FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
|
LIBERTY ENERGY CORP.
(f/k/a DMA MINERALS INC.)
(AN EXPLORATION STAGE COMPANY)
|
July 31, 2012 and 2011
|
Index to Financial Statements
|
|
|
|
|
Report Of Independent Registered Public Accounting Firm
|
18
|
|
|
Balance Sheet:
|
|
July 31, 2012 and 2011
|
19
|
|
|
Statements of Operations:
|
|
For the fiscal years ended July 31, 2012 and 2011, and for the Period from June 6, 2006
through July 31, 2012
|
20
|
|
|
Statement of Changes in Equity
|
|
For the Period from June 6, 2006 through July 31, 2012
|
21
|
|
|
Statements of Cash Flows:
|
|
For the fiscal years ended July 31, 2012 and 2011, and for the Period from June 6, 2006
through July 31, 2012
|
23
|
|
|
Notes to Financial Statements:
|
|
July 31, 2012
|
24
|
17
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Liberty Energy Corp.
Houston, Texas
We have audited the accompanying balance sheet of Liberty Energy Corp. (the Company") as of July 31, 2012 and 2011, and the related statements of operations, shareholders' equity, and cash flows for the year ended July 31, 2012 and the period from June 6, 2006 (inception) to July 31, 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal controls over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Liberty Energy Corp. as of July 31, 2012 and 2011 and the results of its operations and its cash flows for the year ended July 31, 2012 and the period from June 6, 2006 (inception) to July 31, 2012, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, the Company has incurred losses, has had negative operating cash flows since inception, and minimal revenues. These conditions raise substantial doubt as to the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ McConnell & Jones, LLP
Houston, Texas
November 13, 2012
18
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|
|
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|
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LIBERTY ENERGY CORP.
|
(An Exploration Stage Company)
|
Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
As of
|
|
|
|
|
July 31,
|
|
|
July 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash
|
|
$
|
38,880
|
|
$
|
154,557
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
38,880
|
|
|
154,557
|
|
|
|
|
|
|
|
|
|
Oil and Gas Properties, full cost method
|
|
|
363,939
|
|
|
790,398
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
402,819
|
|
$
|
944,955
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
Accounts Payable
|
|
|
52,070
|
|
|
155,673
|
|
Loan Payable
|
|
|
75,778
|
|
|
-
|
|
Loan Payable - related party
|
|
|
-
|
|
|
25,000
|
|
Payroll Liabilities
|
|
|
7,000
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
134,848
|
|
|
180,673
|
|
|
|
|
|
|
|
|
|
Long Term Liabilities
|
|
|
|
|
|
|
|
Asset Retirement Obligations
|
|
|
-
|
|
|
56,328
|
|
Total Long Term Liabilities
|
|
|
-
|
|
|
56,328
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 150,000,000 shares
|
|
|
|
|
|
authorized; 88,527,270 and 62,064,677 shares issued
|
|
|
|
|
|
and outstanding as of July 31, 2012 and
|
|
|
|
|
|
|
|
July 31, 2011 respectively
|
|
|
88,527
|
|
|
62,064
|
|
Additional paid-in capital
|
|
|
1,598,661
|
|
|
1,128,936
|
|
Deficit accumulated during exploration stage
|
|
|
(1,419,217)
|
|
|
(483,046)
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity
|
|
|
267,971
|
|
|
707,954
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES &
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
$
|
402,819
|
|
$
|
944,955
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited financial statements.
|
19
|
|
|
|
|
|
|
|
|
|
LIBERTY ENERGY CORP.
