UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-QSB
|
[X] Quarterly
Report under Section 13 or 15(d) of the Securities Exchange Act of
1934.
|
For
the quarterly period ended:
September 30, 2007
|
[ ] Transition
Report under Section 13 or 15(d) of the Securities Exchange Act of
1934.
|
For
the transition period
from: _______ to _______
Commission
file number:
2-76219-NY
VICTORY
ENERGY CORPORATION
(Exact
name of small business issuer as specified in its charter)
NEVADA
|
87-0564472
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer I.D. Number)
|
112
N Curry Street, Carson City, Nevada 89703-4934
(Address
of principal executive offices)
(866)
279-9257
(Issuer’s
telephone number)
Check
whether the issuer (1) filed all reports required to be filed by Section 13
or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports); and (2) has been subject
to such filing requirements for the past 90 days: YES
[X
]
NO
[
]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).YES [_] NO [X]
State
the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date: As of November 11, 2007, there were
31,285,366 shares of our common stock outstanding.
Transitional
Small Business Disclosure Format. YES [ ] NO [X]
INDEX
|
|
|
Page
No.
|
|
|
PART
1. FINANCIAL INFORMATION
|
|
|
|
Item
1. Financial
Statements
|
3
|
|
|
|
|
December
31, 2006
(audited)
|
3
|
|
|
|
|
and
2006, and cumulative from
inception to June 30, 2007 (unaudited)
|
4
|
|
|
|
|
January
7, 1982 (inception)
through September 30, 2007 (unaudited)
|
5
|
|
|
|
|
September
30, 2007 and 2006, and
cumulative from inception (Jan. 7, 1982)
|
|
to
September 30, 2007
(unaudited)
|
6
|
|
|
|
7
|
|
|
|
13
|
|
|
|
16
|
|
|
PART
II. OTHER INFORMATION
|
|
|
|
|
17
|
|
|
|
17
|
|
|
|
17
|
|
|
|
17
|
|
|
|
17
|
|
|
|
18
|
VICTORY
ENERGY COR
POR
ATION AND SUBSIDIARIES
|
(A
Development Stage Company)
|
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
|
December
31,
|
|
ASSETS
|
|
2007
|
|
|
2006
|
|
|
|
Unaudited
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
and Cash Equivalents
|
|
$
|
129
|
|
|
$
|
-
|
|
Subscriptions
Receivable
|
|
|
735,000
|
|
|
|
-
|
|
Total
Curent Assets
|
|
|
735,129
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
FIXED
ASSETS, NET
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
|
|
Investment
in Joint Venture
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
785,129
|
|
|
$
|
50,000
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
& STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITES
|
|
|
|
|
|
|
|
|
Bank
Overdraft
|
|
$
|
-
|
|
|
$
|
79
|
|
Accounts
Payable
|
|
|
34,600
|
|
|
|
19,142
|
|
Credit
Line - WFB Business Line
|
|
|
80,840
|
|
|
|
56,961
|
|
Prepaid
Subscriptions
|
|
|
203,500
|
|
|
|
203,500
|
|
Total
Current Liabilities
|
|
|
318,940
|
|
|
|
279,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
LIABILITIES
|
|
|
|
|
|
|
|
|
Loan
from Officer
|
|
|
1,148,235
|
|
|
|
690,085
|
|
Total
Other Liabilities
|
|
|
1,148,235
|
|
|
|
690,085
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
1,467,175
|
|
|
|
969,767
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies (Note 6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIT
|
|
|
|
|
|
|
|
|
Preferred
Stock, $0.001 par value, 10,000,000 shares
|
|
|
|
|
|
|
|
|
authorized,
630,517 issued and outstanding
|
|
|
631
|
|
|
|
716
|
|
Common
Stock, $0.001 par value, 200,000,000 shares
|
|
|
|
|
|
|
|
|
authorized, 31,285,366 issued
and outstanding
|
|
|
31,286
|
|
|
|
4,518
|
|
Additional
paid-in capital
|
|
|
7,999,041
|
|
|
|
4,566,320
|
|
Deficit
accumulated in the development stage
|
|
|
(8,713,004
|
)
|
|
|
(5,491,321
|
)
|
|
|
|
|
|
|
|
|
|
Total
Stockholders' Deficit
|
|
|
(682,046
|
)
|
|
|
(919,767
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
$
|
785,129
|
|
|
$
|
50,000
|
|
|
|
|
|
|
|
|
|
|
VICTORY
ENERGY CORPOR
ATI
ON AND
SUBSIDIARIES
|
(A
Development Stage Company)
|
Consolidated
Statement of Operations
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
Inception,
|
|
|
|
For
the
|
|
|
For
the
|
|
|
from
January 2,
|
|
|
|
Three
Months Ended
|
|
|
Nine
Months Ended
|
|
|
1982
through
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
20,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
Expense
|
|
|
95,000
|
|
|
|
254,350
|
|
|
|
3,007,501
|
|
|
|
997,165
|
|
|
|
6,901,855
|
|
Land
Leases
|
|
|
-
|
|
|
|
-
|
|
|
|
1,680
|
|
|
|
24,040
|
|
|
|
25,720
|
|
Wages
and Salaries
|
|
|
-
|
|
|
|
80,000
|
|
|
|
|
|
|
|
102,500
|
|
|
|
270,500
|
|
General
& Administrative
|
|
|
47,159
|
|
|
|
11,074
|
|
|
|
212,502
|
|
|
|
378,571
|
|
|
|
1,407,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Expenses
|
|
|
142,159
|
|
|
|
345,424
|
|
|
|
3,221,683
|
|
|
|
1,502,276
|
|
|
|
8,606,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Loss
|
|
|
(142,159
|
)
|
|
|
(345,424
|
)
|
|
|
(3,221,683
|
)
|
|
|
(1,502,276
|
)
|
|
|
(8,585,837
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Income and (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
on abandonment of subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50,900
|
)
|
Loss
from reduction in debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(48,363
|
)
|
Interest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Other
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Other Income and (expenses)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(97,167
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(142,159
|
)
|
|
$
|
(345,424
|
)
|
|
$
|
(3,221,683
|
)
|
|
$
|
(1,502,276
|
)
|
|
$
|
(8,683,004
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and Dilutive net loss per share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.56
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding,
basic and diluted
|
|
|
31,285,366
|
|
|
|
3,179,439
|
|
|
|
21,461,340
|
|
|
|
2,691,443
|
|
|
|
|
|
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
|
|
|
Note
2
|
|
|
|
|
|
|
Note
2
|
|
|
|
|
|
Dilutive
effect of preferred stock,
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
(Note
2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VICTORY
ENERGY CORPOR
ATION
AND SUBSIDIARIES
|
(A
Development Stage Company)
|
Consolidated
Statement of Stockholders' Equity (Deficit)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Deficit
During
|
|
|
|
|
|
|
Common
Stock
|
|
|
Preferred
Stock
|
|
|
Paid-in
|
|
|
Development
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances
at January 7, 1982
|
|
|
0
|
|
|
$
|
-
|
|
|
|
0
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Common
stock for cash at $7.50/sh
|
|
|
6,000
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
|
0
|
|
|
|
45,006
|
|
Common
stock for cash at $0.39/sh.
