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EX-31 - RedHawk Holdings Corp.ex31-1.txt
EX-32 - RedHawk Holdings Corp.ex32-1.txt

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-Q/A
                                 Amendment No. 2


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    For the quarterly period ended July 31, 2013

                                       or

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    For the transition period from _____________ to _____________

                        Commission File Number 000-54323

                            Independence Energy Corp.
             (Exact name of registrant as specified in its charter)

           Nevada                                           20-3866475
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

3020 Old Ranch Parkway, Suite 300, Seal Beach, CA              90740
    (Address of principal executive offices)                 (Zip Code)

                                 (562) 799-5588
              (Registrant's telephone number, including area code)

                                       N/A
              (Former name, former address and former fiscal year,
                         if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] YES [ ] NO

Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). [X] YES [ ] NO

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act

Large accelerated filer [ ]                        Accelerated filer [ ]
Non-accelerated filer [ ]                          Smaller reporting company [X]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act [ ] YES [X] NO

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [ ] YES [ ] NO

                      APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

121,804,155 common shares issued and outstanding as of September 12, 2013.

EXPLANATORY NOTE Our company is filing this Amendment No. 2 on Form 10-Q/A (the "Amendment") to our Quarterly Report on Form 10-Q for the period ended July 31, 2013 (the "Form 10-K"), filed with the Securities and Exchange Commission on September 16, 2013 (the "Original Filing Date"), and amended on February 10, 2014 to include the related certifications required pursuant to the rules promulgated under the Exchange Act, as adopted pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002. This Amendment speaks as of the Original Filing Date, does not reflect events that may have occurred subsequent to the Original Filing Date, and does not modify or update in any way any other disclosures made in the Form 10-Q. Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the certifications required pursuant to the rules promulgated under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, which were included as exhibits to the Original Report, have been amended, restated and re-executed as of the date of this Amendment No. 2 and are included as Exhibits 31.1 and 32.1 hereto. INDEPENDENCE ENERGY CORP. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item 1. Financial Statements 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 Item 4. Controls and Procedures 14 PART II - OTHER INFORMATION Item 1. Legal Proceedings 15 Item 1A. Risk Factors 15 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15 Item 3. Defaults Upon Senior Securities 15 Item 4. Mine Safety Disclosures 15 Item 5. Other Information 15 Item 6. Exhibits 16 SIGNATURES 18 2
PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. 3
Independence Energy Corp. (An Exploration Stage Company) July 31, 2013 Index ----- Condensed Balance Sheets (unaudited)..................................... 5 Condensed Statements of Operations (unaudited)........................... 6 Condensed Statements of Cash Flows (unaudited)........................... 7 Notes to the Condensed Financial Statements (unaudited).................. 8 4
Independence Energy Corp. (An Exploration Stage Company) Condensed Balance Sheets (expressed in U.S. dollars) July 31, January 31, 2013 2013 ---------- ---------- $ $ ASSETS Current Assets Cash 45,713 36,235 Prepaid expenses and deposits 10,473 12,600 ---------- ---------- Total Current Assets 56,186 48,835 Oil & gas properties 558,242 538,425 ---------- ---------- Total Assets 614,428 587,260 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and accrued liabilities 80,772 60,133 Convertible debenture 57,000 -- Loans payable 156,697 156,697 ---------- ---------- Total Current Liabilities 294,469 216,830 Convertible debenture, net of unamortized discount of $4,104 41,896 -- ---------- ---------- Total Liabilities 336,365 216,830 ---------- ---------- Stockholders' Equity Preferred Stock Authorized: 10,000,000 preferred shares, with a par value of $0.001 per share Issued and outstanding: nil preferred shares -- -- Common Stock Authorized: 375,000,000 common shares, with a par value of $0.001 per share Issued and outstanding: 121,804,155 common shares 121,804 121,804 Additional paid-in capital 522,796 518,196 Deficit accumulated during the exploration stage (366,537) (269,570) ---------- ---------- Total Stockholders' Equity 278,063 370,430 ---------- ---------- Total Liabilities and Stockholders' Equity 614,428 587,260 ========== ========== (The accompanying notes are an integral part of these financial statements) 5