|
(An Exploration Stage Company)
|
Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 6, 2006
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
(inception)
through
|
|
|
|
|
July 31,
|
|
|
July 31,
|
|
|
July 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
-
|
|
$
|
23,582
|
|
$
|
26,778
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Costs
|
|
|
|
|
|
|
|
|
|
|
Operating Costs
|
|
26,340
|
|
|
16,034
|
|
|
42,374
|
|
|
Impairment Expense
|
|
623,124
|
|
|
3,512
|
|
|
626,536
|
|
Total Operating Expense
|
|
(649,464)
|
|
|
(19,546)
|
|
|
(668,910)
|
|
Operating Income (Loss)
|
|
(649,464)
|
|
|
4,036
|
|
|
(642,132)
|
|
|
|
|
|
|
|
|
|
|
|
|
General & Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
Professional Fees
|
|
41,871
|
|
|
27,803
|
|
|
111,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General & Administrative
|
|
244,058
|
|
|
305,924
|
|
|
664,759
|
|
|
|
|
|
|
|
|
|
|
|
|
Total General & Administrative Expenses
|
(285,929)
|
|
|
(333,727)
|
|
|
(776,407)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income/Expense
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
(778)
|
|
|
|
|
|
(778)
|
|
|
Gain from currency exchange
|
|
|
|
|
|
|
|
100
|
|
Net Income (Loss)
|
$
|
(936,171)
|
|
$
|
(329,691)
|
|
$
|
(1,419,217)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
$
|
(0.01)
|
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
|
|
|
|
|
|
|
|
|
|
common shares outstanding
|
|
73,785,864
|
|
|
61,344,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited financial statements.
|
20
|
|
|
|
|
|
LIBERTY ENERGY CORP.
|
(An Exploration Stage Company)
|
Statement of Changes in Equity
|
|
Common Stock
|
Common Stock Amount
|
Additional Capital Paid-in Capital
|
Deficit Accumulated During Exploration Stage
|
Total
|
Balance, June 6, 2006
|
-
|
-
|
-
|
-
|
-
|
Stock issued for cash on June 6, 2006
|
|
|
|
|
|
@ $0.001 per share
|
30,000,000
|
30,000
|
(24,000)
|
|
6,000
|
Net Loss, July 31, 2006
|
|
|
|
(615)
|
(615)
|
Balance, July 31, 2006
|
30,000,000
|
30,000
|
(24,000)
|
(615)
|
5,385
|
|
|
|
|
|
|
Stock Issued for cash on December 4, 2006
|
|
|
|
|
|
@ $0.002 per share
|
30,000,000
|
30,000
|
30,000
|
|
60,000
|
Net Loss, July 31, 2007
|
|
|
|
(14,239)
|
(14,239)
|
Balance, July 31, 2007
|
60,000,000
|
60,000
|
6,000
|
(14,854)
|
51,146
|
|
|
|
|
|
|
Net Loss, July 31, 2008
|
|
|
|
(17,113)
|
(17,113)
|
Balance, July 31, 2008
|
60,000,000
|
60,000
|
6,000
|
(31,967)
|
34,033
|
|
|
|
|
|
|
Net Loss, July 31, 2009
|
|
|
|
(13,013)
|
(13,013)
|
Balance, July 31, 2009
|
60,000,000
|
60,000
|
6,000
|
(44,980)
|
21,020
|
|
|
|
|
|
|
Stock issued for cash on September 8, 2009
|
400,000
|
400
|
199,600
|
|
200,000
|
@ $0.50 per share
|
|
|
|
|
|
Stock issued for cash on April 8, 2010
|
75,000
|
75
|
74,925
|
|
75,000
|
@ $1.000 per share
|
|
|
|
|
|
Stock issued for cash on July 22, 2010
|
200,000
|
200
|
99,800
|
|
100,000
|
@ $0.50 per share
|
|
|
|
|
|
Net Loss, July 31, 2010
|
|
|
|
(108,375)
|
(108,375)
|
Balance, July 31, 2010
|
60,675,000
|
60,675
|
380,325
|
(153,355)
|
287,645
|
|
|
|
|
|
|
Stock Issued for cash on August 27, 2010
|
211,864
|
212
|
124,788
|
|
125,000
|
@ $0.59 per share
|
|
|
|
|
|
Stock Issued for cash on September 28, 2010
|
115,384
|
115
|
74,885
|
|
75,000
|
@ $0.65 per share
|
|
|
|
|
|
Stock Issued for cash on October 29, 2010
|
94,340
|
94
|
49,906
|
|
50,000
|
@ $0.53 per share
|
|
|
|
|
|
Stock Issued for cash on December 8, 2010
|
169,492
|
169
|
99,831
|
|
100,000
|
@ $0.53 per share
|
|
|
|
|
|
Stock Issued for cash on February 14, 2011
|
150,000
|
150
|
74,850
|
|
75,000
|
@ $0.50 per share
|
|
|
|
|
|
Stock Issued for cash on March 3, 2011
|
200,000
|
200
|
99,800
|
|
100,000
|
@ $0.50 per share
|
|
|
|
|
|
Stock Issued for cash on April 25, 2011
|
150,000
|
150
|
74,850
|
|
75,000
|
@ $0.50 per share
|
|
|
|
|
|
