UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2007
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to _________
Commission File Number 033-05384
FRONTIER ENERGY CORP.
----------------------------------------------
(Name of Small Business Issuer in its charter)
NEVADA 87-0443026
- --------------------------------- ---------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
2413 Morocco Avenue, North Las Vegas, Nevada 89031
-------------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Issuer's telephone number: (702) 648-5849
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No[ ]
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 practicable date:7,936,464 as of May 15, 2007.
Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
TABLE OF CONTENTS
Page No.
Consolidated Financial Statements
Consolidated Balance Sheet F-1
Consolidated Statements of Operations F-2
Consolidated Statement of Stockholders' Deficit F-3 - F-4
Consolidated Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6 - F-8
FRONTIER ENERGY CORP.
CONSOLIDATED BALANCE SHEET
March 31,
2007
(Unaudited)
--------------
ASSETS
Current assets
Cash $ 19,040
Receivables, net of allowance
for doubtful accounts of $76,696 -
Officer receivable 216
--------------
Total current assets 19,256
--------------
Fixed assets, net 1,039
Mineral leases 10,905
--------------
Total assets $ 31,200
==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities $ 266,667
Loans payable 177,243
--------------
Total current liabilities 443,910
--------------
Total liabilities 443,910
Commitments and contingencies -
Stockholders' deficit
Common stock subscribed 82,885
Series A preferred stock, $0.001 par
value; 1 share authorized, issued
and outstanding -
Series B preferred stock, $0.001 par
value; 10,000,000 authorized; and
40,000 and no shares issued or
outstanding 40
Common stock, $0.001 par value; 100,000,000
shares authorized, 6,836,464 shares
issued and outstanding 6,836
Additional paid-in capital 5,909,385
Common stock issued for future services on
employment agreement (297,500)
Accumulated deficit (6,114,356)
--------------
Total stockholders' deficit (412,710)
--------------
Total liabilities and stockholders' deficit $ 31,200
==============
See Accompanying Notes to Consolidated Financial Statements
F-1
FRONTIER ENERGY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended
March 31, 2007 March 31, 2006
(Unaudited) (Unaudited)
-------------- --------------
Revenue $ - $ -
Operating expenses
Officer Compensation 101,250 188,000
General and administrative 968,117 14,526
Exploration and development 59,500 -
Loss on impairment of mineral claims
-------------- --------------
Total operating expenses 1,128,867 202,526
-------------- --------------
Net loss $ (1,128,867) $ (202,526)
============== ==============
Earnings (loss) per common share-
Basic and diluted:
Net loss $ (0.21) $ (0.10)
============== ==============
Weighted average common shares outstanding -
Basic and diluted 5,429,242 2,012,939
============== ==============
See Accompanying Notes to Consolidated Financial Statements
F-2
FRONTIER ENERGY CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
(Unaudited)
Preferred A Preferred B Common Stock
------------------ ---------------- ----------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------- ------
Balance,
December 31, 2006 1 $ - 40,000 $ 40 3,886,464 $3,886
====== ====== ====== ====== ========= ======
Issuance of shares for
consulting services - - - - 2,850,000 2,850
Issuance of 150,000 stock
options for services
Exercise of Options 100,000 100
Recognized expense per
employment agreement
Common stock subscribed
Net loss - - - - - -
------ ------ ------ ------ --------- ------
Balance,
March 31, 2007 1 $ - 40,000 $ 40 6,836,464 $6,836
====== ====== ====== ====== ========= ======
See Accompanying Notes to Consolidated Financial Statements
F-3
FRONTIER ENERGY CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
(Unaudited)
Additional Common Employment Accumulated Stockholders'
Paid-in Capital Stock Subscribed Agreement Deficit Defiict
--------------- ---------------- ---------- ----------- ------------
Balance,
December 31, 2006 $ 4,982,210 $ 26,000 $ (386,750) $(4,985,489) $ (360,103)
=============== ================ ========== =========== ============
Issuance of shares for
consulting services 884,350 - - 887,200
Issuance of 150,000 stock
options for services 27,925 27,925
Exercise of Options 14,900 15,000
Recognized expense per
employment agreement 89,250 89,250
Common stock subscribed 56,885 56,885
Net loss - - - (1,128,867) (1,128,867)
--------------- ---------------- ---------- ----------- ------------
Balance,