Independence Energy Corp. (An Exploration Stage Company) Condensed Statements of Operations (expressed in U.S. dollars) Accumulated from November 30, 2005 Three Months Three Months Six Months Six Months (date of Ended Ended Ended Ended inception) to July 31, July 31, July 31, July 31, July 31, 2013 2012 2013 2012 2013 ------------ ------------ ------------ ------------ ------------ $ $ $ $ $ Revenue -- -- -- -- -- Operating Expenses General and administrative 25,681 35,285 62,853 50,193 221,945 Professional fees 13,741 20,723 32,526 38,223 143,004 ------------ ------------ ------------ ------------ ------------ Total Operating Expenses 39,422 56,008 95,379 88,416 364,949 ------------ ------------ ------------ ------------ ------------ Net Loss for the Period (39,422) (56,008) (95,379) (88,416) (364,949) Other Expense Accretion and interest expense (1,283) -- (1,588) -- (1,588) ------------ ------------ ------------ ------------ ------------ Net Loss (40,705) (56,008) (96,967) (88,416) (366,537) ============ ============ ============ ============ ============ Net Loss Per Share, Basic and Diluted -- -- -- -- ============ ============ ============ ============ Weighted Average Shares Outstanding 121,804,155 121,365,534 121,804,155 121,104,356 ============ ============ ============ ============ (The accompanying notes are an integral part of these financial statements) 6
Independence Energy Corp. (An Exploration Stage Company) Condensed Statements of Cash Flows (expressed in U.S. dollars) Accumulated from November 30, 2005 Six Months Six Months (date of Ended Ended inception) to July 31, July 31, July 31, 2013 2012 2013 ---------- ---------- ---------- Operating Activities Net loss (96,967) (88,416) (366,537) Adjustments to reconcile net loss to net cash used in operating activities: Amortization of discount on convertible debenture 496 -- 496 Changes in operating assets and liabilities: Amounts receivable -- 1,607 -- Prepaid expense and deposits 2,127 9,100 (10,473) Accounts payable and accrued liabilities 822 7,315 60,955 Due to a related party -- (675) -- ---------- ---------- ---------- Net Cash Used in Operating Activities (93,522) (71,069) (315,559) ---------- ---------- ---------- Investing Activities Oil and gas property expenditures -- (438,077) (538,425) ---------- ---------- ---------- Net Cash Used in Investing Activities -- (438,077) (538,425) ---------- ---------- ---------- Financing activities Proceeds from issuance of common stock -- 580,000 640,000 Proceeds from issuance of convertible debenture 103,000 -- 103,000 Proceeds from loans payable -- -- 156,697 Proceeds from loans payable to director -- -- 33,000 Repayment of loans payable to director -- -- (33,000) ---------- ---------- ---------- Net Cash Provided by Financing Activities 103,000 580,000 899,697 ---------- ---------- ---------- Increase in Cash 9,478 70,854 45,713 Cash, Beginning of Period 36,235 14,790 -- ---------- ---------- ---------- Cash, End of Period 45,713 85,644 45,713 ========== ========== ========== Non-cash investing and financing activities: Beneficial conversion feature of convertible debenture 4,600 -- 4,600 ========== ========== ========== Supplemental Disclosures Interest paid -- -- -- Income tax paid -- -- -- ========== ========== ========== (The accompanying notes are an integral part of these financial statements) 7
Independence Energy Corp. (An Exploration Stage Company) Notes to the Condensed Financial Statements (expressed in U.S. dollars) 1. NATURE OF OPERATIONS AND CONTINUANCE OF BUSINESS Independence Energy Corp. (the "Company") was incorporated in the State of Nevada on November 30, 2005. The Company was organized to explore natural resource properties in the United States. The Company is an exploration stage company, as defined by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 915, DEVELOPMENT STAGE ENTITIES. GOING CONCERN These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has generated no revenues to date and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. As of July 31, 2013, the Company had a working capital deficit of $238,283 and an accumulated deficit of $366,537. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's future business. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) Basis of Presentation These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company's fiscal year-end is January 31. b) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to valuation and impairment of oil and gas properties, asset retirement obligations, fair value of share-based payments, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. c) Interim Financial Statements These interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. d) Basic and Diluted Net Loss Per Share The Company computes net loss per share in accordance with ASC 260, EARNINGS PER SHARE, which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of July 31, 2013 and January 31, 2013, the Company had 4,600,000 (2012 - nil) potentially dilutive shares. 8