Stock Issued for cash on July 26, 2011
|
300,000
|
300
|
149,700
|
|
150,000
|
@ $0.50 per share
|
|
|
|
|
|
Net Loss, July 31, 2011
|
|
|
|
(329,691)
|
(329,691)
|
Adjustment of share to AP
|
(1,403)
|
(1)
|
1
|
|
0
|
Balance, July 31, 2011
|
62,064,677
|
62,064
|
1,128,936
|
(483,046)
|
707,954
|
(continued on next page)
|
21
|
|
|
|
|
(continued from previous page)
|
Stock Issued for cash on September 27, 2011
|
50,000
|
50
|
24,950
|
|
25,000
|
@ $0.50 per share
|
|
|
|
|
|
Forgiveness of debt by Director
|
|
|
25,000
|
|
25,000
|
Stock Issued for cash on November 28, 2011
|
830,722
|
831
|
44,169
|
|
45,000
|
@ $0.05 per share
|
|
|
|
|
|
Stock Issued for cash on January 24, 2012
|
417,986
|
418
|
24,582
|
|
25,000
|
@ $0.06 per share
|
|
|
|
|
|
Stock Issued for cash on February 15, 2012
|
200,011
|
200
|
24,800
|
|
25,000
|
@ $0.12 per share
|
|
|
|
|
|
Issuance of common stock for oil and gas property
|
24,155,453
|
24,156
|
239,782
|
|
263,938
|
Stock Issued for cash on March 21, 2012
|
401,035
|
401
|
49,599
|
|
50,000
|
@ $0.12 per share
|
|
|
|
|
|
Stock Issued for cash on May 22, 2012
|
382,404
|
382
|
34,618
|
|
35,000
|
@ $0.09 per share
|
|
|
|
|
|
Shares issued for advisory board services
|
25,000
|
25
|
2,225
|
|
2,250
|
Net Loss, July 31, 2012
|
|
|
|
(936,171)
|
(936,171)
|
Balance, July 31, 2012
|
88,527,270
|
88,527
|
1,598,661
|
(1,419,217)
|
267,971
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited financial statements.
|
22
|
|
|
|
|
|
|
|
|
LIBERTY ENERGY CORP.
|
(An Exploration Stage Company)
|
Statement of Cash Flows
|
|
|
|
|
|
|
|
|
|
June 6, 2006
|
|
|
|
|
|
|
|
|
|
(inception)
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
through
|
|
|
|
July 31,
|
|
|
July 31,
|
|
|
July 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(936,171)
|
|
$
|
(329,691)
|
|
$
|
(1,419,217)
|
|
Adjustments to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
|
provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
Impairment Expense
|
|
690,397
|
|
|
3,512
|
|
|
693,909
|
|
Write off of ARO liability
|
|
(33,048)
|
|
|
|
|
|
(33,048)
|
|
Stock compensation
|
|
2,250
|
|
|
|
|
|
2,250
|
|
Other
|
|
-
|
|
|
141
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts Receivable
|
|
-
|
|
|
342
|
|
|
-
|
|
Deposit
|
|
-
|
|
|
1,250
|
|
|
-
|
|
Accounts Payable
|
|
(119,105)
|
|
|
151,996
|
|
|
36,567
|
|
Net cash used in operating activities
|
|
(395,677)
|
|
|
(172,450)
|
|
|
(719,539)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Addition of Oil and Gas Properties
|
|
|
|
|
(498,757)
|
|
|
(737,581)
|
|
Acquisition of equipment
|
|
-
|
|
|
-
|
|
|
-
|
|
Net cash used in investing activities
|
|
-
|
|
|
(498,757)
|
|
|
(737,581)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of common stock
|
|
205,000
|
|
|
750,000
|
|
|
1,396,000
|
|
Loan Payable - related party
|
|
-
|
|
|
-
|
|
|
25,000
|
|
Loan Payable
|
|
75,000
|
|
|
-
|
|
|
75,000
|
|
Net cash used in financing activities
|
|
280,000
|
|
|
750,000
|
|
|
1,496,000
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
(115,677)
|
|
|
78,793
|
|
|
38,880
|
|
Cash at beginning of period
|
|
154,557
|
|
|
75,764
|
|
|
-
|
|
Cash at end of year
|
$
|
38,880
|
|
$
|
154,557
|
|
$
|
38,880
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during year for :
|
|
|
|
|
|
|
|
|
|
Interest
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Income Taxes
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Non Cash Activity
|
|
|
|
|
|
|
|
|
|
Related Party Debt Forgiven
|
|
25,000
|
|
|
|
|
|
25,000
|
|
Lease acquired through issuance of stock
|
|
263,938
|
|
|
|
|
|
263,938
|
|
ARO Assets
|
|
|
|
$
|
-
|
|
|
56,328
|
|
Reversal of Oil and Gas Assets through Notes
|
|
|
|
|
-
|
|
|
(300,000)
|
|
|
$
|
288,938
|
|
$
|
-
|
|
|
45,266
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited financial statements.
