0001393905-13-000159.txt : 20130412 0001393905-13-000159.hdr.sgml : 20130412 20130412163327 ACCESSION NUMBER: 0001393905-13-000159 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20121231 FILED AS OF DATE: 20130412 DATE AS OF CHANGE: 20130412 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERIGO ENERGY, INC. CENTRAL INDEX KEY: 0000278165 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 020314487 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-09047 FILM NUMBER: 13759048 BUSINESS ADDRESS: STREET 1: 2580 ANTHEM VILLAGE DRIVE CITY: HENDERSON STATE: NV ZIP: 89052 BUSINESS PHONE: 702-399-9777 MAIL ADDRESS: STREET 1: 2580 ANTHEM VILLAGE DRIVE CITY: HENDERSON STATE: NV ZIP: 89052 FORMER COMPANY: FORMER CONFORMED NAME: STRATEGIC GAMING INVESTMENTS, INC. DATE OF NAME CHANGE: 20060501 FORMER COMPANY: FORMER CONFORMED NAME: LEFT RIGHT MARKETING TECHNOLOGY INC DATE OF NAME CHANGE: 20031002 FORMER COMPANY: FORMER CONFORMED NAME: LEFT RIGHT MAKETING TECHNOLOGY INC DATE OF NAME CHANGE: 20030815 10-K 1 agoe_10k.txt ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2012 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 000-09047 AMERIGO ENERGY, INC. (Exact name of Smaller Reporting Company as specified in its charter) Delaware 20-3454263 ---------------------------- ---------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 2580 Anthem Village Drive Henderson, NV 89052 (Address of principal executive offices) (702) 399-9777 (Issuer's telephone number) Securities registered under Section 12(b) of the Exchange Act: None. Securities registered under Section 12(g) of the Exchange Act: COMMON STOCK, $0.001 PAR VALUE (Title if Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes [ ] No [X] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 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 website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ({section} 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 [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ({section} 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] (Do not check if a smaller reporting company) Smaller reporting company [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) [ ] Yes [X] No Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. 24,880,416 shares of common stock outstanding as of March 31, 2013 TABLE OF CONTENTS ITEM 1. DESCRIPTION OF BUSINESS................................................ ITEM 1A. RISK FACTORS.......................................................... ITEM 2. DESCRIPTION OF PROPERTY................................................ ITEM 3. LEGAL PROCEEDINGS...................................................... ITEM 4. MINE SAFETY DISCLOSURES................................................ PART II........................................................................ ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............... ITEM 6. SELECTED FINANCIAL DATA................................................ ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ITEM 8. FINANCIAL STATEMENTS................................................... ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE ITEM 9A(T). CONTROLS AND PROCEDURES............................................ ITEM 9B. OTHER INFORMATION..................................................... PART III....................................................................... ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE............... ITEM 11. EXECUTIVE COMPENSATION................................................ ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................ ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES................................ PART IV........................................................................ ITEM 15. EXHIBITS.............................................................. PART I Forward-Looking Statements References in this annual report to "the Company," "we," "us" or "our" are intended to refer to the Company. This report contains numerous "forward- looking statements" that involve substantial risks and uncertainties. These include, without limitation, statements relating to future drilling and completion of wells, well operations, production, prices, costs and expenses, cash flow, investments, business strategies and other plans and objectives of our management for future operations and activities and other such matters including, but not limited to: - Failure to obtain, or a decline in, oil or gas production, or a decline in oil or gas prices, - Incorporate estimates of required capital expenditures, - Increase in the cost of drilling, completion and oil production or other costs of production and operations, - An inability to meet growth projections, and - Other risk factors set forth under "Risk Factors" in this annual report. In addition, the words "believe", "may", "could", "when", "estimate", "continue", "anticipate", "intend", "expect", and similar expressions, as they relate to the Company, our business or our management, are intended to identify forward-looking statements. These statements are based on our beliefs and the assurances we made using information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties and assumptions. Our actual results could differ materially from the results discussed in the forward-looking statements. Some, but not all, of the factors that may cause these differences include those discussed below under the section entitled "Risk Factors" in this annual report. You should not place undue reliance on these forward-looking statements. You should also remember that these statements are made only as of the date of this report and future events may cause them to be less likely to prove to be true. Glossary of Terms DEPLETION is the reduction in petroleum reserves due to production. FORMATION is a reference to a group of rocks of the same age extending over a substantial area of a basin. HYDROCARBONS refer to oil, gas, condensate and other petroleum products. PARTICIPATION INTEREST or WORKING INTEREST is an equity interest (compared with a royalty interest) in an oil and gas property whereby the participating interest holder pays its proportionate percentage share of development and operating costs and receives a corresponding net revenue interest share of the proceeds of hydrocarbon sales after deduction of royalties due on the gross income. PROSPECT is a potential hydrocarbon trap which has been confirmed by geological and geophysical studies to the degree that drilling of an exploration well is warranted. DEVELOPMENT RESERVES of crude oil, natural gas, or natural gas liquids are estimated quantities that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, i.e., prices and costs as of the date the estimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements, but not on escalations based upon future conditions. Reservoirs are considered Development if economic producibility is supported by either actual production or conclusive formation tests or if core analysis and/or log interpretation demonstrates economic producibility with reasonable certainty. The area of a reservoir considered development includes (1) that portion delineated by drilling and defined by fluid contacts, if any, and (2) the immediately adjoining portions not yet drilled that can be reasonably judged as economically productive on the basis of available geological and engineering data. In the absence of data on fluid contacts, the lowest known structural occurrence of hydrocarbons controls the lower development limit of the reservoir. Development reserves are estimates of hydrocarbons to be recovered from a given data forward. They are expected to be revised as hydrocarbons are produced and additional data become available. Reserves that can produced economically through the application of established improved recovery techniques are included in the development classification when these qualifications are met: (1) successful testing by a pilot project, or the operation of an installed program in that reservoir, provides support for the engineering analysis on which the project or program was based, and (2) it is reasonably certain the project will proceed. Estimates of development reserves do not include the following: (1) oil that may become available from known reservoirs but is classified separately as indicated additional reserves; (2) crude oil, natural gas, and natural gas liquids, the recovery of which is subject to reasonable doubt because of uncertainty as to geology, reservoir characteristics, or economic factors; (3) crude oil, natural gas, and natural gas liquids, that may occur in undrilled prospects; and (4) crude oil, natural gas, and natural gas liquids, that may be recovered from oil shales, coal, gilsonite and other such sources. DEVELOPMENT RESERVES A subcategory of development reserves. They are those reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Additional oil and gas expected to be obtained through application of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery are considered developed only after testing by a pilot project or after the operation of an installed program has confirmed through production response that increased recovery will be achieved. PROVED UNDEVELOPED RESERVES is a subcategory of proved reserves. They are reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. Reserves on undrilled acreage are limited to those drilling units offsetting productive units that are reasonably certain of production when drilled. Proved reserves for other undrilled units are claimed only where it can be demonstrated with certainty that there is continuity of production from the existing productive formation. Estimates for proved undeveloped reserves are not attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual tests in the area and in the same reservoir. RESERVOIR is a porous and permeable sedimentary rock formation containing adequate pore space in the rock to provide storage space for oil, gas or water. TRAP is a geological structure in which hydrocarbons aggregate to form an oil or gas field. ITEM 1. DESCRIPTION OF BUSINESS BUSINESS OVERVIEW Amerigo Energy, Inc., a Delaware corporation ("AGOE" or the "Company"), formerly named Strategic Gaming Investments, Inc., was incorporated in 1973. Prior to 2008, the Company was involved in various businesses, none of which were successful. In August of 2008, our Board of Directors voted to get approval from the shareholders of the Company for a name change from Strategic Gaming Investments, Inc. to Amerigo Energy, Inc. The company received the approval from a majority of its stockholders and filed the amendment to its Articles of Incorporation with the State of Delaware. The name change became effective by the State of Delaware on August 26, 2008. The Company also requested a new stock symbol as a result of the name change. Our new trading symbol is "AGOE". The Amerigo Energy's business plan included developing oil and gas reserves while increasing the production rate base and cash flow. The plan was to continue acquiring oil and gas leases for drilling and to take advantage of other opportunities and strategic alliances. Due to declines in production on the oil leases the company had an interest in, the company has been forced to explore its position in the oil industry. In 2011, the company began an aggressive approach to reduce the debt on the company's books as well as looking to diversify the investment holdings, while still maintaining limited interest in oil leases. The company is aggressively looking for potential oil leases to acquire as well as businesses which will fit with the company's strategy. Analyzing opportunities in the oil industry as well as other potential investments has gone slower than planned, but the company is committed to implementing its business plan. Our wholly-owned subsidiary, Amerigo, Inc., incorporated in Nevada on January 11, 2008, holds minimal assets, including oil lease interests. GENERAL DISCUSSION OF OPERATIONS EMPLOYEES AND CONSULTANTS The Company currently has no employees. We contract the services of consultants in the various areas of expertise, as required. Jason F. Griffith, Chief Executive Officer of the Company, and Chief Financial Officer of the Company, currently devotes no more than 50% of his time to the operations of the Company. The amount of time devoted to the Company currently by officers and consultants is due to the limited operations and resources of the Company. However, the Company feels the time devoted to operations is enough to cover the current operational requirements. Expected Significant Changes In The Number Of Employees The Company does not expect any significant change in the number of employees over the next 12 months of operations. As noted previously, the Company currently coordinates all operations, using its Officers and various consultants as necessary. The Company's website address is http://www.amerigoenergy.com; however, the site has come down and is being revamped to account for the updates to the company's business plan. ITEM 1A. RISK FACTORS Risks Related to Amerigo Energy's Business Amerigo Energy is subject to a high degree of risk as Amerigo Energy is considered to be in unsound financial condition. The following risks, if any one or more occurs, could materially harm our business, financial condition or future results of operations. If that occurs, the trading price of the Amerigo Energy's Common Stock could decline. We Have a History Since Amerigo Energy's inception (formerly known as Strategic Gaming Investments, Inc.) we have not been profitable and have reported net losses. For the years ended December 31, 2012 and December 31, 2011 we incurred net losses of $191,364 and $301,445, respectively. Our accumulated deficit as of December 31, 2012 was $15,922,521. No assurance can be given that Amerigo Energy will be successful in reaching or maintaining profitable operations, particularly given Amerigo Energy's minimal business operations. Accordingly, we will likely continue to experience liquidity and cash flow problems. Lack of Liquidity Amerigo Energy's Common Stock is currently quoted for public trading on the Over-the-Counter Bulletin Board under the ticker symbol "AGOE". The trading price of the Amerigo Energy's common stock has been subject to wide fluctuations. Trading prices of Amerigo common stock may fluctuate in response to a number of factors, many of which will be beyond Amerigo Energy's control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with limited or no business operations. These broad market and industry factors may adversely affect the market price of Amerigo Energy's Common Stock, regardless of our operating performance. Further, until such time as Amerigo Energy is an operating company, it is unlikely that a measurable trading market will exist for Amerigo Energy's Common Stock. Amerigo Energy's Common Stock is a "Penny Stock" and should be Considered "High Risk" and Subject to Marketability Restrictions. Since Amerigo Energy's Common Stock is a "penny stock", as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment. Until the trading price of the Common Stock rises above $5.00 per share, if ever, trading in the Common Stock is subject to the "penny stock" rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to: - Deliver to the customer, and obtain a written receipt for, a disclosure document; - Disclose certain price information about the stock; - Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer; - Send monthly statements to customers with market and price information about the penny stock; and - In some circumstances, approve the purchaser's account under certain standards and deliver written statements to the customer with information specified in the rules. Consequently, the "penny stock" rules may restrict the ability or willingness of broker-dealers to sell the Common Stock and may affect the ability of holders to sell their Common Stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future. Funding Difficulties Given Amerigo Energy's historical operating results, obtaining financing will be extremely difficult. This is further compounded by the extremely limited liquidity in Amerigo Energy's Common Stock and the minimal strong business operations. Financing, if available, will likely be significantly dilutive to our common stockholders and will not necessarily improve the liquidity of Amerigo Energy's common stock without a vast improvement in our operating results. In the event we are unsuccessful in procuring adequate financing, our financial condition and results of operations will be further materially adversely affected. "Going Concern" Qualification As a result of Amerigo Energy's deficiency in working capital at December 31, 2012 and other factors, Amerigo Energy's auditors have stated in their report that there is substantial doubt about Amerigo Energy's ability to continue as a going concern. In addition, Amerigo Energy's cash position is inadequate to pay the costs associated with its operations. No assurance can be given that any debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should Amerigo Energy be unable to continue existence. Risks Applicable to Amerigo Energy's Oil and Gas Business Speculative Nature of Oil and Gas Development Activities ("Project"); Natural and Other Hazards. Exploration, drilling and development of oil and gas properties is not an exact science and involves a high degree of risk. There is no assurance that oil or gas will be found within any prospects or that, if found, sufficient oil or gas production will be obtained to enable Amerigo Energy to recoup its investment in the Project. During any drilling or completion of any prospect, Amerigo Energy could encounter hazards including unusual or unexpected formations, high formation, pressures or other conditions, blow-outs, fires, failure of equipment, and downhole collapses. There can be no assurance that in the event of such problems Amerigo Energy will have sufficient funds to solve such problems. Furthermore, the Project may be subject to liability for pollution and other damages and will be subject to statutes and regulations relating to environmental matters. Although Amerigo Energy and/or the operator drilling the prospects will obtain and maintain the insurance coverage, Amerigo Energy may suffer losses due to hazards against which it cannot insure or against which it may elect not to insure. Drilling and Production Risks. Exploration for oil and gas is speculative by its very nature, and involves a high risk of loss. A large number of prospects result in dry holes, and others do not produce oil or gas in sufficient quantities to make them commercially profitable to complete or place in production. Many risks are involved that experience, knowledge, scientific information and careful evaluation cannot avoid. An investor must be prepared to lose all of an investment as there can be no assurance that any prospect will result in or continue to have oil or gas production or that production, if obtained, will be profitable. Oil and gas prospects sometimes experience production decline that is rapid and unexpected. Initial production from a prospect (if any) does not accurately indicate any consistent level of production to be derived from it. Importance of Future Prices, Supply and Demand for Oil and Gas. The revenues which might be generated from the activities of Amerigo Energy will be highly dependent upon the future prices and demand for oil and gas. Factors which may affect prices and demand include worldwide supply; the price of oil produced in the United States or imported from foreign countries; consumer demand; price and availability of alternative fuels; federal and state regulation; and general, national and worldwide economic and political conditions. In addition to the widely-recognized volatility of the oil market, the gas market is also unsettled due to a number of factors. In the past, production from gas prospects in many geographic areas of the United States has been curtailed for considerable periods of time due to a lack of market demand, and such curtailments may exist in the future. Further, there may be an excess supply of gas in the area of the prospects. In that event, it is possible that prospects will be shut in or that gas in those areas will be sold on terms less favorable than might otherwise be obtained. The combination of these factors, among others, makes it particularly difficult to estimate accurately future prices of oil and gas, and any assumptions concerning future prices may prove incorrect. Competition. There are large numbers of companies and individuals engaged in exploration for oil and gas and the development of oil and gas properties. Accordingly, Amerigo Energy will encounter strong competition from independent operators and major oil companies. Many of the companies so encountered have financial resources and staffs considerably larger than those available to Amerigo Energy. There are numerous companies and individuals engaged in the organization and conduct of oil and gas programs and there is a high degree of competition among such companies in the offering of their programs. Markets for Sale of Production. The ability of Amerigo Energy to market oil and gas found and produced, if any, will depend on numerous factors beyond the control of Amerigo Energy, the effect of which cannot be accurately predicted or anticipated. Some of these factors include, without limitation, lifting and transportation costs, the availability of a ready market, the effect of federal and state regulation of production, refining, transportation and sales, and general national and worldwide economic conditions. There is no assurance that Amerigo Energy will be able to market oil or gas produced by the prospects at prices that will prove to be economic after costs. Price Control and Possible Energy Legislation. There are currently no federal price controls on oil or gas production so that sales of oil or gas by Amerigo Energy can be made at uncontrolled market prices. However, there can be no assurance that Congress will not enact controls at any time. No prediction can be made as to what additional energy legislation may be proposed, if any, nor which bills may be enacted nor when any such bills, if enacted, would become effective. Environmental Regulations. The exploration, development and production of oil and gas is subject to various federal and state laws and regulations to protect the environment. Various states and governmental agencies are considering, and some have adopted, laws and regulations regarding environmental control which could adversely affect the business of Amerigo Energy. Compliance with such legislation and regulations, together with any penalties resulting from noncompliance therewith, will increase the cost of oil and gas development and production. Some of these costs may ultimately be borne by Amerigo Energy. Government Regulation. The oil and gas business is subject to extensive governmental regulation under which, among other things, rates of production from wells may be fixed. Governmental regulation also may limit or otherwise affect the market for production and the price which may be paid for that production. Governmental regulations relating to environmental matters could also affect Amerigo Energy's operations. The nature and extent of various regulations, the nature of other political developments and their overall effect upon Amerigo Energy are not predictable. The availability of a ready market for oil and gas, if any, discovered by Amerigo Energy or from existing production and the price obtained for the oil and gas will depend upon numerous factors, including the extent of domestic production and foreign imports of gas and/or oil, the proximity and capacity of pipelines, intrastate and interstate market demand, the extent and effect of federal regulations on the sale of oil and/or natural gas in interstate and intrastate commerce, and other government regulation affecting the production and transportation of oil and/or gas. In addition, certain daily allowable production constraints may change from time to time, the effect of which cannot be predicted by management. There is no assurance that Amerigo Energy will be able to market any oil or gas found or acquired by it at favorable prices, if at all. Uninsured Risks and Other Potential Liabilities. Amerigo Energy's operations will be subject to all of the operating risks normally connected with drilling for and producing oil and gas, such as blow-outs, pollution, premises liability, workplace injury and other risks and events which could result in the Program incurring substantial losses or liabilities. Amerigo Energy anticipates securing insurance as it deems prudent, affordable, necessary and appropriate. Certain risks of Amerigo Energy, the Project, the Operator and Non-Operating interest holders are uninsurable and others may be either uninsured or only partially insured or limited because of high premium costs, the unavailability of such insurance and/or for other reasons. In the event Amerigo Energy and/or the Project incurs uninsured losses or liabilities, all parties may be at risk and the Project's funds available for exploration and development, as well as funds available for Amerigo Energy's other and ongoing operations, may be reduced or lost completely. Decline Curve. Production from all oil and gas wells declines over time. The actual rate of decline is subject to numerous factors and cannot, in normal circumstances, be calculated in advance. Production also fluctuates for many reasons. Prospective investors should understand that production from any well may fluctuate and will ultimately decline, rendering the well non-commercial. Dependence upon Amerigo and the Operators. The operations and financial success of Amerigo Energy depends significantly on its management and of the drilling guarantor. In the event that management of any of these companies becomes unable or unwilling to continue to direct the operations of Amerigo Energy, Amerigo Energy could be adversely affected. Unpredictability of Oil and Gas Investment. Numerous factors, including fluctuations in oil and gas prices and operating costs and the productive life of the wells make it difficult to predict returns with any accuracy. Marketing and Pricing. The market for oil and gas produced from the wells is difficult to predict, as well as the costs incurred in connection with such production. Particularly in the case of natural gas, a market may not immediately be available for the gas from a well because of its distance from a pipeline. The gas may therefore remain unsold for an indefinite period of time. Nevertheless, Amerigo Energy will exercise its best efforts to obtain a market for any natural gas produced from the well as soon as possible if production is achieved. Costs of Treating Natural Gas. Companies that own natural gas production often require that natural gas have certain characteristics before they will purchase it. Gas from an Amerigo Energy well may have to be treated so that the purchasers will take delivery. This treatment might include increasing the pressure, dehydrating it, removing CO2 or other impurities and other items of a similar nature. These treatments may require that additional facilities be built or services be performed. Because these costs concern the operation of a gas well they are treated as lease operating expenses and are generally recouped out of production. The costs of any additional facilities are often paid initially by the first purchasers or gatherers of production, who then reimburse themselves by recouping these capital costs through a minimal reduction of the price paid for the gas. If any gas produced by a well requires special treatment as described above, Amerigo Energy will attempt to minimize the costs associated with treatment and maximize the Project's profits from the sale of the gas. Delays in Receipt of Cash. Amerigo Energy is involved in the exploration for and development of oil and gas reserves. The unavailability of, or delay in obtaining, necessary materials for drilling and completion activities, or in securing title opinions dated to the first production, may delay, for significant periods after the discovery and production of hydrocarbons, the distribution of any cash to Amerigo Energy. Because each prospect will be drilled and completed in succession and not concurrently, revenue, if any, from each prospect will also be distributed in succession with the completion of the prospect. The loss of executive officers or key employees could have a material adverse effect on our business. The Company depends greatly on the efforts of our executive officer and other key personnel to manage our operations. The loss or unavailability of any of our executive officer or other key personnel could have a material adverse effect on our business. The company has no plans to pay dividends on its common stock, and you may not receive funds without selling your common stock. The Board of Directors of the Company does not intend to declare or pay dividends on the Company's Common Stock in the foreseeable future. Instead, the Board of Directors generally intends to invest any future earnings in the business. Subject to Nevada law, the Company's Board of Directors will determine the payment of future dividends on the Company's Common Stock, if any, and the amount of any dividends in light of any applicable contractual restrictions limiting the Company's ability to pay dividends, the Company's earnings and cash flow, the Company's capital requirements, the Company's financial condition, and other factors the Company's Board of Directors deems relevant. Accordingly, you may have to sell some or all of your Common Stock in order to generate cash flow from your investment. You may not receive a gain on your investment when you sell the Company's Common Stock and may lose the entire amount of your investment. Dilution could have an adverse affect on the ownership of the stockholders in the registrant. The Company may issue more Common Stock at prices determined by the board of directors in any private placements or offerings of securities, possibly resulting in dilution of the value of the Common Stock, and, given there is no preemptive right to purchase Common Stock, if a stockholder does not purchase additional Common Stock, the percentage share ownership of the stockholder in the Company will be reduced. The business of the company may be adversely affected if the company has material weaknesses or significant deficiencies in its internal control over financial reporting in the future. As a public company the Company will incur significant legal, accounting, insurance and other expenses. The Sarbanes-Oxley Act of 2002, as well as compliance with other SEC and exchange listing rules, will increase our legal and financial compliance costs and make some activities more time-consuming and costly. Furthermore, SEC rules require that our chief executive officer and chief financial officer periodically certify the existence and effectiveness of our internal control over financial reporting. Our independent registered public accounting firm will be required, beginning with our Annual Report on Form 10-K for our fiscal year ending on December 31, 2012, to attest to our assessment of our internal control over financial reporting. During the course of our testing, we may identify deficiencies that would have to be remediated to satisfy the SEC rules for certification of our internal controls over financial reporting. As a consequence, we may have to disclose in periodic reports we file with the SEC significant deficiencies or material weaknesses in our system of internal controls. The existence of a material weakness would preclude management from concluding that our internal control over financial reporting is effective, and would preclude our independent auditors from issuing an unqualified opinion that our internal control over financial reporting is effective. In addition, disclosures of this type in our SEC reports could cause investors to lose confidence in our financial reporting and may negatively affect the trading price of our Common Stock. Moreover, effective internal controls are necessary to produce reliable financial reports and to prevent fraud. If we have deficiencies in our disclosure controls and procedures or internal control over financial reporting it may negatively impact our business, results of operations and reputation. Cautionary note regarding forward-looking statements and other information contained in this prospectus This Prospectus contains some forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties. Forward-looking statements include statements regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategies, (c) anticipated trends in our industries, (d) our future financing plans and (e) our anticipated needs for working capital. They are generally identifiable by use of the words "may," "will," "should," "anticipate," "estimate," "plans," "potential," "projects," "continuing," "ongoing," "expects," "management believes," "we believe," "we intend" or the negative of these words or other variations on these words or comparable terminology. These statements may be found under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," as well as in this Prospectus generally. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results. Any or all of our forward-looking statements in this report may turn out to be inaccurate. They can be affected by inaccurate assumptions we might make or by known or unknown risks or uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in this Prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to publicly update any forward-looking statements, whether as the result of new information, future events, or otherwise. ITEM 2. DESCRIPTION OF PROPERTY The corporate offices of the Company are located in Henderson, Nevada, at 2580 Anthem Village Drive, Henderson, NV 89052. The Company does not pay rent at this space as of 4th quarter 2011; however as operations increase this should change. CURRENT OIL AND GAS PROPERTIES The Company, in October 2008, acquired its first oil and gas interests and properties. The following descriptions of our oil interests include the amounts acquired in the reorganization as well as interests that were purchased with shares of our Common Stock in 2008 and 2009. Please see the Note 2 to the Financial Statements for accounting policies related to these oil and gas properties. Also note many of these interests have been sold or disposed of by the company. All information related to the oil and gas interests held by the Company that can be reasonably obtained has been disclosed in this filing. There have not been any reserve studies performed on the interests we hold as of the date of this filing due to the fact that it would be cost ineffective due to the materiality of the production on the interests as well as our lack of majority interest in the leases. OIL PRODUCING PROPERTIES WEST BURKE The West Burke lease consists of 115.27 acres of land. The lease has a total of 7 wells, with 5 pumping wells and 2 injection wells. The lease is located in Wichita County, Texas The Company acquired a 18.49% working interest and 13.78% net revenue interest as part of the reorganization with Granite Energy on October 31, 2008. Additionally, in December of 2008 and 1st quarter of 2009, the Company acquired an additional 13.93% and 9.11% working interest and 10.38% and 6.79% net revenue interest, respectfully, with the issuance of our Common Stock. As of December 31, 2011, the Company holds a 41.54% total working interest and 30.95% net revenue interest in West Burke. During the year ended December 2011, the lease did not produce any barrels of oil. No revenue has been recognized from the lease. No impairment has been determined necessary for the West Burke leases as of December 31, 2012. In 2011, the company sold and used its interest in the West Burke lease to settle $72,814 of debt on the company's books. PHILLIPS B The Phillips B leases are located in Cotton County, Oklahoma and are currently operated by SJ OK Oil Company. We receive any revenues from oil sold to Teppco Oil (US) Company, net of oil lease expenses for that period. In December of 2008, the Company acquired an additional 6.53% working interest and 4.90% net revenue interest with the issuance of our Common Stock. During the year ended December 2011, the lease produced a total of 1,599.83 barrels of oil at an average price of $89.95 per barrel for the year ended December 31, 2011. Net revenues of $2,649 have been recognized from revenues of $6,531 net of lease operating expenses in the amount of $3,882. During November 2011 the company sold half of its interest in the Phillips B for $2,445.04 and used the other half of the interest to settle debts on the company's books. As of December 31, 2012 the company held no interest in the Phillips B lease. OIL AND GAS PRODUCING PROPERTIES MELISSA HENSLEY (GOLDFINCH 1) The Melissa Hensley well is located in Kingfisher County, Oklahoma and is operated by H Petro R, Inc. Revenues from this interest are received net of any lease expenses. The Company acquired a 27.96% working interest and 20.97% net revenue interest on October 31, 2008. In December of 2008, the Company acquired an additional 26.14% working interest and 19.61% net revenue interest with the issuance of our Common Stock. In the year ended December 31, 2009, the Company acquired an additional 5.48% working interest and 4.11% net revenue interest with the issuance of our Common Stock. In March 2011 the company settled debts with all of their interest in the Melissa Hensley Lease. As of December 31, 2012, the Company held no interest in the Melissa Hensley lease. During the year ended December 2011, the Company's interest in the lease produced approximately 1,771 MCF's of gas at an average price of $4.85 per MCF, and 82 barrels of oil at an average price of $86.04 per barrel. This resulted in revenue of $14,497 and lease operating expenses of $12,594 for a net revenue to the Company of $1,903. As the interest in the lease was used to settle debts, the carrying value of the interests at December 31, 2012 and 2011, net of depletion, was $0 and $51,676, respectively. DJ HANKS (GOLDFINCH 4) The DJ Hanks well is located in Kingfisher County, Oklahoma and is operated by H Petro R, Inc. Revenues from this interest are received net of any lease expenses. The Company acquired a 5.27% working interest and 3.95% net revenue interest on October 31, 2008. Additionally, In December of 2008, the Company acquired an additional 43.08% working interest and 32.31% net revenue interest with the issuance of our Common Stock. In 2010, the company purchased 3.20% working interest in the Kunkel Lease from an investor by giving the investor 10% working interest in the DJ Hanks Lease. In March 2011 the company settled debts with interest in the DJ Hanks Lease. The company retains an approximate 1.34% interest in the lease. As of December 31, 2011, the Company holds an approximate 1.34% interest in the DJ Hanks lease. During the year ended December 2011, the Company's interest in the lease produced 217.48 MCF's of gas at an average price of $8.26 per MCF, and 51.95 barrels of oil at an average price of $86.04 per barrel. This resulted in revenue of $7,008 and estimated lease operating expenses of $1,814 for a net estimated revenue to the Company of $5,194. During the year ended December 2012, the Company's interest in the lease produced 50.06 MCF's of gas at an average price of $6.54 per MCF, and 11.12 barrels of oil at an average price of $82.75 per barrel. This resulted in revenue of $1,248 and estimated lease operating expenses of $671 for a net estimated revenue to the Company of $577. As the interest in the majority of the lease was used to settle debts, the carrying value of the interests at December 31, 2012 and 2011, net of depletion, was $0 and $0, respectively. RICHARD HENSLEY (GOLDFINCH 2) The Richard Hensley well is located in Kingfisher County, Oklahoma and is operated by H Petro R, Inc. Revenues from this interest are received net of any lease expenses. The Company acquired a 19.55% working interest and 14.66% net revenue interest on October 31, 2008. Additionally, in December of 2008, the Company acquired an additional 32.52% working interest and 24.39% net revenue interest with the issuance of our Common Stock. In October 2011, the company settled debts with all of their interest in the Richard Hensley lease. As of December 31, 2012, the Company holds no interest in the Richard Hensley lease. During the year ended December 2011, the lease had no production. This resulted in estimated revenue of $0 and estimated lease operating expenses of $5,921 for a net loss to the Company of $5,921. The carrying value of the interests at December 31, 2012 and 2011, net of depletion, was $0 and $0, respectively. BROOKS HENSLEY (GOLDFINCH 3) The Brooks Hensley well is located in Kingfisher County, Oklahoma and is operated by H Petro R, Inc. Revenues from this interest are received net of any lease expenses. The Company acquired a 49.58% working interest and 37.23% net revenue interest on October 31, 2008. Additionally, In December of 2008, the Company acquired an additional 12.31% working interest and 9.23% net revenue interest with the issuance of our Common Stock. In March 2011, the company settled debts with all of their interest in the Brooks Hensley lease. As of December 31, 2012, the Company holds no interest in the Brooks Hensley lease. During the year ended December 2011, the lease produced a total of 406.89 MCF's of gas at an average price of $5.43 per MCF, and 84 barrels of oil at an average price of $86.04 per barrel. This resulted in revenue of $8,746 and lease operating expenses of $2,569for a net revenue to the Company of $6,177. As the interest in the lease was used to settle debts, the carrying value of the interests at December 31, 2012 and 2011, net of depletion, was $0 and $47,848, respectively. EXPLORATORY LEASES AND PROPERTY As of December 31, 2012 and 2011, due to lack of production, reserve studies, or potential in the near term of development, all exploratory lease interests listed below were impaired to zero percent of their book value. TIGERSHARK The Company acquired a 27.96% working interest and 20.97% net revenue interest on October 31, 2008. In December of 2008, the Company acquired an additional 26.14% working interest and 19.61% net revenue interest with the issuance of our Common Stock. In the year ended December 31, 2009, the Company acquired an additional 6.47% working interest and 4.88% net revenue interest with the issuance of our Common Stock. As of December 31, 2012 and 2011, the Company holds a 60.58% total working interest and 45.46% net revenue interest in the Tigershark lease. OTHER EXPLORATORY LEASES In December of 2008 and 2009, the Company acquired a working interest and net revenue interest with the issuance of our Common Stock. The Exploratory leases that were acquired as part of these conversions were Evergreen 1, Roadrunner, Southgold 1 (Tony), Southgold 2, Southgold 3, and name pending - Escavada. Due to non-production on the other leases as well as the recent prices of oil and gas, it is not expected that any of these leases will be drilled. ITEM 3. LEGAL PROCEEDINGS Amerigo had signed an agreement with the individual to acquire his interest in certain oil and gas leases for $120,000, payable at $10,000 per month starting April 1, 2010, with subsequent payments due on the 1st of each month. The term of the note was One (1) year. Upon final payment and settlement of the note, the individual will return all shares of stock (with properly executed stock power) that he individually holds of Amerigo Energy, along with his entire interest in the Kunkel lease, which is 3.20% working interest (2.54% net revenue interest), as well as his ownership in what is known as the 4 Well Program (0.325% working interest, 0.2438% net revenue interest). During 2010, the individual sold his interest in the Kunkel lease. The company has not kept current with the agreement and the individuals promissory note has now been escalated to a judgment against the company. As of the date of this filing, terms of settling the judgment have not been resolved. As of December 31, 2012, other than discussed above that occurred subsequent to year end, the Company is not a party to any pending material legal proceeding. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against the Company. To the knowledge of management, no director, executive officer or affiliate of the Company, any owner of record or beneficially of more than five percent of the Company's Common Stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding. ITEM 4. MINE SAFETY DISCLOSURES None. PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS MARKET INFORMATION Amerigo Energy (formerly known as Strategic Gaming Investments, Inc.) shares of Common Stock are not traded on an established market. Amerigo Energy Stock is traded through broker/dealers and in private transactions, and quotations are reported on the OTCQB under the symbol "AGOE". OTCQB quotations reflect interdealer prices, without mark-up, mark-down or commission and may not represent actual transactions. The table below sets forth the range of high and low prices paid for transactions in Amerigo Energy shares of Common Stock as reported on the OTCQB for the periods indicated. No dividends have been declared or paid on Amerigo Energy Common Stock and none are likely to be declared or paid in the near future. Effective July 23, 2012, the Company had its stock quotation under the symbol "AGOE" deleted from the OTC Bulletin Board (the "OTCBB"). The symbol was deleted for factors beyond the Company's control due to various market makers electing to shift their orders from the OTCBB. As a result of not having a sufficient number of market makers providing quotes on the Company's common stock on the OTCBB for four consecutive days, the Company was deemed to be deficient in maintaining a listing standard at the OTCBB pursuant to Rule 15c2- 11. That determination was made entirely without the Company's knowledge. The Company's common stock is now listed for quotation on the OTCQB under the symbol "AGOE". The following table sets forth the quarterly high and low bid prices for our Common Stock during our last two fiscal years, adjusted for the recent stock split. The quotations reflect inter-dealer prices, without retail mark-up, markdown or commission, and do not necessarily represent actual buy and sell transactions. COMMON STOCK High Low ---- --- FISCAL YEAR ENDED DECEMBER 31, 2011: Fiscal Quarter Ended March 31, 2011 0.41 0.25 Fiscal Quarter Ended June 30, 2011 0.38 0.02 Fiscal Quarter Ended September 30, 2011 0.05 0.01 Fiscal Quarter Ended December 31, 2011 0.05 0.005 FISCAL YEAR ENDED DECEMBER 31, 2012: Fiscal Quarter Ended March 31, 2012 0.03 0.01 Fiscal Quarter Ended June 30, 2012 0.03 0.01 Fiscal Quarter Ended September 30, 2012 0.04 0.01 Fiscal Quarter Ended December 31, 2012 0.01 0.01 SHAREHOLDERS OF RECORD AND OUTSTANDING SHARES The authorized capital stock of the Company consists of 100,000,000 shares of common stock with a par value of $.001 and 25,000,000 shares of preferred stock at a par value of $.001. Common Stock. The holders of the common stock are entitled to one vote per share on each matter submitted to a vote at any meeting of the shareholders. Shares of common stock do not carry cumulative voting rights, and therefore a majority of the shares of outstanding common stock will be able to elect the entire Board of Directors, and if they do so, minority stockholders would not be able to elect any persons to the Board of Directors. Our Amended By-laws provide that a majority of the issued and outstanding shares of the Company shall constitute a quorum for shareholders' meeting except with respect to certain matters for which a greater percentage quorum is required by statute or our Articles of Incorporation or By-laws. Shareholders of The Company have no pre-emptive rights to acquire additional shares of common stock or other securities. The common stock is not subject to redemption and carries no subscription or conversion rights. Preferred Stock. As of December 31, 2012, there were 500,000 preferred shares issued and outstanding. Preferred stockholders are entitled to 250 votes per 1 share of preferred stock. The Board of Directors is authorized by the Articles of Incorporation to prescribe by resolution the voting powers, designations, preferences, limitations, restrictions, reactive rights and distinguishing designations of the preferred shares if issued. The stock transfer agent for the Company is Empire Stock, located at 1859 Whitney Mesa Dr., Henderson, NV 89014. Their telephone number is (702) 818- 5898. HOLDERS On December 31, 2012, there were approximately 379 holders of Amerigo Energy, Inc. Common Stock. Due to the prior name change and reverse stock split there are additional beneficial holders which have not converted their stock. DIVIDENDS AND OTHER DISTRIBUTIONS Amerigo Energy has never paid cash dividends on our common stock or preferred stock. We currently intend to retain earnings, if any, for use in our business and do not anticipate paying any cash dividends in the foreseeable future. RECENT SALES OF UNREGISTERED SECURITIES During 2011, the company issued 9,141,216 shares of company stock to settle $646,880 in debts on the company's books. During 2011 the company entered into a settlement agreement with a company we had purchased oil interest from. As part of this agreement the company returned 8,500,000 shares of stock that were part of the purchase agreement signed in 2008. These shares were cancelled and are no longer outstanding. The company also issued 69,277 shares of stock for previously purchased oil interest at a value of $69,277. During 2011 the company realized that the previous transfer agent never issued the shares as part of an agreement that was signed in 2009. During 2011, 2,000,000 shares were issued for consulting services in lieu of cash, these shares were valued at $80,000. During the quarter ended March 31, 2012, the entered into a buyback agreement with a shareholder. The company agreed to buy back 1,500,000 shares for a purchase price of $1,500. These shares were cancelled with the transfer agent and are no longer outstanding. During the year ended December 31, 2012, the company issued 100,000 shares of common stock to a consultant for services rendered and valued at $1,000. ITEM 6. SELECTED FINANCIAL DATA This section is not required for smaller reporting entities. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This discussion contains forward-looking statements. The reader should understand that several factors govern whether any forward-looking statement contained herein will be or can be achieved. Any one of those factors could cause actual results to differ materially from those projected herein. These forward-looking statements include plans and objectives of management for future operations, including plans and objectives relating to the products and the future economic performance of the Company. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, future business decisions, and the time and money required to successfully complete development projects, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of those assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in any of the forward- looking statements contained herein will be realized. Based on actual experience and business development, the Company may alter its marketing, capital expenditure plans or other budgets, which may in turn affect the Company's results of operations. In light of the significant uncertainties inherent in the forward-looking statements included therein, the inclusion of any such statement should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved. INTRODUCTION The Company derives its revenues from its producing oil and gas properties. These properties consist of working interests in producing oil wells having proved reserves. Our capital for investment in producing oil properties has been provided by the sale of common stock to its shareholders. The following is a discussion of the Company's financial condition, results of operations, financial resources and working capital. This discussion and analysis should be read in conjunction with the Company's financial statements contained in this Form 10-K. OVERVIEW RESULTS OF OPERATIONS REVENUES For the year ended December 31, 2012 and 2011, the Company recognized $1,248 and $36,782 in revenues from royalties on producing oil and gas properties and no revenue from rental income. The decrease in oil and gas revenue is directly related to the reduction of ownership interest in the leases. OPERATING EXPENSES Lease Operating - Lease operating expense for the year ended December 31, 2012 totaled $671 as compared to $24,041 for the prior year. During 2012 the reduction in ownership interest in leases caused a decrease in expenses. General and Administrative- General and administrative expenses were $4,635 for the year ended December 31, 2012, compared to $14,848 for the year ended December 31, 2011. Professional Fees - Professional fees for the year ended December 31, 2012 were $186,326 as compared to $300,472 for the period ended December 31, 2011. The decrease was related to the decrease in consulting fees which are part of the consulting agreement with the Chief Executive Officer of the Company, as well as the decreased usage of outside consultants. Depreciation, Amortization, and Depletion - Depreciation and amortization expenses on the fixed assets was $0 and $1,220 for the year ended December 31, 2012 and 2011. The depletion expense for the year ended December 31, 2012 and 2011 was $0 and $1,564 and was calculated based on an estimate using the straight line method over the estimated lives of the development interests until production studies have been completed on the recently acquired oil and gas properties. The decrease is related to the reduction in ownership interest in leases. OTHER INCOME AND EXPENSES During the twelve months ended December 31, 2012 and 2011 the company had no interest income. The company accrued $980 in interest expense for year ended December 31, 2012. The company had no interest expenses in 2011. During 2011 the company sold one of its leases for more than the book value which resulted in a gain of $1,397. During 2011 the company used interest in various oil leases to settle debts on the company's books. These settlements resulted in a gain to the company in the amount of $5,742. During 2011 the company recognized a loss of $3,065 in order to write off the software the company held that was no longer needed. NET LOSS ATTRIBUTABLE TO COMMON STOCK We realized a net loss of $191,364 for the year ended December 31, 2012, compared to a net loss of $301,445 for the year ended December 31, 2011. The decrease in net loss is attributable to officers of the company taking a decrease in salary and cleaning up other expenses. LIQUIDITY AND CAPITAL RESOURCES At December 31, 2012, we had cash in the amount of $55, and a working capital deficit of $457,335, as compared to cash in the amount of $16 and a working capital deficit of $265,471 as of December 31, 2011. In addition, our stockholders' deficit was $456,385 and $264,521 at December 31, 2012 and 2011. Our accumulated deficit is $15,922,521 at December 31, 2012. Our operations provided net cash of $1,539 during the year ended December 31, 2011, compared to $356 during the year ended December 31, 2011, an increase of $1,895. Our cash used for investing activities was $0 and $0 for the year ended December 31, 2012 and 2011. Our financing activities used $1,500 and $0 in net cash during the year ended December 31, 2012 and 2011., The Company's results of operations have not been affected by inflation and management does not expect inflation to have a material impact on its operations in the future. OFF- BALANCE SHEET ARRANGEMENTS The Company currently does not have any off-balance sheet arrangements. ITEM 8. FINANCIAL STATEMENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Amerigo Energy, Inc. We have audited the accompanying consolidated balance sheets of Amerigo Energy, Inc. as of December 31, 2012 and 2011, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the two year period ended December 31, 2012. Amerigo Energy, Inc.'s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Amerigo Energy, Inc. as of December 31, 2012 and 2011, and the results of its operations and its cash flows for each of the years in the two year period ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has an accumulated deficit of $15,922,521 since inception, which raises substantial doubt about its ability to continue as a going concern. Management's plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ L.L. Bradford & Company, LLC L.L. Bradford & Company, LLC April 12, 2013 Las Vegas, Nevada
AMERIGO ENERGY, INC. CONSOLIDATED BALANCE SHEET As of As of December 31, 2012 December 31, 2011 ----------------------------------------- ASSETS Current assets Cash $55 $16 ------------------------------- Total current assets 55 16 Other Assets Deposits 950 950 ------------------------------- Total assets $1,005 $966 =============================== LIABILITIES AND STOCKHOLDERS' (DEFICIT) Current liabilities Accounts payable and accrued liabilities $38,087 $39,604 Accounts payable - related party 138,655 18,215 Advances from related parties 16,077 16,077 Payroll liabilities 108,000 36,000 Accrued Interest - Related Parties 36,571 35,591 Judgement payable 120,000 120,000 ------------------------------- Total current liabilities 457,390 265,487 Long-term liabilities Total liabilities 457,390 265,487 Stockholders' (deficit) Preferred stock (25,000,000 shares authorized & 500,000 shares outstanding at Sep. 30, 2012) 500 500 Common stock; $.001 par value; 100,000,000 shares authorized; 24,124,824 and 25,524,824 shares outstanding at Dec 31, 2012 and Dec 31 2011 respectively 24,124 25,524 Additional paid-in capital 15,441,512 15,440,612 Accumulated deficit (15,922,521) (15,731,157) ------------------------------- Total stockholders' (deficit) (456,385) (264,521) ------------------------------- Total liabilities and stockholders' (deficit) $1,005 $966 =============================== AMERIGO ENERGY, INC. CONSOLIDATED STATEMENT OF OPERATIONS Year Ended December 31, 2012 December 31, 2011 ------------------------------------------ Revenue Oil revenues $921 $ 23,352 Gas revenues 327 13,431 ------------- --------- Total Revenue 1,248 36,782 Operating expenses Lease operating expenses 671 24,041 Selling, general and administrative 4,635 14,848 Professional fees 186,326 300,472 Depreciation and amortization expense - 1,220 Depletion expense - 1,564 ------------- --------- Total operating expenses 191,632 342,145 ------------- --------- Loss from operations (190,384) (305,363) Other income (expenses): Interest expense (980) - Write off of assets/Loss on sale of assets - (3,065) Other expense - (157) Gain on Sale of Phillips B. - 1,397 Gain on extinguishment of debt - 5,742 Rounding error - 1 ------------- --------- Total other income (expenses) (980) 3,917 ------------- --------- Net loss $(191,364) $(301,445) ============= ========== Basic and diluted (loss) per common share $ (0.00) $ (0.01) ============= ========== Basic and diluted weighted average common shares outstanding 24,194,398 23,727,708 ============= ========== AMERIGO ENERGY, INC. STATEMENT OF STOCKHOLDER'S EQUITY Additional Total Common Stock Preferred Stock Paid-in Accumulated Stockholders' Shares Amount Shares Amount Capital Deficit Deficit -------------------- ---------------- ---------- ------------ ------------- Balance, December 31, 2010 22,814,331 33,356 500,000 500 14,608,105 (15,429,712) (787,750) ==================== ================ ========== ============ ========== Shares issued 9,141,216 9,141 459,739 468,880 to settle debts Shares issued 2,000,000 2,000 78,000 80,000 for consulting services Shares issued 69,277 70 70 for previously purchased oil interest Settlement of (8,500,000) (8,500) 8,500 - shares issued to Granite Energy Settlement of 220,723 220,723 debts to related parties Warrants issued 55,000 55,000 Adjustment to (10,543) 10,543 common stock account Rounding error 2 1 Net loss (301,445) (301,445) Balance, December 31, 2011 25,524,824 $25,524 500,000 $500 $15,440,612 $(15,731,157 $(264,521) ==================== ================ =========== ============ ========== Shares issued 100,000 100 900 1,000 for services Repurchase and (1,500,000) (1,500) (1,500) retirement of shares Net loss (191,364) (191,364) Balance, December 31, 2012 24,124,824 $24,124 500,000 $500 $15,441,512 $(15,922,521) $(456,385) ==================== ================ =========== ============= ========== AMERIGO ENERGY, INC. CONSOLIDATED STATEMENT OF CASH FLOWS Year Ended December 31, 2012 December 31, 2011 ------------------------------------------ Cash flows from operating activities: Net loss $(191,364) $(301,445) Adjustments to reconcile net loss to net cash used by operating activities: Sale of oil and gas interests - 150,185 Stock issued for services / settle debt 1,000 433,348 Gain on extinguishment of debt - (5,742) Depletion, depreciation and amortization - 2,784 Impairment of assets - 3,065 Increase in accounts receivable - 12,416 Increase / (decrease) in accounts payable (1,517) (94,590) Increase / (decrease) in accounts payable - related party - (183,035) Increase / (decrease) in advances from related parties 121,420 (22,796) Increase / (decrease) in accrued payroll 72,000 5,455 Rounding error - (1) ------------- ----------- Net cash Provided by operating activities 1,539 (356) Cash flows from financing activities: Repurchase and retirement of shares (1,500) ------------- ----------- Net cash used by financing activities (1,500) - ------------- ----------- Net increase in cash 39 (356) Cash, beginning of period 16 372 ------------- ----------- Cash, end of period $ 55 $ 16 ============ =========== Cash paid for interest $ - $ - ============ =========== Cash paid for taxes $ - $ - ============ =========== Supplementary cash flow information: Stock issued for services $ 1,000 $ - Oil interest used to settle debts $ - $ (8,099) ============ ===========
AMERIGO ENEGY, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY Amerigo Energy, Inc., a Delaware corporation ("AGOE" or the "Company"), formerly named Strategic Gaming Investments, Inc., was incorporated in 1973. Prior to 2008, the Company was involved in various businesses, none of which were successful. In August of 2008, our Board of Directors voted to get approval from the shareholders of the Company for a name change from Strategic Gaming Investments, Inc. to Amerigo Energy, Inc. The company received the approval from a majority of its stockholders and filed the amendment to its Articles of Incorporation with the State of Delaware. The name change became effective by the State of Delaware on August 26, 2008. The Company also requested a new stock symbol as a result of the name change. Our new trading symbol is "AGOE". The Amerigo Energy's business plan included developing oil and gas reserves while increasing the production rate base and cash flow. The plan was to continue acquiring oil and gas leases for drilling and to take advantage of other opportunities and strategic alliances. Due to declines in production on the oil leases the company had an interest in, the company has been exploring its position in the oil industry. In 2011, the company began an aggressive approach to reduce the debt on the company's books as well as looking to diversify the investment holdings, while still maintaining limited interest in oil leases. The company is aggressively looking for potential oil leases to acquire as well as businesses which will fit with the company's strategy. Analyzing opportunities in the oil industry as well as other potential investments has gone slower than planned, but the company is committed to implementing its business plan. Our wholly-owned subsidiary, Amerigo, Inc., incorporated in Nevada on January 11, 2008, holds certain assets, including a minority interest in an oil lease. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the combined accounts of Amerigo, Inc., a Nevada Corporation. All material intercompany transactions and accounts have been eliminated in consolidation. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of highly liquid investments with maturities of three months or less when purchased. USE OF ESTIMATES The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. COMPREHENSIVE INCOME FASB Accounting Standard Codification Topic 220-10, "Comprehensive Income" ("ASC 220-10"), requires that total comprehensive income be reported in the financial statements. ASC 220-10 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements. It requires (a) classification of the components of other comprehensive income by their nature in a financial statement and (b) the display of the accumulated balance of the other comprehensive income separate from retained earnings and additional paid-in capital in the equity section of a statement of financial position. The Company's financial statements do not include any of the components of other comprehensive income during the year ended December 31, 2012 and 2011. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made. PROPERTY AND EQUIPMENT Depreciation is computed primarily on the straight-line method for financial statements purposes over the following estimated useful lives: CATEGORY Estimated LIFE Office building 20 years Vehicles 7 years Equipment 7 years Leasehold Improvements 7 years Furniture and Fixtures 5 years All assets are booked at historical cost. Management reviews on an annual basis the book value, along with the prospective dismantlement, restoration, and abandonment costs and estimate residual value for the assets, in comparison to the carrying values on the financial statements. OIL AND GAS PRODUCING ACTIVITIES The Company uses the successful efforts method of accounting for its oil and natural gas properties. Exploration costs such as exploratory geological and geophysical costs and delay rentals are charged against earnings as incurred The costs to acquire, drill and equip exploratory wells are capitalized pending determinations of whether development reserves can be attributed to the Company's interests as a result of drilling the well. If management determines that commercial quantities of oil and natural gas have not been discovered, costs associated with exploratory wells are charged to exploration expense. Costs to acquire mineral interests, to drill and equip development wells, to drill and equip exploratory wells that find development reserves, and related costs to plug and abandon wells and costs of site restoration are capitalized. Depreciation, depletion and amortization ("DD&A") of oil and gas properties is computed using the unit-of-production method based on recoverable reserves as estimated by the Company's independent reservoir engineers. Capitalized acquisition costs are depleted based on total estimated proved developed and proved undeveloped reserve quantities. Capitalized costs to drill and equip wells are depreciated and amortized based on total estimated proved developed reserve quantities. Investments in Exploratory properties are not amortized until proved reserves associated with the prospects can be determined or until impairment occurs. Oil and natural gas properties are periodically assessed for impairment. If the unamortized capitalized costs of proved properties are in excess of estimated undiscounted future cash flows before income taxes, the property is impaired. Estimated future cash flows are determined using management's best estimates and may be calculated using prices consistent with management expectations for the Company's future oil and natural gas sales. Exploratory oil and natural gas properties are also periodically assessed for impairment, and a valuation allowance is provided if impairment is indicated. Impairment costs are included in exploration expense. Costs of expired or abandoned leases are charged against the valuation allowance. Costs of properties that become productive are transferred to proved oil and natural gas properties. Exploratory oil and gas properties that are individually significant are periodically assessed for impairment of value and a loss is recognized at the time of impairment by providing an impairment allowance. Other Exploratory properties are amortized based on the Company's experience of successful drilling and average holding period. Capitalized costs of producing oil and gas properties, after considering estimated residual salvage values, are depreciated and depleted by the unit-of- production method. Support equipment and other property and equipment are depreciated over their estimated useful lives. On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation, depletion, and amortization with a resulting gain or loss recognized in income. On the sale of an entire interest in an Exploratory property for cash or cash equivalent, gain or loss on the sale is recognized, taking into consideration the amount of any recorded impairment if the property has been assessed individually. If a partial interest in an Exploratory property is sold, the amount received is treated as a reduction of the cost of the interest retained. Pursuant to ASC 932-235-50-1, the following disclosures for exploratory activity are made. a. The amount of capitalized exploratory well costs that is pending the determination of proved reserves. An entity also shall separately disclose for each annual period that an income statement is presented changes in those capitalized exploratory well costs resulting from all of the following: 1. Additions to capitalized exploratory well costs that are pending the determination of proved reserves - 2. Capitalized exploratory well costs that were reclassified to wells, equipment, and facilities based on the determination of proved reserves 3. Capitalized exploratory well costs that were charged to expense. Management has assessed this for the company and it is not relevant or applicable to our operations. a. he amount of exploratory well costs that have been capitalized for a period of greater than one year after the completion of drilling at the most recent balance sheet date and the number of projects for which those costs relate. Additionally, for exploratory well costs that have been capitalized for periods greater than one year at the most recent balance sheet date, an entity shall provide an aging of those amounts by year, or by using a range of years, and the number of projects to which those costs relate. Management has assessed this for the company and it is not relevant or applicable to our operations. b. For exploratory well costs that continue to be capitalized for more than one year after the completion of drilling at the most recent balance sheet date, a description of the projects and the activities that the entity has undertaken to date in order to evaluate the reserves and the projects, and the remaining activities required to classify the associated reserves as proved. Management has assessed this for the company and it is not relevant or applicable to our operations. ASSET RETIREMENT OBLIGATIONS In accordance with accounting standards for asset retirement obligations (ASC 410), the Company records the fair value of a liability for an asset retirement obligation (ARO) when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. No ARO's associated with legal obligations to retire oil and gas properties have been recognized, as indeterminate settlement dates for the asset retirements prevent estimation of the fair value of the associated ARO. The Company performs periodic reviews of its oil and gas properties long-lived assets for any changes in facts and circumstances that might require recognition of a retirement obligation. REVENUE RECOGNITION Oil, gas and natural gas liquids revenues are recognized when the products are sold to a purchaser at a fixed or determinable price, delivery has occurred and title has transferred, and collection of the revenue is reasonably assured. CONCENTRATIONS OF CREDIT RISK Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counter parties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions described below. The Company operates in one primary segment, the oil and gas industry. The Company's customers are located within the United States of America. Financial instruments that subject the Company to credit risk consist principally of oil and gas sales which are based on a short-term purchase contracts from Enterprise Crude Oil (US) Company and various other gatherers in the area, with related accounts receivable subject to credit risk. ACCOUNTS RECEIVABLE Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. Changes in the valuation allowance have not been material to the financial statements and at December 31, 2012 and December 31, 2011; the Company's financial statements do not include an allowance for doubtful accounts because management believes that no allowance is required at those dates. Fair value of financial instruments ----------------------------------- Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2012 and 2011. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand. Level 1: The preferred inputs to valuation efforts are "quoted prices in active markets for identical assets or liabilities," with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets. Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations. Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as "unobservable," and limits their use by saying they "shall be used to measure fair value to the extent that observable inputs are not available." This category allows "for situations in which there is little, if any, market activity for the asset or liability at the measurement date". Earlier in the standard, FASB explains that "observable inputs" are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on the results of operations or stockholders' equity. NET LOSS PER COMMON SHARE FASB Accounting Standards Codification Topic 260-10, "Earnings per Share", requires presentation of "basic" and "diluted" earnings per share on the face of the statements of operations for all entities with complex capital structures. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti- dilutive effect on diluted earnings per share are excluded from the calculation. INCOME TAXES The Company accounts for its income taxes in accordance with FASB Codification Topic 740-10 ("ASC 740-10"), which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. Management feels the Company will have a net operating loss carryover to be used for future years. Such losses may not be fully deductible due to the significant amounts of non-cash service costs. The Company has established a valuation allowance for the full tax benefit of the operating loss carryovers due to the uncertainty regarding realization. STOCK-BASED COMPENSATION The Company has adopted FASB Accounting Standards Codification Topic 718-10, "Compensation- Stock Compensation" ("ASC 718-10") which requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees and directors. Under the fair value recognition provisions of ASC 718-10, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period. Determining the fair value of stock-based awards at the grant date requires considerable judgment, including estimating the expected future volatility of our stock price, estimating the expected length of term of granted options and selecting the appropriate risk-free rate. There is no established trading market for our stock. DIVIDENDS The Company has not yet adopted any policy regarding payment of dividends. GOING CONCERN The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company has incurred recurring losses, has used significant cash in support of its operating activities and, based upon current operating levels, requires additional capital or significant reconfiguration of its operations to sustain its operations for the foreseeable future. These factors, among others, may indicate that the Company will be unable to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate sufficient cash flow to meet obligations on a timely basis and ultimately to attain profitability. The Company has obtained working capital through equity offerings and management plans to obtain additional funding through equity or debt financings in the future. There is no assurance that the Company will be successful in its efforts to raise additional working capital or achieve profitable operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. RECENT ACCOUNTING PRONOUNCEMENTS - The company has evaluated the recent pronouncements and believes that none of them will have a material effect on the company's financial statements. NOTE 3 - ACQUISITION AND DISPOSAL OF ASSETS DURING THE YEAR ENDED DECEMBER 31, 2011: In November 2011, the company sold 50% of its interest in the Phillips B. lease to a third party for $2,445. On the same date the company used the other 50% of its interest to settle $2,445 in debts to Bullfrog Management (an entity controlled by a prior officer). On March 1, 2011 the company settled $150,361 in debt on the company books with oil interest held by the company in leases in Oklahoma. On September 1, 2011 the Company settled $97,723 in debt on the company books with the company's interest in the West Burk lease and the Richard Lease. These leases had previously been written off and had no value on the company's books. The transaction was recorded as additional paid in capital contribution. NOTE 4 - NOTES PAYABLE - RELATED PARTY As of December 31, 2012 and 2011, there are $0 and $0 notes payable outstanding related to the purchase of the Justice lease. During 2011, these notes were settled with 4,116,796 shares of stock. NOTE 5 - STOCKHOLDERS' EQUITY PREFERRED STOCK As of December 31, 2012, there were 25,000,000 preferred shares authorized and 500,000 preferred shares outstanding. The board of directors had previously set the voting rights for the preferred stock at 1 share of preferred to 250 common shares. There are 500,000 shares of preferred stock issued and outstanding at December 31, 2012 and 2011, all of which are owned by the current CEO, These shares had previously been issued in satisfaction of salaries payable, totaling $250,000 to the current CEO and prior officers During the period ending June 30, 2012, the CEO of the company acquired in a private transaction the shares of preferred A stock. As of December 31, 2012, the CEO owns 500,000 shares of preferred stock, which make up 100% of the preferred stock issued and outstanding. COMMON STOCK As of December 31, 2012, there were 100,000,000 shares authorized and there were 24,124,824 shares of common stock outstanding . During 2011, the company issued 9,141,216 shares of company stock to settle $646,880 in debts on the company's books. During 2011 the company entered into a settlement agreement with a company we had purchased oil interest from. As part of this agreement the company returned 8,500,000 shares of stock that were part of the purchase agreement signed in 2008. These shares were cancelled and are no longer outstanding. The company also issued 69,277 shares of stock for previously purchased oil interest at a value of $69,277. During 2011 the company realized that the previous transfer agent never issued the shares as part of an agreement that was signed in 2009. During 2011, 2,000,000 shares were issued for consulting services in lieu of cash, these shares were valued at $80,000. During the quarter ended March 31, 2012, the entered into a buyback agreement with a shareholder. The company agreed to buy back 1,500,000 shares for a purchase price of $1,500. These shares were cancelled with the transfer agent and are no longer outstanding. During the year ended December 31, 2012, the company issued 100,000 shares of common stock to a consultant for services rendered and valued at $1,000. There were no other shares issued during the year 2012. The balance at December 31, 2012 is 24,124,824 common shares outstanding and 500,000 preferred shares. WARRANTS During the 4th quarter of 2011, the company issued 10,000,000 warrants of the company stock with an exercise price of $0.01 to an entity the CEO has an ownership in. The company used the Black Scholes option pricing model to calculate the value of $55,000 based on a 0% dividend yield, 669% expected volatility, 0.95% discounts bond rate and a 7 year term. While the warrants were valued at $55,000, a total of $142,859 was settled with such warrants, thus $87,859 was considered forgiveness of debt-related party, treated as additional paid in capital. Stock options/warrants - The following table summarizes information about options and warrants granted during the years ended December 31, 2012 and 2011: Number of Weighted Average Shares Exercise Price Balance, December 31, 2010 0 $ - Options/warrants granted 10,000,000 0.01 Options/warrants expired - - Options/warrants cancelled, forfeited - - Options/warrants exercised ---- --- Balance, December 31, 2011 10,000,000 0.01 Options/warrants granted - - Options/warrants expired - - Options/warrants cancelled, forfeited - - Options/warrants exercised - - Balance, December 31, 2012 10,000,000 0.01 NOTE 6 - LITIGATION In 2010, Amerigo signed an agreement with the individual to acquire his interest in certain oil and gas leases for $120,000, payable at $10,000 per month starting April 1, 2010, with subsequent payments due on the 1st of each month. The term of the note was One (1) year. Upon final payment and settlement of the note, the individual will return all shares of stock (with properly executed stock power) that he individually holds of Granite Energy and Amerigo Energy, along with his entire interest in the Kunkel lease, which is 3.20% working interest (2.54% net revenue interest), as well as his ownership in what is know as the 4 Well Program (0.325% working interest, 0.2438% net revenue interest). During 2010, the individual sold his interest in the Kunkel lease. The company has not kept current with the agreement and the individuals promissory note has now been escalated to a judgment against the company. As of the date of this filing, terms of settling the judgment have not been resolved despite the efforts of the judgment holder to collect on the amount owed. As of December 31, 2012, other than discussed above that occurred subsequent to year end, the Company is not a party to any pending material legal proceeding. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against the Company. To the knowledge of management, no director, executive officer or affiliate of the Company, any owner of record or beneficially of more than five percent of the Company's Common Stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding. NOTE 7 - RELATED PARTY TRANSACTIONS - The Company has a consulting agreement with a firm controlled by the Company's Chief Financial Officer for a fee of $3,500 per month. The consulting firm has been engaged to assist in organizing and completing the process of filings with the Securities and Exchange Commission and other tasks. As of December 31, 2012 and 2011 the company owed the firm $18,215, and $138,655, respectively. Prior to December 31, 2011 $200,000 was settled with stock and warrants in lieu of cash payment (See Note 5). As of December 31, 2012, the Company's CEO is owed $72,000 in accrued, but not paid, salary. In January 2013, the CEO entered into a compensation agreement as discussed in Note 10 Subsequent events. The Company had an operating agreement with SWJN Oil Company and SJ OK Oil Company to operate the company's oil and gas leases, the current CEO had a minority interest in these entities. The fee charged by these companies to operate these leases is the greater of $1,000 per month or 5% of net oil sales. During 2011 the CEO sold his interest in SJ OK to an outside party and subsequent to year end the CEO relinquished his interest in SWJN to an unrelated third party as well. The total fees Amerigo paid to these entities during 2012 and 2011 was $0 and $652. The company also has a lease agreement with AVES. The company rents an office space from AVES for $1,098 per month. AVES and the building are owned partially by our current CEO Jason F. Griffith. During June 2011, AVES agreed to waive the rent to the office space the company uses until the operations increase. Other Material Transactions. With the exception of the above mentioned transactions, there have been no material transactions, series of similar transactions or currently proposed transactions to which the Company or any officer, director, their immediate families or other beneficial owner is a party or has a material interest in which the amount exceeds $50,000. NOTE 8 - INCOME TAX Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets as of December 31, 2012 and 2011 are as follows: Deferred tax assets: 2012 2011 ---------- ----------- Net operating loss carryforwards 5,518,182 5,246,818 Stock issued for services 1,000 80,000 Impairment Loss - - ---------- ----------- Net deferred tax asset 5,519,182 5,326,818 A reconciliation of income taxes computed at the statutory rate to the income tax amount recorded as follows: 2012 2011 ---------- ----------- Tax at statutory rate (35%) 1,931,714 1,864,386 Increase in valuation allowance (1,931,714) (1,864,386) ---------- ----------- Net deferred tax asset - - Reconciliation between the statutory rate and the effective tax rate is as follows at December 31, 2011 and 2010: 2012 2011 ---- ---- Federal statutory tax rate (35)% (35)% Permanent difference and other 35% 35% At December 31, 2012, the Company had federal net operating loss ("NOL") carry forwards of approximately $5,519,182. Federal NOLs could, if unused, begin to expire in 2021. The company has not filed it's corporate tax return for the 2011 or 2012 tax year so the deductibility of the NOL is uncertain. The valuation allowance for deferred tax assets as of December 31, 2012 was $5,519,182. NOTE 9 - ENVIRONMENTAL MATTERS Various federal and state authorities have authority to regulate the exploration and developments of oil and gas and mineral properties with respect to environmental matters. Such laws and regulations, presently in effect or as hereafter promulgated, may significantly affect the cost of its current oil production and any exploration and development activities undertaken by the Company and could result in loss or liability to the Company in the event that any such operations are subsequently deemed inadequate for purposes of any such law or regulation. NOTE 10 - SUBSEQUENT EVENTS The Company has evaluated subsequent events through April 12, 2013, the date which the financial statements were available to be issued. The Company has determined that, other than disclosed below, there were no other events that warranted disclosure or recognition in the financial statements. In January 2013, the company entered into an employment agreement with the CEO and ended the prior consulting agreements with him. The terms of his compensation agreement are $180,000 per year and should the company not have the funds to cover the amount owed, the amount will accrue interest at 8% per year. In February 2013, the company settled $35,592 worth of debt for 35,592 common shares, valued at $1.00 per share. The CEO of the company was indirectly owed $14,263 of this debt. In March 2013, the company announced the acquisition of the license agreement of Le Flav Spirits for the promotion of a liquor line featuring the celebrity Flavor Flav. The company issued 360,000 shares of common stock in conjunction with this acquisition. The company also issued warrants for the purchase of two million (2,000,000) shares of common stock at $1.00 per shares, with a 5 year exercise period, vested equally at 500,000 shares vested upon every 5,000 cases sold of vodka. The promissory note is to be settled for $1 per bottle for the first 2,000,000 bottles sold. This will be treated as a convertible promissory note, convertible at $1.00 per share (at the option of the note holder). Promissory note bears interest at 8% per year. The Company has the ability to make principal and interest payments above what is earned from the 'per bottle' during the term. Unless otherwise satisfied, the balance of the promissory note is due by March 1, 2016. The CEO had a minority interest in the entity from which the license agreement was purchased. On March 22, 2013, the Company executed a line of credit agreement with a third party for $100,000 to be used as purchase order financing for the production of liquor brands. The line of credit bears interest at twenty percent (20%) on the advanced amount. In consideration for this line of credit, the company issued warrants for 300,000 shares of common stock at an exercise price of $1.00 per share, exercisable for five (5) years. The Company issued 3,000,000 shares of preferred stock as collateral which are being held in trust. WHERE YOU CAN FIND ADDITIONAL INFORMATION We have filed with the Securities and Exchange Commission this Form 10-K registration statement, including exhibits, under the Securities Act. You may read and copy all or any portion of the registration statement or any reports, statements or other information in the files at SEC's Public Reference Room located at 100 F Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m. to 3 p.m. You can request copies of these documents upon payment of a duplicating fee by writing to the Commission. You may call the Commission at 1-800-SEC-0330 for further information on the operation of its public reference room. Our filings, including the registration statement, will also be available to you on the website maintained by the Commission at http://www.sec.gov. We intend to furnish our stockholders with annual reports which will be filed electronically with the SEC containing consolidated financial statements audited by our independent auditors, and to make available to our stockholders quarterly reports for the first three quarters of each year containing unaudited interim consolidated financial statements. Our website www.amerigoenergy.com is currently under construction Our website and the information to be contained on that site, or connected to that site, is not part of or incorporated by reference into this filing. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None ITEM 9A(T). CONTROLS AND PROCEDURES DISCLOSURE CONTROLS AND PROCEDURES We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 ("Exchange Act") is recorded, processed, summarized and reported within the specified time periods. Our Chief Executive Officer and our Principal Accounting and Financial Officer (collectively, the "Certifying Officers") are responsible for maintaining our disclosure controls and procedures. The controls and procedures established by us are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. We reviewed and evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as of the end of the fiscal quarter covered by this report, as required by Securities Exchange Act Rule 13a-15, and concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in our reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management on a timely basis, including our principal executive officer and principal financial and accounting officer. INTERNAL CONTROLS OVER FINANCIAL REPORTING MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING. Section 404 of the Sarbanes-Oxley Act of 2002 requires that management document and test our internal control over financial reporting and include in this Annual Report on Form 10-K a report on management's assessment of the effectiveness of our internal control over financial reporting, and to delineate any material weakness in our internal control. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a- 15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management concluded that our internal control over financial reporting is not effective, as of December 31, 2012. CONCLUSIONS Based on this evaluation, our principal executive officer and principal financial and accounting officer concluded that our disclosure controls and procedures are effective to ensure that the information we are required to disclose in reports that we file pursuant to the Exchange Act are recorded, processed, summarized, and reported in such reports within the time periods specified in the Securities and Exchange Commission's rules and forms. CHANGES IN INTERNAL CONTROLS There were no changes in our internal controls over financial reporting that occurred during the last fiscal quarter, i.e., the three months ended December 31, 2012, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. ITEM 9B. OTHER INFORMATION We have no information that we would have been required to disclose in a report on Form 8-K during the fourth quarter of the year covered by this Form 10-K. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE (a) Identification of Directors and Executive Officers. Name Age Term Served* ----- --- ------------ Jason F. Griffith 36 Elected since 2008 CEO/CFO/Director *All directors hold office until the next annual meeting of the stockholders and the election and qualification of their successors. Officers are elected annually by the Board of Directors and serve at the discretion of the Board. The following is a brief description of the business background of the directors and executive officers of the Company: JASON F. GRIFFITH - CEO/CFO/DIRECTOR Mr. Griffith has served as its Chief Financial Officer as well as a member of the Board of Directors since October 2008. In the third quarter of 2010, Mr. Griffith became the Chief Executive Officer of the company as well. Mr. Griffith's experience includes having served as a chief financial officer for multiple publicly traded companies. Mr. Griffith has additional experience in public accounting, which includes being a partner of a CPA firm in Henderson, Nevada since June 2002, as well as being the accounting manager for another accounting firm in Henderson, Nevada from August 2001 through June 2002. Mr. Griffith was previously associated with Arthur Andersen in Memphis, Tennessee from December 1998 until his move to Nevada in 2001. Prior to joining Arthur Andersen, Mr. Griffith was pursuing and completed his undergraduate and masters degree in accounting from Rhodes College in Memphis, Tennessee. He is a licensed certified public accountant in Nevada, Tennessee, and Georgia. Mr. Griffith is a member of the American Institute of Certified Public Accountants, the Association of Certified Fraud Examiners and the Institute of Management Accountants, along with being a member of the Nevada and Tennessee State Societies of CPAs. BOARD OF DIRECTORS; ELECTION OF OFFICERS All directors hold their office until the next annual meeting of shareholders or until their successors are duly elected and qualified. Any vacancy occurring in the board of directors may be filled by the shareholders, the board of directors, or if the directors remaining in the office constitute less than a quorum of the board of directors, they may fill the vacancy by the affirmative vote of a majority of the directors remaining in office. A director elected to fill a vacancy is elected for the unexpired term of his predecessor in office. Any directorship filled by reason of an increase in the number of directors shall expire at the next shareholders' meeting in which directors are elected, unless the vacancy is filled by the shareholders, in which case the terms shall expiree on the later of (i) the next meeting of the shareholders or (ii) the term designated for the director at the time of creation of the position being filled. BOARD COMMITTEES In light of our small size and the fact that we have only two directors, our board has not yet designated a nominating committee, an audit committee, a compensation committee, or committees performing similar functions. The board intends to designate one or more such committees when practicable. Our board of directors intends to appoint such persons and form such committees as are required to meet the corporate governance requirements imposed by Sarbanes-Oxley and any applicable national securities exchanges. Therefore, we intend that a majority of our directors will eventually be independent directors and at least one director will qualify as an "audit committee financial expert" within the meaning of Item 407(d)(5) of Regulation S-K, as promulgated by the SEC. Additionally, our board of directors is expected to appoint an audit committee, nominating committee and compensation committee and to adopt charters relative to each such committee. Until further determination by the board of directors, the full board of directors will undertake the duties of the audit committee, compensation committee and nominating committee. We do not currently have an "audit committee financial expert" since we currently do not have an audit committee in place. CODE OF ETHICS The Company has adopted a Code of Ethics for its principal executive and financial officers. In the meantime, the Company's management promotes honest and ethical conduct, full and fair disclosures in its reports with the SEC, and compliance with the applicable governmental laws and regulations. ITEM 11. EXECUTIVE COMPENSATION DIRECTOR AND OFFICER CASH COMPENSATION The following table sets forth the aggregate cash compensation paid by the Company for services rendered during the periods indicated to its directors and executive officers: EXECUTIVE COMPENSATION AND OTHER INFORMATION Amerigo Energy The following sets forth the cash components of Amerigo Energy's executive officers during the last two fiscal years. The remuneration described in the table does not include the cost to Amerigo Energy of benefits furnished to the named executive officers provided to such individuals that are extended in connection with the conduct of Amerigo Energy's business.
CASH COMPENSATION TABLE All Name and Stock Option Other Principal Position Year Salary ($) Bonus ($) Awards Awards Compensation Total Jason F. Griffith 2011 0 - - - - 0 Chief Executive Officer 2012 0 - - - - 0 Each director of Amerigo Energy also serves as a director of Amerigo, Inc. Directors do not receive separate compensation for service as directors of Amerigo Energy or Amerigo, Inc. DIRECTOR COMPENSATION Fees Earned Non-Equity Nanqualified or Paid Stock Option Incentive Plan Deferred All Other Name in Cash ($) Awards Awards Compensation Compensation Compensation Total Jason F. Griffith - - - - - - -
