SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/Amendment No. 1

 

(Mark One)

x

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

For the quarterly period ended September 30, 2013

 

OR

 

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

 

Commission File number 000-54834

 

WOODGATE ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware		46-1874004
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

 

2500 Tanglewilde

Suite 260

Houston, Texas 77063

(Address of principal executive offices) (zip code)

 

713-978-6551

(Registrant's telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes     ¨ No

 

Indicate by check mark whether the registrant 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", "non-accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act. 

	Large Accelerated filer	¨	Accelerated filer	¨
	Non-accelerated filer	¨	Smaller reporting company	x

(do not check if smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨ Yes    x No

 

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

Class	Outstanding at September 30, 2013
Common Stock, par value $0.0001	47,295,000

 

Documents incorporated by reference:                                     None

 

  

Woodgate Energy Corporation

A Development Stage Company

Consolidated Statement of Financial Position

For the Period Ending September 30, 2013 and Year Ending December 31, 2012

 

		September 30, 2013				2012
ASSETS
Current Assets
Cash and Cash Equivalents			1,044,270				55,100
Accounts Receivable			337,481				562,438
Accrued Gas Sales			715				-
Prepaid Expense			12,500				13,809
Refundable Deposits			11,204				11,204
			1,406,170				642,551
Fixed Assets
Property and Equipment			33,403				33,403
Furniture and Fixtures			39,236				39,236
Project Under Development			19,282,703				18,351,693
Less accumulated DD&A			(69,276	)			(69,746	)
Total Assets			20,692,236				18,997,137
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable			599,654				698,760
Accrued Expense			366,084				132,463
Payroll Tax Liabilities			4,817				-
Direct Deposit Liabilities			13,553				-
Notes Payable			452,655				714,928
			1,436,763				1,546,151
Long-term Debt
Notes Payable			-				8,400,000
Total			1,436,763				9,946,151
Equity
Common Stock (100,000,000 Common Shares and 20,000,000 Preference shares Authorized. 47,295,000 Common shares and 20,000,000 Common shares issued at par value (0.0001) and outstanding as of Sept 30, 2013 and Dec 31, 2012 respectively)			4,730				2,000
Additional Paid-in Capital			24,136,515				(350	)
Members' Equity			-				12,815,085
Loss Incurred Since Inception			(4,885,772	)			(3,765,749	)
Total Equity			19,255,473				9,050,986
Total Liabilities and Stockholders' Equity			20,692,236				18,997,137

 

  

Woodgate Energy Corporation

A Development Stage Corporation

Statement of Operations

For the Periods Ending

 

		Three Months Ending September 30								Nine Months Ending September 30
		2013				2012				2013				2012				July 23, 2012 (Inception) to Sep 30, 2013
Revenues
Gas Sales			827				1,173				2,968				2,080				23,016
Total			827				1,173				2,968				2,080				23,016
Costs and Expenses
Direct operating costs			(18,855	)			85,698				2,951				356,050				39,527
General and administrative costs
Bad Debt			-				-				107,302				-				107,302
Adv. & Marketing Expenses			820				-				820				-				4,663
Bank charges			86				75				539				240				2,960
Communication			11				2,053				423				5,439				6,818
Depreciation, depletion and amortization			(1,193	)			-				(470	)			-				69,277
Employee insurance			2,350				2,230				6,862				6,501				6,862
Insurance			8,105				5,955				16,813				14,123				97,156
Legal			-				75,949				294				293,300				639,538
License Fees			252				(2	)			378				124				19,016
Miscellaneous			81				202				1,319				810				43,908
Office equipment			1,525				690				2,455				1,290				2,455
Payroll			117,538				111,038				341,407				337,593				2,900,586
Professional Fees			96,129				6,377				454,303				7,083				3,424,565
Rent			11,862				11,784				36,791				33,568				221,734
Stationery			1,021				1,041				2,146				2,006				44,926
Taxes			-				-				4,028				-				6,483
Travel			22,225				31,174				33,600				47,881				405,317
Utilities			1,173				190				2,840				727				52,645
Total			261,985				248,756				1,011,850				750,685				8,056,211
Operating Income			(242,303	)			(333,281	)			(1,011,833	)			(1,104,655	)			(8,072,722	)
Interest, Expense and Other Income
Other Income			3,847				-				163,127				(12,019	)			4,953,037
Financing Cost			-				-				-				-				(301,018	)
Other Expense			-				-				-				-				(126,454	)
Net unrealized gains (losses) on investments			-				-				(271,317	)			-				(1,338,615	)
Income from Continuing Operations			(238,456	)			(333,281	)			(1,120,023	)			(1,116,674	)			(4,885,772	)
Earnings per share											(0.06	)			0.00				(0.06	)