|
23
LIBERTY ENERGY CORP.
(f/k/a DMA MINERALS INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
July 31, 2012
NOTE 1 ORGANIZATION AND DESCRIPTION OF BUSINESS
Liberty Energy Corp. (f/k/a DMA Minerals Inc., the Company) was incorporated on June 6, 2006 under the laws of the State of Nevada. The Company is currently an exploration stage company under the provisions of Accounting Standards Codification (ASC) No. 915,
Development Stage Entities
. Since inception, the Company has produced almost no revenues and will continue to report as an exploration stage company until significant revenues are produced. The Companys principal activity is the exploration and development of oil and gas properties. Properties are located in the United States of America and Bulgaria.
The Companys success will depend in large part on its ability to obtain and develop oil and gas interests within the United States. There can be no assurance that oil and gas properties obtained by the Company will contain reserves or that properties with reserves will be profitable to extract. The Company will be subject to local and national laws and regulations which could impact the Companys ability to execute its business plan.
NOTE 2 GOING CONCERN
The financial statements of the Company have been prepared assuming that future issuances of the Companys equity or debt securities will be required in order for the Company to continue to finance its operations and continue as a going concern. The Companys present revenues are insufficient to meet operating expenses. Continuing as a going concern, the Company contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses since its inception and requires capital for its future operational activities. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Companys plan of operations, and its transition to profitable operations is necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.
Recent Accounting Pronouncements
Recently issued accounting pronouncements will have no significant impact on the Company and its reporting methods.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Net Loss per Share
Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. As the Company is in a net loss position, there are no outstanding potentially dilutive securities that would cause diluted earnings per share to differ from basic earnings per share.
Oil and Gas Properties
The Company follows the full-cost method of accounting for oil and natural gas properties. Under this method, all costs incurred in the exploration, acquisition and development, including unproductive wells, are capitalized in separate cost centers for each country. Such capitalized costs include contract and concessions acquisition, geological, geophysical, and
24
LIBERTY ENERGY CORP.
(f/k/a DMA MINERALS INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
July 31, 2012
other exploration work, drilling, completing and equipping oil and gas wells, constructing production facilities and pipelines, and other related costs.
The capitalized costs of oil and gas properties in each cost center are amortized on a composite unit of production method based on future gross revenues from proved reserves. Sales or other dispositions of oil and gas properties are normally accounted for as adjustments of capitalized costs. A gain or loss is not recognized in income unless a significant portion of a cost centers reserves is involved. Capitalized costs associated with acquisition and evaluation of unproved properties are excluded from amortization until it is determined whether proved reserves can be assigned to such properties or until the value of the properties is impaired. If the net capitalized costs of oil and gas properties in a cost center exceed an amount equal to the sum of the present value of estimated future net revenues from proved oil and gas reserves in the cost center and the lower of cost or fair value of properties not being amortized, both adjusted for income tax effects, such excess is charged to expense.
Capitalized costs associated with acquisition and evaluation of unproved properties are excluded from amortization until it is determined whether proved reserves can be assigned to such properties or until the value of the properties is impaired.
As all client leases with production lapsed were written off the asset retirement obligation of $56,328 was re-evaluated. $23,280 was reclassified to accounts payable to correspond with the plugging and abandonment cost associated with the expired leases and the balance was reversed.
