0001004878-15-000243.txt : 20150810 0001004878-15-000243.hdr.sgml : 20150810 20150807183309 ACCESSION NUMBER: 0001004878-15-000243 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20150630 FILED AS OF DATE: 20150810 DATE AS OF CHANGE: 20150807 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Vanguard Energy Corp CENTRAL INDEX KEY: 0001497649 STANDARD INDUSTRIAL CLASSIFICATION: DRILLING OIL & GAS WELLS [1381] IRS NUMBER: 272888719 STATE OF INCORPORATION: CO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-174194 FILM NUMBER: 151038818 BUSINESS ADDRESS: STREET 1: 1330 POST OAK BLVD. STREET 2: SUITE 1600 CITY: HOUSTON STATE: TX ZIP: 77056 BUSINESS PHONE: 713-627-2500 MAIL ADDRESS: STREET 1: 1330 POST OAK BLVD. STREET 2: SUITE 1600 CITY: HOUSTON STATE: TX ZIP: 77056 10-Q 1 june201510q8-15.txt JUNE 30, 2015 10-Q REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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 June 30, 2015 [ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to __________ Commission File Number: None VANGUARD ENERGY CORPORATION ----------------------------------- (Exact name of registrant as specified in its charter) COLORADO 27-2888719 ------------------------------ ----------------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or Identification No.) organization) 2 Blvd Place, Suite 600 1700 Post Oak Blvd. Houston, Texas 77056 ------------------------------- (Address of principal executive offices, including Zip Code) (713) 627-2500 -------------------------------------------- (Issuer's telephone number, including area code) ---------------------------- (Former name or former address if changed since last report) Check whether the issuer (1) filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate by check mark whether the registrant 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 of Regulation S-T (ss.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 |_| No |X| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of "large accelerated filer," "accelerated filer," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. 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 |_| State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 973,139 shares of common stock as of June 30, 2015. FORWARD LOOKING STATEMENTS The information contained in this Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, including among other things, statements regarding our capital needs, business strategy and expectations. Any statement which does not contain a historical fact may be deemed to be a forward-looking statement. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. In evaluating forward looking statements, you should consider various factors outlined in our Form 10-K report for the year ended September 30, 2014, filed with the U.S. Securities Exchange Commission ("SEC") and, from time to time, in other reports we file with the SEC. These factors may cause our actual results to differ materially from any forward-looking statement. We disclaim any obligation to publicly update these statements, or disclose any difference between our actual results and those reflected in these statements. VANGUARD ENERGY CORPORATION CONSOLIDATED BALANCE SHEETS June 30, September 30, ASSETS 2015 2014 ------------- ----------- (Unaudited) Current assets Cash and cash equivalents $2,183 $ 39,251 Other assets - 12,500 ----------- --------- Total current assets $2,183 51,751 Debt issuance costs - 83,654 ----------- --------- Total assets $2,183 $135,405 =========== ========= LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities Accounts payable $ 9,391 $ 578 Accrued interest payable 33,061 702,901 Other liabilities 8,600 8,600 Short term notes payable 50,000 0 Current portion of notes payable, net of discount $- and $71,754 146,937 2,923,040 ----------- ---------- Total current liabilities 247,989 3,635,119 Commitments and contingencies - - Stockholders' deficit Preferred stock, $0.00001 par value; 5,000,000 shares authorized; none issued or outstanding - - Common stock, $0.00001 par value; 100,000,000 and 50,000,000 shares authorized; 973,139 and 127,114 shares issued and outstanding 973 127 Additional paid-in capital 6,318,920 5,522,204 Accumulated deficit (6,565,699) (9,022,045) ----------- ---------- Total stockholders' deficit (245,806) (3,499,714) ----------- ---------- Total liabilities and stockholders' deficit $2,183 $135,405 =========== ========== The accompanying notes are an integral part of these consolidated financial statements. 1 VANGUARD ENERGY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended June 30 Nine Months Ended June 30 2015 2014 2015 2014 ----------- ------------- ---------- --------------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues Oil and gas sales $ - $ 154,294 $ - $ 1,676,231 Costs and expenses Lease operating expense - 46,408 - 544,045 Production taxes - 7,098 - 77,253 Depreciation, depletion and amortization - - - 984,200 Impairment of O&G properties - (18,634) - 861,579 Asset retirement obligation accretion - - - 29,088 General and administrative (7,616) 212,959 90,418 765,865 --------- --------- --------- ----------- Total costs and expenses (7,616) 90,418 247,831 3,262,030 --------- --------- --------- ----------- Income (Loss) from operations 7,616 (93,537) (90,418) (1,585,799) --------- --------- --------- ----------- Other income (expense) Other income - 2,721 - 3,512 Interest income - - - 233 Gain on settlement of participation liability 171,772 171,772 Liability - - Loss on early extinguishment - of debt (380,539) (380,539) Interest expense (5,510) (393,293) (24,161) (1,295,786) Furniture and equipment write-down - - - (20,819) Gain on debt extinguishment - - 2,570,926 - --------- --------- --------- ----------- Total other income (expense) (5,510) (599,339) 2,546,765 (1,521,626) --------- --------- --------- ----------- Net income (loss) before income taxes 2,106 (692,876) 2,456,347 (3,107,426) Provision for income taxes - - - - --------- --------- --------- ----------- Net income (loss) $ 2,106 $(692,876) $2,456,347 $(3,107,426) ========= ========== ========== =========== Income (loss) per share: Basic and diluted $ 0.00 $ (5.45) $ 2.52 $ (24.45) Weighted average shares outstanding: Basic and diluted 973,139 127,114 973,139 127,1140