March 31, 2007 $ 5,909,385 $ 82,885 $ (297,500) $(6,114,356) $ (412,710)
=============== ================ ========== =========== ============
See Accompanying Notes to Consolidated Financial Statements
F-4
FRONTIER ENERGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended
March 31, 2007 March 31, 2006
(Unaudited) (Unaudited)
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,128,867) $ (202,526)
Adjustments to reconcile loss to net
cash used in operating activities
Depreciation 55 -
Stock based expenses 1,048,775 170,000
Changes in operating assets and liabilities:
Receivables - -
Prepaid expenses -
Accounts payable and accrued liabilities (1,057) 29,526
-------------- --------------
Net cash used in operating activities (81,094) (3,000)
CASH FLOW INVESTING ACTIVITIES
Purchase of fixed assets - -
Acquisition of mineral leases - -
-------------- --------------
Net cash used in financing activities - -
-------------- --------------
CASH FLOW FINANCING ACTIVITIES
Proceeds from issuance of common stock 15,000 -
Proceeds from subscriptions for common stock 12,485 -
Proceeds from loans 49,921 -
Proceeds from borrowings from related parties (662) 3,000
- -
-------------- --------------
Net cash provided by financing activities 76,744 3,000
-------------- --------------
NET CHANGE IN CASH (4,350) -
CASH AT BEGINNING OF YEAR 23,390 1,149
-------------- --------------
CASH AT END OF YEAR $ 19,040 $ 1,149
============== ==============
SUPPLEMENTAL INFORMATION
Interest Paid $ - $ -
============== ==============
Income Taxes Paid $ - $ -
============== ==============
Non-cash activities:
Shares issued pursuant to farm-in agreement $ - $ 800,000
============== ==============
Shares issued in settlement of accounts payable $ - $ 47,216
============== ==============
Shares issued for mineral claims $ - $ 80,000
============== ==============
See Accompanying Notes to Consolidated Financial Statements
F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with Securities and Exchange Commission requirements for interim
financial statements. Therefore, they do not include all of the information
and footnotes required by accounting principles generally accepted in the
United States for complete financial statements. The NOTE financial
statements should be read in conjunction with the Form 10-KSB for the year
ended December 31, 2006 of Frontier Energy, Corp, fka (GTData Corporation)
(the "Company").
The interim financial statements present the balance sheet, statements of
operations, stockholders' equity and cash flows of the Company. The
financial statements have been prepared in accordance with accounting
principles generally accepted in the United States.
The interim financial information is unaudited. In the opinion of
management, all adjustments necessary to present fairly the financial
position as of March 31, 2007 and the results of operations, stockholders'
equity and cash flows presented herein have been included in the financial
statements. Interim results are not necessarily indicative of results of
operations for the full year.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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 the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Going concern - The Company incurred a net loss of approximately
$1,129,000 and $203,000 for the three months ended March 31, 2007 and 2006.
The Company's liabilities exceed its assets by approximately $413,000 as
of March 31, 2007, not counting prepaid salaries for stock issued under
officer employment agreements. The Company's sole operations has been
discontinued with no other source of operating revenues. These factors
create substantial doubt about the Company's ability to continue as a
going concern. The Company's management plans to continue as a going
concern revolves around its ability to develop and/or acquire new
business operations, as well as, raise necessary capital to maintain
the corporate affairs of the Company.
The ability of the Company to continue as a going concern is
dependent on securing additional sources of capital and the success of
the Company's plan. The financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a
going concern.
Reclassification - The financial statements for 2006 reflect certain
reclassifications, which have nominal effect on net income, to
conform to classifications in the current year.
F-6
2. SIGNIFICANT ACCOUNTING POILICIES
Use of estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States
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 the financial statements and the
reported amounts of revenue and expenses during the periods presented.
Actual results could differ from those estimates.
