UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
AMENDMENT NO. 1 TO
FORM 10-K/A
__________________________
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the Fiscal Year Ended DECEMBER 31, 2007
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
NOTE 7 - STOCK
Commission file number: 033-05384
FRONTIER ENERGY CORP.
(Exact name of Registrant as specified in its charter)
___________________________
NEVADA 87-0443026
________________________________ _____________________________
(State or other Jurisdiction (IRS Employer I.D. No.)
of Incorporation or Organization)
2413 MOROCCO AVENUE, NORTH LAS VEGAS, NEVADA 89031
_____________________________________________________________
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (780) 761-2121
Securities registered under section 12(b) of the Exchange Act:
None
Securities registered under section 12(g) of the Exchange Act:
Common Stock
(Title of class)
Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. [ ]
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
Indicate by check mark whether the registrant is a shell company (as defined in
rule 12b-2 of the Exchange Act [ ]Yes [X]No
Revenues for the fiscal year ending December 31, 2007 were $0.
The aggregate market value of the voting stock held by non-affiliates computed
by reference to the last reported sale price of such stock as of April 1, 2008
$1,155,000.
The number of shares of the issuer's Common Stock outstanding as of December
31, 2007 is 41,256,464
Transitional Small Business Issuer Format: [ ]Yes [X]No
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). [ ]Yes [X]No
FRONTIER ENERGY CORP.
FORM 10-K/A
TABLE OF CONTENTS
PART I.................................................................... 3
ITEM 1. DESCRIPTION OF BUSINESS.................................... 3
ITEM 2. DESCRIPTION OF PROPERTY.................................... 10
ITEM 3. LEGAL PROCEEDINGS.......................................... 10
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS....... 11
PART II................................................................... 11
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK ANDRELATED
STOCKHOLDER MATTERS ....................................... 11
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION............................................... 17
ITEM 7. FINANCIAL STATEMENTS....................................... 21
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES....................... 22
ITEM 8A.CONTROLS AND PROCEDURES.................................... 22
ITEM 8A.OTHER INFORMATION.......................................... 23
PART III.................................................................. 24
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT......... 24
ITEM 10.EXECUTIVE COMPENSATION..................................... 25
ITEM 11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS................. 26
ITEM 12.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............. 27
ITEM 13.EXHIBITS, LISTS AND REPORTS ON FORM 8-K.................... 27
ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES..................... 27
FORWARD LOOKING STATEMENTS
This report includes "Forward-Looking Statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act of 1934. Any statements that express or involve discussions with respect
to predictions, expectations, beliefs, plans, projections, objectives,
assumptions or future events or performance (often, but not always, using words
or phrases such as "expects" or "does not expect", "is expected", "anticipates"
or "does not anticipate", "plans", "estimates" or "intends", or stating that
certain actions, events or results "may", "could", "should", "would", "might"
or "will" be taken, occur or be achieved) are not statements of historical fact
and may be considered "forward looking statements". We do not guarantee that
the transactions and events described in this Report will happen as described
or that any positive trends noted in this Report will continue. These types of
statements are generally located in the section entitled "Management's
Discussion and Analysis or Plan of Operation," but may be found elsewhere in
this Report as well. Forward-looking statements are based on expectations,
estimates and projections at the time the statements are made that involve a
number of risks and uncertainties which could cause actual results or events to
differ materially from those presently anticipated. Although we believe that
the expectations reflected in such forward-looking statements are reasonable,
we can give no assurance that such expectations will prove to have been
correct. You should understand that many important factors, in addition to
those discussed elsewhere in this Report, could cause our results to differ
materially from those expressed in the forward-looking statements. These
factors include, without limitation, the timing and extent of changes in
commodity prices for crude oil, natural gas and related products, foreign
currency exchange rates, and interest rates; the timing and impact of liquefied
natural gas imports; the extent and effect of any hedging activities engaged in
by Frontier Energy Corp.; the extent of Frontier Energy Corp.'s success in
discovering, developing, marketing and producing reserves and in acquiring oil
and gas properties; the accuracy of reserve estimates, which by their nature
involve the exercise of professional judgment and may therefore be imprecise;
the availability and cost of drilling rigs, experienced drilling crews,
materials and equipment used in well completions, and tubular steel; the
availability, terms and timing of governmental and other permits and rights of
way; the availability of pipeline transportation capacity; political
developments around the world; acts of war and terrorism and responses to these
acts; weather; and financial market conditions. In light of these risks,
uncertainties and assumptions, the events anticipated by Frontier Energy
Corp.'s forward-looking statements might not occur. You should not place undue
reliance on these forward-looking statements, which speak only as of the date
of this Report. Unless legally required, we undertake no obligation to update
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
For further information about these and other risks, uncertainties and
factors, please review the disclosure included in this report under the caption
"Risk Factors."
2
PART I
THIS ANNUAL REPORT ON FORM 10-K IS BEING AMENDED TO RESPOND TO THOSE CERTAIN
COMMENTS IN THE CORRESPONDENCE DATED MAY 1, 2008 FROM THE SECURITIES AND
EXCHANGE COMMISSION AND FURTHER TO PROVIDE RESTATED FINANCIAL STATEMENTS FOR
FISCAL YEAR ENDED DECEMBER 31, 2007. THE FINANCIAL STATEMENTS WERE AMENDED TO
CORRECT VARIOUS ACCOUNTING ERRORS, INCLUDING THE CONSOLIDATED BALANCE SHEET FOR
FISCAL YEAR ENDED DECEMBER 31, 2007 REGARDING CASH, PREPAID STOCK COMPENSATION,
ACCOUNTS PAYABLE AND ACCRUED EXPENSES, LOANS PAYABLE AND ADDITIONAL PAID-IN
CAPITAL. THE FINANCIAL STATEMENTS WERE FURTHER AMENDED TO CORRECT VARIOUS
ACCOUNTING ERRORS, INCLUDING THE STATEMENTS OF OPERATIONS FOR FISCAL YEAR ENDED
DECEMBER 31, 2007 REGARDING OFFICER COMPENSATION EXPENSE, GENERAL AND
ADMINISTRATIVE EXPENSE AND EXPLORATION AND DEVELOPMENT EXPENSE.
ITEM 1.DESCRIPTION OF BUSINESS
OVERVIEW
Frontier Energy Corp. is an oil and natural gas exploration company that
has recently purchased a lease on an oil and gas property in the United States.
We intend to develop this property as our limited capital resources will allow
and to purchase additional oil and gas leases.
INDUSTRY BACKGROUND
The United States currently depends on natural gas for approximately 23%
of its total primary energy requirements. But with its commitment to the use of
natural gas, particularly in the electricity sector, the U.S. now finds itself
with a supply shortage at a time of increased demand.
The demand for natural gas is further influenced by the crude oil market.
Although crude oil and natural gas are two separate commodities, their prices
have historically been correlated at irregular intervals. Strong oil prices
generally keep natural gas prices elevated because fuel oil is a possible
substitute for natural gas. As the price of crude oil increases, some
industries switch to natural gas. This is particularly true in the electricity
sector.
Presently, the United States relies on three sources for its natural gas.
Domestic production accounts for 81% of supply. Imports from Canada, mainly
the western provinces of Alberta, British Columbia and Saskatchewan provide an
additional 17%. Imports of liquefied natural gas make up the remainder.
Despite rising new natural gas well completions, high drilling rates are
expected to only modestly improve U.S. production levels to 24.1 Tcf by 2025.
Many of the wells that have produced abundant quantities of natural gas since
the 1980s and 1990s are in terminal decline, yielding rapidly diminishing
returns. These waning reserves have not become readily apparent because the
natural gas industry has been bringing new fields online in a frantic effort to
keep production levels from dropping too rapidly. Since nearly half of the
U.S. natural gas supply is coming from wells that have been drilled in the past
five years, this declining trend is likely to continue.
COMPETITION
The strength of commodity prices has resulted in significantly increased
operating cash flows and has led to increased drilling activity. This industry
activity has increased competition for undeveloped lands; skilled personnel;
access to drilling rigs, service rigs and other equipment; and access to
processing and gathering facilities, all of which may cause drilling and
operating costs to increase. Some of our competitors are larger than us and
have substantially greater financial and marketing resources. In addition,
some of our competitors may be able to secure products and services from
vendors on more favorable terms, offer a greater product selection, and adopt
more aggressive pricing policies than we can.
Some of the larger and well capitalized companies that are actively
exploring and producing in our area include, but not limited to, BP, Conoco
Phillips, Gibraltar Exploration Ltd, Mosaic Energy Ltd., Northrock Resources
Ltd., and Temple Energy Inc. Each of these companies has significant existing
cash flow, capital budgets and in-house expertise to continue seeking
additional oil and gas reserves in the western United States.
3
GOVERNMENTAL REGULATIONS
The oil and natural gas industry in the United States is subject to
extensive controls and regulations imposed by various levels of government. We
do not expect that any of these controls or regulations will affect our
operations in a manner materially different than they would affect other oil
and gas industry participants of similar size.
Crude oil and natural gas located in the western United States is owned
both by private landowners and the federal government. Land owners or the
Bureau of Land Management grant rights to explore for and produce oil and
natural gas under leases, licenses and permits with terms generally varying
from two years to five years and on conditions contained in legislation.
Leases, licenses and permits may be continued indefinitely by producing under
the lease, license or permit. Some of the oil and natural gas located in the
western United States is privately owned and rights to explore for and produce
oil and natural gas are granted by the mineral owners on negotiated terms and
conditions.
ENVIRONMENTAL REGULATIONS
The oil and natural gas industry is governed by environmental regulation
under federal and state laws, rules and regulations, which restrict and
prohibit the release or emission and regulate the storage and transportation of
various substances, produced or utilized in association with oil and natural
gas industry operations. In addition, applicable environmental laws require
that well and facility sites are abandoned and reclaimed, to the satisfaction
of state authorities, in order to remediate these sites to near natural
conditions. Also, environmental laws may impose upon "responsible persons"
remediation obligations on property designated as a contaminated site.
Responsible persons include persons responsible for the substance causing the
contamination, persons who caused the release of the substance and any present
or past owner, tenant or other person in possession of the site. Compliance
with such legislation can require significant expenditures. A breach of
environmental laws may result in the imposition of fines and penalties and
suspension of production, in addition to the costs of abandonment and
reclamation.
We have established guidelines and management systems to ensure
compliance with environmental laws, rules and regulations. We have designated
an individual responsible for compliance whose responsibility is to monitor
regulatory requirements and their impact on us, to implement appropriate
compliance procedures and to cause our operations to be carried out in
accordance with applicable environmental guidelines and implementing adequate
safety precautions. The existence of these controls cannot, however, guarantee
total compliance with environmental laws, rules and regulations. We believe
that we are in material compliance with applicable environmental laws and
regulations. We also believe that it is reasonably likely that the trend in
environmental legislation and regulation will continue toward stricter
standards.
PAST ACTIVITIES OF OUR COMPANY
Up until November 2003, we were engaged in the sale, repair and support
service of in-warranty and out-of-warranty computer peripheral devices for a
variety of large and small brand name manufacturers through our wholly owned
subsidiary, Technical Services & Logistics Inc. ("TSLi"). On November 17,
2003, our Board of Directors voted unanimously to liquidate TSLi through a
General Assignment benefiting the creditors of TSLi. On November 26, 2003, the
Company consummated a General Assignment Agreement ("the agreement") that
assign all the assets and liabilities of TSLi to the C.F. Boham Company,
Inc., d.b.a. the Hamer Group, of Los Angeles, California. The assignment was
essentially a liquidation of TSLi that was overseen by the Hamer Group, who
acted as trustee of TSLi's affairs during the liquidation process.
4
The decision to liquidate TSLi provided our Board of Directors with the
opportunity to restructure our debts so that we could continue as a going
concern. On January 22, 2005, we acquired a 100% interest in a copper, gold
and platinum mineral prospect (the "Property"). The Property consists of 20
claim units in central British Columbia, Canada approximately 45 miles east of
Williams Lake. The Property is located in the central Quesnel Trough and
adjoins the south border of Imperial Metals', Mount Polley copper/gold mine.
Our business plan became to explore and develop the potential minerals on the
Property. In October 2005, the Board of Directors, based on the estimated
costs and related benefits to be received from the mineral prospect at Williams
Lake, determined it to be in our best interest to begin exploration of oil and
natural gas properties in the Alberta region of Canada.
EMPLOYEES
As of March 15, 2008, we had 1 employee, our Chief Executive Officer.
Our employee is not covered by a collective bargaining agreement and our
management considers relations with our employee to be good.
RISK FACTORS
RISKS SPECIFIC TO OUR COMPANY
WE HAVE A HISTORY OF LOSSES WHICH MAY CONTINUE, WHICH MAY NEGATIVELY IMPACT OUR
ABILITY TO ACHIEVE OUR BUSINESS OBJECTIVES.
We incurred net losses of approximately $2,164,953 and $911,386 for the
years ended December 31, 2007 and 2006, respectively. We cannot assure you
that we can achieve or sustain profitability on a quarterly or annual basis in
the future. Our operations are subject to the risks and competition inherent in
the establishment of a business enterprise. There can be no assurance that
future operations will be profitable. We may not achieve our business
objectives and the failure to achieve such goals would have an adverse impact
on us.
IF WE ARE UNABLE TO OBTAIN ADDITIONAL FUNDING OUR BUSINESS OPERATIONS WILL BE
HARMED AND IF WE DO OBTAIN ADDITIONAL FINANCING OUR THEN EXISTING SHAREHOLDERS
MAY SUFFER SUBSTANTIAL DILUTION.
We will require additional funds to sustain and expand our oil and gas
exploration activities. We anticipate that we will require approximately
$1,000,000 to fund our continued operations for the fiscal year 2008.
Additional capital will be required to effectively support the operations and
to otherwise implement our overall business strategy. There can be no
assurance that financing will be available in amounts or on terms acceptable to
us, if at all. The inability to obtain additional capital will restrict our
ability to grow and may reduce our ability to continue to conduct business
operations. If we are unable to obtain additional financing, we will likely be
required to curtail our marketing and exploration plans and possibly cease our
operations. Any additional equity financing may involve substantial dilution
to our then existing shareholders.
OUR INDEPENDENT AUDITORS HAVE EXPRESSED SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO
CONTINUE AS A GOING CONCERN, WHICH MAY HINDER OUR ABILITY TO OBTAIN FUTURE
FINANCING.
In their report dated April 14, 2008, our independent auditors stated
that our financial statements for the year ended December 31, 2007 were
prepared assuming that we would continue as a going concern. Our ability to
continue as a going concern is an issue raised as a result of recurring losses
from operations and working capital deficiency. We continue to experience net
operating losses. Our ability to continue as a going concern is subject to our
ability to obtain necessary funding from outside sources, including obtaining
additional funding from the sale of our securities and loans from certain
stockholders. Our continued net operating loss increases the difficulty in
meeting such goals and there can be no assurances that such methods will prove
successful.
WE HAVE A LIMITED OPERATING HISTORY AND IF WE ARE NOT SUCCESSFUL IN CONTINUING
TO GROW OUR BUSINESS, THEN WE MAY HAVE TO SCALE BACK OR EVEN CEASE OUR ONGOING
BUSINESS OPERATIONS.
We have no history of revenues from oil and gas operations and have no
significant tangible assets. We own a mineral lease valued at $10,905. We
have yet to generate positive earnings and there can be no assurance that we
will ever operate profitably. Our company has a limited operating history and
must be considered in the development stage. Our success is significantly
dependent on a successful acquisition, drilling, completion and production
program. Our operations will be subject to all the risks inherent in the
establishment of a developing enterprise and the uncertainties arising from the
absence of a significant operating history. We may be unable to locate
recoverable reserves or operate on a profitable basis. We are in the
development stage and potential investors should be aware of the difficulties
normally encountered by enterprises in the development stage. If our business
plan is not successful, and we are not able to operate profitably, investors
may lose some or all of their investment in our company.
5
OUR INTERESTS IN THE PRODUCTION SHARING CONTRACTS INVOLVE HIGHLY SPECULATIVE
EXPLORATION OPPORTUNITIES THAT INVOLVE MATERIAL RISKS THAT WE WILL BE
UNSUCCESSFUL
Our working interests that comprise our portfolio should be considered to
be highly speculative exploration opportunities that will involve material
risks. None of the working interests in which we have an interest have any
proven reserves and are not producing any quantities of oil or natural gas.
Exploratory drilling activities are subject to many risks, including the risk
that no commercially productive reservoirs will be encountered. There can be
no assurance that wells drilled in any of our land portfolio in which we have
an interest or by any venture in which we may acquire an interest in the future
will be productive or that we will receive any return or recover all or any
portion of our investment. Drilling for oil and gas may involve unprofitable
efforts, not only from dry wells, but from wells that are productive but do not
produce sufficient net revenues to return a profit after drilling, operating
and other costs. The cost of drilling, completing and operating wells is often
uncertain. Drilling operations may be curtailed, delayed or canceled as a
result of numerous factors, many of which are beyond the operator's control,
including economic conditions, mechanical problems, title problems, weather
conditions, compliance with governmental requirements and shortages or delays
of equipment and services. Drilling activities on land in which we hold an
interest may not be successful and, if unsuccessful, such failure may have a
material adverse effect on our future results of operations and financial
condition.
