MONDIAL VENTURES, INC. - FORM 10-Q

Attached files

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EX-31.2 - CERTIFICATION PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934 - MONDIAL VENTURES, INC.	mondialexh312.htm
EX-32.2 - CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - MONDIAL VENTURES, INC.	mondialexh322.htm
EXCEL - IDEA: XBRL DOCUMENT - MONDIAL VENTURES, INC.	Financial_Report.xls
EX-31.1 - CERTIFICATION PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934 - MONDIAL VENTURES, INC.	mondialexh311.htm
EX-32.1 - CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - MONDIAL VENTURES, INC.	mondialexh321.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ____________ to____________

Commission File No. 000-51033

MONDIAL VENTURES, INC.

(Exact name of Registrant as specified in its charter)

Nevada	27-4481914
(State or Other Jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)

6564 Smoke Tree Lane

Scottsdale, Arizona 85253

(Address of Principal Executive Offices)

(480) 948-6581

(Registrant’s Telephone Number)

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. Yes x 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 (§ 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). Yes £ No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller 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 T
(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 £ No T

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

As of May 16, 2014, the registrant had 23,182,295 shares of its $0.001 par value common stock issued and outstanding. There are 100,000 shares of Series C preferred stock issued and outstanding, $0.001 par value for each of the Series of Preferred.

MONDIAL VENTURES, INC.

(A Development Stage Company)

10-Q

September 30, 2013

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION		Page

ITEM 1	FINANCIAL STATEMENTS (UNAUDITED)

	CONDENSED CONSOLIDATED BALANCE SHEETS	F - 1

	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS	F - 2

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	F - 3

	NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	F - 4

ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	1

ITEM 3	QUANTITATIVE AND QUALITATIVE ANALYSIS OF MARKET RISKS	3

ITEM 4(T)	CONTROLS AND PROCEDURES	3

PART II OTHER INFORMATION		4

ITEM 1	LEGAL PROCEEDINGS	4

ITEM 1A	RISK FACTORS.	4

ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	4

ITEM 3	DEFAULTS UPON SENIOR SECURITIES	4

ITEM 4	(REMOVED AND RESERVED)	4

ITEM 5	OTHER INFORMATION	4

ITEM 6	EXHIBITS	5

MONDIAL VENTURES, INC.
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2014 AND DECEMBER 31, 2013


	March 31,		December 31,
	2014		2013
Assets	(Unaudited)
Current assets:
Cash	76,734		3,508
Accounts receivable	$	1,530	$	-
Total current assets		78,264		3,508

Other Assets:
Fixed assets - net		29,771		25,363
Proved oil and natural gas properties - net		1,074,563		800,341
Deferred Financing Costs		14,219		15,324
Total other assets		1,118,553		841,028

Total assets	$	1,196,817	$	844,536

Liabilities and shareholders’ deficit

Current liabilities:
Accounts payable and accrued expenses	$	235,087	$	219,528
Accounts payable and accrued expenses – related parties		24,898		15,958
Loans and notes payable		903,195		366,284
Loans and notes payable – in default		233,869		310,902
Advances and notes – related parties		1,232		1,232
Convertible loans payable, net of discount of $117,479 and $137,742, respectively		178,225		199,446
Convertible loans payable – related parties, net of discount of $2,891 and $6,590, respectively		12,109		8,410
Convertible loan payable, net – in default		176,013		25,000
Derivative liabilities		990,238		220,131
Total current liabilities		2,754,866		1,366,891

Long-term liabilities:
Asset retirement obligation		7,894		5,781
Total long-term liabilities		7,894		5,781

Total Liabilities		2,762,760		1,372,672

Stockholders’ equity (deficit)
Preferred stock, $0.001 par value; 10,000,000 shares authorized, 100,000 shares issued and outstanding as of March 31,2014 and nil at December 31, 2013		100		-
Common stock, $0.001 par value; 1,490,000,000 shares authorized, 13,201,872 shares and 334,738 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively		13,202		335
Additional paid–in capital		7,384,178		4,881,543
Capital stock subscribed		96,630		4,000
Non-controlling interest in subsidiaries		249,090			-
Accumulated other comprehensive income		(1,799)			-
Accumulated deficit		(9,307,344)		(5,414,014)
Total shareholders’ equity (deficit)		(1,565,943)		(528,136)

Total liabilities and stockholders’ equity (deficit)	$	1,196,817	$	844,536

The accompanying notes are an integral part of these statements.

F - 1

MONDIAL VENTURES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND MARCH 31, 2013

(UNAUDITED)

	For the three months ended
	March 31,
	2014		2013
Revenues:
Gross revenues from oil and gas sales	$	35,788	$	17,947
Well operating costs		(39,765)		(54,059)
Gross margin		(3,977)		(36,112)

General and administrative expenses:
General and administration		2,140,154		102,849
Total general and administration expenses		2,140,154		102,849
Net loss from operations		(2,144,131)		(138,961)

Other (income) and expenses:
Interest expense		248,117		56,824
Adjustment to ARO		(2,025)		-
Gain/loss on derivatives		672,876		-
Gain/loss on legal settlement		34,500		-
Gain/loss on transfer of assets		432,488		-
Gain/loss on settlement of debt		365,577		449,181
Net loss before provision for income taxes		(1,751,533)		(506,005)

Provision for income taxes		-		-

Net (loss) before non-controlling interests	$	(3,895,664)	$	(644,966)

Less: net (loss) attributable to non-controlling interest		(2,334)		-

Net (loss)	$	(3,893,330)	$	(644,966)

Other comprehensive income (loss)
Unrealized foreign currency translation (loss)		(2,679)		-
Less: other comprehensive income(loss) attributable to non-controlling interest		(880)		-

Net comprehensive (loss)	$	(3,895,129)	$	(644,966)

Net loss per common share – basic and diluted	$	(0.58)	$	(16.40)

Weighted average common shares outstanding – basic and diluted		6,663,600		39,333

The accompanying notes are an integral part of these statements.

F - 2

MONDIAL VENTURES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND MARCH 31, 2013

(UNAUDITED)

	For the three months ended
	March 31,
	2014			2013
Operating activities
Net loss	$	(3,893,330	)	$	(644,966	)
Net loss attributable to non-controlling interests		(2,334)			-
Adjustments to reconcile net loss to net cash used in operating activities:
Common shares issued for services		2,037,413			-
Preferred shares issued for services		22,000			-
Accretion of asset retirement obligation		2,113			123
Adjustment to asset retirement obligation		(2,025)			-
Depreciation		3,778			2,024
Depletion		2,363			30,068
Amortization of debt discount		180,694			25,846
Loss on debt conversion and settlement		365,577			459,286
Change in fair value of derivative liability		672,876			-
Imputed interest		6,876			-
Loss on stock issued for legal settlement		34,500			-
Loss on transfer of assets		432,489			-
Changes in other operating assets and liabilities:
Account receivables		(1,530)			-
Other assets		7,605			1,463
Accounts payable and accrued expenses		15,252			19,134
Accounts payable and accrued expenses related parties		8,940			(14,820	)
Net cash provided by (used in) operating activities		(106,743)			(121,842	)

Investing activities
Cash received from transfer of non-controlling interest		141,470			-
Net cash provided by investing activities		141,470			-

Financing activities:
Deferred financing costs		(6,500)			(6,000	)
Borrowings on debt		-			65,000
Borrowings on convertible debt		30,678			42,800
Borrowings on non-convertible debt		18,000			-
Payment on debt		(1,000)			-
Net cash provided by financing activities		41,178			101,800

Effect of exchange rate on cash		(2,679)			-

Net increase (decrease) in cash during the period		73,226			(20,042	)
Cash balance at beginning of period		3,508			23,518
Cash balance at end of period	$	76,734		$	3,476

Supplemental disclosures of cash flow information:
Interest paid during the year		-			-
Non-cash activities:
Conversion of debt rescinded during the period	$	12,500		$	-
Debt discount due to embedded derivative		156,734			-
Debt discount due to beneficial conversion feature		-			65,000
Shares issued for debt conversion and settlement		411,402			25,000
Shares subscribed for settlement of debt		92,630			300,000
Adjustment to derivative liabilities due to debt conversion		59,503			-
Effect of share exchange		(54,290)			-
Debt assumed from EGPI for oil and gas properties interest		550,000			-

The accompanying notes are an integral part of these statements.

F - 3

MONDIAL VENTURES, INC.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH 31, 2014

(UNAUDITED)

	Series C Preferred Stock				Common Stock						Additional Paid-in			Stock						Accumulated Other Comprehensive Income			Non- Controlling			Total Stockholders’ Equity
	Shares		Par Value		Shares			Par Value			Capital			Payable			Deficit			(loss)			Interest			(Deficit)

Balance December 31, 2012			$	-		39,333		$	39		$	2,949,471			$	-	$	(2,960,446	)	$	-		$	-		$	(10,936	)

Common stock issued for debt conversion and settlement						293,738			294			1,211,812				-		-									1,212,105

Common shares issued for services						1,667			2			186,565				4,000		-									190,567

Debt discount						-			-			92,500				-		-									92,500

Adjustment to derivative due to debt conversion						-			-			421,206				-		-									421,206

Imputed interest						-			-			19,989				-		-									19,989

Net loss for the year ended December 31, 2013						-			-			-				-		(2,453,568	)								(2,453,568	)

Balance at December 31, 2013						334,738		$	335		$	4,881,543			$	4,000	$	(5,414,014	)							$	(528,136	)

Common stock issued for debt conversion and settlement						2,073,293			2,073			409,329				92,630											504,032

Common stock issued for services						10,425,000			10,425			2,026,988															2,037,413

Common stock issued for legal settlement						375,000			375			34,125															34,500

Common stock cancelled						(6,667	)		(7	)		(12,493	)														(12,500	)

Fractional shares issued for stock split						508			1			(1	)														-

Preferred stock issued for services		100,000		100								21,900															22,000

Adjustment to derivative due to debt conversion												59,503															59,503

Imputed interest												6,876															6,876

Effect of amalgamation and share exchange												(43,592	)											252,304			208,712

Foreign currency translation adjustment																					(1,799	)		(880	)		(2,679	)

Net loss for the three months ended March 31, 2014																		(3,893,330	)					(2,334	)		(3,895,664	)

Balance at March 31, 2014		100,000	$	100		13,201,872		$	13,202		$	7,384,178			$	96,630	$	(9,307,344	)	$	(1,799	)	$	249,090		$	(1,565,943	)

The accompanying notes are an integral part of these statements.