Stock-based compensation - The Company applies SFAS No. 123,
"Accounting for Stock-Based Compensation," which requires the recognition
of compensation cost based upon the fair value of stock options at the
grant date using the Black-Scholes option pricing model.
3. NEW ACCOUNTING PRONOUNCEMENTS
SFAS No. 159
In February 2007, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 159, "The Fair
Value Option for Financial Assets and Financial Liabilities" ("SFAS
No. 159"). SFAS No. 159 provides the option to report certain financial
assets and liabilities at fair value, with the intent to mitigate volatility
in financial reporting that can occur when related assets and liabilities
are recorded on different bases. This statement is effective for us
beginning January 1, 2008. We do not expect SFAS No. 159 to have a material
impact on our consolidated financial statements.
FASB Interpretation No. 48
In July 2006, the FASB issued Financial Interpretation No. 48, "Accounting
for Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109"
("FIN 48"). FIN 48 clarifies the recognition threshold and measurement of a
tax position taken on a tax return. FIN 48 also requires expanded disclosure
with respect to the uncertainty in income taxes. Effective January 1, 2007,
we adopted the provisions of FIN 48
F-7
EITF Issue No. 06-10
In March 2007, the Emerging Issues Task Force ("EITF") reached a consensus
on EITF Issue No. 06-10, "Accounting for Deferred Compensation and
Postretirement Benefit Aspects of Collateral Assignment Split-Dollar Life
Insurance Arrangements" ("EITF 06-10"). EITF 06-10 provides that an employer
should recognize a liability for the postretirement benefit related to
collateral assignment split-dollar life insurance arrangements in accordance
with either SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions," or APB No. 12 "Omnibus Opinion." Entities should
recognize the effects of applying EITF 06-10 through either (i) a change in
accounting principle through a cumulative-effect adjustment to retained
earnings or to other components of equity or net assets in the statement of
financial position as of the beginning of the year of adoption or (ii) a
change in accounting principle through retrospective application to all
prior periods. The provisions of EITF 06-10 are effective as of January 1,
2008 and are not expected to have a material impact on our consolidated
financial statements.
4. RELATED PARTY TRANSACTIONS-
Due to Related Parties - An officer of the Company withdrew $662 in funds
for personal expenses. The balance at March 31, 2007 was a receivable of
$216.
5. STOCKHOLDERS' EQUITY
Common Stock -
During 2007, consultants to the Company were issued 2,550,000 shares of
common stock at par value. Consulting expense of $812,000 was recorded for
the issuance of the shares. The shares issued were valued based on a price
per share of that reflected the weighted-average closing price of the
Company during a five day period prior to the date of the consulting
agreements effective dates.
On February 1, 2007, the Company issued and exercised options and issued
200,000 shares of stock to the officer and corporate counsel. The Company
recorded consulting expense of $75,200 for the shares. The shares issued
were valued based on a price per share of $0.376 that reflects the
weighted-average closing price of the Company during a five day period prior
to agreement to issue the shares.
On March 15, 2007, the Company entered into a consulting agreement to issue
200,000 shares of stock for services. The Company recorded consulting
expense of $44,400 for the services. The shares issued were valued based on
a price per share of $0.222 that reflects the weighted-average closing price
of the Company during a five day period prior to the day of the agreement.
The Company recorded the expenses to common stock subscribed, as the shares
were unissued at March 31, 2007.
On March 15, 2007, the Company entered into a consulting agreement issuing
150,000 options to acquire common stock of the Company at $0.15 per share.
The stock options were valued using the Black-Shoales valuation model,
recording expense of 27,925. On March 29, 2007, the consultant exercised
100,000 shares at $0.15 pre share for $15,000. As of March 31, 2007, the
consultant held 50,000 stock options at $0.15 per share.
The Company received $12,485 for shares of stock that were unissued as of
March 31, 2007 and recorded as common stock subscribed at March 31, 2007.