IF WE ARE UNABLE TO SUCCESSFULLY RECRUIT QUALIFIED MANAGERIAL AND FIELD
PERSONNEL HAVING EXPERIENCE IN OIL AND GAS EXPLORATION, WE MAY NOT BE ABLE TO
CONTINUE OUR OPERATIONS.
In order to successfully implement and manage our business and
acquisition plans, we will be dependent upon, among other things, successfully
recruiting qualified managerial and field personnel having experience in the
oil and gas exploration business. Competition for qualified individuals is
intense. There can be no assurance that we will be able to find, attract and
retain existing employees or that we will be able to find, attract and retain
qualified personnel on acceptable terms.
AS OUR PROPERTIES ARE IN THE EXPLORATION AND DEVELOPMENT STAGE, THERE CAN BE NO
ASSURANCE THAT WE WILL ESTABLISH COMMERCIAL DISCOVERIES ON OUR PROPERTIES.
Exploration for economic reserves of oil and gas is subject to a number
of risk factors. Few properties that are explored are ultimately developed
into producing oil and/or gas wells. Our properties are in the exploration and
development stage only and are without proven reserves of oil and gas. We may
not establish commercial discoveries on any of our properties.
THE POTENTIAL PROFITABILITY OF OIL AND GAS VENTURES DEPENDS UPON FACTORS BEYOND
THE CONTROL OF OUR COMPANY.
The potential profitability of oil and gas properties is dependent upon
many factors beyond our control. For instance, world prices and markets for
oil and gas are unpredictable, highly volatile, potentially subject to
governmental fixing, pegging, controls, or any combination of these and other
factors, and respond to changes in domestic, international, political, social
and economic environments. Additionally, due to worldwide economic
uncertainty, the availability and cost of funds for production and other
expenses have become increasingly difficult, if not impossible, to project. In
addition, adverse weather conditions can also hinder drilling operations.
These changes and events may materially affect our financial performance.
These factors cannot be accurately predicted and the combination of these
factors may result in our company not receiving an adequate return on invested
capital.
6
EVEN IF WE ARE ABLE TO DISCOVER AND GENERATE A GAS WELL, THERE CAN BE NO
ASSURANCE THE WELL WILL BECOME PROFITABLE.
We have not yet made a discovery of gas or drilled a gas well to capture
any gas. Even if we are able to, a productive well may become uneconomic in
the event water or other deleterious substances are encountered which impair or
prevent the production of oil and/or gas from the well. In addition,
production from any well may be unmarketable if it is impregnated with water or
other deleterious substances. In addition, the marketability of oil and gas
which may be acquired or discovered will be affected by numerous factors,
including the proximity and capacity of oil and gas pipelines and processing
equipment, market fluctuations of prices, taxes, royalties, land tenure,
allowable production and environmental protection, all of which could result in
greater expenses than revenue generated by the well.
COMPETITION IN THE OIL AND GAS INDUSTRY IS HIGHLY COMPETITIVE AND THERE IS NO
ASSURANCE THAT WE WILL BE SUCCESSFUL IN ACQUIRING THE LEASES.
The oil and gas industry is intensely competitive. We compete with
numerous individuals and companies, including many major oil and gas companies,
which have substantially greater technical, financial and operational resources
and staffs. Accordingly, there is a high degree of competition for desirable
oil and gas leases, suitable properties for drilling operations and necessary
drilling equipment, as well as for access to funds. We cannot predict if the
necessary funds can be raised or that any projected work will be completed.
Our budget anticipates our acquisition of additional land the Alberta area.
This acreage may not become available or if it is available for leasing, that
we may not be successful in acquiring the leases.
RISKS SPECIFIC TO OUR INDUSTRY
THE MARKETABILITY OF NATURAL RESOURCES WILL BE AFFECTED BY NUMEROUS FACTORS
BEYOND OUR CONTROL WHICH MAY RESULT IN US NOT RECEIVING AN ADEQUATE RETURN ON
INVESTED CAPITAL TO BE PROFITABLE OR VIABLE.
The marketability of natural resources which may be acquired or
discovered by us will be affected by numerous factors beyond our control.
These factors include market fluctuations in oil and gas pricing and demand,
the proximity and capacity of natural resource markets and processing
equipment, governmental regulations, land tenure, land use, regulation
concerning the importing and exporting of oil and gas and environmental
protection regulations. The exact effect of these factors cannot be accurately
predicted, but the combination of these factors may result in us not receiving
an adequate return on invested capital to be profitable or viable.
OIL AND GAS OPERATIONS ARE SUBJECT TO COMPREHENSIVE REGULATION WHICH MAY CAUSE
SUBSTANTIAL DELAYS OR REQUIRE CAPITAL OUTLAYS IN EXCESS OF THOSE ANTICIPATED
CAUSING AN ADVERSE EFFECT ON OUR COMPANY.
Oil and gas operations are subject to federal, state and local laws
relating to the protection of the environment, including laws regulating
removal of natural resources from the ground and the discharge of materials
into the environment. Oil and gas operations are also subject to federal,
state, and local laws and regulations which seek to maintain health and safety
standards by regulating the design and use of drilling methods and equipment.
Various permits from government bodies are required for drilling operations to
be conducted; no assurance can be given that such permits will be received.
Environmental standards imposed by federal, state or local authorities may be
changed and any such changes may have material adverse effects on our
activities. Moreover, compliance with such laws may cause substantial delays
or require capital outlays in excess of those anticipated, thus causing an
adverse effect on us. Additionally, we may be subject to liability for
pollution or other environmental damages. To date we have not been required to
spend any material amount on compliance with environmental regulations.
However, we may be required to do so in future and this may affect our ability
to expand or maintain our operations.
7
EXPLORATION AND PRODUCTION ACTIVITIES ARE SUBJECT TO CERTAIN ENVIRONMENTAL
REGULATIONS WHICH MAY PREVENT OR DELAY THE COMMENCEMENT OR CONTINUANCE OF OUR
OPERATIONS.
In general, our exploration and production activities are subject to
certain federal, state and local laws and regulations relating to environmental
quality and pollution control. Such laws and regulations increase the costs of
these activities and may prevent or delay the commencement or continuance of a
given operation. Compliance with these laws and regulations has not had a
material effect on our operations or financial condition to date.
Specifically, we are subject to legislation regarding emissions into the
environment, water discharges and storage and disposition of hazardous wastes.
In addition, legislation has been enacted which requires well and facility
sites to be abandoned and reclaimed to the satisfaction of state authorities.
However, such laws and regulations are frequently changed and we are unable to
predict the ultimate cost of compliance. Generally, environmental requirements
do not appear to affect us any differently or to any greater or lesser extent
than other companies in the industry. We believe that our operations comply,
in all material respects, with all applicable environmental regulations. Our
operating partners maintain insurance coverage customary to the industry;
however, we are not fully insured against all possible environmental risks.
EXPLORATORY DRILLING INVOLVES MANY RISKS AND WE MAY BECOME LIABLE FOR POLLUTION
OR OTHER LIABILITIES WHICH MAY HAVE AN ADVERSE EFFECT ON OUR FINANCIAL
POSITION.
Drilling operations generally involve a high degree of risk. Hazards
such as unusual or unexpected geological formations, power outages, labor
disruptions, blow-outs, sour gas leakage, fire, inability to obtain suitable or
adequate machinery, equipment or labor, and other risks are involved. We may
become subject to liability for pollution or hazards against which it cannot
adequately insure or which it may elect not to insure. Incurring any such
liability may have a material adverse effect on our financial position and
results from operations.
THE EXPLORATION FOR AND DEVELOPMENT OF OIL AND NATURAL GAS RESERVES DEPENDS ON
ACCESS TO AREAS WHERE OPERATIONS ARE TO BE CONDUCTED.
Seasonal weather variations, including freeze-up and break-up affect
access in certain circumstances. Natural gas is used principally as a heating
fuel and for power generation. Accordingly, seasonal variations in weather
patterns affect the demand for natural gas. Depending on prevailing
conditions, the prices received for sales of natural gas are generally higher
in winter than summer months, while prices are generally higher in summer than
spring and fall months. A decrease in natural gas or oil prices due to
seasonal variations may have a material adverse effect on our results from
operations.
RISKS RELATED TO OUR SECURITIES
OUR COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" RULES OF THE SEC AND THE
TRADING MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR
STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.
The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for the purposes relevant to us,
as any equity security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require:
* that a broker or dealer approve a person's account for
transactions in penny stocks; and
* the broker or dealer receives from the investor a written
agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased.
8
In order to approve a person's account for transactions in penny stocks,
the broker or dealer must:
* obtain financial information and investment experience
objectives of the person; and
* make a reasonable determination that the transactions in penny
stocks are suitable for that person and the person has sufficient
knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a
penny stock, a disclosure schedule prescribed by the Commission relating to the
penny stock market, which, in highlight form:
* sets forth the basis on which the broker or dealer made the
suitability determination; and
* that the broker or dealer received a signed, written agreement
from the investor prior to the transaction.
Generally, brokers may be less willing to execute transactions in
securities subject to the "penny stock" rules. This may make it more difficult
for investors to dispose of our common stock and cause a decline in the market
value of our stock.
Disclosure also has to be made about the risks of investing in penny
stocks in both public offerings and in secondary trading and about the
commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and the rights and
remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on
the limited market in penny stocks.
FUTURE SALES OF SHARES MAY ADVERSELY IMPACT THE VALUE OF OUR STOCK.
We will seek to raise additional capital through the sale of our common
stock. Future sales of our common stock could cause the market price of our
common stock to decline.
IF A MARKET WERE TO DEVELOP FOR OUR SHARES, THE SHARE PRICES MAY BE HIGHLY
VOLATILE.
The market prices of equity securities of small companies have
experienced extreme price volatility in recent years not necessarily related to
the individual performance of specific companies. Factors such as
announcements by us, or our competitors concerning products, technology,
governmental regulatory actions, other events affecting tanning companies
generally and general market conditions may have a significant impact on the
market price of our shares and could cause it to fluctuate substantially.
POSSIBLE ISSUANCE OF ADDITIONAL SHARES MAY IMPACT THE PRICE OF OUR STOCK SHOULD
A PUBLIC TRADING MARKET EVER DEVELOP.
Our Certificate of Incorporation authorizes the issuance of 100,000,000
shares of common stock. Our Board of Directors has the power to issue any or
all of such additional common stock without stockholder approval. Investors
should be aware that any stock issuances might result in a reduction of the
book value or market price, if any, of the then outstanding common stock. If
we were to issue additional common stock, such issuance will reduce
proportionate ownership and voting power of the other stockholders. Also, any
new issuance of common stock may result in a change of control.
HISTORICAL DEFICIENCIES IN THE EFFECTIVENESS OF OUR DISCLOSURE CONTROLS AND
PROCEDURES MAY POSE A MATERIAL RISK TO INVESTORS.
The Company has restated its Balance Sheets at fiscal year ended December
31, 2007 and its Statements of Operations, Statements of Stockholders' Deficit
and Statement of Cash Flows as of and for fiscal year ended December 31, 2007
to correct certain accounting errors. This change in presentation of its
financial statements affected some of the items within its balance sheets and
statements of cash flows for fiscal year ended December 31, 2007.
9
As a result of the restatement of our Balance Sheet, Statement of
Operations and Statement of Stockholders' Deficit and the Statement of Cash
Flows, the Company's management determined that there had been a significant
deficiency in its internal control over financial reporting as of December 31,
2007 related to the presentation of certain line items. Although the Company's
management believes that the Company has corrected its presentation and
recording of these line items in its Balance Sheets, its Statement of
Operations and its Statement of Stockholders' Equity, the Company has
determined that such significant deficiency did give rise to the level of a
material weakness in its internal control over financial reporting. Therefore,
a material risk to investors may exist due to the fact that recent changes have
been made to its disclosure controls and procedures to address such significant
deficiencies.
The Company has implemented additional measures as part of changes to our
internal controls to determine and ensure that information required to be
disclosed in reports filed under the Exchange Act was recorded, processed,
summarized and reported within the time periods specified in the rules and
forms including, but not limited to, the following: (i) documentation of
processes, performing testing and reviewing our internal control over financial
reporting in connection with our assessment under Section 404 of the Sarbanes-
Oxley Act; (ii) evaluation and implementation of improvements to our accounting
and management information systems; and (iii) development and implementation of
a remediation plan to address any perceived deficiencies identified in its
internal control over financial reporting. The costs of these additional
measures did not have a material impact on the Company's future results or
operations liquidity.
The Company's management, including its Chief Executive Officer and Chief
Financial Officer, do not expect that the Company's disclosure controls and
internal controls will prevent all errors and all fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. The
Company's disclosure controls and procedures are designed to provide reasonable
assurance of achieving its objectives and certifying officers have concluded
that its disclosure controls and procedures are currently effective at a
reasonable assurance level. See Item 8. Internal Controls and Procedures."
ITEM 2.DESCRIPTION OF PROPERTY
We do not own or lease any real property for corporate office purposes.
An office is maintained for the Company at the present time at 2413 Morocco
Avenue, North Las Vegas, Nevada 89031. This office is provided as an
accommodation to the Company by the president of the Company.
OIL AND GAS PROPERTIES
The following is a brief description of the oil and gas properties in
which Frontier held an interest as of December 31, 2007. In 2006, the Company
leased for a ten year lease term at auctions the oil and gas rights on one 640
acre section from the United States Bureau of Land Management. The property is
located in the state of Montana.
Exploratory and Development Wells Drilled
Frontier did not participate in the drilling of any wells during the last
three fiscal years.
Miscellaneous
Frontier is not obligated to provide quantities of oil or gas in the future
under existing contracts or agreements. Frontier has not filed any reports
containing oil or gas reserve estimates with any federal or foreign
governmental authority or agency within the past 12 months.
ITEM 3.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. The Company has
settled this matter.
10
ITEM 4.SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the last
quarter of the fiscal year ended December 31, 2007.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Our common stock is quoted on the "Pink sheets" electronic over-the-
counter quotation system under the symbol "FRGY".
For the periods indicated, the following table sets forth the high and
low per share closing prices for our common stock. These prices represent
inter-dealer quotations without retail markup, markdown or commission and may
not necessarily represent actual transactions.
2006 HIGH LOW
_____________ ____ ____
First Quarter 1.50 1.02
Second Quarter 1.30 0.55
Third Quarter 1.10 0.51
Fourth Quarter 0.65 0.15
2007
_____________
First Quarter 0.60 0.14
Second Quarter 0.18 0.02
Third Quarter 0.03 0.004
Fourth Quarter 0.02 0.002
HOLDERS
As of April 1, 2008, we had approximately 704 holders of our common
stock. The number of record holders includes beneficial owners of common stock
whose shares are held in the names of various security brokers, dealers, and
registered clearing agencies. The transfer agent of our common stock is
Standard Registrar and Transfer Company, Inc., 12528 South 1840 East, Draper,
Utah 84020.
On October 4, 2005, the Company declared a stock dividend of one share of
common stock for each forty shares of common stock outstanding. On December
14, 2004, the Company declared a stock dividend of one share of common stock
for each ten shares of common stock outstanding. We have not declared any cash
dividends since inception, and have no present intention of paying any cash
dividends on our shares in the foreseeable future. The payment of dividends,
if any, in the future, rests within the discretion of our Board of Directors
and will depend, among other things, upon our earnings, our capital
requirements and our financial condition, as well as other relevant factors.
RECENT SALES OF UNREGISTERED SECURITIES
During fiscal year ended December 31, 2007, to provide capital, the
Company sold stock in private placement offerings, issued stock in exchange for
its debts or pursuant to contractual agreements including, but not limited to,
those as set forth below.
11
(i) During fiscal year ended December 31, 2007, the Company issued an
aggregate of 35,970,000 shares of its common stock to certain approximately
thirty-three consultants in exchange for consulting services. Shares of common
stock were issued to approximately thirteen non-United States consultants in
reliance on Regulation S promulgated under the Securities Act and to twenty
United States resident consultants in reliance on Regulation D, Rule 506
thereunder. The shares of common stock have not been registered under the
Securities Act or under any state securities laws and may not be offered or
sold without registration with the United States Securities and Exchange
Commission or an applicable exemption from the registration requirements.
Certain consultants executed certain consultant agreements as reflected below
and acknowledged that the securities to be issued have not been registered
under the Securities Act, that they understood the economic risk of an
investment in the securities, and that they had the opportunity to ask
questions of and receive answers from our management concerning any and all
matters related to acquisition of the securities. Other consultants entered
into verbal agreements with the Company and acknowledged that the securities to
be issued have not been registered under the Securities Act. The valuation of
the shares of common stock was determined by the closing price per share as of
the measurement date. Therefore, the Company incurred consulting expense
related to the issuance of shares of $1,371,400, which is net of $11,000 in
prepaid expenses and options valued at $27,925.