|
|
|
168,503
|
|
|
|
169
|
|
|
|
|
|
|
|
|
|
|
|
65,819
|
|
|
|
0
|
|
|
|
65,988
|
|
Net
loss from inception to Dec. 31,'82
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
(39,597
|
)
|
|
|
(39,597
|
)
|
Balances
at Dec. 31, 1982
|
|
|
174,503
|
|
|
|
175
|
|
|
|
|
|
|
|
|
|
|
|
110,819
|
|
|
|
(39,597
|
)
|
|
|
71,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss, year ended Dec. 31, 1983
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
(71,397
|
)
|
|
|
(71,397
|
)
|
Balances
at Dec. 31, 1983
|
|
|
174,503
|
|
|
|
175
|
|
|
|
|
|
|
|
|
|
|
|
110,819
|
|
|
|
(110,994
|
)
|
|
|
(0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock for cash at $25.00/sh.
|
|
|
57
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
1,425
|
|
|
|
0
|
|
|
|
1,425
|
|
Common
stock for cash at $25.00/sh. per share
|
|
|
3
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
75
|
|
|
|
0
|
|
|
|
75
|
|
Common
stock for cash at $0.025/sh. per share
|
|
|
1,580,000
|
|
|
|
1,580
|
|
|
|
|
|
|
|
|
|
|
|
38,373
|
|
|
|
0
|
|
|
|
39,953
|
|
Net
loss - year ended Dec. 31, 1984
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Balances
at Dec. 31, 1984
|
|
|
1,754,563
|
|
|
|
1,755
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(110,994
|
)
|
|
|
41,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation
of common stock
|
|
|
(1,296,132
|
)
|
|
|
(1,297
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,297
|
)
|
Net
loss - year ended Dec. 31, 1985
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Balances
at Dec. 31, 1985
|
|
|
458,431
|
|
|
|
458
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(110,994
|
)
|
|
|
40,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1986
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Balances
at Dec. 31, 1986
|
|
|
458,431
|
|
|
|
458
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(110,994
|
)
|
|
|
40,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1987
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Balances
at Dec. 31, 1987
|
|
|
458,431
|
|
|
|
458
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(110,994
|
)
|
|
|
40,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1988
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Balances
at Dec. 31, 1988
|
|
|
458,431
|
|
|
|
458
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(110,994
|
)
|
|
|
40,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1989
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Balances
at Dec. 31, 1989
|
|
|
458,431
|
|
|
|
458
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(110,994
|
)
|
|
|
40,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1990
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Balances
at Dec. 31, 1990
|
|
|
458,431
|
|
|
|
458
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(110,994
|
)
|
|
|
40,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1991
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Balances
at Dec. 31, 1991
|
|
|
458,431
|
|
|
|
458
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(110,994
|
)
|
|
|
40,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1992
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Balances
at Dec. 31, 1992
|
|
|
458,431
|
|
|
|
458
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(110,994
|
)
|
|
|
40,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1993
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Balances
at Dec. 31, 1993
|
|
|
458,431
|
|
|
|
458
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(110,994
|
)
|
|
|
40,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation
of common stock
|
|
|
(316,000
|
)
|
|
|
(316
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(316
|
)
|
Net
loss - year ended Dec. 31, 1994
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
(6,656
|
)
|
|
|
(6,656
|
)
|
Balances
at Dec. 31, 1994
|
|
|
142,431
|
|
|
|
142
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(117,650
|
)
|
|
|
33,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock for cash at $0.001/sh.
|
|
|
2,357,895
|
|
|
|
2,359
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,359
|
|
Net
loss - year ended Dec. 31, 1995
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
(49,097
|
)
|
|
|
(49,097
|
)
|
Balances
at Dec. 31, 1995
|
|
|
2,500,326
|
|
|
|
2,500
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(166,747
|
)
|
|
|
(13,555
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock for cash at $0.001/sh.
|
|
|
120,000
|
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
120
|
|
Net
loss - year ended Dec. 31, 1996
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
(1,681
|
)
|
|
|
(1,681
|
)
|
Balances
at Dec. 31, 1996
|
|
|
2,620,326
|
|
|
|
2,620
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(168,428
|
)
|
|
|
(15,116
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1997
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
(3,517
|
)
|
|
|
(3,517
|
)
|
Balances
at Dec. 31, 1997
|
|
|
2,620,326
|
|
|
|
2,620
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(171,945
|
)
|
|
|
(18,633
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1998
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
(2,479
|
)
|
|
|
(2,479
|
)
|
Balances
at Dec. 31, 1998
|
|
|
2,620,326
|
|
|
|
2,620
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(174,424
|
)
|
|
|
(21,112
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1999
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
(6,307
|
)
|
|
|
(6,307
|
)
|
Balances
at Dec. 31, 1999
|
|
|
2,620,326
|
|
|
|
2,620
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(180,731
|
)
|
|
|
(27,419
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 2000
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
(9,011
|
)
|
|
|
(9,011
|
)
|
Balances
at Dec. 31, 2000
|
|
|
2,620,326
|
|
|
|
2,620
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(189,742
|
)
|
|
|
(36,430
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 2001
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
(19,461
|
)
|
|
|
(19,461
|
)
|
Balances
at Dec. 31, 2001
|
|
|
2,620,326
|
|
|
|
2,620
|
|
|
|
|
|
|
|
|
|
|
|
150,692
|
|
|
|
(209,203
|
)
|
|
|
(55,891
|
)
|
Contributed
capital for rent and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other
compensation
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
1,950
|
|
|
|
0
|
|
|
|
1,950
|
|
Net
loss - year ended Dec. 31, 2002
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
(13,960
|
)
|
|
|
(13,960
|
)
|
Balances
at Dec. 31, 2002
|
|
|
2,620,326
|
|
|
|
2,620
|
|
|
|
|
|
|
|
|
|
|
|
152,642
|
|
|
|
(223,163
|
)
|
|
|
(67,901
|
)
|
Contributed
capital for rent and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
officer
compensation
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
488
|
|
|
|
0
|
|
|
|
488
|
|
Capital
contributed by shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
via
accounts payable and interest
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
77,415
|
|
|
|
0
|
|
|
|
77,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for services $0.025/sh.
|
|
|
13,389,932
|
|
|
|
13,390
|
|
|
|
|
|
|
|
|
|
|
|
321,358
|
|
|
|
0
|
|
|
|
334,748
|
|
Stock
issued for services at $0.61/sh.
|
|
|
100,000
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
60,900
|
|
|
|
0
|
|
|
|
61,000
|
|
Stock
for consulting at $0.47/share
|
|
|
10,000
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
4,690
|
|
|
|
0
|
|
|
|
4,700
|
|
Net
loss - year ended Dec. 31, 2003
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
(592,962
|
)
|
|
|
(592,962
|
)
|
Balances
at Dec. 31, 2003
|
|
|
16,120,258
|
|
|
|
16,120
|
|
|
|
|
|
|
|
|
|
|
|
617,493
|
|
|
|
(816,125
|
)
|
|
|
(182,512
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for services at $0.16/sh
|
|
|
1,000,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
159,000
|
|
|
|
0
|
|
|
|
160,000
|
|
Stock
issued for services at $0.17/sh.
|
|
|
1,800,000
|
|
|
|
1,800
|
|
|
|
|
|
|
|
|
|
|
|
304,200
|
|
|
|
0
|
|
|
|
306,000
|
|
Stock
issued for services at $0.165/sh
|
|
|
800,000
|
|
|
|
800
|
|
|
|
|
|
|
|
|
|
|
|
131,200
|
|
|
|
0
|
|
|
|
132,000
|
|
Stock
issued for services at $0.215/sh.
|
|
|
30,000
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
6,420
|
|
|
|
0
|
|
|
|
6,450
|
|
Stock
issued for debt at $0.45 per sh.