F - 4

F-

Mondial Ventures, Inc

Notes to the Unaudited Consolidated Financial Statements

For the three months ended March 31, 2014 and March 31, 2013

1. Organization of the Company and Significant Accounting Principals

The Company was incorporated in the state of Nevada May 29, 2002 as Mondial Ventures, Inc.

In December 2003, the Company owned a 100% interest, subject to a 2% net smelter returns royalty, in four mineral claims located in the Namaimo Mining Division of British Columbia.

Effective December 1, 2010, the Company increased its authorized common shares to 250,000,000 with a par value of $0.001, and authorized shares of blank check preferred stock, par value $0.001 per share.

On December 15, 2010 the claims related to the 100% interest owned in the British Columbia mineral claims expired.

On December 30, 2010, the Company completed a merger with Legacy Athletic Apparel, LLC, a Virginia limited liability company (Legacy) in a Merger Agreement dated December 14, 2010, by and between the Company and Legacy. Pursuant to the Plan of Merger, Legacy merged into the Company, with the Company being the surviving entity (“the Merger”). The transaction was accounted for using the purchase method of accounting.

On July 31, 2012, the Company purchased oil and gas assets and interests in the J.B. Tubb Leasehold Estate from EGPI Firecreek, Inc. The Company issued 14,000,000 shares of common stock to EGPI Firecreek, Inc. and the assumption of debt for 37.5% working interest and corresponding 28.125% net revenue interest in the oil and gas interests and pro rata oil and gas revenue and reserves in the North 40 plus additional right agreement for the South 40 of the J.B. Tubb Leasehold Estate, and for all depths below the surface to 8,500 ft. Also included are all related assets, fixtures, equipment, three well heads and three well bores.

On October 30, 2012 the Company entered into a Definitive Short Form Agreement with EGPI Firecreek, Inc. for development of 240 acre leases, reserves, three wells and equipment located in Callahan, Steven and Shackelford Counties, West Central Texas, which includes but is not limited to continuing negotiations to buy out 50% partner interests, due diligence, evaluation and preparation including an initial 3-D Seismic study reserve studies and roll over leases if necessary. The agreement is non-binding and the parties intend to finalize the agreement by executing a Definitive Long Form Agreement in the future. The parties had until November 6, 2012 to finalize this agreement but did not do so by that date. Both parties are still interested in pursuing this transaction in the future.

Effective August 21, 2013, the Company increased its authorized common shares to 490,000,000 with a par value of $0.001, and with its current 10,000,000 authorized shares of blank check preferred stock, par value $0.001 per share.

Effective October 2, 2013, the Company increased its authorized common shares to 1,490,000,000 with a par value of $0.001, and with its current 10,000,000 authorized shares of blank check preferred stock, par value $0.001 per share.

Effective on January 31, 2014, the Company effected a one (1) for fifteen hundred (1,500) reverse stock split whereby, as of the record date, for every fifteen hundred shares of common stock then owned, each shareholder received one share of common stock. All share amounts throughout this report have been retroactively adjusted for all periods to reflect this stock-split.

On January 27, 2014, the Company executed an Omnibus Agreement with EGPI, TWL Investments aLLC (“TWL”), and Thomas J. Richards (“TJR”) whereby EGPI delivered an Assignment and Bill of Sale (the “Assignment and Bill of Sale Agreement”) for transfer of i) an additional 12.5% Working Interest and corresponding 9.375% Net Revenue Interest in the North 40 acres of the J.B. Tubb Leasehold Estate/Amoco Crawar field and oil and gas interests, including all related assets, fixtures, equipment, three well heads, three well bores, and pro rata oil & gas revenue and reserves for all depths below the surface to at least 8500 ft. ii) 12.5% Working Interest and 9.375% corresponding Net Revenue Interest in the Highland Production Company No. 2 well-bore located in the South 40 acres of the J.B. Tubb Leasehold Estate/Amoco Crawar field, oil and gas interests, pro rata oil & gas revenues and reserves with depth of ownership 4700 ft. to 4900 ft in well bore and 3800 ft. to 4000 ft in well bore, and iii) interest in the Participation Agreement (Turnkey Drilling, Re Entry, and Multiple Wells) granting certain rights in and to interests for additional development in the J.B. Tubb Leasehold Estate. In consideration for the additional working interest, the Company assumed $550,000 debt from EGPI. The Assignment and Bill of Sale was retroactively effective on January 1, 2014.

On March 25, 2014, Boomerang Oil, Inc. (formerly 0922327 B.C. Ltd.) entered into acquisition agreement with Shale Corp to acquire all issued and outstanding Shale Corp shares. Pursuant to the acquisition agreement, Boomerang issued 70,000,000 of its common stock to acquire all of Shale Corp's issued and outstanding shares on a 1 to 1 basis. Subsequent to the share exchange, Shale Corp became Boomerang's wholly owned subsidiary. Immediately after the share exchange, Shale Corp amalgamated with Boomerang's wholly owned subsidiary 2301840 Ontario, Inc. to form a new subsidiary subsequently named as 1913564 Ontario, Inc. As a result of the share exchange, the Company, which owned 47 million of Shale Corp immediately prior to the share exchanges, became 66.17% owner of the consolidated entity of Boomerang Oil, Inc. and 1913564 Ontario, Inc.

F - 5

Use of Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make reasonable estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses at the date of the consolidated financial statements and for the period they include. Actual results may differ from these estimates.

Revenue and Cost Recognition

Oil and Gas: Revenue is recognized from oil and gas sales in the period of delivery. Settlement on sales occurs anywhere from two weeks to two months after the delivery date. The Company recognizes revenue when an arrangement exists, the product has been delivered, the sales price has been fixed or determinable, and collectability is reasonably assured.

Cash Equivalents

The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. There were no cash equivalents as of March 31, 2014 or December 31, 2013. The Company had cash balance of $78,264 and $3,508 as of March 31, 2014 and December 31, 2013, respectively.

Oil and Gas Activities

The Company uses the successful efforts method of accounting for oil and gas producing activities. Under this method, acquisition costs for proved and unproved properties are capitalized when incurred. Exploration costs, including geological and geophysical costs, the costs of carrying and retaining unproved properties and exploratory dry hole drilling costs are expensed. Development costs, including the costs to drill and equip developmental wells, and successful exploratory drilling costs to locate proved reserves are capitalized.

Exploratory drilling costs are capitalized when incurred pending the determination of whether a well has found proved reserves. A determination of whether a well has found proved reserves is made shortly after drilling is completed. The determination is based on a process which relies on interpretations of available geologic, geophysics, and engineering data. If a well is determined to be unsuccessful, the capitalized drilling costs will be charged to expense in the period the determination is made. If an exploratory well requires a major capital expenditure before production can begin, the cost of drilling the exploratory well will continue to be carried as an asset pending determination of whether proved reserves have been found only as long as: i) the well has found a sufficient quantity of reserves to justify its completion as a producing well if the required capital expenditure is made, and: ii) drilling of the additional exploratory well is under way or firmly planned for the near future. If drilling in the area is not under way or firmly planned, or if the well has not found a commercially producible quantity of reserves, the exploratory well is assumed to be impaired, and its costs are charged to expense.

In the absence of a determination as to whether the reserves that have been found can be classified as proved, the cost of drilling such an exploratory well is not carried as an asset for more than one year following completion of drilling. If after that year is passed, a determination that proved reserves exist cannot be made, the well is assumed impaired and it’s costs are charged to expense. Its costs can, however, continue to be capitalized if a sufficient quantity of reserves is discovered in the well to justify its completion as a producing well and sufficient progress is made in assessing the reserves and the well’s economic and operating feasibility.

The impairment of unamortized capital costs is measured at a lease level and is reduced to fair value if it is determined that the sum of expected future net cash flows is less than the net book value. The Company determines if impairment has occurred through either adverse changes or as a result of the annual review of all fields. During 2013 after conducting an impairment analysis, the Company recorded an impairment of $84,778.

Asset Retirement Obligations

(“ARO”- The estimated costs of restoration and removal of facilities are accrued. The fair value of a liability for an asset’s retirement obligation is recorded in the period in which it is incurred and the corresponding cost capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted to its then present value each period, and the capitalized cost is depreciated with the related long-lived asset. If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized. For all periods presented, estimated future costs of abandonment and dismantlement are included in the full cost amortization base and are amortized as a component of depletion expense. At March 31, 2014 and December 31, 2013, the ARO of $7,894 and $5,781 is included in liabilities and fixed assets.

Development costs of proved oil and gas properties, including estimated dismantlement, restoration and abandonment costs and acquisition costs, are depreciated and depleted on a field basis by the units-of-production method using proved developed and proved reserves, respectively. The costs of unproved oil and gas properties are generally combined and impaired over a period that is based on the average holding period for such properties and the Company’s experience of successful drilling.

Costs of retired, sold or abandoned properties that make up a part of an amortization base (partial field) are charged to accumulated depreciation, depletion and amortization if the units-of-production rate is not significantly affected. Accordingly, a gain or loss, if any, is recognized only when a group of proved properties (entire field) that make up the amortization base has been retired, abandoned or sold.

F - 6

Stock-Based Compensation

The Company estimates the fair value of share-based payment awards made to employees and directors, including stock options, restricted stock and employee stock purchases related to employee stock purchase plans, on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense ratably over the requisite service periods. We estimate the fair value of each share-based award using the Black-Sholes option pricing model. The Black-Sholes model is highly complex and dependent on key estimates by management. The estimates with the greatest degree of subjective judgment are the estimated lives of the stock-based awards and the estimated volatility of our stock price. The Black-Sholes model is also used for our valuation of warrants.

Earnings per Common Share

Basic earnings per common share are calculated based upon the weighted average number of common shares outstanding for the period. Diluted earnings per common share is computed by dividing net income by the weighted average number of common shares and dilutive common share equivalents (convertible notes and interest on the notes, stock awards and stock options) outstanding during the period. Dilutive earnings per common share reflect the potential dilution that could occur if options to purchase common stock were exercised for shares of common stock. Basic and diluted EPS are the same as the effect of our potential common stock equivalents would be anti-dilutive.

