UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2013
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
Commission File Number: 000-54306
RANGEFORD RESOURCES, INC.
(Exact name of registrant as specified in its charter)
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Nevada | 77-1176182 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
556 Silicon Drive, Suite 103, Southlake, TX 76092
(Address of principal executive offices)
817-648-8062
(Registrant's Telephone number)
____________________________________________________
(Former Address and phone of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. [ ] Yes [X] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 for Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] Yes [X] No
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:
Large accelerated filer | [ ] | Accelerated filer | [ ] |
Non-accelerated filer | [ ] | Smaller reporting company | [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
As of May 27, 2014, there were 19,843,385 shares of the registrants common stock issued and outstanding.
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RANGEFORD RESOURCES, INC.
FORM 10-Q
September 30, 2013
INDEX
PART I-- FINANCIAL INFORMATION
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Item 1. | Financial Statements | 5 |
Item 2. | Management s Discussion and Analysis of Financial Condition and Results of Operations | 19 |
Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 28 |
Item 4. | Controls and Procedures | 28 |
PART II-- OTHER INFORMATION
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Item 1 | Legal Proceedings | 31 |
Item 1A | Risk Factors | 32 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 32 |
Item 3. | Defaults Upon Senior Securities | 33 |
Item 4. | Mine Safety Disclosure | 33 |
Item 5. | Other Information | 33 |
Item 6. | Exhibits | 33 |
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| SIGNATURES | 34 |
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INTRODUCTORY NOTE
Except as otherwise indicated by the context, references in this interim report on Form 10-Q (this Form 10-Q) to the Company, Rangeford we, us or our are references to Rangeford Resources, Inc., a Nevada corporation.
Special Note Regarding Forward-Looking Statements
This report contains forward-looking statements and information that are based on the beliefs of our management as well as assumptions made by and information currently available to us. Such statements should not be unduly relied upon. When used in this report, forward-looking statements include, but are not limited to, the words anticipate, believe, estimate, expect, intend, plan and similar expressions, as well as statements regarding new and existing products, technologies and opportunities, statements regarding market and industry segment growth and demand and acceptance of new and existing products, any projections of sales, earnings, revenue, margins or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements regarding future economic conditions or performance, uncertainties related to conducting business, any statements of belief or intention, and any statements or assumptions underlying any of the foregoing. These statements reflect our current view concerning future events and are subject to risks, uncertainties and assumptions. There are important factors that could cause actual results to vary materially from those described in this report as anticipated, estimated or expected, including, but not limited to: competition in the industry in which we operate and the impact of such competition on pricing, revenues and margins, volatility in the securities market due to the general economic downturn; Securities and Exchange Commission (the SEC) regulations which affect trading in the securities of penny stocks, and other risks and uncertainties. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward- looking statements, even if new information becomes available in the future. Depending on the market for our stock and other conditional tests, a specific safe harbor under the Private Securities Litigation Reform Act of 1995 may be available. Notwithstanding the above, Section 27A of the Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act) expressly state that the safe harbor for forward-looking statements does not apply to companies that issue penny stock. Because we may from time to time be considered to be an issuer of penny stock, the safe harbor for forward-looking statements may not apply to us at certain times.
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
RANGEFORD RESOURCES, INC. | |||||
(A Development Stage Company) | |||||
Unaudited Balance Sheets | |||||
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| September 30, |
| March 31, | |
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| 2013 |
| 2013 | |
ASSETS | |||||
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Current assets |
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| Cash | $ 2,155 |
| $ - | |
| Prepaid expenses-related party | 8,125 |
| 24,375 | |
| Debt Issuance Costs-net of amortization | 156,455 |
| - | |
Total current assets | 166,735 |
| 24,375 | ||
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| Deposit | 36,557 |
| 36,557 | |
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Total assets | $ 203,292 |
| $ 60,932 | ||
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LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||
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Current liabilities |
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| Accounts payable | 418,155 |
| 288,468 | |
| Accrued interest payable | 2,023 |
| 3,504 | |
| Related party advances and notes payable | 170,081 |
| 137,015 | |
Total current liabilities | 590,259 |
| 428,987 | ||
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Stockholders' deficit |
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| Series A convertible preferred stock, $.001 par value, stated value $5.00 per share, 3,000,0000 shares authorized; 182,000 and 162,000 shares issued and outstanding at September 30, 2013 and 2012, respectively | 182 |
| 162 | |
| Common stock, $.001 par value; 75,000,000 shares authorized; 19,716,822 and 18,102,912 shares issued and outstanding at September 30, 2013 and 2012, respectively | 19,717 |
| 18,128 | |
| Additional paid in capital | 2,739,677 |
| 2,094,910 | |
| Deficit accumulated during the development stage | (3,146,543) |
| (2,481,255) | |
Total stockholders' deficit | (386,967) |
| (368,055) | ||
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Total liabilities and stockholders' deficit | $ 203,292 |
| $ 60,932 |
RANGEFORD RESOURCES, INC. | ||||||||||
(A Development Stage Company) | ||||||||||
Unaudited Statements of Operations | ||||||||||
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| Three months ended | Six months ended | For the period from December 4, 2007 (inception) to | ||||||
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| September 30, | September 30, | September 30, | ||||||
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| 2013 |
| 2012 |
| 2013 |
| 2012 |
| 2013 |
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Operating expenses |
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| Investor relations | 9,735 |
| 17,104 |
| 24,866 |
| 17,104 |
| 55,360 |
| Professional fees | 8,921 |
| 6,733 |
| 65,104 |
| 6,933 |
| 162,494 |
| Professional fees-related party | 361,766 |
| 262,121 |
| 523,856 |
| 262,121 |
| 1,999,777 |
| General and administrative | 1,890 |
| 2,525 |
| 36,678 |
| 4,040 |
| 131,370 |
| Impairment of deposit | - |
| - |
| - |
| - |
| 700,000 |
Total operating expenses | 382,312 |
| 288,483 |
| 650,504 |
| 290,198 |
| 3,049,001 | |
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Loss from operations | (382,312) |
| (288,483) |
| (650,504) |
| (290,198) |
| (3,049,001) | |
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Other expense |
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| Interest expense | 11,608 |
| - |
| 14,783 |
| - |
| 97,541 |
Total other expense | 11,608 |
| - |
| 14,783 |
| - |
| 97,541 | |
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Loss before income taxes | (393,920) |
| (288,483) |
| (665,287) |
| (290,198) |
| (3,146,542) | |
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Provision for income tax | - |
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| - |
| - |
| - | |
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Net loss | $ (393,920) |
| $ (288,483) |
| $ (665,287) |
| $ (290,198) |
| $ (3,146,542) | |
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Preferred stock dividends | (64,632) |
| - |
| (64,632) |
| - |
| (760,401) | |
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Net loss attributable to common shareholders | $ (458,552) |
| $ (288,483) |
| $ (729,919) |
| $ (290,198) |
| $ (3,906,943) | |
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Basic and diluted loss per common share | $ (0.03) |
| $ (0.03) |
| $ (0.04) |
| $ (0.03) |
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Weighted average shares outstanding | 18,295,114 |
| 10,081,700 |
| 18,214,938 |
| 10,081,700 |
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See accompanying notes to unaudited financial statements
6
RANGEFORD RESOURCES, INC. | ||||||||
(A Development Stage Enterprise) | ||||||||
Unaudited Statements of Cash Flows | ||||||||
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| Six months ended | For the period from December 4, 2007 (inception) to | |||
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| September 30, | September 30, | |||
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| 2013 |
| 2012 |
| 2013 |
Cash flows from operating activities |
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| Net loss |
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| $ (665,287) |
| $ (290,198) |