|
|
|
150,000
|
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
67,350
|
|
|
|
0
|
|
|
|
67,500
|
|
Stock
issued for services at $0.40/sh
|
|
|
300,000
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
|
119,700
|
|
|
|
0
|
|
|
|
120,000
|
|
Stock
issued for services at $0.34/sh.
|
|
|
700,000
|
|
|
|
700
|
|
|
|
|
|
|
|
|
|
|
|
237,300
|
|
|
|
0
|
|
|
|
238,000
|
|
Stock
issued for services at $0.41/sh.
|
|
|
300,000
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
|
122,700
|
|
|
|
0
|
|
|
|
123,000
|
|
Stock
issued for services at $0.27/sh.
|
|
|
300,000
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
|
80,700
|
|
|
|
0
|
|
|
|
81,000
|
|
Stock
issued for services at $0.22/sh.
|
|
|
600,000
|
|
|
|
600
|
|
|
|
|
|
|
|
|
|
|
|
131,400
|
|
|
|
0
|
|
|
|
132,000
|
|
Net
loss - year ended Dec. 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,606,057
|
)
|
|
|
(1,606,057
|
)
|
Balances
at Dec. 31, 2004
|
|
|
22,100,258
|
|
|
|
22,100
|
|
|
|
|
|
|
|
|
|
|
|
1,977,463
|
|
|
|
(2,422,182
|
)
|
|
|
(422,619
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed
capital for general and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
138,701
|
|
|
|
|
|
|
|
138,701
|
|
Stock
issued for services at $0.03/sh.
|
|
|
19,860,000
|
|
|
|
19,860
|
|
|
|
|
|
|
|
|
|
|
|
575,940
|
|
|
|
|
|
|
|
595,800
|
|
Net
loss - year ended Dec. 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,323,775
|
)
|
|
|
(1,323,775
|
)
|
Balances
at December 31, 2005
|
|
|
41,960,258
|
|
|
|
41,960
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,692,104
|
|
|
|
(3,745,957
|
)
|
|
|
(1,011,893
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for services at $0.027/sh.
|
|
|
17,583,334
|
|
|
|
17,583
|
|
|
|
|
|
|
|
|
|
|
|
459,917
|
|
|
|
|
|
|
|
477,500
|
|
Common
stock issued in debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
restructuring
at $0.06 and $0.03
|
|
|
10,666,667
|
|
|
|
10,667
|
|
|
|
|
|
|
|
|
|
|
|
429,333
|
|
|
|
|
|
|
|
440,000
|
|
Stock
issued for debt at $0.06/ sh.
|
|
|
5,000,000
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
295,000
|
|
|
|
|
|
|
|
300,000
|
|
Stock
issued for services at $0.03/sh.
|
|
|
2,500,000
|
|
|
|
2,500
|
|
|
|
|
|
|
|
|
|
|
|
72,500
|
|
|
|
|
|
|
|
75,000
|
|
Stock
issued for services at $0.05/sh.
|
|
|
500,000
|
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
24,500
|
|
|
|
|
|
|
|
25,000
|
|
Stock
issued for services at $0.008/sh.
|
|
|
10,000,000
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
|
|
|
|
|
|
|
80,000
|
|
Stock
for consulting at $0.008/sh.
|
|
|
4,500,000
|
|
|
|
4,500
|
|
|
|
|
|
|
|
|
|
|
|
31,500
|
|
|
|
|
|
|
|
36,000
|
|
Stock
for consulting at $0.008/sh.
|
|
|
500,000
|
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
3,500
|
|
|
|
|
|
|
|
4,000
|
|
Stock
for consulting at $0.008/sh.
|
|
|
4,000,000
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
28,000
|
|
|
|
|
|
|
|
32,000
|
|
Stock
for consulting at $0.008/sh.
|
|
|
700,000
|
|
|
|
700
|
|
|
|
|
|
|
|
|
|
|
|
4,900
|
|
|
|
|
|
|
|
5,600
|
|
Stock
for consulting at $0.008/sh.
|
|
|
300,000
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
|
2,100
|
|
|
|
|
|
|
|
2,400
|
|
Stock
for consulting at $0.008/sh.
|
|
|
3,600,000
|
|
|
|
3,600
|
|
|
|
|
|
|
|
|
|
|
|
25,200
|
|
|
|
|
|
|
|
28,800
|
|
Stock
for consulting at $0.008/sh.
|
|
|
3,000,000
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
21,000
|
|
|
|
|
|
|
|
24,000
|
|
Stock
for consulting at $0.008/sh.
|
|
|
4,000,000
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
28,000
|
|
|
|
|
|
|
|
32,000
|
|
Balances
before reverse split
|
|
|
108,810,259
|
|
|
|
108,810
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,187,554
|
|
|
|
(3,745,957
|
)
|
|
|
550,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reverse
split 25 to 1
|
|
|
(104,457,849
|
)
|
|
|
(104,458
|
)
|
|
|
0
|
|
|
|
0
|
|
|
|
104,458
|
|
|
|
|
|
|
|
0
|
|
New
Stock issued for rounding
|
|
|
890
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
0
|
|
Balances
after reverse split
|
|
|
4,353,300
|
|
|
|
4,353
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,292,011
|
|
|
|
(3,745,957
|
)
|
|
|
550,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock for cash at $0.467/sh.
|
|
|
|
|
|
|
|
715,517
|
|
|
|
716
|
|
|
|
246,234
|
|
|
|
|
|
|
|
246,950
|
|
Common
stock for rounding$0.50/sh.
|
|
|
1
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
Common
stock for services $0.20/sh
|
|
|
5,200
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
1,035
|
|
|
|
|
|
|
|
1,040
|
|
Common
stock for rounding$0.20/sh.
|
|
|
14
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
Common
stock for services $0.17/sh.
|
|
|
160,000
|
|
|
|
160
|
|
|
|
|
|
|
|
|
|
|
|
27,040
|
|
|
|
|
|
|
|
27,200
|
|
Net
loss - year ended Dec. 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,745,364
|
)
|
|
|
(1,745,364
|
)
|
Balances
at December 31, 2006
|
|
|
4,518,515
|
|
|
|
4,518
|
|
|
|
715,517
|
|
|
|
716
|
|
|
|
4,566,320
|
|
|
|
(5,491,321
|
)
|
|
|
(919,767
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock for services $0.15/sh
|
|
|
6,277,251
|
|
|
|
6,278
|
|
|
|
|
|
|
|
|
|
|
|
935,310
|
|
|
|
|
|
|
|
941,588
|
|
Common
stock sold @ $0.21/sh
|
|
|
5,662,000
|
|
|
|
5,662
|
|
|
|
|
|
|
|
|
|
|
|
1,183,358
|
|
|
|
|
|
|
|
1,189,020
|
|
Common
stock for services $0.21/sh
|
|
|
40,000
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
8,360
|
|
|
|
|
|
|
|
8,400
|
|
Common
stock for services $0.21/sh
|
|
|
2,787,600
|
|
|
|
2,788
|
|
|
|
|
|
|
|
|
|
|
|
582,608
|
|
|
|
|
|
|
|
585,396
|
|
Common
stock subscribed, issued $0.21
|
|
|
3,500,000
|
|
|
|
3,500
|
|
|
|
|
|
|
|
|
|
|
|
731,500
|
|
|
|
|
|
|
|
735,000
|
|
Preferred
Stock converted to common
|
|
|
8,500,000
|
|
|
|
8,500
|
|
|
|
(85,000
|
)
|
|
|
(85
|
)
|
|
|
(8,415
|
)
|
|
|
|
|
|
|
0
|
|
Net
loss - 9 mo ended Sep. 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,221,683
|
)
|
|
|
(3,221,683
|
)
|
Balances
at September 30, 2007
|
|
|
31,285,366
|
|
|
$
|
31,286
|
|
|
|
630,517
|
|
|
$
|
631
|
|
|
$
|
7,999,041
|
|
|
$
|
(8,713,004
|
)
|
|
$
|
(682,046
|
)
|
VICTORY
ENERGY CORPOR
ATIO
N AND SUBSIDIARIES
|
(A
Development Stage Company)
|
Consolidated
Statements of Cash Flows
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the
|
|
|
For
the
|
|
|
Inception
from
|
|
|
|
Three
Months Ended
|
|
|
Nine Months
Ended
|
|
|
Jan.
