0001165527-14-000306.txt : 20140515 0001165527-14-000306.hdr.sgml : 20140515 20140515155846 ACCESSION NUMBER: 0001165527-14-000306 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20140331 FILED AS OF DATE: 20140515 DATE AS OF CHANGE: 20140515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHANCELLOR GROUP INC. CENTRAL INDEX KEY: 0000894544 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 870438647 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-30219 FILM NUMBER: 14846969 BUSINESS ADDRESS: STREET 1: 216 SOUTH PRICE ROAD, CITY: PAMPA, STATE: TX ZIP: 79065 BUSINESS PHONE: 7027927479 MAIL ADDRESS: STREET 1: 216 SOUTH PRICE ROAD, CITY: PAMPA, STATE: TX ZIP: 79065 FORMER COMPANY: FORMER CONFORMED NAME: CHANCELLOR GROUP INC/ DATE OF NAME CHANGE: 19960520 FORMER COMPANY: FORMER CONFORMED NAME: NIGHTHAWK CAPITAL INC DATE OF NAME CHANGE: 19940426 10-Q 1 g7406.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2014 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File No. 000-30219 CHANCELLOR GROUP, INC. (Exact name of Registrant as Specified in Its Charter) Nevada 87-0438647 (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 500 Taylor Street, Plaza Two - Suite 200, Amarillo, TX 79101 (Address of principal executive offices, including zip code) Issuer's Telephone Number, Including Area Code: (806) 322-2731 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ] 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. (Check One): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] Number of shares of Common Stock outstanding as of May 12, 2014: 74,500,030 CHANCELLOR GROUP, INC. INDEX Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements: 3 Condensed and Consolidated Balance Sheets, as of March 31, 2014 (unaudited) and as of December 31, 2013 4 Condensed and Consolidated Statements of Operations, for the Three Months Ended March 31, 2014 and 2013 (unaudited) 5 Condensed and Consolidated Statements of Cash Flows, for the Three Months Ended March 31, 2014 and 2013 (unaudited) 6 Notes to Unaudited Condensed and Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3. Quantitative and Qualitative Disclosures About Market Risk 22 Item 4. Controls and Procedures 22 PART II. OTHER INFORMATION Item 1. Legal Proceedings 22 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22 Item 6. Exhibits 23 SIGNATURES 24 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that the following consolidated financial statements be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013. The results of operations for the three months ended March 31, 2014 and 2013 are not necessarily indicative of the results for the entire fiscal year or for any other period. 3 CHANCELLOR GROUP, INC. Consolidated Balance Sheets

See Notes to Unaudited Consolidated Financial Statements 4 CHANCELLOR GROUP, INC. Consolidated Statements of Operations Three Months Ended March 31, 2014 and 2013 (Unaudited)

See Notes to Unaudited Consolidated Financial Statements 5 CHANCELLOR GROUP, INC. Consolidated Statements of Cash Flows Three Months Ended March 31, 2014 and 2013 (Unaudited)

See Notes to Unaudited Consolidated Financial Statements 6 CHANCELLOR GROUP, INC. Notes to Unaudited Consolidated Financial Statements March 31, 2014 NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ORGANIZATION Chancellor Group, Inc. (the "Company", "our", "we", "Chancellor" or the "Company") was incorporated in the state of Utah on May 2, 1986, and then, on December 30, 1993, dissolved as a Utah corporation and reincorporated as a Nevada corporation. The Company's primary business purpose is to engage in the acquisition, exploration and development of oil and gas production. On March 26, 1996, the Company's corporate name was changed from Nighthawk Capital, Inc. to Chancellor Group, Inc. During early 2012, the Company's corporate office was moved from Pampa to Amarillo, Texas. On November 16, 2012, a certificate of incorporation was filed with the state of Delaware for the formation of Pimovi, Inc. ("Pimovi"), a new majority-owned subsidiary of Chancellor, and with which separate company financial statements are consolidated with Chancellor's consolidated financial statements beginning for the fourth quarter of 2012. Chancellor owns 61% of the equity of Pimovi in the form of Series A Preferred Stock, therefore Chancellor maintains significant financial control. As of March 31, 2014, Pimovi had not commenced principal operations and had no sales or revenues, therefore Pimovi is considered a "development-stage enterprise". The primary business purpose of Pimovi relates largely to technology and mobile application fields, including development of proprietary consumer algorithms, creating user photographic and other activity records, First Person Video Feeds and other such activities related to mobile and computer gaming. On August 15, 2013, Chancellor Group, Inc. entered into a binding term sheet (the "Term Sheet") with The Fuelist, LLC, a California limited liability company ("Fuelist"), and its founders, Matthew Hamilton, Eric Maas and Thomas Rand-Nash (together, the "Founders"), pursuant to which Chancellor agreed to acquire a 51% ownership interest in Fuelist. As consideration for the ownership interest, Chancellor contributed to Fuelist a total of $271,200 in cash. As additional consideration for the ownership interest, Chancellor contributed a total of 2,000,000 shares of newly issued common stock to Fuelist on August 19, 2013, valued at $156,000, or $0.078 per share. As of March 31, 2014, Fuelist had not commenced principal operations and had no sales or operating revenues through March 31, 2014, therefore Fuelist is considered a "development-stage enterprise". The primary purpose of Fuelist is the development of a data-driven mobile and web technology platform that leverages extensive segment expertise and big data analysis tools to value classic vehicles. These tools will enable users to quickly find values, track valuations over time, and to identify investment and arbitrage opportunities in this lucrative market. GOING CONCERN These consolidated financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has had continued net operating losses with net losses attributable to Chancellor Group, Inc. shareholders of $216,649 and $225,242 for the three months ended March 31, 2014 and 2013, respectively, and retained earnings deficits of $2,990,308 and $2,773,659 as of March 31, 2014 and December 31, 2013, respectively. The Company's continued operations are dependent on the successful implementation of its business plan and its ability to obtain additional financing as needed. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. OPERATIONS The Company is licensed by the Texas Railroad Commission as an oil and gas producer and operator. The Company and its wholly-owned subsidiaries, Gryphon Production Company, LLC and Gryphon Field Services, LLC, own 5 wells in Gray County, Texas, of which 1 is a water disposal well. As of March 31, 2014, approximately 4 oil wells are actively producing. 7 We produced a total of 248 barrels of oil in the three months ended March 31, 2014. The oil is light sweet crude. Both Pimovi and Fuelist were development stage enterprises as of March 31, 2014, with no significant operations other than the ongoing development of their respective technologies as described above. SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION The consolidated financial statements of Chancellor Group, Inc. have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q and in accordance with US GAAP. Accordingly, these consolidated financial statements do not include all of the information and footnotes required by US GAAP for annual consolidated financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes in the Chancellor Group, Inc. Annual Report on Form 10-K for the year ended December 31, 2013. These accompanying consolidated financial statements include the accounts of Chancellor and its wholly-owned subsidiaries: Gryphon Production Company, LLC, and Gryphon Field Services, LLC. These entities are collectively hereinafter referred to as "the Company". The accompanying consolidated financial statements include the accounts of Chancellor's majority-owned subsidiary, Pimovi, Inc., with which Chancellor owns 61% of the equity of Pimovi and maintains significant financial control. Beginning in the third quarter 2013, the accompanying consolidated financial statements also include The Fuelist, LLC, which Chancellor acquired 51% of the equity of Fuelist and maintains significant financial control. