model.
IMPAIRED ASSET POLICY
Our company periodically reviews its long-lived assets when applicable to
determine if any events or changes in circumstances have transpired which
indicate that the carrying value of its assets may not be recoverable, pursuant
to guidance established in ASC "Property, Plant, and Equipment". Our company
determines impairment by comparing the discounted future cash flows estimated to
be generated by its assets to their respective carrying amounts. If impairment
is deemed to exist, the assets will be written down to fair value.
START-UP EXPENSES
Our company has adopted Statement of Position (SOP) No. 98-5 ("SOP 98-5"),
"Reporting the Costs of Start-up Activities", which requires that costs
associated with start-up activities be expensed as incurred. Accordingly,
start-up costs associated with our company's formation have been included in our
company's general and administrative expenses for the period from inception on
November 30, 2005 to April 30, 2012.
OIL AND GAS PROPERTY COSTS
Oil and gas acquisition, exploration and development costs are capitalized as
incurred until such time as economic reserves are quantified. From that time
forward, our company will capitalize all costs to the extent that future cash
flows from oil and gas revenues equal or exceed the costs deferred. The deferred
costs will be amortized over the recoverable reserves when a property reaches
commercial production. Costs related to site restoration programs will be
accrued over the life of the project.
FOREIGN CURRENCY TRANSLATION
Our company's functional currency is the US dollar as substantially all of our
company's operations are in the United States. Our company used the United
States dollar as its reporting currency for consistency with registrants of the
Securities and Exchange Commission and in accordance with the ASC 830 "Foreign
Currency Translation".
Assets and liabilities that are denominated in a foreign currency are translated
at the exchange rate in effect at the year end and capital accounts are
translated at historical rates. Income statement accounts are translated at the
average rates of exchange prevailing during the period. Translation adjustments
from the use of different exchange rates from period to period are included in
the Comprehensive Income statement account in stockholders' (deficit) equity, if
applicable. There were no translation adjustments as of April 30, 2012.
22
Transactions undertaken in currencies other than the functional currency of the
entity are translated using the exchange rate in effect as of the transaction
date. If applicable, exchange gains and losses are included in other items on
the statements of operations. There were no exchange gains or losses as of April
30, 2012.
BASIC AND DILUTED LOSS PER SHARE
Our company computed basic and diluted loss per share amounts pursuant to the
ASC 260 "Earnings per Share." There are no potentially dilutive shares
outstanding and, accordingly, dilutive per share amounts have not been presented
in the accompanying statements of operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
ASC 820, "Fair Value Measurement and Disclosures," requires disclosures of
information regarding the fair value of certain financial instruments for which
it is practicable to estimate the value. For purpose of this disclosure, the
fair value of a financial instrument is the amount at which the instrument could
be exchanged in a current transaction between willing parties, other than in a
forced sale of liquidation.
COMPREHENSIVE LOSS
ASC 220, "Reporting Comprehensive Income," establishes standards for the
reporting and display of comprehensive loss and its components in the financial
statements. As of April 30, 2012, our company has no items that represent
comprehensive loss and therefore, has not included a schedule of comprehensive
loss in financial statements.
INCOME TAXES
Income taxes are recognized in accordance with ASC 740, "Income Taxes", whereby
deferred Income tax liabilities or assets at the end of each period are
determined using the tax rate expected to be in effect when the taxes are
actually paid or recovered. A valuation allowance is recognized on deferred tax
assets when it is more likely than not that some or all of these deferred tax
assets will not be realized.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company we are not required to provide the information
under this Item.
ITEM 4. CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to our management, including our chief executive officer and chief
financial officer (our principal executive officer, principal financial officer
and principal accounting officer) to allow for timely decisions regarding
required disclosure.
As of the end of our quarter covered by this report, we carried out an
evaluation, under the supervision and with the participation of our chief
executive officer and chief financial officer (our principal executive officer,
principal financial officer and principal accounting officer), of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on the foregoing, our chief executive officer and chief
financial officer (our principal executive officer, principal financial officer
and principal accounting officer) concluded that our disclosure controls and
procedures were not effective as of the end of the period covered by this
quarterly report.
23
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During the period covered by this report there were no changes in our internal
control over financial reporting that materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our
company, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which our director, officer or
any affiliates, or any registered or beneficial shareholder, is an adverse party
or has a material interest adverse to our interest.
ITEM 1A. RISK FACTORS
As a smaller reporting company we are not required to provide the information
under this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the quarter ended April 30, 2012, we issued an aggregate of 238,888
common shares of unregistered securities to one non-U.S. person, in an offshore
transaction relying on Regulation S of the Securities Act of 1933.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
24
ITEM 6. EXHIBITS
Exhibit
Number Description of Exhibit
------ ----------------------
(3) ARTICLES OF INCORPORATION AND BYLAWS
3.01 Articles of Incorporation (incorporated by reference to our
Registration Statement on Form SB-2 filed on March 7, 2006)
3.02 Bylaws (incorporated by reference to our Registration Statement on Form
SB-2 filed on March 7, 2006)
3.03 Certificate of Amendment filed on July 23, 2008 (incorporated by
reference to Exhibit 3.2 to the Company's Current Report on Form 8-K
filed on August 14, 2008)
3.04 Certificate of Change filed on July 23, 2008 (incorporated by reference
to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on
August 14, 2008)
(10) MATERIAL CONTRACTS
10.1 Share Purchase agreement between Gregory Rotelli and Bruce Thomson
dated January 24, 2012
10.2 Form of Financing Agreement dated May 24, 2012 (incorporated by
reference to our Current Report on Form 8-K filed on May 24, 2012)
10.3 Purchaser Agreement and Bill of Sale dated May 25, 2012 between our
company and MontCrest Energy, Inc. (incorporated by reference to our
Current Report on Form 8-K filed on June 1, 2012)
(14) CODE OF ETHICS
14.1* Code of Ethics
(31) RULE 13A-14(A) / 15D-14(A) CERTIFICATIONS
31.1* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of the Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer.
(32) SECTION 1350 CERTIFICATIONS
32.1* Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
of the Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer.
101 INTERACTIVE DATA FILE
101** Interactive Data File (Form 10-Q for the period ended April 30, 2012
furnished in XBRL).
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
----------
* Filed herewith.
** Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the
Interactive Data Files on Exhibit 101 hereto are deemed not filed or part
of a registration statement or prospectus for purposes of Sections 11 or 12
of the Securities Act of 1933, are deemed not filed for purposes of Section
18 of the Securities and Exchange Act of 1934, and otherwise are not
subject to liability under these sections.
25
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INDEPENDENCE ENERGY CORP.
Dated June 19, 2012 By: /s/ Gregory Rotelli
-------------------------------------------------
Gregory Rotelli
Chief Executive Officer, Chief Financial Officer,
President, Secretary and Treasurer
26