7, 1982
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
through
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
Sep.
30, 2007
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(142,159
|
)
|
|
$
|
(345,424
|
)
|
|
$
|
(3,221,683
|
)
|
|
$
|
(1,502,276
|
)
|
|
$
|
(8,584,504
|
)
|
Adjustments
to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
used
by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
299
|
|
|
|
|
|
|
|
898
|
|
|
|
2,294
|
|
Loss
on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,363
|
|
Loss
on abandonment of subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,900
|
|
Issuance
of common stock for services rendered
|
|
|
|
244,800
|
|
|
|
1,535,384
|
|
|
|
1,122,300
|
|
|
|
6,178,540
|
|
Increase
in Short Term Receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
(Increase) in Prepaid Expenses
|
|
|
|
43,450
|
|
|
|
|
|
|
|
246,950
|
|
|
|
|
|
Increase
(Decrease) in Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incrrease
(Decrease) in Prepaid Subscriptions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
203,500
|
|
(Incrrease)
Decrease in Subscriptions Receivable
|
|
|
|
|
|
|
|
(735,000
|
)
|
|
|
|
|
|
|
(735,000
|
)
|
Increase
(Decrease) in accounts payable
|
|
|
(5,840
|
)
|
|
|
9,176
|
|
|
|
15,458
|
|
|
|
(321,794
|
)
|
|
|
34,600
|
|
Increase
(Decrease) in accrued liabilities
|
|
|
|
16,006
|
|
|
|
|
|
|
|
4,590
|
|
|
|
|
|
Increase
(Decrease ) in Accrued Payroll,P'roll Taxes
|
|
|
43,994
|
|
|
|
|
|
|
|
510,970
|
|
|
|
|
|
Increase
(Decrease) in Short Term Receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment
of long term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in Accrued Liabilities-Related
|
|
|
|
4,500
|
|
|
|
|
|
|
|
4,500
|
|
|
|
|
|
Non-cash
contributed capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(524
|
)
|
Net
Cash provided by (used by)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
(147,999
|
)
|
|
|
16,801
|
|
|
|
(2,405,841
|
)
|
|
|
66,138
|
|
|
|
(2,801,831
|
)
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of Fixed Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,294
|
)
|
Purchase
/ Sale of Marketable Securities
|
|
|
|
|
|
|
|
|
|
|
|
88,300
|
|
|
|
|
|
Investment
in Joint Venture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50,000
|
)
|
|
|
(50,000
|
)
|
Net
Cash (used by) Investing Activities
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
38,300
|
|
|
|
(52,294
|
)
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
of Note Payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,027
|
|
|
|
|
|
Proceeds
(Repayment) of Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(210,984
|
)
|
|
|
|
|
Increase
(decrease) in Credit Line
|
|
|
218
|
|
|
|
61,128
|
|
|
|
23,879
|
|
|
|
61,128
|
|
|
|
80,840
|
|
Proceeds
(Repayment) of Loan from Officer
|
|
|
159,670
|
|
|
|
(75,000
|
)
|
|
|
458,150
|
|
|
|
41,664
|
|
|
|
1,019,735
|
|
Proceeds
(Repayment) of Note Payable-Related Party
|
|
|
|
|
|
|
|
(2,500
|
)
|
|
|
|
|
Increase
(Decrease) in Other Loans Payable
|
|
|
|
19,000
|
|
|
|
|
|
|
|
19,000
|
|
|
|
|
|
Contributed
capital for rent and officers' compensation
|
|
|
|
|
|
|
|
|
|
|
|
2,438
|
|
Proceeds
from the sale of Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from the sale/conversion of Common Stock
|
|
|
|
1,189,020
|
|
|
|
|
|
|
|
1,504,291
|
|
Commons
stock subscribed, issued
|
|
|
|
|
|
|
|
|
|
|
735,000
|
|
|
|
|
|
|
|
|
|
Proceeds
from the sale/conversion of Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
246,950
|
|
Contributed
Capital by shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash provided by Financing Activities
|
|
|
159,888
|
|
|
|
5,128
|
|
|
|
2,406,049
|
|
|
|
(88,665
|
)
|
|
|
2,854,254
|
|
NET
INCREASE IN CASH
|
|
|
11,889
|
|
|
|
21,929
|
|
|
|
208
|
|
|
|
15,773
|
|
|
|
129
|
|
CASH
AT BEGINNING OF PERIOD
|
|
|
(11,760
|
)
|
|
|
(2,082
|
)
|
|
|
(79
|
)
|
|
|
4,074
|
|
|
|
-
|
|
CASH
AT END OF PERIOD
|
|
$
|
129
|
|
|
$
|
19,847
|
|
|
$
|
129
|
|
|
$
|
19,847
|
|
|
$
|
129
|
|
CASH
PAID FOR:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Income
Taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
NOTES
TO CONSOL
ID
ATED FINANCIAL STATEMENTS
NOTE
1 -
BUSINESS AND CONTINUED OPERATIONS
Victory
Energy Corporation (OTC symbol VTYE), formerly known as Victory Capital Holdings
Corporation (our “Company”) was organized under the laws of the State of Nevada
on January 7, 1982, under the name All Things, Inc. On March 21, 1985 the
Company’s name was changed to New Environmental Technologies Corporation and on
April 28, 2003 to Victory Capital Holdings Corporation. The name was
changed finally to Victory Energy Corporation on May 3, 2006.
The
Company was formed for the purpose of engaging in all lawful businesses. The
Company’s initial authorized capital consisted of 100,000,000 shares of $0.001
par value common voting stock and as of the date of this filing the authorized
capital is 200,000,000 shares of $.001 par value common stock.
The
consolidated financial statements presented are those of Victory Energy
Corporation and subsidiaries. While the information presented
in the accompanying interim nine months financial statements is unaudited,
it
includes all adjustments which are, in the opinion of management, necessary
to
present fairly the financial position, results of operations and cash flows
for
the interim periods presented in accordance with the accounting principles
generally accepted in the United States of America. These interim financial
statements follow the same accounting policies and methods of their application
as the Company’s December 31, 2006 annual financial statements. All adjustments
are of a normal recurring nature. It is suggested that these abridged interim
financial statements be read in conjunction with the Company’s December 31, 2006
annual financial statements.
Operating
results for the nine months ended September 30, 2007 are not necessarily
indicative of the results that can be expected for the year ended December
31,
2007.
On
October 3, 2001, the Company formed a wholly owned subsidiary named Papadog,
Inc. Papadog has since changed its name to Global Card Services, Inc and then
to
Global Card Incorporated, (“Global”). As of the date of this report,
there has been no activity for this subsidiary.
On
November 12, 2003, the Company formed a wholly owned subsidiary named On Demand
Communications, Inc., (“On Demand”). As of the date of this report,
there has been no activity for this subsidiary.
On
November 27, 2006 the company incorporated a
Nevada subsidiary, Victory Energy Resources,
Inc. The name of the subsidiary was changed to Victory Carbon
Solutions, Inc. There has been no activity in this
company.