Independence Energy Corp. (An Exploration Stage Company) Notes to the Condensed Financial Statements (expressed in U.S. dollars) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) e) Oil and Gas Property Costs The Company utilizes the full-cost method of accounting for petroleum and natural gas properties. Under this method, the Company capitalizes all costs associated with acquisition, exploration, and development of oil and natural gas reserves, including leasehold acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties and costs of drilling of productive and non-productive wells into the full cost pool on a country-by-country basis. When the Company obtains proven oil and gas reserves, capitalized costs, including estimated future costs to develop the reserves proved and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. The costs of unproved properties are not amortized until it is determined whether or not proved reserves can be assigned to the properties. Until such determination is made, the Company assesses annually whether impairment has occurred, and includes in the amortization base drilling exploratory dry holes associated with unproved properties. The Company applies a ceiling test to the capitalized cost in the full cost pool. The ceiling test limits such cost to the estimated present value, using a ten percent discount rate, of the future net revenue from proved reserves based on current economic and operating conditions. Specifically, the Company computes the ceiling test so that capitalized cost, less accumulated depletion and related deferred income tax, do not exceed an amount (the ceiling) equal to the sum of: The present value of estimated future net revenue computed by applying current prices of oil and gas reserves (with consideration of price changes only to the extent provided by contractual arrangements) to estimated future production of proved oil and gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on current cost) to be incurred in developing and producing the proved reserves computed using a discount factor of ten percent and assuming continuation of existing economic conditions; plus the cost of property not being amortized; plus the lower of cost or estimated fair value of unproven properties included in the costs being amortized; less income tax effects related to differences between the book and tax basis of the property. For unproven properties, the Company excludes from capitalized costs subject to depletion, all costs directly associated with the acquisition and evaluation of the unproved property until it is determined whether or not proved reserves can be assigned to the property. Until such a determination is made, the Company assesses the property at least annually to ascertain whether impairment has occurred. In assessing impairment the Company considers factors such as historical experience and other data such as primary lease terms of the property, average holding periods of unproved property, and geographic and geologic data. The Company adds the amount of impairment assessed to the cost to be amortized subject to the ceiling test. f) Financial Instruments Pursuant to ASC 820, FAIR VALUE MEASUREMENTS AND DISCLOSURES, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: LEVEL 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. LEVEL 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. 9
Independence Energy Corp. (An Exploration Stage Company) Notes to the Condensed Financial Statements (expressed in U.S. dollars) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) f) Financial Instruments (continued) LEVEL 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Company's financial instruments consist principally of cash, accounts payable and accrued liabilities, and amounts due to related parties. Pursuant to ASC 820 and 825, the fair value of our cash is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. g) Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its consolidated financial statements. 3. OIL AND GAS PROPERTIES a) On December 15, 2011, the Company acquired a 2.5% interest in four wells in the Quinlan Lease ("Quinlan") from Wise Oil and Gas LLC ("Wise"), with the option to increase the interest to 10%. On December 23, 2011, the Company acquired an additional 2.5% interest in Quinlan. Quinlan is located in Pottawatomie County, Oklahoma. On March 1, 2012, the Company acquired an additional 5% interest in Quinlan in exchange for $78,080, bringing the Company's total interest to 10%. b) On March 29, 2012, the Company acquired a 5% interest in a 70% net revenue interest of properties in Coleman County, Texas for $115,000. On June 28, 2012, the Company amended the original agreement to acquire a 7% interest in a 75% net revenue interest in the properties for an additional payment of $47,000, and replaced the terms of the original agreement. Refer to Note 3(e). c) On May 29, 