EMPLOYMENT CONTRACTS AND OTHER ARRANGEMENTS In January 2013, the company entered into a compensation agreement with the Chief Executive Officer. The agreement calls for compensation of $180,000 per year beginning January 1, 2013 and continuing for a five year term. There is an additional advisory period through December 31, 2022. Should the company not have the financial ability to pay the salary, the amount owed will convert to a loan at eight (8%) interest. Through December 31, 2012, other than as described above, there are no compensatory plans or arrangements, including payments to be received from Amerigo Energy, with respect to any party named above which could result in payments to any such person because of his resignation, retirement, or other termination of such person's employment with Amerigo Energy or its subsidiaries, or any change in control of Amerigo Energy, or a change in the person's responsibilities following a change in control of Amerigo Energy. INDEMNIFICATION OF DIRECTORS AND OFFICERS Pursuant to Article VI of Amerigo Energy's by-laws, Amerigo Energy may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of Amerigo Energy, by reason of the fact that he is or was a director, officer, employee or agent of Amerigo Energy, or is or was serving at the request of Amerigo Energy as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of Amerigo Energy, and, with respect to any criminal action or proceeding, has no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and that, with respect to any criminal action or proceeding, he had reasonable cause to believe that his conduct was unlawful. Amerigo Energy may also indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of Amerigo Energy to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of Amerigo Energy, or is or was serving at the request of Amerigo Energy as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys' fees, actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of Amerigo Energy. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to Amerigo Energy or for amounts paid in settlement to Amerigo Energy, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. Under Delaware law, a director of a Delaware corporation will not be found to have violated his or her fiduciary duties to the corporation or its shareholders unless there is proof by clear and convincing evidence that the director has not acted in good faith, in a manner he or she reasonably believes to be in or not opposed to the best interests of the corporation, or with the care that an ordinarily prudent person in a like position would use under similar circumstances. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The beneficial ownership of each person as described in the table below was calculated based on 24,124,824 of Amerigo Energy Common Stock outstanding as of December 31, 2012, according to the record ownership listings as of that date and the verifications Amerigo Energy solicited and received from each director, executive officer and five percent holder. Security Ownership of Certain Beneficial Owners as of December 31, 2012 Title of Name and Address Amount and Nature Percent of Class of Beneficial Owner of Beneficial Ownership Class --------------------------------------------------------------------------- Common Jason Griffith. 5,415,025 22.45% 2580 Anthem Village Dr. Henderson, NV 89052 Security Ownership of Management Title of Name and Address Amount and Nature Percent of Class of Beneficial Owner of Beneficial Ownership Class --------------------------------------------------------------------------- Common Jason F. Griffith 5,415,025* 22.45% Preferred Chief ExecutiveOfficer 500,000 100.00% 2580 Anthem Village Dr. (1) Henderson, NV 89052 (1) all of these shares are indirectly owned by a trust controlled by Mr. Griffith or through entities which Mr. Griffith has ownership interest.. * Total Current Officers and Directors common shares held is 5,415,025 (22.45%) Management has no knowledge of the existence of any arrangements or pledges of the Company's securities which may result in a change in control of the Company. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - As of December 31, 2012, the company has $138,655 in liabilities due to a firm controlled by the Company's Chief Executive Officer. This loan is non- interest bearing and has no due date assigned to it. Prior to December 31, 2011 $200,000 was settled with stock and warrants in lieu of cash payment. As of December 31, 2012, the Company's CEO is owed $108,000 in accrued, but not paid, salary. The Company had an operating agreement with SWJN Oil Company and SJ OK Oil Company to operate the company's oil and gas leases, the current CEO previously had a minority interest in these entities. The fee charged by these companies to operate these leases was the greater of $1,000 per month or 5% of net oil sales. During 2011 the CEO sold his interest in SJ OK to an outside party and in 2012 the CEO relinquished his interest in SWJN to an unrelated third party as well. The total fees Amerigo paid to these entities during 2011 and 2012 was $652. The company also has a lease agreement with AVES. The company rents an office space from AVES for $1,098 per month. AVES and the building are owned partially by our current CEO Jason F. Griffith. During October 2011, AVES agreed to waive the rent to the office space the company uses until operations of the company increased. Other Material Transactions. With the exception of the above mentioned transactions, there have been no material transactions, series of similar transactions or currently proposed transactions to which the Company or any officer, director, their immediate families or other beneficial owner is a party or has a material interest in which the amount exceeds $50,000. REVIEW AND APPROVAL OF RELATED PARTY TRANSACTIONS The board of directors reviews and approves transactions with directors, officers, and holders of more than 5% of our voting securities and their affiliates, or each, a related party. Prior to board consideration of a transaction with a related party, the material facts as to the related party's relationship or interest in the transaction are disclosed to the board, and the transaction is not considered approved by the board unless a majority of the directors who are not interested in the transaction approve the transaction. Further, when stockholders are entitled to vote on a transaction with a related party, the material facts of the related party's relationship or interest in the transaction are disclosed to the stockholders, who must approve the transaction in good faith. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES AUDIT AND NON-AUDIT FEES Fiscal Year Ended December 31, 2012 2011 -------------------------- Audit fees $10,000 $10,000 Audit related fees - Tax fees - - All other fees - - PRE APPROVAL OF SERVICES BY THE INDEPENDENT AUDITOR The Board of Directors has established policies and procedures for the approval and pre approval of audit services and permitted non-audit services. The Board has the responsibility to engage and terminate the Company's independent registered public accountants, to pre-approve their performance of audit services and permitted non-audit services and to review with the Company's independent registered public accountants their fees and plans for all auditing services. All services provided by and fees paid to our auditor, LL Bradford were approved by our Board of Directors PART IV ITEM 15. EXHIBITS 10.1 COMPENSATION AGREEMENT, DATED JANUARY 4, 2013 31.1 CERTIFICATION BY CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A)/15(D)- 14(A) 31.2 CERTIFICATION BY CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A)/15(D)- 14(A) 32.1 CERTIFICATION OF OUR CEO AND CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Date: April 12, 2013 By: /s/ Jason F. Griffith -------------------------- Jason F. Griffith Chief Executive and Financial Officer and Principal Accounting Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: April 12, 20132 By: /s/ Jason F. Griffith --------------------- Jason F. Griffith Chief Executive and Financial Officer and Principal Accounting Officer
EX-31.1 2 agoeex_31-1.txt CERTIFICATION EXHIBIT 31.1 CERTIFICATION BY CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A)/15(D)-14(A) I, Jason F. Griffith, certify that: 1. I have reviewed this annual report on Form 10-K of Amerigo Energy, Inc. for the fiscal year ended December 31, 2012; 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. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-14(e)) 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 5. I have disclosed, based on my 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: April 12, 2013 /s/ Jason F. Griffith ------------------------ Chief Executive Officer (Principal Executive Officer) EX-31.2 3 agoeex_31-2.txt CERTIFICATION EXHIBIT 31.2 CERTIFICATION BY CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A)/15(D)-14(A) I, Jason F. Griffith, certify that: 1. I have reviewed this annual report on Form 10-K of Amerigo Energy, Inc. for the fiscal year ended December 31, 2012; 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. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-14(e)) 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 5. I have disclosed, based on my 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: April 12, 2013 /s/ Jason F. Griffith ------------------------ Chief Executive Officer (Principal Executive Officer) EX-32.1 4 agoeex_32-1.txt CERTIFICATION EXHIBIT 32.1 CERTIFICATION 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 Annual Report of Amerigo Energy, Inc. (the "Company") on Form 10-K for the period ending December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Jason F. Griffith, Chief Executive and Financial Officer of the Company, respectively, do certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his and her 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. /s/ Jason F. Griffith ----------------------- Chief Executive and Financial Officer April 12, 2012 EX-10.1 5 agoeex_ex10.txt COMPENSATION AGREEMENT EXHIBIT 10.5: Executive Compensation Agreement - Jason Griffith EXECUTIVE COMPENSATION AGREEMENT Between AMERIGO ENERGY, INC and JASON F. GRIFFITH This Agreement is made this 4th day of January 2013, by and between AMERIGO ENERGY INC, a Deleware corporation ("AMERIGO ENERGY"), and JASON GRIFFITH ("EXECUTIVE"), with effective date of January 1, 2013. WHEREAS, AMERIGO ENERGY desires to retain the services of the EXECUTIVE in the capacity of its Chief Executive Officer. NOW THEREFORE, IT IS AGREED AS FOLLOWS: SECTION 1. EMPLOYMENT. 1.1 EXECUTIVE EMPLOYMENT. AMERIGO ENERGY appoints EXECUTIVE and EXECUTIVE accepts the appointment as Chief Executive Officer until December 31, 2017. 1.2 ADVISORY PERIOD. If EXECUTIVE's Employment is terminated as provided in paragraph (1.1) above, or in any other manner, he shall nevertheless be retained thereafter by AMERIGO ENERGY as an advisor and consultant until December 31, 2022 (Advisory Period). SECTION 2. DUTIES. EXECUTIVE shall serve as Chief Executive Officer of AMERIGO ENERGY, with such duties as are customarily associated with such position in public corporations and specifically as set out in the By-Laws of AMERIGO ENERGY. SECTION 3. EXTENT OF SERVICES. EXECUTIVE shall devote his best efforts, attention, and energies to the performance of his duties as set out above. The duties shall be rendered at the AMERIGO ENERGY offices, or at such other place or places and at such times as the needs of AMERIGO ENERGY may from time-to- time dictate. Nothing in this Agreement shall preclude EXECUTIVE from conducting other business or holding official positions or directorships in other entities, the activities of which do not directly conflict with EXECUTIVE's duties and responsibilities as Chief Executive Officer of AMERIGO ENERGY. SECTION 4. TERM. The term of this Agreement shall begin on January 1, 2013 (the "Effective Date"), and shall continue for a five year period. The parties presently anticipate that the employment relationship may continue beyond this five-year term. SECTION 5. EXECUTIVE COMPENSATION. 5.1 BASE SALARY. AMERIGO ENERGY will pay to EXECUTIVE a base salary for the first year in the amount of One Hundred and Eighty Thousand Dollars ($180,000), payable in accordance with AMERIGO ENERGY's standard payroll procedures but no less frequently than monthly, at the election of EXECUTIVE. This base salary will be payable throughout the term serving in the EXECUTIVE or advisory capacity, as defined in Section 1.1 (Executive Employment) and 1.2 (the Advisory Period). The Executive's Base Salary shall be reviewed, and may be increased but not decreased, annually, by the Board pursuant to its normal performance review policies for senior executives, with the first such review occurring not later than September 2013. Should the Company for any reason be unable to pay the Executive monthly or more frequent installments in accordance with the Company's payroll policies, the Executive may elect either of the following alternatives, or a combination thereof; (a) Executive may elect to treat the unpaid compensation as a loan payable on demand that accrues an annual interest of eight (8) percent, (b) Executive may elect to receive common stock of the Company issued under an S-8 registration statement which will provide the Executive common stock at fair market value based on the average closing price for the five (5) trading days preceding the request for issuance of stock for the effective pay period. Executive may also elect to receive common stock of the Company issued under an S-8 registration statement which will provide the Executive common stock at fair market value based on the average closing price of the five (5) trading days preceding the request for issuance of stock for the loan payable on demand pursuant to subsection 5.1(a). 5.2 SUPPLEMENTAL SALARY during any period of the contract in which EXECUTIVE provides consulting services relating to AMERIGO ENERGY which are outside those services normally provided by a Chief Executive Officer, he shall be entitled to separate and supplemental compensation in amounts reasonably associated with such services, in addition to other compensation provided for under this agreement. 5.3 BONUSES. EXECUTIVE shall be eligible to receive a discretionary bonus for each year (or portion thereof) during the term of this Agreement and any extensions thereof, with the actual amount of any such bonus to be determined in the sole discretion of the Board of Directors based upon its evaluation of EXECUTIVE's performance during such year. SECTION 6. EXECUTIVE BENEFIT PACKAGE. 6.1 Disability Benefits. In the event EXECUTIVE should become disabled during the period of his executive employment, his salary shall continue at the same rate that it was on the date of such disability. If such disability continues for a period of five consecutive months (or EXECUTIVE shall die), AMERIGO ENERGY may at its option thereafter, upon written notice to EXECUTIVE or his Personal Representative, terminate his executive employment. In such event the advisory period shall commence immediately upon such termination of employment and shall continue until December 31, 2022, regardless of the disability or death of EXECUTIVE. If EXECUTIVE shall receive any disability payments from any insurance policies paid for by AMERIGO ENERGY, payments to EXECUTIVE during any period of disability shall be reduced by the amount of the disability payments received by EXECUTIVE under such insurance policy or policies. For the purposes of this agreement, disability shall mean mental or physical illness or condition rendering EXECUTIVE incapable of performing his normal duties with AMERIGO ENERGY. 6.2 Vacation Benefits. EXECUTIVE shall be entitled to four (4) weeks of vacation leave per year for each year of the contract period including the executive and advisory period, cumulative at the option of EXECUTIVE. 6.3 Reserved. 6.4 Death Benefits. If EXECUTIVE shall die between the date of this agreement and December 31, 2022, compensation payments hereunder shall not cease and AMERIGO ENERGY shall pay to EXECUTIVE's widow, if she survives him, or if she shall not survive him to his estate, in equal monthly installments in an amount equal to the advisory compensation provided for above. Such payments shall commence with the month following the date of death. Said amount shall not be less than two years' base salary, if less time is remaining on subject contract. 6.5 Employment Benefits. This Agreement is not intended to and shall not be deemed to be in lieu of any rights, benefits and privileges to which EXECUTIVE may be entitled as an employee of AMERIGO ENERGY under any retirement, pension, profit-sharing, insurance, hospital, automobile or other plans which may now be in effect or which may hereinafter be adopted, it being understood that EXECUTIVE shall have the same rights and privileges to participate in such plans and benefits as any other employee during this period providing such benefits are at least equal to those provided herein. SECTION 7. STOCK AND STOCK OPTIONS 7.1 It is acknowledged that EXECUTIVE owns a number of shares of common stock in AMERIGO ENERGY and further, that (a) AMERIGO ENERGY shall register for public trading with the Securities and Exchange Commission at least ten percent (10%) of the shares owned by EXECUTIVE per year for each year of the contract beginning with the second year of the contract or the first offering of securities, whichever shall occur first. (b) In the event a voluntary termination by EXECUTIVE and AMERIGO ENERGY, AMERIGO ENERGY shall register the balance of the stock owned by EXECUTIVE pro- rata over five (5) years following such termination in the event such stock is not sooner sold. (c) In the event of involuntary termination or an offer is made by a single purchaser or group of purchasers and accepted by AMERIGO ENERGY for 51% or more of the outstanding common stock of AMERIGO ENERGY, all remaining shares of stock owned by EXECUTIVE shall be registered for public trading immediately. 7.2 EXECUTIVE is entitled to receive stock distributions of fully paid and non-assessable common stock of AMERIGO ENERGY, in addition to any other stock options EXECUTIVE may be entitled to, as described in Exhibit A to this Agreement, entitled "Executive Stock Option Agreement". SECTION 8. TERMINATION. 8.1 Termination For Cause. Termination For Cause may be effected by AMERIGO ENERGY at any time during the term of this Agreement and shall be effected by written notification to EXECUTIVE. Provided, however, EXECUTIVE shall be given 30 days from date of delivery of such notification to cure the defect set out in the notice. Upon Termination For Cause, Employee shall promptly be paid all accrued salary, bonus compensation to extent earned, vested deferred compensation (other than pension or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of AMERIGO ENERGY in which EXECUTIVE is a participant to the full extent of EXECUTIVE's rights under such plans, accrued vacation pay and any appropriate business expenses incurred by EXECUTIVE in connection with his duties hereunder, all to the date of termination, along with a severance payment equal to six-months base salary. 8.2 Termination Other Than For Cause. Notwithstanding anything else in this Agreement, AMERIGO ENERGY may effect a Termination Other Than For Cause at any time upon giving written notice to EXECUTIVE of such termination. Upon any Termination Other Than For Cause, EXECUTIVE shall promptly be paid all accrued salary, bonus compensation to extent earned, vested deferred compensation (other than pension or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of AMERIGO ENERGY in which EXECUTIVE is a participant to the full extent of EXECUTIVE's rights under such plans, (including accelerated vesting, if any, of awards granted to EXECUTIVE under AMERIGO ENERGY's stock option plan), accrued vacation pay and any appropriate business expenses incurred by EXECUTIVE in connection with his duties hereunder, all to the date of termination. Thereafter, EXECUTIVE will be retained as an advisor and consultant during the Advisory Period in accordance with Paragraph 1.2. 8.3 Voluntary Termination. In the event of a Voluntary Termination, EXECUTIVE shall promptly be paid all accrued salary, bonus compensation to extent earned, vested deferred compensation (other than pension or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of AMERIGO ENERGY in which EXECUTIVE is a participant to the full extent of EXECUTIVE's rights under such plans, accrued vacation pay and any appropriate business expenses incurred by EXECUTIVE in connection with his duties hereunder, all to the date of termination. Thereafter, EXECUTIVE will be retained as an advisor and consultant during the Advisory Period in accordance with Paragraph 1.2. 8.4 Termination Upon A Change of Control. In the event of a Termination Upon A Change of Control, EXECUTIVE shall promptly be paid all accrued salary, bonus compensation to extent earned, vested deferred compensation (other than pension or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of AMERIGO ENERGY in which EXECUTIVE is a participant to the full extent of EXECUTIVE's rights under such plans, accrued vacation pay and any appropriate business expenses incurred by EXECUTIVE in connection with his duties hereunder, all to the date of termination. Thereafter, EXECUTIVE will be retained as an advisor and consultant during the Advisory Period in accordance with Paragraph 1.2. 8.5 Notice of Termination. AMERIGO ENERGY may effect a termination of this Agreement pursuant to the provisions of this Section upon giving 30 days written notice to EXECUTIVE of such termination. EXECUTIVE may effect a termination of this Agreement pursuant to the provisions of this Section upon giving 30 days written notice to AMERIGO ENERGY of such termination. SECTION 9. CONFIDENTIALITY. EXECUTIVE acknowledges that he will develop and be exposed to information that is or will be confidential and proprietary to the AMERIGO ENERGY. The information includes oil and gas prospects, engineering and geological information, exploration and development plans, and other intangible information. Such information shall be deemed confidential to the extent not generally known within the trade. EXECUTIVE agrees to make use of such information only in the performance of his duties under this Agreement, to maintain such information in confidence and to disclose the information only to persons with a need to know. SECTION 10. MISCELLANEOUS PROVISIONS. 10.1 WAIVER. AMERIGO ENERGY's waiver of the EXECUTIVE's breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by the EXECUTIVE. EXECUTIVE's waiver of AMERIGO ENERGY'S breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by AMERIGO ENERGY. 10.2 NOTICES. Any notices permitted or required under this Agreement shall be deemed given upon the date of personal delivery or forty-eight (48) hours after deposit in the United States mail, postage fully prepaid, return receipt requested, addressed to AMERIGO ENERGY at: AMERIGO ENERGY INC 2580 Anthem Village Drive Henderson, NV 89052 addressed to EXECUTIVE at: JASON GRIFFITH 2580 Anthem Village Drive Henderson, NV 89052 or at any other address as any party may, from time to time, designate by notice given in compliance with this Section. 10.3 LAW GOVERNING. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada. 10.4 TITLES AND CAPTIONS. All section titles or captions contained in this Agreement are for convenience only and shall not be deemed part of the context nor effect the interpretation of this Agreement. 10.5 ENTIRE AGREEMENT. This Agreement contains the entire understanding between and among the parties and supersedes any prior understandings and agreements among them respecting the subject matter of this Agreement. 10.6 NON-TRANSFERABILITY. Neither EXECUTIVE, his wife, nor their estates shall have any right to commute, anticipate, encumber, or dispose of any payment hereunder, which payment and the rights thereto are expressly declared nonassignable and nontransferable, except as other wise specifically provided herein. 10.7 AGREEMENT BINDING. This Agreement shall inure to the benefit of and be binding upon AMERIGO ENERGY, its successors and assigns, including, without limitations, any persons, partnership, company or corporation which may acquire substantially all of AMERIGO ENERGY'S assets or business or with or into which AMERIGO ENERGY may be liquidated, consolidated, merged or otherwise combined, and shall inure to the benefit of and be binding upon EXECUTIVE, his heirs, distributees and personal representatives. If payments become payable to the surviving widow of EXECUTIVE and he shall thereafter die prior to September 15, 2 such payments shall nevertheless continue to be made to his estate until such date. 10.8 COMPUTATION OF TIME. In computing any period of time pursuant to this Agreement, the day of the act, event or default from which the designated period of time begins to run shall be included, unless it is a Saturday, Sunday, or a legal holiday, in which event the period shall begin to run on the next day which is not a Saturday, Sunday, or legal holiday, in which event the period shall run until the end of the next day thereafter which is not a Saturday, Sunday, or legal holiday. 10.9 PRONOUNS AND PLURALS. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular, or plural as the identity of the person or persons may require. 10.10 ARBITRATION. If at any time during the term of this Agreement any dispute, difference, or disagreement shall arise upon or in respect of the Agreement, and the meaning and construction hereof, every such dispute, difference, and disagreement shall be referred to a single arbiter agreed upon by the parties, or if no single arbiter can be agreed upon, an arbiter or arbiters shall be selected in accordance with the rules of the American Arbitration Association and such dispute, difference, or disagreement shall be settled by arbitration in accordance with the then prevailing commercial rules of the American Arbitration Association, and judgment upon the award rendered by the arbiter may be entered in any court having jurisdiction thereof. 10.11 PRESUMPTION. This Agreement or any section thereof shall not be construed against any party due to the fact that said Agreement or any section thereof was drafted by said party. 10.12 FURTHER ACTION. The parties hereto shall execute and deliver all documents, provide all information and take or forbear from all such action as may be necessary or appropriate to achieve the purposes of the Agreement. 10.13 PARTIES IN INTEREST. Nothing herein shall be construed to be to the benefit of any third party, nor is it intended that any provision shall be for the benefit of any third party. 10.14 SEVERABILITY. If any provision of this Agreement, or the application of such provision to any person or circumstance, shall be held invalid, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby, and shall remain in full force and effect. AMERIGO ENERGY, INC. JASON F. GRIFFITH By: /s/ Jason F. Griffith By: /s/ Jason F. Griffith ----------------------------- -------------------------- Jason F. Griffith An individual Chief Executive Officer and Director Dated: January 4, 2013 EX-101.INS 6 agoe-20121231.xml 10-K 2012-12-31 false AMERIGO ENERGY, INC. 0000278165 --12-31 241248 Smaller Reporting Company Yes No No 2012 FY 24124824 55 16 55 16 950 950 950 950 1005 966 38087 39604 138655 18215 16077 16077 108000 36000 36571 35591 120000 120000 457390 265487 457390 265487 500 500 24124 25524 15441512 15440612 -15922521 -15731157 -456385 -264521 1005 966 0.001 0.001 25000000 25000000 500000 0.001 0.001 100000000 100000000 25524824 22814331 500000 33356 500 14608105 -15429712 -787750 9141216 9141 459739 468880 2000000 2000 78000 80000 69277 70 70 -8500000 -8500 8500 220723 220723 55000 55000 -10543 10543 2 1 -301445 -301445 25524824 500000 25524 500 15440612 -15731157 -264521 100000 100 900 1000 -1500000 -1500 -1500 -191364 -191364 24124824 500000 24124 500 15441512 -15922521 -456385 921 23352 327 13431 1248 36782 671 24041 4635 14848 186326 300472 1220 1564 191632 342145 -190384 -305363 -980 -3065 -157 1397 5742 -980 3917 -191364 -301445 0 0 25099824 23727708 -191364 -301445 150185 1000 433348 -5742 2784 3065 12416 -1517 -94590 -183035 121420 -22796 72000 5455 -1 1539 -356 -1500 -1500 39 -356 372 55 16 1000 -8099 <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Amerigo Energy, Inc., a Delaware corporation (&quot;AGOE&quot; or the &quot;Company&quot;), formerly named Strategic Gaming Investments, Inc., was incorporated in 1973. Prior to 2008, the Company was involved in various businesses, none of which were successful. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>In August of 2008, our Board of Directors voted to get approval from the shareholders of the Company for a name change from Strategic Gaming Investments, Inc. to Amerigo Energy, Inc. The company received the approval from a majority of its stockholders and filed the amendment to its Articles of Incorporation with the State of Delaware. The name change became effective by the State of Delaware on August 26, 2008. The Company also requested a new stock symbol as a result of the name change. Our new trading symbol is &quot;AGOE&quot;.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The Amerigo Energy&#146;s business plan included developing oil and gas reserves while increasing the production rate base and cash flow. The plan was to continue acquiring oil and gas leases for drilling and to take advantage of other opportunities and strategic alliances. Due to declines in production on the oil leases the company had an interest in the company has been forced to reconsider its position in the oil industry. In 2011, the company began an aggressive approach to reduce the debt on the company&#146;s books as well as looking to diversify the investment holdings, while still maintaining limited interest in oil leases. The company is aggressively looking for potential oil leases to acquire as well as businesses which will fit with the company's strategy.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Our wholly-owned subsidiary, Amerigo, Inc., incorporated in Nevada on January 11, 2008, holds certain assets, including a minority interest in an oil lease.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>PRINCIPLES OF CONSOLIDATION</b></p> <p style='margin-top:11.25pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;margin-top:0in'>&nbsp;</p> <p style='margin-top:11.25pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;margin-top:0in'>The consolidated financial statements include the combined accounts of Amerigo, Inc., a Nevada Corporation. All material intercompany transactions and accounts have been eliminated in consolidation.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>CASH AND CASH EQUIVALENTS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Cash and cash equivalents consist of highly liquid investments with maturities of three months or less when purchased.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>USE OF ESTIMATES</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>COMPREHENSIVE INCOME</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>FASB Accounting Standard Codification Topic 220-10, &#147;Comprehensive Income&#148; (&#147;ASC 220-10&quot;), requires that total comprehensive income be reported in the financial statements. ASC 220-10 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements. It requires (a) classification of the components of other comprehensive income by their nature in a financial statement and (b) the display of the accumulated balance of the other comprehensive income separate from retained earnings and additional paid-in capital in the equity section of a statement of financial position. The Company&#146;s financial statements do not include any of the components of other comprehensive income during the year ended December 31, 2012 and 2011.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>FAIR VALUE OF FINANCIAL INSTRUMENTS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>PROPERTY AND EQUIPMENT</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Depreciation is computed primarily on the straight-line method for financial statements purposes over the following estimated useful lives:</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr style='height:25.3pt'> <td width="295" valign="bottom" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt;height:25.3pt'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font><b>Category</b></p> </td> <td width="295" valign="bottom" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt;height:25.3pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b>Estimated</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b>Life</b></p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Office building</p> </td> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>20 years</p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Vehicles</p> </td> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>7 years</p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Equipment</p> </td> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>7 years</p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Leasehold Improvements</p> </td> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>7 years</p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Furniture and Fixtures</p> </td> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>5 years</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>All assets are booked at historical cost. Management reviews on an annual basis the book value, along with the prospective dismantlement, restoration, and abandonment costs and estimate residual value for the assets, in comparison to the carrying values on the financial statements. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>OIL AND GAS PRODUCING ACTIVITIES</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The Company uses the successful efforts method of accounting for its oil and natural gas properties. Exploration costs such as exploratory geological and geophysical costs and delay rentals are charged against earnings as incurred The costs to acquire, drill and equip exploratory wells are capitalized pending determinations of whether development reserves can be attributed to the Company&#146;s interests as a result of drilling the well. If management determines that commercial quantities of oil and natural gas have not been discovered, costs associated with exploratory wells are charged to exploration expense. Costs to acquire mineral interests, to drill and equip development wells, to drill and equip exploratory wells that find development reserves, and related costs to plug and abandon wells and costs of site restoration are capitalized.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Depreciation, depletion and amortization (&#147;DD&amp;A&#148;) of oil and gas properties is computed using the unit-of-production method based on recoverable reserves as estimated by the Company&#146;s independent reservoir engineers. Capitalized acquisition costs are depleted based on total estimated proved developed and proved undeveloped reserve quantities. Capitalized costs to drill and equip wells are depreciated and amortized based on total estimated proved developed reserve quantities. Investments in Exploratory properties are not amortized until proved reserves associated with the prospects can be determined or until impairment occurs. Oil and natural gas properties are periodically assessed for impairment. If the unamortized capitalized costs of proved properties are in excess of estimated undiscounted future cash flows before income taxes, the property is impaired. Estimated future cash flows are determined using management&#146;s best estimates and may be calculated using prices consistent with management expectations for the Company&#146;s future oil and natural gas sales. Exploratory oil and natural gas properties are also periodically assessed for impairment, and a valuation allowance is provided if impairment is indicated. Impairment costs are included in exploration expense. Costs of expired or abandoned leases are charged against the valuation allowance. Costs of properties that become productive are transferred to proved oil and natural gas properties.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Exploratory oil and gas properties that are individually significant are periodically assessed for impairment of value and a loss is recognized at the time of impairment by providing an impairment allowance. Other Exploratory properties are amortized based on the Company&#146;s experience of successful drilling and average holding period. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Capitalized costs of producing oil and gas properties, after considering estimated residual salvage values, are depreciated and depleted by the unit-of-production method. Support equipment and other property and equipment are depreciated over their estimated useful lives.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation, depletion, and amortization with a resulting gain or loss recognized in income.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>On the sale of an entire interest in an Exploratory property for cash or cash equivalent, gain or loss on the sale is recognized, taking into consideration the amount of any recorded impairment if the property has been assessed individually. If a partial interest in an Exploratory property is sold, the amount received is treated as a reduction of the cost of the interest retained. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Pursuant to ASC 932-235-50-1, the following disclosures for exploratory activity are made.