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements. The consolidated financial statements are unaudited, but, in management's opinion, include all adjustments (which, unless otherwise noted, include only normal recurring adjustments) necessary for a fair presentation of such financial statements. Financial results for this interim period are not necessarily indicative of results that may be expected for any other interim period or for the year ending December 31, 2014. ACCOUNTING YEAR The Company employs a calendar accounting year. The Company recognizes income and expenses based on the accrual method of accounting under generally accepted accounting principles. USE OF ESTIMATES The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. PRODUCTS AND SERVICES, GEOGRAPHIC AREAS AND MAJOR CUSTOMERS For our oil segment, the Company has no plans at this stage to further develop its producing domestic oil properties, located in Gray County, Texas. The Company's major customers, to which substantially all oil production is sold are Plains Marketing, ExxonMobil, and XTO Energy. Given the number of readily available purchasers for our products, it is unlikely that the loss of a single customer in the areas in which we sell our products would materially affect our sales. For our technology segment, the Company plans to continue developing its web-based and mobile technology platforms for its two majority-owned subsidiaries, Pimovi, Inc. and Fuelist, LLC. NET LOSS PER SHARE The net loss per share is computed by dividing the net loss by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if 8 any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. CONCENTRATION OF CREDIT RISK Some of the Company's operating cash balances are maintained in accounts that currently exceed federally insured limits. The Company believes that the financial strength of depositing institutions mitigates the underlying risk of loss. To date, these concentrations of credit risk have not had a significant impact on the Company's financial position or results of operations. RESTRICTED CASH Included in restricted cash at March 31, 2014 and December 31, 2013 are deposits totaling $25,000, in the form of a bond issued to the Railroad Commission of Texas as required for the Company's oil and gas activities which is renewed annually. ACCOUNTS RECEIVABLE The Company reviews accounts receivable periodically for collectability, establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. Based on review of accounts receivable by management at period end, including credit quality and subsequent collections from customers, an allowance for doubtful accounts was not considered necessary or recorded at March 31, 2014 or December 31, 2013. PREPAID EXPENSES Certain expenses, primarily consulting fees, have been prepaid and will be used within one year. GOODWILL Goodwill represents the cost in excess of the fair value of net assets of the acquisition. Goodwill is not amortized but is subject to periodic testing for impairment. The Company tests goodwill for impairment using a two-step process. The first step tests for potential impairment, while the second step measures the amount of the impairment, if any. The Company performs the annual impairment test during the last quarter of each year. As of March 31, 2014, we determined there was no impairment of our goodwill. PROPERTY AND DEPRECIATION Property and equipment are recorded at cost and depreciated under the straight-line method over the estimated useful life of the assets. The estimated useful life of leasehold costs, equipment and tools ranges from five to seven years. Equipment is depreciated over the estimated useful lives of the assets, which ranged from 5 to 7 years, using the straight-line method. OIL AND GAS PROPERTIES The Company follows the successful efforts method of accounting for its oil and gas activities. Under this accounting method, costs associated with the acquisition, drilling and equipping of successful exploratory and development wells are capitalized. Geological and geophysical costs, delay rentals and drilling costs of unsuccessful exploratory wells are charged to expense as incurred. The carrying value of mineral leases is depleted over the minimum estimated productive life of the leases, or ten years. Undeveloped properties are periodically assessed for possible impairment due to un-recoverability of costs invested. Cash received for partial conveyances of property interests is treated as a recovery of cost and no gain or loss is recognized. 9 LONG-LIVED ASSETS The Company assesses potential impairment of its long-lived assets, which include its property and equipment and its identifiable intangibles such as deferred charges, under the guidance Topic 360 "PROPERTY, PLANT AND EQUIPMENT" in the Accounting Standards Codification (the "ASC"). The Company must continually determine if a permanent impairment of its long-lived assets has occurred and write down the assets to their fair values and charge current operations for the measured impairment. As of March 31, 2014 we do not believe any of our long-lived assets are impaired. ASSET RETIREMENT OBLIGATIONS The Company has not recorded an asset retirement obligation (ARO) in accordance with ASC 410. Under ASC 410, a liability should be recorded for the fair value of an asset retirement obligation when there is a legal obligation associated with the retirement of a tangible long-lived asset, and the liability can be reasonably estimated. The associated asset retirement costs should also be capitalized and recorded as part of the carrying amount of the related oil and gas properties. Management believes that not recording an ARO liability and asset under ASC 410 is immaterial to the consolidated financial statements. INCOME TAXES Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. We have recorded a valuation allowance as of March 31, 2014. REVENUE RECOGNITION For our oil segment, revenue is recognized for the oil production when a product is sold to a customer, either for cash or as evidenced by an obligation on the part of the customer to pay. For our technology segment, revenue will be recognized when earned, including both future subscriptions and other future revenue streams, as required under relevant revenue recognition policies under generally accepted accounting policies. FAIR VALUE MEASUREMENTS AND DISCLOSURES The Company estimates fair values of assets and liabilities which require either recognition or disclosure in the financial statements in accordance with FASB ASC Topic 820 "FAIR VALUE MEASUREMENTS". There is no material impact on the March 31, 2014 consolidated financial statements related to fair value measurements and disclosures. Fair value measurements include the following levels: Level 1: Quoted market prices in active markets for identical assets or liabilities. Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data. Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or similar assets or liabilities. Level 3: Unobservable inputs that are not corroborated by market data. Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations 10 incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying value of the Company's financial instruments, including cash and cash equivalents, accounts receivable and accounts payable and long term debt, as reported in the accompanying consolidated balance sheet, approximates fair values. EMPLOYEE STOCK-BASED COMPENSATION Compensation expense is recognized for performance-based stock awards if management deems it probable that the performance conditions are or will be met. Determining the amount of stock-based compensation expense requires us to develop estimates that are used in calculating the fair value of stock-based compensation, and also requires us to make estimates of assumptions including expected stock price volatility which is derived based upon our historical stock prices. BUSINESS COMBINATIONS The Company accounts for business combinations in accordance with FASB ASC Topic 805 "Business Combinations". This standard modifies certain aspects of how the acquiring entity recognizes and measures the identifiable assets, the liabilities assumed and the goodwill acquired in a business combination. The Company entered into a business combination with The Fuelist, LLC on August 15, 2013 (See Note 7 for further disclosure). SUBSEQUENT EVENTS Events occurring after March 31, 2014 were evaluated through the date this quarterly report was issued, in compliance FASB ASC Topic 855 "SUBSEQUENT EVENTS", to ensure that any subsequent events that met the criteria for recognition and/or disclosure in this report have been included. RECENT ACCOUNTING PRONOUNCEMENTS In July 2013, FASB issued ASU No. 2013-11, INCOME TAXES (TOPIC 740): PRESENTATION OF AN UNRECOGNIZED TAX BENEFIT WHEN A NET OPERATING LOSS CARRYFORWARD, A SIMILAR TAX LOSS, OR A TAX CREDIT CARRYFORWARD EXISTS. This ASU is effective for interim and annual periods beginning after December 15, 2013. This update standardizes the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This accounting pronouncement did not have any material effect on our consolidated financial statements. There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries, and are not expected to have a material impact on the Company's financial position, results of operations or cash flows. NOTE 2. INCOME TAXES Deferred income taxes are recorded for temporary differences between financial statement and income tax basis. Temporary differences are differences between the amounts of assets and liabilities reported for financial statement purposes and their tax basis. Deferred tax assets are recognized for temporary differences that will be deductible in future years' tax returns and for operating loss and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will not be realized. Deferred tax liabilities are recognized for temporary differences that will be taxable in future years' tax returns. At March 31, 2014, the Company had a federal net operating loss carry-forward of approximately $2,830,083 compared to $2,639,577 at December 31, 2013. A deferred tax asset of approximately $566,017 at March 31, 2014 and $527,915 at December 31, 2013 has been partially offset by a valuation allowance of approximately 11 $562,581 and $524,414 at March 31, 2014 and December 31, 2013, respectively, due to federal net operating loss carry-back and carry-forward limitations. The Company also had approximately $3,436 and $3,501 in deferred income tax liability at March 31, 2014 and December 31, 2013, respectively, attributable to timing differences between federal income tax depreciation, depletion and book depreciation, which has been offset against the deferred tax asset related to the net operating loss carry-forward. Management evaluated the Company's tax positions under FASB ASC No. 740 "UNCERTAIN TAX POSITIONS," and concluded that the Company had taken no uncertain tax positions that require adjustment to the consolidated financial statements to comply with the provisions of this guidance. With few exceptions, the Company is no longer subject to income tax examinations by the U.S. federal, state or local tax authorities for years before 2010. NOTE 3. STOCKHOLDERS' EQUITY PREFERRED STOCK The Company has authorized 250,000 shares, par value $1,000 per share, of convertible Preferred Series B stock ("Series B"). Each Series B share is convertible into 166.667 shares of the Company's common stock upon election by the stockholder, with dates and terms set by the Board. No shares of Series B preferred stock have been issued. COMMON STOCK The Company has 250,000,000 authorized shares of common stock, par value $.001, with 74,250,030 and 73,760,030 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively. STOCK BASED COMPENSATION For the three months ending March 31, 2014, the Company issued 490,000 shares of common stock at a price of $0.055 per share and recognized $26,950 in consulting fees expense, which is recorded in general and administrative expenses. NON-EMPLOYEE STOCK OPTIONS AND WARRANTS The Company accounts for non-employee stock options under FASB ASC Topic 505 "EQUITY-BASED PAYMENTS TO NON-EMPLOYEES", whereby options costs are recorded based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. During the quarter ended March 31, 2014, no options were issued, exercised or cancelled. The Company currently has outstanding warrants expiring December 31, 2014 to purchase an aggregate of 6,000,000 shares of common stock; these warrants consist of warrants to purchase 2,000,000 shares at an exercise price of $.025 per share, and warrants to purchase 4,000,000 shares at an exercise price of $0.02 per share. In July 2009, the Company issued additional warrants expiring June 30, 2014 to purchase an aggregate of 500,000 shares of common stock at an exercise price of $0.125 per share. From June 2010 thru April 2011, the Company issued additional warrants expiring June 30, 2015 to purchase an aggregate of 420,000 shares of common stock at an exercise price of $0.125 per share. On March 31, 2014, the Company had the following outstanding warrants: 12 Exercise Weighted Remaining Price times Average Exercise Number of Contractual Life Number of Exercise Price Shares (in years) Shares Price ----- ------ ---------- ------ ----- $0.025 2,000,000 .75 $ 50,000 $0.020 4,000,000 .75 $ 80,000 $0.125 500,000 .25 $ 62,500 $0.125 420,000 1.25 $ 52,500 --------- -------- 6,920,000 $245,000 $0.035 ========= ======== Weighted Average Remaining Number of Exercise Contractual Life Warrants Shares Price (in years) -------- ------ ----- ---------- Outstanding at December 31, 2013 6,920,000 $0.035 --------- ------ Issued -- -- Exercised -- -- Expired/Cancelled -- -- --------- ------ Outstanding at March 31, 2014 6,920,000 $0.035 1.0 --------- ------ ---- Exercisable at March 31, 2014 6,920,000 $0.035 1.0 ========= ====== ==== NOTE 4. PROPERTY AND EQUIPMENT A summary of fixed assets at: Balance Balance December 31, March 31, 2013 Additions Deletions 2014 -------- --------- --------- -------- Equipment $ 4,454 $1,201 $ -- $ 5,655 Leasehold Costs - Developed 57,580 5,360 -- 62,940 ------- ------ ------- ------- Total Cost $62,034 $6,561 $ -- $68,595 ======= ====== ======= ======= Less: Accumulated Depreciation $29,752 $1,851 $ -- $31,603 ------- ------ ------- ------- Total Property and Equipment, net $32,282 $4,710 $ -- $36,992 ======= ====== ======= ======= NOTE 5. CONTRACTUAL OBLIGATIONS On February 25, 2013, the Company entered into a twelve month agreement with a new investor relations consultant, which pays the consultant a fee of $9,000 monthly for the period from February 2013 through July 2013. In addition, the Company granted 1,000,000 shares of common stock to the consultant upon execution of the agreement. The Company recognized $9,500 in consulting fees related to this agreement for the quarter ended March 31, 2014. On May 1, 2013, Fuelist entered into a lease agreement with a related party limited liability company for its main office, located in Berkeley, California. The lease term is for one year beginning on May 1, 2013 and ending May 1, 2014. The Company is obligated to pay a minimum amount of rent of $6,000 per year in equal monthly installments of $500 payable on the 1st of each month. The Company 13 subsequently entered into a sublease agreement with another related party entity in which it was not legally relieved of its primary obligation for the lease agreement. The