 

  

Woodgate Energy Corporation

A Development Stage company

Statement of Cash Flows

For the Periods Ending

  

		Three Months Ending September 30								Nine Months Ending September 30
		2013				2012				2013				2012				July 23, 2012 (Inception) to Sep 30, 2013
Operating Activities
Net Income			(238,456	)			(333,281	)			(1,120,023	)			(1,116,674	)			(4,885,772	)
Adjustments to reconcile Net Income to net Cash provided by Operations
Accounts Payable			74,817				(15,038	)			(280,408	)			372,307				4,526,654
Accounts Receivable			(47,932	)			(12,500	)			702,869				(106,663	)			42,549
Accrued Sale of Gas Income			(61	)			-				218				243				(715	)
Prepaid Expense			0				-				1,309				(2,928	)			(12,500	)
Credit Cards			210				88				200				61				209
Deposits			0				-				0				-				(11,204	)
Depreciation			(1,193	)			-				(470	)			-				69,277
Direct Deposit Liabilities			13,553				-				13,553				-				13,553
Payroll Tax Liabilities			(5,246	)			(5,295	)			(3,457	)			5				4,816
Accrued Expense			6,036				(1,300	)			233,272				(13,336	)			425,734
Net Cash Provided/(used) by Operating Activities			(198,272	)			(367,326	)			(452,937	)			(866,985	)			172,601
Investing Activities
Notes Receivable			0				-				0				-				(4,537,500	)
Projects Under Development			(95,863	)			-				(613,743	)			(388	)			(19,335,801	)
Property and Equipment			0				-				0				-				(72,640	)
Investment in EPCO			0				-				10,803,493				-				5,851,256
Debt Support to EPCO			0				-				(289,119	)			-				(289,119	)
			(95,863	)			-				9,900,631				(388	)			(18,383,804	)
Financing Activities
Cash Balances from Subsidiaries			53,100				-				53,100				-				53,100
Notes Payables			(9,492,584	)			35,000				(13,199,772	)			590,000				452,656
Proceeds from Issuance of Stock			1,295,017				-				1,293,066				-				1,295,223
Proceeds from Stock Sale			875				-				875				-				75
Proceeds from Members/Stockholder's Contribution			9,440,834				330,000				3,447,307				330,000				17,454,419
Net Cash Provided by Financing Activities			1,297,242				365,000				(8,405,424	)			920,000				19,255,473
Net Cash increase for period			1,003,107				(2,326	)			1,042,270				52,627				1,044,270
Cash at Beginning of Period			41,163				63,479				2,000				8,526				0
Cash at end of Period			1,044,270				61,153				1,044,270				61,153				1,044,270

 

  

Woodgate Energy Corporation

A Development Stage Company

Statement of Stockholders' Equity

For the period ending Sep 30, 2013

 

		Shares				Members' Capital				Additional Paid-in Capital				Accumulated Earnings				Total Members Equity
Balance July 23, 2012			0				12,815,085				0				(3,144,420	)			9,670,665
Issuance of Common Stock			20,000,000				2,000				0								2,000
Members' Equity			0				0				0				0				0
Additional Paid-in-Capital			0				0				(350	)			0				(350	)
Net Income/loss			0				0				0				(621,329	)			(621,329	)
Balance December 31, 2012			20,000,000				12,817,085				(350	)			(3,765,749	)			9,050,986
Conversion of Members' Equity			0				(12,815,085	)			0				0				(12,815,085	)
Redemption of Common Stock			(10,750,000	)			(1,075	)			0				0				(1,075	)
Issuance of Common Stock			38,045,000				3,805				24,136,866				0				24,140,671
Net Income/loss			0				0				0				(1,120,023	)			(1,120,023	)
Balance September 30, 2013			47,295,000				4,730				24,136,516				(4,885,772	)			19,255,473

 

  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1.