Revenue and Cost Recognition
The Company uses the sales method of accounting for natural gas and oil revenues. Under this method, revenues are recognized based on the actual volumes of gas and oil sold to purchasers. The volume sold may differ from the volumes to which the Company is entitled based on our interest in the properties. Costs associated with production are expensed in the period incurred
.
Reclassification
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses.
Income Taxes
The Company accounts for its income taxes in accordance with ASC No. 740, "Income Taxes". Under Statement 740, a liability method is used whereby deferred tax assets and liabilities are determined based on temporary differences between basis used for financial reporting and income tax reporting purposes. Income taxes are provided based on tax rates in effect at the time such temporary differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not, that the Company will not realize the tax assets through future operations.
The Companys federal tax returns for the years ended 2006 through 2011 are open to examination. At July 31, 2012, and 2011, the Company evaluated its open tax years in all known jurisdictions. Based on this evaluation, the Company did not identify any uncertain tax positions. The Company accounts for interest and penalties relating to uncertain tax positions in the current period statement of operations as necessary.
Fair Value of Financial Instruments
ASC No. 825-50-10-1, "Financial Instruments Overall Disclosure", requires the Company to disclose, when reasonably attainable, the fair market values of its assets and liabilities which are deemed to be financial instruments. The Company's financial instruments consist primarily of cash and accounts, and notes payable which due to their short term nature approximate fair value or carry interest rates that approximate market rates.
25
LIBERTY ENERGY CORP.
(f/k/a DMA MINERALS INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
July 31, 2012
NOTE 4 - UNEVALUATED OIL AND GAS PROPERTIES AND 3
rd
QUARTER RESTATEMENT
On October 1, 2009, the Company entered into a lease purchase and sale agreement with Trius Energy LLC, a Texas corporation, to acquire four oil and gas leases in Texas for $125,000. The interests consist of a 100% WI (Working Interest) at a 75% NRI (Net Revenue Interest) in the Dahlstrom Lease, 2% WI at 75% NRI in the Ratliff Lease and 100% WI at a 70% NRI in the Lockhart Project, consisting of two leases, the Anton Lease (1 tract) and Alexander Lease (3 tracts).
The Anton Lease lapsed on January 9, 2011 this tract had 1 shut-in well. It was determined by the Company after discussions with their operators, geologists and based on historical data, that it would not be cost effective to pursue the well therefore the lease was allowed to lapse. In connection with the lapse $3,512 of leasehold cost were written off.
The remaining leases lapsed on July 25, 2012. It was determined by the Company after discussions with their operators, geologists and based on historical data, that it would not be cost effective to pursue the leases and existing wells therefore the lease was allowed to lapse. In connection with the lapse $690,397 of leasehold cost were written off. The Company also accrued payable for $23,280 for the plugging and abandonment of wells associated with these properties.
Bulgaria
On September 22, 2009, the Company entered into a purchase and sales agreement with William C. Athens, of Tulsa, Oklahoma. The Company agreed to acquire a total of 1/16
th
of 1% of 8/8ths ORRI (overriding royalty interest) in the A-Lovech exploration block in Bulgaria for a total price of $400,000. The payments and assignments are payable in four separate $100,000 closings to take place approximately 30 days apart, from the date of execution of the agreement.
Mr. Athens passed away between the date the contract was executed and full payment was made, completion of the contract was delayed pending notification from his estate. On April 28, 2011, Ms. Susan W. Athens, the executor for the estate of Mr. William C. Athens, executed an agreement to terminate the purchase and sale agreement between Liberty Energy Corp. and William C. Athens. Under the terms of the agreement Liberty Energy Corp. shall retain the 1/64th of the 1% interest in the A-Lovech exploration block and Mr. Athens estate shall retain the $100,000 which was forwarded to Mr. Athens for this acquisition. Oil and gas properties and notes payable were both reduced by $300,000 in accordance with the revised agreement.
Langold Acquisition
On February 22, 2012, the Company entered into and closed a 3 year lease assignment agreement with Langold Enterprises Limited (an entity with some cross ownership and common principal manager of Asia-Pacific, the Companys primary source of capital) pertaining to certain interests in oil and gas properties in Bastrop, Caldwell and Eastland Counties, Texas. The interests which were assigned to the Company are three year leases to the following properties:
A 100% working interest in 2 separate properties equaling approximately 300 acres of exploration property located in Bastrop Town Tract, Abstract No. 11, Bastrop County, TX and the T. J. Hardeman Survey A 203, in Bastrop County, Texas.