Current
Business of the Company
Management
has determined that the Company will focus on projects in the oil and gas
industry. This is based upon a belief that this industry is becoming an
economically viable sector in which to conduct business operations. We have
targeted specific prospects and intend to engage in the drilling for oil
and
gas. Jon Fullenkamp, our President, has a great deal of experience in the
oil
and gas industry and has already recruited additional experience with the
addition of new directors and advisory board member.
Victory
Carbon Solutions Inc. was formed as a wholly owned subsidiary of the Corporation
to participate in the Green House Gas opportunities currently available in
today’s energy markets and for the Corporation to join in the Carbon Credits
exchange currently offered as part of the Chicago Climate
Exchange. In addition the Corporation will utilize this platform to
establish a fund having a focus of investing in Carbon Credits as well as
financing eco-friendly projects like, windmill farms, geothermal production,
solar farms, and other energy saving projects.
The
Corporation has secured the options on five (5) shallow gas wells located
in the
Adams-Baggett Ranch located in Crockett County Texas. The
Adams-Baggett Canyon Sandstone gas field is located in the Permian Basin
part of
the 6
th
largest
known oil and gas reserves in the world. The Canyon Sandstone
formation is found at a depth of 4,300 feet to 4,900 feet. Each well
drilled in the field has an estimated proven undeveloped reserve of 500 Million
cubic feet of gas per well, giving a total of approximately 2.5 Billion cubic
feet of natural gas of proven undeveloped reserves for the
Corporation. The Corporation has an addition first right of refusal
on five (5) more options as it evaluates the initial five (5) wells to be
drilled.
Management
has recently negotiated the mineral rights on a prospect for Victory in the
Palo
Duro Basin located in Briscoe County Texas. Victory has established a letter
of
intent which sets out the substantive terms of a Formal Agreement (“Agreement”)
that Victory intends to complete and execute. Under the Agreement, we will
be
required to commit up to one hundred thousand dollars ($100,000.00) for seismic
evaluation to determine the first three drilling targets. In exchange, we
will
receive 50% of the mineral rights of all hydrocarbon deposits on the first
eight
sections, approximately 10 sections of land. During the evaluation of the
drilling targets, and including the time to drill the first three wells,
we will
have the ability to exercise its irrevocable option to lease up to a total
of
100,000 acres of mineral rights within the Palo Duro Basin.
The
Corporation also holds interest as a joint venture partner in the Mesa
Gas
Prospect located in Roosevelt County New Mexico.
This
Prospect is a 12,000-acre field targeted primarily for
gas. Additionally, the Corporation owns the mineral rights in a
prospective oilfield identified as N.E. Glasgow Prospect located in Valley
County Montana. This particular acreage has a Wrench Fault identified
geologically. The acreage also has indications of Lodgepole Reef
deposits. We had taken on the evaluation of a prospect in
Oklahoma identified as the Skedee Prospect. As we progressed into the due
diligence of these prospects and the potential production, management determined
that the development of the prospect was not worth the required investment
capital. Even with the potential reduction in investment dollars, the prospects
had an unacceptable pay back time for the initial investment. Management
felt
the shareholders would be better served by seeking other
prospects.
NOTE
2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fair
Value of Financial Instruments
The
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards (“SFAS”) No. 107, “Disclosures About Fair Value of Financial
Instruments.” SFAS No. 107 requires disclosure of fair value information
about financial instruments when it is practicable to estimate that value.
The carrying amounts of the Company’s financial instruments as of September 30,
2007 and December 31, 2006 approximate their respective fair values because
of
the short-term nature of these instruments. Such instruments consist of
cash, accounts payable and accrued expenses. The fair value of related
party payables is not determinable.
Income
Taxes
The
Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
recognition of deferred tax assets and liabilities for the expected future
tax
consequences of events that have been included in the financial statements
or
tax returns. Under this method, deferred tax assets and liabilities
are determined based on the difference between the tax basis of assets and
liabilities and their financial reporting amounts based on enacted tax laws
and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. The Company generated deferred tax credits through
net
operating loss carryforwards. However, a valuation allowance of 100%
has been established, as the realization of the deferred tax credits is not
reasonably certain, based on going concern considerations outlined
below.
Going
Concern
The
Company’s financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has
suffered recurring losses. The Company incurred a net loss of
$3,221,683 and a negative cash flow from operations of $2,405,841 during the
nine months ended September 30, 2007, and a shareholders’ deficiency of $682,046
at September 30, 2007. The Company has not yet established an ongoing
source of revenues sufficient to cover its operating costs and to allow it
to
continue as a going concern. The ability of the Company to continue
as a going concern is dependent on the Company obtaining adequate capital to
fund operating losses until it becomes profitable. If the Company is
unable to obtain adequate capital, it could be forced to cease development
of
operations.
In
order
to continue as a going concern, develop a reliable source of revenues, and
achieve a profitable level of operations the Company will need, among other
things, additional capital resources. Management’s plans to continue
as a going concern include raising additional capital through sales of common
stock. In the interim, shareholders of the Company are committed to
meeting its minimal operating expenses. However, management cannot
provide any assurances that the Company will be successful in accomplishing
any
of its plans.
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as
a
going concern.
Development-Stage
Company
The
Company is considered a development-stage company, with no operating revenues
during the periods presented, as defined by Statement of Financial Accounting
Standards (“SFAS”) No. 7. SFAS No. 7 requires companies to report
their operations, shareholders deficit and cash flows since inception through
the date that revenues are generated from management’s intended operations,
among other things. Management has defined inception as January 7,
1982. Since inception, the Company has incurred operating losses
totaling $8,713,004, much of which relates to stock-based compensation to
officers, directors and consultants as a means to preserve working
capital. The Company’s working capital has been generated through the
sales of common stock, loans made by officers of the Company and a bank line
of
credit. Management has provided financial data since January 7, 1982 “Inception”
in the financial statements, as a means to provide readers of the Company’s
financial information to make informed investment decisions.
Use
of
Estimates
The
preparation of the financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
and
disclosure of contingent liabilities at the date of the financial statements
and
the reported amounts of expenses during the reporting period. Actual
results could differ from those estimates.
Principles
of Consolidation
The
consolidated financial statements include those of Victory Energy Corporation
and its wholly owned subsidiaries, Global Card Incorporated, On Demand
Communications, Inc. and Victory Energy Resources, Inc. All material
inter-company items and transactions have been eliminated. There was
no activity in the subsidiaries in the first nine months of 2007 and during
2006.
Loss
Per Share
Statement
of Financial Accounting Standards No. 128 “Earnings Per Share” requires
presentation of basic earnings per share and diluted earnings per
share. Basic income (loss) per share (“Basic EPS”) is computed by
dividing net loss available to common stockholders by the weighted average
number of common shares outstanding during the period. Diluted
earnings per share (“Diluted EPS”) is similarly calculated using the treasury
stock method except that the denominator is increased to reflect the potential
dilution that would occur if preferred stock at the end of the applicable period
were exercised. These potential dilutive securities were not included in the
calculation of loss per share for the nine months ended September 30, 2007
because the Company incurred a loss in the period, and thus their effect would
have been anti-dilutive. At September 30, 2007, potentially dilutive
securities consisted of 630,517 shares of preferred stock, convertible at the
rate of 1 preferred share to 100 common shares.
The
following is a reconciliation of the numerators and denominators of the basic
and diluted earnings per share computations for the nine months ended September
30, 2007 and 2006.
In
2006 a
reverse stock split of Common Stock occurred on a 25 to 1 basis.