The accompanying notes are an integral part of these consolidated financial statements. 2 VANGUARD ENERGY CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Month ended June 30, 2015 2014 ----------- ------------- (Unaudited) (Unaudited) Cash flows from operating activities Net income (loss) $2,456,347 $(3,107,426) Adjustments to reconcile net income (loss) to net cash from operating activities Depreciation, depletion and amortization - 941,294 Impairment of O&G properties - 861,579 Gain on settlement of participation liability - (171,772) Amortization of debt issuance costs 4,107 223,933 (Gain) loss on early debt extinguishment (2,677,698) 380,539 Asset retirement obligation accretion - 29,088 Amortization of debt discount 3,523 169,145 Accretion of participation liability - (63,160) Furniture and equipment write-down - 20,819 Change in operating assets and liabilities: Accounts receivable - 185,360 Other assets 12,500 26,863 Accounts payable 8,813 (82,923) Accrued interest payable 105,341 - Short term notes payable 50,000 Other liabilities - 268,403 --------- ----------- Net cash from operating activities (37,068) (318,258) --------- ----------- Cash flows from investing activities Capital expenditures on oil and gas properties - (1,012,794) Proceeds from sales of O&G properties - 5,500,000 --------- ----------- Net cash from investing activities - 4,487,206 --------- ----------- Cash flows from financing activities Repayment of note payable - (5,259,706) Settlement of participation liability - (230,619) --------- ----------- Net cash from financing activities - (5,490,325) --------- ----------- Net change in cash and cash equivalents (37,068) (1,321,377) Cash and cash equivalents Beginning of period 39,251 1,334,285 --------- ----------- End of period $2,183 $12,908 ========= =========== 3 VANGUARD ENERGY CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Nine Month ended June 30, 2015 2014 ----------- ------------- (Unaudited) (Unaudited) Supplemental cash flow information: Interest paid $ - $ 312,111 Noncash investing and financing activities: Issuance of shares for settlement of debt 797,562 - Asset retirement obligations incurred - 29,088 The accompanying notes are an integral part of these consolidated financial statements. 4 VANGUARD ENERGY CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - BASIS OF PRESENTATION These consolidated financial statements of Vanguard Energy Corporation (Vanguard or the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). In the opinion of management, these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to Securities and Exchange Commission (SEC) rules and regulations. These financial statements should be read along with Vanguard's audited financial statements as of September 30, 2014. Going Concern - The Company has incurred cumulative net losses since its inception and will require capital for future operating activities to take place. The Company's ability to raise funding through the future issuances of debt or common stock is unknown. The obtainment of additional financing, the successful development of a plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern. Future issuances of the Company's equity or debt securities will be required in order for the Company to finance operations and continue as a going concern. The financial statements do not include any adjustments that may result from the outcome of these aforementioned uncertainties. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES As of June 30, 2015, Vanguard's significant accounting policies were consistent with those discussed in the audited financial statements as of September 30, 2014. Earnings (Loss) Per Share--Basic earnings (loss) per share have been calculated based upon the weighted-average number of common shares outstanding. Diluted earnings per share have been calculated based upon the weighted-average number of common and potential common shares. The calculation of diluted weighted-average shares outstanding for the three-month and nine-month periods ended June 30, 2015 and 2014 excludes 149,394 and 192,619 shares, respectively, issuable pursuant to outstanding warrants, stock options and debt conversion features because their effect is anti-dilutive. 5 VANGUARD ENERGY CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 3 - SALE OF OIL AND GAS PROPERTIES/PAYMENT OF CONVERTIBLE NOTES During 2012, the Company sold $8,254,500 of Convertible Promissory Notes. On March 31, 2014 the Company failed to make the scheduled interest payments on the notes. As a result, the note holders were entitled to declare the notes in default, in which case the principal amount of the notes, plus all accrued and unpaid interest would be immediately due and payable. The Company's inability to make the interest payment to the note holders was the result of the expenditure of considerable capital to work over some of the Company's wells. The costs of that work far exceeded the Company's expectations and yet the work was required in order to get the wells back into production. This depleted the Company's cash position far below its expectations. Further, although the initial work on those wells was successful in boosting production momentarily, further complications resulted in lower production than anticipated, which was not adequate to replenish the cash expended and enable the Company to make required interest payments. With a view to paying its note holders, the Company, on June 17, 2014, sold its oil and gas properties to Vast Exploration, Inc. for $5,500,000, after