6. SUBSEQUENT EVENTS
In April 2007, consultants to the Company were issued 1,000,000 shares of
common stock at par value. Consulting expense of $88,000 was recorded for
the issuance of 500,000 of the shares. The shares issued were valued based
on a price per share of $0.176 that reflects the weighted-average closing
price of the Company during a five day period prior to agreement to issue
the shares. Shares subscribed of 200,000 were issued and an over issuance
of 300,000 shares were issued to the consultant.
On February 1, 2007, the Company issued and exercised options and issued
100,000 shares of stock to the officer and corporate counsel. The Company
recorded consulting expense of $17,600 for the shares. The shares issued
were valued based on a price per share of $0.176 that reflects the weighted-
average closing price of the Company during a five day period prior to
agreement to issue the shares.
F-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
The following discussion of our plan of operations, financial condition
and results of operations should be read in conjunction with the Company's
unaudited financial statements, and notes thereto, included elsewhere herein.
This discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of various factors including,
but not limited to, those discussed in the Company's filings under the
Securities Exchange Act of 1934, as amended.
IN GENERAL
Frontier Energy Corp., through subsidiaries and agreements in which we
intend to participate, is engaged in the acquisition, exploration, development
and operation of oil and gas reserves. We have cancelled the contracts on
certain prospects in 2006 and acquired a working interest in another prospect
during the period covered by this report. We have been unable to fund the
exploitation of any this prospect, but are seeking to partner with another
party. Our ability to emerge from the exploration stage with respect to any
planned principal business activity is dependent upon our successful efforts to
raise additional equity financing and generate significant revenue. In the
three-month period ended March 31, 2007, the Company had no revenues from
operations or other sources.
PLAN OF OPERATIONS
We intend to acquire prospects and raise the funds necessary to extract
oil and/or natural gas from such prospects. To date, we have acquired a
working interest in one prospect and are seeking a partner to exploit this
prospect. We intend to seek out other prospects, with the intention of raising
funds to exploit such prospects.
In the alternative, if we are unable to acquire oil or gas properties,
the Company may seek to enter into a merger with an operating company, if the
Board deems it in the best interests of the Company's stockholders. We have
not identified any potential merger target as of the date of this report.
Liquidity and Capital Resources
The Company did not generate any revenue in the quarter ended March 31,
2007; nor has the Company had access to sufficient capital to implement our
business plan. Since our future revenues from operations (if any) will not
provide sufficient capital to allow us to implement our acquisition and merger
plans in the near future, we must secure a source of additional capital.
We currently have very limited operating funds ($19,040 as of March 31,
2007), and we will require additional cash to maintain our operations for the
next twelve months. Our operating expenses for the three-month period ending
March 31, 2007 were $1,128,867, as compared to $202,526 for the same period in
2006. Of the $1,128,867 in expenses during the current period, $1,048,830 was
stock-based expenses and depreciation, which are non-cash items. Based on the
cash we currently have, we will likely need additional financing to continue
operations beyond September 2007. We have been dependent on loans and private
sales of our common stock to continue operations. Thus, our success is
entirely dependent upon our ability to raise additional capital. If the
Company cannot raise additional capital in the very near term, the Company may
be forced to discontinue operations.
We believe that we will require an additional $3,000,000 to fund our
currently anticipated requirements for our proposed operations to implement our
business plan over the next twelve-month period, most of which the Company must
raise through loans or the sale of equity. In the longer term, we hope to
satisfy our liquidity requirements from cash flow from operations and to the
extent such funds are insufficient, we must raise additional funds to sustain
operations. We can give no assurances that we will be able to obtain the
required capital from any source or that we will be able to commence
operations.
Variables and Trends
We have no operating history with respect to oil and natural gas
exploration. In the event we are able to obtain the necessary financing to
move forward with our business plan, we expect our expenses to increase
significantly as we grow our business with the acquisition of property or
through acquisitions. Accordingly, the comparison of the financial data for
the periods presented may not be a meaningful indicator of our future
performance and must be considered in light of our operating history.
Recent Accounting Pronouncements
In February 2007, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 159, "The Fair
Value Option for Financial Assets and Financial Liabilities" ("SFAS No. 159").