SUMMARY OF ACCOUNTING POLICIES

 

Principles of Consolidation. The Consolidated Financial Statements include the accounts of subsidiaries the Corporation controls.

 

Majority ownership is normally the indicator of control that is the basis on which subsidiaries are consolidated. However, certain factors may indicate that a majority-owned investment is not controlled and therefore should be accounted for using the equity method of accounting. These factors occur where the minority shareholders are granted by law or by contract substantive participating rights. These include the right to approve operating policies, expense budgets, financing and investment plans, and management compensation and succession plans.

 

Evidence of loss in value that might indicate impairment of investments in companies accounted for on the equity method is assessed to determine if such evidence represents a loss in value of the Corporation’s investment that is other than temporary. Examples of key indicators include a history of operating losses, a negative earnings and cash flow outlook, significant downward revisions to oil and gas reserves, and the financial condition and prospects for the investee’s business segment or geographic region. If evidence of an other than temporary loss in fair value below carrying amount is determined, an impairment is recognized. In the absence of market prices for the investment, discounted cash flows are used to assess fair value.

 

Revenue Recognition. The Corporation generally sells crude oil, natural gas and petroleum under short-term agreements at prevailing market prices. In some cases (e.g., natural gas), products may be sold under long-term agreements, with periodic price adjustments. Revenues are recognized when the products are delivered, which occurs when the customer has taken title and has assumed the risks and rewards of ownership, prices are fixed or determinable and collectibility is reasonably assured.

 

Derivative Instruments. The Corporation makes no use of derivative instruments. The Corporation does not engage in speculative derivative activities or derivative trading activities, nor does it use derivatives with leveraged features.

 

Fair Value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Hierarchy Levels 1, 2 and 3 are terms for the priority of inputs to valuation techniques used to measure fair value. Hierarchy Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Hierarchy Level 2 inputs are inputs other than quoted prices included within Level 1 that are directly or indirectly observable for the asset or liability. Hierarchy Level 3 inputs are inputs that are not observable in the market.

 

Property, Plant and Equipment. Depreciation, depletion and amortization, based on cost less estimated salvage value of the asset, are primarily determined under either the unit-of-production method or the straight-line method, which is based on estimated asset service life taking obsolescence into consideration. Maintenance and repairs, including planned major maintenance, are expensed as incurred. Major renewals and improvements are capitalized and the assets replaced are retired.

 

Interest costs incurred to finance expenditures during the construction phase of multiyear projects are capitalized as part of the historical cost of acquiring the constructed assets. The project construction phase commences with the development of the detailed engineering design and ends when the constructed assets are ready for their intended use. Capitalized interest costs are included in property, plant and equipment and are depreciated over the service life of the related assets.

 

The Corporation uses the “successful efforts” method to account for its exploration and production activities. Under this method, costs are accumulated on a field-by-field basis with certain exploratory expenditures and exploratory dry holes being expensed as incurred. Costs of productive wells and development dry holes are capitalized and amortized on the unit-of-production method.

 

The Corporation carries as an asset exploratory well costs when the well has found a sufficient quantity of reserves to justify its completion as a producing well and where the Corporation is making sufficient progress assessing the reserves and the economic and operating viability of the project. Exploratory well costs not meeting these criteria are charged to expense. Other exploratory expenditures, including geophysical costs and annual lease rentals, are expensed as incurred.

 

  

Acquisition costs of proved properties are amortized using a unit-of-production method, computed on the basis of total proved oil and gas reserves.

 

Capitalized exploratory drilling and development costs associated with productive depletable extractive properties are amortized using unit-of-production rates based on the amount of proved developed reserves of oil, gas and other minerals that are estimated to be recoverable from existing facilities using current operating methods.

 

Under the unit-of-production method, oil and gas volumes are considered produced once they have been measured through meters at custody transfer or sales transaction points at the outlet valve on the lease or field storage tank.