The
September, 2006 loss per share for the first three months and nine months of
2006 has been restated accordingly, giving retroactive effect to the reverse
stock split.
|
|
September
30, 2007
|
|
|
September
30,
2006
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(3,221,683
|
)
|
|
$
|
(1,502,276
|
)
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted weighted average
|
|
|
|
|
|
|
|
|
number
of shares outstanding
|
|
|
21,461,340
|
|
|
|
2,691,443
|
|
|
|
|
|
|
|
|
|
|
Basic
and Diluted Net Loss Per Share
|
|
$
|
(0.15
|
)
|
|
$
|
(0.56
|
)
|
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
|
|
Dilutive
effect of Preferred Stock
|
|
Nil
|
|
|
N/A
|
|
Equipment
and Fixtures
Equipment
and fixtures are recorded at cost. Depreciation is provided using
accelerated and straight-line methods over the estimated useful lives of the
related assets as follows.
Description
|
Years
|
|
|
Furniture
and fixtures
|
7
|
Computer
hardware and software
|
3-5
|
Equipment
and fixtures have been fully depreciated.
NOTE
3 –
RELATED PARTY TRANSACTIONS
Five
ledger accounts in the books of the Company relating to loans, salaries and
out-of-pocket expenses payable to the President/C.E.O., Jon Fullenkamp, were
combined into one account “Loan from Officer”, which totaled $1,148,235 at
September 30, 2007. The loan is non-interest bearing and payable on
demand. Under the terms of the employment agreement, the employee may
at his election convert any and all funds due to him into shares of the
Company’s common stock at a conversion price of $0.01 per share. In practice, in
prior years, funds due to him were converted at a discounted market
value.
In
the
nine months ended September 30, 2007 and 2006 the President/CEO incurred
$458,150 and $62,664 respectively in reimbursable expenses on behalf of the
Company.
In
March
2006 the company issued a promissory note to a group of stockholders for
consideration of $141,458 in cash. The terms were to be repayable in one year
at
an interest rate of 10%, payable quarterly. Interest was deferred. In
December, 2006 the note was reclassified to prepaid subscriptions, reflecting
an
accommodation with the stockholders.
NOTE
4 –
INVESTMENT IN JOINT VENTURE
In
May,
2006 the Company paid $50,000 to Geosurveys, Inc, a geophysical survey company
of oil and gas prospects. This was part of an agreement with Eldorado
Exploration, Inc. whereby the Company obtained a 2 ½ percent working interest in
a prospective oil well called the Mesa #1 well on leased land in New
Mexico. The agreement provides for cost sharing of drilling
costs.
NOTE
5 -
COMMITMENTS AND CONTINGENCIES
There
were no additional commitments and contingencies in the six months ended
September 30, 2007.
NOTE
6 –
CAPITAL STOCK TRANSACTIONS
Reverse
Common Stock Split
The
Common Stock issued and outstanding at October 26, 2006 was
108,810,259. On this date the Board of Directors declared a
reverse stock split of the Company’s Common Stock, converting the common stock
on a 25 to 1 basis. Common shares outstanding were
reduced by 104,457,849. New stock outstanding after the split and
after issuing 890 shares for rounding was 4,353,300. The effect
on the balance sheet was to increase Paid-in Capital by $104,458 and to reduce
Common Stock by $104,458, a neutral effect on stockholders’ equity.
On
October 20, 2005 one share was issued at $0.50, valued de minimus, for rounding
following the reverse split.
On
November 11, 2006 5,200 shares were issued for services valued at $1,040 at
market value of $0.20 per share.
On
December 5, 2006, 14 shares valued de minimus were issued for
rounding.
On
December 27, 2006, 160,000 shares were issued for services, valued at $27,200,
at market value of $0.17.
2007
On
January 22, 2007, 6,277,251 shares of common stock were issued for services
at
$0.15 per share, reflecting market value. $941,588 was recorded as
consulting fees.
On
February 1, 2007, 5,662,000 shares of common stock were issued at $0.21
reflecting market value for subscriptions receivable
of $1,189,020.
On
March
1, 2007, 40,000 shares of common stock were issued to a Director for services
rendered at $0.21 per share reflecting market
value. $8,400 was recorded as consulting
fees.
On
May 7,
2007, 1,710,000 shares of common stock were issued for services at $0.21 per
share, reflecting market value. $359,100 was
recorded as consulting fees.
On
June
5, 2007, 1,077,600 shares of common stock were issued for services at
$0.21 per share reflecting market value. $226,296 was recorded as consulting
fees.
On
June
13, 2007, 850,000 shares of common stock were issued to preferred stockholders
in a conversion of 85,000 shares of preferred stock to common, converted at
the
rate of one share of preferred stock to 100 shares of common stock.
On
June
15, 3,500,000 shares of common stock were issued at $0.21 per share reflecting
market value, for subscriptions receivable of $735,000.
The
total
of issued and outstanding common shares at September 30, 2007 and
2006 was 31,285,366 and 3,925,743 respectively, (September
30, 2006 was restated for a reverse 25 to 1 stock split October 26,
2006).
Preferred
Stock
On
August
22, 2006 the Board of Directors resolved to amend the Articles of Incorporation,
to authorize 10,000,000 shares of preferred stock, having a par value of
$0.001. The stock is convertible to common stock at will in a ratio
of 1 preferred to 100 common. Preferred stockholders may vote as
common stockholders on any matter on which common stockholders can vote, and
in
accordance with the underlying common stock held. Preferred stock
dividends may be declared by the Board of Directors.
On
October 20, 2006, 715,512.23 preferred shares were issued for cash at $0.467
each pursuant to Regulation “S”, realizing $246,950.
On
June
13, 2007 85,000 shares of preferred stock were converted, at the rate of one
share of preferred stock to 100 shares of common stock, to 850,000 shares common
stock.
The
total
of issued and outstanding preferred shares at September 30, 2007 and 2006 was
630,517 and zero, respectively.
NOTE
7 –
LITIGATION
During
the second quarter of 2007, a former consultant solicited the courts for the
shortfall between the original settlement amount and the amount realized in
a
court action. On June 6, 2007, the Corporation delivered final
settlement, but appealed the court’s decision. The appeal process
will take approximately 12 months to be reviewed by the appellate court.
Effectively
the trial court proceedings have been stayed.
Neither
the Company nor any of its officers or directors is involved in any other
litigation either as plaintiffs or defendants, and have no knowledge of any
threatened or pending litigation against them or any of the officers or
directors.
Item
2.
Management's Discuss
ion
and Analysis or Plan of
Operation
The
following discussion includes certain forward-looking statements within the
meaning of the safe harbor protections of Section 27A of the Securities Act
of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Statements that include words such as “believe,” “expect,” “should,”
“intend,” “may,” “anticipate,” “likely,” “contingent,” “could,” “may,” or other
future-oriented statements, are forward-looking statements. Such forward-looking
statements include, but are not limited to, statements regarding our business
plans, strategies and objectives, and, in particular, statements referring
to
our expectations regarding our ability to continue as a going concern, generate
increased market awareness of, and demand for, our current products, realize
profitability and positive cash flow, and timely obtain required financing.