A 100% working interest in 5 separate properties equaling approximately 622 acres of exploration property located in Sampson Connell Survey, A-63, Caldwell County, TX, the G. W. James Survey, Caldwell County, TX, the Jasper Gilbert Survey, Caldwell County, TX and the A100 Evans, Wistar, Caldwell County, TX.
A 100% working interest in an approximately 5 acre oil and gas property called the Dillon Hall property located in the Gerron Hinds League in Caldwell County, Texas. The Dillon Hall property is not currently producing, and though it holds an existing well, that well requires a work-over to be put back into production.
A 100% working interest in a property equaling approximately 112 acres of exploration property located in the N. W. 1/4 of Section 24, Block 2, H & C. R. R. Co., Survey, Eastland County, TX.
In consideration for the above leases the Company issued 24,155,435 restricted shares of our common stock to Langold, a non-US shareholder. The restricted shares were valued equal the volume weighted average of the closing price (the VWAP) of Common Stock for the ten (10) Banking Days immediately preceding the execution of the assignment, as
26
LIBERTY ENERGY CORP.
(f/k/a DMA MINERALS INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
July 31, 2012
quoted on Google Finance or other source of stock quotes as agreed to by the parties. The original value assigned these shares and the leaseholds was $3.3 million. It was determined that due to the relationship between Langold and Asia-Pacific this transaction was not arms length but rather was related party. The Company corrected the error and the shares issued and the leasehold costs recorded were valued at the price paid by Langold on their original 3 year lease acquisition from the land owners. That price paid was $20,000 cash plus 1,800,000 shares of restricted Liberty Energy stock which was valued at $243,932 for a total consideration of $263,932.Based on the above we are restating our April 30, 2012 financial statements file on form 10-Q to correct this error on the April 30, 2012 balance sheet.
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet for the six months ended April 30, 2012
|
|
|
|
|
As reported
|
|
Adjustment
|
|
As restated
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
$
|
600
|
|
|
|
600
|
Oil and Gas Properties, full cost method
|
|
4,052,938
|
|
(3,009,548)
|
|
1,043,390
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
$
|
4,053,538
|
|
(3,009,548)
|
|
1,043,990
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
$
|
36,550
|
|
|
|
36,550
|
Total Long term Liabilities
|
|
56,328
|
|
|
|
56,328
|
Stockholders' Equity
|
|
|
|
|
|
|
Common stock
|
|
88,120
|
|
|
|
88,120
|
Additional paid-in capital
|
|
4,571,366
|
|
(3,009,548)
|
|
1,561,818
|
Deficit accumulated during exploration stage
|
|
(698,826)
|
|
|
|
(698,826)
|
Total Stockholders' Equity
|
$
|
3,960,660
|
|
(3,009,548)
|
|
951,112
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
|
$
|
4,053,538
|
|
(3,009,548)
|
|
1,043,990
|
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company may from time to time be involved in legal proceedings arising from the normal course of business. There are no pending or threatened legal proceedings as of July 31, 2012.
On March 1, 2012, we entered into a consulting agreement with Peter Gawith for a period of three years, ending February 28, 2015. Mr. Gawith will provide consulting services in regards to our Companys management and operations. Pursuant to the agreement, Mr. Gawith will receive a share remuneration of 25,000 shares on a quarterly basis during the term of the agreement. Effective September 1, 2012, we issued 25,000 shares of common stock for the services provided for the three month quarter. The Company recorded the shares at the market price on the issue date of $0.09 for a total consulting expense of $2,250. Mr. Gawith is also entitled to $500 per day that he works on the Companys business. No amounts have been earned or paid pursuant to this contract.
NOTE 6 RELATED PARTY TRANSACTIONS
On October 27, 2011, Management agreed to forgive debt outstanding to Ian A. Spowart totalling $25,000, which has been recorded as contributed capital.