Fair Value Measurements

On January 1, 2008, the Company adopted guidance which defines fair value, establishes a framework for using fair value to measure financial assets and liabilities on a recurring basis, and expands disclosures about fair value measurements. Beginning on January 1, 2009, the Company also applied the guidance to non-financial assets and liabilities measured at fair value on a non-recurring basis, which includes goodwill and intangible assets. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:

Level 1 – Valuation is based upon unadjusted quoted market prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2 –Valuation is based upon quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable in the market.

Level 3 – Valuation is based on models where significant inputs are not observable. The unobservable inputs reflect the Company’s own assumptions about the inputs that market participants would use.

The following table presents assets and liabilities that are measured and recognized at fair value as of March 31, 2014 on a recurring and non-recurring basis:

							Total
							Gains
Description	Level 1		Level 2		Level 3		(Losses)

Derivative liabilities (recurring)	$	-	$	-	$	990,238	$	990,238

The following table presents assets and liabilities that are measured and recognized at fair value as of December 31, 2013 on a recurring and non-recurring basis:

							Total
							Gains
Description	Level 1		Level 2		Level 3		(Losses)

Derivative liabilities (recurring)	$	-	$	-	$	220,131	$	220,131

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and long-term debt. The estimated fair value of cash, accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments. The carrying value of long-term debt also approximates fair value since their terms are similar to those in the lending market for comparable loans with comparable risks. None of these instruments are held for trading purposes.

F - 7

Fixed Assets

Fixed assets are stated at cost. Depreciation expense is computed using the straight-line method over the estimated useful life of the asset. The following is a summary of the estimated useful lives used in computing depreciation expense:

Well equipment

5 years

Expenditures for major repairs and renewals that extend the useful life of the asset are capitalized. Minor repair expenditures are charged to expense as incurred.

Impairment of Long-Lived Assets

The Company has adopted Accounting Standards Codification subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires that those assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

Goodwill and Other Intangible Assets

The Company periodically reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist. Goodwill and certain intangible assets are assessed annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. Specifically, goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses level 3 inputs and a discounted cash flow methodology to estimate the fair value of a reporting unit. A discounted cash flow analysis requires one to make various judgmental assumptions including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. The Company’s evaluation of goodwill completed at December 31, 2012 pertaining to Legacy resulted in a full impairment. This impairment was recorded as an impairment expense of $104,272.

As of March 31, 2014 the Company had no amortizable intangible assets.

Income taxes

The Company accounts for income taxes using the asset and liability method, which requires the establishment of deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided to the extent deferred tax assets may not be recoverable after consideration of the future reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income.

The Company uses a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance requires the Company to recognize tax benefits only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet these recognition and measurement standards.

Foreign Currency Translation

The functional currency of the Company’s majority owned subsidiary is the Canadian dollar and these financial statements have been translated into U.S. dollars in accordance with standards issued by the FASB. The Canadian dollar based accounts of the Company’s foreign operations have been translated into United States dollars using the current rate method. Assets and liabilities of those operations are translated into U.S. dollars using exchange rates as of the balance sheet date; income and expenses are translated using the weighted average exchange rates for the reporting period. Translation adjustments are recorded as accumulated other comprehensive income (loss), a separate component of shareholders’ equity.

F - 8

Recent accounting pronouncements

In July 2013, FASB issued ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward a Similar Tax Loss, or a Tax Credit Carryforward Exists.” The provisions of ASU No. 2013-11 require an entity to present an unrecognized tax benefit, or portion thereof, in the statement of financial position as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income , to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:

-	Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income – but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and

-	Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense

The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities , which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.

2. Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. 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 has experienced substantial losses, maintains a negative working capital and capital deficits, which raise substantial doubt about the Company’s ability to continue as a going concern.

The Company is working to manage its current liabilities while it continues to make changes in operations to improve its cash flow and liquidity position. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon the Company’s ability to generate revenue from the sale of its services and the cooperation of the Company’s note holders to assist with obtaining working capital to meet operating costs in addition to our ability to raise funds.

3. Common Stock Transactions

During the quarter ended March 31, 2014, the Company issued 10,425,000 shares of common stock for services that were expensed and valued at $2,037,413 based upon the closing price of the common stock at the date of grant and reflecting the 1:1,500 reverse stock split.

During the quarter ended March 31, 2014, the Company issued 2,073,293 shares of common stock valued at $504,032 for conversion or settlement of debt in the amount of $138,455, resulting in a loss on debt settlement of $365,577. All shares issued were valued based upon the closing price of the Company’s common stock at the date of the debt settled. For all debts that were converted within the terms of the related promissory notes, no gain or loss was recorded. Any debts converted outside of the terms resulted in a gain or loss based on the fair value of the stock on the date of conversion.

F - 9

During the quarter ended March 31, 2014, the Company issued 375,000 as settlement fee for legal settlement with third party. The common stock issued was valued on settlement date at $34,500. The Company recorded a corresponding loss on the settlement.

During the quarter ended March 31, 2014, the Company and one of its debt holders agreed to rescind a conversion of convertible debt executed during fiscal year 2013. Common stock of 6,667 was rescinded and debt in the amount of $12,500 was reinstated as of March 31, 2014.

During the quarter ended March 31, 2014, the Company issued 507 fractional shares in relation to the reverse stock split effective on January 31, 2014. These fractional shares have no value.

4. Preferred Stock Transactions

Series C preferred stock: The Preferred C stock has a par value of $0.001 and no stated dividend rate and is non-participatory. The Series C (i) has voting rights for each share of Series C Preferred Stock shall have 31,500 votes on the election of directors of the Company and for all other purposes, and (ii) has no right to convert to common shares of the Company.

During the quarter ended March 31, 2014, the Company issued 100,000 Series C preferred stock for services rendered. The value assigned to this issuance is $22,000 based on an estimate of the fair market value on the issuance date. The holders of Series C preferred stock represent a controlling voting interest in the Company. As a result, a determination of the control premium was determined to estimate the value of the shares. The control premium is based on publicly traded companies or comparable entities which have been recently acquired in arm’s length transactions. The Company performed the valuation with the assistance of a valuations expert.

5. Fixed Assets

The following is a detailed list of fixed assets:

	March 31, 2014		December 31, 2013

Well equipment		75,551		56,663
Accumulated depreciation		(42,003)		(31,300)
Fixed assets – net	$	29,771		25,363

Depreciation expense was $3,778 and $2,024 for the quarter ended March 31, 2014 and 2013, respectively.

6. Oil and Gas

	For the		For the
	Period Ended		Year Ended
	March 31,		December 31,
	2014		2013

Purchase of oil and gas properties through assumption of debt, net of accumulated depletion	$	276,585	$	-
Total purchase of oil and gas properties	$	276,585	$	-

Oil and Gas Properties:	March 31, 2014		December 31, 2014

Oil and gas properties – proved reserves	$	1,248,784	$	958,157
Accumulated depletion		(174,221)		(157,665	)

Oil and gas properties – net	$	1,074,563	$	800,341

Depletion expense was $2,363 and $30,068 for the quarter ended March 31, 2014 and 2013, respectively.

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7. Acquisition of interest in oil and gas property

·	Acquisition of 50% Oil and Gas Working Interests in the J.B. Tubb Leasehold Estate/Amoco Crawar Field, Ward County, Texas

On July 31, 2012 the Company, acquired assets of Energy Producers, Inc., a wholly owned subsidiary of EGPI Firecreek, Inc., (“EPI”) as described in the preliminary Assignment and Bill of Sale and summarily as follows: Under the terms of the agreement, which shall be effective July 31, 2012, the Company acquired a 37.5% Working Interest and 28.125% corresponding Net Revenue Interest in the North 40 acres of the J.B. Tubb Leasehold Estate/Amoco Crawar field and oil and gas interests, including all related assets, fixtures, equipment, three well heads, three well bores, and pro rata oil & gas revenue and reserves for all depths below the surface to 8500 ft. The field is located in the Permian Basin and the Crawar Field in Ward County, Texas (12 miles west of Monahans & 30 miles west of Odessa in West Texas). Included in the transaction, the Company will also acquire 37.5% Working Interest and 28.125% corresponding Net Revenue Interest in the Highland Production Company No. 2 well-bore located in the South 40 acres of the J.B. Tubb Leasehold Estate/Amoco Crawar field, oil and gas interests, pro rata oil & gas revenues and reserves with depth of ownership 4700 ft. to 4900 ft. As consideration for the transaction the Company agreed to authorize, issue and sell to EGPI Firecreek, Inc. 14,000,000 shares of common stock, and assumption of $450,000 in related debt.

On January 27, 2014, the Company executed an Omnibus Agreement with EGPI, TWL Investments aLLC (“TWL”), and Thomas J. Richards (“TJR”) whereby EGPI delivered an Assignment and Bill of Sale (the “Assignment and Bill of Sale Agreement”) for transfer of i) an additional 12.5% Working Interest and corresponding 9.375% Net Revenue Interest in the North 40 acres of the J.B. Tubb Leasehold Estate/Amoco Crawar field and oil and gas interests, including all related assets, fixtures, equipment, three well heads, three well bores, and pro rata oil & gas revenue and reserves for all depths below the surface to at least 8500 ft. ii) 12.5% Working Interest and 9.375% corresponding Net Revenue Interest in the Highland Production Company No. 2 well-bore located in the South 40 acres of the J.B. Tubb Leasehold Estate/Amoco Crawar field, oil and gas interests, pro rata oil & gas revenues and reserves with depth of ownership 4700 ft. to 4900 ft in well bore and 3800 ft. to 4000 ft in well bore, and iii) interest in the Participation Agreement (Turnkey Drilling, Re Entry, and Multiple Wells) granting certain rights in and to interests for additional development in the J.B. Tubb Leasehold Estate. In consideration for the additional working interest, the Company assumed $550,000 debt from EGPI. As the net carrying value of the additional working interest was less than debt assumed, the Company recorded loss of $267,256 on the acquisition. The Assignment and Bill of Sale was retroactively effective on January 1, 2014.