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>a. The amount of capitalized exploratory well costs that is pending the determination of proved reserves. An entity also shall separately disclose for each annual period that an income statement is presented changes in those capitalized exploratory well costs resulting from all of the following:</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>1. Additions to capitalized exploratory well costs that are pending the determination of proved reserves -</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>2. Capitalized exploratory well costs that were reclassified to wells, equipment, and facilities based on the determination of proved reserves</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>3. Capitalized exploratory well costs that were charged to expense.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Management has assessed this for the company and it is not relevant or applicable to our operations.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>b. The amount of exploratory well costs that have been capitalized for a period of greater than one year after the completion of drilling at the most recent&#160;&#160; balance sheet date and the number of projects for which those costs relate.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Additionally, for exploratory well costs that have been capitalized for&#160;&#160; periods greater than one year at the most recent balance sheet date, an entity shall provide an aging of those amounts by year, or by using a range of years, and the number of projects to which those costs relate.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Management has assessed this for the company and it is not relevant or applicable to our operations.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>c. For exploratory well costs that continue to be capitalized for more than one year after the completion of drilling at the most recent balance sheet date, a description of the projects and the activities that the entity has undertaken to date in order to evaluate the reserves and the projects, and&#160;&#160; the remaining activities required to classify the associated reserves as&#160; proved. Management has assessed this for the company and it is not relevant or applicable to our operations.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>ASSET RETIREMENT OBLIGATIONS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>In accordance with accounting standards for asset retirement obligations (ASC 410), the Company records the fair value of a liability for an asset retirement obligation (ARO) when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. No ARO&#146;s associated with legal obligations to retire oil and gas properties have been recognized, as indeterminate settlement dates for the asset retirements prevent estimation of the fair value of the associated ARO. The Company performs periodic reviews of its oil and gas properties long-lived assets for any changes in facts and circumstances that might require recognition of a retirement obligation. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>REVENUE RECOGNITION</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Oil, gas and natural gas liquids revenues are recognized when the products are sold to a purchaser at a fixed or determinable price, delivery has occurred and title has transferred, and collection of the revenue is reasonably assured. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>CONCENTRATIONS OF CREDIT RISK</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counter parties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions described below.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The Company operates in one primary segment, the oil and gas industry. The Company's customers are located within the United States of America. Financial instruments that subject the Company to credit risk consist principally of oil and gas sales which are based on a short-term purchase contracts from Enterprise Crude Oil (US) Company and various other gatherers in the area, with related accounts receivable subject to credit risk.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>ACCOUNTS RECEIVABLE</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. Changes in the valuation allowance have not been material to the financial statements and at December 31, 2012 and December 31, 2011; the Company&#146;s financial statements do not include an allowance for doubtful accounts because management believes that no allowance is required at those dates. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><u>Fair value of financial instruments</u></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2012 and 20111. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Level 1: The preferred inputs to valuation efforts are &quot;quoted prices in active markets for identical assets or liabilities,&quot; with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as &quot;unobservable,&quot; and limits their use by saying they &quot;shall be used to measure fair value to the extent that observable inputs are not available.&quot; This category allows &quot;for situations in which there is little, if any, market activity for the asset or liability at the measurement date&quot;. Earlier in the standard, FASB explains that &quot;observable inputs&quot; are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>RECLASSIFICATIONS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on the results of operations or stockholders&#146; equity.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>NET LOSS PER COMMON SHARE</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>FASB Accounting Standards Codification Topic 260-10, &#147;Earnings per Share&#148;, requires presentation of &quot;basic&quot; and &quot;diluted&quot; earnings per share on the face of the statements of operations for all entities with complex capital structures. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti- dilutive effect on diluted earnings per share are excluded from the calculation.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>INCOME TAXES</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The Company accounts for its income taxes in accordance with FASB Codification Topic 740-10 (&#147;ASC 740-10&#148;), which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Management feels the Company will have a net operating loss carryover to be used for future years. Such losses may not be fully deductible due to the significant amounts of non-cash service costs. The Company has established a valuation allowance for the full tax benefit of the operating loss carryovers due to the uncertainty regarding realization.</p> <p style='margin-top:11.25pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;margin-top:0in'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>STOCK-BASED COMPENSATION</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The Company has adopted FASB Accounting Standards Codification Topic 718-10, &#147;Compensation- Stock Compensation&#148; (&#147;ASC 718-10&#148;) which requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees and directors. Under the fair value recognition provisions of ASC 718-10, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Determining the fair value of stock-based awards at the grant date requires considerable judgment, including estimating the expected future volatility of our stock price, estimating the expected length of term of granted options and selecting the appropriate risk-free rate. There is no established trading market for our stock.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>DIVIDENDS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The Company has not yet adopted any policy regarding payment of dividends.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>GOING CONCERN</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company has incurred recurring losses, has used significant cash in support of its operating activities and, based upon current operating levels, requires additional capital or significant reconfiguration of its operations to sustain its operations for the foreseeable future. These factors, among others, may indicate that the Company will be unable to continue as a going concern.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate sufficient cash flow to meet obligations on a timely basis and ultimately to attain profitability. The Company has obtained working capital through equity offerings and management plans to obtain additional funding through equity or debt financings in the future. There is no assurance that the Company will be successful in its efforts to raise additional working capital or achieve profitable operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>RECENT ACCOUNTING PRONOUNCEMENTS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The company has evaluated the recent pronouncements and believes that none of them will have a material effect on the company&#146;s financial statements.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>NOTE 3 - ACQUISITION AND DISPOSAL OF ASSETS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>During the year ended December 31, 2011:</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>In November 2011, the company sold 50% of its interest in the Phillips B. lease to a third party for $2,445. On the same date the company used the other 50% of its interest to settle $2,445 in debts to Bullfrog Management (an entity controlled by a prior officer). </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>On March 1, 2011 the company settled $150,361 in debt on the company books with oil interest held by the company in leases in Oklahoma.&#160; </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>On September 1, 2011 the Company settled $97,723 in debt on the company books with the company&#146;s interest in the West Burk lease and the Richard Lease. These leases had previously been written off and had no value on the company&#146;s books. The transaction was recorded as additional paid in capital contribution. </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>NOTE 4 - NOTES PAYABLE - RELATED PARTY</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>As of December 31, 2012 and 2011, there are $0 and $0 notes payable outstanding related to the purchase of the Justice lease. During 2011, these notes were settled with 4,116,796 shares of stock. </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>NOTE 5 - STOCKHOLDERS' EQUITY</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>PREFERRED STOCK </b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>As of December 31, 2012, there were 25,000,000 preferred shares authorized and 500,000 preferred shares outstanding. The board of directors had previously set the voting rights for the preferred stock at 1 share of preferred to 250 common shares. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>There are 500,000 shares of preferred stock issued and outstanding at December 31, 2012 and 2011, all of which are owned by the current CEO, These shares had previously been issued in satisfaction of salaries payable, totaling $250,000 to the current CEO and prior officers.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>During the period ending June 30, 2012, the CEO of the company acquired in a private transaction the shares of preferred A stock. As of December 31, 2012, the CEO owns 500,000 shares of preferred stock, which make up 100% of the preferred stock issued and outstanding.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>COMMON STOCK</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>As of December 31, 2012, there were 100,000,000 shares authorized and there were 24,124,824 shares of common stock outstanding.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>During 2011, the company issued 9,141,216 shares of company stock to settle $646,880 in debts on the company&#146;s books. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>During 2011 the company entered into a settlement agreement with a company we had purchased oil interest from. As part of this agreement the company returned 8,500,000 shares of stock that were part of the purchase agreement signed in 2008. These shares were cancelled and are no longer outstanding.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The company also issued 69,277 shares of stock for previously purchased oil interest at a value of $69,277. During 2011 the company realized that the previous transfer agent never issued the shares as part of an agreement that was signed in 2009. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>During 2011, 2,000,000 shares were issued for consulting services in lieu of cash, these shares were valued at $80,000.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>During the quarter ended March 31, 2012, the entered into a buyback agreement with a shareholder. The company agreed to buy back 1,500,000 shares for a purchase price of $1,500. These shares were cancelled with the transfer agent and are no longer outstanding.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>During the year ended December 31, 2012, the company issued 100,000 shares of common stock to a consultant for services rendered and valued at $1,000.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>There were no other shares issued during the year 2012.&#160; The balance at December 31, 2012 is 24,124,824 common shares outstanding and 500,000 preferred shares. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>Warrants</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>During the 4th quarter of 2011, the company issued 10,000,000 warrants of the company stock with an exercise price of $0.01 to an entity the CEO has an ownership in. The company used the Black Scholes option pricing model to calculate the value of $55,000 based on a 0% dividend yield, 669% expected volatility, 0.95% discounts bond rate and a 7 year term. While the warrants were valued at $55,000, a total of $142,859 was settled with such warrants, thus $87,859 was considered forgiveness of debt-related party, treated as additional paid in capital.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><u>Stock options/warrants</u> - The following table summarizes information about options and warrants granted during the years ended December 31, 2012 and 2011:</p> <p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%'> <tr style='height:48.15pt'> <td width="54%" valign="bottom" style='width:54.02%;background:white;padding:0in 0in 1.5pt 0in;height:48.15pt'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font></p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0in 0in 1.5pt 0in;height:48.15pt'></td> <td width="20%" colspan="2" valign="bottom" style='width:20.16%;border:none;border-bottom:solid black 1.5pt;background:white;padding:0;height:48.15pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Number of</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Shares</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0in 0in 1.5pt 0in;height:48.15pt'></td> <td width="21%" colspan="2" valign="bottom" style='width:21.22%;border:none;border-bottom:solid black 1.5pt;background:white;padding:0;height:48.15pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Weighted</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Average</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Exercise</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Price</p> </td> <td valign="bottom" style='background:white;padding:0in 0in 1.5pt 0in;height:48.15pt'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:#DBE5F1;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Balance, December 31, 2010</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:#DBE5F1;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>$</p> </td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:#DBE5F1;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants granted</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>10,000,000</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.01</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:white;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:#DBE5F1;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants expired</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:#DBE5F1;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants cancelled, forfeited</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:white;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants exercised</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'></td> <td width="2%" valign="bottom" style='width:2.12%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'></td> <td width="3%" valign="bottom" style='width:3.18%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'></td> <td width="0%" valign="bottom" style='width:.36%;background:white;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:#DBE5F1;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Balance, December 31, 2011</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:#DBE5F1;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants granted</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:white;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:#DBE5F1;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants expired</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:#DBE5F1;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants cancelled, forfeited</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:white;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants exercised</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'></td> <td width="2%" valign="bottom" style='width:2.12%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'></td> <td width="3%" valign="bottom" style='width:3.18%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'></td> <td width="0%" valign="bottom" style='width:.36%;background:white;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:#DBE5F1;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Balance, December 31, 2012</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>10,000,000</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.01</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:#DBE5F1;padding:0'></td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>NOTE 6 - LITIGATION</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>In 2010, Amerigo signed an agreement with the individual to acquire his interest in certain oil and gas leases for $120,000, payable at $10,000 per month starting April 1, 2010, with subsequent payments due on the 1st of each month. The term of the note was One (1) year. Upon final payment and settlement of the note, the individual will return all shares of stock (with properly executed stock power) that he individually holds of Granite Energy and Amerigo Energy, along with his entire interest in the Kunkel lease, which is 3.20% working interest (2.54% net revenue interest), as well as his ownership in what is now as the 4 Well Program (0.325% working interest, 0.2438% net revenue interest). During 2010, the individual sold his interest in the Kunkel lease. The company has not kept current with the agreement and the individual&#146;s promissory note has now been escalated to a judgment against the company. As of the date of this filing, terms of settling the judgment have not been resolved despite the efforts of the judgment holder to collect on the amount owed. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>As of December 31, 2012, other than discussed above that occurred subsequent to year end, the Company is not a party to any pending material legal proceeding. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against the Company. To the knowledge of management, no director, executive officer or affiliate of the Company, any owner of record or beneficially of more than five percent of the Company's Common Stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>NOTE 7 - RELATED PARTY TRANSACTIONS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The Company has a consulting agreement with a firm controlled by the Company's Chief Financial Officer for a fee of $3,500 per month. The consulting firm has been engaged to assist in organizing and completing the process of filings with the Securities and Exchange Commission and other tasks. As of December 31, 2012 and 2011 the company owed the firm $18,215, and $138,655, respectively. Prior to December 31, 2011 $200,000 was settled with stock and warrants in lieu of cash payment (See Note 5).</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>As of December 31, 2012, the Company&#146;s CEO is owed $72,000 in accrued, but not paid, salary.&#160; In January 2013, the CEO entered into a compensation agreement as discussed in Note 10 Subsequent events. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The Company had an operating agreement with SWJN Oil Company and SJ OK Oil Company to operate the company&#146;s oil and gas leases, the current CEO had a minority interest in these entities.&#160; The fee charged by these companies to operate these leases is the greater of $1,000 per month or 5% of net oil sales. During 2011 the CEO sold his interest in SJ OK to an outside party and subsequent to year end the CEO relinquished his interest in SWJN to an unrelated third party as well. The total fees Amerigo paid to these entities during 2012 and 2011 was $0 and $652.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The company also has a lease agreement with AVES. The company rents an office space from AVES for $1,098 per month. AVES and the building are owned partially by our current CEO Jason F. Griffith. During June 2011, AVES agreed to waive the rent to the office space the company uses until the operations increase. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Other Material Transactions. With the exception of the above mentioned transactions, there have been no material transactions, series of similar transactions or currently proposed transactions to which the Company or any officer, director, their immediate families or other beneficial owner is a party or has a material interest in which the amount exceeds $50,000. </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>NOTE 8 - INCOME TAX</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets as of December 31, 2012 and 2011 are as follows:</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><font style='display:none'>&#160;</font></p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse'> <tr style='height:12.75pt'> <td width="262" valign="bottom" style='width:196.6pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font>Deferred tax assets:</p> </td> <td width="73" valign="bottom" style='width:54.8pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b><u>2012</u></b></p> </td> <td width="73" valign="bottom" style='width:54.8pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b><u>2011</u></b></p> </td> </tr> <tr style='height:12.75pt'> <td width="262" valign="bottom" style='width:196.6pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; Net operating loss carryforwards</p> </td> <td width="73" valign="bottom" style='width:54.8pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>5,518,182</p> </td> <td width="73" valign="bottom" style='width:54.8pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>5,246,818</p> </td> </tr> <tr style='height:12.75pt'> <td width="262" valign="bottom" style='width:196.6pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; Stock issued for services</p> </td> <td width="73" valign="bottom" style='width:54.8pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>1,000</p> </td> <td width="73" valign="bottom" style='width:54.8pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>80,000</p> </td> </tr> <tr style='height:13.5pt'> <td width="262" valign="bottom" style='width:196.6pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; Impairment Loss</p> </td> <td width="73" valign="bottom" style='width:54.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="73" valign="bottom" style='width:54.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> </tr> <tr style='height:12.75pt'> <td width="262" valign="bottom" style='width:196.6pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Net deferred tax asset</p> </td> <td width="73" valign="bottom" style='width:54.8pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>5,519,182</p> </td> <td width="73" valign="bottom" style='width:54.8pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>5,326,818</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>A reconciliation of income taxes computed at the statutory rate to the income tax amount recorded as follows:</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse'> <tr style='height:12.75pt'> <td width="251" valign="bottom" style='width:188.0pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font></p> </td> <td width="83" valign="bottom" style='width:62.15pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b><u>2012</u></b></p> </td> <td width="83" valign="bottom" style='width:62.15pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b><u>2011</u></b></p> </td> </tr> <tr style='height:12.75pt'> <td width="251" valign="bottom" style='width:188.0pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Tax at statutory rate (35%)</p> </td> <td width="83" valign="bottom" style='width:62.15pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>1,931,714</p> </td> <td width="83" valign="bottom" style='width:62.15pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>1,864,386</p> </td> </tr> <tr style='height:13.5pt'> <td width="251" valign="bottom" style='width:188.0pt;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Increase in valuation allowance</p> </td> <td width="83" valign="bottom" style='width:62.15pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(1,931,714)</p> </td> <td width="83" valign="bottom" style='width:62.15pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(1,864,386)</p> </td> </tr> <tr style='height:12.75pt'> <td width="251" valign="bottom" style='width:188.0pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Net deferred tax asset</p> </td> <td width="83" valign="bottom" style='width:62.15pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="83" valign="bottom" style='width:62.15pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Reconciliation between the statutory rate and the effective tax rate is as follows at December 31, 2011 and 2010:</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse'> <tr style='height:12.75pt'> <td width="251" valign="bottom" style='width:188.0pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font></p> </td> <td width="67" valign="bottom" style='width:50.0pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b><u>2012</u></b></p> </td> <td width="67" valign="bottom" style='width:50.0pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b><u>2011</u></b></p> </td> </tr> <tr style='height:13.5pt'> <td width="251" valign="bottom" style='width:188.0pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Federal statutory tax rate</p> </td> <td width="67" valign="bottom" style='width:50.0pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(35)%</p> </td> <td width="67" valign="bottom" style='width:50.0pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(35)%</p> </td> </tr> <tr style='height:12.75pt'> <td width="251" valign="bottom" style='width:188.0pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Permanent difference and other</p> </td> <td width="67" valign="bottom" style='width:50.0pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>35%</p> </td> <td width="67" valign="bottom" style='width:50.0pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>35%</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>At December 31, 2012, the Company had federal net operating loss (&quot;NOL&quot;) carry forwards of approximately $5,519,182.&#160; Federal NOLs could, if unused, begin to expire in 2021.&#160; The company has not filed its corporate tax return for the 2011 or 2012 tax year so the deductibility of the NOL is uncertain.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The valuation allowance for deferred tax assets as of December 31, 2012 was $5,519,182.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b>NOTE 9 - ENVIRONMENTAL MATTERS</b></p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Various federal and state authorities have authority to regulate the exploration and developments of oil and gas and mineral properties with respect to environmental matters. Such laws and regulations, presently in effect or as hereafter promulgated, may significantly affect the cost of its current oil production and any exploration and development activities undertaken by the Company and could result in loss or liability to the Company in the event that any such operations are subsequently deemed inadequate for purposes of any such law or regulation.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>NOTE 10 - SUBSEQUENT EVENTS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The Company has evaluated subsequent events through March 31, 2013, the date which the financial statements were available to be issued. The Company has determined that, other than disclosed below, there were no other events that warranted disclosure or recognition in the financial statements.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>In January 2013, the company entered into an employment agreement with the CEO and ended the prior consulting agreements with him. The terms of his compensation agreement are $180,000 per year and should the company not have the funds to cover the amount owed, the amount will accrue interest at 8% per year.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>In February 2013, the company settled $26,081 worth of debt for 26,081 common shares, valued at $1.00 per share.&#160; The CEO of the company was owed $14,263 of this debt. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>In March 2013, the company announced the acquisition of the license agreement of Le Flav Spirits for the promotion of a liquor line featuring the celebrity Flavor Flav. The company issued 360,000 shares of common stock in conjunction with this acquisition. The company also issued warrants for the purchase of two million (2,000,000) shares of common stock at $1.00 per shares, with a 5 year exercise period, vested equally at 500,000 shares vested upon every 5,000 cases sold of vodka.&#160; The promissory note is to be settled for $1 per bottle for the first 2,000,000 bottles sold.&#160; This will be treated as a convertible promissory note, convertible at $1.00 per share (at the option of the note holder).&#160; Promissory note bears interest at 8% per year.&#160; The Company has the ability to make principal and interest payments above what is earned from the 'per bottle' during the term.&#160; Unless otherwise satisfied, the balance of the promissory note is due by March 1, 2016. The CEO had a minority interest in the entity from which the license agreement was purchased.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>On March 22, 2013, the Company executed a line of credit agreement with a third party for $100,000 to be used as purchase order financing for the production of liquor brands.&#160; The line of credit bears interest at twenty percent (20%) on the advanced amount.&#160; In consideration for this line of credit, the company issued warrants for 300,000 shares of common stock at an exercise price of $1.00 per share, exercisable for five (5) years.&#160; The Company issued 3,000,000 shares of preferred stock as collateral which are being held in trust.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>PRINCIPLES OF CONSOLIDATION</b></p> <p style='margin-top:11.25pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;margin-top:0in'>&nbsp;</p> <p style='margin-top:11.25pt;margin-right:0in;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none;margin-top:0in'>The consolidated financial statements include the combined accounts of Amerigo, Inc., a Nevada Corporation. All material intercompany transactions and accounts have been eliminated in consolidation.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>CASH AND CASH EQUIVALENTS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Cash and cash equivalents consist of highly liquid investments with maturities of three months or less when purchased.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>USE OF ESTIMATES</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>COMPREHENSIVE INCOME</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>FASB Accounting Standard Codification Topic 220-10, &#147;Comprehensive Income&#148; (&#147;ASC 220-10&quot;), requires that total comprehensive income be reported in the financial statements. ASC 220-10 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements. It requires (a) classification of the components of other comprehensive income by their nature in a financial statement and (b) the display of the accumulated balance of the other comprehensive income separate from retained earnings and additional paid-in capital in the equity section of a statement of financial position. The Company&#146;s financial statements do not include any of the components of other comprehensive income during the year ended December 31, 2012 and 2011.