* On January 9, 2007, the Company entered into that certain consultant
agreement with Crescent Fund LLC ("Crescent Fund") pursuant to which
Crescent Fund agreed to provide certain investor relations services to the
Company and the Company agreed to issue to Crescent Fund an aggregate of
500,000 shares of common stock.
* On January 24, 2007, the Company entered into that certain verbal
consultant agreement with Coast 2 Coast Investments LLC ("Coast 2 Coast"),
pursuant to which Coast 2 Coast agreed to provide certain investor relations
services to the Company and the Company agreed to issue to Coast to Coast
an aggregate of 600,000 shares of common stock. On March 20, 2007, a further
500,000 shares of the Company's common stock were issued to Coast 2 Coast
pursuant to contractual agreement relating to the successful results of
Coast 2 Coast's services provided to the Company. The 500,000 shares
were subsequently cancelled and returned to treasury.
* On February 5, 2007, the Company entered into that certain corporate
consulting agreement with Sam Aiello ("Aiello"), pursuant to which Aiello
agreed to provide certain services including sourcing of viable oil and gas
prospects and properties and re-designing and deploying the Company's
website and current corporate marketing data and the Company agreed to issue
to Aiello an aggregate of 400,000 shares of common stock. On May 17, 2007, a
further 220,000 shares of the Company's common stock were issued to Aiello
pursuant to contractual agreement relating to the successful results of
Aiello's services provided to the Company.
* On February 5, 2007, the Company entered into that certain corporate
consulting agreement with Jeffrey D. Cox ("Cox"), pursuant to which Cox
agreed to provide certain consulting services including sourcing of viable
oil and gas prospects and properties and re-designing and deploying the
Company's website and current corporate marketing data and the Company
agreed to issue to Cox an aggregate of 400,000 shares of common stock.
* On March 15, 2007, the Company entered into that certain corporate
consulting agreement with Malcolm Albert ("Albery"), pursuant to which
Albery agreed to provide certain services including sourcing of viable oil
and gas prospects and properties, assisting in the development of business
plans and providing to the Company an extensive list and the Company agreed
to grant 150,000 stock options valued at $27,925 to Albert which were
subsequently exercised for proceeds of $15,000 and issuance of 100,000
shares of common stock.
* On March 15, 2007, the Company entered into that certain corporate
consulting agreement with Larry Taylor ("Taylor"), pursuant to which Taylor
agreed to provide certain services including sourcing of viable oil and gas
prospects and negotiating with Excessior Oil, a private company with tar
sands in Fort Murray, regarding a contractual arrangement and the Company
agreed to issue to Taylor an aggregate of 200,000 shares of common stock.
* On April 2, 2007, the Company entered into that certain consulting
agreement with William Tyler Dillerson ("Dillerstone"), pursuant to which
Dillerstone agreed to provide certain services including web development
services and the Company agreed to issue to Dillerstone an aggregate of
500,000 shares of common stock.
* On May 1, 2007, the Company entered into that certain corporate
consulting agreement with Curtiss Parker ("Parker"), pursuant to which
Parker agreed to provide certain services including sourcing of viable oil
and gas prospects and properties and re-designing and deploying the
Company's website and current corporate marketing data and the Company
agreed to issue to Parker an aggregate of 1,500,000 shares of common stock.
12
* On May 1, 2007, the Company entered into that certain verbal
consultant agreement with Semso Rekic ("Rekic"), pursuant to which
Rekic agreed to provide certain investor relations services and the Company
agreed to issue to Rekic an aggregate of 50,000 shares of common stock.
* On May 24, 2007, the Company entered into that certain corporate
consulting agreement with Bart Lawrence ("Lawrence"), pursuant to which
Lawrence agreed to provide certain services including sourcing of viable oil
and gas prospects and properties, assisting in the development of business
plans and providing to the Company an extensive client list and the Company
agreed to issue to Lawrence an aggregate of 300,000 shares of common stock.
On June 11, 2007, a further 600,000 shares of the Company's common stock
were issued to Lawrence pursuant to contractual agreement relating to the
successful results of Lawrence's services provided to the Company. On August
17, 2007, a further 1,000,000 shares of the Company's common stock were
issued to Lawrence pursuant to contractual agreement relating to the
successful results of Lawrence's services provided to the Company.
* On June 1, 2007, the Company entered into a verbal agreement with Ken
Raina ("Raina"), pursuant to termination of service as board member and the
Company agreed to issue to Raina an aggregate of 200,000 shares of common
stock.
* On June 1, 2007, the Company entered into a verbal agreement with
Laurie Bloom ("Bloom"), pursuant to which Bloom agreed to provide office
space for the Company's use and the Company agreed to issue to Bloom an
aggregate of 150,000 shares of common stock.
* On June 1, 2007, the Company entered into that certain verbal
consultant agreement with Mark Genesi ("Genesi"), pursuant to which Genesi
agreed to provide certain investor relations services to the Company and
the Company agreed to issue to Genesi an aggregate of 150,000 shares of
common stock.
* On July 30, 2007, the Company entered into that certain corporate
consulting agreement with Scott Burnim ("Burnim"), pursuant to which Burnim
agreed to provide certain services including sourcing of viable oil and gas
prospects and properties, re-designing current corporate marketing data and
providing to the Company an extensive client list and the Company agreed to
issue to Burnim an aggregate of 1,000,000 shares of common stock.
* On August 8, 2007, the Company entered into that certain consulting
agreement with Kristin Anez ("Anez"), pursuant to which Anez agreed to
provide certain financial advisory and consulting services with respect to
matters related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to Anez
an aggregate of 1,000,000 shares of common stock. On October 30, 2007, a
further 500,000 shares of the Company's common stock were issued to Anez
pursuant to contractual agreement relating to the successful results of
Anez's services provided to the Company.
* On September 5, 2007, the Company entered into that certain corporate
consulting agreement with Jamie Gomez ("Gomez"), pursuant to which Gomez
agreed to provide certain services including sourcing of viable oil and gas
prospects and properties, assisting in the development of website and
current marketing data and providing to the Company an extensive client list
and the Company agreed to issue to Gomez an aggregate of 1,000,000 shares of
common stock.
* On September 5, 2007, the Company entered into that certain corporate
consulting agreement with Reba Duggan ("Duggan"), pursuant to which Duggan
agreed to provide certain services including sourcing of viable oil and gas
prospects and properties, assisting in the development of website and
current marketing data and providing to the Company an extensive client list
and the Company agreed to issue to Duggan an aggregate of 1,000,000 shares
of common stock.
13
* On September 5, 2007, the Company entered into that certain corporate
consulting agreement with Scott Belazi ("Belazi"), pursuant to which Belazi
agreed to provide certain services including sourcing of viable oil and gas
prospects and properties, assisting in the development of website and
current marketing data and providing to the Company an extensive client list
and the Company agreed to issue to Belazi an aggregate of 1,000,000 shares
of common stock
* On September 24, 2007, the Company entered into that certain consulting
agreement with Mark Brummell ("Brummell"), pursuant to which Brummell agreed
to provide certain advisory and consulting services with respect to matters
related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to
Brummell an aggregate of 6,000,000 shares of common stock.
* On September 24, 2007, the Company entered into that certain consulting
agreement with Phillip Russell ("Russell"), pursuant to which Russell agreed
to provide certain advisory and consulting services with respect to matters
related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to
Russell an aggregate of 3,000,000 shares of common stock.
* On October 15, 2007, the Company entered into that certain consulting
agreement with Allison Nigro ("Nigro"), pursuant to which Nigro agreed to
provide certain advisory and consulting services with respect to matters
related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to Nigro
an aggregate of 1,000,000 shares of common stock.
* On October 15, 2007, the Company entered into that certain verbal
consulting agreement with Paul Short ("Short"), pursuant to which Short
agreed to provide certain advisory and consulting services with respect
to matters related to the development of the Company's business plan,
including portfolio review, comprehensive business planning, business
valuation, aid in organizational strategies, management consulting, and
individualized financial performance optimization, and the Company agreed to
issue to Short an aggregate of 1,000,000 shares of common stock.
* On October 15, 2007, the Company entered into that certain verbal
consulting agreement with Roddy Duggan ("Duggan"), pursuant to which Duggan
agreed to provide certain advisory and consulting services with respect
to matters related to the development of the Company's business plan,
including portfolio review, comprehensive business planning, business
valuation, aid in organizational strategies, management consulting, and
individualized financial performance optimization, and the Company agreed
to issue to Duggan an aggregate of 1,000,000 shares of common stock.
* On October 30, 2007, the Company entered into that certain consulting
agreement with Alison Burnim ("Burnim"), pursuant to which Burnim agreed to
provide certain advisory and consulting services with respect to matters
related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to
Burnim an aggregate of 1,500,000 shares of common stock.
* On November 28, 2007, the Company entered into that certain consulting
agreement with John Williams ("Williams"), pursuant to which Williams agreed
to provide certain advisory and consulting services with respect to matters
related to the development of the Company's portfolio of oil and gas
properties and the Company agreed to issue to Williams an aggregate of
1,000,000 shares of common stock.
* On November 28, 2007, the Company entered into that certain consulting
agreement with Gil Whyte ("Whyte"), pursuant to which Whyte agreed to
provide certain advisory and consulting services with respect to matters
related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to Whyte
an aggregate of 2,500,000 shares of common stock.
14
* On November 28, 2007, the Company entered into that certain consulting
agreement with Rick Shykora ("Shykora"), pursuant to which Skykora agreed to
provide certain advisory and consulting services with respect to matters
related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to
Shykora an aggregate of 2,500,000 shares of common stock.
* On December 5, 2007, the Company entered into that certain consulting
agreement with Daniel R. Davison ("Davison"), pursuant to which Davison
agreed to provide certain advisory and consulting services with respect to
matters related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to
Davison an aggregate of 1,000,000 shares of common stock.
* On December 5, 2007, the Company entered into that certain consulting
agreement with Peter Kolacz ("Kolacz"), pursuant to which Kolacz agreed to
provide certain advisory and consulting services with respect to matters
related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to
Kolacz an aggregate of 3,000,000 shares of common stock.
* On December 20, 2007, the Company entered into that certain consulting
agreement with Kenneth P. Bottoms ("Bottoms"), pursuant to which Bottoms
agreed to provide certain oil and gas prospects for the Company in oil
industry matters and the Company agreed to issue to Bottoms an aggregate of
200,000 shares of common stock.
(ii) During fiscal ear ended December 31, 2007 and including the shares
issued to Robert Genesi, we issued an aggregate of 1,200,000 shares of our
common stock to certain of our officers/directors as compensation for services.
On February 1, 2007, April 2, 2007, June 11, 2007, October 31, 2007 and
November 14, 2007, an aggregate of 150,000, 50,000, 900,000, 100,000 and
8,900,000 shares of common stock were issued to Don Hwang and Robert Genesi as
compensation for services rendered related to there role as a director of the
Company. The 8,900,000 shares of common stock were subsequently cancelled and
returned to treasury. See "Item __. Executive Compensation".
The shares of common stock were issued to non-United States residents in
reliance on Regulation S promulgated under the Securities Act. The shares of
common stock have not been registered under the Securities Act or under any
state securities laws and may not be offered or sold without registration with
the United States Securities and Exchange Commission or an applicable exemption
from the registration requirements. The officers/directors acknowledged that
the securities to be issued have not been registered under the Securities Act,
that they understood the economic risk of an investment in the securities, and
that they had the opportunity to ask questions of and receive answers from
management concerning any and all matters related to acquisition of the
securities. The valuation of the shares of common stock was determined by the
closing price per share as of the measurement date. Therefore, the Company
incurred compensation expense related to the issuance of shares of $90,500.00.
(iii) During fiscal year ended December 31, 2007, we issued an aggregate
of 100,000 shares of the Company's common stock to securities counsel as
compensation for services rendered. The shares of common stock were issued to a
U.S. resident in reliance on. Section 4(2) of the Securities Act. The shares of
common stock have not been registered under the Securities Act or under any
state securities laws and may not be offered or sold without registration with
the United States Securities and Exchange Commission or an applicable exemption
from the registration requirements. The securities counsel acknowledged that
the securities to be issued have not been registered under the Securities Act,
that he understood the economic risk of an investment in the securities, and
that he had the opportunity to ask questions of and receive answers from
management concerning any and all matters related to acquisition of the
securities. The valuation of the shares of common stock was determined by the
closing price per share as of the measurement date. Therefore, the Company
incurred a legal expense related to the issuance of shares of $27,000.00.
15
(iv) During fiscal year ended December 31, 2007, we issued an aggregate
of 40,000 shares of the Company's Series B Preferred Stock for aggregate
proceeds of $10,000. The shares of Series B Preferred Stock were issued to a
non-U.S. resident in reliance on Regulation S promulgated under the Securities
Act. The shares of Series B Preferred Stock have not bee registered under the
Securities Act or under any state securities laws and may not be offered or
sold without registration with the United States Securities and Exchange
Commission or an applicable exemption from the registration requirements. The
investor acknowledged that the securities to be issued have not been registered
under the Securities Act, that he understood the economic risk of an investment
in the securities, and that he had the opportunity to ask questions of and
receive answers from management concerning any and all matters related to
acquisition of the securities.
EQUITY COMPENSATION PLAN INFORMATION
We have two equity compensation plans, the Frontier Energy Corp. 2000
Stock Option Plan (the "2000 Plan") and the Frontier Energy Corp. 2001 Stock
Option Plan (the "2001 Plan"). The table set forth below presents information
relating to our equity compensation plans as of the date of this Annual Report:
NUMBER OF SECURITIES NUMBER OF SECURITIES
TO BE ISSUED UPON WEIGHTED-AVERAGE REMAINING AVAILABLE FOR
EXERCISE OF EXERCISE PRICE OF FUTURE ISSUANCE UNDER
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, WARRANTS EQUITY COMPENSATION
PLAN CATEGORY WARRANTS AND RIGHTS AND RIGHTS PLANS
_____________________________________________ ___________________ ______________________________ ________________________
Equity compensation plans approved by 115,000 $2.33 0
shareholders
Equity compensation plans not approved by 0 - 0
shareholders
___________________ ______________________________ ________________________
Total: 20,000,000 $0.005 0
2000 PLAN
In February 2000, the Company's Board of Directors and majority
shareholders authorized and approved the adoption of the 2000 Plan, under which
an aggregate of 333,333 shares of common stock are reserved for issuance. The
exercise price for each option shall be equal to 100% to 110% of the fair
market value of the common stock on the date of grant. The 2000 Plan shall
terminate ten years after its adoption and may be terminated by the Board of
Directors on any earlier date.
In March 2001, the Company's Board of Directors and majority
shareholders authorized and approved the adoption of the 2001 Plan, under which
an aggregate of 4,500,000 shares of common stock are reserved for issuance.
The exercise price for each option shall be no less than 100% to 110% of the
fair market value of the common stock on the date of grant. The 2001 Plan shall
terminate ten years after its adoption and may be terminated by the Board of
Directors on any earlier date.
The purpose of the 2000 Plan and the 2001 Plan is to enhance our long-
term stockholder value by offering opportunities to our directors, officers,
employees and eligible consultants to acquire and maintain stock ownership in
order to give these persons the opportunity to participate in our growth and
success, and to encourage them to remain in our service.
The 2000 Plan and the 2001 Plan are to be administered by our Board of
Directors or a committee appointed by and consisting of one or more members of
the Board of Directors, which shall determine (i) the persons to be granted
Stock Options under the 2000 Plan or 2001 Plan; (ii) the number of shares
subject to each option, the exercise price of each Stock Option; and (iii)
whether the Stock Option shall be exercisable at any time during the option
period up to ten (10) years or whether the Stock Option shall be exercisable in
installments or by vesting only.
16
In the event an optionee ceases to be employed by or to provide services
to us for reasons other than cause, retirement, disability or death, any Stock
Option that is vested and held by such optionee generally may be exercisable
within up to ninety (90) calendar days after the effective date that his
position ceases, and after such 90-day period any unexercised Stock Option
shall expire. In the event an optionee ceases to be employed by or to provide
services to us for reasons of retirement, disability or death, any Stock Option
that is vested and held by such optionee generally may be exercisable within up
to one-year after the effective date that his position ceases, and after such
one-year period, any unexercised Stock Option shall expire.
No Stock Options granted under the Stock Option Plan will be transferable
by the optionee, and each Stock Option will be exercisable during the lifetime
of the optionee subject to the option period up to ten (10) years or the
limitations described above. Any Stock Option held by an optionee at the time
of his death may be exercised by his estate within one (1) year of his death or
such longer period as the Board of Directors may determine.
ITEM 6.MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion of our plan of operation, financial condition
and results of operations should be read in conjunction with the Company's
consolidated 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 this Annual Report.