 

Production involves lifting the oil and gas to the surface and gathering, treating, field processing and field storage of the oil and gas. The production function normally terminates at the outlet valve on the lease or field production storage tank. Production costs are those incurred to operate and maintain the Corporation’s wells and related equipment and facilities and are expensed as incurred. They become part of the cost of oil and gas produced. These costs, sometimes referred to as lifting costs, include such items as labor costs to operate the wells and related equipment; repair and maintenance costs on the wells and equipment; materials, supplies and energy costs required to operate the wells and related equipment; and administrative expenses related to the production activity.

 

Proved oil and gas properties held and used by the Corporation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets.

 

The Corporation estimates the future undiscounted cash flows of the affected properties to judge the recoverability of carrying amounts. Cash flows used in impairment evaluations are developed using annually updated corporate plan investment evaluation assumptions for crude oil commodity prices, refining and chemical margins and foreign currency exchange rates. Annual volumes are based on field production profiles, which are also updated annually. Prices for natural gas and other products are based on corporate plan assumptions developed annually by major region and also for investment evaluation purposes. Cash flow estimates for impairment testing exclude derivative instruments.

 

Impairment analyses are generally based on proved reserves. Where probable reserves exist, an appropriately risk-adjusted amount of these reserves may be included in the impairment evaluation. An asset group would be impaired if the undiscounted cash flows were less than its carrying value.  Impairments are measured by the amount the carrying value exceeds fair value.

 

Significant unproved properties are assessed for impairment individually, and valuation allowances against the capitalized costs are recorded based on the estimated economic chance of success and the length of time that the Corporation expects to hold the properties. Properties that are not individually significant are aggregated by groups and amortized based on development risk and average holding period. The valuation allowances are reviewed at least annually.

 

Gains on sales of proved and unproved properties are only recognized when there is neither uncertainty about the recovery of costs applicable to any interest retained nor any substantial obligation for future performance by the Corporation.

 

Losses on properties sold are recognized when incurred or when the properties are held for sale and the fair value of the properties is less than the carrying value.

 

Asset Retirement Obligations and Environmental Liabilities. The Corporation incurs retirement obligations for certain assets. The fair values of these obligations are recorded as liabilities on a discounted basis, which is typically at the time the assets are installed. The costs associated with these liabilities are capitalized as part of the related assets and depreciated. Over time, the liabilities are accreted for the change in their present value.

 

Liabilities for environmental costs are recorded when it is probable that obligations have been incurred and the amounts can be reasonably estimated. These liabilities are not reduced by possible recoveries from third parties and projected cash expenditures are not discounted.

 

Foreign Currency Translation. The Corporation selects the United States Dollar as the functional reporting currency for it’s based on the currency of the primary economic environment in which each subsidiary operates.

 

  

For all operations, gains or losses from remeasuring foreign currency transactions into the functional currency are included in income.

 

NOTE 2.

GOING CONCERN

 

The Company sustained operating losses since inception. It has losses for the nine months ending September 30, 2013 and 2012 of $1,011,833 and $1,104,655, respectively. The Company has an accumulated deficit of $4,885,772 since inception. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and/or obtain additional financing from its stockholders and/or other third parties.

 

These financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The continuation of the Company as a going concern is dependent upon financial support from stockholders and the ability of the Company to obtain necessary equity financing to continue operations.

 

There is no assurance that the Company will ever be profitable. The financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a growing concern.

 

Management has developed specific current and long-term plans to address its viability as a going concern as follows:

 

·

Upon registration, the Company will attempt to raise funds through equity offerings. If successful, these funds will be used to provide working capital.

·

In the longer term, the Company believes the cash flows from growth in its operations will provide resources for continued operations.

 

There can be no assurance the Company will have the ability to implement its business plan and to ultimately attain profitability. The Company’s long-term viability as a going concern is dependent upon three key factors:

 

·

The Company’s ability to obtain adequate sources of equity funding to meet current commitments and fund the continuation of its business operation in the near term.

·

The ability of the Company to control costs and expand revenues.