Our Company has entered into Consulting Agreements with Daniel Martinez-Atkinson and Ian Spowart on an ongoing basis, dated the 12th day of February, 2010, whereby the Company has agreed to retain Daniel Martinez-Atkinson to the position of Chief Financial Officer and Ian Spowart to the position of Chief Executive Officer of our Company. The agreements may be terminated with 30 days notice. As compensation, the agreements provide for monthly payments of US$5,000 to Daniel Martinez-Atkinson and US$6,500 to Ian Spowart. On July 1, 2011 the directors thought it to be in the best interest of the Company to enter into an Amended Consulting Agreement with Daniel Martinez-Atkinson to increase the consulting fee to $5,500 from July 1, 2011. On June 1, 2012 the directors thought it to be in the best interest of the Company to enter into an Amended Consulting Agreement with Ian Spowart to decrease the consulting fee to $3,500 from
27
LIBERTY ENERGY CORP.
(f/k/a DMA MINERALS INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
July 31, 2012
June 1, 2012.
Daniel Martinez-Atkinson and Ian A. Spowart, the officers and directors of the Company may, in the future, become involved in other business opportunities as they become available, thus they may face a conflict in selecting between the Company and their other business opportunities. The Company has not formulated a policy for the resolution of such conflicts.
NOTE 7 CONVERTIBLE NOTES PAYABLE
On May 23, 2012, the Company entered into a Securities Purchase Agreement with Asher Enterprises Inc. Pursuant to the Agreement, Asher Enterprises has agreed to purchase an 8% convertible note in the aggregate principal amount of $42,500. $40,000 was funded to the Company with the remaining $2,500 recorded as legal expenses charged by Ashers legal counsel. This convertible note together with any unpaid accrued interest is convertible into shares of common stock at the holders option 180 days from inception at a variable conversion price calculated as 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date with no floor stated in the conversion feature. The convertible note, issued on May 23, 2012, is due on February 25, 2013 at an interest rate of 8% per annum. The Company will analyze whether the variable conversion price results in need of bifurcation of the conversion feature into a separate derivative liability valued at fair market value on the date the contingency of the conversion feature is settled which is 180 days from inception of the note.
On July 12, 2012, the Company entered into a Securities Purchase Agreement with Asher Enterprises Inc. Pursuant to the Agreement, Asher Enterprises has agreed to purchase an 8% convertible note in the aggregate principal amount of $32,500, .$30,000 was funded to the Company with the remaining $2,500 recorded as legal expenses charged by Ashers legal counsel. This convertible note together with any unpaid accrued interest is convertible into shares of common stock at the holders option 180 days from inception at a variable conversion price calculated as 58% of the market price which means the average of the lowest three trading prices during the ten trading day period ending on the latest complete trading day prior to the conversion date with no floor stated in the conversion feature. The convertible note, issued on July 12, 2012, is due on April 16, 2013 at an interest rate of 8% per annum. The Company will analyze whether the variable conversion price results in need of bifurcation of the conversion feature into a separate derivative liability valued at fair market value on the date the contingency of the conversion feature is settled which is 180 days from inception of the note.
NOTE 8 STOCK TRANSACTIONS
On July 19, 2010, the Company entered into a stock and warrant purchase agreement with Asia-Pacific Capital Ltd. Pursuant to which the investor agreed to lend up to $4,000,000 to the Company in multiple installments in exchange for units of the Company at unit price. The unit price means a price equal to the higher of either $ 0.50, or 90% of the volume-weighted average of the closing price of common stock, for the five days immediately preceding the date of receipt of notice from the Company for the advance of funds from Asia-Pacific Capital Ltd. Each unit shall consist of one share (restricted) of the common stock of the Company and one and a half share purchase warrant. Each warrant shall entitle Asia-Pacific Capital Ltd. to purchase one additional share of common stock, at an exercise price equal to 125% of the unit price at which the unit containing the warrant being exercised was issued, for a period of three (3) years from the date such warrant is issued.
On March 8, 2011, the Company entered into a letter agreement to amend the share issuance agreement entered into with Asia-Pacific Capital Ltd. on July 19, 2010. Pursuant to the terms of the share issuance agreement Asia-Pacific agreed to advance $4,000,000 to the Company and had the option to advance a further $4,000,000 once the initial amount had been exhausted. Pursuant to the terms of the letter agreement amending the original share issuance agreement Asia-Pacific has now committed to providing the Company with a total of $8,000,000 in advances despite the fact that the initial $4,000,000 has not yet been fully advanced. As of July 31, 2012 the Company has issued a total of 3,871,835 shares to Asia-Pacific for a total cash amount of $1,055,000 under the terms of the above mentioned agreement.