IN GENERAL
Frontier Energy Corp. has recently leased one oil lease property that we
believe is capable of producing oil revenue. Our ability to emerge from the
exploration stage with respect to any planned principal business activity is
dependent upon our efforts to raise additional equity financing and generate
significant revenue.
RESULTS OF OPERATION
FISCAL YEAR ENDED DECEMBER 31, 2007 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
2006.
The net loss for the Company for fiscal year ended December 31, 2007
was ($2,164,953) compared to a net loss of ($911,386) during fiscal year ended
December 31, 2006, an increase of $1,253,567. During fiscal years ended
December 31, 2007 and 2006, the Company did not generate any revenue.
During fiscal year ended December 31, 2007, the Company incurred
operating expenses of $2,159,886 compared to $911,386 incurred during fiscal
year ended December 31, 2006, an increase of $1,248,500. The increase in
operating expenses was primarily attributable to the following items: (i)
general and administrative of $1,505,986 (2006: $353,257); (ii) exploration and
development of $120,000 (2006: $9,979); (iii) loss on impairment of mineral
claims of $40,000 (2008: $0); (iv) and officer compensation of $493,900 (2006:
$548,150).
Operating expenses incurred during fiscal year ended December 31, 2007
compared to fiscal year ended December 31, 2006 increased primarily due to the
recording of the valuation of shares issued for consultant services. General
and administrative expenses generally include corporate overhead, financial and
administrative contracted services, marketing, and consulting costs.
Interest expense of $5,067 (2008: $-0-) incurred during fiscal year ended
December 31, 2007 was recorded. Our net loss during fiscal year ended December
31, 2007 was ($2,164,963) or $0.14 per share compared to a net loss of
($911,386) or $0.49 per share during fiscal year ended December 31, 2006. The
weighted average number of shares outstanding was 15,466,765 for fiscal year
ended December 31, 2007 compared to 1,875,654 for fiscal year ended December
31, 2006.
17
LIQUIDITY AND CAPITAL RESOURCES
FISCAL YEAR ENDED DECEMBER 31, 2007
As of December 31, 2007, the Company's current assets were $56,414 and
the Company's current liabilities were $679,675, which resulted in a working
capital deficit of $623,261. As of December 31, 2007, current assets were
comprised of $15,664 in cash and $11,000 in pre-paid stock compensation and
$29,750 in prepaid stock compensation on employment agreement. As of December
31, 2007, current liabilities were comprised of $424,883 in accounts payable
and accrued liabilities, $38,485 in common stock subscribed and $216,307 in
loans payable.
As of December 31, 2007, the Company's total assets were $68,194
comprised of: (i) $56,414 in current assets; (ii) $875 in fixed assets net of
$219 accumulated depreciation; and (iii) $10,905 in mineral leases. The
decrease in total assets during fiscal year ended December 31, 2007 from fiscal
year ended December 31, 2006 was primarily due to the pre-paid stock
compensation.
As of December 31, 2007, the Company's total liabilities were $679,675
comprised entirely of current liabilities. The increase in liabilities during
fiscal year ended December 31, 2007 from fiscal year ended December 31, 2006
was primarily due to the increase in accounts payable and accrued liabilities.
Stockholders' deficit increased from $647 for fiscal year ended December
31, 2006 to ($611,481) for fiscal year ended December 31, 2007 primarily due to
the issuance of shares to the Company's consultants.
CASH FLOWS FROM OPERATING ACTIVITIES
The Company has not generated positive cash flows from operating
activities. For fiscal year ended December 31, 2007, net cash flows used in
operating activities was $93,750, consisting primarily of a net loss of
$2,164,953 adjusted by $219 in depreciation and amortization expense, $40,000
loss on impairment of mineral claims and $1,873,825 in stock based
compensation. Net cash flows used in operating activities was further changed
by $157,159 in accounts payable and accrued liabilities.
For fiscal year ended December 31, 2006, net cash flows used in
operating activities was $245,138, consisting primarily of a net loss of
$911,386 adjusted by $581,600 in stock based compensation. Net cash flows used
in operating activities was further changed by $84,648 in accounts payable and
accrued liabilities.
CASH FLOWS FROM INVESTING ACTIVITIES
For fiscal year ended December 31, 2007, net cash flows used in investing
activities was $40,000 consisting of in acquisitions of mineral leases compared
to net cash flows used in investing activities of $11,999 consisting of $1,094
in purchase of fixed assets and $10,905 in acquisition of mineral leases.
CASH FLOWS FROM FINANCING ACTIVITIES
The Company has financed its operations primarily from debt or the
issuance of equity instruments. For the fiscal year ended December 31, 2007,
net cash flows provided from financing activities was $126,024 compared to
$280,283 for fiscal year ended December 31, 2006. Cash flows from financing
activities for fiscal year ended December 31, 2007 consisted of: (i) $25,000 in
proceeds from issuance of common stock; (ii) $12,485 in proceeds from
subscriptions for common stock; (iii) $88,985 in proceeds from borrowings from
notes payable offset by ($446) in proceeds from financings from related
parties.
18
PLAN OF OPERATION
The Company has leased one oil lease on property located in the western
United States and we are currently attempting to raise sufficient funds to
exploit this lease and purchase other leases. We can give no assurances that
the Company will be able to exploit its existing lease or purchase any
additional leases.
MARKETING OF PRODUCTION
Each oil and gas property in which we have an interest in will have an
operator who will be responsible for marketing production. In our current
project, we are not subject to any contractual restrictions that require that
non-operators such as us consent to the terms and conditions of any sales
contract before it is entered into.
Any non-operator who chooses to do so may negotiate and enter into a
sales contract with third parties for the sale of its share of oil and/or gas.
LIQUIDITY AND CAPITAL RESOURCES
We have not generated sufficient operating revenue or had access to
sufficient capital to implement our business plan. Since our revenues from
operations alone are not likely to 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, and we will require
additional cash to maintain our operations for the next twelve months. Based
on the cash we currently have, we will likely need additional financing to
continue operations beyond 2008. We have been dependent on loans from certain
stockholders to continue operations. Thus, our success is greatly dependent
upon our ability to raise additional capital. In the event that we obtain only
modest amounts of additional capital to fund our operations, we will be forced
to seek such additional capital or discontinue operations.
We believe that we will require an additional $1,000,000 to fund our
currently anticipated requirements for ongoing operations for our existing
business for the next twelve-month period. We currently intend to satisfy our
long-term liquidity requirements from cash flow from operations and to the
extent such funds are insufficient, we must raise additional funds to sustain
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 additional
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.
CRITICAL ACCOUNTING POLICIES
We prepare our financial statements in conformity with accounting
principals generally accepted in the United States. As such, we are required
to make certain estimates, judgments and assumptions that we believe are
reasonable based upon the information available to us. These estimates and
assumptions affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the periods presented. The significant accounting policies that we
believe are the most critical to aid in fully understanding and evaluating our
reported financial results include the following:
19
Full Cost Method. We utilize the full cost method to account for our
investment in oil and gas properties. Accordingly, all costs associated with
acquisition, exploration and development of oil and gas reserves, including
such costs as leasehold acquisition costs, interest costs relating to unproved
properties, geological expenditures and direct internal costs are capitalized
into the full cost pool. As of December 31, 2007, we had no properties with
proven reserves. When we obtain proven oil and gas reserves, capitalized
costs, including estimated future costs to develop the reserves and estimated
abandonment costs, net of salvage, will be depleted on the units-of-production
method using estimates of proved reserves. Investments in unproved properties
and major development projects including capitalized interest, if any, are not
amortized until proved reserves associated with the projects can be determined.
If the future exploration of unproved properties is determined uneconomical,
the amount of such properties is added to the capitalized cost to be amortized.
The capitalized costs included in the full cost pool are subject to a
"ceiling test," which limits such costs to the aggregate of the estimated
present value, using an estimated discount rate, of the future net revenues
from proved reserves, based on current economic and operating conditions and
the estimated value of unproven properties. As at December 31, 2007, one of
our unproved oil and gas properties was impaired at $40,000.
Net operating loss carryforwards. We have not recognized the benefit in
our financial statements with respect to the approximately $2,722,000 net
operating loss carryforward for federal income tax purposes as of December 31,
2007. This benefit was not recognized due to the possibility that the net
operating loss carryforward would not be utilized, for various reasons,
including the potential that we might not have sufficient profits to use the
carryforward or that the carryforward may be limited as a result of changes in
our equity ownership. We intend to use this carryforward to offset our future
taxable income. If we were to use any of this net operating loss carryforward
to reduce our future taxable income and the Internal Revenue Service were to
then successfully assert that our carryforward is subject to limitation as a
result of certain capital transactions, we may be liable for back taxes,
interest and, possibly, penalties prospectively.
Impairment of Long Lived Assets. We assess the impairment of long-lived
assets on an ongoing basis and whenever events or changes in circumstances
indicate that the carrying value may not be recoverable based upon an estimate
of future undiscounted cash flows. Factors we consider that could trigger an
impairment review include the following: (i) significant underperformance
relative to expected historical or projected future operating results; (ii)
significant changes in the manner of our use of the acquired assets or the
strategy for our overall business; (iii) significant negative industry or
economic trends; (iv) significant decline in our stock price for a sustained
period; and (v) our market capitalization relative to net book value.
When we determine that the carrying value of any long-lived asset may not
be recoverable based upon the existence of one or more of the above indicators
of impairment, we measure impairment based on the difference between an asset's
carrying value and an estimate of fair value, which may be determined based
upon quotes or a projected discounted cash flow, using a discount rate
determined by our management to be commensurate with our cost of capital and
the risk inherent in our current business model, and other measures of fair
value.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2004, the FASB issued Statement No. 123R, "Share-Based
Payment," which requires companies to recognize in the statement of operations
all share-based payments to employees, including grants of employee stock
options, based on their fair values. Accounting for share-based compensation
transactions using the intrinsic method supplemented by pro forma disclosures
will no longer be permissible. The new statement will be effective for public
entities in the first interim period for fiscal years beginning after June 15,
2005, and, accordingly, will be adopted by us in the first quarter of calendar
year 2006. The actual impact of adoption of SFAS 123R cannot be fully
predicted at this time because it will depend on levels of share-based payments
granted in the future. The adoption of this new statement will have no effect
until share-based compensation is issued by the Company.
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.
20
ITEM 7. FINANCIAL STATEMENTS
TABLE OF CONTENTS
Page No.
Report of Independent Registered Public Accounting Firm F-1
Financial Statements
Balance Sheets F-2
Statements of Operations F-3
Statement of Stockholders' Deficit F-4
Statements of Cash Flows F-5
Notes to Financial Statements F6 - F21
21
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Frontier Energy Corp.
Las Vegas, Nevada
We have audited the accompanying balance sheets of Frontier Energy Corp.
as of December 31, 2007 and 2006, and the related statements of operations,
stockholders' deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Frontier Energy
Corp., as of December 31, 2007 and 2006, and the results of its operations and
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered losses and current liabilities
exceed current assets, all of which raise substantial doubt about its ability
to continue as a going concern. Management's plans in regards to these matters
are also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
As discussed in Note 9 to the financial statements, under the heading,
"Restatement", the Company's balance sheet, statement of operations, statement
of stockholders' deficit and statement of cash flows as of and for the year
ended December 31, 2007, have been restated from previously reported amounts.
We also audited the adjustments described in Note 9 that were applied to
restate the 2007 financial statements, respectively. In our opinion, such
adjustments are appropriate and have been properly applied.
/s/ De Joya Griffith & Company, LLC
De Joya Griffith & Company, LLC
Henderson, Nevada
April 14, 2008, except for Note 9, as to which the date is June 28, 2010.
F-1
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
BALANCE SHEETS
December 31,
------------
2007 2006
(restated)
---------- ----------
ASSETS
Current assets
Cash $ 15,664 $ 23,390
Prepaid stock compensation 11,000 -
Prepaid stock compensation - related party 29,750 386,750
----------- ----------
Total current assets 56,414 410,140
----------- ----------
Fixed assets, net of $219 accumulated depreciation 875 1,094
Mineral leases 10,905 10,905
----------- ----------
Total assets $ 68,194 $ 422,139
=========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities $ 424,883 $ 267,724
Loans payable 216,307 127,322
Common stock subscribed 38,485 26,000
Due to related parties - 446
----------- ----------
Total current liabilities 679,675 421,492
----------- ----------
Total liabilities 679,675 421,492
Stockholders' deficit
Series A preferred stock, $0.001 par value; 1 share
authorized, and 1 share issued and outstanding - -
Series B preferred stock, $0.001 par value; 130,000
authorized; and 80,000 and 40,000 shares issued or outstanding 80 40
Common stock, $0.001 par value; 100,000,000 shares
authorized, 41,256,464 and 3,886,464 shares issued and outstanding 41,256 3,886
Additional paid-in capital 6,497,625 4,982,210
Accumulated deficit prior to reentering exploration stage (3,042,536) (3,042,536)
Accumulated deficit after reentering exploration stage (4,107,906) (1,942,953)
----------- ----------
Total stockholders' deficit (611,481) 647
----------- ----------
Total liabilities and stockholders' deficit $ 68,194 $ 422,139
=========== ==========
See Accompanying Notes to Financial Statements
F-2
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
Cumulative After
Reentering
Exploration
For the Years Ended Stage through
December 31, 2007 December 31, 2006 December 31, 2007
(restated) (restated)
------------------ ------------------ ------------------
Revenue $ - $ - $ -
Operating expenses
Officer Compensation 493,900 548,150 1,042,050
General and administrative 1,505,986 353,257 2,810,810
Exploration and development 120,000 9,979 129,979
Loss on impairment of mineral 40,000 - 120,000
claims
----------- ----------- --------------
Total operating expenses 2,159,886 911,386 4,102,839
----------- ----------- --------------
Net operating loss (2,159,886) (911,386) (4,102,839)
Interest expense 5,067 - 5,067
----------- ----------- --------------
Net loss $(2,164,953) $ (911,386) $ (4,107,906)
=========== =========== ==============
Earnings (loss) per common share -
basic:
Net loss -Common Stock $ (0.14) $ (0.49)
=========== ===========
Weighted average common shares
outstanding -
Basic - Common Stock 15,446,765 1,875,654
=========== ===========
See Accompanying Notes to Financial Statements
F-3
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' DEFICIT
Accumulated Accumulated
Deficit Deficit
Prior to After
Additional Reentering Reentering Total
Preferred A Preferred B Common Stock Paid-in Exploration Exploration Stockholders'
Shares Amount Shares Amount Shares Amount Capital Stage Stage Defiict
---------------- ---------------- ---------------- ---------- ------------ ------------ -------------
Balance,
December 31, 1 2003 - - - - 9,341 9 2,169,462 (3,042,536) - (873,065)
Re-pricing of
stock options
from $0.20 to
$0.10 resulting in
the issuance of
an additional
400,000 shares of
common stock - - - - 1,000 1 39,999 - - 40,000
Shares issued
to satisfy Company
debts to its
President and
a former officer - - - - 9,575 10 456,951 - - 456,961
Shares issued
for settlement of
lawsuit - - - - 238 0 5,000 - - 5,000
Shares issued
for compensation
of stock price
decrease - - - - 500 1 (20) - - (20)
Reversal of
shares issued
in error - - - - (500) (1) 20 - - 20
Shares issued
for private
placement
memorandum - - - - 10,500 11 31,490 - - 31,500
Shares issued
for private
placement
memorandum - - - - 8,750 9 26,241 - - 26,250
Shares issued
for private
placement
memorandum - - - - 4,500 5 13,496 - - 13,500
Shares issued
to satisfy
payables to
third parties - - - - 2,406 2 141,879 - - 141,881
Net loss - - - - - - - - (83,614) (83,614)
---------------- ---------------- ---------------- ---------- ------------ ------------ ---------
Balance,
December 31, 2004 1 - - - 46,310 46 2,884,517 (3,042,536) (83,614) (241,587)
Issuance of
shares in
exchange for
mineral
claims - - - - 246,461 246 79,754 - - 80,000
Issuance of
16,250 stock
options
for
settlement of - - - - - - 47,216 - - 47,216
payable
Exercise of
stock options - - - - 16,250 16 (16) - - -
Rounding for
reverse split - - - - 585 - - - - -
Issuance of
shares for
consulting
services - - - - 20,000 20 19,980 - - 20,000
Issuance of
shares for
finder's fee
related to
the Bindloss
Agreement - - - - 500,000 500 799,500 - - 800,000
Net loss - - - - - - - - (947,953) (947,953)
---------------- ---------------- ---------------- ---------- ------------ ------------ ---------
Balance,
December 31, 2005 1 - - - 829,606 829 3,830,950 (3,042,536) (1,031,567) (242,324)
Exercise of
stock options
for loan - - - - 500,000 500 - - - 500
Exercise of
stock options
for cash - - - - 434,000 434 - - - 434
Issuance of
shares per
employment
agreements - - - - 700,000 700 713,300 - - 714,000
Compensation
paid with
254,167
shares of
common stock - - - - 108,000 108 110,392 - - 110,500
Issuance of
shares for
consulting
services - - - - 375,000 375 103,075 - - 103,450
Issuance of
shares to
Director
containing
1,000 votes
per share - - 40,000 40 - - 40,360 - - 40,400
Issuance of
Reg S Shares - - - - 939,858 940 184,133 - - 185,073
Net loss - - - - - - - - (911,386) (911,386)
---------------- ---------------- ---------------- ---------- ------------ ------------ ---------
Balance,
December 31, 2006 1 - 40,000 40 3,886,464 3,886 4,982,210 (3,042,536) (1,942,953) 647
Issuance of
shares for
consulting
services - - - - 35,970,000 35,970 1,346,430 - - 1,382,400
Issuance of
shares for
officer
compensation - - - - 1,200,000 1,200 89,300 - - 90,500
Issuance of
shares for
legal
services - - - - 100,000 100 26,900 - - 27,000
Issuance of
150,000 stock
options for
services - - - - - - 27,925 - - 27,925
Issuance of
40,000
preferred
stock for
cash - - 40,000 40 - - 9,960 - - 10,000
Exercise of
Options - - - - 100,000 100 14,900 - - 15,000
Net loss - - - - - - - - (2,164,953) (2,164,953)
---------------- ---------------- ---------------- ---------- ------------ ------------ -----------
Balance,
December 31, 2007 1 - 80,000 80 41,256,464 41,256 6,497,625 (3,042,536) (4,107,906) (611,481)
================ ================ ================= ========== ============ ============ ===========
See Accompanying Notes to Financial Statements
F-4
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENTS OF CASH FLOW
Cumulative After
Reentering
Exploration
For the Years Ended Stage through
December 31, 2007 December 31, 2006 December 31, 2007
(restated) (restated)
------------------ ------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,164,953) $ (911,386) $ (4,107,906)
Adjustments to reconcile loss
to net cash used in operating activities:
Depreciation and amortization expense 219 - 219
Stock issued as finders fee for mineral - - 800,000
rights agreement
Loss on impairment of mineral claims 40,000 - 120,000
Stock based expenses 1,873,825 581,600 2,541,675
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities 157,159 84,648 196,513
-------------- -------------- ---------------
Net cash used in operating activities (93,750) (245,138) (449,499)
CASH FLOW INVESTING ACTIVITIES
Purchase of fixed assets - (1,094) (1,094)
Acquisition of mineral leases (40,000) (10,905) (50,905)
-------------- -------------- ---------------
Net cash used in financing activities (40,000) (11,999) (51,999)
-------------- -------------- ---------------
CASH FLOW FINANCING ACTIVITIES
Proceeds from issuance of common stock 25,000 185,507 255,507
Proceeds from subscriptions for common stock 12,485 26,000 38,485
Proceeds from borrowings from notes payable 88,985 68,105 216,512
Proceeds from borrowings from related parties (446) 671 2,295
-------------- -------------- ---------------
Net cash provided by financing activities 126,024 280,283 512,799
-------------- -------------- ---------------
NET CHANGE IN CASH (7,726) 23,146 11,301
CASH AT BEGINNING OF YEAR 23,390 244 4,363
-------------- -------------- ---------------
CASH AT END OF YEAR $ 15,664 23,390 15,664
=============== ============== ===============
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 $ - - 188,096
=============== ============== ===============
Shares issued for mineral claims $ - - 80,000
=============== ============== ===============
Shares issued for settlement of lawsuit $ - - 6,000
=============== ============== ===============
Shares issued for consulting services treated as
prepaid expenses $ 11,000 - 11,000
=============== ============== ===============
Shares issued in settlement of debts to related $ - - 462,961
=============== ============== ===============
See Accompanying Notes to Financial Statements
F-5
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
NOTE 1 - HISTORY AND ORGANIZATION
Re-entering Exploration Stage - As described below, the Company distributed the
assets and liabilities of the operating segment of the Company on November 26,
2003. Subsequent to that date, the Company changed from a computer services
company to an exploration company pursuing interests in the oil and gas, and
precious metals industry. The Company has devoted most of its efforts to
establish the new business with raising capital and acquiring mineral leases.