| $ (3,146,541) |
| Adjustments to reconcile net loss to net cash |
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| used in operating activities: |
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| Common stock issued for services |
| 373,656 |
| 212,175 |
| 1,075,082 |
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| Amortization of debt discount |
| 7,883 |
| - |
| 86,677 |
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| Warrant expense |
| - |
| 27,945 |
| 495,695 |
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| Preferred stock issued for interest expense |
| 8,381 |
| - |
| 8,381 |
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| Impairment of deposit |
| - |
| - |
| 700,000 |
| Changes in operating assets: |
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| - | |
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| Prepaid expenses |
| 16,250 |
| (1,200) |
| (8,125) |
| Changes in operating liabilities: |
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| - | |
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| Accounts payable |
| 129,687 |
| 50,699 |
| 357,855 |
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| Accrued interest payable |
| (1,481) |
| - |
| 2,023 |
Net cash used in operating activities |
| $ (130,911) |
| $ (579) |
| $ (428,953) | ||
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Cash flows from investing activities |
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| Deposit |
| - |
| - |
| (600,000) |
Net cash used in investing activities |
| $ - |
| $ - |
| $ (600,000) | ||
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Cash flows from financing activities |
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| Proceeds from related party payable |
| 133,066 |
| 2,000 |
| 226,716 |
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| Repayments of related party payables |
| - |
| - |
| (35,580) |
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| Issuance of Series A preferred stock |
| - |
| - |
| 810,000 |
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| Contributed capital |
| - |
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| 4,160 |
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| Proceeds from issuance of stock |
| - |
| - |
| 25,813 |
Net cash provided by financing activities |
| $ 133,066 |
| $ 2,000 |
| $ 1,031,109 | ||
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| Net (decrease) increase in cash |
| 2,155 |
| 1,421 |
| 2,155 |
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| Cash at beginning of period |
| - |
| 200 |
| - |
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| Cash at end of period |
| $ 2,155 |
| $ 1,621 |
| $ 2,155 |
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Supplemental disclosure of non-cash investing and financing activities: |
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| Issuance of Series A preferred stock to settle shareholder note payable |
| $ 108,381 |
| $ - |
| $ 108,381 |
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| Issuance of 7,630,058 shares of common stock for professional and consulting services |
| $ - |
| $ - |
| $ 13,200 |
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| Issuance of 275,000 shares of common stock with debt |
| $ - |
| $ - |
| $ 78,794 |
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| Issuance of 7,400,000 shares of common stock for deposit |
| $ - |
| $ - |
| $ 36,557 |
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| Cash paid directly to third party for deposit |
| $ - |
| $ - |
| $ 100,000 |
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| Forgiveness of related party loans |
| $ - |
| $ 23,055 |
| $ 21,055 |
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| Unpaid issuance costs |
| $ - |
| $ - |
| $ 60,300 |
See accompanying notes to unaudited financial statements
7
Rangeford Resources, Inc.
(A Development Stage Enterprise)
Notes to Unaudited Financial Statements
For the Three Months and Six Months Ended September 30, 2013 and 2012 and the
Period of December 4, 2007 (Inception) to September 30, 2013
NOTE 1 CONDENSED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the US (US GAAP) for interim financial information, with the instructions to Form 10-Q, and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. The accompanying financial statements at September 30, 2013 and March 31, 2013 and for the three months ended September 30, 2013 and 2012 contain all normally recurring adjustments considered necessary for a fair presentation of our financial position, results of operations, cash flows and shareholders equity for such periods. Operating results for the three months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending March 31, 2014.
NOTE 2 GOING CONCERN
The Companys financial statements are prepared using generally accepted accounting principles 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 not yet established an ongoing source of revenues sufficient to cover its operating costs and 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 operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Managements plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. 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.
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NOTE 3 AGREEMENTS TO PURCHASE OIL AND GAS PROPERTIES
Great Northern Energy, Inc.
On November 15, 2012, the Company entered into a Purchase and Sale Agreement (the Agreement) with Great Northern Energy, Inc. (GNE), which was later modified through an addendum dated January 25, 2013, to acquire a substantial non-operating working interest in oil assets in East Texas in consideration for a purchase price that includes (a) a cash payment of $3,900,000 in the form of (i) a deposit of $100,000; (ii) a promissory note in the amount of $1,100,000; and (iii) a promissory note in the amount of $2,700,000 and (b) 7,400,000 shares of its restricted common stock.
As of September 30, 2013, the Company had transferred a total of $700,000 and issued 7,400,000 shares of common stock to GNE towards the purchase of the oil and gas properties, but the agreement has not been consummated. The $700,000 payment was initially recorded as a long-term deposit on the balance sheet and, subsequently, has been charged to impairment of deposit on the income statement for the year ended March 31, 2013.
GNE has returned the stock certificate for 7,400,000 shares, however, GNE did not submit an executed stock power which is required to cancel the GNE shares. The 7,400,000 shares are considered issued and outstanding at September 30, 2013. The deposit of $36,557 recorded on the balance sheet as of June 30, 2013, which is related to the issuance of the 7,400,000 shares of common stock, will be reversed in the period the shares are properly cancelled.
On May 20, 2014, we sent a letter to GNE informing them of this determination and seeking to mutually terminate the Agreement. Given the amount of time that has passed since we first entered into negotiations with GNE and the lack of any tangible results as contemplated in the Agreement, in addition to GNE'S failure to uphold certain of its obligations under the Agreement, we determined it would be in our best interest to terminate the Agreement In that letter, we requested that GNE comply with the termination provisions of the Agreement and provide the stock power necessary to cancel the shares and return the $700,000 advanced to them under the terms of the Agreement. Accordingly, once GNE returns the $700,000 and submits the outstanding stock power, we shall immediately consent to and permit the mutual termination of the Agreement.
NOTE 4 RELATED PARTY TRANSACTIONS
Harry McMillan is trustee of the C.E. McMillan Family Trust, which Trust serves as the managing member of Fidare Consulting Group, LLC (Fidare) and Cicerone Corporate Development, LLC (Cicerone). Mr. McMillan is the Trustee for the benefit of his wife, Christy McMillan and their children, and is also a member of each of Fidare and Cicerone. Each of these entities, as well as certain beneficiaries of the Trust, own shares of our common stock and therefore, Mr. McMillan and the Trust may be deemed to beneficially own such shares. Each disclaims beneficial ownership of such shares.
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Professional Services
The company recorded professional fees to related parties of $361,766 which are as follows:
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| For the three | For the six |
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| months ended | months ended |
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| June 30, 2013 | September 30, 2013 |
Fidare Consulting Group, LLC | Strategic planning | $ 212,183 | $ 212,183 |
Directors Fees |
| 36,500 | 79,000 |
Kevin A. Carreno | Director/Legal | 41,583 | 101,173 |
Colin Richardson | President | 30,000 | 60,000 |
Suzie Guthrie | Secretary | 11,500 | 11,500 |
Steven R. Henson | Former President | 30,000 | 60,000 |
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| $ 361,766 | $ 523,856 |
In September 2012, the Company entered into a professional services contract with Fidare to provide consulting services relating to corporate governance, accounting procedures and controls and strategic planning. In accordance with the terms of the original contract, Fidare received monthly compensation of 20,000 common shares per month and warrants to purchase 20,000 common shares with an exercise price equal to the closing sale price of the Companys common stock on the date of issuance, plus reasonable and necessary expenses. The warrants are exercisable at any time for two years from the date of issuance and may be settled on a net basis. In December 2012, the contract was amended to provide for monthly compensation of $20,000 per month plus warrants to purchase 20,000 common shares on the same terms described above.
