Attached files
| file | filename |
|---|---|
| 8-K - Petron Energy II, Inc. | petron8k010312.htm |
| EX-10.11 - Petron Energy II, Inc. | ex10-11.htm |
| EX-99.1 - Petron Energy II, Inc. | ex99-1.htm |
| EX-99.3 - Petron Energy II, Inc. | ex99-3.htm |
Exhibit 99.2
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UNAUDITED FINANCIAL STATEMENTS
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Consolidated Balance Sheets as of September 30, 2011 (Unaudited) and 2010 (Audited)
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F- 19
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Consolidated Statements of Operations for the nine month period ended September 30, 2011 and 2010
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F-20
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Consolidated Statements of Cash Flows for the nine month period ended September 30, 2011 and 2010
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F-21
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Notes to Consolidated Financial Statements
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F-22
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PETRON ENERGY SPECIAL CORP.
(Formerly Petron Energy II, Inc.)
CONSOLIDATED BALANCE SHEETS
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September 30,
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December 31,
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2011
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2010
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(Unaudited)
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(Audited)
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ASSETS
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Current Assets
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Cash and Cash Equivalents
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$ | 152,613 | $ | 88,742 | ||||
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Accounts Receivable-oil & gas sales
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14,520 | 14,664 | ||||||
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Prepaid Expenses
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4,151 | - | ||||||
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Total Current Assets
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171,284 | 103,406 | ||||||
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Investments in Pipeline, net of accumulated depreciation of $162,847
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825,153 | 874,578 | ||||||
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and $113,422, respectively
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Producing Oil & Gas Properties, net of accumulated depletion
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of $605,495 and $591,695, respectively
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808,998 | 860,628 | ||||||
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Other Depreciable Equipment, net of accumulated depreciation
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of $24,993 and $17,618, respectively
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46,860 | 50,214 | ||||||
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Investment in common stock
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296,650 | - | ||||||
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Other Assets
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31,575 | 5,000 | ||||||
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TOTAL ASSETS
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$ | 2,180,520 | $ | 1,893,826 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current Liabilities
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Accounts Payable--Trade
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$ | 256,989 | $ | 20,923 | ||||
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Accounts Payable--Related Party
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2,967 | 2,967 | ||||||
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Accrued Liabilities
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38,822 | 38,822 | ||||||
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Related Party Payables
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138,747 | - | ||||||
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Total Current Liabilities
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437,525 | 62,712 | ||||||
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Stockholders's Equity
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Preferred Stock, $0.01 par value, 10,000,000 shares authorized,
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none issued and outstanding
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- | - | ||||||
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Series A Preferred Stock, $0.01 par value, 20,000,000 shares authorized,
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13,633,261 and 11,793,794 issued and outstanding, respectively
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136,333 | 117,940 | ||||||
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Common Stock, $0.01 par value, 500,000,000 shares authorized,
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51,252,956 and 48,501,823 issued and outstanding, respectively
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512,529 | 485,018 | ||||||
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Additional Paid-In Capital
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11,396,023 | 9,594,700 | ||||||
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Accumulated Deficit
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(10,301,890 | ) | (8,366,544 | ) | ||||
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Total Stockholders' Equity
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1,742,995 | 1,831,114 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 2,180,520 | $ | 1,893,826 | ||||
The accompanying notes are an integral part to these consolidated financial statements.
F-19
PETRON ENERGY SPECIAL CORP.
(Formerly Petron Energy II, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Nine Months Ended September 30,
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2011
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2010
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Revenues
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Oil & Gas Sales
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$ | 85,862 | $ | 163,901 | ||||
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Pipeline Revenue
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3,642 | 29,573 | ||||||
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Total Revenue
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89,504 | 193,474 | ||||||
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Costs and Expenses
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Cost of Revenue
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203,391 | 180,145 | ||||||
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Depletion, Depreciation and Amortization
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70,600 | 65,542 | ||||||
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General and Adminstrative
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1,749,984 | 631,042 | ||||||
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Interest Expense
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- | 496,733 | ||||||
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Total Expenses
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2,023,975 | 1,373,462 | ||||||
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Loss from Operations Before Income Taxes
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(1,934,471 | ) | (1,179,988 | ) | ||||
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Income Tax Benefit
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- | - | ||||||
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Net Loss
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(1,934,471 | ) | (1,179,988 | ) | ||||
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Preferred Stock Dividends
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(875 | ) | (12,269 | ) | ||||
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Net Loss Available to Common Stockholders
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$ | (1,935,346 | ) | $ | (1,192,257 | ) | ||
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Loss per share--basic and diluted
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$ | (0.039 | ) | $ | (0.028 | ) | ||
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Weighted average number of shares-basic and diluted
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49,055,747 | 41,891,520 | ||||||
The accompanying notes are an integral part to these consolidated financial statements.
F-20
PETRON ENERGY SPECIAL CORP.