Company recognized $5,460 in sub-lease rent revenue in other income and $8,100 in rent expense in other operating expenses, related to these agreements during the quarter ended March 31, 2014. NOTE 6. RELATED PARTY TRANSACTIONS The Company has used the services of a consulting company owned by the Chairman of the Board. The Company has paid $27,000 and $29,400 for those services during the quarter ended March 31, 2014 and 2013, respectively. The Company has paid directors fees to a company owned by the chairman of the board in the amount of $7,500 and $7,500 and during the quarter ended March 31, 2014 and 2013, respectively and to one other director in the amount of $7,500 and $7,500 during the quarter ended March 31, 2014 and 2013 respectively. NOTE 7. BUSINESS COMBINATION On August 15, 2013, Chancellor entered into a binding term sheet with The Fuelist, LLC, a California limited liability company ("Fuelist"), and its founders (the "Founders"), pursuant to which Chancellor acquired a 51% ownership interest in Fuelist. As consideration for the 51% ownership interest in Fuelist, Chancellor agreed to contribute to Fuelist a total of $271,200 in cash payable in 12 monthly installments of $22,600. As additional consideration for the ownership interest, Chancellor contributed a total of 2,000,000 shares of newly issued common stock to Fuelist on August 19, 2013, valued at $156,000, or $0.078 per share. Also in the term sheet, the 2,000,000 shares of Chancellor common stock are deemed the property of the Founders irrespective of any future sales of the Company or outcomes, and in the event of any sale of the Company to a third party, the Founder's shares paid as part-consideration to the Company for the purchase of Chancellor's 51% shall remain the property of the Founders and those Founder's shares shall be transferred to the Founders before, or as part of, the closing of any such sale in the future to a third party. Chancellor determined that the acquisition of its majority-owned interest in Fuelist constitutes a business combination as defined by FASB ASC Topic 805, Business Combinations. Accordingly, the net assets acquired were recorded upon acquisition at their estimated fair values. Fair values were determined based on the requirements of FASB ASC Topic 820, Fair Value Measurements. In many cases the determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. These fair value estimates were considered preliminary, and are subject to change for up to one year after the closing date of the acquisition if any additional information relative to closing dated fair values becomes available. The initial fair value of assets acquired and liabilities assumed in the purchase has yielded little to no value as such all the proceeds are currently allocated to goodwill as shown below: Purchase Price: Issuance of 2,000,000 shares of common stock $156,000 Contributions payable 271,200 -------- Total $427,200 ======== As of December 31, 2013 Chancellor paid $180,800 toward its contributions payable to Fuelist. For the quarter ended March 31, 2014, Chancellor paid $90,400 towards its contributions payable to Fuelist resulting in no further funding commitments as of March 31, 2014. NOTE 8. NON-CONTROLLING INTERESTS All non-controlling interest of Chancellor related to Fuelist is a result of Chancellor's initial investment, the investment of other members in Fuelist, and results of operations. Cumulative results of these activities result in: 14

NOTE 9. SUBSEQUENT EVENTS Events occurring after March 31, 2014 were evaluated through the date the Form 10Q was issued, in compliance FASB ASC Topic 855 "Subsequent Events", to ensure that any subsequent events that met the criteria for recognition and/or disclosure in this report have been included. On April 28, 2014, Chancellor received an interest-free loan of approximately $5,000 from a related party company owned by the chairman of the board with no specific repayment terms. On April 29, 2014, Chancellor issued 250,000 shares of common stock for consulting services valued at $7,500. 15 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS Throughout this report, we make statements that may be deemed "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, that address activities, events, outcomes and other matters that Chancellor plans, expects, intends, assumes, believes, budgets, predicts, forecasts, projects, estimates or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. These forward-looking statements are based on management's current belief, based on currently available information, as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this report. We caution you that these forward-looking statements are subject to all of the risks and uncertainties, many of which are beyond our control, incident to the exploration for and development, production and sale of oil and gas. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of goods and services, environmental risks, operating risks, regulatory changes, the uncertainty inherent in estimating proved oil and natural gas reserves and in projecting future rates of production and timing of development expenditures and other risks described herein, the effects of existing or continued deterioration in economic conditions in the United States or the markets in which we operate, and acts of war or terrorism inside the United States or abroad. BACKGROUND In April 2007 we commenced operations with what were 84 producing wells in Gray and Carson counties, Texas. On July 22, 2008, we had entered into an Agreement, effective as of June 1, 2008 with Legacy Reserves Operating LP ("Legacy") for the sale of our oil and gas wells in Carson County, Texas, representing for approximately 84% of our oil and gas production at that time. In 2010, the Company acquired three additional properties in Hutchinson County including approximately 16 wells. In 2011, the Company continued our operational and restoration programs and the production capacity from our 67 actively producing wells in Gray and Hutchinson counties. On October 18, 2011, pursuant to the terms of the Purchase and Sale Agreement, LCB Resources purchased all of Gryphon's rights, titles and interests in certain leases, wells, equipment, contracts, data and other designated property, which sale to LCB constituted approximately 82% of the Company's consolidated total assets as of September 30, 2011 and contributed approximately 95% and 77%, respectively, of the Company's consolidated gross revenues and total expenses for the nine months then ended. Under the terms of the Purchase and Sale Agreement, LCB paid Gryphon $2,050,000 in cash, subject to certain adjustments as set forth in the Agreement. Since the sale of substantially all of the assets of Gryphon to LCB, the Company has continued to maintain a total of four (4) producing wells and one (1) water disposal well. Gryphon also retains an operator's license with the Texas Railroad Commission and continues to operate the Hood Leases itself. The proceeds from the asset sale to LCB are being used to provide working capital to Chancellor and for future corporate purposes, including but not limited to possible acquisitions, including new business ventures outside of the oil and gas industry, such as with Pimovi, Inc. commencing during the fourth quarter of 2012 and The Fuelist, LLC commencing during the third quarter 2013. On November 16, 2012, a certificate of incorporation was filed with the state of Delaware for the formation of Pimovi, Inc. ("Pimovi"), a new majority-owned subsidiary of Chancellor, the separate company financial statements of which are consolidated with Chancellor's consolidated financial statements beginning for the fourth quarter of 2012. Subsequently on January 11, 2013 the final binding term sheet was signed by Chancellor summarizing the principal terms, conditions and formal establishment of Pimovi by its two "Co-Founders", Chancellor and Kasian Franks. Under the agreement, Chancellor agreed to provide the initial funding of $250,000 over a period of up to eight months, in consideration of the receipt of 61% of the equity of Pimovi in the form of Series A Preferred Stock. Kasian Franks, whom is also the Chief Scientific Officer of Pimovi, agreed to contribute certain intellectual property related to its business in consideration for receipt of the remaining equity in Pimovi in the form of common stock. The primary business purpose of Pimovi relates largely to technology and mobile application fields, including development of proprietary consumer algorithms, creating user photographic and other activity records, First Person Video Feeds and other such activities related to mobile and computer gaming. In March 2013, Pimovi was reincorporated in Nevada. 