The Consulting Agreement with Fidare was terminated on February 28, 2013 with an effective date of April 4, 2013.
On June 26, 2013, the Company entered into a new Consulting Agreement with Fidare to provide consulting services relating to corporate governance, accounting procedures and control and strategic planning In accordance with the terms of the Consulting Agreement, Fidare receives monthly compensation of shares of common stock valued at $20,000 based on the price at the close on the last trading day of each month and 20,000 warrants to purchase common stock, with each warrant having an exercise price equal to the closing sale price of the Common Stock on the date of issue and providing for a cashless or net issue exercise. As of September 30, 2013, 118,606 shares of common stock and 200,000 warrants had been issued to Fidare. As of May 27, 2014, 148,959 shares of common stock and 340,000 warrants have been issued to Fidare, pursuant to the terms of the contract. The managing member of Fidare is the C.E. McMillan Family Trust. Harry McMillan is trustee of the C.E. McMillan Family Trust.
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The fair value of each warrant granted was estimated on the date of grant using the Black-Scholes option valuation. Expected volatilities are based on volatilities from the historical trading ranges of the Companys stock. The expected term of options granted is estimated at the contractual term as noted in the individual option agreements and represents the period of time that options granted are expected to be outstanding. The risk-free rate for the periods within the contractual life of the option is based on the U.S. Treasury bill rate in effect at the time of grant for bonds with maturity dates at the estimated term of the options. The key assumptions used in evaluating the warrants and the estimated fair value are as follows:
Grant Date | Warrants issued | Fair Value | Expected Volatility | Expected Dividends | Expected term (in years) | Risk-free rate | Estimated Fair Value Using Black-Scholes Model |
September 30, 2012 | 20,000 | $ 29,714 | 249.8% | - | 2 | 0.23% | $ 1.49 |
October 31, 2012 | 20,000 | $ 18,667 | 250.8% | - | 2 | 0.30% | $ 0.93 |
November 30, 2012 | 20,000 | $ 92,494 | 251.6% | - | 2 | 0.25% | $ 4.62 |
December 31, 2012 | 20,000 | $ 129,565 | 252.0% | - | 2 | 0.25% | $ 6.48 |
January 31, 2013 | 20,000 | $ 120,711 | 254.7% | - | 2 | 0.27% | $ 6.04 |
February 28, 2013 | 20,000 | $ 130,322 | 256.9% | - | 2 | 0.25% | $ 6.52 |
March 31, 2013 | 20,000 | $ 22,711 | 256.8% | - | 2 | 0.25% | $ 1.14 |
July 31, 2013 | 20,000 | $ 40,096 | 257.1% | - | 2 | 0.31% | $ 2.00 |
August 31, 2013 | 20,000 | $ 52,340 | 251.9% | - | 2 | 0.39% | $ 2.62 |
September 30, 2013 | 20,000 | $ 59,747 | 248.2% | - | 2 | 0.33% | $ 2.99 |
Total | 200,000 | $ 696,367 |
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In December 2012, the Company entered into a Master Services Agreement with IntreOrg Systems, Inc. (IntreOrg) to provide third party data aggregation and surveillance of share ownership, purchases, sales and custody by individuals, institutions, broker-dealers, clearing agents, and custodians for a period of one year commencing on December 31, 2012. The annual subscription service is $30,000 plus a one-time set-up fee of $2,500. The agreement renews automatically and remains evergreen for succeeding one year terms, unless terminated according to the termination provisions contained in the agreement. The former principle owner and CEO/President/Director of IntreOrg was the President and a major stockholder of the Company as of September 30, 2013.
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NOTE 5 RELATED PARTY NOTES PAYABLE AND ADVANCES
On November 1, 2012, the Company entered into a note agreement with a shareholder/director of the Company, pursuant to which the Company borrowed $100,000 from the shareholder which was payable in 60 days with interest at 6% per annum (the Hadley Note). Proceeds from the Hadley Note were paid directly to GNE as a deposit to purchase certain oil and gas assets (see Note 3). The Hadley Note was payable in 60 days with interest at 6% per annum. In accordance with the terms of the note, the Company agreed to issue 250,000 shares of unregistered common stock to the shareholder. The shares of unregistered common stock had a relative fair value of approximately $71,631 as of November 1, 2012, which was recorded as additional interest expense over the 60 day term of the note. As of September 30, 2013, all 250,000 shares were issued to Hadley. On September 23, 2013 the Company issued 20,000 shares of its Series A convertible preferred stock to settle the past due outstanding promissory note payable to settle the Hadley Note in full. No gain or loss will be recognized on settlement of the debt because the fair value of the preferred stock issued is equal to the carrying value of the debt.
On November 28, 2012, the C. E. McMillan Family Trust advanced the Company $100 to facilitate the opening of a new bank account. The trustee of the C.E. McMillan Family Trust is also the managing member of Fidare Consulting Group, LLC ("Fidare") and Cicerone Corporate Development, LLC ("Cicerone"). The advance had not been repaid as of September 30, 2013.
At various times, Cicerone has advanced funds to the Company for operating expenses. During the quarter ended September 30, 2013, Cicerone advanced a total of $47,949. The principal balance owed to Cicerone was $169,982 with accrued interest of $2,023 as of September 30, 2013. The managing member of Cicerone is the C. E. McMillan Family Trust. Harry McMillan is trustee of the C.E. McMillan Family Trust.
On September 4, 2013, we received a $750,000 Revolving Credit Note (the "Cicerone Revolving Note") from Cicerone Corporate Development, LLC ("Cicerone") (a related party). The Cicerone Revolving Note matures on February 1, 2015 and bears interest at the rate of LIBOR plus 2.75% per annum, which is payable semi-annually on June 30 and December 31 of each year. We may request advances on the Cicerone Revolving Note in increments of $10,000 at any time prior to the maturity date. If we do not pay the outstanding amount on the maturity date, then the interest rate shall increase to the lesser of 12% or the maximum rate of interest permitted by law. As an inducement to entering into the Cicerone Revolving Note, we issued Cicerone 1,500,000 shares of our common stock (the "Inducement Shares"). The Cicerone Revolving Note contains standard events of default, including nonpayment of the Note or any other liability exceeding $50,000, as well as a change in control or entry into bankruptcy, upon which Cicerone may enforce its rights under the Revolving Note. At the time of entering into the Cicerone Revolving Note, Cicerone had already loaned us approximately $65,100, which amount is included as amount advanced under the Cicerone Revolving Note that must be paid back. As of May 27, 2014, we received a total of approximately $368,114, including the $65,100, in advances under the Cicerone Revolving Note. The managing member of Cicerone is the C.E. McMillan Family Trust. Harry McMillan is trustee of the C.E. McMillan Family Trust.
12
We received loans from two of our shareholders totaling $21,055 from inception to June 30, 2012 for the purposes of funding startup operations. These loans were non-interest bearing and due on demand. On June 30, 2012 these loans totaling $21,055 were forgiven by the shareholders and credited to our additional paid in capital account.
NOTE 6 CORRECTION OF AN ERROR
During the preparation of this quarterly report, certain errors were identified related to the 2012 comparative period. The error was related to an understatement of $228,500 in professional fees to a related party which were originally recorded in the quarter ended September, 2012. The impact on the net loss for the 2012 year for the adjustment of $228,500 to professional services-related party was offset in the subsequent quarter by an overstatement of $198,956 in interest expense and a decrease in professional services-related part of $5,972. The combined impact on the 2012 net loss of the adjustments to this quarter and the subsequent quarter are an increase in the net loss of $23,572. Certain items were reclassified to conform to the current year presentation. Management evaluated this error both quantitatively and qualitatively, and determined that the error was immaterial to the prior year. Pursuant to the SEC SAB Topic 108, the prior period amounts have been corrected in this filing.