2012, the Company acquired a 2.5% interest in a 70% net revenue interest in two oil and gas wells and approximately 20 acres of land surrounding the area in Coleman County, Texas for $82,500. Refer to Note 3(e). d) On June 8, 2012, the Company acquired a 12.5% interest, with an option to acquire an additional 12.5% interest, for $90,785. The properties comprise an area of 2,421 acres in Coleman County, Texas. Refer to Note 3(e). e) On February 28, 2013, the Company entered into a Compromise, Settlement and Property Exchange Agreement with MontCrest Energy, Inc. and Black Strata, LLC. Pursuant to the terms of the agreement, the Company transferred its working interests in Coleman County with a book value of $335,285, in consideration of a 100% interest in approximately 1,400 acres of the Coleman County South Lease held by Black Strata, LLC. 4. CONVERTIBLE DEBENTURES a) On April 5, 2013, the Company entered into a convertible promissory note agreement for $46,000. Pursuant to the agreement, the loan is unsecured, bears interest at 6% per annum, and is due on April 5, 2016. The note is convertible into common shares of the Company at any time at a conversion price of $0.01 at the option of the note holder. As at July 31, 2013, accrued interest of $892 (2012 - $nil) has been recorded in accounts payable and accrued liabilities. In accordance with ASC 470-20, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $4,600 as additional paid-in capital and an equivalent discount which will be charged to operations over the term of the convertible note up to its face value of $46,000. For the six months ended July 31, 2013, $496 (2012 - $nil) had been accreted, increasing the carrying value to $41,896 (January 31, 2013 - $nil). 10
Independence Energy Corp. (An Exploration Stage Company) Notes to the Condensed Financial Statements (expressed in U.S. dollars) 4. CONVERTIBLE DEBENTURES (continued) b) On July 15, 2013, the Company issued a $57,000 convertible note which is unsecured, bears interest at 8% per annum and due on April 17, 2014. The note is convertible into shares of common stock 180 days after the date of issuance (January 11, 2014) at a conversion rate of 58% of the average of the three lowest closing bid prices of the Company's common stock for the ten trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. Upon an event of default, the entire principal balance and accrued interest outstanding is due immediately, and interest shall accrue on the unpaid principal balance at 22% per annum. As at July 31, 2013, accrued interest of $200 (2012 - $nil) has been recorded in accounts payable and accrued liabilities. 5. LOAN PAYABLE As of July 31, 2013, the Company had loan payable of $156,697 (January 31, 2013 - $156,697) owing to an unrelated third party. The amount owing is non-interest bearing, unsecured and due on demand. 6. RELATED PARTY TRANSACTIONS During the period ended July 31, 2013, the Company incurred $34,500 (2012 - $15,000) to the President and CEO of the Company for management services. As of July 31, 2013, the Company had $6,000 (January 31, 2013 - $10,500) in prepaid expense for management fees paid to the President and CEO of the Company. 7. SUBSEQUENT EVENTS On September 1, 2013, the Company entered into a consulting agreement with the CEO of the Company and agreed to pay $7,500 per month for a period of two years. 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. Our financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles. WORKING CAPITAL July 31, January 31, 2013 2013 ---------- ---------- $ $ Current Assets 56,186 48,835 Current Liabilities 294,469 216,830 Working Capital (Deficit) (238,283) (167,995) CASH FLOWS Six months Six months ended ended July 31, July 31, 2013 2012 ---------- ---------- $ $ Cash Flows from (used in) Operating Activities $ (93,522) $ (71,069) Cash Flows from (used in) Investing Activities -- (438,077) Cash Flows from (used in) Financing Activities 103,000 580,000 Net Increase (decrease) in Cash During Period 9,478 70,854 OPERATING REVENUES For the period from November 30, 2005 (date of inception) to July 31, 2013, our company did not earn any operating revenues. OPERATING EXPENSES AND NET LOSS Operating expenses for the six months ended July 31, 2013 were $95,379 compared with $88,416 for the six months ended July 31, 2012. The increase of $6,963 was due to an increase of $12,660 in general and administrative costs relating to $12,000 bonus to management, and an overall increase in day-to-day expenditures, offset by a decrease of $5,697 in professional fees. Operating expenses for the three months ended July 31, 2013 were $39,422 compared with $56,008 for the three months ended July 31, 2012. The decrease of $16,586 during 2013 resulted from an incidental decrease in operating activity during the three months ended July 31, 2013, marked by a corresponding reduction in professional fees and general and administrative expense. 12