·

The ability of the Company to ultimately achieve adequate profitability and cash flows from operations to sustain its operations.

 

NOTE 3.

ACCOUNTING CHANGES

 

The Corporation did not adopt authoritative guidance in 2013 that had a material impact on the Corporation’s financial statements.

 

NOTE 4.

STOCKHOLDERS’ EQUITY

 

The Company is authorized to issue 100,000,000 shares of common stock and 20,000,000 shares of preferred stock.

 

In July 2012, the Company issued 20,000,000 common shares to two directors and officers for an aggregated amount of $2,000 in cash.

 

On May 16, 2013, the Company redeemed an aggregate of 19,500,000 of the 20,000,000 outstanding shares at a redemption price of $.0001 per share for an aggregate redemption price of $1,950.

 

On May 17, 2013, the Company issued 8,750,000 shares of its common stock pursuant to Section 4(2) of the Securities Act of 1933 at par representing 94.5% of the total outstanding 9,250,000 shares of common stock.

 

In July 2013, the Company began to offer its common shares through private placement. The first sale was registered on July 30, 2013. By December 31, 2013, the Company had issued 1,345,000 shares of its common stock through private placement.

 

On September 6, 2013, the Company entered into a business combination with two LLCs – Prestige O & G, LLC and E & P Co., LLC, taking the form of a reverse merger.

 

The exchange closing took place on September 25, 2013 and the Company allotted a new issue of 36,750,000 to the members of Prestige O & G, LLC and E & P Co., LLC

 

 

As of September 30, 2013, 47,295,000 shares of common stock and no preferred stock were issued and outstanding.

 

NOTE 5.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Cash and Cash Equivalents

 

At September 30, 2013 and December 31, 2012, the Company had Cash and Cash Equivalents consisting of $1,044,270 and $55,100, respectively.

 

Accounts Receivable

 

At September 30, 2013 and December 31, 2012, the Company had Accounts Receivable – Related Party consisting of $337,481 and $562,438, respectively.

 

Projects Under Developments

 

At September 30, 2013 and December 31, 2012, the Company’s Projects Under Development were $19,282,703 and $18,351,693, respectively.

 

Entity		2013				2012
Woodgate Energy Corporation (Parent)			-				-
E & P Co., LLC (Subsidiary)			9,185,255				18,001,693
Prestige O & G, LLC (Subsidiary)			10,097,448				350,000
Total			19,282,703				18,351,693

 

Notes Payable

 

At September 30, 2013 and December 31, 2012, the Company held Notes Payable consisting of $452,655 and $714,928, respectively.

 

Entity		2013				2012
Woodgate Energy Corporation (Parent)			-				-
E & P Co., LLC (Subsidiary)			452,655				714,928
Prestige O & G, LLC (Subsidiary)			-				-
Total			452,655				714,928

 

Accounts Payable

 

At September 30, 2013 and December 31, 2012, the Company held Accounts Payable consisting of $599,654 and $698,760, respectively.

 

Entity		2013				2012
Woodgate Energy Corporation (Parent)			-				-
E & P Co., LLC (Subsidiary)			599,654				698,760
Prestige O & G, LLC (Subsidiary)			-				-
Total			599,654				698,760

 

Revenues

 

For the Quarter ending September 30, 2013 and 2012, Woodgate had limited revenues of gas sales in the amount of $827 and $1,173 and had limited income or cash flows from operations. The continuation of Woodgate as a going concern is dependent upon financial support from its stockholders or its ability to obtain necessary equity financing to continue operations.

 

  

Earnings Per Share

 

For the quarter ending September 30, 2013 and 2012, the company recorded operational losses of $242,303 and $333,281, respectively. This resulted in Earnings Per Share of ($0.01) and ($0.02) for those respective quarter ends. The majority of these losses are attributable to operational expenses incurred by the subsidiaries of the Company.

 

Litigation and other Contingencies

 

Management has regular litigation reviews, including updates from corporate and outside counsel, to assess the need for accounting recognition or disclosure of these contingencies. The Company accrues an undiscounted liability for those contingencies where the incurrence of loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For purposes of our contingency disclosures, “significant” includes material matters as well as other matters which management believes should be disclosed. E & P Co., LLC will continue to defend itself vigorously in these matters. Based on a consideration of all relevant facts and circumstances, the Company does not believe the ultimate outcome of any currently pending lawsuit against E & P Co., LLC will have a material adverse effect upon the Company’s operations, financial condition, or financial statements taken as a whole.