The acquired leases and the property to which they relate are identified below:

North 40 acres: J.B. TUBB “18-1”, being the W1/2 of the NW1/4 of Section 18, Block B-20, Public School Lands, Ward County, Texas, containing Forty (North 40) acres only (also listed as Exhibit “A” to Exhibit 10.1 in our Current Report on Form 8-K filed on March 7, 2011, incorporated herein by reference.

Well-bore located on South 40 acres: The Highland Production Company (Crawar) #2 well-bore, API No. 42-475-33611, located on the J.B. Tubb Lease in W ½ of the NW ¼ of Sec. 18, Block B-20, Public School Lands, Ward County, Texas at 1787 FNL and 853 FWL being on the South Forty (40) acres of the J. B. Tubb Lease, Ward County, Texas.

The following wells are located on the leases identified, above:

1.	Crawar #1

2.	Tubb #18-1

3.	Highland Production Company(Crawar) #2 well-bore only, with depth of ownership 4700’ to 4900’ft. in well bore, described as: The Highland Production Company (Crawar) #2 well-bore, API No. 42-475-33611, located on the J.B. Tubb Lease in W ½ of the NW ¼ of Sec. 18, Block B-20, Public School Lands, Ward County, Texas at 1787 FNL and 853 FWL being on the South Forty (40) acres of the J. B. Tubb Lease, Ward County, Texas.

Listing for the Equipment items related to the wells on the leases on the J.B. Tubb Leasehold Estate (RRC #33611) Amoco/ Crawar field are as follows:

The following is the current & present equipment list that Mondial Ventures, Inc. will acquire 50% ownership rights, on the J.B. Tubb property: 2 (Two) 500 barrels metal tanks, 1(One) 500 barrel cement salt water tank- (open top), 1 (One) heater treater/oil & gas separator, all flow lines, on the north forty acres, well-heads, 2 (two) Christmas tree valve systems on well-heads, 3 (Three) well heads, three wells (well-bores). Model 320D Pumpjack Serial No. E98371M/456604, One (1) Fiberglass lined heater-treater, One (1) Test pot, Tubing string Rods and down hole pump.

Due to the fact that EGPI Firecreek, Inc. and Mondial Ventures, Inc. are considered related parties, the acquired assets were recorded at historical cost in the financial statements with no step up in basis. On July 31, 2012, the total gross cost of oil and gas properties recorded on the date of the acquisition was $1,109,572, as well as an accumulated depletion of $98,230, and the gross cost of $56,663 with an accumulated depreciation of $16,055. The consideration given consisted of 14,000,000 shares of common stock valued at $595,684 and assumed debt of $450,000. On January 1, 2014, the total gross cost of the additional 12.5% working interest of oil and gas properties was $290,778 with an accumulated depletion of $14,193, and the gross cost of additional fixed assets acquired discussed in Note 6, was $18,888 with an accumulated depreciation of $10,703. In consideration for the additional working interest, the Company assumed $550,000 debt from EGPI. As the net carrying value of the additional working interest was less than debt assumed, the Company recorded loss of $267,256 on the acquisition.

F - 11

8. Transfer of oil and gas properties interest

Effective on January 1, 2014, the Company delivered an Assignment and Bill of Sale agreement to Shale Corp. for transfer of its entire 50% of working interest and corresponding 37.50% net revenue interest in the North 40 acres of the J.B. Tubb Leasehold Estate, discussed in Note 7. In consideration, the Company received $42,703 cash payment, $400,000 outstanding debt to be assumed by Shale corp., and 47 million of Shale Corp's common stock. Based on the 47 million common stock ownership, the Company became 67.14% owner of Shale Corp, and reported the net value of the oil and gas properties and fixed assets in the consolidated financial statements with non-controlling interest in the Shale Corp. At the time of the transaction, Shale Corp. consisted of only $141,470 in cash and had no operating activities. Non-controlling interest of $263,001 and loss of $165,233 were recorded for this transaction.

9. Income Tax Provision

Deferred income tax assets and liabilities consist of the following at March 31, 2014 and December 31, 2013:

	Mach 31,		December 31,
	2014		2013

Deferred Tax asset		423,285	$	372,442
Valuation allowance		(423,285)		(372,442)
Net deferred tax assets		-		-

The Company estimates that it has an NOL carry forward of approximately $1,209,385 that begins to expire in 2024.

After evaluating any potential tax consequence from our former subsidiary and our own potential tax uncertainties, the Company has determined that there are no material uncertain tax positions that have a greater than 50% likelihood of reversal if the Company were to be audited. The Company believes that it is current with all payroll and other statutory taxes. Our tax return for the years ended December 31, 2010 to December 31, 2013 may be subject to IRS audit.

10. Related Party Transactions

Through December 31, 2012 the CEO of Mondial Ventures, Inc provided office space for the Company’s Scottsdale office free of charge. As of January 1, 2013, a lease was signed for the same premises at a monthly rate of $2,000. Accrued rent due on this contract was $10,845 and $8,105 as of March 31, 2014 and December 31, 2013, respectively.

The Company has a service agreement with Global Media Network USA, Inc. a company 100% owned by Dennis Alexander, to provide the services of Dennis Alexander to the Company at a monthly rate of $5,000. The monthly rate was increased to $10,000 as of October 1, 2013. Balance due on this contract was $nil and $1,800 as of March 31, 2014 and December 31, 2013, respectively.

The Company’s majority owned subsidiary Boomerang Oil, Inc. has a service agreement with Global Media Network USA, Inc. a company 100% owned by Dennis Alexander, to provide the services of Dennis Alexander to the Company at a monthly rate of $10,000 effective in March 2014. Balance due on this contract was $10,000 and $nil as of March 31, 2014 and December 31, 2013, respectively.

The Company has a service agreement with Joanne M. Sylvanus, Accountant, a company owned 100% by Joanne M, Sylvanus, to provide her services to the Company at a rate of $3,000 per month. Balance due on this contract was $nil and $6,000 as of March 31, 2014 and December 31, 2013, respectively.

The Company’s majority owned subsidiary Boomerang Oil, Inc. has a service agreement with Joanne M. Sylvanus, Accountant, a company owned 100% by Joanne M, Sylvanus, to provide her services to the Company at a rate of $4,000 per month. Balance due on this contract was $4,000 and $nil as of March 31, 2014 and December 31, 2013, respectively.

As December 31, 2013, the Company’s CEO, Dennis Alexander, paid $53 on behalf of the Company for business related expenses. The balance remained outstanding as of March 31, 2014.

On November 20, 2013, the Company received cash proceeds of $15,000 from related party for debt obligation which bears interest at the rate of 6%. A debt discount of $7,424 was recorded due to embedded derivative feature in the convertible promissory note. This note is convertible into a number of shares by dividing the principal and interest owed by 50% of the average lowest three day trading prices over the 10 trading days prior to the conversion date. Financing costs of $10,000 were paid in conjunction with this debt. For the quarter ended March 31, 2014, the Company recorded debt discount amortization of $3,699 and amortization of deferred financing cost of $2,500. No payments were made during the quarter ended March 31, 2014, and there was $326 in accrued interest on the note.

As discussed in Note 7, EGPI Firecreek, Inc. sold a 37.5% working interest to the Company in the J.B. Tubb Leasehold Estate/Amoco Crawar Field on July 31, 2012, and sold an additional 12.5% working interest in the same properties on January 1, 2014. The assets were recorded by the Company at historical cost and there was no step up in basis.

F - 12

11. Notes Payable

At March 31, 2014 the Company was liable on the following Promissory notes

(See notes below to the accompanying table)

Date of			Date Obligation	Interest		Balance Due
Obligation	Notes		Matures	Rate (%)		3/31/2014 ($)

2/8/2011		1	5/9/2011		24		20,000
3/17/2014		4	3/17/2015		10		10,000
8/4/2011		2	8/4/2012		24		75,250
8/1/2012		3	On demand		18*		105,331
1/2/2014		6	1/2/2015		9.875		12,500
8/1/2012		5	8/31/2013		24		100,000
3/17/2014		8	3/17/2015		10		7,500
1/11/2013		7	1/11/2014		12		17,870
1/2/2014		9	1/2/2015		10		15,000
2/11/2014		14	11/13/2014		8		22,500
3/27/2013		10	On demand		n/a		11,300
4/1/2013		5	3/31/2014		24		22,000
5/20/2013		11	3/20/2014		22		30,000
4/18/2013		12	12/18/2013		6		25,000
5/22/2013		13	5/22/2014		12		21,135
3/21/2014		18	On demand		n/a		60,234
6/19/2013		15	10/19/2013		18*		16,619
5/30/2013		16	2/28/2014		22		50,000
Various		17	On demand		18*		22,266
1/2/2014		24	On demand		18*		181,545
8/1/2013		19	5/5/2014		8		25,335
8/14/2013		20	5/14/2014		8		22,000
8/21/2013		13	8/21/2014		12		29,500
8/23/2013		21	2/23/2014		12		25,000
8/26/2013		11	3/16/2014		22		28,142
8/30/2013		11	8/30/2014		12		25,000
9/30/2013		22	7/2/2014		8		32,500
11/20/2013		23	11/20/2014		6		15,000
1/1/2014		26	On demand		18*		382,755
4/26/2013		25	4/1/2014		n/a		200,000
8/14/2013		27	5/14/2014		8		12,500
Total							1,623,784
Unamortized discount							(120,371)
Net							1,504,411

*compounded monthly

Note 1: The Company entered into two note agreements with an unrelated third party for the amount of $20,000 and $25,000 during fiscal year 2011. During the year ended December 31, 2013, the Company entered into an agreement with the note holder to settle one of the note agreements in the amount of $25,000 with Company’s common shares. As of December 31, 2013 the promissory note of $20,000, bearing interest at 24% annually remained outstanding. No payment was made for this note during the period and there was $15,942 in accrued interest on the note. The note is at default as of March 31, 2014.

Note 2: Promissory note in the amount of $175,000 was outstanding as of December 31, 2013, bearing interest 24% annually. During the quarter ended March 31, 2014 the Company had settled $99,750 of the outstanding balance with issuance of 950,000 of Company’s common shares. The common shares were valued as of settlement date in the amount of $141,835. The Company recorded loss of $42,085 on the conversion. Debt amount of $75,250 and accrued interest of $129,920 was outstanding as of March 31, 2014. The note is at default as of March 31, 2014.