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>FAIR VALUE OF FINANCIAL INSTRUMENTS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>PROPERTY AND EQUIPMENT</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Depreciation is computed primarily on the straight-line method for financial statements purposes over the following estimated useful lives:</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr style='height:25.3pt'> <td width="295" valign="bottom" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt;height:25.3pt'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font><b>Category</b></p> </td> <td width="295" valign="bottom" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt;height:25.3pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b>Estimated</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b>Life</b></p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Office building</p> </td> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>20 years</p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Vehicles</p> </td> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>7 years</p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Equipment</p> </td> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>7 years</p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Leasehold Improvements</p> </td> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>7 years</p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Furniture and Fixtures</p> </td> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>5 years</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>All assets are booked at historical cost. Management reviews on an annual basis the book value, along with the prospective dismantlement, restoration, and abandonment costs and estimate residual value for the assets, in comparison to the carrying values on the financial statements. </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>OIL AND GAS PRODUCING ACTIVITIES</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The Company uses the successful efforts method of accounting for its oil and natural gas properties. Exploration costs such as exploratory geological and geophysical costs and delay rentals are charged against earnings as incurred The costs to acquire, drill and equip exploratory wells are capitalized pending determinations of whether development reserves can be attributed to the Company&#146;s interests as a result of drilling the well. If management determines that commercial quantities of oil and natural gas have not been discovered, costs associated with exploratory wells are charged to exploration expense. Costs to acquire mineral interests, to drill and equip development wells, to drill and equip exploratory wells that find development reserves, and related costs to plug and abandon wells and costs of site restoration are capitalized.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Depreciation, depletion and amortization (&#147;DD&amp;A&#148;) of oil and gas properties is computed using the unit-of-production method based on recoverable reserves as estimated by the Company&#146;s independent reservoir engineers. Capitalized acquisition costs are depleted based on total estimated proved developed and proved undeveloped reserve quantities. Capitalized costs to drill and equip wells are depreciated and amortized based on total estimated proved developed reserve quantities. Investments in Exploratory properties are not amortized until proved reserves associated with the prospects can be determined or until impairment occurs. Oil and natural gas properties are periodically assessed for impairment. If the unamortized capitalized costs of proved properties are in excess of estimated undiscounted future cash flows before income taxes, the property is impaired. Estimated future cash flows are determined using management&#146;s best estimates and may be calculated using prices consistent with management expectations for the Company&#146;s future oil and natural gas sales. Exploratory oil and natural gas properties are also periodically assessed for impairment, and a valuation allowance is provided if impairment is indicated. Impairment costs are included in exploration expense. Costs of expired or abandoned leases are charged against the valuation allowance. Costs of properties that become productive are transferred to proved oil and natural gas properties.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Exploratory oil and gas properties that are individually significant are periodically assessed for impairment of value and a loss is recognized at the time of impairment by providing an impairment allowance. Other Exploratory properties are amortized based on the Company&#146;s experience of successful drilling and average holding period. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Capitalized costs of producing oil and gas properties, after considering estimated residual salvage values, are depreciated and depleted by the unit-of-production method. Support equipment and other property and equipment are depreciated over their estimated useful lives.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation, depletion, and amortization with a resulting gain or loss recognized in income.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>On the sale of an entire interest in an Exploratory property for cash or cash equivalent, gain or loss on the sale is recognized, taking into consideration the amount of any recorded impairment if the property has been assessed individually. If a partial interest in an Exploratory property is sold, the amount received is treated as a reduction of the cost of the interest retained. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Pursuant to ASC 932-235-50-1, the following disclosures for exploratory activity are made.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>a. The amount of capitalized exploratory well costs that is pending the determination of proved reserves. An entity also shall separately disclose for each annual period that an income statement is presented changes in those capitalized exploratory well costs resulting from all of the following:</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>1. Additions to capitalized exploratory well costs that are pending the determination of proved reserves -</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>2. Capitalized exploratory well costs that were reclassified to wells, equipment, and facilities based on the determination of proved reserves</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>3. Capitalized exploratory well costs that were charged to expense.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Management has assessed this for the company and it is not relevant or applicable to our operations.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>b. The amount of exploratory well costs that have been capitalized for a period of greater than one year after the completion of drilling at the most recent&#160;&#160; balance sheet date and the number of projects for which those costs relate.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Additionally, for exploratory well costs that have been capitalized for&#160;&#160; periods greater than one year at the most recent balance sheet date, an entity shall provide an aging of those amounts by year, or by using a range of years, and the number of projects to which those costs relate.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Management has assessed this for the company and it is not relevant or applicable to our operations.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>c. For exploratory well costs that continue to be capitalized for more than one year after the completion of drilling at the most recent balance sheet date, a description of the projects and the activities that the entity has undertaken to date in order to evaluate the reserves and the projects, and&#160;&#160; the remaining activities required to classify the associated reserves as&#160; proved. Management has assessed this for the company and it is not relevant or applicable to our operations.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>ASSET RETIREMENT OBLIGATIONS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>In accordance with accounting standards for asset retirement obligations (ASC 410), the Company records the fair value of a liability for an asset retirement obligation (ARO) when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. No ARO&#146;s associated with legal obligations to retire oil and gas properties have been recognized, as indeterminate settlement dates for the asset retirements prevent estimation of the fair value of the associated ARO. The Company performs periodic reviews of its oil and gas properties long-lived assets for any changes in facts and circumstances that might require recognition of a retirement obligation. </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>REVENUE RECOGNITION</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Oil, gas and natural gas liquids revenues are recognized when the products are sold to a purchaser at a fixed or determinable price, delivery has occurred and title has transferred, and collection of the revenue is reasonably assured. </p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>CONCENTRATIONS OF CREDIT RISK</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counter parties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions described below.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The Company operates in one primary segment, the oil and gas industry. The Company's customers are located within the United States of America. Financial instruments that subject the Company to credit risk consist principally of oil and gas sales which are based on a short-term purchase contracts from Enterprise Crude Oil (US) Company and various other gatherers in the area, with related accounts receivable subject to credit risk.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>ACCOUNTS RECEIVABLE</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. Changes in the valuation allowance have not been material to the financial statements and at December 31, 2012 and December 31, 2011; the Company&#146;s financial statements do not include an allowance for doubtful accounts because management believes that no allowance is required at those dates. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><u>Fair value of financial instruments</u></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2012 and 20111. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Level 1: The preferred inputs to valuation efforts are &quot;quoted prices in active markets for identical assets or liabilities,&quot; with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as &quot;unobservable,&quot; and limits their use by saying they &quot;shall be used to measure fair value to the extent that observable inputs are not available.&quot; This category allows &quot;for situations in which there is little, if any, market activity for the asset or liability at the measurement date&quot;. Earlier in the standard, FASB explains that &quot;observable inputs&quot; are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><b>RECLASSIFICATIONS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on the results of operations or stockholders&#146; equity.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>NET LOSS PER COMMON SHARE</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>FASB Accounting Standards Codification Topic 260-10, &#147;Earnings per Share&#148;, requires presentation of &quot;basic&quot; and &quot;diluted&quot; earnings per share on the face of the statements of operations for all entities with complex capital structures. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti- dilutive effect on diluted earnings per share are excluded from the calculation.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>INCOME TAXES</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The Company accounts for its income taxes in accordance with FASB Codification Topic 740-10 (&#147;ASC 740-10&#148;), which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Management feels the Company will have a net operating loss carryover to be used for future years. Such losses may not be fully deductible due to the significant amounts of non-cash service costs. The Company has established a valuation allowance for the full tax benefit of the operating loss carryovers due to the uncertainty regarding realization.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>STOCK-BASED COMPENSATION</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The Company has adopted FASB Accounting Standards Codification Topic 718-10, &#147;Compensation- Stock Compensation&#148; (&#147;ASC 718-10&#148;) which requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees and directors. Under the fair value recognition provisions of ASC 718-10, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>Determining the fair value of stock-based awards at the grant date requires considerable judgment, including estimating the expected future volatility of our stock price, estimating the expected length of term of granted options and selecting the appropriate risk-free rate. There is no established trading market for our stock.</p> <!--egx--> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>DIVIDENDS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The Company has not yet adopted any policy regarding payment of dividends.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>GOING CONCERN</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company has incurred recurring losses, has used significant cash in support of its operating activities and, based upon current operating levels, requires additional capital or significant reconfiguration of its operations to sustain its operations for the foreseeable future. These factors, among others, may indicate that the Company will be unable to continue as a going concern.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate sufficient cash flow to meet obligations on a timely basis and ultimately to attain profitability. The Company has obtained working capital through equity offerings and management plans to obtain additional funding through equity or debt financings in the future. There is no assurance that the Company will be successful in its efforts to raise additional working capital or achieve profitable operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>RECENT ACCOUNTING PRONOUNCEMENTS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>The company has evaluated the recent pronouncements and believes that none of them will have a material effect on the company&#146;s financial statements.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr style='height:25.3pt'> <td width="295" valign="bottom" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt;height:25.3pt'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font><b>Category</b></p> </td> <td width="295" valign="bottom" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt;height:25.3pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b>Estimated</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b>Life</b></p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Office building</p> </td> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>20 years</p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Vehicles</p> </td> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>7 years</p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Equipment</p> </td> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>7 years</p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Leasehold Improvements</p> </td> <td width="295" valign="top" style='width:221.4pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>7 years</p> </td> </tr> <tr align="left"> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Furniture and Fixtures</p> </td> <td width="295" valign="top" style='width:221.4pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>5 years</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%'> <tr style='height:48.15pt'> <td width="54%" valign="bottom" style='width:54.02%;background:white;padding:0in 0in 1.5pt 0in;height:48.15pt'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font></p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0in 0in 1.5pt 0in;height:48.15pt'></td> <td width="20%" colspan="2" valign="bottom" style='width:20.16%;border:none;border-bottom:solid black 1.5pt;background:white;padding:0;height:48.15pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Number of</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Shares</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0in 0in 1.5pt 0in;height:48.15pt'></td> <td width="21%" colspan="2" valign="bottom" style='width:21.22%;border:none;border-bottom:solid black 1.5pt;background:white;padding:0;height:48.15pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Weighted</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Average</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Exercise</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Price</p> </td> <td valign="bottom" style='background:white;padding:0in 0in 1.5pt 0in;height:48.15pt'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:#DBE5F1;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Balance, December 31, 2010</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:#DBE5F1;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>$</p> </td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:#DBE5F1;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants granted</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>10,000,000</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.01</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:white;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:#DBE5F1;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants expired</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:#DBE5F1;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants cancelled, forfeited</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:white;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants exercised</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'></td> <td width="2%" valign="bottom" style='width:2.12%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'></td> <td width="3%" valign="bottom" style='width:3.18%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'></td> <td width="0%" valign="bottom" style='width:.36%;background:white;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:#DBE5F1;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Balance, December 31, 2011</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:#DBE5F1;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants granted</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:white;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:#DBE5F1;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants expired</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:#DBE5F1;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants cancelled, forfeited</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:white;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'> <p style='margin:0in;margin-bottom:.0001pt'>Options/warrants exercised</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'></td> <td width="2%" valign="bottom" style='width:2.12%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'></td> <td width="3%" valign="bottom" style='width:3.18%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;border:none;border-bottom:solid black 1.5pt;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:#DBE5F1;padding:0in 0in 1.5pt 0in'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:white;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:white;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:white;padding:0'></td> <td width="0%" valign="bottom" style='width:.36%;background:white;padding:0'></td> </tr> <tr align="left"> <td width="54%" valign="bottom" style='width:54.02%;background:#DBE5F1;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Balance, December 31, 2012</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>10,000,000</p> </td> <td width="2%" valign="bottom" style='width:2.12%;background:#DBE5F1;padding:0'></td> <td width="3%" valign="bottom" style='width:3.18%;background:#DBE5F1;padding:0'></td> <td width="18%" valign="bottom" style='width:18.02%;background:#DBE5F1;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.01</p> </td> <td width="0%" valign="bottom" style='width:.36%;background:#DBE5F1;padding:0'></td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><font style='display:none'>&#160;</font></p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse'> <tr style='height:12.75pt'> <td width="262" valign="bottom" style='width:196.6pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font>Deferred tax assets:</p> </td> <td width="73" valign="bottom" style='width:54.8pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b><u>2012</u></b></p> </td> <td width="73" valign="bottom" style='width:54.8pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b><u>2011</u></b></p> </td> </tr> <tr style='height:12.75pt'> <td width="262" valign="bottom" style='width:196.6pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; Net operating loss carryforwards</p> </td> <td width="73" valign="bottom" style='width:54.8pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>5,518,182</p> </td> <td width="73" valign="bottom" style='width:54.8pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>5,246,818</p> </td> </tr> <tr style='height:12.75pt'> <td width="262" valign="bottom" style='width:196.6pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; Stock issued for services</p> </td> <td width="73" valign="bottom" style='width:54.8pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>1,000</p> </td> <td width="73" valign="bottom" style='width:54.8pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>80,000</p> </td> </tr> <tr style='height:13.5pt'> <td width="262" valign="bottom" style='width:196.6pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>&#160; Impairment Loss</p> </td> <td width="73" valign="bottom" style='width:54.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> <td width="73" valign="bottom" style='width:54.8pt;border:none;border-bottom:solid windowtext 1.0pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>--</p> </td> </tr> <tr style='height:12.75pt'> <td width="262" valign="bottom" style='width:196.6pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Net deferred tax asset</p> </td> <td width="73" valign="bottom" style='width:54.8pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>5,519,182</p> </td> <td width="73" valign="bottom" style='width:54.8pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>5,326,818</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse'> <tr style='height:12.75pt'> <td width="251" valign="bottom" style='width:188.0pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font></p> </td> <td width="83" valign="bottom" style='width:62.15pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b><u>2012</u></b></p> </td> <td width="83" valign="bottom" style='width:62.15pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b><u>2011</u></b></p> </td> </tr> <tr style='height:12.75pt'> <td width="251" valign="bottom" style='width:188.0pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Tax at statutory rate (35%)</p> </td> <td width="83" valign="bottom" style='width:62.15pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>1,931,714</p> </td> <td width="83" valign="bottom" style='width:62.15pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>1,864,386</p> </td> </tr> <tr style='height:13.5pt'> <td width="251" valign="bottom" style='width:188.0pt;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Increase in valuation allowance</p> </td> <td width="83" valign="bottom" style='width:62.15pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(1,931,714)</p> </td> <td width="83" valign="bottom" style='width:62.15pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(1,864,386)</p> </td> </tr> <tr style='height:12.75pt'> <td width="251" valign="bottom" style='width:188.0pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Net deferred tax asset</p> </td> <td width="83" valign="bottom" style='width:62.15pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> <td width="83" valign="bottom" style='width:62.15pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>-</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&#160;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse'> <tr style='height:12.75pt'> <td width="251" valign="bottom" style='width:188.0pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'><font style='display:none'>.</font></p> </td> <td width="67" valign="bottom" style='width:50.0pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b><u>2012</u></b></p> </td> <td width="67" valign="bottom" style='width:50.0pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'><b><u>2011</u></b></p> </td> </tr> <tr style='height:13.5pt'> <td width="251" valign="bottom" style='width:188.0pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Federal statutory tax rate</p> </td> <td width="67" valign="bottom" style='width:50.0pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(35)%</p> </td> <td width="67" valign="bottom" style='width:50.0pt;background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;height:13.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>(35)%</p> </td> </tr> <tr style='height:12.75pt'> <td width="251" valign="bottom" style='width:188.0pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>Permanent difference and other</p> </td> <td 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Preferred stock, shares outstanding Preferred shares outstanding Preferred stock, par value Total current assets Total current assets ASSETS Entity Well-known Seasoned Issuer Line of credit agreement Line of credit agreement The Company executed a line of credit agreement with a third party to be used as purchase order financing Permanent difference and other Reconciliation between the statutory rate and the effective tax rate Value of Warrants granted Value of Warrants granted The company used the Black Scholes option pricing model to calculate the value of warrants granted Total stockholders' (deficit) Total stockholders' (deficit) Beginning Balance, amount Ending Balance, amount Accounts payable and accrued liabilities Statement {1} Statement Entity Public Float Warrants issued for asset acquisition, subsequent period Warrants issued for asset acquisition, subsequent period Number of warrants for common stock issued for acquisition of license agreement Common stock issued to settle debt Common stock issued to settle debt Number of shares of common stock issued to settle debts on the company's books. GOING CONCERN CASH AND CASH EQUIVALENTS Depletion, depreciation and amortization Total stockholders' deficit Common stock, shares authorized Document Type Weighted Average Exercise Price, Warrants Weighted Average Exercise Price, Warrants Weighted Average Exercise Price of warrants granted and outstanding Estimated Life, Leasehold Improvements Describes the periods of time over which an entity anticipates to receive utility from its property, plant and equipment (that is, the periods of time over which an entity allocates the initial cost of its property, plant and equipment). RECENT ACCOUNTING PRONOUNCEMENTS ENVIRONMENTAL MATTERS Changes in operating assets and liabilities: Net Loss Shares issued for previously purchased oil interest, value Equity Components Basic and diluted (loss) per common share Accounts payable - related party Net operating loss carry forwards Common stock cancelled, settlement agreement Common stock cancelled, settlement agreement Number of shares of common stock returned and cancelled as part of a settlement agreement Sale of interest in Phillips B. lease, debt settled The cash inflow resulting from the sale of an interest in a corporate lease, used to settle debts ASSET RETIREMENT OBLIGATIONS USE OF ESTIMATES Rounding error {1} Rounding error Increase / (Decrease) in accounts payable - related party Total other income (expenses) Total other income (expenses) Write-off of assets/Loss on sale of assets Additional paid-in capital Entity Voluntary Filers Common stock issued for asset acquisition, subsequent period Common stock issued for asset acquisition, subsequent period Number of shares of common stock issued for acquisition of license agreement CONCENTRATIONS OF CREDIT RISK HISTORY AND ORGANIZATION OF THE COMPANY Warrants issued Shares issued for previously purchased oil interest, shares Shares issued for services, value Rendered value of common stock issued for services Gain on Sale of Phillips B. Depreciation and amortization expense Rental income Total liabilities and stockholders' (deficit) Total liabilities and stockholders' (deficit) Judgment payable Entity Registrant Name Common stock issued to settle debt, subsequent period Common stock issued to settle debt, subsequent period Number of shares of common stock issued to settle debts on the company's books. Tax at statutory rate (35%) Net deferred tax assets Sale of interest in Phillips B. lease, proceeds The cash inflow resulting from the sale of an interest in a corporate lease FAIR VALUE OF FINANCIAL INSTRUMENTS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Stock issued for services Supplementary cash flow information Repurchase and retirement shares Loss from operations Balance Sheet Accumulated deficit Stockholders' (deficit) Document Period End Date Document and Entity Information Line of credit agreement, warrants issued (Shares of common stock) Line of credit agreement, warrants issued (Shares of common stock) The Company executed a line of credit agreement with a third party to be used as purchase order financing. In consideration for this line of credit, the company issued warrants for shares of common stock OIL AND GAS PRODUCING ACTIVITIES COMPREHENSIVE INCOME Gain on extinguishment of debt {1} Gain on extinguishment of debt Stock issued for services / settlement of debt Adjustment to common stock account Deposits {1} Deposits Amendment Flag Impairment Loss Judgement against the Company Judgement against the Company Promissory note from previous agreement that escalated to a judgment against the company. Terms of settling the judgment have not been resolved despite the efforts of the judgment holder to collect on the amount owed. Estimated Life, Vehicles Describes the periods of time over which an entity anticipates to receive utility from its property, plant and equipment (that is, the periods of time over which an entity allocates the initial cost of its property, plant and equipment). Policies Common stock, shares outstanding Common stock outstanding Common stock value Current liabilities LIABILITIES AND STOCKHOLDERS' (DEFICIT) Statement of Financial Position Current Fiscal Year End Date Compensation agreement with CEO, annual The company entered into an employment agreement with the CEO and ended the prior consulting agreements with him. The terms of his compensation agreement are per year Deferred tax assets, net operating loss carryforwards Buyback and cancellation of common stock, purchase price Purchase price of shares the company agreed to buyback from a shareholder and subsequently cancel Common stock issued for consulting services Common stock issued for consulting services Shares of common stock issued for consulting services in lieu of cash Reconciliation of income taxes Tabular Tables/Schedules STOCK-BASED COMPENSATION- RECLASSIFICATIONS ACCOUNTS RECEIVABLE- Cash, beginning of period Cash, beginning of period Cash, end of period Net increase (decrease) in cash Cash flows from financing activities: Sale of oil and gas interests Settlement of shares issued to Granite Energy, shares Shares issued for consulting services, value Basic and diluted weighted average common shares outstanding Total operating expenses Total operating expenses Preferred stock value Accounts receivable Statement Entity Current Reporting Status Valuation allowance for deferred tax assets Accrued salary due, related pary Accrued salary due, related pary Accrued and unpaid salary due to officer Due to consulting firm, related pary Due to consulting firm, related pary The Company has a consulting agreement with a firm controlled by the Company's Chief Financial Officer. The consulting firm has been engaged to assist in organizing and completing the process of filings with the Securities and Exchange Commission and other tasks. Forgiveness of debt, related party, with Warrants Forgiveness of debt, related party, with Warrants Amount considered forgiveness of debt-related party, treated as additional paid in capital Warrants granted Warrants granted Number of warrants of the company's common stock issued to an entity the CEO has ownership in Common stock issued, oil interest value Common stock issued, oil interest value Oil interest value for which shares of common stock were issued Common stock issued for oil interest Common stock issued for oil interest Number of shares of common stock issued for previously purchased oil interest Options and warrants granted Estimated useful lives SUBSEQUENT EVENTS Oil interest used to settle debts Increase / (Decrease) in accrued payroll Increase / (Decrease) in accounts payable Rounding error Rounding error Selling, general and administrative Consulting expense Total Revenue Total Revenue Income Statement Common stock, par value Payroll liabilities Total other assets Total other assets Other Assets {1} Other Assets Entity Central Index Key Deferred tax assets, stock issued for services Component of deferred tax assets Fees paid to operate leases, related pary Fees paid to operate leases, related pary Fees charged by companies, for whom an officer has a minority interest in, for operating oil and gas leases Buyback and cancellation of common stock, shares Number of shares the company agreed to buyback from a shareholder and subsequently cancel Debt settled with common stock Debt settled with common stock Amount of debt settled with shares of common stock Reconciliation between statutory and effective tax rates Tabular NET LOSS PER COMMON SHARE LITIGATION ACQUISITION AND DISPOSAL OF ASSETS Cash paid for interest Sale of oil and gas interests {1} Sale of oil and gas interests Statement of Cash Flows Shares issued for services, shares Common stock issued to a consultant for services rendered Beginning Balance, shares Beginning Balance, shares Ending Balance, shares Professional fees Cash Document Fiscal Year Focus Increase in valuation allowance: INCOME TAX Cash flows from operating activities: Repurchase and retirement of shares, shares Accumulated deficit {1} Accumulated deficit Net loss Net loss Net loss for the period Depletion expense Operating expenses Total liabilities Total liabilities Current assets EX-101.PRE 11 agoe-20121231_pre.xml XML 12 R39.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAX: Reconciliation between statutory and effective tax rates (Tables)
12 Months Ended
Dec. 31, 2012
Tables/Schedules  
Reconciliation between statutory and effective tax rates