 

On April 16, 2009, Noram Drilling Company filed an original complaint against E & P Co. International, LLC and E & P Co., LLC in the 37^th District Court of Louisiana, arguing E & P Co., LLC was liable for breach of contract by E & P Co., LLC under the theory of single enterprise liability. The Company argues no such single enterprise liability exists as the contract is to be construed under Texas law. On January 16, 2013, the 37^th District Court in the Parish of Caldwell, Louisiana, the court granted E & P Co., LLC’s Motion for Summary Judgment, holding the Company not to be a party to the drilling contract. The Court further denied NorAm’s Motion for Summary Judgment for damages. On December 11, 2013, the Court of Appeals of the Second Circuit of the State of Louisiana affirmed the trial court’s finding.

 

At this time, the company is subject to no legal proceedings and the Company is unaware of any proceedings contemplated against it.

 

Supplemental Information on Oil and Gas Exploration and Production

 

The results of operations for producing activities shown below do not include earnings from nonoperating activities.

 

 

Results of Operations for the Quarter Ending		September 30, 2013				September 30, 2012
Revenue
Sales to third parties			827				1,173
Production costs excluding taxes			(18,855	)			85,698
Exploration expenses incurred			-				-
Taxes other than income			-				-
Related income tax			-				-
Results of producing activities			19,682				(84,525	)

 

  

Management’s judgment regarding the project’s capitalization of exploration well costs is based upon its current inability to estimate reserves. Currently, the project requires additional investment and approximately six months production history at substantially higher rates before an appropriate valuation of proved reserves may be made. The Company anticipates the following costs necessary to achieve proven reserve status of which E & P Co., LLC will be responsible for its interest accordingly:

 

Description		Cost
Addition of new saltwater disposal well			1,000,000
Re-drill Well No. 1			1,000,000
Replace pumps on Wells No. 4 and 5			200,000
Proved reserves valuation			25,000
			-
Net costs			2,225,000

 

As of September 30, 2013 and December 31, 2012, the amounts of capitalized costs related to oil and gas producing activities was as follows:

 

		2013								2012
		Consolidated				Entity’s Share of Equity Method Investees				Consolidated				Entity’s Share of Equity Method Investees
Unproved oil and gas properties			19,282,703				19,282,703				18,351,693				18,351,693
Proved oil and gas properties			-				-				-				-
Accumulated depreciation, depletion and amortization, and valuation allowances			-				-				-				-
Net capitalized costs			19,282,703				19,282,703				18,351,693				18,351,693

 

The aging of amounts of capitalized well costs and number of projects are as follows:

  

Period Ending December 31		Well Costs Capitalized for the Period				Number of Projects
2008			5,569,607				2
2009			2,986,906				2
2010			3,544,207				2
2011			5,285,613				2
2012			965,360				2
2013			931,010				2
Total			19,282,703				2

 

  

Costs Incurred In Oil And Gas Property Acquisition, Exploration And Development For The Quarter Ended September 2013 and December 31, 2012
Consolidated Entries		2013				2012
Acquisition of Properties
Proved			-				-
Unproved			10,000				10,000
Exploration Costs			2,950				1,845
Development Costs			600,792				953,512
Entity’s Share of Equity Method Investees:
Acquisition of Properties
Proved			-				-
Unproved			10,000				10,000
Exploration Costs			2,950				1,845
Development Costs			600,792				953,512

 

Subsequent Events

 

None noted.

 

 

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Woodgate Energy Corporation (formerly Woodgate Acquisition Corporation) was incorporated on July 23, 2012 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. Woodgate was formed to provide a method for a foreign or domestic private company to become a reporting company with a class of securities registered under the Securities Exchange Act of 1934.

 

Woodgate has filed with the Securities and Exchange Commission a registration statement on Form 10 and has effected a change in control in May, 2013. The Company has filed a Form 8-K noticing the change of its name and a subsequent Form 8-K notifying the change in control.