Note 3: The Company entered into a promissory note agreement in the amount of $450,000 in 2012. On March 29, 2013, the Company entered into an agreement with the note holder to pay $300,000 of the note with 2,857,152 shares of common stock. On May 20, 2013, May 30, 2013, August 29, 2013 and December 3, 2013 note holder entered into debt assignment agreements to assign $30,000, $120,000, $42,000 and 21,000 interests to unrelated third parties respectively. On September 3, 2013, the note holder paid $5,250 on behalf of the Company for business related expenses. On December 3, 2013, the Company assumed an additional $86,000 of debt in relation to an amendment agreement related to acquisition of the Tubb leases in July 2012. During the quarter ended March 31, 2014, the debt holder advanced $8,000 to the Company for daily operation. On January 2, 2014 and March 17, 2014, debt holder assigned $20,000 and $7,500 to unrelated third parties respectively. As of March 31, 2014 unpaid compounded interest in the amount of $4,536 was reclassified from accrued interest to note payable due to note holder. The note is due on demand as of March 31, 2014.

F - 13

Note 4: On March 17, 2014, the Company received cash proceeds of $10,000 for this debt obligation which bears interest at the rate of 10% and included financing cost of $1,500. This note is convertible into a number of shares by dividing the principal and interest owed by 50% of the average lowest 3 trading prices over the 30 days prior to the conversion date. A debt discount was recorded for $10,000 based on the fact that there was an embedded derivative features in the note. The debt discount and financing cost are amortized over the life of the note. Amortization of debt discount of $384 and deferred financing cost of $58 were recorded for the three months ended March 31, 2014. Accrued interest of $38 was outstanding as of March 31, 2014.

Note 5: During fiscal year 2012 Company entered into a non interest bearing note in the amount of $100,000 with 10% interest expenses embedded in the note amount, and default interest rate of $24%. No payment was made to this note during the quarter ended March 31, 2014. Interest debt discount was fully amortized as of December 31, 2013. On April 1, 2013, the Company entered into a second note agreement with the same party in the amount of $22,000 with the same terms. No payments were made during the quarter ended March 31, 2014. Interest discount is being amortized over the life of the note. Debt discount amortization for the quarter ended March 31, 2014 was $490 for this note. Both notes were at default as of March 31, 2014.

Note 6: On January 2, 2014, the Company received cash proceeds of $12,500 for this debt obligation which bears interest at the rate of 10% and included financing cost of $2,500. This note is convertible into a number of shares by dividing the principal and interest owed by 50% of the average lowest 3 trading prices over the 30 days prior to the conversion date. A debt discount was recorded for $12,500 based on the fact that there was an embedded derivative features in the note. The debt discount and financing cost are amortized over the life of the note. Amortization of debt discount of $3,014 and deferred financing cost of $603 were recorded for the three months ended March 31, 2014. Accrued interest of $298 was outstanding as of March 31, 2014.

Note 7: The Company had a debt obligation which bears interest at the rate of 12%. During the year ended December 31, 2013, the Company settled $17,130 in debt for common stock, yielding a balance of $17,870 and accrued interest of $2,725 at the end of the period. This note is convertible into a number of shares by dividing the principal and interest owed by 30% of the average lowest trading prices over the 15 days prior to the conversion date. During the quarter ended March 31, 2014, no payment was made to the notes. Amortization of debt discount of $539 was recorded for the quarter ended March 31, 2014. Accrued interest of $3,261 was outstanding as of March 31, 2014. The note was at default as of March 31, 2014.

Note 8: On March 17, 2014, one of the note holders assigned debt in the amount of $7,500 to unrelated third party, and Company issued a convertible promissory note to this unrelated party for the debt assigned with 10% annual interest. This note is convertible into a number of shares at a discount of 65% of the lowest intra-day trading price during the five trading days immediately prior to conversion date. The Company evaluated the note and determined that the shares issuable pursuant to the conversion option were indeterminate and therefore this conversion option and all other dilutive securities would be classified as a derivative liability as of March 17, 2014. A debt discount of $7,500 was recorded due to embedded derivative feature in the convertible promissory note, and a loss on derivative valuation of $11,173 was recorded on issuance date of the note. The debt discount was amortized over the life of the debt. The Company recorded debt discount amortization of $288 for the quarter ended March 31, 2014. Accrued interest of $29 was outstanding as of March 31, 2014.

Note 9: On January 2, 2014, one of the note holders assigned debt in the amount of $20,000 to unrelated third party, and Company issued a convertible promissory note to this unrelated party for the debt assigned with 10% annual interest. This note is convertible into a number of shares at a discount of 65% of the lowest intra-day trading price during the five trading days immediately prior to conversion date. The Company evaluated the note and determined that the shares issuable pursuant to the conversion option were indeterminate and therefore this conversion option and all other dilutive securities would be classified as a derivative liability as of January 2, 2014. A debt discount of $20,000 was recorded due to embedded derivative feature in the convertible promissory note, and a loss on derivative valuation of $24,989 was recorded on issuance date of the note. The debt discount was amortized over the life of the debt. During the quarter ended March 31, 2014, the Company issued 133,333 shares to settle $5,000 of outstanding balance, yielding balance of $15,000 due as of March 31, 2014. The shares were valued per conversion term and market price on conversion date. The Company recorded loss of $13,351 on the conversions. The Company recorded debt discount amortization of $24,822 for the quarter ended March 31, 2014. Accrued interest of $494 was outstanding as of March 31, 2014.

Note 10: As of March 31, 2014 the Company had a debt obligation of $11,300. The note bears no interest; therefore, Company imputed interest at 12% and recorded imputed interest in the amount of $399 for the quarter ended as March 31, 2014 as additional paid in capital. No payments were made during the period.

Note 11: On May 20, 2013, one of the note holders assigned debt in the amount of $30,000 to unrelated third party, and Company issued a convertible promissory note to this unrelated party for the debt assigned with 12% annual interest and default rate of 22%. The note is convertible into a number of shares at a discount of 50% off the lowest intra-day trading prices during the 10 days prior to the conversion date. The Company evaluated the note and determined that the shares issuable pursuant to the conversion option were indeterminate and therefore this conversion option and all other dilutive securities would be classified as a derivative liability as of May 20, 2013. Debt discount of $30,000 for each convertible note was recorded due to embedded derivative feature, and a loss on derivative valuation of $4,541 for each convertible note was also recorded as of December 31, 203. The debt discount was fully amortized as of March 31, 2014, and the Company recorded debt discount amortization of $7,796 for the three months ended March 31, 2014. Accrued interest was due on this note in the amount of $3,869 as of March 31, 2014. This note was at default as of March 31, 2014. On August 26, 2013, one of the note holders assigned debt in the amount of $42,000 to this same unrelated third party, and Company issued a convertible promissory note for the debt assigned with 12% annual interests and default rate of 22%. This convertible note has the same conversion terms as those previously issued to this unrelated third party. A debt discount of $42,000 was recorded due to embedded derivative feature in the convertible promissory note, and a loss on derivative valuation of $11,035 was recorded as of December 31, 2013. During the year ended December 31, 2013, the Company settled $12,483 of this note by issuing common stock, yielding balance of $29,517. During the quarter ended March 31, 2014, the Company settled $1,375 of this note by issuing 18,333 of Company’s common shares, yielding balance of $28,412. The shares were valued per conversion term and market price on conversion date. The Company recorded a gain of $13 for the conversion. The Company recorded debt discount amortization of $10,959 for the quarter ended March 31, 2014. Accrued interest of $3,116 was outstanding as of March 31, 2 014. This note was at default as of March 31, 2014. On August 30, 2013, the Company received cash proceeds in the amount of $25,000 related to a convertible debt obligation with the same unrelated third party. This convertible note has the same conversion terms as those previously issued to this unrelated third party. A debt discount of $25,000 was recorded due to embedded derivative feature in the convertible promissory note, and a loss on derivative valuation of $5,026 was recorded as of December 31, 2013. No payments were made during the quarter ended March 31, 2014. The Company recorded debt discount amortization of $6,164 for the quarter ended March 31, 2014, and there is accrued interest of $1,998 on this note.

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Note 12: As of March 31, 2014 the Company has a debt obligation of $25,000 which bears interest at the rate of 6%. No payments were made during the quarter ended March 31, 2014, and there is accrued interest of $4,278 on the note. This note is convertible into a number of shares arrived at by dividing the principal and interest owed by 50% of the average lowest 3 trading prices over the 20 days prior to the conversion date. A debt discount was recorded for $25,000 based on the fact that there was a beneficial conversion feature in the promissory note and fully amortized during the year ended December 31, 2013. This note is at default as of March 31, 2014.

Note 13: On May 22, 2013, the Company received cash advances of $25,000 against a reserved note of $275,000. Outstanding principal amount included cash proceed of $25,000, 10% of original interest discount of $2,500, and financing cost of $2,000. The note bears annual interest of 12%. During the year ended December 31, 2013, the Company settled $2,200 in debt for common stock, yielding a balance of $27,300 at the end of the period, and there is $3,540 in accrued interest on the note. This note is convertible into a number of shares equal to the dollar conversion amount divided by the lesser of $0.10 or 60% of the lowest trading price in the 25 trading days prior to conversion. A debt discount of $26,137 was recorded due to embedded derivative feature in the convertible promissory note. For the year ended December 31, 2013, the Company recorded debt discount amortization of $16,842, original interest discount amortization of $1,884, and amortization of financing cost of $1,167 for this note. During the quarter ended March 31, 2014, the Company settled $6,165 of the debt by issuing 100,000 Company’s common shares, yielding balance of $21,135 as of March 31, 2014. The shares were valued per conversion term and market price on conversion date, and the Company recorded a loss of $2,424 on the conversion. For the quarter ended March 31, 2014, the Company recorded debt discount amortization of $7,254, original interest discount amortization of $616, and amortization of financing cost of $500 for this note. Accrued interest of $3,540 was outstanding as of March 31, 2014. In addition, on August 21, 2013, the Company received another convertible note in the amount of $25,000 against the reserved note of $275,000 from the same unrelated third party. Outstanding principal of this note included cash proceed of $25,000, 10% of original interest discount of $2,500, and financing cost of $2,000. This note has the same conversion and interest term as that previously issued to the same party. A debt discount of $29,500 was recorded due to embedded derivative feature in the convertible promissory note, and a loss on derivative valuation of $9,369 was recorded as of December 31, 2013. For the year ended December 31, 2013, the Company recorded debt discount amortization of $10,668, original interest discount amortization of $904, and amortization of financing costs of $719 for this note. No payment was made to this note during the quarter ended March 31, 2014. For the quarter ended March 31, 2014, the Company recorded debt discount amortization of $7,247, original interest discount amortization of $616, and amortization of financing costs of $500 for this note. Accrued interest of $3,540 was outstanding as of March 31, 2014.