The following tables reflect the impact of the error:
13
Statement of Operations for the quarter ended September 30, 2012:
|
| As reported |
| Adjustment |
| As Adjusted |
Operating expenses |
|
|
|
|
| |
| Investor relations | 17,104 |
| - |
| 17,104 |
| Professional fees | 40,353 |
| (33,620) |
| 6,733 |
| Professional fees-related party | - |
| 262,121 |
| 262,121 |
| General and administrative | 2,526 |
| (1) |
| 2,525 |
| Impairment of deposit | - |
| - |
| - |
Total operating expenses | 59,983 |
| 228,500 |
| 288,483 | |
|
|
|
|
|
|
|
Loss from operations | (59,983) |
| (228,500) |
| (288,483) | |
|
|
|
|
|
|
|
Other expense |
|
|
|
|
| |
| Interest expense | - |
| - |
| - |
Total other expense | - |
| - |
| - | |
|
|
|
|
|
|
|
Loss before income taxes | (59,983) |
| (228,500) |
| (288,483) | |
|
|
|
|
|
|
|
Provision for income tax | - |
| - |
| - | |
|
|
|
|
|
|
|
Net loss | $ (59,983) |
| $ (228,500) |
| $ (288,483) | |
|
|
|
|
|
|
|
Preferred stock dividends | - |
| - |
| - | |
|
|
|
|
|
|
|
Net loss attributable to common shareholders | $ (59,983) |
| $ (228,500) |
| $ (288,483) | |
|
|
|
|
|
|
|
Basic and diluted loss per common share | $ (0.01) |
| $ (0.02) |
| $ (0.03) | |
|
|
|
|
|
|
|
Weighted average shares outstanding | 10,081,700 |
| - |
| 10,081,700 |
14
Statement of Cash Flows for the quarter ended September 30, 2012:
|
|
| As reported |
| Adjustment |
| As Adjusted |
Cash flows from operating activities |
|
|
|
|
| ||
| Net loss |
| $ (61,698) |
| $ (228,500) |
| $ (290,198) |
| Adjustments to reconcile net loss to net cash |
|
|
|
| - | |
| used in operating activities: |
|
|
|
| - | |
|
| Common stock issued for services | 11,620 |
| 200,555 |
| 212,175 |
|
| Amortization of debt discount | - |
| - |
| - |
|
| Warrant expense | - |
| 27,945 |
| 27,945 |
|
| Impairment of deposit | - |
| - |
| - |
| Changes in operating assets: | - |
| - |
| - | |
|
| Prepaid expenses | (1,200) |
| - |
| (1,200) |
| Changes in operating liabilities: | - |
| - |
| - | |
|
| Accounts payable | 50,699 |
| - |
| 50,699 |
|
| Accrued interest payable |
|
|
|
| - |
Net cash used in operating activities | $ (579) |
| $ - |
| $ (579) | ||
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
| ||
|
| Deposit | - |
| - |
| - |
Net cash used in investing activities | - |
| - |
| - | ||
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
| ||
|
| Proceeds from related party payable | 2,000 |
| - |
| 2,000 |
|
| Repayments of related party payables | - |
| - |
| - |
|
| Issuance of Series A preferred stock | - |
| - |
| - |
|
| Contributed capital | - |
| - |
| - |
|
| Proceeds from issuance of stock | - |
| - |
| - |
Net cash provided by financing activities | $ 2,000 |
| $ - |
| $ 2,000 | ||
|
|
|
|
|
|
| - |
|
| Net (decrease) increase in cash | 1,421 |
| - |
| 1,421 |
|
| Cash at beginning of period | 200 |
| - |
| 200 |
|
| Cash at end of period | $ 1,621 |
| $ - |
| $ 1,621 |
See accompanying notes to unaudited financial statements
15
NOTE 7 COMMITMENTS AND CONTINGENCIES
On June 7, 2012, several former shareholders (including the Companys CEO, Dr. Steven Henson, although not in such capacity) of Sun River Energy, Inc. (Sun River) filed a derivative action against Sun River and its management in a case now styled Colin Richardson, et al., derivatively on behalf of Sun River Energy, Inc. v. Sun River Energy, Inc. v. Donald R. Schmidt, Jr., et al., Cause No. DC-12-06318, in the District Court of Dallas County, Texas (the Derivative Suit). On January 24, 2013, the Court found the Plaintiffs in the case had shown a probable right to the relief sought at an evidentiary hearing and a likelihood of success on the claims of breach of fiduciary duty, fraudulent transfer and certain defamation claims, and entered a temporary injunction against Sun River and its management (the Temporary Injunction). The terms of the Temporary Injunction prevent Sun River, and all officers, directors, agents, servants, attorneys, employees, and all those in active concert or participation, from any performance, claims of default, payments, transfer or other actions with respect to certain notes and mortgages; any payments on those notes based on alleged past due compensation without Board Approval and without providing notice to the parties; entry into contracts by Donal R. Schmidt, Jr. to lease, purchase, or sell Sun Rivers interest in its hard rock minerals, coal, oil, timber, gas and or other minerals in Colfax County, New Mexico, without Board Approval and without providing notice to the parties, and any and all issuances of stock or any other compensation, payments, bonuses, gifts or other transfers by Sun River to the Defendants without Board Approval and without providing notice to the parties outside of normal payroll payment activity. On February 7, 2013, Defendants Schmidt et al. filed an Amended Answer, Special Exception, Counterclaim and Original Third Party Petition asserting claims against certain third parties for breach of contract, breach of fiduciary duty, misappropriation of confidential information, and against the Company (as well as others) for conversion, constructive trust and conspiracy and places some of the blame for these alleged actions on Dr. Steven Henson. On January 27, 2014, upon motion made by the Company and other third party defendants in their joint motions for severance of third party claims relief was granted by the district court of Dallas County, Texas and a new suit, styled Sun River, et al. v. the Company, et al. (including the other initial third party defendants) was created (the Third Party Suit); however, as of March 31, 2014, Sun River has yet to pay the requisite filing fees and the case has yet to be assigned a cause number. As a result of such severance, the Company is no longer a party to the Derivative Suit. The Derivative Suit case is set for trial on June 9, 2014. Subject, it is understood to a Motion for Continuance. There is no current trial set in the Third Party Suit although the parties to the Third Party Suit have circulated an agreed Scheduling Order setting the Third Party Suit for trial in January 2015; no order setting such trial date has been submitted for the Courts signature as of this date. In addition, Sun River appealed the decision of temporary injunction in the Derivative Suit and on January 13, 2014, the Appeals Court reversed the temporary injunction in the Derivative Suit on the grounds that the Plaintiffs did not show imminent harm. Plaintiffs in the Derivative Suit have filed a new request for temporary injunction to the Appeals Court seeking new relief. Dr. Steven Henson believes the claims in the Third Party Suit are completely without merit and the Company will defend their respective positions vigorously.
16
On January 15, 2013, Gruber Hurst Johansen Hail Shank LLP ("GHJHS") initiated a lawsuit against Steve Henson, M.D., David K. Henson, Colin Richardson, et al, in the 134th District Court of Dallas County, Cause No. DC-13-00553. GHJHS brought this suit seeking payment for legal representation previously provided to the defendants regarding the Sun River case disclosed above. This case was later assigned to mediation.