 

.

2012

2011

Federal statutory tax rate

(35)%

(35)%

Permanent difference and other

35%

35%

XML 13 R48.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAX: Reconciliation of income taxes (Details) (USD $)
Dec. 31, 2012
Dec. 31, 2011
Tax at statutory rate (35%) $ 1,931,714 $ 1,864,386
Increase in valuation allowance: $ (1,931,714) $ (1,864,386)
XML 14 R46.htm IDEA: XBRL DOCUMENT v2.4.0.6
RELATED PARTY TRANSACTIONS (Details) (USD $)
Dec. 31, 2012
Dec. 31, 2011
Due to consulting firm, related pary $ 18,215 $ 138,655
Accrued salary due, related pary 72,000  
Fees paid to operate leases, related pary $ 0 $ 652
XML 15 R33.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: GOING CONCERN (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
GOING CONCERN

GOING CONCERN

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company has incurred recurring losses, has used significant cash in support of its operating activities and, based upon current operating levels, requires additional capital or significant reconfiguration of its operations to sustain its operations for the foreseeable future. These factors, among others, may indicate that the Company will be unable to continue as a going concern.

 

The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate sufficient cash flow to meet obligations on a timely basis and ultimately to attain profitability. The Company has obtained working capital through equity offerings and management plans to obtain additional funding through equity or debt financings in the future. There is no assurance that the Company will be successful in its efforts to raise additional working capital or achieve profitable operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: REVENUE RECOGNITION (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
REVENUE RECOGNITION

REVENUE RECOGNITION

 

Oil, gas and natural gas liquids revenues are recognized when the products are sold to a purchaser at a fixed or determinable price, delivery has occurred and title has transferred, and collection of the revenue is reasonably assured.

XML 18 R50.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAX (Details) (USD $)
Dec. 31, 2012
Net operating loss carry forwards $ 5,519,182
Valuation allowance for deferred tax assets $ 5,519,182
XML 19 R42.htm IDEA: XBRL DOCUMENT v2.4.0.6
NOTES PAYABLE - RELATED PARTY (Details)
12 Months Ended
Dec. 31, 2011
Stock issued to settle notes 4,116,796
XML 20 R37.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAX: Deferred tax liabilities and assets (Tables)
12 Months Ended
Dec. 31, 2012
Tables/Schedules  
Deferred tax liabilities and assets

 

.Deferred tax assets:

2012

2011

  Net operating loss carryforwards

5,518,182

5,246,818

  Stock issued for services

1,000

80,000

  Impairment Loss

--

--

Net deferred tax asset

5,519,182

5,326,818

XML 21 R47.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAX: Deferred tax liabilities and assets (Details) (USD $)
Dec. 31, 2012
Dec. 31, 2011
Deferred tax assets, net operating loss carryforwards $ 5,518,182 $ 5,246,818
Deferred tax assets, stock issued for services 1,000 80,000
Net deferred tax assets $ 5,519,182 $ 5,326,818
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ACQUISITION AND DISPOSAL OF ASSETS
12 Months Ended
Dec. 31, 2012
Notes  
ACQUISITION AND DISPOSAL OF ASSETS

NOTE 3 - ACQUISITION AND DISPOSAL OF ASSETS

 

During the year ended December 31, 2011:

 

In November 2011, the company sold 50% of its interest in the Phillips B. lease to a third party for $2,445. On the same date the company used the other 50% of its interest to settle $2,445 in debts to Bullfrog Management (an entity controlled by a prior officer).

 

On March 1, 2011 the company settled $150,361 in debt on the company books with oil interest held by the company in leases in Oklahoma. 

 

On September 1, 2011 the Company settled $97,723 in debt on the company books with the company’s interest in the West Burk lease and the Richard Lease. These leases had previously been written off and had no value on the company’s books. The transaction was recorded as additional paid in capital contribution.

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STOCKHOLDERS' EQUITY (Details) (USD $)
3 Months Ended 12 Months Ended
Mar. 31, 2012
Dec. 31, 2012
Dec. 31, 2011
Preferred shares outstanding   500,000 500,000
Salaries payable for which preferred shares were issued     $ 250,000
Number of preferred shares owned by CEO   500,000  
Common stock outstanding   24,124,824 25,524,824
Common stock issued to settle debt     9,141,216
Debt settled with common stock     646,880
Common stock cancelled, settlement agreement     8,500,000
Common stock issued for oil interest     69,277
Common stock issued, oil interest value     69,277
Common stock issued for consulting services     2,000,000
Common stock issued for consulting services (value of services)     80,000
Buyback and cancellation of common stock, shares 1,500,000    
Buyback and cancellation of common stock, purchase price 1,500    
Common stock issued to a consultant for services rendered   100,000  
Rendered value of common stock issued for services   1,000  
Warrants granted     10,000,000
Value of Warrants granted     55,000
Amount settled with Warrants     142,859
Forgiveness of debt, related party, with Warrants     $ 87,859
XML 25 R29.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: NET LOSS PER COMMON SHARE (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
NET LOSS PER COMMON SHARE

NET LOSS PER COMMON SHARE

 

FASB Accounting Standards Codification Topic 260-10, “Earnings per Share”, requires presentation of "basic" and "diluted" earnings per share on the face of the statements of operations for all entities with complex capital structures. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti- dilutive effect on diluted earnings per share are excluded from the calculation.

XML 26 R28.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: RECLASSIFICATIONS (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
RECLASSIFICATIONS

RECLASSIFICATIONS

 

Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on the results of operations or stockholders’ equity.

XML 27 R44.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDERS' EQUITY: Options and warrants granted (Details) (USD $)
Dec. 31, 2012
Warrants outstanding 10,000,000
Weighted Average Exercise Price, Warrants $ 0.01
XML 28 R30.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: INCOME TAXES- (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
INCOME TAXES-

INCOME TAXES

 

The Company accounts for its income taxes in accordance with FASB Codification Topic 740-10 (“ASC 740-10”), which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

 

Management feels the Company will have a net operating loss carryover to be used for future years. Such losses may not be fully deductible due to the significant amounts of non-cash service costs. The Company has established a valuation allowance for the full tax benefit of the operating loss carryovers due to the uncertainty regarding realization.

XML 29 R31.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: STOCK-BASED COMPENSATION- (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
STOCK-BASED COMPENSATION-

STOCK-BASED COMPENSATION

 

The Company has adopted FASB Accounting Standards Codification Topic 718-10, “Compensation- Stock Compensation” (“ASC 718-10”) which requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees and directors. Under the fair value recognition provisions of ASC 718-10, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period.

 

Determining the fair value of stock-based awards at the grant date requires considerable judgment, including estimating the expected future volatility of our stock price, estimating the expected length of term of granted options and selecting the appropriate risk-free rate. There is no established trading market for our stock.

XML 30 R8.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Dec. 31, 2012
Notes  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

PRINCIPLES OF CONSOLIDATION

 

The consolidated financial statements include the combined accounts of Amerigo, Inc., a Nevada Corporation. All material intercompany transactions and accounts have been eliminated in consolidation.

 

CASH AND CASH EQUIVALENTS

 

Cash and cash equivalents consist of highly liquid investments with maturities of three months or less when purchased.

 

USE OF ESTIMATES

 

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

COMPREHENSIVE INCOME

 

FASB Accounting Standard Codification Topic 220-10, “Comprehensive Income” (“ASC 220-10"), requires that total comprehensive income be reported in the financial statements. ASC 220-10 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements. It requires (a) classification of the components of other comprehensive income by their nature in a financial statement and (b) the display of the accumulated balance of the other comprehensive income separate from retained earnings and additional paid-in capital in the equity section of a statement of financial position. The Company’s financial statements do not include any of the components of other comprehensive income during the year ended December 31, 2012 and 2011.

 

FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made.

 

PROPERTY AND EQUIPMENT

 

Depreciation is computed primarily on the straight-line method for financial statements purposes over the following estimated useful lives:

 

.Category

Estimated

Life

 

 

Office building

20 years

Vehicles

7 years

Equipment

7 years

Leasehold Improvements

7 years

Furniture and Fixtures

5 years

 

 

All assets are booked at historical cost. Management reviews on an annual basis the book value, along with the prospective dismantlement, restoration, and abandonment costs and estimate residual value for the assets, in comparison to the carrying values on the financial statements.

 

OIL AND GAS PRODUCING ACTIVITIES

 

The Company uses the successful efforts method of accounting for its oil and natural gas properties. Exploration costs such as exploratory geological and geophysical costs and delay rentals are charged against earnings as incurred The costs to acquire, drill and equip exploratory wells are capitalized pending determinations of whether development reserves can be attributed to the Company’s interests as a result of drilling the well. If management determines that commercial quantities of oil and natural gas have not been discovered, costs associated with exploratory wells are charged to exploration expense. Costs to acquire mineral interests, to drill and equip development wells, to drill and equip exploratory wells that find development reserves, and related costs to plug and abandon wells and costs of site restoration are capitalized.

 

Depreciation, depletion and amortization (“DD&A”) of oil and gas properties is computed using the unit-of-production method based on recoverable reserves as estimated by the Company’s independent reservoir engineers. Capitalized acquisition costs are depleted based on total estimated proved developed and proved undeveloped reserve quantities. Capitalized costs to drill and equip wells are depreciated and amortized based on total estimated proved developed reserve quantities. Investments in Exploratory properties are not amortized until proved reserves associated with the prospects can be determined or until impairment occurs. Oil and natural gas properties are periodically assessed for impairment. If the unamortized capitalized costs of proved properties are in excess of estimated undiscounted future cash flows before income taxes, the property is impaired. Estimated future cash flows are determined using management’s best estimates and may be calculated using prices consistent with management expectations for the Company’s future oil and natural gas sales. Exploratory oil and natural gas properties are also periodically assessed for impairment, and a valuation allowance is provided if impairment is indicated. Impairment costs are included in exploration expense. Costs of expired or abandoned leases are charged against the valuation allowance. Costs of properties that become productive are transferred to proved oil and natural gas properties.

 

Exploratory oil and gas properties that are individually significant are periodically assessed for impairment of value and a loss is recognized at the time of impairment by providing an impairment allowance. Other Exploratory properties are amortized based on the Company’s experience of successful drilling and average holding period.

 

Capitalized costs of producing oil and gas properties, after considering estimated residual salvage values, are depreciated and depleted by the unit-of-production method. Support equipment and other property and equipment are depreciated over their estimated useful lives.

 

On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation, depletion, and amortization with a resulting gain or loss recognized in income.

 

On the sale of an entire interest in an Exploratory property for cash or cash equivalent, gain or loss on the sale is recognized, taking into consideration the amount of any recorded impairment if the property has been assessed individually. If a partial interest in an Exploratory property is sold, the amount received is treated as a reduction of the cost of the interest retained.

 

Pursuant to ASC 932-235-50-1, the following disclosures for exploratory activity are made.

 

a. The amount of capitalized exploratory well costs that is pending the determination of proved reserves. An entity also shall separately disclose for each annual period that an income statement is presented changes in those capitalized exploratory well costs resulting from all of the following:

 

1. Additions to capitalized exploratory well costs that are pending the determination of proved reserves -

 

2. Capitalized exploratory well costs that were reclassified to wells, equipment, and facilities based on the determination of proved reserves

 

3. Capitalized exploratory well costs that were charged to expense.

 

Management has assessed this for the company and it is not relevant or applicable to our operations.

 

b. The amount of exploratory well costs that have been capitalized for a period of greater than one year after the completion of drilling at the most recent   balance sheet date and the number of projects for which those costs relate.

 

Additionally, for exploratory well costs that have been capitalized for   periods greater than one year at the most recent balance sheet date, an entity shall provide an aging of those amounts by year, or by using a range of years, and the number of projects to which those costs relate.

 

Management has assessed this for the company and it is not relevant or applicable to our operations.

 

c. For exploratory well costs that continue to be capitalized for more than one year after the completion of drilling at the most recent balance sheet date, a description of the projects and the activities that the entity has undertaken to date in order to evaluate the reserves and the projects, and   the remaining activities required to classify the associated reserves as  proved. Management has assessed this for the company and it is not relevant or applicable to our operations.

 

ASSET RETIREMENT OBLIGATIONS

 

In accordance with accounting standards for asset retirement obligations (ASC 410), the Company records the fair value of a liability for an asset retirement obligation (ARO) when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. No ARO’s associated with legal obligations to retire oil and gas properties have been recognized, as indeterminate settlement dates for the asset retirements prevent estimation of the fair value of the associated ARO. The Company performs periodic reviews of its oil and gas properties long-lived assets for any changes in facts and circumstances that might require recognition of a retirement obligation.

 

REVENUE RECOGNITION

 

Oil, gas and natural gas liquids revenues are recognized when the products are sold to a purchaser at a fixed or determinable price, delivery has occurred and title has transferred, and collection of the revenue is reasonably assured.

 

CONCENTRATIONS OF CREDIT RISK

 

Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counter parties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions described below.

 

The Company operates in one primary segment, the oil and gas industry. The Company's customers are located within the United States of America. Financial instruments that subject the Company to credit risk consist principally of oil and gas sales which are based on a short-term purchase contracts from Enterprise Crude Oil (US) Company and various other gatherers in the area, with related accounts receivable subject to credit risk.

 

ACCOUNTS RECEIVABLE

 

Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. Changes in the valuation allowance have not been material to the financial statements and at December 31, 2012 and December 31, 2011; the Company’s financial statements do not include an allowance for doubtful accounts because management believes that no allowance is required at those dates.

 

Fair value of financial instruments

 

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2012 and 20111. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

 

Level 1: The preferred inputs to valuation efforts are "quoted prices in active markets for identical assets or liabilities," with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

 

Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.

 

Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as "unobservable," and limits their use by saying they "shall be used to measure fair value to the extent that observable inputs are not available." This category allows "for situations in which there is little, if any, market activity for the asset or liability at the measurement date". Earlier in the standard, FASB explains that "observable inputs" are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

 

RECLASSIFICATIONS

 

Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on the results of operations or stockholders’ equity.

 

NET LOSS PER COMMON SHARE

 

FASB Accounting Standards Codification Topic 260-10, “Earnings per Share”, requires presentation of "basic" and "diluted" earnings per share on the face of the statements of operations for all entities with complex capital structures. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti- dilutive effect on diluted earnings per share are excluded from the calculation.

 

INCOME TAXES

 

The Company accounts for its income taxes in accordance with FASB Codification Topic 740-10 (“ASC 740-10”), which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

 

Management feels the Company will have a net operating loss carryover to be used for future years. Such losses may not be fully deductible due to the significant amounts of non-cash service costs. The Company has established a valuation allowance for the full tax benefit of the operating loss carryovers due to the uncertainty regarding realization.

 

STOCK-BASED COMPENSATION

 

The Company has adopted FASB Accounting Standards Codification Topic 718-10, “Compensation- Stock Compensation” (“ASC 718-10”) which requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees and directors. Under the fair value recognition provisions of ASC 718-10, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period.

 

Determining the fair value of stock-based awards at the grant date requires considerable judgment, including estimating the expected future volatility of our stock price, estimating the expected length of term of granted options and selecting the appropriate risk-free rate. There is no established trading market for our stock.

DIVIDENDS

The Company has not yet adopted any policy regarding payment of dividends.

 

GOING CONCERN

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company has incurred recurring losses, has used significant cash in support of its operating activities and, based upon current operating levels, requires additional capital or significant reconfiguration of its operations to sustain its operations for the foreseeable future. These factors, among others, may indicate that the Company will be unable to continue as a going concern.

 

The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate sufficient cash flow to meet obligations on a timely basis and ultimately to attain profitability. The Company has obtained working capital through equity offerings and management plans to obtain additional funding through equity or debt financings in the future. There is no assurance that the Company will be successful in its efforts to raise additional working capital or achieve profitable operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

The company has evaluated the recent pronouncements and believes that none of them will have a material effect on the company’s financial statements.

XML 31 R32.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: DIVIDENDS (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
DIVIDENDS

DIVIDENDS

The Company has not yet adopted any policy regarding payment of dividends.

XML 32 R40.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: PROPERTY AND EQUIPMENT-: Estimated useful lives (Details)
12 Months Ended
Dec. 31, 2012
Estimated Life, office building 20 years
Estimated Life, Vehicles 7 years
Estimated Life, Equipment 7 years
Estimated Life, Leasehold Improvements 7 years
Estimated Life, Furniture and Fixtures 5 years
XML 33 R2.htm IDEA: XBRL DOCUMENT v2.4.0.6
BALANCE SHEETS (USD $)
Dec. 31, 2012
Dec. 31, 2011
Current assets    
Cash $ 55 $ 16
Total current assets 55 16
Other Assets    
Deposits 950 950
Total other assets 950 950
Total assets 1,005 966
Current liabilities    
Accounts payable and accrued liabilities 38,087 39,604
Accounts payable - related party 138,655 18,215
Advances from related parties 16,077 16,077
Payroll liabilities 108,000 36,000
Accrued interest - related parties 36,571 35,591
Judgment payable 120,000 120,000
Total current liabilities 457,390 265,487
Total liabilities 457,390 265,487
Stockholders' (deficit)    
Preferred stock value 500 500
Common stock value 24,124 25,524
Additional paid-in capital 15,441,512 15,440,612
Accumulated deficit (15,922,521) (15,731,157)
Total stockholders' (deficit) (456,385) (264,521)
Total liabilities and stockholders' (deficit) $ 1,005 $ 966
XML 34 R45.htm IDEA: XBRL DOCUMENT v2.4.0.6
LITIGATION (Details) (USD $)
12 Months Ended
Dec. 31, 2010
Judgement against the Company $ 120,000
XML 35 R6.htm IDEA: XBRL DOCUMENT v2.4.0.6
STATEMENTS OF CASH FLOW (USD $)
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Cash flows from operating activities:    
Net Loss $ (191,364) $ (301,445)
Adjustments to reconcile net loss to net cash used by operating activities:    
Sale of oil and gas interests   150,185
Stock issued for services / settlement of debt 1,000 433,348
Gain on extinguishment of debt   (5,742)
Depletion, depreciation and amortization   2,784
Impairment of assets   3,065
Changes in operating assets and liabilities:    
Increase in accounts receivable   12,416
Increase / (Decrease) in accounts payable (1,517) (94,590)
Increase / (Decrease) in accounts payable - related party   (183,035)
Increase / (Decrease) in advances from related party 121,420 (22,796)
Increase / (Decrease) in accrued payroll 72,000 5,455
Rounding error   (1)
Net cash provided by operating activities 1,539 (356)
Cash flows from financing activities:    
Repurchase and retirement shares (1,500)  
Net cash used by financing activities (1,500)  
Net increase (decrease) in cash 39 (356)
Cash, beginning of period 16 372
Cash, end of period 55 16
Cash paid for interest      
Cash paid for taxes      
Supplementary cash flow information    
Stock issued for services 1,000  
Oil interest used to settle debts   $ (8,099)
XML 36 R35.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: PROPERTY AND EQUIPMENT-: Estimated useful lives (Tables)
12 Months Ended
Dec. 31, 2012
Tables/Schedules  
Estimated useful lives

 

.Category

Estimated

Life

 

 

Office building

20 years

Vehicles

7 years

Equipment

7 years

Leasehold Improvements

7 years

Furniture and Fixtures

5 years

XML 37 R22.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: PROPERTY AND EQUIPMENT- (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
PROPERTY AND EQUIPMENT-

PROPERTY AND EQUIPMENT

 

Depreciation is computed primarily on the straight-line method for financial statements purposes over the following estimated useful lives:

 

.Category

Estimated

Life

 

 

Office building

20 years

Vehicles

7 years

Equipment

7 years

Leasehold Improvements

7 years

Furniture and Fixtures

5 years

 

 

All assets are booked at historical cost. Management reviews on an annual basis the book value, along with the prospective dismantlement, restoration, and abandonment costs and estimate residual value for the assets, in comparison to the carrying values on the financial statements.

XML 38 R36.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDERS' EQUITY: Options and warrants granted (Tables)
12 Months Ended
Dec. 31, 2012
Tables/Schedules  
Options and warrants granted

 

.

Number of

Shares

Weighted

Average

Exercise

Price

Balance, December 31, 2010

0

$

--

Options/warrants granted

10,000,000

0.01

Options/warrants expired

--

--

Options/warrants cancelled, forfeited

--

--

Options/warrants exercised

--

--

 

Balance, December 31, 2011

--

--

Options/warrants granted

--

--

Options/warrants expired

--

--

Options/warrants cancelled, forfeited

--

--

Options/warrants exercised

--

--

Balance, December 31, 2012

10,000,000

0.01

XML 39 R24.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ASSET RETIREMENT OBLIGATIONS (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
ASSET RETIREMENT OBLIGATIONS

ASSET RETIREMENT OBLIGATIONS

 

In accordance with accounting standards for asset retirement obligations (ASC 410), the Company records the fair value of a liability for an asset retirement obligation (ARO) when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. No ARO’s associated with legal obligations to retire oil and gas properties have been recognized, as indeterminate settlement dates for the asset retirements prevent estimation of the fair value of the associated ARO. The Company performs periodic reviews of its oil and gas properties long-lived assets for any changes in facts and circumstances that might require recognition of a retirement obligation.

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XML 41 R7.htm IDEA: XBRL DOCUMENT v2.4.0.6
HISTORY AND ORGANIZATION OF THE COMPANY
12 Months Ended
Dec. 31, 2012
Notes  
HISTORY AND ORGANIZATION OF THE COMPANY

NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY

 

Amerigo Energy, Inc., a Delaware corporation ("AGOE" or the "Company"), formerly named Strategic Gaming Investments, Inc., was incorporated in 1973. Prior to 2008, the Company was involved in various businesses, none of which were successful.