On September 27, 2011 the Company issued a total of 50,000 shares of common stock to Asia-Pacific for cash in the amount of $0.50 per share for a total of $25,000.
On November 23, 2011, the Company amended the share issuance agreement to modify the share issuance agreement originally entered into with Asia-Pacific Capital Ltd. on July 19, 2010. The parties have agreed to amend the pricing mechanisms (the Unit Price) within the original agreement. The definition of the Unit Price in of the original agreement
28
LIBERTY ENERGY CORP.
(f/k/a DMA MINERALS INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
July 31, 2012
is deleted and replaced with Unit Price means a price equal 95% of the volume weighted average of the closing price (the VWAP) of Common Stock for the ten (10) Banking Days immediately preceding the date of the Notice, as quoted on Google Finance or other source of stock quotes as agreed to by the parties, but at no time less than $0.05 per share. Excluding the modifications to the Unit Price, the original agreement remains in full force and effect.
On November 28, 2011 the Company issued a total of 830,722 shares of common stock to a Asia-Pacific for cash in the amount of $0.05 per share for a total of $45,000.
On January 24, 2012 the Company issued a total of 417,986 shares of common stock to a Asia-Pacific for cash in the amount of $0.06 per share for a total of $25,000.
On February 15, 2012 the Company issued a total of 200,011 shares of common stock to a Asia-Pacific for cash in the amount of $0.12 per share for a total of $25,000.
On February 22, 2012, the Company entered into and closed a lease assignment agreement with Langold Enterprises Limited pertaining to certain interests in oil and gas properties in Bastrop, Caldwell and Eastland Counties, Texas. In consideration for the above leases the Company issued 24,155,435 restricted shares of its common stock to Langold, a non-US shareholder. The restricted shares were valued equal the volume weighted average of the closing price (the VWAP) of Common Stock for the ten (10) Banking Days immediately preceding the execution of the assignment, as quoted on Google Finance or other source of stock quotes as agreed to by the parties. These shares were issued without a prospectus, in reliance on exemptions from registration found in Regulation S of the Securities Act of 1933, as amended.
On March 21, 2012 the Company issued a total of 401,035 shares of common stock to a Asia-Pacific for cash in the amount of $0.12 per share for a total of $50,000.
On May 22, 2012 the Company received an advance from to Asia-Pacific Capital Ltd. of $35,000. However, the company has not received the funds as of the report date. The Company issued 382,404 units consisting of (i) one share of the Companys common stock and (ii) one and a half share purchase warrant that entitles the Asia-Pacific Capital Ltd. to purchase one additional share of common stock exercisable at 125% of the unit per share expiring three (3) years from the date such warrant is issued.
As of July 31, 2012 and as part of the agreement with its main investor, Asia-Pacific Capital Ltd., the Company issued 5,807,752 warrants. The warrants issued have an exercise price of $1.25 and are fully vested at the date of grant. The warrants have a term of three years and have an average remaining contractual life of 1.839 years as of July 31, 2012. As these warrant are so far out of the money no value was allocated to them. As of July 31, 2012 no warrants had been exercised.
NOTE 9 INCOME TAXES
As of July 31, 2012, the Company had federal net operating loss carryforwards of approximately $1,419,217, which can be used to offset future federal income tax. The federal and state net operating loss carryforwards expire at various dates through 2031. Deferred tax assets resulting from the net operating losses are reduced by a valuation allowance, when, in the opinion of management, utilization is not reasonably assured.
A summary of the Companys deferred tax assets as of July 31, 2012 are as follows:
Federal net operating loss (@ 25%)
$354,804
Less: valuation allowance
(354,804)
Net deferred tax asset
$
-
29
LIBERTY ENERGY CORP.
(f/k/a DMA MINERALS INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
July 31, 2012
NOTE 10 SUBSEQUENT EVENTS
The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The management of the Company determined that the following were certain reportable subsequent events to be disclosed as follows:
On September 1, 2012 issued 25,000 restricted shares to Peter Gawith, advisory board member, in accordance with his agreement for consulting services.
30