Note 14: On February 11, 2014, the Company received cash proceeds of $22,500 for this debt obligation which bears interest at the rate of 8% and includes financing cost of $2,500. This note is convertible into a number of shares arrived at by dividing the principal and interest owed by 45% of the average lowest 3 days trading prices over the 10 days prior to the conversion date. The Company evaluated the note and determined that the shares issuable pursuant to the conversion option were indeterminate and therefore this conversion option and all other dilutive securities would be classified as a derivative liability as of February 11, 2014. A debt discount of $22,500 was recorded due to embedded derivative feature in the convertible promissory note, and a loss on derivative valuation of $19,666 was recorded as of March 31, 2014. For the quarter ended March 31, 2014, the Company record debt discount amortization of $3,564 and financing cost of $556. Accrued interest of $236 was due as of March 31, 2014.

Note 15: As of December 31, 2013 the Company had a note outstanding of $12,000 for this debt obligation which bears interest at the rate of 18% compounded monthly. No payments were made during the period and there is accrued interest of $3,903 on the note. Accrued interest was reclassified to principal owed as of December 31, 2013, yielding balance of $15,903. During the quarter ended March 31, 2014, no payment was made, interest expenses of $716 for the three months ended March 31,2 014 was reclassified to the principal owed, yielding balance of $16,619 as of March 31, 2014. This note is at default as of March 31, 2014.

Note 16: On May 30, 2013, the Company received cash proceeds of $50,000 for this debt obligation which bears interest at the rate of 12% and default rate of 22%. This note is convertible into a number of shares arrived at by dividing the principal and interest owed by 50% of the average lowest trading prices over the 5 days prior to the conversion date. A debt discount of $50,000 was recorded due to embedded derivative feature in the convertible promissory note, and a loss on derivative valuation of $5,652 was recorded as of December 31, 2013. In relation to the cash advances, financing costs of $2,500 were paid in conjunction with this debt. These fees are amortized over the term of the loan. For the quarter ended March 31, 2014, no payment was made to this note, and the Company recorded debt discount amortization of $10,766 and amortization of financing cost of $556. There was accrued interest of $6,250 as of March 31, 2014 for this note. The note was at default as of March 31, 2014.

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Note 17: During the year ended December 31, 2013 we had received cash proceeds from an unrelated third party for the aggregate amount of $11,500 , which is payable in principal and interest with rates of 18% compounded monthly. No payments were made during the year ended December 31, 2013 and accrued interest of $1,186 was reclassified to principal owed, yielding balance of $12,686 as of December 31, 2014. During the quarter ended March 31, 2014, this unrelated third party advanced additional $10,000 cash to the Company for its daily operation, and the Company repaid this party $1,000 cash during the period. Interest expense in the amount of $579 for three months ended March 31, 2014 was reclassified to principal owed, yielding balance of $22,266 due as of March 31, 2014.

Note 18: On March 21, 2014, the Company entered into a settlement agreement with unrelated third party. Pursuant to the settlement agreement the third party was to pay past due accounts payable up to $206,000 on behalf of the Company in exchange for the issuance of Company stock at 60% of the lowest trading price during 15 trading days prior to conversion. During the quarter ended March 31, 2014, the third party assumed $63,234 of Company’s past due liabilities. During the quarter ended March 31, 2014, the Company settled $3,000 of the debt by issuing 100,000 Company’s common stock. The stock was valued per conversion term and market price on conversion date, no gain or loss recorded for this conversion.

Note 19: On August 1, 2013, the Company received cash proceeds of $27,500 for this debt obligation which bears interest at the rate of 8% and includes financing cost of $2,500. This note is convertible into a number of shares by dividing the principal and interest owed by 45% of the average lowest three day trading prices over the 20 days prior to the conversion date. During the quarter ended March 31, 2014, the Company settled $2,165 of the debt by issuing 40,093 of Company’s common shares, yielding balance of $25,335 as of March 31, 2014. The shares were valued per conversion term and market price on conversion date, and no gain or loss recorded on this conversion. For the quarter ended March 31, 2014, the Company recorded debt discount amortization of $3,142 and amortization of financial cost of $833. Accrued interest of $1,445 was due as of March 31, 2014.

Note 20: On August 14, 2013, the Company received cash proceeds of $22,000 for this convertible debt obligation which bears interest at the rate of 8%, and includes financing cost of $2,500. This note is convertible into a number of shares by dividing the principal and interest owed by 50% of the average lowest three day trading prices over the 10 days prior to the conversion date. A debt discount of $22,000 was recorded due to embedded derivative feature in the convertible promissory note, and a loss on derivative valuation of $1,407 was recorded as of December 31, 2013. During the quarter ended March 31, 2014, no payment was made to this note. The Company recorded debt discount amortization of $7,253 and amortization of financial cost of $667. Accrued interest of $1,049 was due as of March 31, 2014.

Note 21: On August 23, 2013, the Company received cash proceeds of $25,000 for this convertible debt obligation that has a cash redemption premium of 125%. This note is convertible into a number of shares by dividing the principal by 50% of the average of the three lowest trades over the 10 days prior to the conversion date. This convertible note bears no interest; therefore, the Company imputed interest at 12%, and recorded imputed interest of $500 for the quarter ended March 31, 2014 as additional paid in capital. A debt discount of $25,000 was recorded due to embedded derivative feature in the convertible promissory note, and a loss on derivative valuation of $7,178 was recorded as of December 31, 2013. For the quarter ended March 31, 2014, the Company recorded debt discount amortization of $7,337. The note was at default as of March 31, 2014.

Note 22: On September 30, 2013, the Company received cash proceeds of $32,500 for this debt obligation which bears interest at the rate of 8% and includes financing cost of $2,500. This note is convertible into a number of shares by dividing the principal and interest owed by 45% of the average lowest three day trading prices over the 20 days prior to the conversion date. A debt discount of $32,500 was recorded due to embedded derivative feature in the convertible promissory note, and a loss on derivative valuation of $9,967 was recorded as of December 31, 2013. During the quarter ended March 31, 2014, no payment was made to this note. The Company recorded debt discount amortization of $10,636 and amortization of financial cost of $833. Accrued interest of $1,300 was due as of March 31, 2014.

Note 23: On November 20, 2013, the Company received cash proceeds of $15,000 from related party for debt obligation which bears interest at the rate of 6% and includes financing cost of $10,000. This note is convertible into a number of shares by dividing the principal and interest owed by 50% of the average lowest three day trading prices during the 10 trading days prior to the conversion date. A debt discount of $7,424 was recorded due to embedded derivative feature in the convertible promissory note as of December 31, 2013. During the quarter ended March 31, 2014, no payment was made to this note. The Company recorded debt discount amortization of $3,699 and amortization of financial cost of $2,500. Accrued interest of $326 was due as of March 31, 2014.

Note 24: On January 1, 2014, the Company acquired additional 12.5% of the total 100% of working interest in the Tubb lease oil and gas properties from its related party EGPI Firecreek. As consideration of the acquisition, the Company assumed $173,727 debt from EGPI Firecreek. The debt assumed bears 18% compounded annual interest. During the quarter ended March 31, 2014, no payments were made to the note, and interest expense for the three months ended March 31, 2014 in the amount of $7,818 was reclassified to the principal owed, yielding balance of $181,545 as of March 31, 2014.

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Note 25: On April 26, 2013, the Company entered into an agreement to extend option with related party EGPI Firecreek and its oil and gas properties operator. In the agreement, the Company acknowledged that related party, EGPI Firecreek, Inc. had outstanding balance in the amount of $200,000 owed to Company’s oil and gas properties operator, and agreed to assume the debt repaying obligation along with EGPI Firecreek. For the quarter ended March 31, 2014, no payment was made. As the note agreement has no stated interest, the Company imputed interest at 12%, and recorded imputed interest of $6,000 for the quarter ended March 31, 2014 as additional paid in capital.

Note 26: On January 1, 2014, the Company acquired additional 12.5% of the total 100% of working interest in the Tubb lease oil and gas properties from its related party EGPI Firecreek. As consideration of the acquisition, the Company assumed $376,273 debt from EGPI Firecreek. The debt assumed bears 18% compounded annual interest. During the quarter ended March 31, 2014, $10,000 of the debt was paid by unrelated party on behalf of the Company. Interest expense for the three months ended March 31, 2014 in the amount of $16,482 was reclassified to the principal owed, yielding balance of $382,755 as of March 31, 2014.

Note 27: During the quarter ended March 31, 2014, the Company and one of its debt holders agreed to rescind a conversion of convertible debt executed during fiscal year 2013. Common stock of 6,667 was rescinded and debt in the amount of $12,500 was reinstated as of March 31, 2014. During the quarter ended March 31, 2014, no payment was made to this note, and there was accrued interest of $250 due on this note as of March 31, 2014.

12. Derivative Liabilities

The Company evaluated the conversion feature embedded in the convertible notes to determine if such conversion feature should be bifurcated from its host instrument and accounted for as a freestanding derivative. Due to the note not meeting the definition of a conventional debt instrument because it contained a diluted issuance provision, the convertible notes were accounted for in accordance with ASC 815. According to ASC 815, the derivatives associated with the convertible notes were recognized as a discount to the debt instrument, and the discount is being amortized over the life of the note and any excess of the derivative value over the note payable value is recognized as additional expense at issuance date.