We have recently become aware of a letter dated December 17, 2012 from Dr. Steven Henson to Michael Farmer, who at time was not a director or officer of Rangeford, with regard to our offering of up to $3,000,000 of our preferred stock in connection with our proposed acquisition of certain properties from Great Northern Energy, Inc. In the letter, Dr. Henson, who at the time was the President and Chairman of the Board of Rangeford, purports to grant a right of rescission to certain investors in the event that we were unable to raise the full amount of funds necessary to acquire the subject properties from Great Northern Energy. This right of rescission was never approved by our Board of Directors and it is our position that Dr. Henson acted without proper authority in providing the letter to Mr. Farmer, as the representative of certain investors. At this point no claim has been made by any of the investors, who invested approximately $300,000 in Rangeford and we have no reason to assume that a claim will ultimately be made.
NOTE 8 SUBSEQUENT EVENTS
On January 27, 2014, the Company issued 33,140 shares valued at $16,570 in partial payment of the companys cumulative Series A Convertible Preferred stock dividend.
On February 25, 2014, the Company issued 30,800 shares to Fidare Consulting Group related to the exercise of 120,000 warrants.
As of March 31, 2014, we have issued Mr. Richardson 26,313 shares of common stock and 120,000 warrants, valued at $120,000, pursuant to his Officer Agreement.
On April 28, 2014, the Company granted 108,000 options to purchase the Companys common stock with a three year term and an exercise price of $1 pursuant to the terms of the board of directors agreement with Michael Farmer. The value of the options at April 28th was $427,901.
On April 28, 2014, the Company granted 200,000 options to purchase the Companys common stock with a three year term and an exercise price of $3 pursuant to the terms of the board of directors agreement with Michael Farmer. The value of the options at April 28th was $751,494.
On April 30, 2014, the Company issued Mr. Richardson 5,000 shares of common stock valued at $20,000 and 20,000 warrants valued at $58,897 pursuant to the terms of his Officer Agreement.
On April 30, 2014, the Company issued Fidare Consulting Group 5,000 shares of common stock valued at $20,000 and 20,000 warrants valued at $58,897 pursuant to the terms of its Consulting Agreement.
17
On May 20, 2014, we sent a letter to GNE informing them of this determination and seeking to mutually terminate the Agreement. Given the amount of time that has passed since we first entered into negotiations with GNE and the lack of any tangible results as contemplated in the Agreement, in addition to GNE'S failure to uphold certain of its obligations under the Agreement, we determined it would be in our best interest to terminate the Agreement In that letter, we requested that GNE comply with the termination provisions of the Agreement and provide the stock power necessary to cancel the shares and return the $700,000 advanced to them under the terms of the Agreement. Accordingly, once GNE returns the $700,000 and submits the outstanding stock power, we shall immediately consent to and permit the mutual termination of the Agreement.
18
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with our unaudited financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward-looking statements.
The independent registered public accounting firms report on the Companys financial statements as of March 31, 2013, and for each of the years in the two-year period then ended, includes a going concern explanatory paragraph, that describes substantial doubt about the Companys ability to continue as a going concern.
PLAN OF OPERATIONS
Overview
Rangeford Resources, Inc. (the Company) is a development stage company that was incorporated on December 4, 2007, in the state of Nevada. The Company has never declared bankruptcy, it has never been in receivership. Since becoming incorporated, Rangeford Resources has not made any significant purchase or sale of assets, nor has it been involved in any mergers, acquisitions or consolidations and the Company owns no subsidiaries. The fiscal year end is March 31st. The Company has not had revenues from operations since its inception and/or any interim period in the current fiscal year.
Going Concern
We have incurred net losses of approximately $3,146,542 since inception through September 30, 2013. The report of our independent registered public accounting firm on our financial statements for the year ended March 31, 2013 contains an explanatory paragraph regarding our ability to continue as a going concern based upon our operating losses and need to raise additional capital. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to increase our revenues and report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.
19
Plan of Operation
We have $590,259 in current liabilities as of September 30, 2013. From the date of inception (December 4, 2007) to September 30, 2013, the Company has recorded a net loss of $3,146,542 of which were expenses relating to the initial development of the Company, filing its Registration Statement on Form S-1, and expenses relating to maintaining Reporting Company status with the SEC. In order to survive as a going concern over the Company will require additional capital investments or borrowed funds to meet cash flow projections and carry forward our business objectives. There can be no guarantee or assurance that we can raise adequate capital from outside sources to fund the proposed business. Failure to secure additional financing would result in business failure and a complete loss of any investment made into the Company.
Since August 15, 2008, the Company has sold 181,700 shares of common stock to the public with total proceeds raised of $22,713. These proceeds have been utilized by the Company to fund its initial development including administrative costs associated with maintaining its status as a Reporting Company as defined by the Securities and Exchange Commission (SEC) under the Exchange Act of 1934 as amended. The Company plans to continue to focus efforts on selling their common shares in order to continue to fund its initial development and fund the expenses associated with maintaining a reporting company status.
Black Gold Kansas Productions, LLC
On October 2, 2013, the Company executed a Letter of Intent (LOI) with Black Gold Kansas Productions, LLC, a Texas limited liability company (BGKP). The LOI sets forth the parties intention to enter into and negotiate a Purchase and Sale Agreement (PSA), the basic terms of which are set forth in the LOI.
On January 14, 2014, the Parties executed the contemplated PSA.
Pursuant to the PSA, the Company shall receive the following:
an undivided sixty percent working interest delivering a forty-eight percent in and to the George Lease: a 190 acre property in Bourbon County, Kansas, with four wells connected to tank batteries of 990 barrels of storage capacity, gravel roads, electric meters, electric line and power poles, flow lines and pumping units, rods and down hole pumps on location with electric lines trenched for the George #5 and #6 to be drilled (the George Lease);
an undivided seventy-five percent working interest, delivering a sixty percent net revenue interest in and to 2,950+ acres in Bourbon and Allen Counties, Kansas, with additional leasing in progress and existing leases having primary terms ranging from 2 to 5 years with all but one having 2 to 5 year extension options (2,950 Acres);
20
a like undivided interest in and to all wells, whether producing, shut in or abandoned, and whether for production, injection or disposal or otherwise associated with the Subject Interests, including those described in the exhibits and schedules attached to the PSA (collectively, the Wells and each a Well), (collectively, the Leases and each a Lease) and any overriding royalty interests, royalty interests, non-working or carried interests, operating rights, miner rights and other rights and interest described on the schedules and exhibits attached to the PSA, together with the lands covered thereby or pooled or utilized therewith (the Lands), together with (i) all rights with respect to any pooled, communitized or unitized interest by virtue of any Leases and Lands and (ii) all production of oil, gas, associated liquids and other hydrocarbons (collectively, Hydrocarbons) after the Effective Time from the Leases and the Lands, and from any such pool or unit and allocated to any such Leases and Lands (the Leases, the Lands, and the rights described in clause (i) above, and the Hydrocarbons described in clause (ii) above, being collectively referred to as the Subject Interests or singularly as a Subject Interest;
a like undivided interest in and to all equipment, machinery, fixtures, spare parts, inventory, communications equipment, telemetry and production measurement equipment, and other personal property (including Sellers leasehold interests therein subject to any necessary consents to assignment) used in connection with the operation of the Subject Interests or the Wells or in connection with the production, storage, treatment, compression, gathering, transportation, sale, or disposal of Hydrocarbons produced from or attributable to the Subject Interests or the Wells, and any water, byproducts or waste produced therefrom or therewith or otherwise attributable thereto, and all wellhead equipment, pumps, pumping units, flowlines, gathering systems, pipe, tanks, treatment facilities, injection facilities, disposal facilities, compression facilities and other materials, supplies, buildings, trailers and offices used in connection with the Subject Interests, the Wells and the other matters described in this definition (collectively, Assets);
to the extent assignable or transferable, a like undivided interest in and to all (i) all easements, rights-of-way, servitudes, licenses, permits, surface leases, surface use agreements and other rights or agreements related to the use of the surface and subsurface, in each case to the extent used in connection with the operation of the Subject Interests or the Wells; (ii) all contracts, agreements, drilling contracts, equipment leases, production sales and marketing contracts, farmout and farming agreements, operating agreements, service agreements, unit agreements, gas gathering and transportation agreements and other contracts, agreements and arrangements, relating to the Subject Interests, the Wells and the other matters described in this definition of Assets, (iii) equipment leases and rental contracts, service agreements, supply agreements and other contracts, agreements and arrangements relating to the Subject Interests, the Wells and the other matters described in this definition of Assets, (the agreements identified in clauses (i), (ii) and (iii) above being, collectively described in Exhibit A, Schedule 2 to the PSA, the Contracts);
to the extent assignable or transferable, all permits, licenses, franchises, consents, approvals and other similar rights and privileges, in each case to the extent used in connection with the operation of the Subject Interests or the Wells (the Permits);
all Production Imbalances;
21
a like undivided interest in and to all books, records, files and databases, (ii) to the extent assignable or transferable, copies of all maps and well logs and data, and (iii) muniments of title, reports and similar documents and materials, in each case to the extent directly relating to the foregoing interests and in the possession or control of Seller (the Records).