Organization History - Frontier Energy Corp., (the "Company") was originally
incorporated on April 14, 1998, according to the laws of Colorado.
The Company was reincorporated according to the laws of Delaware on
February 17, 2000. On February 27, 2001, World Internetworks, Inc. ("WINS")
entered into an Agreement and Plan of Reorganization and Merger (the
"Plan of Merger") with GTD Acquisition, Inc. ("Newco") and GT Data
Corporation ("GT Data"). On March 20, 2001, and pursuant to a Certificate
filed with the Nevada Secretary of State, the WINS effected a 1 for 2 reverse
split of all the outstanding shares of its common stock, options and warrants.
Immediately following the reverse split WINS had 250,000,000 shares
authorized and 355,206 shares issued and outstanding. Outstanding options and
warrants were 11,225 and 40,750 respectively, after the reverse split. On
March 22, 2001, the Plan of Merger became effective (the "Merger"). Under
the Merger, Newco merged with and into GT Data, with GT Data as the surviving
subsidiary of the Company. On December 3, 2001, the Company changed its
name from WINS to GT Data Corporation. Pursuant to the Plan of Merger, all
of the 384,420 outstanding preferred B and common shares of GT Data were
exchanged for shares of WINS 1 for 1 on a post-split basis and 37,500
shares were issued to Fairway Capital Partners, LLC, a finder, in
connection with the transaction. All of the outstanding shares of Newco were
converted into shares of GT Data as the surviving corporation, with WINS as
the sole holder of those shares. The transaction was regarded as a reverse
merger whereby GT Data was considered to be the accounting acquirer as it
retained control of WINS after the Merger. Pursuant to the Plan of Merger,
certain shareholders of GT Data agreed to surrender 358,297 shares of
common stock prior to the consummation of the Merger. Prior to the
merger, the WINS had insignificant business activity. The accounting for
the acquisition is identical to that resulting from a reverse acquisition,
except goodwill or other intangible assets are not recorded. Accordingly,
these financial statements are the historical financial statements of GT
Data.
Up until November 2003, the Company was engaged in the sale, repair and support
service of in-warranty and out-of- warranty computer peripheral devices for
a variety of large and small brand name manufacturers through its wholly
owned subsidiary, Technical Services & Logistics Inc. ("TSLi"). On November
17, 2003, the Company's Board of Directors voted unanimously to liquidate
TSLi through a General Assignment benefiting the creditors of TSLi. On
November 26, 2003, the Company consummated a General Assignment Agreement ("the
agreement") that assign all the assets and liabilities of TSLi to the C.F.
Boham Company, Inc., d.b.a. the Hamer Group, of Los Angeles, California.
The assignment is essentially a liquidation of TSLi that was overseen by the
Hamer Group, who acted as trustee of TSLi's affairs during the liquidation
process.
Pursuant to the terms of the agreement, the Company agreed to immediately
assign all of TSLi's assets and liabilities, and forward all books and records
relating to TSLi, to the Hamer Group. The assignment constitutes a grant
deed to all real property owned by TSLi and effectively transfers title of
TSLi's real property to the Hamer Group. In addition, the agreement
transfers legal title and possession of all assets and liabilities of TSLi
to the Hamer Group and also gave the Hamer Group sole authority, and
responsibility, to sell the assets of TSLi and distribute any available
funds to the creditors of TSLi. In effect, the agreement gives total and
complete control of TSLi to the Hamer Group to oversee the liquidation process.
The agreement also stated that the Hamer Group shall pay itself, from the gross
proceeds of sales, collections, operations, and any and all other sources, a
minimum of thirty thousand dollars ($30,000) plus reasonable administrative
expenses.
F-6
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
NOTE 1 - HISTORY AND ORGANIZATION (CONTINUED)
The agreement also stated that the Hamer Group is entitled to pay its agents,
and any other professionals and individuals employed on its behalf, for any
and all services and expenses incurred during the liquidation of TSLi. In
addition, the Hamer Group is entitled to a 15% fee on gross recoveries from
collections on preferences or lawsuits and a reasonable fee, including
expenses, for the collection thereof. In the event that an involuntary
proceeding is filed, the Hamer Group may pay its counsel, or other
professionals, out of liquidated recoveries of TSLi's estate.
Per the agreement, all aforementioned amounts are to be determined at the
sole, but reasonable, discretion of the Hamer Group, and judgment shall include
but not be limited to monthly administrative charges. The Company has
accounted for this assignment of TSLi as discontinued operations in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 144.
Accordingly, the Company has reflected all activities related to TSLi
operations as discontinued operations in the accompanying financial
statements.
As a result of the discontinued operations of TSLi activities, the
Company's sole activity as of December 31, 2007 and 2006 is pursuing
interest in the oil and gas and precious metals industry.
On July 27, 2005, the Company authorized a name change to Frontier Energy Corp.
and changed the authorized shares to 100,000,000 shares with par value of
$0.001 per share. The Company also approved a 1-for -40 reverse stock split of
its common stock. Accordingly, the accompanying Financial Statements have been
retroactively adjusted as if the reverse stock split had occurred at the
Company's inception.
The Company formed FEC Holdings, Corp ("FEC"), as a Canadian subsidiary to
facilitate the agreement with Angel Exploration, FEC incurred some exploration
costs, primarily connected to the Angels Exploration Fund, Inc. outlined in
Note 4. Following the cancellation of the agreement with Angel Exploration,
Frontier entered into a proposed merger negotiations with Sol-Terra Energy, Inc
After the termination of the Sol-Terra Energy, Inc. merger negotiations, FEC
ceased operations in 2006.
On January 19, 2005, the Company entered into an Assignment and Assumption
Agreement ("Agreement") with a Company that holds and Option Purchase Agreement
("Contract") for purchase and sale of property in British Columbia, Canada.
In consideration for the Agreement, the Company issued 246,461 shares of common
stock valued at $80,000. As of December 31, 2005, the Company had fully
impaired the $80,000 interest.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going concern - The Company incurred a net loss of approximately $2,165,000
and $911,000 for the years ended December 31, 2007 and 2006, respectively. The
Company's liabilities exceed its assets by approximately $623,000 as of
December 31, 2007. The Company's sole operations have been limited to
pursuing interests in the oil and gas, and precious metals industry with no
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.
F-7
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
Property and equipment - Fixed assets are stated at cost less
accumulated depreciation. Depreciation is provided principally on the
straight-line method over the estimated useful lives of the assets, which are
generally 5 to 7 years. The amounts of depreciation provided are sufficient
to charge the cost of the related assets to operations over their estimated
useful lives. The cost of repairs and maintenance is charged to expense as
incurred. Expenditures for property betterments and renewals are
capitalized. Upon sale or other disposition of a depreciable property,
cost and accumulated depreciation are removed from the accounts and any
gain or loss is reflected in other income.
The Company periodically evaluates whether events and circumstances
have occurred that may warrant revision of the estimated useful life of fixed
assets or whether the remaining balance of fixed assets should be
evaluated for possible impairment. The Company uses an estimate of the
related undiscounted cash flows over the remaining life of the fixed
assets in measuring their recoverability.
Comprehensive income - In June 1998, the Financial Accounting Standards
Board ("FASB") issued SFAS No. 130, "Reporting Comprehensive Income" was
issued. SFAS No. 130 establishes standards for the reporting and display of
comprehensive income and its components in the financial statements. As of
December 31, 2007 and 2006, the Company has no items that represent
comprehensive income and, therefore, has not included a schedule of
Comprehensive Income in the accompanying financial statements.
Income taxes - The Company accounts for its income taxes in accordance with
SFAS No. 109 "Accounting for Income Taxes," which requires recognition of
deferred tax assets and liabilities for future tax consequences attributable
to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and tax
credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in operations in the period that includes the enactment date.
As of December 31, 2007, the Company has available net operating loss
carryovers of approximately $2,722,000 that will expire in various periods
through 2027. Such losses may not be fully deductible due to the significant
amounts of non-cash service costs. The Company has established a valuation
allowance for the full tax benefit of the operating loss carryovers due to the
uncertainty regarding realization.
F-8
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Stock-based compensation - The Company applied Accounting Principles
Board ("APB") Opinion No. 25 through December 31, 2005. Effective January
1, 2006, the Company adopted SFAS 123(R) using the modified prospective
transition method, which requires the measurement and recognition of
compensation expense for all share-based payment awards made to the Company's
employees and directors including stock options under the New Plan. The
Company's financial statements reflect the effect of SFAS 123(R). In
accordance with the modified prospective transition method, the Company's
financial statements for prior periods have not been restated to reflect, and
do not include, the impact of SFAS 123(R). Share-based compensation expense
recognized is based on the value of the portion of share-based payment awards
that is ultimately expected to vest. Share-based compensation expense
recognized in the Company's Statements of Operations during the year ended
December 31, 2006 included compensation expense for share-based payment awards
granted prior to, but not yet vested, as of December 31, 2006 based on the
grant date fair value estimated in accordance with the pro forma provisions of
SFAS 123 and compensation expense for the share-based payment awards granted
subsequent to December 31, 2005 based on the grant date fair value estimated in
accordance with the provisions of SFAS 123(R). In conjunction with the adoption
of SFAS 123(R), the Company elected to attribute the value of share-based
compensation to expense using the straight-line attribution. Share-based
employee compensation expense related to stock options was $ - and $ - for the
years ended December 31, 2007 and 2006, respectively. During the years ended
December 31, 2007, and 2006, there was no share-based employee compensation
expense related to stock options recognized under the intrinsic value method in
accordance with APB 25.
Upon adoption of SFAS 123(R), the Company elected to value its share-based
payment awards granted after January 1, 2006 using the Black-Scholes option-
pricing model, which was previously used for its pro-forma information required
under SFAS 123. The Black-Scholes model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. The Black-Scholes model requires the input of certain
assumptions. The Company's options have characteristics significantly different
from those of traded options, and changes in the assumptions can materially
affect the fair value estimates.
The Company issued 2,000,000 shares for stock compensation to officers of the
Company on February 17, 2006. The employment agreements vest the shares over a
24 month period beginning with the date of issue. Valuation of $2,040,000 was
based upon the weighted average stock price of $1.02 for the 5 trading days
preceding the issuance of the shares. However, the Company cancelled two
certificates totaling 1,300,000 shares with a value totaling $1,326,000 leaving
net common stock totaling 700,000 shares and value of $714,000. The
compensation is being expensed on a monthly basis as the shares vest. Payroll
taxes are being accrued on the vested shares. The Company has recorded the
issued shares as a prepaid expense and accrued the vested shares against the
prepaid monthly. As of December 31, 2007 and 2006, the Company recorded
$357,000 and $327,250, respectively, as an expense related to the portion
vested during those periods, with a remaining prepaid of $29,759 and $386,750,
respectively. The Company also issued shares to terminated officers totaling
108,000 shares of common stock with a total value of $110,500 which was
expensed in 2005.
Net income (loss) per common share - The Company computes net income (loss)
per share in accordance with SFAS No. 128, "Earnings per Share" and
SEC Staff Accounting Bulletin ("SAB") No. 98. Under the provisions of SFAS
No. 128 and SAB No. 98, basic net loss per share is computed by dividing
the net loss available to common stockholders for the period by the weighted
average number of shares of common stock outstanding during the period.
The calculation of diluted net loss per share gives effect to common stock
equivalents, however, potential common shares are excluded if their
effect is antidilutive.
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-9
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
NOTE 3 - NEW ACCOUNTING PRONOUNCEMENTS
In February 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 159, "The Fair Value Option for Financial
Assets and Financial Liabilities - Including an amendment of FASB Statement No.
115" (hereinafter "SFAS No. 159"). This statement permits entities to choose to
measure many financial instruments and certain other items at fair value. The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex
hedge accounting provisions. This statement is expected to expand the use of
fair value measurement, which is consistent with the Board's long-term
measurement objectives for accounting for financial instruments. This statement
is effective as of the beginning of an entity's first fiscal year that begins
after November 15, 2007, although earlier adoption is permitted. Management has
not determined the effect that adopting this statement would have on the
Company's financial condition or results of operations.
SFAS 141(R) - In December 2007, the FASB issued SFAS 141(R), "Business
Combinations." This Statement replaces SFAS 141, "Business Combinations," and
requires an acquirer to recognize the assets acquired, the liabilities assumed,
including those arising from contractual contingencies, any contingent
consideration, and any noncontrolling interest in the acquiree at the
acquisition date, measured at their fair values as of that date, with limited
exceptions specified in the statement. SFAS 141(R) also requires the acquirer
in a business combination achieved in stages (sometimes referred to as a step
acquisition) to recognize the identifiable assets and liabilities, as well as
the noncontrolling interest in the acquiree, at the full amounts of their fair
values (or other amounts determined in accordance with SFAS 141(R)). In
addition, SFAS 141(R)'s requirement to measure the noncontrolling interest in
the acquiree at fair value will result in recognizing the goodwill attributable
to the noncontrolling interest in addition to that attributable to the
acquirer. SFAS 141(R) amends SFAS No. 109, "Accounting for Income Taxes," to
require the acquirer to recognize changes in the amount of its deferred tax
benefits that are recognizable because of a business combination either in
income from continuing operations in the period of the combination or directly
in contributed capital, depending on the circumstances.
