Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with United States Generally Accepted Accounting
Principles.
Notes to the Condensed Financial Statements
(expressed in U.S. dollars)
1. NATURE OF OPERATIONS AND CONTINUANCE OF BUSINESS
Independence Energy Corp. (the "Company") was incorporated in the State of
Nevada on November 30, 2005. The Company was organized to explore natural
resource properties in the United States. The Company is an exploration stage
company, as defined by Financial Accounting Standards Board ("FASB") Accounting
Standards Codification ("ASC") 915, DEVELOPMENT STAGE ENTITIES.
GOING CONCERN
These financial statements have been prepared on a going concern basis, which
implies that the Company will continue to realize its assets and discharge its
liabilities in the normal course of business. The Company has generated no
revenues to date and has never paid any dividends and is unlikely to pay
dividends or generate significant earnings in the immediate or foreseeable
future. As of October 31, 2012, the Company had a working capital deficit of
$99,940 and an accumulated deficit of $244,975. The continuation of the Company
as a going concern is dependent upon the continued financial support from its
shareholders, the ability to raise equity or debt financing, and the attainment
of profitable operations from the Company's future business. These factors raise
substantial doubt regarding the Company's ability to continue as a going
concern. These financial statements do not include any adjustments to the
recoverability and classification of recorded asset amounts and classification
of liabilities that might be necessary should the Company be unable to continue
as a going concern.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Presentation
These financial statements and related notes are presented in accordance
with accounting principles generally accepted in the United States, and are
expressed in US dollars. The Company's fiscal year-end is January 31.
b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States and 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 the reported amounts of
revenues and expenses during the reporting period. The Company regularly
evaluates estimates and assumptions related to valuation and impairment of
oil and gas properties, asset retirement obligations, fair value of
share-based payments, and deferred income tax asset valuation allowances.
The Company bases its estimates and assumptions on current facts,
historical experience and various other factors that it believes to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities and
the accrual of costs and expenses that are not readily apparent from other
sources. The actual results experienced by the Company may differ
materially and adversely from the Company's estimates. To the extent there
are material differences between the estimates and the actual results,
future results of operations will be affected.
c) Basic and Diluted Net Loss Per Share
The Company computes net loss per share in accordance with ASC 260,
EARNINGS PER SHARE, which requires presentation of both basic and diluted
earnings per share (EPS) on the face of the income statement. Basic EPS is
computed by dividing net loss available to common shareholders (numerator)
by the weighted average number of shares outstanding (denominator) during
the period. Diluted EPS gives effect to all dilutive potential common
shares outstanding during the period using the treasury stock method and
convertible preferred stock using the if-converted method. In computing
Diluted EPS, the average stock price for the period is used in determining
the number of shares assumed to be purchased from the exercise of stock
options or warrants. Diluted EPS excludes all dilutive potential shares if
their effect is anti-dilutive. As of October 31, 2012, the Company did not
have any potentially dilutive shares.
d) Interim Financial Statements
These interim unaudited financial statements have been prepared on the same
basis as the annual financial statements and in the opinion of management,
reflect all adjustments, which include only normal recurring adjustments,
necessary to present fairly the Company's financial position, results of
operations and cash flows for the periods shown. The results of operations
for such periods are not necessarily indicative of the results expected for
a full year or for any future period.
8
Independence Energy Corp.
(An Exploration Stage Company)
Notes to the Condensed Financial Statements
(expressed in U.S. dollars)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
e) Oil and Gas Property Costs
The Company utilizes the full-cost method of accounting for petroleum and
natural gas properties. Under this method, the Company capitalizes all
costs associated with acquisition, exploration, and development of oil and
natural gas reserves, including leasehold acquisition costs, geological and
geophysical expenditures, lease rentals on undeveloped properties and costs
of drilling of productive and non-productive wells into the full cost pool
on a country-by-country basis. When the Company obtains proven oil and gas
reserves, capitalized costs, including estimated future costs to develop
the reserves proved and estimated abandonment costs, net of salvage, will
be depleted on the units-of-production method using estimates of proved
reserves. The costs of unproved properties are not amortized until it is
determined whether or not proved reserves can be assigned to the
properties. Until such determination is made, the Company assesses annually
whether impairment has occurred, and includes in the amortization base
drilling exploratory dry holes associated with unproved properties.
The Company applies a ceiling test to the capitalized cost in the full cost
pool. The ceiling test limits such cost to the estimated present value,
using a ten percent discount rate, of the future net revenue from proved
reserves based on current economic and operating conditions. Specifically,
the Company computes the ceiling test so that capitalized cost, less
accumulated depletion and related deferred income tax, do not exceed an
amount (the ceiling) equal to the sum of: The present value of estimated
future net revenue computed by applying current prices of oil and gas
reserves (with consideration of price changes only to the extent provided
by contractual arrangements) to estimated future production of proved oil
and gas reserves as of the date of the latest balance sheet presented, less
estimated future expenditures (based on current cost) to be incurred in
developing and producing the proved reserves computed using a discount
factor of ten percent and assuming continuation of existing economic
conditions; plus the cost of property not being amortized; plus the lower
of cost or estimated fair value of unproven properties included in the
costs being amortized; less income tax effects related to differences
between the book and tax basis of the property. For unproven properties,
the Company excludes from capitalized costs subject to depletion, all costs
directly associated with the acquisition and evaluation of the unproved
property until it is determined whether or not proved reserves can be
assigned to the property. Until such a determination is made, the Company
assesses the property at least annually to ascertain whether impairment has
occurred. In assessing impairment the Company considers factors such as
historical experience and other data such as primary lease terms of the
property, average holding periods of unproved property, and geographic and
geologic data. The Company adds the amount of impairment assessed to the
cost to be amortized subject to the ceiling test.
f) Financial Instruments
Pursuant to ASC 820, FAIR VALUE MEASUREMENTS AND DISCLOSURES, an entity is
required to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. ASC 820 establishes a fair
value hierarchy based on the level of independent, objective evidence
surrounding the inputs used to measure fair value. A financial instrument's
categorization within the fair value hierarchy is based upon the lowest
level of input that is significant to the fair value measurement. ASC 820
prioritizes the inputs into three levels that may be used to measure fair
value:
LEVEL 1
Level 1 applies to assets or liabilities for which there are quoted prices
in active markets for identical assets or liabilities.