 

In August of 2008, our Board of Directors voted to get approval from the shareholders of the Company for a name change from Strategic Gaming Investments, Inc. to Amerigo Energy, Inc. The company received the approval from a majority of its stockholders and filed the amendment to its Articles of Incorporation with the State of Delaware. The name change became effective by the State of Delaware on August 26, 2008. The Company also requested a new stock symbol as a result of the name change. Our new trading symbol is "AGOE".

 

The Amerigo Energy’s business plan included developing oil and gas reserves while increasing the production rate base and cash flow. The plan was to continue acquiring oil and gas leases for drilling and to take advantage of other opportunities and strategic alliances. Due to declines in production on the oil leases the company had an interest in the company has been forced to reconsider its position in the oil industry. In 2011, the company began an aggressive approach to reduce the debt on the company’s books as well as looking to diversify the investment holdings, while still maintaining limited interest in oil leases. The company is aggressively looking for potential oil leases to acquire as well as businesses which will fit with the company's strategy.

 

Our wholly-owned subsidiary, Amerigo, Inc., incorporated in Nevada on January 11, 2008, holds certain assets, including a minority interest in an oil lease.

XML 42 R3.htm IDEA: XBRL DOCUMENT v2.4.0.6
BALANCE SHEETS (parenthetical) (USD $)
Dec. 31, 2012
Dec. 31, 2011
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 25,000,000 25,000,000
Preferred stock, shares outstanding 500,000 500,000
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares outstanding 24,124,824 25,524,824
XML 43 R17.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: PRINCIPLES OF CONSOLIDATION (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
PRINCIPLES OF CONSOLIDATION

PRINCIPLES OF CONSOLIDATION

 

The consolidated financial statements include the combined accounts of Amerigo, Inc., a Nevada Corporation. All material intercompany transactions and accounts have been eliminated in consolidation.

XML 44 R1.htm IDEA: XBRL DOCUMENT v2.4.0.6
Document and Entity Information (USD $)
12 Months Ended
Dec. 31, 2012
Document and Entity Information  
Entity Registrant Name AMERIGO ENERGY, INC.
Document Type 10-K
Document Period End Date Dec. 31, 2012
Amendment Flag false
Entity Central Index Key 0000278165
Current Fiscal Year End Date --12-31
Entity Common Stock, Shares Outstanding 24,124,824
Entity Filer Category Smaller Reporting Company
Entity Current Reporting Status Yes
Entity Voluntary Filers No
Entity Well-known Seasoned Issuer No
Document Fiscal Year Focus 2012
Document Fiscal Period Focus FY
Entity Public Float $ 241,248
XML 45 R18.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: CASH AND CASH EQUIVALENTS (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS

 

Cash and cash equivalents consist of highly liquid investments with maturities of three months or less when purchased.

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STATEMENT OF OPERATIONS (USD $)
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Revenue    
Oil revenues $ 921 $ 23,352
Gas revenues 327 13,431
Total Revenue 1,248 36,782
Operating expenses    
Lease operating expenses 671 24,041
Selling, general and administrative 4,635 14,848
Professional fees 186,326 300,472
Depreciation and amortization expense   1,220
Depletion expense   1,564
Total operating expenses 191,632 342,145
Loss from operations (190,384) (305,363)
Other income (expenses):    
Interest expense (980)  
Write-off of assets/Loss on sale of assets   (3,065)
Other expense   (157)
Gain on Sale of Phillips B.   1,397
Gain on extinguishment of debt   5,742
Total other income (expenses) (980) 3,917
Net loss $ (191,364) $ (301,445)
Basic and diluted (loss) per common share $ 0 $ 0
Basic and diluted weighted average common shares outstanding 25,099,824 23,727,708
XML 48 R12.htm IDEA: XBRL DOCUMENT v2.4.0.6
LITIGATION
12 Months Ended
Dec. 31, 2012
Notes  
LITIGATION

NOTE 6 - LITIGATION

 

In 2010, Amerigo signed an agreement with the individual to acquire his interest in certain oil and gas leases for $120,000, payable at $10,000 per month starting April 1, 2010, with subsequent payments due on the 1st of each month. The term of the note was One (1) year. Upon final payment and settlement of the note, the individual will return all shares of stock (with properly executed stock power) that he individually holds of Granite Energy and Amerigo Energy, along with his entire interest in the Kunkel lease, which is 3.20% working interest (2.54% net revenue interest), as well as his ownership in what is now as the 4 Well Program (0.325% working interest, 0.2438% net revenue interest). During 2010, the individual sold his interest in the Kunkel lease. The company has not kept current with the agreement and the individual’s promissory note has now been escalated to a judgment against the company. As of the date of this filing, terms of settling the judgment have not been resolved despite the efforts of the judgment holder to collect on the amount owed.

 

As of December 31, 2012, other than discussed above that occurred subsequent to year end, the Company is not a party to any pending material legal proceeding. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against the Company. To the knowledge of management, no director, executive officer or affiliate of the Company, any owner of record or beneficially of more than five percent of the Company's Common Stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.

XML 49 R11.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDERS' EQUITY
12 Months Ended
Dec. 31, 2012
Notes  
STOCKHOLDERS' EQUITY

NOTE 5 - STOCKHOLDERS' EQUITY

 

PREFERRED STOCK

 

As of December 31, 2012, there were 25,000,000 preferred shares authorized and 500,000 preferred shares outstanding. The board of directors had previously set the voting rights for the preferred stock at 1 share of preferred to 250 common shares.

 

There are 500,000 shares of preferred stock issued and outstanding at December 31, 2012 and 2011, all of which are owned by the current CEO, These shares had previously been issued in satisfaction of salaries payable, totaling $250,000 to the current CEO and prior officers.

 

During the period ending June 30, 2012, the CEO of the company acquired in a private transaction the shares of preferred A stock. As of December 31, 2012, the CEO owns 500,000 shares of preferred stock, which make up 100% of the preferred stock issued and outstanding.

 

COMMON STOCK

 

As of December 31, 2012, there were 100,000,000 shares authorized and there were 24,124,824 shares of common stock outstanding.

 

During 2011, the company issued 9,141,216 shares of company stock to settle $646,880 in debts on the company’s books.

 

During 2011 the company entered into a settlement agreement with a company we had purchased oil interest from. As part of this agreement the company returned 8,500,000 shares of stock that were part of the purchase agreement signed in 2008. These shares were cancelled and are no longer outstanding.

 

The company also issued 69,277 shares of stock for previously purchased oil interest at a value of $69,277. During 2011 the company realized that the previous transfer agent never issued the shares as part of an agreement that was signed in 2009.

 

During 2011, 2,000,000 shares were issued for consulting services in lieu of cash, these shares were valued at $80,000.

 

During the quarter ended March 31, 2012, the entered into a buyback agreement with a shareholder. The company agreed to buy back 1,500,000 shares for a purchase price of $1,500. These shares were cancelled with the transfer agent and are no longer outstanding.

 

During the year ended December 31, 2012, the company issued 100,000 shares of common stock to a consultant for services rendered and valued at $1,000.

 

There were no other shares issued during the year 2012.  The balance at December 31, 2012 is 24,124,824 common shares outstanding and 500,000 preferred shares.

 

Warrants

 

During the 4th quarter of 2011, the company issued 10,000,000 warrants of the company stock with an exercise price of $0.01 to an entity the CEO has an ownership in. The company used the Black Scholes option pricing model to calculate the value of $55,000 based on a 0% dividend yield, 669% expected volatility, 0.95% discounts bond rate and a 7 year term. While the warrants were valued at $55,000, a total of $142,859 was settled with such warrants, thus $87,859 was considered forgiveness of debt-related party, treated as additional paid in capital.

 

Stock options/warrants - The following table summarizes information about options and warrants granted during the years ended December 31, 2012 and 2011:

 

.

Number of

Shares

Weighted

Average

Exercise

Price

Balance, December 31, 2010

0

$

--

Options/warrants granted

10,000,000

0.01

Options/warrants expired

--

--

Options/warrants cancelled, forfeited

--

--

Options/warrants exercised

--

--

 

Balance, December 31, 2011

--

--

Options/warrants granted

--

--

Options/warrants expired

--

--

Options/warrants cancelled, forfeited

--

--

Options/warrants exercised

--

--

Balance, December 31, 2012

10,000,000

0.01

 

XML 50 R23.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: OIL AND GAS PRODUCING ACTIVITIES (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
OIL AND GAS PRODUCING ACTIVITIES

OIL AND GAS PRODUCING ACTIVITIES

 

The Company uses the successful efforts method of accounting for its oil and natural gas properties. Exploration costs such as exploratory geological and geophysical costs and delay rentals are charged against earnings as incurred The costs to acquire, drill and equip exploratory wells are capitalized pending determinations of whether development reserves can be attributed to the Company’s interests as a result of drilling the well. If management determines that commercial quantities of oil and natural gas have not been discovered, costs associated with exploratory wells are charged to exploration expense. Costs to acquire mineral interests, to drill and equip development wells, to drill and equip exploratory wells that find development reserves, and related costs to plug and abandon wells and costs of site restoration are capitalized.

 

Depreciation, depletion and amortization (“DD&A”) of oil and gas properties is computed using the unit-of-production method based on recoverable reserves as estimated by the Company’s independent reservoir engineers. Capitalized acquisition costs are depleted based on total estimated proved developed and proved undeveloped reserve quantities. Capitalized costs to drill and equip wells are depreciated and amortized based on total estimated proved developed reserve quantities. Investments in Exploratory properties are not amortized until proved reserves associated with the prospects can be determined or until impairment occurs. Oil and natural gas properties are periodically assessed for impairment. If the unamortized capitalized costs of proved properties are in excess of estimated undiscounted future cash flows before income taxes, the property is impaired. Estimated future cash flows are determined using management’s best estimates and may be calculated using prices consistent with management expectations for the Company’s future oil and natural gas sales. Exploratory oil and natural gas properties are also periodically assessed for impairment, and a valuation allowance is provided if impairment is indicated. Impairment costs are included in exploration expense. Costs of expired or abandoned leases are charged against the valuation allowance. Costs of properties that become productive are transferred to proved oil and natural gas properties.

 

Exploratory oil and gas properties that are individually significant are periodically assessed for impairment of value and a loss is recognized at the time of impairment by providing an impairment allowance. Other Exploratory properties are amortized based on the Company’s experience of successful drilling and average holding period.

 

Capitalized costs of producing oil and gas properties, after considering estimated residual salvage values, are depreciated and depleted by the unit-of-production method. Support equipment and other property and equipment are depreciated over their estimated useful lives.

 

On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation, depletion, and amortization with a resulting gain or loss recognized in income.

 

On the sale of an entire interest in an Exploratory property for cash or cash equivalent, gain or loss on the sale is recognized, taking into consideration the amount of any recorded impairment if the property has been assessed individually. If a partial interest in an Exploratory property is sold, the amount received is treated as a reduction of the cost of the interest retained.

 

Pursuant to ASC 932-235-50-1, the following disclosures for exploratory activity are made.

 

a. The amount of capitalized exploratory well costs that is pending the determination of proved reserves. An entity also shall separately disclose for each annual period that an income statement is presented changes in those capitalized exploratory well costs resulting from all of the following:

 

1. Additions to capitalized exploratory well costs that are pending the determination of proved reserves -

 

2. Capitalized exploratory well costs that were reclassified to wells, equipment, and facilities based on the determination of proved reserves

 

3. Capitalized exploratory well costs that were charged to expense.

 

Management has assessed this for the company and it is not relevant or applicable to our operations.

 

b. The amount of exploratory well costs that have been capitalized for a period of greater than one year after the completion of drilling at the most recent   balance sheet date and the number of projects for which those costs relate.

 

Additionally, for exploratory well costs that have been capitalized for   periods greater than one year at the most recent balance sheet date, an entity shall provide an aging of those amounts by year, or by using a range of years, and the number of projects to which those costs relate.

 

Management has assessed this for the company and it is not relevant or applicable to our operations.

 

c. For exploratory well costs that continue to be capitalized for more than one year after the completion of drilling at the most recent balance sheet date, a description of the projects and the activities that the entity has undertaken to date in order to evaluate the reserves and the projects, and   the remaining activities required to classify the associated reserves as  proved. Management has assessed this for the company and it is not relevant or applicable to our operations.

XML 51 R19.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: USE OF ESTIMATES (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
USE OF ESTIMATES

USE OF ESTIMATES

 

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

XML 52 R15.htm IDEA: XBRL DOCUMENT v2.4.0.6
ENVIRONMENTAL MATTERS
12 Months Ended
Dec. 31, 2012
Notes  
ENVIRONMENTAL MATTERS

NOTE 9 - ENVIRONMENTAL MATTERS

 

Various federal and state authorities have authority to regulate the exploration and developments of oil and gas and mineral properties with respect to environmental matters. Such laws and regulations, presently in effect or as hereafter promulgated, may significantly affect the cost of its current oil production and any exploration and development activities undertaken by the Company and could result in loss or liability to the Company in the event that any such operations are subsequently deemed inadequate for purposes of any such law or regulation.

XML 53 R13.htm IDEA: XBRL DOCUMENT v2.4.0.6
RELATED PARTY TRANSACTIONS
12 Months Ended
Dec. 31, 2012
Notes  
RELATED PARTY TRANSACTIONS

NOTE 7 - RELATED PARTY TRANSACTIONS

 

The Company has a consulting agreement with a firm controlled by the Company's Chief Financial Officer for a fee of $3,500 per month. The consulting firm has been engaged to assist in organizing and completing the process of filings with the Securities and Exchange Commission and other tasks. As of December 31, 2012 and 2011 the company owed the firm $18,215, and $138,655, respectively. Prior to December 31, 2011 $200,000 was settled with stock and warrants in lieu of cash payment (See Note 5).

 

As of December 31, 2012, the Company’s CEO is owed $72,000 in accrued, but not paid, salary.  In January 2013, the CEO entered into a compensation agreement as discussed in Note 10 Subsequent events.

 

The Company had an operating agreement with SWJN Oil Company and SJ OK Oil Company to operate the company’s oil and gas leases, the current CEO had a minority interest in these entities.  The fee charged by these companies to operate these leases is the greater of $1,000 per month or 5% of net oil sales. During 2011 the CEO sold his interest in SJ OK to an outside party and subsequent to year end the CEO relinquished his interest in SWJN to an unrelated third party as well. The total fees Amerigo paid to these entities during 2012 and 2011 was $0 and $652.

 

The company also has a lease agreement with AVES. The company rents an office space from AVES for $1,098 per month. AVES and the building are owned partially by our current CEO Jason F. Griffith. During June 2011, AVES agreed to waive the rent to the office space the company uses until the operations increase.

 

Other Material Transactions. With the exception of the above mentioned transactions, there have been no material transactions, series of similar transactions or currently proposed transactions to which the Company or any officer, director, their immediate families or other beneficial owner is a party or has a material interest in which the amount exceeds $50,000.

XML 54 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAX
12 Months Ended
Dec. 31, 2012
Notes  
INCOME TAX

NOTE 8 - INCOME TAX

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets as of December 31, 2012 and 2011 are as follows:

 

.Deferred tax assets:

2012

2011

  Net operating loss carryforwards

5,518,182

5,246,818

  Stock issued for services

1,000

80,000

  Impairment Loss

--

--

Net deferred tax asset

5,519,182

5,326,818

 

A reconciliation of income taxes computed at the statutory rate to the income tax amount recorded as follows:

 

.

2012

2011

Tax at statutory rate (35%)

1,931,714

1,864,386

Increase in valuation allowance

(1,931,714)

(1,864,386)

Net deferred tax asset

-

-

 

Reconciliation between the statutory rate and the effective tax rate is as follows at December 31, 2011 and 2010:

 

.

2012

2011

Federal statutory tax rate

(35)%

(35)%

Permanent difference and other

35%

35%

At December 31, 2012, the Company had federal net operating loss ("NOL") carry forwards of approximately $5,519,182.  Federal NOLs could, if unused, begin to expire in 2021.  The company has not filed its corporate tax return for the 2011 or 2012 tax year so the deductibility of the NOL is uncertain.

The valuation allowance for deferred tax assets as of December 31, 2012 was $5,519,182.

XML 55 R16.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUBSEQUENT EVENTS
12 Months Ended
Dec. 31, 2012
Notes  
SUBSEQUENT EVENTS

NOTE 10 - SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events through March 31, 2013, the date which the financial statements were available to be issued. The Company has determined that, other than disclosed below, there were no other events that warranted disclosure or recognition in the financial statements.

 

In January 2013, the company entered into an employment agreement with the CEO and ended the prior consulting agreements with him. The terms of his compensation agreement are $180,000 per year and should the company not have the funds to cover the amount owed, the amount will accrue interest at 8% per year.

 

In February 2013, the company settled $26,081 worth of debt for 26,081 common shares, valued at $1.00 per share.  The CEO of the company was owed $14,263 of this debt.

 

In March 2013, the company announced the acquisition of the license agreement of Le Flav Spirits for the promotion of a liquor line featuring the celebrity Flavor Flav. The company issued 360,000 shares of common stock in conjunction with this acquisition. The company also issued warrants for the purchase of two million (2,000,000) shares of common stock at $1.00 per shares, with a 5 year exercise period, vested equally at 500,000 shares vested upon every 5,000 cases sold of vodka.  The promissory note is to be settled for $1 per bottle for the first 2,000,000 bottles sold.  This will be treated as a convertible promissory note, convertible at $1.00 per share (at the option of the note holder).  Promissory note bears interest at 8% per year.  The Company has the ability to make principal and interest payments above what is earned from the 'per bottle' during the term.  Unless otherwise satisfied, the balance of the promissory note is due by March 1, 2016. The CEO had a minority interest in the entity from which the license agreement was purchased.

 

On March 22, 2013, the Company executed a line of credit agreement with a third party for $100,000 to be used as purchase order financing for the production of liquor brands.  The line of credit bears interest at twenty percent (20%) on the advanced amount.  In consideration for this line of credit, the company issued warrants for 300,000 shares of common stock at an exercise price of $1.00 per share, exercisable for five (5) years.  The Company issued 3,000,000 shares of preferred stock as collateral which are being held in trust.

XML 56 R34.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: RECENT ACCOUNTING PRONOUNCEMENTS (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

 

The company has evaluated the recent pronouncements and believes that none of them will have a material effect on the company’s financial statements.

XML 57 R51.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUBSEQUENT EVENTS (Details) (USD $)
1 Months Ended
Mar. 31, 2013
Feb. 28, 2013
Mar. 22, 2013
Jan. 31, 2013
Compensation agreement with CEO, annual       $ 180,000
Debt settled with common stock, subsequent period   26,081    
Common stock issued to settle debt, subsequent period   26,081    
Debt settled with common stock, subsequent period (amount owed to CEO)   14,263    
Common stock issued for asset acquisition, subsequent period 360,000      
Warrants issued for asset acquisition, subsequent period 2,000,000      
Line of credit agreement     $ 100,000  
Line of credit agreement, warrants issued (Shares of common stock)     300,000  
Line of credit agreement, preferred stock as collateral     3,000,000  
XML 58 R21.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: FAIR VALUE OF FINANCIAL INSTRUMENTS (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made.

XML 59 R26.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: CONCENTRATIONS OF CREDIT RISK (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
CONCENTRATIONS OF CREDIT RISK

CONCENTRATIONS OF CREDIT RISK

 

Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counter parties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions described below.

 

The Company operates in one primary segment, the oil and gas industry. The Company's customers are located within the United States of America. Financial instruments that subject the Company to credit risk consist principally of oil and gas sales which are based on a short-term purchase contracts from Enterprise Crude Oil (US) Company and various other gatherers in the area, with related accounts receivable subject to credit risk.

XML 60 R49.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAX: Reconciliation between statutory and effective tax rates (Details)
Dec. 31, 2012
Dec. 31, 2011
Federal statutory tax rate (35.00%) (35.00%)
Permanent difference and other 35.00% 35.00%
XML 61 R41.htm IDEA: XBRL DOCUMENT v2.4.0.6
ACQUISITION AND DISPOSAL OF ASSETS (Details) (USD $)
1 Months Ended
Nov. 30, 2011
Sep. 01, 2011
Mar. 01, 2011
Sale of interest in Phillips B. lease, proceeds $ 2,445    
Sale of interest in Phillips B. lease, debt settled 2,445    
Debt settled with oil interest     150,361
Debt settled with West Burk and Richard Lease   $ 97,723  
XML 62 R5.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (USD $)
Common stock
Preferred Stock
Additional paid-in capital
Accumulated deficit
Total stockholders' deficit
Beginning Balance, amount at Dec. 31, 2010 $ 33,356 $ 500 $ 14,608,105 $ (15,429,712) $ (787,750)
Beginning Balance, shares at Dec. 31, 2010 22,814,331 500,000      
Shares issued for services, shares 9,141,216        
Shares issued for services, value 9,141   459,739   468,880
Shares issued for consulting services, shares 2,000,000        
Shares issued for consulting services, value 2,000   78,000   80,000
Shares issued for previously purchased oil interest, shares 69,277        
Shares issued for previously purchased oil interest, value 70       70
Settlement of shares issued to Granite Energy, shares (8,500,000)        
Settlement of shares issued to Granite Energy, value (8,500)   8,500    
Settlement of debts to related parties     220,723   220,723
Warrants issued     55,000   55,000
Adjustment to common stock account   (10,543) 10,543    
Rounding error     2   1
Net loss for the period       (301,445) (301,445)
Ending Balance, amount at Dec. 31, 2011 25,524 500 15,440,612 (15,731,157) (264,521)
Ending Balance, shares at Dec. 31, 2011 25,524,824 500,000      
Shares issued for services, shares 100,000        
Shares issued for services, value 100   900   1,000
Repurchase and retirement of shares, shares (1,500,000)        
Repurchase and retirement of shares, value (1,500)       (1,500)
Net loss for the period       (191,364) (191,364)
Ending Balance, amount at Dec. 31, 2012 $ 24,124 $ 500 $ 15,441,512 $ (15,922,521) $ (456,385)
Ending Balance, shares at Dec. 31, 2012 24,124,824 500,000      
XML 63 R10.htm IDEA: XBRL DOCUMENT v2.4.0.6
NOTES PAYABLE - RELATED PARTY
12 Months Ended
Dec. 31, 2012
Notes  
NOTES PAYABLE - RELATED PARTY

NOTE 4 - NOTES PAYABLE - RELATED PARTY

 

As of December 31, 2012 and 2011, there are $0 and $0 notes payable outstanding related to the purchase of the Justice lease. During 2011, these notes were settled with 4,116,796 shares of stock.

XML 64 R27.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ACCOUNTS RECEIVABLE- (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
ACCOUNTS RECEIVABLE-

ACCOUNTS RECEIVABLE

 

Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. Changes in the valuation allowance have not been material to the financial statements and at December 31, 2012 and December 31, 2011; the Company’s financial statements do not include an allowance for doubtful accounts because management believes that no allowance is required at those dates.

 

Fair value of financial instruments

 

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2012 and 20111. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

 

Level 1: The preferred inputs to valuation efforts are "quoted prices in active markets for identical assets or liabilities," with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

 

Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.

 

Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as "unobservable," and limits their use by saying they "shall be used to measure fair value to the extent that observable inputs are not available." This category allows "for situations in which there is little, if any, market activity for the asset or liability at the measurement date". Earlier in the standard, FASB explains that "observable inputs" are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

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Statement - STATEMENT OF OPERATIONS Process Flow-Through: 000060 - Statement - STATEMENTS OF CASH FLOW agoe-20121231.xml agoe-20121231.xsd agoe-20121231_cal.xml agoe-20121231_def.xml agoe-20121231_lab.xml agoe-20121231_pre.xml true true XML 66 R38.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAX: Reconciliation of income taxes (Tables)
12 Months Ended
Dec. 31, 2012
Tables/Schedules  
Reconciliation of income taxes

 

.

2012

2011

Tax at statutory rate (35%)

1,931,714

1,864,386

Increase in valuation allowance

(1,931,714)

(1,864,386)

Net deferred tax asset

-

-

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: COMPREHENSIVE INCOME (Policies)
12 Months Ended
Dec. 31, 2012
Policies  
COMPREHENSIVE INCOME

COMPREHENSIVE INCOME

 

FASB Accounting Standard Codification Topic 220-10, “Comprehensive Income” (“ASC 220-10"), requires that total comprehensive income be reported in the financial statements. ASC 220-10 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements. It requires (a) classification of the components of other comprehensive income by their nature in a financial statement and (b) the display of the accumulated balance of the other comprehensive income separate from retained earnings and additional paid-in capital in the equity section of a statement of financial position. The Company’s financial statements do not include any of the components of other comprehensive income during the year ended December 31, 2012 and 2011.