F-9
It also amends SFAS 142, "Goodwill and Other Intangible Assets," to, among
other things, provide guidance on the impairment testing of acquired research
and development intangible assets and assets that the acquirer intends not to
use.
SFAS 141(R) applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. Management has not determined
the effect that adopting this statement would have on the Company's financial
condition or results of operations.
SFAS 160 - In December 2007, the FASB issued SFAS 160, "Noncontrolling
Interests in Consolidated Financial Statements." SFAS 160 amends Accounting
Research Bulletin 51, "Consolidated Financial Statements," to establish
accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. It also clarifies that
a noncontrolling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements. SFAS 160 also changes the way the consolidated income
statement is presented by requiring consolidated net income to be reported at
amounts that include the amounts attributable to both the parent and the
noncontrolling interest. It also requires disclosure, on the face of the
consolidated statement of income, of the amounts of consolidated net income
attributable to the parent and to the noncontrolling interest. SFAS 160
requires that a parent recognize a gain or loss in net income when a subsidiary
is deconsolidated and requires expanded disclosures in the consolidated
financial statements that clearly identify and distinguish between the
interests of the parent owners and the interests of the noncontrolling owners
of a subsidiary. SFAS 160 is effective for fiscal periods, and interim periods
within those fiscal years, beginning on or after December 15, 2008. Management
has not determined the effect that adopting this statement would have on the
Company's financial condition or results of operations.
F-10
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
NOTE 4 - MINERAL RIGHTS
On January 19, 2005, the Company entered into an Assignment and Assumption
Agreement ("Agreement") with a Company that holds and Option Purchase Agreement
("Contract") for purchase and sale of property in British Columbia, Canada. In
consideration for the Agreement, the Company issued 246,461 (9,858,434 pre-
split) shares of common stock valued at $80,000. On January 22, 2005, the
registrant acquired the 100% interest in a copper, gold and platinum mineral
prospect (the "Property"). The Property consists of 20 claim units in
central British Columbia, Canada approximately 45 miles east of Williams Lake.
The Property is located in the central Quesnel Trough and adjoins the
south border of Imperial Metals', Mount Polley copper/gold mine. Due to the
Company's change of business direction and decision to not renew the required
annual 2006 fees for maintaining these claims, the Company has recorded an
$80,000 loss on impairment of mineral claims in 2005.
On October 12, 2005, the Company entered into an agreement with Angels
Exploration Fund, Inc. (Angel's). The October 12 agreement agreed to pay
5,000,000 in restricted shares for the funding of test wells on property in
Alberta, Canada. An additional 100,000 restricted shares are deliverable if
the first test well is taken to completion. If Angel's is unable to provide
$1,000,000 in financing costs within 90 days of the agreement, 4,500,000 of the
shares will be cancelled. If Angel's is unable to provide $2,000,000 within 90
days of the agreement, the Company will have the right to cancel 2,500,000 of
the shares. Under the agreement, the Company acquired an eighty percent
working interest from Angels undivided 100 percent working interest, subject to
a 10 percent gross overriding royalty.
On October 25, 2005, the Company and Angel's entered into an agreement with
1097855 Alberta, Ltd. to drill test wells on property that 1097855 Alberta,
Ltd. has title interest. Development is to begin prior to July 30, 2006.
Under the agreement, the Company could earn a ninety percent working interest
from the undivided 100 percent working interest that 1097855 Alberta Ltd. owns,
subject to a 15 percent gross overriding royalty. Angel Exploration was unable
to raise the necessary capital to complete the drilling program and the
agreement between Angel Exploration and Frontier energy was subsequently
cancelled.
On March 31, 2006, no additional exploration had been performed on the
agreements and the Company agreed to cancel the agreements.
In December 2006, the Company paid $10,905 to lease 640 acres in the Rocky
Mountain range located in the state of Montana for a 10 year term. Annually,
the mineral rights are tested for impairment.
NOTE 5 - RELATED PARTY TRANSACTIONS
Due to Related Parties - Due to related parties at December 31, 2007 and 2006
totaling $0 and $446, respectively consisted of working capital advances
from the Company's stockholders. The advances are non-interest bearing,
unsecured and due on demand.
During 2006 the President of the company received 40,000 shares of Series B
preferred stock for services. Each Series B preferred share has the voting
rights of 1,000 shares of common stock. Valuation of $40,400 was based upon
the weighted average stock price of $1.01 for the 5 trading days preceding the
issuance of the shares.
F-11
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
NOTE 6 - INCOME TAXES
The Company did not record any current or deferred income tax provision
or benefit for any of the periods presented due to continuing net losses
and nominal differences.
The Company has provided a full valuation allowance on the deferred tax
asset, consisting primarily of net operating losses, because of uncertainty
regarding its realizability.
As of December 31, 2007 and 2006, the Company had a net operating loss carry
forward of approximately $2,722,000 and $2,412,000 respectively for federal
income tax purposes to offset future taxable income, if any. Utilization
of the net operating loss carry forward, which will expire in various periods
through 2026, may be subject to certain limitations under Section 382 of the
Internal Revenue Code of 1986, as amended, and other limitations under state
and foreign tax laws. To the extent that net operating losses of approximately
$2,700,000, when realized, relate to stock options and warrants, the
resulting benefits will be credited to stockholders' equity.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. As
of December 31, 2007 and 2006 the significant components of the Company's
deferred tax assets are approximately as follows:
2007 2006
__________ ___________
Net operating loss $2,722,000 $2,412,000)
Stock based compensation 4,428,000 2,573,000
__________ ___________
$7,150,000 $4,985,000
========== ===========
Deferred tax asset at 35% $2,500,000 $1,745,000
Valuation allowance for deferred tax assets (2,500,000) (1,745,000)
__________ ___________
Net deferred tax assets $ -- $ --
========== ===========
NOTE 7 - STOCKHOLDERS' EQUITY
Preferred Stock -
The Company's articles of incorporation authorize up to 100,000,000 shares
of $0.001 par value Common stock. Shares of common stock may be issued in
one or more classes or series at such time as the Board of Directors
determine.
During fiscal 2000, the Board of Directors designated 1 share of Series A
preferred stock ("Preferred A"). Each share of Preferred A is convertible into
common stock at a rate of $10.00 per share, subject to future adjustments, as
defined. As of December 31, 2007, the Company has 1 share of Preferred A
issued and outstanding.
F-12
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
NOTE 7 - STOCKHOLDERS' EQUITY (CONTINUED)
During fiscal 2000, the Board of Directors had designated 130,000 shares of
Series B 7% convertible preferred stock ("Preferred B"). Each Preferred B
share has a liquidation preference of $10.00 per share plus accrued dividends
and is convertible at anytime into such number of fully paid and non-
assessable shares of common stock as is determined by dividing $10.00
plus the amount of any accrued and unpaid dividends by the conversion price
of $10.00 at the time of conversion, subject to future adjustments, as
defined. The Preferred B shares are automatically converted in the event of an
effective registration statement filing or and affirmative vote of the
preferred holders voting as a separate class.
On May 31, 2006, the Company issued 40,000 shares of Class B preferred stock to
the Chairman, Robert Genesi in exchange for his services. The preferred
shares carry voting rights of 1,000 votes per share.
During 2007, the Company issued 40,000 shares of Preferred B stock for $10,000.
As of December 31, 2007 and 2006, 80,000 and 40,000 shares, respectively,
of Preferred B were issued or outstanding.
Common Stock -
During 2004, the Company issued 500 shares of its common stock to its
President as a result of options that were exercised. The options were
granted as a result of options previously granted and exercised in 2003 with an
exercise price of $0.20. The Company had elected to re-price those
previously granted and exercised options from $0.20 to $0.10 which
resulted in the additional issuance of options for 500 shares of common
stock. The re-pricing and additional issuance of such options has resulted
in an expense to Company of approximately $20,000 which has been reflected
in 2005.
On July 27, 2005, the Company authorized a name change to Frontier Energy Corp.
and changed the authorized shares to 100,000,000 shares with par value of
$0.001 per share. The Company also approved a 1-for -40 reverse stock split of
its common stock. Accordingly, the accompanying consolidated Financial
Statements have been retroactively adjusted as if the reverse stock split had
occurred at the Company's inception.
Pursuant to the upset provision in the Angel's Agreement that was signed by the
Company on October 12, 2005, the Company cancelled 4,500,000 of the 5,000,000
shares issued to Mr. Jeffrey A. Cocks in March 2006. The remaining shares were
accounted for by the Company as a finder's fee for the agreement.
During 2006, consultants to the Company exercised options to acquire 500,000
shares of common stock at par value. The consultants paid for the exercise by
reducing accounts payable owed by the Company.
During 2006, the Company issued 2,000,000 shares for stock compensation to
officers of the Company on February 17, 2006. The employment agreements vest
the shares over a 24 month period beginning with the date of issue. Valuation
was based upon the weighted average stock price of $1.02 for the 5 trading days
preceding the issuance of the shares. The compensation is being expenses on a
monthly basis as the shares vest. For the year ended December 31, 2006,
428,837 shares of stock under the employment agreements have vested to the
officers, at an expense of $437,750.
On April 5, 2006, the Registrant's Board of Directors terminated the employment
contracts of Jeffery Cocks as the Registrant's Chief Operating Officer and
Kevin Tattersall as the Registrant's Chief Exploration Officer. The Registrant
has not appointed successors to either position. The Registrant terminated
these contracts as part of a re-evaluation of the Registrant's entire
management team and overhead expenses and should not be construed as a negative
judgment on Messrs. Cocks and Tattersall. Pursuant to the agreement,
termination of employment without cause obligates the Company to pay two months
of the officers' salaries, totaling $8,000 to each officer. Two certificates
for 1,300,000 shares were returned to the transfer agent and cancelled. New
certificates for the vested shares were issued by the Company upon cancellation
of the original certificates. Each officer received new certificates of 54,000
vested shares valued at $55,250.
F-13
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
The share certificate for 700,000 shares issued to the remaining officer of the
Company is being held by the Company. The shares for the officer are
considered contingently issuable shares, and thus are included in EPS only as
they are vested over the two year vesting period. The unvested shares are
reported as "Common stock issued for future services on employment agreement"
as a contra equity account on the balance sheet.
In February 2006, the Registrant commenced an offering under Regulation S (the
"Offering"), solely to non-US persons located outside of the United States. On
April 5, 2006, before accepting any subscriptions or funds from investors in
the Offering, the Registrant cancelled the Offering and requested the return of
all offering materials
On April 5, 2006, the Company issued 50,000,000 shares of common stock to Sol-
Terra Energy, Inc. in exchange for all of Sol-Terra's assets, which include a
substantial interest in gas-bearing property in Alberta. The Company has held
the stock certificate pending valuation of the assets and closing of the
transaction. The Company will record the transaction upon completion of the
asset valuation. Due to the Company's possession of the certificate, it is
deemed un-issued and not outstanding. On October 16, 2006, failing to receive
an appraisal for the assets of Sol-Terra, the Company cancelled the 50,000,000
share certificate and terminated the April 5, 2006 agreement.
On July 6, 2006, the Registrant commenced an offering under Regulation S (the
"Offering"), solely to non-US persons located outside of the United States.
Terms of the agreement were to raise up to $2,000,000 by sale of common shares
at a per share purchase price equal to 40% of the previous day's last trade
price, as traced on the Other the Counter Bulletin Board. The sales agent
received 10% of the proceeds. Through December 31,2006, the Company sold
939,858 shares for net $185,073.
On July 28, 2006, 309,000 options were exercised at $0.001 for $309. On
September 5, 2006, 50,000 options were exercised at $0.001 for $50. On
September 13, 2006, 75,000 options were exercised at $0.001 for $75.
During the year ended December 31, 2007, consultants to the Company were
compensated with 35,970,000 shares in exchange for consulting services valued
at $1,382,400. The valuation of the shares was determined by the closing price
per share as of the measurement date. The Company incurred consulting expense
related to the issuance of shares of $1,371,400 net of prepaid stock
compensation totaling $11,000 at December 31, 2007.
* January 9, 2007, the Company entered into that certain consultant
agreement with Crescent Fund LLC ("Crescent Fund") pursuant to which
Crescent Fund agreed to provide certain investor relations services to the
Company and the Company agreed to issue to Crescent Fund an aggregate of
500,000 shares of common stock valued at $0.20 per share.
* On January 24, 2007, the Company entered into that verbal certain
consultant agreement with Coast 2 Coast Investments LLC ("Coast 2 Coast"),
pursuant to which Coast 2 Coast agreed to provide certain investor relations
services to the Company and the Company agreed to issue to Coast to Coast
an aggregate of 100,000 shares of common stock valued at $0.25 per share.
On February 1, 2007, a further 500,000 shares were granted valued at
$0.40 per share On March 20, 2007, a further 500,000 shares of the
Company's common stock were issued to Coast 2 Coast pursuant to contractual
agreement relating to the successful results of Coast 2 Coast's
services provided to the Company valued at $0.20 per share. On June 6,
2006, the 500,000 shares valued at $0.40 were subsequently cancelled and
returned to treasury. The value of shares is presented net of canceled
shares.
F-14
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
NOTE 7 - STOCKHOLDERS' EQUITY (CONTINUED)
* On February 5, 2007, the Company entered into that certain corporate
consulting agreement with Sam Aiello ("Aiello"), pursuant to which Aiello
agreed to provide certain services including sourcing of viable oil and gas
prospects and properties and re-designing and deploying the Company's
website and current corporate marketing data and the Company agreed to issue
to Aiello an aggregate of 400,000 shares of common stock valued at $0.40 per
share. On May 17, 2007, a further 220,000 shares of the Company's common
stock valued at $.08 per share were issued to Aiello pursuant to contractual
agreement relating to the successful results of Aiello's services provided
to the Company.
* On February 5, 2007, the Company entered into that certain corporate
consulting agreement with Jeffrey D. Cox ("Cox"), pursuant to which Cox
agreed to provide certain consulting services including sourcing of viable
oil and gas prospects and properties and re-designing and deploying the
Company's website and current corporate marketing data and the Company
agreed to issue to Cox an aggregate of 400,000 shares of common stock valued
at $0.40 per share.
* On March 15, 2007, the Company entered into that certain corporate
consulting agreement with Larry Taylor ("Taylor"), pursuant to which Taylor
agreed to provide certain services including sourcing of viable oil and gas
prospects and negotiating with Excessior Oil, a private company with tar
sands in Fort Murray, regarding a contractual arrangement and the Company
agreed to issue to Taylor an aggregate of 200,000 shares of common stock
valued at $0.20 per share.
* On April 2, 2007, the Company entered into that certain consulting
agreement with William Tyler Dillerson ("Dillerstone"), pursuant to which
Dillerstone agreed to provide certain services including web development
services and the Company agreed to issue to Dillerstone an aggregate of
500,000 shares of common stock valued at $0.14 per share.
* On May 1, 2007, the Company entered into that certain corporate
consulting agreement with Curtiss Parker ("Parker"), pursuant to which
Parker agreed to provide certain services including sourcing of viable oil
and gas prospects and properties and re-designing and deploying the
Company's website and current corporate marketing data and the Company
agreed to issue to Parker an aggregate of 1,500,000 shares of common stock
valued at $0.08 per share.
* On May 1, 2007, the Company entered into that certain verbal
consultant agreement with Semso Rekic ("Rekic"), pursuant to which Rekic
agreed to provide certain investor relations services and the Company
agreed to issue to Rekic an aggregate of 50,000 shares of common stock
valued at $0.08 per share.
* On May 24, 2007, the Company entered into that certain corporate
consulting agreement with Bart Lawrence ("Lawrence"), pursuant to which
Lawrence agreed to provide certain services including sourcing of viable oil
and gas prospects and properties, assisting in the development of business
plans and providing to the Company an extensive client list and the Company
agreed to issue to Lawrence an aggregate of 300,000 shares of common stock
valued at $0.05 per share. On June 11, 2007, a further 600,000 shares of the
Company's common stock valued at $0.05 per share were issued to Lawrence
pursuant to contractual agreement relating to the successful results of
Lawrence's services provided to the Company. On August 17, 2007, a further
1,000,000 shares of the Company's common stock valued at $0.016 per share
were issued to Lawrence pursuant to contractual agreement relating to the
successful results of Lawrence's services provided to the Company.
F-15
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
NOTE 7 - STOCKHOLDERS' EQUITY (CONTINUED)
* On June 1, 2007, the Company entered into that certain verbal agreement
with Ken Raina ("Raina"), pursuant to termination of service as board member
and the Company agreed to issue to Raina an aggregate of 200,000 shares of
common stock valued at $0.08 per share.