16 On August 15, 2013, Chancellor entered into a binding term sheet with The Fuelist, LLC, a California limited liability company ("Fuelist"), and its founders, Matthew Hamilton, Eric Maas and Thomas Rand-Nash, pursuant to which Chancellor agreed to acquire a 51% ownership interest in Fuelist. As consideration for the ownership interest, Chancellor contributed to Fuelist a total of $271,200 in cash payable in 12 monthly installments of $22,600, beginning in August 2013. The contribution was paid in full as of March 31, 2014. As additional consideration for the ownership interest, Chancellor contributed a total of 2,000,000 shares of newly issued common stock to Fuelist on August 19, 2013, valued at $156,000, or $0.078 per share. The primary business purpose of Fuelist relates largely to developing a data-driven mobile and web technology platform that leverages extensive segment expertise and big data analysis tools to value classic vehicles. These tools enable users to quickly find values, track valuations over time and to identify investment and arbitrage opportunities in this lucrative market. Our common stock is quoted on the Over-The-Counter market and trades under the symbol CHAG.OB. As of May 12, 2014, there were 74,500,030 shares of our common stock issued and outstanding. RESULTS OF OPERATIONS Three Months Ended March 31, 2014 Compared to Three Months Ended March 31, 2013. OIL SEGMENT REVENUES AND PRODUCTION: During the three months ended March 31, 2014, we produced and sold 248 barrels of oil and produced and sold no gas, generating $22,684 in gross revenues net of royalties paid, with a one month lag in receipt of revenues for the prior months sales, as compared with 137 barrels of oil, generating $11,526 in gross revenues for the same period in 2013. The Company recorded other income of $0 during the quarter ended March 31, 2014 compared to $53,377 in the same period during 2013 related to the settlement of Cause 37053, related to production proceeds from 2009 through 2011 from properties previously owned and operated by the Company which had been previously paid to another party in error. We had 4 wells actually producing oil and none producing gas at March 31, 2014 and had 4 wells actually producing oil and none producing at March 31, 2013. The Company has continued to maintain a total of four (4) producing wells and one (1) water disposal well. Gryphon will also retain an operator's license with the Texas Railroad Commission and continue to operate the Hood Leases itself. The proceeds from the asset sale to LCB in 2011 will continue to be used to provide working capital to Gryphon and for future corporate purposes including, but not limited to, possible acquisitions and other corporate programs and purposes that have yet to be identified The following table summarizes our production volumes and average sales prices for the periods ended March 31: 2014 2013 -------- -------- Oil Sales: Oil Sales (Bbl) 248 137 Average Sales Price: Oil, per Bbl $91.49 $84.27 The increase in net sales of oil during the period ended March 31, 2014 (as compared to the period ended March 31, 2013) is primarily attributable to the timing of oil deliveries. The production from the existing wells in operation increased by 111 barrels compared to the same period last year. TECHNOLOGY SEGMENT REVENUES AND DEVELOPMENT: During the quarters ended March 31, 2014 and 2013, we did not generate any revenues as our operations focused solely on the development of our web-based and mobile application technologies. DEPRECIATION AND AMORTIZATION: Expense recognized for depreciation and amortization of property and equipment increased $411, or approximately 29% in the three months ended March 31, 2014 compared to the same period in 2013. This 17 increase was primarily attributable to an increase in capitalized well equipment for the oil production segment and capitalized computer equipment for the technology segment. OPERATING EXPENSES AND ADMINISTRATIVE EXPENSES: During the three months ended March 31, 2014, our general and administrative expenses decreased $46,609, or approximately 25% compared to same period in 2013. Significant components of these expenses include professional and consulting fees, travel expenses, and insurance expense. Professional and consulting fees decreased approximately $48,000, or approximately 31%, during the three months ending March 31, 2014 compared to the same period in 2013, primarily the result of large investor relations expenses and consultation costs with third parties in the first quarter of 2013 related to the formation of Pimovi. Travel expenses decreased approximately $3,000 compared to same period in 2013, primarily the result of travel expenses related to the Company's investment in Pimovi, Inc. and the hiring of a new investor relations firm during the first quarter 2013. During the first three months of 2014, approximately $40,000 of investment related professional and consulting expenses were incurred by Pimovi, Inc. compared to approximately $151,000 for the same period in 2013. The majority of this expense incurred was for the financing of Pimovi's general business purpose related to the initial development of technology and mobile applications fields. During the first three months of 2014, approximately $110,700 of investment related professional and consulting expenses were incurred by Fuelist compared to $0 in the for the same period in 2013, as Chancellor's interest in Fuelist was not acquired until the third quarter of 2013. The majority of this expense was incurred for the financing of Fuelist's general business purpose related to the initial development of technology and mobile applications fields. During the three months ended March 31, 2014, we continued with the ongoing production and maintenance of our 4 producing wells in Gray County. As a result of these efforts, our gross revenues from oil production for the three months ended March 31, 2014 were $22,684. The management of the Company has expended a large amount of time and resources in exploring other acquisitions and business opportunities, primarily outside of the oil and gas industry. During the three months ended March 31, 2014, Pimovi incurred a loss of $42,319, compared to $151,187 for the same period in 2013 mostly related to consulting fees and general and administrative expenses, as it continues to develop its product line. Chancellor recorded a $25,814 loss from Pimovi during first quarter of 2014, representing its 61% share of Pimovi compared to $92,224 for the same period during 2013. During the third quarter of 2013, Chancellor acquired a 51% ownership interest in The Fuelist, LLC. During the quarter ended March 31, 2014, Fuelist incurred a loss of $121,331, mostly related to consulting fees and general and administrative expenses, as it continues to develop its technologies. Chancellor recorded a $61,879 loss from Fuelist for the period ended March 31, 2014 representing its 51% share of Fuelist. Therefore, the Company reported a consolidated net loss of $216,649 during the quarter ended March 31, 2014, compared to a net loss $225,242 reported for the same period in 2013. LIQUIDITY AND CAPITAL RESOURCES OVERVIEW: The following table highlights certain information relation to our liquidity and