These forward-looking statements involve risks and uncertainties that could
cause actual results to differ from anticipated results. The forward-looking
statements are based on our current expectations and what we believe are
reasonable assumptions given our knowledge of the markets; however, our actual
performance, results and achievements could differ materially from those
expressed in, or implied by, these forward-looking statements. Factors within
and beyond our control that could cause or contribute to such differences
include, among others, the following: those associated with drilling and
subsequent sale of oil and gas, our critical capital raising efforts in an
uncertain and volatile economical environment, our ability to maintain
relationship with strategic companies, our cash preservation and cost
containment efforts, our ability to retain key management personnel, our
relative inexperience with advertising, our competition and the potential impact
of technological advancements thereon, the impact of changing economic,
political, and geo-political environments on our business, as well as those
factors discussed elsewhere in this Form 10-QSB and in “Item 1 - Our Business,”
“Item 6 - Management’s Discussion and Analysis,” and elsewhere in our most
recent Form 10-KSB, filed with the United States Securities and Exchange
Commission.
Readers
are urged to carefully review and consider the various disclosures made by
us in
this report and those detailed from time to time in our reports and filings
with
the United States Securities and Exchange Commission that attempt to advise
interested parties of the risks and factors that are likely to affect our
business.
Our
fiscal year ends on December 31. References to a fiscal year refer to the
calendar year in which such fiscal year ends.
Our
Business
Victory
Energy Corporation (OTC symbol VYEY), formerly known as Victory Capital Holdings
Corporation (our “Company”) was organized under the laws of the State of Nevada
on January 7, 1982, under the name All Things, Inc. On March 21, 1985, our
Company’s name was changed to New Environmental Technologies Corporation; on
April 28, 2003, our name was changed to Victory Capital Holdings Corporation
and
on May 3, 2006, it was changed to Victory Energy Corporation. Our Company was
formed for the purpose of engaging in all lawful businesses. Our Company’s
initial authorized capital consisted of 100,000,000 shares of $0.001 par value
common voting stock and as of the date of this filing our authorized capital
is
200,000,000 shares of $.001 par value common stock.
Our
Company has had no material business operations since 1989. In 2004, we began
the search for the acquisition of assets, property or businesses that may
benefit our Company and our shareholders. Our goal has been to bring value
to
the Company and to our shareholders through such acquisitions. Each merger
and
acquisition we approach is done with the intention to position us in markets
and
sectors where excellent growth is anticipated. We plan to retain a percentage
of
stock ownership in each subsidiary while spinning them out as their own new
public company if such transaction is economically feasible. The balance of
the
stock will be distributed to the Company’s shareholders at the time of spin out
of the new public company. This is a non-dilutive method to increase shareholder
value as we grow and maintain a position in the market segments
selected.
Current
Business of the Company
Management
has determined that the Company will focus on projects in the oil and gas
industry. This is based upon a belief that this industry is becoming an
economically viable sector in which to conduct business operations. We have
targeted specific prospects and intend to engage in the drilling for oil and
gas. Jon Fullenkamp, our President, has a great deal of experience in the oil
and gas industry and has already recruited additional experience with the
addition of new directors and advisory board member.
Victory
Carbon Solutions Inc. was formed as a wholly owned subsidiary of the Corporation
to participate in the Green House Gas opportunities currently available in
today’s energy markets and for the Corporation to join in the Carbon Credits
exchange currently offered as part of the Chicago Climate
Exchange. In addition the Corporation will utilize this platform to
establish a fund having a focus of investing in Carbon Credits as well as
financing eco-friendly projects like, windmill farms, geothermal production,
solar farms, and other energy saving projects.
The
Corporation has secured the options on five (5) shallow gas wells located in
the
Adams-Baggett Ranch located in Crockett County Texas. The
Adams-Baggett Canyon Sandstone gas field is located in the Permian Basin part
of
the 6
th
largest
known oil and gas reserves in the world. The Canyon Sandstone
formation is found at a depth of 4,300 feet to 4,900 feet. Each well
drilled in the field has an estimated proven undeveloped reserve of 500 Million
cubic feet of gas per well, giving a total of approximately 2.5 Billion cubic
feet of natural gas of proven undeveloped reserves for the
Corporation. The Corporation has an addition first right of refusal
on five (5) more options as it evaluates the initial five (5) wells to be
drilled.
Management
has recently negotiated the mineral rights on a prospect for Victory in the
Palo
Duro Basin located in Briscoe County Texas. Victory has established a letter
of
intent which sets out the substantive terms of a Formal Agreement (“Agreement”)
that Victory intends to complete and execute. Under the Agreement, we will
be
required to commit up to one hundred thousand dollars ($100,000.00) for seismic
evaluation to determine the first three drilling targets. In exchange, we will
receive 50% of the mineral rights of all hydrocarbon deposits on the first
eight
sections, approximately 10 sections of land. During the evaluation of the
drilling targets, and including the time to drill the first three wells, we
will
have the ability to exercise its irrevocable option to lease up to a total
of
100,000 acres of mineral rights within the Palo Duro Basin.
The
Corporation also holds interest as a joint venture partner in the Mesa Gas
Prospect located in Roosevelt County New Mexico.
This
Prospect is a 12,000-acre field targeted primarily for
gas. Additionally, the Corporation owns the mineral rights in a
prospective oilfield identified as N.E. Glasgow Prospect located in Valley
County Montana. This particular acreage has a Wrench Fault identified
geologically. The acreage also has indications of Lodgepole Reef
deposits. We had taken on the evaluation of a prospect in
Oklahoma identified as the Skedee Prospect. As we progressed into the due
diligence of these prospects and the potential production, management determined
that the development of the prospect was not worth the required investment
capital. Even with the potential reduction in investment dollars, the prospects
had an unacceptable pay back time for the initial investment. Management felt
the shareholders would be better served by seeking other prospects.
We
have
no other employees at this time and will seek to retain independent contractors
to assist in operating and managing the prospects as well as to carry out the
principal and necessary functions incidental to the oil and gas business. With
the intended acquisition of oil and natural gas, we intend to establish
ourselves as an industry partner within the industry. Once we can establish
a
revenue base with cash flow, we will seek opportunities more aggressive in
nature.
Our
plan
of operation for the next 12 months will be the continued acquisition of
economically viable oil and gas prospects. Once acquired, we intend to develop
and produce the prospects assuming they are commercially economical to produce
based on a complete due diligence process. In that case, we can expect to derive
revenues from operations. We intend to diversify our holdings in both oil and
gas producing wells to take advantage of what we believe is a potentially strong
window of opportunity that currently exists in the oil and gas industry for
the
next several years.
We
completed due diligence on other projects which ultimately proved to be too
expensive to pursue. We have continued to seek out other viable
opportunities.
Results
of Operations for Period Ended September 30, 2007
As
of
September 30, 2007, the Company has not earned any revenues and has incurred
a
net loss to date of $3,221,683. Operations have been primarily seeking potential
opportunities in the oil and gas industry through the location of commercially
economical prospects, and raising capital and developing revenue generating
opportunities and strategic relationships.
During
the three month period ended September 30, 2007, we incurred operating expenses
in the amount of $3,221,683. These operating expenses included due diligence
expenses, consulting fees, professional fees, land leases, oil and gas leases,
and office and general expenses.
Liquidity
and Capital Resources
To
date,
we have financed our operations from funds put into the Company by our CEO.
We
intend to raise future capital from the sale of a percentage of our prospects
to
fund development and production or through the sale of our common stock to
finance the prospects in their entirety.
Recent
Accounting Pronouncements
In
February 2007, the Financial Accounting Standards Board (FASB) issued SFAS
No.
159, “The Fair Value Option for Financial Assets and Financial Liabilities –
Including an Amendment of FASB Statement No. 115”. This statement
permits entities to choose to measure many financial instruments and certain
other items at fair value. Most of the provisions of SFAS No. 159 apply only
to
entities that elect the fair value option. However, the amendment to SFAS No.