Further, and in accordance with ASC 815, the embedded derivatives are revalued at each balance sheet date and marked to fair value with the corresponding adjustment as a “gain or loss on change in fair value of derivatives” in the consolidated statement of operations. As of March 31, 2014, the fair value of the embedded derivatives included on the accompanying consolidated balance sheet was $990,238. During the three months period ended March 31, 2014, the Company recognized a loss on change in fair value of derivative liability totaling $672,876. Key assumptions used in the valuation of derivative liabilities associated with the convertible notes at March 31, 2014 were as follows:

·	The stock price would fluctuate with an annual volatility ranging from 324% to 385% based on the historical volatility for the company.

·	An event of default would occur 5% of the time, increasing 1.00% per quarter to a maximum of 10%.

·	Alternative financing for the convertible notes would be initially available to redeem the note 0% of the time and increase quarterly by 1% to a maximum of 20%.

·	The monthly trading volume would average $51,785 to $487,379 and would increase at 1% per month.

·	The variable conversion prices ranging from 25% to 60% of bid or close prices over 10 to 25 trading days have effective discount rates of 55.79% to 72.96%

·	The holder would automatically convert at variable conversion prices ranging from 25% to 60% of bid or close prices over 10 to 25 trading days if the registration was effective and the company was not in default.

·	Conversion price reset events are assumed every 3 months.

The Company classifies the fair value of these securities under level three of the fair value hierarchy of financial instruments. The fair value of the derivative liability was calculated using a lattice model that values the compound embedded derivatives based on a probability weighted discounted cash flow model. This model is based on future projections of the various potential outcomes. The embedded derivatives that were analyzed and incorporated into the model included the conversion feature with the full ratchet reset, and the redemption options.

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The components of the derivative liability on the Company’s balance sheet at March 31, 2014 and December 31, 2013 are as follows:

	March 31, 2014		December 31, 2013

Embedded conversion features - convertible promissory notes	$	990,238	$	220,131
	$	990,238	$	220,131

The Company had the following changes in the derivative liability:

Balance at December 31, 2013		220,131
Issuance of securities with embedded derivatives	$	248,406
Debt conversion		(59,503)
Prior period conversion rescinded		3,911
Derivative (gain) or loss due to mark to market adjustment		577,293
Balance at December 31, 2013	$	990,238

13. Asset Retirement Obligation (ARO)

The ARO is recorded at fair value and accretion expense is recognized as the discounted liability is accreted to its expected settlement value. The fair value of the ARO liability is measured by using expected future cash outflows discounted at the Company’s credit adjusted risk free interest rate.

Amounts incurred to settle plugging and abandonment obligations that are either less than or greater than amounts accrued are recorded as a gain or loss in current operations. Revisions to previous estimates, such as the estimated cost to plug a well or the estimated future economic life of a well, may require adjustments to the ARO and are capitalized as part of the costs of proved oil and natural gas property.

The following table is a reconciliation of the ARO liability for continuing operations for the three months ended March 31, 2014 and December 31, 2013.

	March 31, 2014			December 31, 2013

Asset retirement obligation at the beginning of period	$	5,781		$	5,114
Acquisition of oil and gas leases		2,025			-
Adjustment to ARO		(2,025	)		-
Dispositions		-			-
Accretion expense		2,113			667
Asset retirement obligation at the end of period	$	7,894		$	5,781

14. Concentrations and Risk

Customers

During the quarter ended March 31, 2014, revenue generated under the top two customers accounted for 100% of the Company’s total revenue. Concentration with a single or a few customers may expose the Company to the risk of substantial losses if a single dominant customer stops conducting business with the Company. Moreover, the Company may be subject to the risks faced by these major customers to the extent that such risks impede such customers’ ability to stay in business and make timely payments.

15. Legal Proceeding

On March 21, 2014, the Circuit Court in the Twelfth Judicial Circuit in and for Sarasota County, Florida (the “Court”), entered an Order Granting Approval of Settlement Agreement (the “Order”) approving, among other things, the fairness of the terms and conditions of an exchange pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended (the “Securities Act”), in accordance with a Settlement Agreement (the “Settlement Agreement”) between the Company and IBC Funds, LLC, a Nevada limited liability company (“IBC”), in the matter entitled IBC Funds, LLC, vs. Mondial Ventures, Inc., Case No. 2014 CA 011677 NC (the “Action”). IBC commenced the Action against us to recover an aggregate of $206,000 of past-due accounts payable, which IBC had purchased from certain of our vendors pursuant to the terms of separate claim purchase agreements between IBC and each of the respective vendors (the Assigned Accounts), plus fees and costs (the “Claim”). The Assigned Accounts relate to certain transfer agent fees, oil and gas development costs, oil and gas reserve and engineering report costs, and legal fees and services, and consulting fees. The Order provides for the full and final settlement of the Claim and the Action.

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During the quarter ended March 31, 2014, IBC Funds, LLC purchased claim purchase agreement in the amount of $63,234. During the quarter ended March 31, 2014, the Company has issued 100,000 shares valued at $3,000 to settle $3,000 of debt due to IBC Funds, LLC. In addition, the Company issued 375,000 valued on settlement date at $34,500 as settlement fee pursuant to the settlement agreement.

16. Contingencies

The Company has certain notes that may become convertible in the future and potentially result in dilution to our common shareholders.

17. Amalgamation and Acquisition

On 3/25/2014, Boomerang Oil, Inc. (formerly 0922327 B.C. Ltd.) entered into acquisition agreement with Shale Corp to acquire all issued and outstanding Shale Corp shares. Pursuant to the acquisition agreement, Boomerang was to issue 70,000,000 of its common stock to acquire all of Shale Corp's issued and outstanding shares on a 1 to 1 basis. Subsequent to the share exchange, Shale Corp became Boomerang's wholly owned subsidiary. Immediately after the share exchange, Shale Corp amalgamated with Boomerang's wholly owned subsidiary 2301840 Ontario, Inc. to form a new subsidiary subsequently named as 1913564 Ontario, Inc. As a result of the share exchange, the Company, which owned 47 million of Shale Corp immediately prior to the share exchanges, became 66.17% owner of the consolidated entity of Boomerang Oil, Inc. and 1913564 Ontario, Inc. Through its majority ownership, the Company reported carrying value of net assets/liabilities of Boomerang Oil, Inc. and 1913564 Ontario, Inc. with non-controlling interest. The Company recorded $208,712 equity balance as effect of the amalgamation and acquisition as of March 31, 2014.

18. Non-controlling interest

Non-controlling interest represents the 33.83% interest in the subsidiaries. This non-controlling interest balance is composed of the transfer of oil and gas properties interest, amalgamation and acquisition among majority owned subsidiaries, net loss, and unrealized foreign currency translation loss attributable to the non-controlling interest for the quarter ended March 31, 2014. The Company recorded $249,090 and $nil non-controlling interest as of March 31, 2014 and December 31, 2013, respectively.

19. Subsequent Events

In April 2014, the Company issued 8% promissory notes to certain institutional or accredited investors in the amount of $8,000 all due nine (9) months from the date of issuance. The Company has the right to repay within 180 days from the effectiveness of the note.

On May 9, 2014 IBC Funds, LLC, a Nevada limited liability company (“IBC”) noticed default to the Company pursuant to provisions of paragraph 8(d) of a *Settlement Agreement and Stipulation, further described below, for failure of the Company’s common stock on the Principal Markets to comply with market price and volume requirements. Therefore claims related to tranches two and three of the Settlement Agreement in the aggregate total amount of $60,000 and $82,766.83, respectively to be paid to each of the approved creditors by IBC on dates specified to the court would, as of May 15, 2014, be returned to the creditors. The Company’s requirement to issue its shares of common stock for remaining amounts owing on IBC’s initial tranche one payment made by IBC in compliance and accordance with terms of the Settlement Agreement would be required until payment in full is completed. *Noting summary record that on March 21, 2014, the Circuit Court in the Twelfth Judicial Circuit in and for Sarasota County, Florida (the “Court”), entered an Order Granting Approval of Settlement Agreement (the “Order”) in accordance with a Settlement Agreement (the “Settlement Agreement”) between the Company and IBC in the matter entitled IBC Funds, LLC, vs. Mondial Ventuers, Inc., Case No. 2014 CA 011677 NC (the “Action”). The Settlement Agreement in the total aggregate amount of $206,000 plus costs to be paid by IBC became effective and binding on March 21, 2014. The Settlement Agreement approval called for initial payment (the first tranche) of $63,233.67 to approved creditors and related costs which were paid by funds advanced by IBC, and further to be followed in accordance with the terms of settlement by a second tranche payment of $60,000 to approved creditors in 60 days and third tranche payment of $82,766.33 to approved creditors in 120 days following the formal court order on March 21, 2014, respectively. For further information please see our Current Report on Form 8-K filed on March 31, 2014, incorporated herein by reference.

In May 2014, the Company approved a partial assignment of debt in the face amount of $60,000 to certain institutional or accredited investors. The debt is convertible at a 50% discount off of the lowest traded price of the ten days prior to the submission of a notice of conversion to the Company’s Transfer Agent. The only recourse the investors will have is rescission.

In May 2014, the Company issued a 0% interest discounted convertible promissory note to certain institutional or accredited investors in behalf of its direct investment to the Company with terms for the purchase price of $20,000 on the total face amount of $30,000 all due seven (7) months from the date of issuance.

Subsequent to quarter ended March 31, 2014 through May 16, 2014, the Company issued 6,798,491 common shares to reduce debt on convertible promissory notes.

Subsequent to quarter ended March 31, 2014 through May 16, 2014, the Company issued 3,182,000 common shares to reduce account payable balances.

Subsequent to quarter ended March 31, 2014 through May 16, 2014, the Company cancelled 68 common shares.

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ITEM 2. – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis in conjunction with the Consolidated Financial Statements in Form 10-K, as amended, and the other financial data appearing elsewhere in this Form 10-Q Report.

The information set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including, among others (i) expected changes in the Company’s revenues and profitability, (ii) prospective business opportunities and (iii) the Company’s strategy for financing its business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as “believes”, “anticipates”, “intends” or “expects”. These forward-looking statements relate to the plans, objectives and expectations of the Company for future operations. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of its knowledge of its business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this report should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved. In light of these risks and uncertainties, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. The foregoing review of important factors should not be construed as exhaustive. The Company undertakes no obligation to release publicly the results of any future revisions it may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

General

As of July 31, 2012 we are an oil and gas production company focused on the recovery and development of oil and natural gas.

