Taglikeme 10K below that was filed yesterday. Not the most reassuring thing that I've read:
Annual Report
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
The summarized financial data set forth in the table above is derived from and should be read in conjunction with our audited financial statements for the period from inception (October 19, 2004) to fiscal year ended December 31, 2013, including the notes to those financial statements which are included in this Annual Report. The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this Annual Report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Annual Report, particularly in the section entitled "Risk Factors". Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
We a development stage company and have not generated any revenue to date. The above table sets forth selected financial information for the periods indicated. We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
RESULTS OF OPERATION
Fiscal Year Ended December 31, 2013 Compared to Fiscal Year Ended December 31, 2012.
Our net loss for fiscal year ended December 31, 2013 was ($3,865,852) compared to a net loss of ($481,734) during fiscal year ended December 31, 2012 (an increase of $3,384,116). During fiscal years ended December 31, 2013 and 2012, we did not generate any revenue.
During fiscal year ended December 31, 2013, we incurred operating expenses of approximately $361,636 compared to $623,878 incurred during fiscal year ended December 31, 2012 (a decrease of $262,242). These operating expenses incurred during fiscal year ended December 31, 2013 consisted of: (i) consulting fees of $75,983 (2012: $143,675); (ii) management fees - related party of $128,766
(2012: $101,041); (iii) office and general of $58,345 (2012: $275,794); and (v)
professional fees of $98,542 (2012: $103,368).
Operating expenses incurred during fiscal year ended December 31, 2013 compared to fiscal year ended December 31, 2012 decreased primarily due to lower office costs and lower consulting fees. General and administrative expenses generally include corporate overhead, financial and administrative contracted services, marketing, and consulting costs.
During fiscal year ended December 31, 2013, we recorded total other expenses consisting of interest expense of $42,073 (2012: $37,279), impairment of goodwill of $347,302 (2012: $0), interest expense-derivative of $3,114,841 ( 2012: $Nil), a gain on forgiveness of debt of $0 ( 2012: $229,423) and abandonment expense of $0 ( 2012: $50,000).
Thus, our net loss during fiscal year ended December 31, 2013 was ($3,865,852) or ($0.00) per share compared to a net loss of ($481,734) or ($0.00) per share during fiscal year ended December 31, 2012. The weighted average number of shares outstanding was 1,041,468,158 for fiscal year ended December 31, 2013 compared to 298,515,200 for fiscal year ended December 31, 2012.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is the ability of a company to generate adequate amounts of cash to meet its needs for cash. The following table provides certain selected balance sheet comparisons between December 31, 2013, and December 31, 2012:
December 31, December 31, $ %
2013 2012 Change Change
Working Capital $ (3,865,803 ) $ (1,213,019 ) $ (2,638,784 ) (Over 100) %
Cash 1,584 7,575 (5,991 ) (79.1) %
Total current assets 1,608 7,599 (5,991 ) (78.8) %
Total assets 3,098 357,807 (354,709 ) (99.1) %
Accounts payable and accrued liabilities 441,631 455,001 (13,370 ) (2.9) %
Loans payable 95,360 756,100 (660,740 ) (87.4) %
Notes payable and accrued interest 187,443 - 187,443 Over 100 %
Derivative liability 3,114,841 - 3,114,841 Over 100 %
Total current liabilities 3,867,411 1,220,618 2,646,793 Over 100 %
Total liabilities 3,867,411 1,220,618 2,646,793 Over 100 %
At December 31, 2013, our working capital deficit decreased as compared to December 31, 2012, primarily as a result of an increase in derivative liability of $3,114,841.
Fiscal Year Ended December 31, 2013
As of December 31, 2013, our current assets were $1,608 (2012: $7,599) and our current liabilities were $3,867,411 ( 2012: $1,220,618), which resulted in a working capital deficit of $3,865,803 ( 2012: deficit of $1,213,019). As of December 31, 2013, current assets were comprised of: (i) $1,584 in cash ( 2012:
$7,575); and (ii) $24 in prepaid expense ( 2012: $24). As of December 31, 2013, current liabilities were comprised of: (i) $441,631 in accounts payable and accrued liabilities ( 2012: $455,001); (ii) $28,136 in amounts due to related parties ( 2012: $9,518); (iii) $95,360 in loans payable ( 2012: $756,100); (iv) $187,443 in convertible loans ( 2012: $0): and (v) $3,114,841 in derivative liability (2012: $0).
As of December 31, 2013, our total assets were $3,098 ( 2012: $357,807) comprised of (i) cash of $1,584 ( 2012: $7,575), (ii) prepaids of $24 ( 2012:
$24), (iii) and equipment of $1,490 ( 2012: $2,906).