obtaining approvals from the holders of a majority of the Company's outstanding shares of common stock and approvals of a majority of note holders. An impairment charge of $880,213 was recognized during the quarter ended March 31, 2014 for the amount by which the carrying value of the Company's oil and gas properties exceeded the estimated net proceeds from the planned sale. The Company adjusted the impairment charge by $(18,634) during the quarter ended June 30, 2014 based on final closing of the transaction. The Company used the proceeds from the sale to: Pay holders of the convertible notes $5,259,706 Purchase the net profits interest held by Vanguard Net Profits, LLC 230,619 Pay legal and closing costs 9,675 --------- $5,500,000 A loss on early extinguishment of debt totaling $380,539 was recognized during the quarter ended June 30, 2014 for the write-off of a portion of the debt issuance costs and debt issuance discount associated with the debt repayment. In consideration for accepting less than the full amount due on the notes, and releasing their lien on the Company's oil and gas properties, holders of notes in the principal of amount of $2,847,857 as a group, agreed to receive 860,380 shares of the Company's stock in payment of the remaining balances on their notes, plus accrued interest. The Company issued the additional shares as payment for the notes and accrued interest in the quarter ended December 31, 2014 and recognized a gain on the extinguishment of this debt totaling $2,570,926. 6 VANGUARD ENERGY CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) At June 30, 2015, convertible notes totaling $146,937 remain outstanding together with accrued interest of $33,061. NOTE 4 - INCOME TAXES The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur. The Company recorded no income tax expense for the three-month and nine-month periods ended June 30, 2015 because the Company estimates it will record no income tax expense for the year ended September 30, 2015. The Company has a valuation allowance that fully offsets net deferred tax assets. * * * * * 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATION We have fully depleted our resources and have no assets of operational value. We are seeking an opportunity to merge with another company that might provide us with operational and financial capabilities to meet unpaid obligations and to justify a market for our stock. Absent achieving such a transaction in the near future, our viability is in doubt. As of June 30, 2015 the Company has not been successful in meeting this goal; however, work continues in the effort and we believe that before the end of the current fiscal year a merger or sale of the Company is possible. ITEM 4. CONTROLS AND PROCEDURES. (a) We maintain a system of controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended ("1934 Act"), is recorded, processed, summarized and reported within time periods specified in the SEC's rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the 1934 Act is accumulated and communicated to our management, including our Principal Executive and Financial Officer, as appropriate to allow timely decisions regarding required disclosure. As of June 30, 2015, our Principal Executive and Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Principal Executive and Financial Officer concluded that our disclosure controls and procedures were effective. (b) Changes in Internal Controls. There were no changes in our internal control over financial reporting during the three month period ended June 30, 2015 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. PART II ITEM 6. EXHIBITS Exhibits 31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act. 8 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. VANGUARD ENERGY CORPORATION Date: August 7, 2015 By: /s/ Warren Dillard ---------------------------- Warren Dillard, Chief Executive, Financial and Accounting Officer EX-31 2 june201510qex311aug-15.txt EXHIBIT 31.1 CERTIFICATION EXHIBIT 31.1 CERTIFICATIONS I, Warren Dillard, certify that; 1. I have reviewed this quarterly report on Form 10-Q of Vanguard Energy Corporation; 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 the 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. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-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 fourth fiscal 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; and 5. The registrant's other certifying officer(s) and 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: August 7, 2015 By:/s/ Warren Dillard --------------------------- Warren Dillard, Principal Executive Officer EX-31 3 june201510qex312aug-15.txt EXHIBIT 31.2 CERTIFICATION EXHIBIT 31.2 CERTIFICATIONS I, Warren Dillard, certify that; 1. I have reviewed this quarterly report on Form 10-Q of Vanguard Energy Corporation; 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 the 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. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-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 fourth fiscal 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; and 5. The registrant's other certifying officer(s) and 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: August 7, 2015 By:/s/ Warren Dillard --------------------------- Warren Dillard, Principal Financial Officer EX-32 4 june201510qex32aug-15.txt EXHIBIT 32 CERTIFICATION EXHIBIT 32 In connection with the Quarterly Report of Vanguard Energy Corporation (the "Company") on Form 10-Q for the period ending June 30, 2015 as filed with the Securities and Exchange Commission (the "Report"), Warren Dillard, the Principal Executive and Financial Officer of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge: (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. Date: August 7, 2015 By:/s/ Warren Dillard ----------------------- Warren Dillard, Principal Executive and Financial Officer