For the three months ended July 31, 2013, our company incurred a net loss of $40,705 or $nil per share compared with $56,008 or $nil per share for the three months ended July 31, 2012. For the six months ended July 31, 2013, our company incurred a net loss of $96,967 or $nil per share compared with $88,416 or $nil per share for the six months ended July 31, 2012. In addition to operating expenses, our company incurred accretion and interest expense of $1,588 during the three and six months ended July 31, 2013 relating to the $46,000 convertible note debenture which is unsecured, bears interest at 6% per annum, and due on April 5, 2016 and the $57,000 convertible note debenture, which is unsecured, bears interest at 8% per annum, and due on April 17, 2014. The $46,000 note is convertible into common shares of our company at a rate of $0.01 per share, at the option of the note holder at any time. The $57,000 note is convertible into shares of common stock 180 days after the date of issuance (January 11, 2014) at a conversion rate of 58% of the average of the three lowest closing bid prices of our company's common stock for the ten trading days ending one trading day prior to the date the conversion notice is sent by the holder to our company. LIQUIDITY AND CAPITAL RESOURCES As at July 31, 2013, our company had cash of $45,713 compared with $36,235 at January 31, 2013. The increase in cash was attributed to the fact that our company obtained additional financing of $103,000 from the issuance of convertible debentures, net costs paid for the general expenditures incurred by our company for our operations. Our company had total assets at July 31, 2013 of $614,428 compared with $587,260 at January 31, 2012. Overall, cash increased by $9,478 and oil and gas properties increased by $19,817, offset by a decrease in prepaid expenses and deposits of $2,127. At July 31, 2013, our company had total liabilities of 336,365 compared with $216,830 at January 31, 2013. The increase in total liabilities was attributed to an increase in accounts payable and accrued liabilities of $20,639, and $98,896 for the net liability of the convertible debenture net of unamortized discount of $4,104. During the period ended July 31, 2013, our company did not have any equity or capital transactions. CASHFLOW FROM OPERATING ACTIVITIES During the six months ended July 31, 2013, our company used cash of $93,522 for operating activities compared with $71,069 during the six months ended July 31, 2012. The increase in cash used for operating activities was attributed to proceeds received from the convertible debentures which were used to repay outstanding obligations incurred in day-to-day operations of our company. CASHFLOW FROM INVESTING ACTIVITIES During the six months ended July 31, 2013, our company did not have any investing activities compared with the use of $438,077 during the six months ended July 31, 2012 for the acquisition of oil and gas properties. CASHFLOW FROM FINANCING ACTIVITIES During the six months ended July 31, 2013, our company received $46,000 in financing from the issuance of a convertible debenture which is unsecured, bears interest at 6% per annum, and due on April 5, 2016 and $57,000 from the issuance of a convertible debenture which is unsecured, bears interest at 8% per annum, and due on April 17, 2014. Conversely, our company received $580,000 during the period ended July 31, 2012 from the issuance of common shares. GOING CONCERN We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing. 13
OFF-BALANCE SHEET ARRANGEMENTS We have no significant 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 stockholders. FUTURE FINANCINGS We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities. CRITICAL ACCOUNTING POLICIES Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Our company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and our company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company we are not required to provide the information under this Item. ITEM 4. CONTROLS AND PROCEDURES MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure. 14
As of the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. ITEM 1A. RISK FACTORS As a smaller reporting company we are not required to provide the information under this Item. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Effective July 22, 2013, we entered into and closed a securities purchase agreement with Asher Enterprises, Inc. Under the terms of the agreement, our company issued an 8% convertible promissory note, in the principal amount of $57,000, which matures on April 17, 2014 and may be converted into shares of our company's common stock at a rate of 58% of the market price on any conversion date, any time after 180 days from July 15, 2013, subject to adjustments as further set out in the note. Our company has the right to prepay the note together with all accrued interest within 180 days of July 15, 2013 subject to a prepayment penalty equal to 15% during the first 30 days of the prepayment period and increasing by 5% during each subsequent 30 day period. Following the maturity date of April 17, 2014, the note shall bear interest at the rate of 22%. The note was issued to Asher Enterprises pursuant to Rule 506 of Regulation D of the Securities Act of 1933 on the basis that they represented to our company that they were an "accredited investor" as such term is defined in Rule 501(a) of Regulation D. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ITEM 5. OTHER INFORMATION On September 1, 2013, we entered into a consulting agreement with our sole officer and director Gregory Rotelli regarding the provision of Mr. Rotelli's management services to our company as Chief Executive Officer. 15