Our Historical Business

Legacy – Mondial Merger

Pursuant to an Agreement and Plan of Merger dated as of December 14, 2010, entered into by and between Legacy Athletic Apparel LLC, (“Legacy”) a Virginia limited liability company and Mondial a Nevada corporation, on December 30, 2010, Legacy merged into Mondial, with Mondial being the surviving entity. Prior to the Plan of Merger Legacy was formed in July 2010 as a Virginia limited liability company. As a result of the merger, Mondial succeeded to the business and acquired all the assets and assumed all the liabilities of Legacy. Previous business activities related to Legacy operations included the development, design, marketing and distribution of branded performance apparel, footwear and accessories for men, women and youth.

Historical Mining Operations

Prior to the historical merger with Legacy, the Company was an exploration stage mineral company engaged in the acquisition, and exploration of mineral properties with a view to exploiting any mineral deposits we would discover and that demonstrated economic feasibility. Prior to December 15, 2010, we owned a 100% interest in four contiguous mineral claims collectively known as the Q29 property. The claims expired on December 15, 2010, and in light of our determination to change our business as contemplated in the merger, we did not re-stake the claims.

We account for or have accounted for Legacy in discontinued operations in the consolidated statements of operations for the related fiscal year.

Completion and Entry into a Definitive Agreement with Energy Producers, Inc., a wholly owned subsidiary of EGPI Firecreek, Inc. (“EGPI”) for Sale of Oil and Gas Interests and Rights in J.B. Tubb Leasehold Estate, Ward and Jones County Texas

On July 31, 2012, the Company as the assignee of CUBO Energy PLC entered into and completed the closing of an Assignment and Bill of Sale and Stock Purchase Agreement (“SPA”) with EGPI Firecreek Inc. through its wholly owned subsidiary Energy Producers, Inc. (“EGPI”). The interests acquired from EGPI were oil and gas interests in the J.B. Tubb Leasehold Estate located outside of Odessa Texas in Ward and Jones County. The Agreement included our entering into a Participation Agreement (Turnkey Drilling, Re Entry, and Multiple Wells) granting certain rights in and to interests for additional development on the J.B. Tubb Leasehold Estate. The Company presently owns 37.5% working interest ("WI"), 28.125% net revenue interest ("NRI") in the oil and gas interests, and pro rata oil & gas revenue and reserves for all depths below the surface to at least 8500 ft. including all related assets, fixtures, equipment, three well heads and three well bores. The field is located in the Permian Basin and the Crawar Field, directly adjacent to property operated by Chevron Corporation in Ward County, Texas (12 miles southeast of Monahans and 30 miles west of Odessa in West Texas). For further information see the section on the “Business” and “Description of Properties” listed in this Report.

Completion and Entry into a Definitive Short Form Agreement with Energy Producers, Inc., a wholly owned subsidiary of EGPI Firecreek, Inc., for Evaluation and Potential Acquisition of 50% Oil and Gas Working Interests, Callahan, Stephens, and

Shakelford Counties, Texas

On October 30, 2012, the Company as the assignee of CUBO Energy PLC and Energy Producers, Inc., a wholly owned subsidiary of EGPI Firecreek, Inc. (“EGPI”) entered into a Linear Short Form Agreement involving the development and acquisition of oil and gas interests subject to certain requirements. The interests relating to 50% working interests and corresponding 32% net revenue interests in oil and gas leases representing the aggregate total of 240 acre leases, reserves, three wells, and equipment located in Callahan, Stephens, and Shackelford Counties, West Central Texas. For further information see the section on the “Business” listed in this Report. The parties had until November 6, 2012 to finalize this agreement but did not do so by that date. Both parties are still interested in pursuing this transaction in the future.

The Company expects to incur an increase in operating expenses during the next year from commencing activities related to its plans for the Company’s oil and gas business including, but not limited to uncertainty as to development and the time and timing required for the Company’s plans to be fully implemented, governmental regulatory responses to the Company’s plans, fluctuating markets and corresponding spikes, or dips in our products demand, currency exchange rates between countries, acquisition and development pricing, related costs, expenses, offsets, increases, and adjustments. There can be no assurance that the Company will ever generate significant revenues or achieve profitability at all or on any substantial basis.

To the extent possible, the following discussion will highlight the Company’s business activities for the three months end March 31, 2014 and 2013.

Results of Operations

Three months ended March 31, 2014 compared to the three months ended March 31, 2013.

Total revenue for sales of oil and gas during the three months ended March 31, 2014 was $35,788 compared with $17,947 in 2013.

Following is a breakdown of general and administrative costs for this period versus a year ago:

Detail of general and administrative expenses:

	For the three months ended March 31
	2014		2013

Advertising and promotion	$	503	$	68
Administration		24,788		7,561
Rent and utilities		6,000		6,000
Professional Fees		2,108,863		89,220
Total	$	2,140,154	$	102,849

For the three months ended March 31, 2014, total administration expenses increased by $17,227 compared to the same period in 2013.

For the three months ended March 31, 2014 professional fees of $ 2,108,863 were incurred in regard to management advisory, legal costs and accounting which included additional costs for the acquisition of a subsidiary company as compared to $89,220 for the three months ended March 31, 2013.

Interest expense for the three months ended March 31, 2014 was $248,117 compared to $56,824 for the same period last year.

Income (loss) per share was ($0.58) per share for the three months ended March 31, 2014, compared to an income (loss) of ($16.40) per share for the three months ended March 31, 2013.

The Company incurred loss on debt settlement in the amount of $365,577 for the three months ended March 31, 2014, compared to $449,181 in the same period in 2013.

The Company incurred loss on derivative in the amount of $672,876 for the three months ended March 31 2014, compared to $nil in the same period in 2013.

Discussion of Financial Condition: Liquidity and Capital Resources

Cash on hand at March 31, 2014 was $76,734 compared to $3,508 at December 31, 2013. The Company had working capital deficit of $2,676,602 at March 31, 2014 compared to a working capital deficit of $ 1,363,383 at December 31, 2013.

Total assets increased to $1,196,817 at March 31, 2014 compared to $844,536 at December 31, 2014 mainly as a result of the acquisition of additional oil and gas leases.

Shareholders’ equity (deficit) increased to a deficit of $1,565,943 at March 31, 2014 from a deficit of $528,136 at December 31, 2013. During the three months ended March 31, 2014, the Company issued 12,873,293 shares to retire debt and pay for services.

For the three months period ended March 31, 2014, the Company has used $106,743 cash in operating activities compared to $121,842 cash provided in the same period in 2013.

For the three months period ended March 31, 2014, the Company has received cash $141,470 for investing activities in relation to oil and gas assets transferred. There was no investing activity for the three months ended March 31, 2013.

For the three months period ended March 31, 2014, the Company has generated $41,178 cash in financing activities compared to $101,800 in the same period in 2013.

The Company must generally undertake certain ongoing expenditures in connection with rebuilding, expanding and developing its oil and gas business and related acquisition activity and its business acquisition activities, and for various past and present legal, accounting, consulting, and technical review, and to perform due diligence for the acquisition and development programs for both lines of business; furthering research for new and ongoing business prospects, and in pursuing capital financing for its existing available rights and proposed operations.

Management has estimated that cost for initially paying down certain of the Company’s recent debt, providing necessary working capital, and activating development of its current plans for domestic oil and gas segment operations, alternative energy division, acquisition and development, will initially require $5,000,000 to $35,000,000 during the next six to twelve months .

The Company may elect to reduce or increase its requirement as circumstances dictate. We may elect to revise our plans and requirements for funds depending on factors including; changes in acquisition and development estimates; interim corporate and project finance requirements; unexpected timing of markets as to cyclical aspects as a whole; currency and exchange rates; project availability with respect to interest and timing factors indicated from parties representing potential sources of capital; structure and status of our strategic alliances, potential joint venture partners, and or our targeted acquisitions and or interests.

The Company cannot predict that it will be successful in obtaining funding for its plans or that it will achieve profitability in fiscal 2014.

ITEM 3. – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 under the Exchange Act and therefore we are not required to provide the information required under this item.

ITEM 4(T) – CONTROLS AND PROCEDURES

(a)	Evaluation of Disclosure and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of March 31, 2014. This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer. Based on this evaluation, these officers have concluded that there are material weaknesses in our disclosure controls and procedures and they were not effective for the following reasons:

●	Due to our relatively small size and not having present operations, we do not have segregation of duties which is a deficiency in our disclosure controls. We do not presently have the resources to cure this deficiency.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Principal Executive Officer and Principal Accounting Officer, to allow timely decisions regarding required disclosure.

All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability and financial statement preparation and presentation. In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

(b)	Changes in Internal Controls over financial reporting

There have been no changes in our internal controls over financial reporting during our last fiscal quarter, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. – LEGAL PROCEEDINGS

Currently, and from time to time, we are involved in litigation incidental to the conduct of our business. We are not a party to any lawsuit or proceedings that, in the opinion of our management and based on consultation with legal counsel, is likely to have a material adverse effect on our financial position or results of operations.

ITEM 1A. – RISK FACTORS

There have been no material changes in our risk factors from those disclosed in our Form 10-K for the fiscal year ended December 31, 2013.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Required information has been furnished in current Report(s) on Form 8-K filings and other reports, as amended, during the period covered by this Report.

Please see information contained in our Annual Report on Form 10-K filed on April 15, 2014.

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4 – (REMOVED AND RESERVED)

ITEM 5 – OTHER INFORMATION

The Company is presently in different stages of review and discussion, gathering data and information, and any available reports on other potential acquisitions in Texas, Montana, and other productive regions and areas in the U.S.

From time to time Management will examine oil and gas operations in other geographical areas for potential acquisition and joint venture development.

ITEM 6. – EXHIBITS

31.1	Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

31.2	Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101 INS	XBRL Instance Document*

101 SCH	XBRL Schema Document*

101 CAL	XBRL Calculation Linkbase Document*

101 DEF	XBRL Definition Linkbase Document*

101 LAB	XBRL Labels Linkbase Document*

101 PRE	XBRL Presentation Linkbase Document*

* The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 20, 2014

Mondial Ventures, Inc.

/s/ Dennis Alexander

Dennis Alexander

Chief Executive Officer and

Chairman of the Board of Directors

Attached files

MONDIAL VENTURES, INC. Reports

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