The total consideration for the purchase, sale and conveyance of the Assets to the Company and the Companys assumption of the undivided share of liabilities provided for in the PSA, is the Companys payment to BGKP of the sum of $1,005,159 (the Purchase Price), as adjusted in accordance with the provisions of the PSA. As of the date of this Report, the Company has not yet paid the Purchase Price and will not be able to do so without receiving additional funding, of which there can be no guarantee. Accordingly, the purchase may not occur.
The PSA may be terminated (1) at any time prior to closing by mutual written consent of the Company and BGKP, (2) by either party if closing has not occurred by November, 2013, or such later date to which the Closing Date has been delayed, (3) by the Company if there is a material breach of the representations and warranties made by BGKP with 15 days prior notice, and (4) by BGKP if there is a material breach of the representations and warranties made by the Company with 15 days prior notice.
The Company was required to give a $10,000 deposit upon signing the PSA, which BGKP may retain as liquidated damages if the Company fails to close the transactions contempleted by the PSA on the closing date if all of the closing conditions are satisfied and BGKP is ready, willing and able to perform its obligations under the PSA, or, if BGKP terminates the PSA due to the Company's material breach of any of its representations and warranties included in the PSA or failure to comply with its covenants and agreements after the related cure period set forth in the PSA.
Great Northern Energy, Inc.
On November 15, 2012, the Company entered into a Purchase and Sale Agreement (the Agreement) with Great Northern Energy, Inc. (GNE) to acquire a substantial non-operating working interest in oil assets in East Texas in consideration for a purchase price that includes (a) a cash payment of $3,900,000 in the form of (i) a deposit of $100,000; (ii) a promissory note in the amount of $1,100,000; and (iii) a promissory note in the amount of $2,700,000 and (b) 7,400,000 shares of its restricted common stock.
As of September 30, 2013, the Company had transferred a total of $700,000 and issued 7,400,000 shares of common stock to GNE towards the purchase of the oil and gas properties, but the agreement has not been consummated. The $700,000 payment was initially recorded as a long-term deposit on the balance sheet and, subsequently, has been charged to impairment of deposit on the income statement for the year ended March 31, 2013.
22
GNE has returned the stock certificate for 7,400,000 shares, however, GNE did not submit an executed stock power which is required to cancel the GNE shares. The 7,400,000 shares are considered issued and outstanding at June 30, 2013. The deposit of $36,557 recorded on the balance sheet as of September 30, 2013, which is related to the issuance of the 7,400,000 shares of common stock, will be reversed in the period the shares are properly cancelled.
On May 20, 2014, we sent a letter to GNE informing them of this determination and seeking to mutually terminate the Agreement. Given the amount of time that has passed since we first entered into negotiations with GNE and the lack of any tangible results as contemplated in the Agreement, in addition to GNE'S failure to uphold certain of its obligations under the Agreement, we determined it would be in our best interest to terminate the Agreement In that letter, we requested that GNE comply with the termination provisions of the Agreement and provide the stock power necessary to cancel the shares and return the $700,000 advanced to them under the terms of the Agreement. Accordingly, once GNE returns the $700,000 and submits the outstanding stock power, we shall immediately consent to and permit the mutual termination of the Agreement.
23
Drilling and Development
The Company does not anticipate any costs or expenses to be incurred for drilling research and development within the next six months.
Results of Operations
For the Three and Six Months Ended September 30, 2013 Compared to the Three Months and Six Months Ended September 30, 2012
The following table sets forth information from our statements of operations for the three months ended September 30, 2013 and 2012.
| Three months ended September 30, | Increase/ | |||
| 2013 |
| 2012 |
| Decrease |
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
Investor relations | 9,735 |
| 17,104 |
| $ (7,369) |
Professional fees | 8,921 |
| 6,733 |
| 2,188 |
Professional fees-related party | 361,766 |
| 262,121 |
| 99,645 |
General and administrative | 1,890 |
| 2,525 |
| (635) |
Total operating expenses | 382,312 |
| 288,483 |
| 93,829 |
|
|
|
|
|
|
Loss from operations | (382,312) |
| (288,483) |
| (93,829) |
|
|
|
|
|
|
Other expense |
|
|
|
|
|
Interest expense | 11,608 |
| - |
| 11,608 |
Total other expense | 11,608 |
| - |
| 11,608 |
|
|
|
|
|
|
Loss before income taxes | (393,920) |
| (288,483) |
| (105,437) |
|
|
|
|
|
|
Provision for income tax | - |
| - |
| - |
|
|
|
|
|
|
Net loss | $ (393,920) |
| $ (288,483) |
| $ (105,437) |
During the three months ended September 30, 2013 and 2012, the Company did not recognize any revenues from it operating activities.
For the three months ended September 30, 2013, the Company recognized a net loss of $393,920 compared to $288,483 for the three months ended September, 2012. The increase of $82,867 was a result of the Companys increase in expenses for operational charges and interest expense.
24
During the three months ended September 30, 2013, the Company incurred $9,735 in investor relations expenses as compared to $17,104 in the comparable period in the prior year. The decrease of $7,369 was due to timing differences.
During the three months ended September 30, 2013, the Company incurred $8,921 in professional fees compared with $6,733 in the comparable period in the prior year. During the three months ended September 30, 2013, the Company incurred $361,766 in professional fees-to related parties compared with $262,121 in the comparable period in the prior year. The increase in professional fees were primarily related to legal, accounting, management and board fees resulting from the GNE agreement, the Preferred Stock issuance and corporate governance. Professional fees- related party related to the professional services contract with Fidare Consulting Group, LLC to provide consulting services relating to corporate governance, accounting procedures and controls and strategic planning in the amount of $212,183 of which $60,800 was paid in common stock $152,183 was paid in the form of warrants to purchase common stock (see Note 4).
General and administrative expenses decreased to $1,890 from $2,525 primarily related to decreases in common stock transfer fees, quote fees for the Companys common stock and meals and entertainment associated with the Companys increased activities.
During the three months ended September 30, 2013, the Company incurred $11,285 in interest expense compared with none in the prior year period.