Pursuant to the agreement, we have agreed to pay to Mr. Rotelli monthly compensation of $7,500 payable at Mr. Rotelli's option in cash or in shares of our common stock. Compensation paid in common shares will be based on an conversion price equal to the weighted average trading price of our common shares for the 5 trading days immediately preceding the date upon which compensation becomes due. Mr. Rotelli will also be entitled to receive basic health insurance coverage or an in kind allowance. The term of the Agreement will be 24 months beginning on September 1, 2013 and will renew automatically for an additional 24 months unless earlier terminated. The agreement may be terminated by either party without cause by giving 30 days notice. If terminated without cause by the Company, Mr. Rotelli will be entitled to severance equal to 6 months compensation under the Agreement and shall be entitled to exercise any vested options or warrants for a period of twelve months from termination. ITEM 6. EXHIBITS Exhibit NumberDescription of Exhibit (3) ARTICLES OF INCORPORATION AND BYLAWS 3.01 Articles of Incorporation (incorporated by reference to our Registration Statement on Form SB-2 filed on March 7, 2006) 3.02 Bylaws (incorporated by reference to our Registration Statement on Form SB-2 filed on March 7, 2006) 3.03 Certificate of Amendment filed on July 23, 2008 (incorporated by reference to our Current Report on Form 8-K filed on August 14, 2008) 3.04 Certificate of Change filed on July 23, 2008 (incorporated by reference to our Current Report on Form 8-K filed on August 14, 2008) 3.05 Certificate of Change filed on June 14, 2012 (incorporated by reference to our Current Report on Form 8-K filed on June 16, 2012) (10) MATERIAL CONTRACTS 10.1 Share Purchase agreement between Gregory Rotelli and Bruce Thomson dated January 24, 2012 (incorporated by reference to our Current Report on Form 8-K filed on January 30, 2012) 10.2 Form of Financing Agreement dated May 24, 2012 (incorporated by reference to our Current Report on Form 8-K filed on May 24, 2012) 10.3 Purchase Agreement and Bill of Sale dated May 29, 2012 between our company and MontCrest Energy, Inc. (incorporated by reference to our Current Report on Form 8-K filed on June 1, 2012) 10.4 Joint Development and Operating Agreement dated June 8, 2012 between our company and MontCrest Energy Properties, Inc., MontCrest Energy, Inc., and Black Strata, LLC (incorporated by reference to our Current Report on Form 8-K filed on June 12, 2012) 10.5 Purchaser Agreement and Bill of Sale dated June 18, 2012 between our company and MontCrest Energy, Inc. (incorporated by reference to our Current Report on Form 8-K filed on June 19, 2012) 10.6 Compromise, Settlement and Property Exchange Agreement dated February 25, 2013 between our company and MontCrest Energy, Inc. and Black Strata, LLC (incorporated by reference to our Current Report on Form 8-K filed on March 7, 2013) 10.7 Form of Convertible Debenture dated for reference April 5,2012 issued to Europa Capital AG (incorporated by reference to our Current Report on Form 8-K filed on April 9, 2013) 16
10.8 Form of Securities Purchase Agreement dated July 15, 2013 with Asher Enterprises, Inc. (incorporated by reference to our Current Report on Form 8-K filed on July 29, 2013) 10.9 Form of Convertible Promissory Note dated July 15, 2013 with Asher Enterprises, Inc. (incorporated by reference to our Current Report on Form 8-K filed on July 29, 2013) 10.10* Consulting Agreement with Gregory Rotelli dated September 1, 2013 (incorporated by reference to our Interim Report on Form 10-Q filed on September 16, 2014) (14) CODE OF ETHICS 14.1 Code of Ethics (incorporated by reference to Interim Report on Form 10-Q filed on June 19, 2012) (31) RULE 13A-14(A) / 15D-14(A) CERTIFICATIONS 31.1* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. (32) SECTION 1350 CERTIFICATIONS 32.1* Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. 101 INTERACTIVE DATA FILE 101** Interactive Data File (Form 10-Q for the quarter ended July 31, 2013 furnished in XBRL). 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document ---------- * Filed herewith. ** Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under these sections. 17
SIGNATURES In accordance with Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INDEPENDENCE ENERGY, CORP. (Registrant) Dated: May 13, 2014 /s/ Gregory Rotelli ------------------------------------------------- Gregory Rotelli Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) 1