LEVEL 2
Level 2 applies to assets or liabilities for which there are inputs other
than quoted prices that are observable for the asset or liability such as
quoted prices for similar assets or liabilities in active markets; quoted
prices for identical assets or liabilities in markets with insufficient
volume or infrequent transactions (less active markets); or model-derived
valuations in which significant inputs are observable or can be derived
principally from, or corroborated by, observable market data.
9
Independence Energy Corp.
(An Exploration Stage Company)
Notes to the Condensed Financial Statements
(expressed in U.S. dollars)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
f) Financial Instruments (continued)
LEVEL 3
Level 3 applies to assets or liabilities for which there are unobservable
inputs to the valuation methodology that are significant to the measurement
of the fair value of the assets or liabilities.
The Company's financial instruments consist principally of cash, and
amounts due to related parties. Pursuant to ASC 820 and 825, the fair value
of our cash is determined based on "Level 1" inputs, which consist of
quoted prices in active markets for identical assets. We believe that the
recorded values of all of our other financial instruments approximate their
current fair values because of their nature and respective maturity dates
or durations.
g) Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in
effect and that may impact its financial statements and does not believe
that there are any other new accounting pronouncements that have been
issued that might have a material impact on its consolidated financial
statements.
3. OIL AND GAS PROPERTIES
a) On December 15, 2011, the Company acquired a 2.5% interest in four wells in
the Quinlan Lease ("Quinlan") from Wise Oil and Gas LLC ("Wise"), with the
option to increase the interest to 10%. On December 23, 2011, the Company
acquired an additional 2.5% interest in Quinlan. Quinlan is located in
Pottawatomie County, Oklahoma. On March 1, 2012, the Company acquired an
additional 5% interest in Quinlan in exchange for $78,080, bringing the
Company's total interest to 10%.
b) On March 29, 2012, the Company acquired a 5% interest in a 70% net revenue
interest of properties in Coleman County, Texas for $115,000. On June 28,
2012, the Company amended the original agreement to acquire a 7% interest
in a 75% net revenue interest in the properties for an additional payment
of $47,000, and replaced the terms of the original agreement.
c) On May 29, 2012, the Company acquired a 2.5% interest in a 70% net revenue
interest in two oil and gas wells and approximately 20 acres of land
surrounding the area in Coleman County, Texas for $82,500.
d) On June 8, 2012, the Company acquired a 12.5% interest, with an option to
acquire an additional 12.5% interest, for $90,785. The properties comprise
an area of 2,421 acres in Coleman County, Texas.
4. RELATED PARTY TRANSACTIONS
a) As at October 31, 2012, the Company owes $nil (January 31, 2012 - $675) to
a company controlled by officers and directors of the Company. The amounts
owing are unsecured, non-interest bearing and due on demand.
b) During the period ended October 31, 2012, the Company incurred $25,500
(October 31, 2011 - $nil) to the President and CEO of the Company for
management services. As of October 31, 2012, the Company had $10,500
(January 31, 2012 - $nil) in prepaid expense for management fees paid to
the President and CEO of the Company.
c) During the period ended October 31, 2012, the Company incurred rent
expenses of $nil (October 31, 2011 - $1,120) to the former President and
CEO of the Company
5. LOAN PAYABLE
As of October 31, 2012, the Company had loan payable of $156,697 (January 31,
2012 - $156,697) owing to an unrelated third party. The amount owing is
non-interest bearing, unsecured and due on demand.
10
Independence Energy Corp.
(An Exploration Stage Company)
Notes to the Condensed Financial Statements
(expressed in U.S. dollars)
6. COMMON STOCK
a) On March 1, 2012, the Company issued 694,440 post-split common shares for
proceeds of $125,000.
b) On March 15, 2012, the Company issued 500,000 post-split common shares for
proceeds of $130,000.
c) On May 15, 2012, the Company issued 250,000 post-split common shares for
proceeds of $125,000.
d) On May 24, 2012, the Company entered into a financing agreement with a
non-related party. Pursuant to the agreement, the Company can borrow
$1,000,000 by way of advances until May 24, 2013, to be payable by issuance
of common shares of the Company at an issuance price equal to 90% of the
average share price of the Company for the five banking days preceding the
date of advance. The agreement is subject to extension of additional terms
of twelve months at the option of either the Company or the lender. On June
6, 2012, the Company issued 359,715 post-split common shares in exchange
for an advance of $200,000.
e) On June 22, 2012, the Company and its Board of Directors authorized an
increase in its authorized capital from 75,000,000 common shares to
375,000,000 common shares and effected a 5-for-1 forward split of its
issued and outstanding share capital such that every one share of common
stock issued and outstanding prior to the split was exchanged for five
post-split shares of common stock. The effect of the forward split
increased the number of issued and outstanding common shares from
24,360,831 common shares to 121,804,155 common shares, and the forward
split has been applied retroactively to the Company's inception date.
7. SUBSEQUENT EVENTS
We have evaluated subsequent events through the date of issuance of the
financial statements, and did not have any material recognizable subsequent
events after October 31, 2012.
11