 

On September 6, 2013, Woodgate entered into a business combination with Prestige O&G, LLC and E&P Co., LLC. The combination took the form of stock-for-stock acquisition and Prestige O&G, LLC and E&P Co., LLC became fully owned subsidiaries of the Company. Following the business combination the Company filed a Form 8-K with the Securities and Exchange Commission.

 

Following the business combination of Woodgate with Prestige O&G, LLC and E&P Co., LLC, the Company allotted a new issue of 23,453,050 Common Shares to be given to the members of Prestige O&G, LLC and E&P Co., LLC for the purpose of acquiring the LLCs by the Company. Additionally, the Company also allotted the aggregate of 13,296,950 Common shares against the outstanding Debt balances in the books of LLCs as it appeared on the day of business combination. The Company also issued 1,295,000 shares of its common stock through private placement through September 30, 2013.

 

As of September 30, 2013, 47,295,000 shares of common stock and no preferred stock were issued and outstanding.

The presented financials for Woodgate for September 30, 2013 are the consolidated financials for Woodgate Energy Corporation and its subsidiaries, Prestige O&G, LLC and E&P Co., LLC.

 

Cash & Cash Equivalents

 

At September 30, 2013 and December 31, 2012, Cash and Cash Equivalents consisted of $1,044,270 and $55,100, respectively.

 

Name of the Entity		As of September 30, 2013
Woodgate Energy Corporation (Parent Company)			1,000,611
E&P Co., LLC (Subsidiary Company)			40,833
Prestige O&G, LLC (Subsidiary Company)			2,826
TOTAL			1,044,270

 

Accounts Receivable

 

Woodgate had an Accounts Receivable of $337,481 at September 30, 2013 and $562,438 at December 31, 2012.

 

Name of the Entity		As of September 30, 2013
Woodgate Energy Corporation (Parent Company)			289,119
E&P Co., LLC (Subsidiary Company)			47,931
Prestige O&G, LLC (Subsidiary Company)			431
			337,481

 

  

Projects Under Development

 

At September 30, 2013, the Company has $19,282,703 recorded as Projects Under Development. This includes 18,932,703 for the CBM project held jointly by its subsidiaries E&P Co., LLC and Prestige O&G, LLC and $350,000 for the Washington project held by Prestige O&G, LLC.

 

Name of the Entity		As of September 30, 2013
Woodgate Energy Corporation (Parent Company)			0
E&P Co., LLC (Subsidiary Company)			9,185,255
Prestige O&G, LLC (Subsidiary Company)			10,097,448
			19,282,703

 

Notes Payables

 

At September 30, 2013, the Company had Notes Payables for $452,655. At December 31, 2012, the Company recorded Notes Payables for $9,114,928.

 

Name of the Entity		As of September 30, 2013
Woodgate Energy Corporation (Parent Company)			0
E&P Co., LLC (Subsidiary Company)			452,655
Prestige O&G, LLC (Subsidiary Company)			0
			452,655

 

Accounts Payable

 

The Company recorded Accounts Payables for $599,654 at September 30, 2013, and $698,760 at December 31, 2012.

 

Name of the Entity		As of September 30, 2013
Woodgate Energy Corporation (Parent Company)			872
E&P Co., LLC (Subsidiary Company)			550,851
Prestige O&G, LLC (Subsidiary Company)			47,931
			599,654

 

Revenues

 

As of September 30, 2013, Woodgate had generated limited revenues (Gas Sales for $2,928) for the reported period and had limited income or cash flows from operations. For the Quarters ending September 30, 2013 and 2012, Woodgate had limited revenues of gas sales in the amount of $827 and $1,173. The continuation of Woodgate as a going concern is dependent upon financial support from its stockholders or its ability to obtain necessary equity financing to continue operations.

 

  

Earnings Per Share

 

For the period ending September 30, 2013, the company has recorded a loss of $1,120,023 resulting in Earning per share of ($0.06) per share. For the quarters ending September 30, 2013 and 2012, the company recorded operational losses of $242,303 and $333,281, respectively. This resulted in Earnings Per Share of ($0.01) and ($0.02) for those respective quarter ends. Majority of this loss has been contributed by the operational expenses incurred by the subsidiaries of the Company and hence consolidated.