(Formerly Petron Energy II, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Nine Months Ended September 30,
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2011
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2010
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OPERATING ACTIVITIES
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Net Loss
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$ | (1,934,471 | ) | $ | (1,179,988 | ) | ||
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Adjustments to reconcile net loss to
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cash used by operating activitites:
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Depletion and depreciation
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70,600 | 65,542 | ||||||
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Preferred stock issued for services
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18,393 | 12,146 | ||||||
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Common stock issued for services
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693,284 | 193,776 | ||||||
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Change in other asset and liabilities:
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Oil & gas receivables
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144 | 18,803 | ||||||
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Prepaids and other assets
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(30,726 | ) | - | |||||
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Accounts payable
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236,066 | (20,929 | ) | |||||
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Accrued liabilities
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- | 408,478 | ||||||
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Cash used in operating activities
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(946,710 | ) | (502,172 | ) | ||||
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INVESTING ACTIVITIES
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Investment in oil & gas properties
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(278,820 | ) | (134,740 | ) | ||||
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Proceeds from sale of oil & gas property
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20,000 | - | ||||||
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Purchase of other equipment
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(4,022 | ) | (12,025 | ) | ||||
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Cash used in investing activities
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(262,842 | ) | (146,765 | ) | ||||
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FINANCING ACTIVITIES
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Proceeds from sales of preferred stock
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378,800 | 526,050 | ||||||
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Proceeds from sales of common stock
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756,751 | 87,500 | ||||||
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Related party payable
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138,747 | - | ||||||
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Dividends paid
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(875 | ) | (12,269 | ) | ||||
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Cash from financing activities
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1,273,423 | 601,281 | ||||||
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(Decrease) Increase in cash
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63,871 | (47,656 | ) | |||||
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Cash at beginning of period
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88,742 | 55,231 | ||||||
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Cash at end of period
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$ | 152,613 | $ | 7,575 | ||||
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Supplemental Disclosure of Cash Flow Information
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Cash paid during the period for:
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Interest
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$ | - | $ | 80,125 | ||||
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Income Taxes
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$ | - | $ | - | ||||
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Non Cash Investing and Financing Activities
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Related party payable
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$ | - | $ | - | ||||
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Note payable
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- | 1,964,721 | ||||||
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Accrued liabilities
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- | 777,712 | ||||||
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Common stock
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- | (63,732 | ) | |||||
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Additional paid-capital
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- | (2,678,701 | ) | |||||
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Producing oil & gas properties
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296,650 | - | ||||||
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Investment in common stock
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(296,650 | ) | - | |||||
| $ | - | $ | - | |||||
The accompanying notes are an integral part to these consolidated financial statements.
F-21
PETRON ENERGY SPECIAL CORP.
(Formerly Petron Energy II, Inc.)
Notes to Interim Consolidated Financial Statements
(Unaudited)
September 30, 2011
NOTE 1—BASIS OF PRESENTATION
The interim consolidated financial statements as of September 30, 2011and 2010 have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, these consolidated financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. These interim unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2010. In the opinion of management, the interim unaudited consolidated financial statements furnished herein include all adjustments,
all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim periods presented.
The consolidated statements of operations and cash flows reflect the results of operations and the changes in cash flows of the Company for the nine month periods ended September 30, 2011and 2010. Operating results for the nine month period ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.
NOTE 2—GOING CONCERN
The accompanying interim consolidated financial statements have been prepared on a going concern basis of accounting which contemplates continuity of operations, realization of assets, liabilities and commitments in the normal course of business. As of September 30, 2011 the Company has a working capital deficit, accumulated deficit and an operating loss for the nine month period. Further losses are anticipated which raise substantial doubt as to the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company
plans to acquire sufficient capital from investors with which to pursue its business plan. There can be no assurance that the future operations will be significant and profitable, or that the Company will have sufficient resources to meet its objectives. There is no assurance that the Company will be successful in raising additional funds.
NOTE 3—STOCKHOLDERS’ EQUITY
During the nine month period ended September 30, 2011 the Company raised $756,751 through the sale of 2,646,000 shares of common stock. An additional $378,800 was raised by the sale of 656,938 shares of preferred stock.
On August 12, 2011, the Company entered into an Asset Purchase Agreement (the “Agreement”) with Petron Energy II, Inc., which is controlled by Floyd Smith, who is its majority shareholder, President and sole director. Mr. Smith is also the majority shareholder and CEO of the Company, therefore, any assets purchased or sold between the two companies will be accounted for using the historical basis of accounting for such assets. The agreement was amended on August 15 and 30, 2011, with the following terms:
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The Company will receive 20,000,000 shares of Petron Energy II, Inc.’s restricted common shares in exchange for all of the oil and gas properties, pipeline and other equipment owned by the Company. The closing date of the transaction to be October 15, 2011.
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F-22
PETRON ENERGY SPECIAL CORP.
(Formerly Petron Energy II, Inc.)
Notes to Interim Consolidated Financial Statements
(Unaudited)
September 30, 2011
NOTE 3—STOCKHOLDERS’ EQUITY-continued
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August 31, 2011 3,000,000 shares of Petron Energy II, Inc.’s common shares were issued to the Company for certain oil and gas equipment owned by the Company.
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The remainder of the shares (17,000,000) will be issued to the Company at the time of closing.
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The total historical value of the assets included in the Agreement aggregated $1,977,661, at September 30, 2011, which resulted in an average per share value of $0.0989. The average value was used to value the 3,000,000 common shares ($296,650) issued to the Company on August 31, 2011.
F-23