As of December 31, 2013, our total liabilities were $3,867,411 ( 2012:
$1,220,618) comprised entirely of current liabilities. The increase in liabilities during fiscal year ended December 31, 2013 from fiscal year ended December 31, 2012 was primarily due to derivative liability on convertible loans.
Stockholders' Equity/Deficit decreased from a deficit of ($862,811) for fiscal year ended December 31, 2012 to Stockholders' deficit of ($3,864,313) for fiscal year ended December 31, 2013.
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the fiscal year ended December 31, 2013, net cash flows used in operating activities was ($354,970), consisting primarily of a net loss of ($3,865,852). Net cash flows used in operating activities was adjusted by $1,416 for amortization. Net cash flows used in operating activities was further changed by an increase of $42,075 in accrued interest, an increase of $3,114,841 in accrued interest-derivative liability, an impairment expense of $347,302, a decrease of ($13,370) in accounts payable and accrued liabilities and an increase of $18,618 in due to related parties.
For fiscal year ended December 31, 2012, net cash flows used in operating activities was ($520,428), consisting primarily of a net loss of ($481,734). Net cash flows used in operating activities was adjusted by ($229,423) for forgiveness of debt, $50,000 for impairment of oil and gas properties and $236 for depreciation. Net cash flows used in operating activities was further changed by an increase of $37,279 in accrued interest, an increase of $343,264 in accounts payable and accrued liabilities, a decrease of ($247,816) in due to related parties and an increase of $7,766 in prepaid expenses and deposits.
Cash Flows from Investing Activities
For fiscal year ended December 31, 2013, net cash flows from in investing activities was $0. For fiscal year ended December 31, 2012, net cash flows from investing activities was ($2,654) consisting of ($2,841) in intellectual property and $187 in the acquisition of Glob Media, net of cash received.
Cash Flows from Financing Activities
We have financed our operations primarily from either advancements or the issuance of equity and debt instruments. For fiscal year ended December 31, 2013, net cash flows provided from financing activities was $348,979 compared to $526,539 for fiscal year ended December 31, 2012. Cash flows from financing activities for fiscal year ended December 31, 2013 consisted of $348,979 in proceeds from convertible promissory notes. Cash flows from financing activities for fiscal year ended December 31, 2012 was $526,539 consisting of loans payable.
We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.
PLAN OF OPERATION AND FUNDING
Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) oil and gas operating properties; (ii) possible drilling initiatives on current properties and future properties; and
(iii) future property acquisitions. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.
MATERIAL COMMITMENTS
During 2012, the Company received loan proceeds of $245,000 from an unrelated party pursuant to an unsecured promissory note agreement. The promissory note is due on demand and bears interest at 10% per annum. During 2013, the Company assigned the entire outstanding balance on this loan to Magna Group LLC.
During fiscal year ended December 31, 2011, we received loan proceeds of $175,000 from an unrelated third party. The loan was evidenced in a promissory note dated May 15, 2011 and maturing November 15, 2011. The promissory note bears interest at the rate of 10% per annum and is due on demand. During 2013, the Company assigned $100,000 of principal plus accrued interest on this loan to WHC and the remaining $75,000 in principal plus accrued interest to CP-US Income Group LLC.
During 2012, the Company received loan proceeds of $25,000 from an unrelated third party pursuant to an unsecured promissory note. The promissory note is due on demand and bears interest at a rate of 10% per annum. During 2013, the Company assigned the entire outstanding balance on this loan to CP-US Income Group LLC.
During 2012, the Company received loan proceeds of $60,000 from an unrelated third party pursuant to an unsecured promissory note. The promissory note is due on demand and bears interest at a rate of 10% per annum. During 2013, the Company assigned the entire outstanding balance on this loan to CP-US Income Group LLC.
During 2012, the Company received loan proceeds of $99,953 from an unrelated third party pursuant to an unsecured promissory note. The promissory note is due on demand and bears interest at a rate of 10% per annum. During 2013, the Company assigned the entire outstanding balance on this loan to CP-US Income Group LLC.
During 2012, the Company received loan proceeds of $39,500 from an unrelated third party pursuant to an unsecured promissory note agreement. The promissory note is due on demand and bears interest at 10% per annum. During 2013, the Company repaid $5,000 and assigned the remaining outstanding balance of the loan to Tidepool LLC.
During 2012, Glob Media received loan proceeds of $50,865 from an unrelated third party pursuant to an unsecured promissory note agreement. The promissory note is due on demand and bears interest at 10% per annum. Total accrued interest was $2,319 leaving a total of $53,184 owing on this promissory note at December 31, 2013.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve months.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Annual Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
GOING CONCERN
The independent auditors' report accompanying our December 31, 2013 and December 31, 2012 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