capital resources at: March 31, 2014 December 31, 2013 -------------- ----------------- Working Capital $ 299,879 $ 465,115 Current Assets 422,852 657,854 Current Liabilities 122,973 192,739 Stockholders' Equity 764,321 924,846 Our working capital at March 31, 2014 decreased by $165,236 or approximately 36% from December 31, 2013, primarily from the loss from operations during first quarter 2014 related to Pimovi and Fuelist which consists mostly of third party consulting expenses as our technology segment continues to develop its technologies. Current assets decreased by $235,002 or approximately 36%, while current liabilities decreased $69,766 or approximately 36%, primarily as a result of the timing of cash disbursements related to Pimovi and Fuelist operating expenses and Chancellor's fulfillment of its capital contributions to Fuelist during the quarter ended March 31, 2014. Our capital resources consist primarily of cash from operations and permanent financing, in the form of capital contributions from our stockholders. As of March 31, 2014, the Company had $362,701 of unrestricted cash on hand. Our 18 capital expenditures related to our oil and gas operations for fiscal year 2014, estimated to be approximately $15,000 to $20,000, consist of repair and maintenance of our four producing oil wells and one water disposal well. Chancellor has fulfilled its contractual obligations to provide funding for Fuelist but expects from time to time to provide additional support for Pimovi until such time as Pimovi receives sufficient operating revenue from its business. This additional support is not expected to exceed $20,000 - $25,000 a month. Based on current cash availability Chancellor should be able to provide this for the next 3 - 5 months. Thereafter it would need to obtain third party financing. There is no assurance that would be available on favourable terms or at all. It is anticipated that Fuelist will require significant additional capital to further develop its business. Fuelist plans to fund this development from subscriptions and royalties from its website which went live on March 22, 2014 and from other planned developments such as a related phone app. If such revenue is not sufficient to fund business operations and development Fuelist would need third party financing and there is no assurance that would be available on favourable terms or at all. CASH FLOW: Net cash used during the three months ended March 31, 2014 was $227,200 compared to net cash used of $140,372 during same period in 2013. The most significant factor causing the increase in net cash used during the three months ended March 31, 2014 relates to the decrease in liabilities related to the timing of cash disbursements. Cash used for operations increased by $92,847, or approximately 66% during the first quarter in 2014, compared to the same period in 2013, primarily resulting from the loss from operations attributable to both Pimovi and Fuelist of approximately $163,650. These operating losses were mostly related to consulting fees and general and administrative expenses, as Pimovi and Fuelist continue to develop their technologies. Cash used for investing activities is $2,081 during the three months ended March 31, 2014 compared to cash used for investment activities of $0 for the same period during 2013, attributable to computer equipment purchased by Fuelist and well costs capitalized by Chancellor. Cash provided by financing activities increased $8,100, or approximately 100% during the three months ended March 31, 2014 compared to the same period in 2013 solely related to the cash contributions received by Fuelist from its other equity members. EQUITY FINANCING: As of March 31, 2014, our stockholders have contributed $3,914,563 in total equity financing to date. We do not anticipate that significant equity financing will take place in the foreseeable future. CONTRACTUAL OBLIGATIONS On February 25, 2013, the Company entered into a 12 month agreement with a new investor relations consultant, which pays the consultant a fee of $9,000 monthly for the period from February 2013 through July 2013. In addition, the Company granted 1,000,000 shares of common stock to the consultant upon execution of the agreement. The Company recognized $9,500 in consulting fees related to this agreement for the quarter ending March 31, 2014. On May 1, 2013, Fuelist entered into a lease agreement with a related party limited liability company for its main office, located in Berkeley, California. The lease term is for one year beginning on May 1, 2013 and ending May 1, 2014. The Company is obligated to pay a minimum amount of rent of $6,000 per year in equal monthly installments of $500 payable on the 1st of each month. The Company subsequently entered into a sublease agreement with another related party entity in which it was not legally relieved of its primary obligation for the lease agreement. The Company recognized $5,460 in sub-lease rent revenue in other income and $8,100 in rent expense in other operating expenses, related to these agreements during the quarter ended March 31, 2014. CRITICAL ACCOUNTING POLICIES The Securities and Exchange Commission (the "SEC") recently issued "FINANCIAL REPORTING RELEASE NO. 60 CAUTIONARY ADVICE REGARDING DISCLOSURE ABOUT CRITICAL ACCOUNTING POLICIES" ("FRR 60"), suggesting companies provide additional disclosures, discussion and commentary on those accounting policies considered most critical to its business and financial reporting requirements. FRR 60 considers an accounting policy to be critical if it is important to the 19 Company's financial condition and results of operations, and requires significant judgment and estimates on the part of management in the application of the policy. For a summary of the Company's significant accounting policies, including the critical accounting policies discussed below, please refer to the accompanying notes to the financial statements provided in this Quarterly Report on Form 10-Q. This discussion and analysis of financial condition and results of operations has been prepared by our management based on our consolidated financial statements, which have been prepared in accordance with US GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, our management evaluates our critical accounting policies and estimates, including those related to revenue recognition, valuation of accounts receivable, intangible assets and contingencies. Estimates are based on historical experience and on various assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. These judgments and estimates affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting periods. We consider the following accounting policies important in understanding our operating results and financial condition: GOING CONCERN These consolidated financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has had continued net operating losses with net losses attributable to Chancellor Group, Inc. shareholders of $214,512 and $225,242 for the three months ended March 31, 2014 and 2013, respectively, and retained earnings deficits of $2,988,171 and $2,773,659 as of March 31, 2014 and December 31, 2013, respectively. The Company's continued operations are dependent on the successful implementation of its business plan and its ability to obtain additional financing as needed. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. INTANGIBLE ASSET VALUATION Assessing the valuation of intangible assets is subjective in nature and involves significant estimates and assumptions as well as management's judgment. We periodically perform impairment tests on our long-lived assets, including our intangible assets, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Long-lived assets are testing for impairment by first comparing the estimated future undiscounted cash flows from a particular asset or asset group to the carrying value. If the expected undiscounted cash flows are greater than the carrying value, no impairment is recognized. If the expected undiscounted cash flows are less than the carrying value, then an impairment charge is recorded for the difference between the carrying value and the expected discounted cash flows. The assumptions used in developing expected cash flow estimates are similar to those used in developing other information used by us for budgeting and other forecasting purposes. In instances where a range of potential future cash flows is possible, we use a probability-weighted approach to weigh the likelihood of those possible outcomes. As of March 31, 2014, we do not believe any of our long-lived assets are impaired. GOODWILL Our goodwill represents the excess of the purchase price paid for The Fuelist, LLC over the fair value of the identifiable net assets and liabilities acquired. Goodwill is not amortized but is tested annually for impairment, and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Goodwill is tested for impairment by comparing the carrying amount of the asset to its fair value, which is estimated through the use of a discounted cash flows model. If the carrying amount exceeds fair value, an impairment loss is recognized for the difference. As of March 31, 2014, we determined there was no impairment of our goodwill. 20 REVENUE RECOGNITION For our oil segment, revenue is recognized for the oil production segment when a product is sold to a customer, either for cash or as evidenced by an obligation on the part of the customer to pay. For our technology segment, revenue will be recognized when earned, including both future subscriptions and other future revenue streams, as required under relevant revenue recognition policies under generally accepted accounting policies. NATURAL GAS AND OIL PROPERTIES The process of estimating quantities of oil and gas reserves is complex, requiring significant decisions in the evaluation of all available geological, geophysical, engineering and economic data. The data for a given field may also change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history and continual reassessment of the viability of production under varying economic conditions. As a result, material revisions to existing reserve estimates may occur from time to time. Although every reasonable effort is made to ensure that reserve estimates reported represent the most accurate assessments possible, the subjective decisions and variances in available data make these estimates generally less precise than other estimates included in the financial statement disclosures. INCOME TAXES As part of the process of preparing the consolidated financial statements, we are required to estimate federal and state income taxes in each of the jurisdictions in which Chancellor operates. This process involves estimating the actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as derivative instruments, depreciation, depletion and amortization, and certain accrued liabilities for tax and accounting purposes. These differences and our net operating loss carry-forwards result in deferred tax assets and liabilities, which are included in our consolidated balance sheet. We must then assess, using all available positive and negative evidence, the likelihood that the deferred tax assets will be recovered from future taxable income. If we believe that recovery is not likely, we must establish a valuation allowance. Generally, to the extent Chancellor establishes a valuation allowance or increases or decreases this allowance in a period, we must include an expense or reduction of expense within the tax provision in the consolidated statement of operations. Under accounting guidance for income taxes, an enterprise must use judgment in considering the relative impact of negative and positive evidence. The weight given to the potential effect of negative and positive evidence should be commensurate with the extent to which it can be objectively verified. The more negative evidence that exists (i) the more positive evidence is necessary and (ii) the more difficult it is to support a conclusion that a valuation allowance is not needed for some portion or all of the deferred tax asset. Among the more significant types of evidence that we consider are: * taxable income projections in future years; * whether the carry-forward period is so brief that it would limit realization of tax benefit; * future sales and operating cost projections that will produce more than enough taxable income to realize the deferred tax asset based on existing sales prices and cost structures; and * our earnings history exclusive of the loss that created the future deductible amount coupled with evidence indicating that the loss is an aberration rather than a continuing condition. If (i) oil and natural gas prices were to decrease significantly below present levels (and if such decreases were considered other than temporary), (ii) exploration, drilling and operating costs were to increase significantly beyond current levels, or (iii) we were confronted with any other significantly negative evidence pertaining to our ability to realize our NOL carry-forwards prior to their expiration, we may be required to provide a valuation allowance against our deferred tax assets. As of March 31, 2014, a deferred tax liability of $3,616 has been recognized but partially offset by a valuation allowance of approximately $438,000 due to federal NOL carry-back and carry-forward limitations. 21 BUSINESS COMBINATIONS The Company accounts for business combinations in accordance with FASB ASC Topic 805 "Business Combinations". This standard modifies certain aspects of how the acquiring entity recognizes and measures the identifiable assets acquired, the liabilities assumed and the goodwill acquired in a business combination. Net assets acquired must be recorded upon acquisition at their estimated fair values. Fair values must be determined based on the requirements of FASB ASC Topic 820, Fair Value Measurements. In many cases the determination of fair values of net assets requires management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. Also often times these fair value estimates are considered preliminary at acquisition date, and are subject to change for up to one year after the closing date of the acquisition if any additional information relative to closing dated fair values becomes available. On August 15, 2013, the Company entered into a business combination with The Fuelist, LLC.). ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable for Small Reporting Company. ITEM 4. CONTROLS AND PROCEDURES As supervised by our Board of Directors and our principal executive and principal financial officer, management has established a system of disclosure controls and procedures and has evaluated the effectiveness of that system. The system and its evaluation are reported on in the below Management's Report on Internal Control over Financial Reporting. Based on the evaluation of our controls and procedures (as defined in Rule 13a-15(e) under the 1934 Securities Exchange Act, as amended (the "Exchange Act")) required by paragraph (b) of Rule 13a-15, our principal executive and financial officer has concluded that our disclosure controls and procedures as of March 31, 2014, are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (x) accumulated and communicated to management, including our principal executive and financial officer, as appropriate to show timely decisions regarding required disclosure and (y) recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms. There have been no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Chancellor is from time to time involved in legal proceedings incidental to its business and arising in the ordinary course. Chancellor's management does not believe that any such proceedings will result in liability material to its financial condition, results of operations or cash flow. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The following table sets forth the sales of unregistered securities since the Company's last report filed under this item.