* On June 1, 2007, the Company entered into that certain verbal agreement
with Laurie Bloom ("Bloom"), pursuant to which Bloom agreed to provide office
space for the Company's use and the Company agreed to issue to Bloom an
aggregate of 150,000 shares of common stock valued at $0.08 per share.
* On June 1, 2007, the Company entered into that certain verbal
consultant agreement with Mark Genesi ("Genesi"), pursuant to which Genesi
agreed to provide certain investor relations services to the Company and
the Company agreed to issue to Genesi an aggregate of 150,000 shares of
common stock valued at $0.08 per share.
* On July 30, 2007, the Company entered into that certain corporate
consulting agreement with Scott Burnim ("Burnim"), pursuant to which Burnim
agreed to provide certain services including sourcing of viable oil and gas
prospects and properties, re-designing current corporate marketing data and
providing to the Company an extensive client list and the Company agreed to
issue to Burnim an aggregate of 1,000,000 shares of common stock valued at
$0.012 per share.
* On August 8, 2007, the Company entered into that certain consulting
agreement with Kristin Anez ("Anez"), pursuant to which Anez agreed to
provide certain financial advisory and consulting services with respect to
matters related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to Anez
an aggregate of 1,000,000 shares of common stock valued at $0.01 per share.
On October 30, 2007, a further 500,000 shares of the Company's common stock
valued at $0.01 per share were issued to Anez pursuant to contractual
agreement relating to the successful results of Anez's services provided to
the Company.
* On September 5, 2007, the Company entered into that certain corporate
consulting agreement with Jamie Gomez ("Gomez"), pursuant to which Gomez
agreed to provide certain services including sourcing of viable oil and gas
prospects and properties, assisting in the development of website and
current marketing data and providing to the Company an extensive client list
and the Company agreed to issue to Gomez an aggregate of 1,000,000 shares of
common stock valued at $0.007 per share.
* On September 5, 2007, the Company entered into that certain corporate
consulting agreement with Reba Duggan ("Duggan"), pursuant to which Duggan
agreed to provide certain services including sourcing of viable oil and gas
prospects and properties, assisting in the development of website and
current marketing data and providing to the Company an extensive client list
and the Company agreed to issue to Duggan an aggregate of 1,000,000 shares
of common stock valued at $0.007 per share.
* On September 5, 2007, the Company entered into that certain corporate
consulting agreement with Scott Belazi ("Belazi"), pursuant to which Belazi
agreed to provide certain services including sourcing of viable oil and gas
prospects and properties, assisting in the development of website and
current marketing data and providing to the Company an extensive client list
and the Company agreed to issue to Belazi an aggregate of 1,000,000 shares
of common stock valued at $0.007 per share.
F-16
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
NOTE 7 - STOCKHOLDERS' EQUITY (CONTINUED)
* On September 24, 2007, the Company entered into that certain consulting
agreement with Mark Brummell ("Brummell"), pursuant to which Brummell agreed
to provide certain advisory and consulting services with respect to matters
related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to
Brummell an aggregate of 6,000,000 shares of common stock valued at $0.012
per share.
* On September 24, 2007, the Company entered into that certain consulting
agreement with Phillip Russell ("Russell"), pursuant to which Russell agreed
to provide certain advisory and consulting services with respect to matters
related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to
Russell an aggregate of 3,000,000 shares of common stock valued at $0.012
per share.
* On October 15, 2007, the Company entered into that certain consulting
agreement with Allison Nigro ("Nigro"), pursuant to which Nigro agreed to
provide certain advisory and consulting services with respect to matters
related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to Nigro
an aggregate of 1,000,000 shares of common stock valued at $0.017 per share.
* On October 15, 2007, the Company entered into that certain verbal
consulting agreement with Paul Short ("Short"), pursuant to which Short
agreed to provide certain advisory and consulting services with respect to
matters related to the development of the Company's business plan,
including portfolio review, comprehensive business planning, business
valuation, aid in organizational strategies, management consulting, and
individualized financial performance optimization, and the Company agreed to
issue to Short an aggregate of 1,000,000 shares of common stock valued at
$0.08 per share.
* On October 15, 2007, the Company entered into that certain verbal
consulting agreement with Roddy Duggan ("Duggan"), pursuant to which Duggan
agreed to provide certain advisory and consulting services with respect
to matters related to the development of the Company's business plan,
including portfolio review, comprehensive business planning, business
valuation, aid in organizational strategies, management consulting, and
individualized financial performance optimization, and the Company agreed
to issue to Duggan an aggregate of 1,000,000 shares of common stock valued
at $0.08 per share.
* On October 30, 2007, the Company entered into that certain consulting
agreement with Alison Burnim ("Burnim"), pursuant to which Burnim agreed to
provide certain advisory and consulting services with respect to matters
related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation,
aid in organizational strategies, management consulting, and
individualized financial performance optimization, and the Company agreed
to issue to Burnim an aggregate of 1,500,000 shares of common stock valued
at $0.01 per share.
* On November 28, 2007, the Company entered into that certain consulting
agreement with John Williams ("Williams"), pursuant to which Williams agreed
to provide certain advisory and consulting services with respect to matters
related to the development of the Company's portfolio of oil and gas
properties and the Company agreed to issue to Williams an aggregate of
1,000,000 shares of common stock valued at $0.003 per share.
F-17
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
NOTE 7 - STOCKHOLDERS' EQUITY (CONTINUED)
* On November 28, 2007, the Company entered into that certain consulting
agreement with Gil Whyte ("Whyte"), pursuant to which Whyte agreed to
provide certain advisory and consulting services with respect to matters
related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to Whyte
an aggregate of 2,500,000 shares of common stock valued at $0.003 per share.
* On November 28, 2007, the Company entered into that certain consulting
agreement with Rick Shykora ("Shykora"), pursuant to which Skykora agreed to
provide certain advisory and consulting services with respect to matters
related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to
Shykora an aggregate of 2,500,000 shares of common stock valued at $0.003
per share.
* On December 5, 2007, the Company entered into that certain consulting
agreement with Daniel R. Davison ("Davison"), pursuant to which Davison
agreed to provide certain advisory and consulting services with respect to
matters related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to
Davison an aggregate of 1,000,000 shares of common stock valued at $0.004
per share.
* On December 5, 2007, the Company entered into that certain consulting
agreement with Peter Kolacz ("Kolacz"), pursuant to which Kolacz agreed to
provide certain advisory and consulting services with respect to matters
related to the development of the Company's business plan, including
portfolio review, comprehensive business planning, business valuation, aid
in organizational strategies, management consulting, and individualized
financial performance optimization, and the Company agreed to issue to
Kolacz an aggregate of 3,000,000 shares of common stock valued at $0.017 per
share.
* On December 20, 2007, the Company entered into that certain consulting
agreement with Kenneth P. Bottoms ("Bottoms"), pursuant to which Bottoms
agreed to provide certain oil and gas prospects for the Company in oil
industry matters and the Company agreed to issue to Bottoms an aggregate of
200,000 shares of common stock valued at $0.325 per share.
During fiscal ear ended December 31, 2007 and including the shares issued to
Robert Genesi, we issued an aggregate of 1,200,000 shares of our common stock
to certain of our officers/directors as compensation for services. On February
1, 2007, April 2, 2007, June 11, 2007, October 31, 2007 and November 14, 2007,
an aggregate of 150,000 valued at $0.4 per share, 50,000 valued at $0.14 per
share, 900,000 valued at $0.025, and 8,900,000 shares of common stock were
issued to Robert Genesi as compensation for services rendered related to there
role as a director of the Company. On November 14, 2007, the 8,900,000 shares
of common stock were subsequently cancelled and returned to treasury. The
value of the share is presented net of canceled shares. An additional 100,000
shares of common stock valued at $0.1 were issued to Don Hwang as director
compensation.
During the year ended December 31, 2007, securities counsel to the Company was
compensated with 100,000 shares in exchange for legal services. 50,000 shares
were valued at $.40 per share the other 50,000 were valued at $0.14 per share
determined by the date the shares were granted. The Company incurred legal
expense related to the issuance of shares of $27,000.
F-18
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
NOTE 7 - STOCKHOLDERS' EQUITY (CONTINUED)
On March 29, 2007, 100,000 options granted to Malcolm Albert for consulting
services were exercised at $0.15 for $15,000 in cash proceeds.
Stock Options -
In February 2000, the Company's Board of Directors and majority shareholders
approved and adopted the Frontier Energy Corp., fka GT Data Corporation 2000
Stock Option Plan ("the 2000 plan"). As amended, a total of 333,333 shares of
common stock are reserved for issuance under the 2000 plan. The exercise price
for each option shall be equal to 100% to 110% of the fair market value of
the common stock on the date of grant, as defined. The 2000 plan shall
terminate ten years after its adoption by the Board of Directors and may
be terminated by the Board of Directors on any earlier date, as defined.
In March 2001, the Company's Board of Directors and majority
shareholders approved and adopted the Frontier Energy Corp., fka GT Data
Corporation 2001 Stock Option Plan ("the 2001 plan"). A total of 4,500,000
shares of common stock are reserved for issuance under the 2001 plan. The
exercise price for each option shall be no less than 100% to 110% of the fair
market value of the common stock on the date of grant, as defined. The 2001
plan shall terminate ten years after its adoption by the Board of Directors
and may be terminated by the Board of Directors on any earlier date, as
defined.
On March 15, 2007, the Company entered into that certain corporate consulting
agreement with Malcolm Albert ("Albery"), pursuant to which Albery agreed to
provide certain services including sourcing of viable oil and gas prospects and
properties, assisting in the development of business plans and providing to the
Company an extensive list and the Company agreed to grant 150,000 stock options
valued at $27,925 to Albert. The options granted the rights to acquire 150,000
shares of the Company's Common stock at $0.15 per share. The value of each
option were estimated using the Black-Scholes option pricing model on the date
of grant using the following assumptions: (i) no dividend yield, (ii)
average volatility of 336%, (iii) weighted average risk free interest rate of
approximately 4% and (iv) average expected useful life of 3 years. The
options value resulted in consulting expense of $27,925. On March 29, 2007,
100,000 options were exercised at $0.15 for $15,000.
The following is a status of the stock options outstanding at December 31,
2007 and 2006 and the changes during the two years then ended:
Years Ended December 31,
_________________________________________
2007 2006
---- ----
Weighted Average Weighted Average
Options Price Options Price
_______ ______ _______ _______
Outstanding, beginning of year 65,000 $ 4.00 65,000 $ 4.00
Granted 150,000 0.15 934,000 0.001
Exercised (100,000) 0.15 (934,000) 0.001
Cancelled/Forfeited -- -- -- --
_______ ______ _______ ______
Outstanding, end of year 115,000 $ 2.33 65,000 $ 4.00
======= ====== ======= ======
Exercisable, end of year 115,000 $ 2.33 65,000 $ 4.00
======= ====== ======= ======
Weighted average fair
value of options granted $ 2.33 $ 4.00
====== ======
F19
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
NOTE 7 - STOCKHOLDERS' EQUITY (CONTINUED)
115,000 of the outstanding options at December 31, 2007 have an average
exercise price $2.33 per share and average remaining contractual life of 3.5
years. The 115,000 and 65,000 options were exercisable during 2007 and 2006,
respectively.
Had compensation costs for the Company's 2003 options granted to
employees been determined under SFAS 123, the minimum value of each option
would have been estimated using the Black-Scholes option pricing model on the
date of grant using the following assumptions: (i) no dividend yield,
(ii) average volatility ranging from 366% to 470%, (iii) weighted average risk
free interest rate of approximately 4% and (iv) average expected useful
life of 3 years.
During 2004, the re-priced options for 10,000 (400,000 pre-split) shares of
common stock which were issued during 2003 from $0.20 to $0.10 (pre-reverse
stock split) per share. As a result of this re-pricing, the Company issued the
10,000 (400,000 pre-split) shares to two individuals: (1) the President of the
Company; and (2) shareholder of the Company. The Company recorded a $40,000
expense related to this re-pricing and subsequent issuance of common stock.
Warrants - From time to time, the Company issues warrants pursuant to various
consulting agreements. There were no warrants granted during fiscal years
ended 2007 and 2006.
The following represents a summary of warrants outstanding for the years
ended December 31, 2007 and 2006:
Years Ended December 31,
_________________________________________
2007 2006
---- ----
Weighted Average Weighted Average
Warrants Price Warrants Price
_______ ______ _______ _______
Outstanding, beginning of year 2,000 $50.00 2,000 $50.00
Granted -- -- -- --
Exercised -- -- -- --
Cancelled/Forfeited (2,000) 50.00 -- --
_______ ______ _______ ______
Outstanding, end of year -- $ -- 2,000 $50.00
======= ====== ======= ======
Exercisable, end of year -- $ -- 2,000 $50.00
======= ====== ======= ======
All of the warrants outstanding at December 31, 2006 have an exercise price of
$50.00 per share and a weighted average remaining contractual life of 0.5
years. All of the warrants are expired at December 31, 2007.
NOTE 8 - SUBSEQUENT EVENTS
In January 2008, the Company issued a total of 6,100,000 shares to its
directors in exchange for conversion of debt.
In February 2008, the Company issued 5,000,000 shares in exchange for
conversion of debt and 1,000,000 shares for services rendered.
F-20
FRONTIER ENERGY CORP.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
NOTE 9 - RESTATEMENT
As Originally Filed Adjustments Restated
___________________ ___________ ________
Cash 131 15,533 15,664
Prepaid Stock Compensation - 11,000 11,000
Prepaid Stock Compensation on Employment Agreement - 29,750 29,750
Mineral Leases 9,814 1,091 10.905
Accounts Payable and Accrued Expenses 332,458 92,425 424,883
Loans Payable 192,322 23,985 216,307
Additional Paid in Capital 6,631,034 (133,408) 6,497,626
Officer Compensation Expense 405,000 88,900 493,900
General & Administrative Expense 1,740,009 (232,931) 1,507,078
Exploration & Development Expense 59,500 60,500 120,000
Loss on Impairment of Mineral Claim - 40,000 40,000
EPS - Common Stock ($0.14) - ($0.14)
The balances above were corrected due to various accounting errors.
Cash
The Company did not record all of the transactions in December 2007. The
adjustments correct the balance.
Prepaid Stock Compensation
The Company did not properly record all of the equity transactions. The
Company signed several consulting agreements for periods ranging from 3 - 6
months. The adjustments correct the amortization of the consulting services
over the requisite service period.
Mineral Leases
The Company recorded amortization of the mineral claims over the 10 year life
of the lease. The adjustment was to reverse the amortization to correct the
balance of the mineral leases. The Company will test the assets for impairment
annually.
Accounts Payable and Accrued Expenses
The Company did not record all of the transactions in December 2007. The
adjustments correct the balance.
Loans Payable
The Company did not record all of the transactions in December 2007. The
adjustments correct the balance.
Additional Paid in Capital
The Company did not properly record all of the equity transactions. The
adjustments correct the valuation of the consulting services.
Officer Compensation Expense
The Company did not properly record all of the equity transactions. The
adjustments correct the valuation of the services.
NOTE 9 - RESTATEMENT (CONTINUED)
General & Administrative Expense
The Company did not properly record all of the equity transactions. The
adjustments correct the valuation of the services.
Exploration & Development Expense
The Company did not properly record all of the equity transactions. The
adjustments correct the terms of the agreement with a consultant.
F-21
ITEM 8.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
The auditor for the Company prior to March 7, 2006, was De Joya &
Company. The Company was notified that De Joya & Company decided to withdraw
from the Public Company Auditing Oversight Board and will no longer be
performing public company audits. On March 7, 2006, the Company engaged De Joya
Griffith & Company, LLC as its independent registered public accounting firm
to audit the Company's financial statements. The prior auditor De Joya &
Company audited the Company's financial statements for the fiscal year ended
December 31, 2004 and 2003. This firm's report on these financial statements
was modified as to uncertainty that the Company will continue as a going
concern; other than this, the accountant's report on the financial statements
for the period neither contained an adverse opinion or a disclaimer of opinion,
nor was qualified or modified as to uncertainty, audit scope, or accounting
principles.
ITEM 8A. CONTROLS AND PROCEDURES
The Company maintains "disclosure controls and procedures," as such term
is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the
"Exchange Act"), that are designed to ensure that information required to be
disclosed in its Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. We conducted an evaluation (the "Evaluation"), under the
supervision and with the participation of our Chief Executive Officer ("CEO")
and Chief Financial Officer ("CFO"), of the effectiveness of the design and
operation of our disclosure controls and procedures ("Disclosure Controls") as
of the end of the period covered by this report pursuant to Rule 13a-15 of the
Exchange Act. The evaluation of the Company's disclosure controls and
procedures included a review of the disclosure controls' and procedures'
objectives, design, implementation and the effect of the controls and
procedures on the information generated for use in this report. In the course
of its evaluation, management sought to identify data errors, control problems
or acts of fraud and to confirm the appropriate corrective actions, if any,
including process improvements, were being undertaken. The Company's Chief
Executive Officer and Chief Financial Officer concluded that, as of the end of
the period covered by this report, the Company's disclosure controls and
procedures were not effective and were not operating at the reasonable
assurance level.