SFAS No. 159 provides the option to report certain financial assets and
liabilities at fair value, with the intent to mitigate volatility in financial
reporting that can occur when related assets and liabilities are recorded on
different bases. This statement is effective for us beginning January 1, 2008.
We do not expect SFAS No. 159 to have a material impact on our consolidated
financial statements.
In July 2006, the FASB issued Financial Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes-an Interpretation of FASB Statement
No. 109" ("FIN 48"). FIN 48 clarifies the recognition threshold and measurement
of a tax position taken on a tax return. FIN 48 also requires expanded
disclosure with respect to the uncertainty in income taxes. Effective
January 1, 2007, we adopted the provisions of FIN 48
In March 2007, the Emerging Issues Task Force ("EITF") reached a
consensus on EITF Issue No. 06-10, "Accounting for Deferred Compensation and
Postretirement Benefit Aspects of Collateral Assignment Split-Dollar Life
Insurance Arrangements" ("EITF 06-10"). EITF 06-10 provides that an employer
should recognize a liability for the postretirement benefit related to
collateral assignment split-dollar life insurance arrangements in accordance
with either SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions," or APB No. 12 "Omnibus Opinion." Entities should
recognize the effects of applying EITF 06-10 through either (i) a change in
accounting principle through a cumulative-effect adjustment to retained
earnings or to other components of equity or net assets in the statement of
financial position as of the beginning of the year of adoption or (ii) a change
in accounting principle through retrospective application to all prior periods.
The provisions of EITF 06-10 are effective as of January 1, 2008 and are not
expected to have a material impact on our consolidated financial statements.
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 are material to investors.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We are not a party to any pending legal proceeding or litigation, except
as described in the following paragraph. In addition, none of our property is
the subject of a pending legal proceeding. We are not aware of any legal
proceedings against the Company or our property contemplated by any
governmental authority.
In 2006, the Company was sued by a former consultant for fees allegedly
owed and repayment of funds purported lent to the Company. The Company and the
consultant agreed to a settlement of this dispute in the first quarter of 2007.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
During 2007, consultants to the Company were issued 2,550,000 shares of
common stock at par value. Consulting expense of $812,000 was recorded for the
issuance of the shares. The shares issued were valued based on a price per
share of that reflected the weighted-average closing price of the Company
during a five day period prior to the date of the consulting agreements
effective dates.
On February 1, 2007, the Company issued and exercised options and issued
200,000 shares of stock to the officer and corporate counsel. The Company
recorded consulting expense of $75,200 for the shares. The shares issued were
valued based on a price per share of $0.376 that reflects the weighted-average
closing price of the Company during a five day period prior to agreement to
issue the shares.
On March 15, 2007, the Company entered into a consulting agreement to
issue 200,000 shares of stock for services. The Company recorded consulting
expense of $44,400 for the services. The shares issued were valued based on a
price per share of $0.222 that reflects the weighted-average closing price of
the Company during a five day period prior to the day of the agreement. The
Company recorded the expenses to common stock subscribed, as the shares were
unissued at March 31, 2007.
On March 15, 2007, the Company entered into a consulting agreement
issuing 150,000 options to acquire common stock of the Company at $0.15 per
share. The stock options were valued using the Black-Shoales valuation model,
recording expense of 27,925. On March 29, 2007, the consultant exercised
100,000 shares at $0.15 pre share for $15,000. As of March 31, 2007, the
consultant held 50,000 stock options at $0.15 per share.
The Company received $12,485 for shares of stock that were unissued as of
March 31, 2007 and recorded as common stock subscribed at March 31, 2007.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
Not Applicable.
ITEM 6. EXHIBITS
EXHIBIT NUMBER. DESCRIPTION
31.1 Certification of Principal Executive Officer and Principal Financial
Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated
under the Securities Exchange Act of 1934, as amended
32.1 Certification of Principal Executive Officer and Principal Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of The Sarbanes-Oxley Act of 2002.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: May 14, 2007
FRONTIER ENERGY CORP.
By: /s/ Robert Genesi
- ---------------------
Name: Robert Genesi
Title: President and Acting
Chief Financial Officer
Principal Financial Officer