The following table sets forth information from our statements of operations for the six months ended September 30, 2013 and 2012.
| Six months ended September 30, | Increase/ | |||
| 2013 |
| 2012 |
| Decrease |
Operating expenses |
|
|
|
|
|
Investor relations | 24,866 |
| 17,104 |
| 7,762 |
Professional fees | 65,104 |
| 6,933 |
| 58,171 |
Professional fees-related party | 523,856 |
| 262,121 |
| 261,735 |
General and administrative | 36,678 |
| 4,040 |
| 32,638 |
Total operating expenses | 650,504 |
| 290,198 |
| 360,306 |
|
|
|
|
|
|
Loss from operations | (650,504) |
| (290,198) |
| (360,306) |
Other expense |
|
|
|
|
|
Interest expense | 14,783 |
| - |
| 14,783 |
Total other expense | 14,783 |
| - |
| 14,783 |
Loss before income taxes | (665,287) |
| (290,198) |
| (375,089) |
Provision for income tax | - |
| - |
| - |
Net loss | (665,287) |
| (290,198) |
| (375,089) |
25
During the six months ended September 30, 2013 and 2012, the Company did not recognize any revenues from it operating activities.
During the six months ended September 30, 2013, the Company recognized a net loss of $665,287 compared to a net loss of $290,198 for the six months ended September 30, 2012. The increase of $375,089 was the result of the Companys increase in operational expenses and interest charges.
During the six months ended September 30, 2013, the Company incurred $24,866 in investor relations expenses as compared to $17,104 in the comparable period in the prior year as the Company commenced a more active role in communicating the Companys activities to shareholders.
During the six months ended September 30, 2013, the Company incurred $65,104 in professional fees compared with $6,933 in the comparable period in the prior year. During the six months ended September 30, 2013, the Company incurred $523,856 in professional fees-to related parties compared with $262,121 in the comparable period in the prior year. The increase in professional fees were primarily related to legal, accounting, management and board fees resulting from the GNE agreement, the Preferred Stock issuance and corporate governance. Professional fees- related party related to the professional services contract with Fidare to provide consulting services relating to corporate governance, accounting procedures and controls and strategic planning in the amount of $212,183 of which $60,800 was paid in common stock $152,183 was paid in the form of warrants to purchase common stock (see Note 4).
General and administrative expenses increased to $36,679 from $4,040 primarily relating to increase in common stock transfer fees, quote fees for the companys common stock and meals and entertainment associated with the Companys increased activities.
During the six months ended September 30, 2013, the Company incurred $14, 783 in interest expense compared with none in the prior year period. Interest expense of $4,877 was incurred on the Hadley note, $2,023 on the Cicerone revolving line of credit, and includes amortization of debt issuance costs of $7,883 related to the issuance of the Cicerone note. (see Note 5).
Liquidity and Capital Resources
At September 30, 2013, the Company had total current assets of $166,735, including cash of $2,155, $8,125 in prepaid expenses to a related party, and debt issuance costs-net of amortization of $156,455. At September 30, 2013, the Company had total current liabilities of $590,259 which includes, $418,155 in accounts payable, $2,023 in accrued interest, and, $170,082 in notes payable. At September 30, 2013, the Company had a working capital deficit of $423,524.
During the six months ended September 30, 2013, the Company used cash of $139,292 in our operations compared to $579 during the six months ended September 30, 2012. No cash was provided by or used in investing activities for the six months ended September 30, 2013 and 2012. During the six months ended September 30, 2013, the Company received funds of $141,447 from financing activities and generated $2,000 cash from financing activities for the six months ended September 30, 2012.
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Cicerone Corporate Development, LLC (a related party) advanced $133,066 to the Company for operating expenses during the quarter ended September 30, 2013.
We received loans from two of our shareholders totaling $21,055 from inception to June 30, 2012 for the purposes of funding startup operations. These loans were non-interest bearing and due on demand. On June 30, 2012 these loans totaling $21,055 were forgiven by the shareholders and credited to our additional paid in capital account.
Short Term
On a short-term basis, the Company has not generated any revenue or revenues sufficient to cover operations. Based on prior history, the Company will continue to have insufficient revenue to satisfy current and recurring liabilities as the Company continues exploration activities.
Capital Resources
The Company will need to raise an additional $3,213,260 in funding to fully comply with the terms of the revised GNE agreement of which is due and payable immediately.
The Company is making every effort to sell at least a sufficient amount of Preferred Stock to meet the capital requirements of the GNE agreement and for general corporate purposes. There can be no assurances that the Company will be successful in its attempt to sell the preferred shares.
The Company will need to raise an additional $1,005,159 in funding to complete Phase I of the agreement with BGKP. Phase II of the agreement with BGKP will require the Company to fund $2,500,000 for the drilling, testing, and completion of 20 wells in Bourbon, or Allen County, Kansas.
The Company has no material commitments for capital expenditures within the next year, however if operations are commenced, substantial capital will be needed to pay for participation, investigation, exploration, acquisition and working capital.
Need for Additional Financing
The Company does not have capital sufficient to meet its cash needs. The Company will have to seek loans or equity placements to cover such cash needs. Once exploration commences, its needs for additional financing is likely to increase substantially.
No commitments to provide additional funds have been made by the Companys management or other stockholders. Accordingly, there can be no assurance that any additional funds will be available to us to allow us to cover the Companys expenses as they may be incurred.
27
The Company will need substantial additional capital to support its proposed future petroleum exploration operations. The Company has no revenues. The Company has no committed source for any funds as of the date hereof. No representation is made that any funds will be available when needed. In the event funds cannot be raised when needed, the Company may not be able to carry out its business plan, may never achieve sales or royalty income, and could fail in business as a result of these uncertainties.
Decisions regarding future participation in exploration wells or geophysical studies or other activities will be made on a case-by-case basis. The Company may, in any particular case, decide to participate or decline participation. If participating, the Company may pay its proportionate share of costs to maintain the Companys proportionate interest through cash flow or debt or equity financing. If participation is declined, the Company may elect to farm-out, non-consent, sell or otherwise negotiate a method of cost sharing in order to maintain some continuing interest in the prospect.
Going Concern
We have incurred net losses of approximately $3,146,542 since inception through September 30, 2013. The report of our independent registered public accounting firm on our financial statements for the year ended March 31, 2013 contains an explanatory paragraph regarding our ability to continue as a going concern based upon our operating losses and need to raise additional capital. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to increase our revenues and report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report, the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets
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Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not Applicable to smaller reporting companies
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The Company failed to timely file its annual report on Form 10K for the year ended March 31, 2013 and the quarterly reports on Form 10-Q for that same fiscal year, which demonstrates that its Disclosure Controls and Procedures have been inadequate.
Evaluation of Disclosure Controls and Procedures
As of the end of our last fiscal year ended March 31, 2013 and the quarter ended September 30, 2013, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon those evaluations, management concluded that our disclosure controls and procedures were not effective as of March 31, 2013 or September 30, 2013, to cause the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods prescribed by SEC, and that such information is accumulated and communicated to management, including our chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Going forward from this filing, the Company intends to re-establish and maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the SEC), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
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Changes in Internal Control over Financial Reporting
During the quarter covered by this Report, there were not any changes in our internal control over financial reporting identified in connection with the evaluation management performed at the end of the quarter ending September 30, 2013 or the end of the fiscal year ending March 31, 2013 that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
Other than those disclosed in the Annual Report on Form 10K for the year ending March 31, 2013, as amended, there have not been any changes in our internal control over financial reporting identified in connection with the evaluation management performed at the end of the fiscal year ending March 31, 2013 that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
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PART II OTHER INFORMATION
Item 1. Legal Proceedings.