It is the Company's responsibility and that of management to identify any
deficiencies in internal controls over financial reporting. The Company
discovered certain deficiencies in its internal control over financial reports,
which resulted in the restatement of its Balance Sheets and Statements of
Operations, Statements of Stockholders' Deficit and Statement of Cash Flows,
respectively, at December 31, 2007 to properly reflect certain transactions. As
more fully described in the Company's Annual Report on Form 10-K for fiscal
year ended December 31, 2007, the Company reported that it had identified a
significant deficiency in its internal control over financial reporting
relating to its recording and valuation of consulting and executive officer
services. The deficiency was caused by the lack of an understanding of the
valuation of such issuances of stock for consulting and executive services
rendered. As a result, the Company concluded that as of December 31, 2007, its
disclosure controls and procedures were not effective at a reasonable level of
assurance based on the evaluation of these controls and procedures required by
Exchange Act rules 13(a)-15(e) or 15(d)-15(e).
As a result of the identified significant deficiency and subsequently
identified errors related to the recording and presentation of derivative
liabilities, the Company has taken actions to enhance its internal control over
financial reporting in an effort to prevent a recurrence of the errors which
led to the restatement of its financial statements. The Company's Chief
Financial Officer and our independent public accountants have performed
research and an investigation to gain a more thorough understanding of the
nature of the errors. As a result of this research and investigation, the
Company has modified its reporting checklists to improve its recording.
As a result of the restatements of our financial statements, the Company
has determined that such significant deficiency constituted a material weakness
in its internal control over financial reporting. Because of management's
research and subsequent correction of its presentation and recording of the
valuation of issuance of stock for services, the Company's Chief Executive
Officer and Chief Financial Officer concluded that the Company has corrected
this significant deficiency.
22
Moreover, the Company has implemented measures as part of its internal
controls to determine and ensure that information required to be disclosed in
reports filed under the Exchange Act are recorded, processed, summarized and
reported within the time periods specified in the rules and forms including,
but not limited to, the following: (i) documentation of processes, performing
testing and reviewing its internal control over financial reporting in
connection with our assessment under Section 404 of the Sarbanes-Oxley Act;
(ii) evaluation and implementation of improvements to its accounting and
management information systems; and (iii) development and implementation of a
remediation plan to address any perceived deficiencies identified in its
internal control over financial reporting. The costs of these additional
measures did not have a material impact on its future results or operations
liquidity.
Other than the changes related to the proper recording of the valuation
of issued shares of stock for services, there were no other substantial changes
in the Company's internal control over financial reporting identified in
connection with the evaluation required by paragraph (d) of Rule 13a-15 under
the Exchange Act with respect to the fiscal year ended December 31, 2007 that
have materially affected, or are reasonably likely to materially affect, its
internal control over financial reporting.
Our management, including our CEO and CFO, do not expect that our
disclosure controls and internal controls will prevent all errors and all
fraud. A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control
system are met. The Company's disclosure controls and procedures are designed
to provide reasonable assurance of achieving its objectives and its certifying
officers have concluded that the Company's disclosure controls and procedures
are effective at a reasonable assurance level. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and
instances of fraud, if any, within our Company have been detected. These
inherent limitations include the realities that judgments in decision-making
can be faulty, and that breakdowns can occur because of a simple error or
mistake. Additionally, controls can be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management or board
override of the control. The design of any system of controls also is based in
part upon certain assumptions about the likelihood of future events, and there
can be no potential future conditions; over time, controls may become
inadequate because of changes in conditions, or the degree of compliance with
the policies or procedures may deteriorate. Because of the inherent limitations
in a cost-effective control system, misstatements due to error or fraud may
occur and not be detected.
ITEM 8A. OTHER INFORMATION
None.
23
PART III
ITEM 9.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The names of our executive officers and directors, their ages as of April
15, 2007, and the positions currently held by each are as follows:
NAME AGE POSITION
Robert Genesi 69 President, Chief Executive Officer,
Principal Financial Officer and Director
Sam Aiello 46 Director
The terms of each of the directors expires at the next annual meeting of
the stockholders, the date for which has not been set by the Board of
Directors. The officers serve at the pleasure of the Board of Directors.
All directors hold office until the next annual meeting of stockholders
and until their successors have been duly elected and qualified. Directors
will be elected at the annual meetings to serve for one-year terms. The
Company does not know of any agreements with respect to the election of
directors. The Company has not compensated its directors for service on the
Board of Directors of Frontier or any of its subsidiaries or any committee
thereof. Any non-employee director of Frontier or its subsidiaries is
reimbursed for expenses incurred for attendance at meetings of the Board of
Directors and any committee of the Board of Directors, although no such
committee has been established. Each executive officer of Frontier is
appointed by and serves at the discretion of the Board of Directors.
None of the officers or directors of Frontier is currently an officer or
director of a company required to file reports with the Securities and Exchange
Commission, other than Frontier.
The business experience of each of the persons listed above during the
past five years is as follows:
ROBERT GENESI, DIRECTOR, CHIEF EXECUTIVE OFFICER
Mr. Genesi has in excess of 25 years of operating experience in senior
and corporate level positions with a variety of major technology firms and
holds five patent designs. Mr. Genesi was a co-founder and served as the
President and CEO of GTDATA Corporation, which later became Frontier Energy,
from 1998 to 2008. Mr. Genesi served as the President and CEO of DAS Devices
from 1997-1998 and raised over $54,000,000 in financings for the company in
addition to selling the head manufacturing company to Applied Magnetics
Corporation. From 1993 to 1996, Mr. Genesi was the President and CEO of Rexon
Corporation. During his tenure at Rexon, Mr. Genesi was able to successfully
sell the company to Legacy - Canada. Mr. Genesi was President and COO of
Read-Rite Corporation from 1987 to 1993.From 1986 to 1987 Mr. Genesi did a
successful turnaround on Tecmar a computer peripheral Co. In 1984 to 1986 Mr
Genesi was a member of the start up team and President and COO of
Integrated Power Semiconductor Co in Scotland , where Mr Genesi helped the
CEO to raise $56,000,000.From 1979 to 1984 Mr Genesi did a sucessful turn
around on Silicon General as President and COO. Mr Genesi worked at Sprague
Electric Co from 1962 to 1979.as a semiconductor Engineer. Mr. Genesi has been
involved in many different areas during his career, including production,
finance, marketing, and human resources. Mr. Genesi is an engineer by training.
SAM AIELLO, DIRECTOR
Mr. Sam Aiello was elected as a director to fill a vacant seat on the
Company's Board of Directors in November 2007. Mr. Aiello has more than 20
years of experience as an entrepreneur in business development and is a 13-year
veteran in the real estate industry. Mr. Aiello brings a wealth of experience
and contacts with respect to funding and adding shareholder value. In
addition, Mr. Aiello has been instrumental in raising capital for many emerging
growth, private and public companies, including those in the Oil and Gas
sector.
24
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Based solely upon a review of Forms 3 and 4 (there have been no
amendments) furnished to the Company during the year ended December 31, 2006
(no Forms 5 having been furnished with respect to such year) and written
representations furnished to the Company as provided in paragraph (b)(2)(i) of
Item 405 of Form 10-KSB, there are no persons who need to be identified under
this Item as having failed to file on a timely basis reports required by
Section 16(a) of the Securities Exchange Act of 1934 during the most recent
fiscal year, except that Mr. Genesi failed to file a Form 4 and Mr. Huang
failed to file a Form 3.
CODE OF ETHICS
We adopted the Frontier Energy Corp. Code of Ethics for the CEO and
Senior Financial Officers (the "finance code of ethics"), a code of ethics that
applies to our Chief Executive Officer, Chief Operating Officer, Chief
Exploration Officer, Principal Financial Officer, controller and other finance
organization employees. A copy of the finance code of ethics may be obtained
from the Company, free of charge, upon written request delivered to the
Company's Investor Relations Department, c/o Frontier Energy Corp., 2413
Morocco Avenue, North Las Vegas, Nevada 89031 If we make any substantive
amendments to the finance code of ethics or grant any waiver, including any
implicit waiver, from a provision of the code to any of our executives or
employees, we will disclose the nature of such amendment or waiver in a report
on Form 8-K.
ITEM 10. EXECUTIVE COMPENSATION
The following table shows the cash compensation paid by us, as well as
certain other compensation paid or accrued, during the period ended December
31, 2006 to our Chief Executive Officer.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------
OTHER ANNUAL
NAME AND POSITION YEAR SALARY ($) COMPENSATION ($)
- ----------------- ---- ----------- ----------------
Robert Genesi, CEO 2007 $60,000 (1) $ 82,940 (2)
2006 $60,000 $ --
2005 $105,000 $ --
2004 $105,000 $ 12,000
______________
(1)Accrued and remains unpaid. Includes housing and car allowance.
(2)Other compensation includes the valuation of the issuance of 1,100,000
shares of common stock at $0.0754 per share for aggregate remuneration of
$82,940. The 8,900,000 shares of common stock issued to Mr. Genesi were
subsequently cancelled and returned to treasury.
25
EMPLOYMENT CONTRACTS
On July 17, 2006, the Company entered into an amended and revised
employment agreement with Robert Genesi whereby Mr. Genesi will serve as the
CEO of the Company. The term ("Term") of employment is from July 1, 2006 to
June 30, 2011, which may be extended upon the mutual agreement of the parties.
Mr. Genesi will be paid an annual salary of $60,000. He will also receive
700,000 common shares of the Company which will vest monthly over 24 months.
The shares are also subject to a lock agreement pursuant to which none of the
shares may be sold prior to February 17, 2008.
DIRECTORS' COMPENSATION
Currently there is no compensation package for our board. While we
expect to create a compensation package for our board members during the next
12 months, we do not currently have any preliminary agreements or
understandings with respect to such compensation packages.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table presents information known to us, as of March 15,
2008, relating to the beneficial ownership of common stock by:
* each person who is known by us to be the beneficial holder of more
than 5% of our outstanding common stock;
* each of our named executive officers and directors; and
* our directors and executive officers as a group.
We believe that all persons named in the table have sole voting and
investment power with respect to all shares beneficially owned by them, except
as noted.
Percentage ownership in the following table is based on 41,256,464
shares of common stock outstanding as of December 31, 2007. A person is deemed
to be the beneficial owner of securities that can be acquired by that person
within 60 days from the date of this Annual Report upon the exercise of
options, warrants or convertible securities. Each beneficial owner's percentage
ownership is determined by dividing the number of shares beneficially owned by
that person by the base number of outstanding shares, increased to reflect the
shares underlying options, warrants or other convertible securities included in
that person's holdings, but not those underlying shares held by any other
person.
NUMBER OF
SHARES OF COMMON PERCENTAGE OF SHARES
NAME OF BENEFICIAL OWNER STOCK BENEFICIALLY OWNED BENEFICIALLY OWNED
- ------------------------- ------------------------ ---------------------
Robert Genesi (1) 700,000 1.70%
All directors and officers 700,000 1.70%
(1 person)
___________
(1) The address of our officer listed in the table is in care of Frontier
Energy Corp., 2413 Morocco Avenue, North Las Vegas, Nevada 89031
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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our President and another former officer of the Company accepted 383,000
shares in lieu of outstanding debt totaling $456,961 during 2004.
ITEM 13. EXHIBITS, LISTS AND REPORTS ON FORM 8-K
EXHIBITS AND FINANCIAL STATEMENTS.
(A) Financial Statements and Schedules
See "Index to Financial Statements"
(B) Exhibits
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10.1 Consultant Agreement between Frontier Energy Corp. and Crescent
Fund LLC dated January 9, 2007.**
10.2 Corporate Consulting Agreement between Frontier Energy Corp. and
Sam Aiello dated February 5, 2007.**
10.3 Corporate Consulting Agreement between Frontier Energy Corp. and
Jeffrey D. Cox dated February 5, 2007.**
10.4 Corporate Consulting Agreement between Frontier Energy Corp. and
Malcolm Albert dated March 15, 2007.**
10.5 Corporate Consulting Agreement between Frontier Energy Corp. and
Larry Taylor dated March 15, 2007.**
10.6 Consulting Agreement between Frontier Energy Corp. and William
Tyler Dillerson dated April 2, 2007.**
10.7 Employment Agreement dated July 15, 2006 between the Company and
Robert Genesi.*
10.8 Corporate Consulting Agreement between Frontier Energy Corp. and
Bart Lawrence dated May 24, 2007.**
10.9 Corporate Consulting Agreement between Frontier Energy Corp. and
Bart Lawrence dated August 11, 2007.**
10.10 Corporate Consulting Agreement between Frontier Energy Corp. and
Scott Burnim dated July 30, 2007.**
10.11 Consulting Agreement between Frontier Energy Corp. and Kristen
Anez dated November 3, 2007.**
10.12 Corporate Consulting Agreement between Frontier Energy Corp. and
Jamie Gomez dated September 5, 2007.**
10.13 Corporate Consulting Agreement between Frontier Energy Corp. and
Reba Duggan dated September 5, 2007.**
10.14 Corporate Consulting Agreement between Frontier Energy Corp. and
Scott Belazi dated September 5, 2007.**
10.15 Consulting Agreement between Frontier Energy Corp. and Mark
Brummell dated September 24, 2007.**
10.16 Consulting Agreement between Frontier Energy Corp. and Phillip
Russell dated September 24, 2007.**
10.17 Consulting Agreement between Frontier Energy Corp. and Allison
Nigro dated October 15, 2007.**
10.18 Consulting Agreement between Frontier Energy Corp. and Alison
Burnim dated October 30, 2007.**
10.19 Consulting Agreement between Frontier Energy Corp. and John
Williams dated November 28, 2007.**
10.20 Consulting Agreement between Frontier Energy Corp. and Gil Whyte
dated November 28, 2007.**
10.21 Consulting Agreement between Frontier Energy Corp. and Rick
Shykora dated November 28, 2007. **
10.22 Consulting Agreement between Frontier Energy Corp. and Daniel R.
Davison dated December 5, 2007.**
10.23 Consulting Agreement between Frontier Energy Corp. and Peter
Kolacz dated December 5, 2007.**
10.24 Consulting Agreement between Frontier Energy Corp. and Kenneth P.
Bottoms dated December 20, 2007.**
10.25 Corporate Consulting Agreement between Frontier Energy Corp. and
Curtiss Parker dated May 1, 2007.**
31.1 Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.**
32.1 Certification of Chief Executive Officer and Chief Financial
Officers pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.**
__________
* Filed with the registrant's Form 10-KSB for the year ended December 31, 2006.
** Filed Herewith
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Company's Board of Directors reviews and approves audit and
permissible non-audit services performed by its independent accountants, as
well as the fees charged for such services. In its review of non-audit service
fees and its appointment of De Joya, Griffith & Company, LLC as the Company's
independent accountants, the Board of Directors considered whether the
provision of such services is compatible with maintaining independence. All of
the services provided and fees charged by De Joya, Griffith and Company, LLC
were approved by the Board of Directors. The following table presents fees for
audit services rendered by De Joya and Company and De Joya Griffith & Company,
LLC for the audits of the our annual financial statements for the years ended
December 31, 2007 and December 31, 20075, respectively and fees billed for
other services rendered during those periods.
FISCAL 2007 FISCAL 2006
Audit-Related Fees(2) 15,000 15,000
Tax Fees(3) - -
Subtotal 15,000 15,000
All other Fees(4) -0- -0-
Total - -
(1) Audit Fees - Audit fees billed to the Company for auditing the Company's
annual financial statements and reviewing the financial statements included in
the Company's Quarterly Reports on Form 10-QSB.
(2) Audit-Related Fees - There were no other fees billed by during the last
two fiscal years for assurance and related services that were reasonably
related to the performance of the audit or review of the Company's financial
statements and not reported under "Audit Fees" above.
(3) Tax Fees - There were no tax fees billed during the last two fiscal years
for professional services.
(4) All Other Fees - There were no other fees billed by during the last two
fiscal years for products and services provided.
Pre-approval of Audit and Non-Audit Services of Independent Auditor
The Board of Director's policy is to pre-approve all audit and non-audit
services provided by the independent auditors. These services may include
audit services, audit-related services, tax services and other services. Pre-
approval is generally provided for up to 12 months from the date of pre-
approval and any pre-approval is detailed as to the particular service or
category of services. The Board of Directors may delegate pre-approval
authority to one or more of its members when expedition of services is
necessary. The Board of Directors has determined that the provision of non-
audit services by De Joya Griffith & Company, LLC is compatible with
maintaining its independence.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
FRONTIER ENERGY CORP.
Dated: July 29, 2010
By: /S/ Rick Shykora
Name: Rick Shykora
Title: President, CEO, Principal Financial
Officer and Director
28