 

Subsequent Events

 

Subsequent to the date of this Report, commencing in October, 2013, the Company has been in process of identifying a market maker for achieving the trading status for its shares. The Company expects its share to be traded by the end of 2014.

 

On October 2, 2013, Osman Kaldirim, Jr. resigned as President and Mr. Fuad Al Humoud was appointed President of the Company. On October 2, 2013, Dr. Osman Kaldirim (Age 61 years) and Mel Bernstein (Age 42 years) were named as directors of the Company which made the total number of directors to Four. The Company has filed a form 8-k to this effect.

 

On October 25, 2013, the Company repealed existing Bylaws and adopted new Bylaws following which the 8-k filing was made with the SEC.

 

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Information not required to be filed by Smaller reporting companies.

 

ITEM 4. Controls and Procedures.

 

Disclosures and Procedures

 

Pursuant to Rules adopted by the Securities and Exchange Commission, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rules. This evaluation was done as of the end of the period covered by this report under the supervision and with the participation of the Company's principal executive officer and the principal financial officer.

 

Based upon that evaluation, they concluded that, as of September 30, 2013 that the Company's disclosure controls and procedures are effective in gathering, analyzing and disclosing information needed to ensure that the information required to be disclosed by the Company in its periodic reports is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

This Quarterly Report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this Quarterly Report.

 

  

Changes in Internal Control Over Financial Reporting

 

Notwithstanding the change in control of management and shareholders, there was no change in the Company's internal control over financial reporting that was identified in connection with such evaluation that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

 

PART II — OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

There are no legal proceedings against the Company and the Company is unaware of such proceedings contemplated against it.

 

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

 

During the past three years, Woodgate has issued 47,295,000 common shares pursuant to Section 4(2) of the Securities Act of 1933 for an aggregate purchase price of $4,730 as follows:

 

On July 31, 2012, Woodgate issued the following shares of its common stock:

 

Name		Number of Shares				Consideration
Tiber Creek Corporation			10,000,000			$	1,000
MB Americus LLC			10,000,000			$	1,000

 

On May 16, 2013, the Company redeemed an aggregate of 19,500,000 of the then 20,000,000 shares of outstanding stock at a redemption price of $.0001 per share for an aggregate redemption price of $1,950.

 

On May 17, 2013, the Company issued 8,750,000 shares of its common stock pursuant to Section 4(2) of the securities Act of 1933 at par representing 94.5% of the total outstanding 9,250,000 shares of the common stock.

 

In July 2013, the Company began to offer its common shares through private placement. The first sale was registered on July 30, 2013. By September 30, 2013, the Company had issued 1,295,000 shares of its common stock through private placement.

 

On September 6, 2013, the Company entered into a Business Combination with two LLCs – Prestige O&G, LLC and E&P Co, LLC and the combination took the form of Stock-for-Stock acquisition.

The Exchange Closing took place on September 25, 2013 and the Company allotted a new issue of 23,453,050 Common Shares to be given to the members of Prestige O&G, LLC and E&P Co., LLC for the purpose of acquiring the LLCs by the Company. Additionally, the Company also allotted the aggregate of 13,296,950 Common shares against the outstanding Debt balances in the books of LLCs as it appeared on the day of business combination. In sum, a total of 36,750,000 shares of common stock of the Company were issued in the Acquisitions.

 

As of September 30, 2013, 47,295,000 shares of common stock and no preferred stock were issued and outstanding.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

Not applicable.

 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

Not applicable.

 

  

ITEM 5. OTHER INFORMATION

 

(a) Not applicable.

(b) Item 407(c)(3) of Regulation S-K:

 

During the quarter covered by this Report, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.

 

ITEM 6. EXHIBITS

 

(a)

Exhibits

 

31

Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

32

Certification of the President and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

WOODGATE ENERGY CORPORATION

 

By:	/s/ Fuad Al-Humoud.
	President
	Chief Financial Officer

 

Dated: October 14, 2014