On June 7, 2012, several former shareholders (including the Companys CEO, Dr. Steven Henson, although not in such capacity) of Sun River Energy, Inc. (Sun River) filed a derivative action against Sun River and its management in a case now styled Colin Richardson, et al., derivatively on behalf of Sun River Energy, Inc. v. Sun River Energy, Inc. v. Donald R. Schmidt, Jr., et al., Cause No. DC-12-06318, in the District Court of Dallas County, Texas (the Derivative Suit). On January 24, 2013, the Court found the Plaintiffs in the case had shown a probable right to the relief sought at an evidentiary hearing and a likelihood of success on the claims of breach of fiduciary duty, fraudulent transfer and certain defamation claims, and entered a temporary injunction against Sun River and its management (the Temporary Injunction). The terms of the Temporary Injunction prevent Sun River, and all officers, directors, agents, servants, attorneys, employees, and all those in active concert or participation, from any performance, claims of default, payments, transfer or other actions with respect to certain notes and mortgages; any payments on those notes based on alleged past due compensation without Board Approval and without providing notice to the parties; entry into contracts by Donal R. Schmidt, Jr. to lease, purchase, or sell Sun Rivers interest in its hard rock minerals, coal, oil, timber, gas and or other minerals in Colfax County, New Mexico, without Board Approval and without providing notice to the parties, and any and all issuances of stock or any other compensation, payments, bonuses, gifts or other transfers by Sun River to the Defendants without Board Approval and without providing notice to the parties outside of normal payroll payment activity. On February 7, 2013, Defendants Schmidt et al. filed an Amended Answer, Special Exception, Counterclaim and Original Third Party Petition asserting claims against certain third parties for breach of contract, breach of fiduciary duty, misappropriation of confidential information, and against the Company (as well as others) for conversion, constructive trust and conspiracy and places some of the blame for these alleged actions on Dr. Steven Henson. On January 27, 2014, upon motion made by the Company and other third party defendants in their joint motions for severance of third party claims relief was granted by the district court of Dallas County, Texas and a new suit, styled Sun River, et al. v. the Company, et al. (including the other initial third party defendants) was created (the Third Party Suit); however, as of March 31, 2014, Sun River has yet to pay the requisite filing fees and the case has yet to be assigned a cause number. As a result of such severance, the Company is no longer a party to the Derivative Suit. The Derivative Suit case is set for trial on June 9, 2014. Subject, it is understood to a Motion for Continuance. There is no current trial set in the Third Party Suit although the parties to the Third Party Suit have circulated an agreed Scheduling Order setting the Third Party Suit for trial in January 2015; no order setting such trial date has been submitted for the Courts signature as of this date. In addition, Sun River appealed the decision of temporary injunction in the Derivative Suit and on January 13, 2014, the Appeals Court reversed the temporary injunction in the Derivative Suit on the grounds that the Plaintiffs did not show imminent harm. Plaintiffs in the Derivative Suit have filed a new request for temporary injunction to the Appeals Court seeking new relief. Dr. Steven Henson believes the claims in the Third Party Suit are completely without merit and the Company will defend their respective positions vigorously.
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On January 15, 2013, Gruber Hurst Johansen Hail Shank LLP ("GHJHS") initiated a lawsuit against Steve Henson, M.D., David K. Henson, Colin Richardson, et al, in the 134th District Court of Dallas County, Cause No. DC-13-00553. GHJHS brought this suit seeking payment for legal representation previously provided to the defendants regarding the Sun River case disclosed above. This case was later assigned to mediation.
We have recently become aware of a letter dated December 17, 2012 from Dr. Steven Henson to Michael Farmer, who at time was not a director or officer of Rangeford, with regard to our offering of up to $3,000,000 of our preferred stock in connection with our proposed acquisition of certain properties from Great Northern Energy, Inc. In the letter, Dr. Henson, who at the time was the President and Chairman of the Board of Rangeford, purports to grant a right of rescission to certain investors in the event that we were unable to raise the full amount of funds necessary to acquire the subject properties from Great Northern Energy. This right of rescission was never approved by our Board of Directors and it is our position that Dr. Henson acted without proper authority in providing the letter to Mr. Farmer, as the representative of certain investors. At this point no claim has been made by any of the investors, who invested approximately $300,000 in Rangeford and we have no reason to assume that a claim will ultimately be made.
Other than the above mentioned litigation matters, neither we nor any of our direct or indirect subsidiaries is a party to, nor is any of our property the subject of, any legal proceedings. There are no proceedings pending in which any of our officers, directors or 5% shareholders are adverse to us or any of our subsidiaries or in which they are taking a position or have a material interest that is adverse to us or any of our subsidiaries.
Item 1A. Risk Factors.
Not Applicable to Smaller Reporting Companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Information on any and all equity securities we have sold during the period covered by this Report that were not registered under the Securities Act of 1933, as amended and not included in a previously filed Current Report on Form 8-K is set forth below:
On September 23, 2013, the Company issued 20,000 shares of its Series A convertible preferred stock to settle the past due outstanding promissory note payable to settle the Hadley Note in full.
On September 24, 2013, the Company issued 1,500,000 shares with a relative value of $164,338 to Cicerone Corporate Development, LLC related to providing the $750,000 line of credit.
On September 30, 2013, we issued Mr. Kevin Carreno, a former Board Member, 12,364 shares of our common stock as payment of outstanding invoices owed to him for his legal services, which is valued at $41,583.
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For the quarter ended September 30, 2013 the company authorized the issuance of 18,606 shares of common stock valued at $60,000 pursuant to the terms of the consulting agreement with Fidare Consulting Group, LLC.
All of the transactions listed above were made pursuant to the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(2) of the Securities Act for sales not involving a public offering. The securities issued have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosure.
Not Applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.
Exhibit Number |
| Description |
31.1 |
| Certification of Chief Financial Officer and Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act |
|
|
|
32.1 |
| Certification of Principal Executive and Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act |
101** | Interactive Data File (Form 10-Q for the quarter ended September 30, 2013 furnished in XBRL). |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Schema |
101.CAL | XBRL Taxonomy Calculation Linkbase |
101.DEF | XBRL Taxonomy Definition Linkbase |
101.LAB | XBRL Taxonomy Label Linkbase |
101.PRE | XBRL Taxonomy Presentation Linkbase |
** To be filed by Amendment
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| RANGEFORD RESOURCES, INC. | |
|
|
|
Dated: June 3, 2014 | By: | /s/ Colin Richardson |
|
| Colin Richardson |
|
| Chief Executive Officer, President, Principal Executive Officer and Principal Financial and Accounting Officer |
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EXHIBIT 31.1
SECTION 302 CERTIFICATION OF PERIODIC REPORT
I, Colin Richardson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Rangeford Resources, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. As the registrant's sole certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's 4th quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
5. As the registrant's certifying officer, I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: June 3, 2014
By: /s/ Colin Richardson
Colin Richardson
President & CEO
EXHIBIT 31.2
SECTION 302 CERTIFICATION OF PERIODIC REPORT
I, Colin Richardson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Rangeford Resources, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. As the registrant's sole certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's 4th quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
5. As the registrant's certifying officer, I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: June 3, 2014
By: /s/ Colin Richardson
Colin Richardson
Principal Financial Officer
Exhibit 32.1
CERTIFICATION OF DISCLOSURE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Rangeford Resources, Inc. (the "Company") on Form 10-Q for the period ending September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report") I, Colin Richardson, President and CEO of the Company, certify, pursuant to 18 USC section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: June 3, 2014
By: /s/ Colin Richardson
Colin Richardson
President & CEO
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 32.2
CERTIFICATION OF DISCLOSURE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Rangeford Resources, Inc. (the "Company") on Form 10-Q for the period ending September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report") I, Colin Richardson, President and CEO of the Company, certify, pursuant to 18 USC section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: June 3, 2014
By: /s/ Colin Richardson
Colin Richardson
Principal Financial Officer
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.