115 “Accounting for Certain Investments in Debt and Equity Securities” applies
to all entities with available-for-sale and trading securities. SFAS No. 159
is
effective as of the beginning of an entity’s first fiscal year that begins after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provision of SFAS No. 157, “Fair Value Measurements”. In February
2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 159,
“The
Fair Value Option for Financial Assets and Financial Liabilities – Including an
Amendment of FASB Statement No. 115”. This statement permits entities
to choose to measure many financial instruments and certain other items at
fair
value. Most of the provisions of SFAS No. 159 apply only to entities that elect
the fair value option. However, the amendment to SFAS No. 115 “Accounting for
Certain Investments in Debt and Equity Securities” applies to all entities with
available-for-sale and trading securities. SFAS No. 159 is effective as of
the
beginning of an entity’s first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins
on
or before November 15, 2007, provided the entity also elects to apply the
provision of SFAS No. 157, “Fair Value Measurements”. The adoption of this
statement is not expected to have a material effect on our financial
statements.
In
September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) No. 108,
“Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements.” SAB No. 108 addresses how
the effects of prior year uncorrected misstatements should be considered when
quantifying misstatements in current year financial statements. SAB No. 108
requires companies to quantify misstatements using a balance sheet and income
statement approach and to evaluate whether either approach results in
quantifying an error that is material in light of relevant quantitative and
qualitative factors. SAB No. 108 is effective for period ending after November
15, 2006. We are currently evaluating the impact of adopting SAB No. 108 but
does not expect that it will have a material effect on its financial
statements
In
September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements
No. 87, 88, 106, and 132®”. This statement requires employers to recognize the
overfunded or underfunded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year
in
which the changes occur through comprehensive income of a business entity or
changes in unrestricted net assets of a not-for-profit
organization. This statement also requires an employer to measure the
funded status of a plan as of the date of its year-end statement of financial
position, with limited exceptions. The provisions of SFAS No. 158 are effective
for employers with publicly traded equity securities as of the end of the fiscal
year ending after December 15, 2006. The adoption of this statement did not
have
a material effect on our reported financial position or results of
operations.
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
objective of SFAS No. 157 is to increase consistency and comparability in fair
value measurements and to expand disclosures about fair value
measurements. SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. SFAS No. 157 applies
under other accounting pronouncements that require or permit fair value
measurements and does not require any new fair value measurements. The
provisions of SFAS No. 157 are effective for fair value measurements made in
fiscal years beginning after November 15, 2007. The adoption of this statement
is not expected to have a material effect on our future reported financial
position or results of operations.
In
June
2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes, an interpretation of FASB Statements No. 109”. FIN 48 clarifies
the accounting for uncertainty in income taxes by prescribing a two-step method
of first evaluating whether a tax position has met a more likely than not
recognition threshold and second, measuring that tax position to determine
the
amount of benefit to be recognized in the financial statements. FIN 48 provides
guidance on the presentation of such positions within a classified statement
of
financial position as well as on derecognition, interest and penalties,
accounting in interim periods, disclosure, and transition. FIN 48 is effective
for fiscal years beginning after December 15, 2006. The adoption of this
statement is not expected to have a material effect on our future reported
financial position or results of operations.
In
September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) No. 108,
“Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements.” SAB No. 108 addresses how
the effects of prior year uncorrected misstatements should be considered when
quantifying misstatements in current year financial statements. SAB No. 108
requires companies to quantify misstatements using a balance sheet and income
statement approach and to evaluate whether either approach results in
quantifying an error that is material in light of relevant quantitative and
qualitative factors. SAB No. 108 is effective for period ending after November
15, 2006. We are currently evaluating the impact of adopting SAB No. 108 but
do
not expect that it will have a material effect on our financial
statements
In
September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements
No. 87, 88, 106, and 132®”. This statement requires employers to recognize the
overfunded or underfunded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year
in
which the changes occur through comprehensive income of a business entity or
changes in unrestricted net assets of a not-for-profit
organization. This statement also requires an employer to measure the
funded status of a plan as of the date of its year-end statement of financial
position, with limited exceptions. The provisions of SFAS No. 158 are effective
for employers with publicly traded equity securities as of the end of the fiscal
year ending after December 15, 2006. The adoption of this statement did not
have
a material effect on our reported financial position or results of
operations.
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
objective of SFAS No. 157 is to increase consistency and comparability in fair
value measurements and to expand disclosures about fair value
measurements. SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. SFAS No. 157 applies
under other accounting pronouncements that require or permit fair value
measurements and does not require any new fair value measurements. The
provisions of SFAS No. 157 are effective for fair value measurements made in
fiscal years beginning after November 15, 2007. The adoption of this statement
is not expected to have a material effect on our future reported
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the Company. Under the supervision and
with
the participation of our management, including the Principal Executive Officer
and Principal Financial Officer, we have evaluated the effectiveness of the
design and operation of our disclosure controls and procedures pursuant to
Exchange Act Rules 13a-15 and 15d-15 as of the end of the period covered by
this
report. Based on that evaluation, the Principal Executive Officer and Principal
Financial Officer have concluded that these disclosure controls and procedures
were effective such that the material information required to be filed in our
SEC reports is recorded, processed, summarized and reported within the required
time periods specified in the SEC rules and forms. There were no changes in
our
internal control over financial reporting during the quarter ended June 30,
2007
that have materially affected, or are reasonably likely to materially affect,
our internal controls over financial reporting. Potential investors should
be
aware that the design of any system of controls and procedures is based in
part
upon certain assumptions about the likelihood of future events. There can
be no assurance that any system of controls and procedures will succeed in
achieving its stated goals under all potential future conditions, regardless
of
how remote.
PART
II -
OT
HER INFORMATION
Item
1. Legal Proceedings
During
the second quarter of 2007, the former consultant solicited the courts for
the
shortfall between the original settlement amount and the amount
realized. On June 6, 2007, the Corporation delivered final
settlement, but appealed the court’s decision. The appeal process
will take approximately 12 months to be reviewed by the appellate
court. Effectively the trial court proceedings have been
stayed.
On
July
24, 2006, all litigation was settled between the Company and a former
consultant. The Company settled the case for an estimated value of $280,000
to
be realized over a 10-month period ending in May of 2007.
In
May
2006, we settled a past debt with Treetop Investments for 5,000,000 shares
of
our restricted common stock in a transaction combining settlement of debt and
purchase of stock.
Neither
the Company nor any of our officers or directors is involved in any other
litigation either as plaintiffs or defendants and we have no knowledge of any
threatened or pending litigation against us or any of our officers or
directors.
Item
2. Unregistered Sales
of Equity
Securities and
Use of Proceeds
During
the three months ended September 30, 2007 no common shares of stock were
issued.
Item
3. Defaults Upon Senior Securities
During
the three months ended September 30, 2007, we were not in default on any of
our
indebtedness.
Item
4. Submission of Matters to a Vote of Security
Holders
There
were no matters submitted to a vote of our shareholders.
Item
5. Other Information.
None
Exhibit
No.
|
Description
of Exhibit
|
|
|
31
|
|
32
|
|
SIGNATURE
In
accordance with the requirements of the Exchange Act, the registrant caused
this
report to be signed on its behalf by the undersigned, hereunto duly
authorized.
Victory
Energy
Corporation
Date:
November __, 2007
---------------------------------------
Jon
Fullenkamp
Principal
Executive
Officer
Principal
Financial
Officer
Principal
Accounting
Officer
and
Director
Date: November
__,
2007
----------------------------------------
Rick May, Director
Date: November
__,
2007
-----------------------------------------
Perry Mansell, Director
Victory Oilfield Tech (CE) (USOTC:VYEY)
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