22 (1) The issuances to advisors are viewed by the Company as exempt from registration under the Securities Act of 1933, as amended ("Securities Act"), alternatively, as transactions either not involving any public offering, or as exempt under the provisions of Regulation D promulgated by the SEC under the Securities Act. The Company did not engage an underwriter with respect to any of the issuances of securities described in the foregoing table, and none of these issuances gave rise to any underwriting discount or commission. The shares were issued in private transactions, exempt from registration under the Securities Act of 1933, and are restricted securities within the meaning of Rule 144 thereunder. ITEM 6. EXHIBITS 10.1 Term Sheet for Investment in Pimovi, Inc. (incorporated by reference to Exhibit 10.2 to the Annual Report on Form 10-K filed by the Company on March 25, 2013 with the Securities and Exchange Commission). 10.2 Binding Term Sheet for Investment in The Fuelist, LLC, dated August 15, 2013 (incorporated by reference to Exhibit No. 10.1 to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 20, 2013). 31 Certification of Chief Executive Officer and Principal Financial Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002.* 32 Certification of Chief Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** SEC Ref.No. Title of Document ------- ----------------- 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Label Linkbase Document 101.PRE XBRL Taxonomy Presentation Linkbase Document ---------- * Filed herewith. ** Furnished herewith. 23 SIGNATURES Pursuant to the requirements of Section 12(g) 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, on May 12, 2014. CHANCELLOR GROUP, INC. By: /s/ Maxwell Grant ------------------------------------- Maxwell Grant Chief Executive Officer and Principal Financial 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 in the capacities indicated, on May 12, 2014. By: /s/ Maxwell Grant -------------------------------------- Maxwell Grant, Chief Executive Officer 24 EXHIBIT INDEX 10.1 Term Sheet for Investment in Pimovi, Inc. (incorporated by reference to Exhibit 10.2 to the Annual Report on Form 10-K filed by the Company on March 25, 2013 with the Securities and Exchange Commission). 10.2 Binding Term Sheet for Investment in The Fuelist, LLC, dated August 15, 2013 (incorporated by reference to Exhibit No. 10.1 to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 20, 2013). 31 Certification of Chief Executive Officer and Principal Financial Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002.* 32 Certification of Chief Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** SEC Ref.No. Title of Document ------- ----------------- 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Label Linkbase Document 101.PRE XBRL Taxonomy Presentation Linkbase Document ---------- * Filed herewith. ** Furnished herewith. EX-31 2 ex31.txt EXHIBIT 31 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002 CERTIFICATION I, Maxwell Grant, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of Chancellor Group, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me 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 liability 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 my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. 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: May 12, 2014 /s/ Maxwell Grant -------------------------------------- Maxwell Grant, Chief Executive Officer and Principal Financial Officer EX-32 3 ex32.txt EXHIBIT 32 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 Quarterly Report of Chancellor Group, Inc. (the "Company") on Form 10-Q for the quarter ended March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Maxwell Grant, Chief Executive Officer and Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my 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 result of operations of the Company. /s/ Maxwell Grant -------------------------------------- Maxwell Grant Chief Executive Officer and Principal Financial Officer May 12, 2014 EX-101.INS 4 chag-20140331.xml 271200

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<pre>NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:</pre><pre>ORGANIZATION</pre><pre>Chancellor  Group,  Inc.  (the  "Company",  "our",  "we",  "Chancellor"  or  the</pre><pre>"Company")  was  incorporated  in the state of Utah on May 2, 1986, and then, on</pre><pre>December  30, 1993,  dissolved as a Utah  corporation  and  reincorporated  as a</pre><pre>Nevada  corporation.  The Company's primary business purpose is to engage in the</pre><pre>acquisition, exploration and development of oil and gas production. On March 26,</pre><pre>1996, the Company's  corporate name was changed from Nighthawk Capital,  Inc. to</pre><pre>Chancellor  Group,  Inc. During early 2012, the Company's  corporate  office was</pre><pre>moved from Pampa to Amarillo, Texas.</pre><pre>On November 16, 2012, a certificate of incorporation was filed with the state of</pre><pre>Delaware for the  formation of Pimovi,  Inc.  ("Pimovi"),  a new  majority-owned</pre><pre>subsidiary of Chancellor,  and with which separate company financial  statements</pre><pre>are consolidated with Chancellor's  consolidated  financial statements beginning</pre><pre>for the fourth quarter of 2012.  Chancellor  owns 61% of the equity of Pimovi in</pre><pre>the form of Series A Preferred Stock, therefore Chancellor maintains significant</pre><pre>financial  control.  As of March 31, 2014,  Pimovi had not  commenced  principal</pre><pre>operations  and had no sales or  revenues,  therefore  Pimovi  is  considered  a</pre><pre>"development-stage  enterprise".  The primary business purpose of Pimovi relates</pre><pre>largely to technology and mobile application  fields,  including  development of</pre><pre>proprietary consumer  algorithms,  creating user photographic and other activity</pre><pre>records,  First Person Video Feeds and other such  activities  related to mobile</pre><pre>and computer gaming.</pre><pre>On August 15, 2013,  Chancellor  Group,  Inc.  entered into a binding term sheet</pre><pre>(the "Term Sheet") with The Fuelist, LLC, a California limited liability company</pre><pre>("Fuelist"),  and its founders, Matthew Hamilton, Eric Maas and Thomas Rand-Nash</pre><pre>(together, the "Founders"), pursuant to which Chancellor agreed to acquire a 51%</pre><pre>ownership  interest in Fuelist.  As  consideration  for the ownership  interest,</pre><pre>Chancellor  contributed  to Fuelist a total of $271,200 in cash.  As  additional</pre><pre>consideration  for the  ownership  interest,  Chancellor  contributed a total of</pre><pre>2,000,000  shares of newly  issued  common  stock to Fuelist on August 19, 2013,</pre><pre>valued at $156,000,  or $0.078 per share. As of March 31, 2014,  Fuelist had not</pre><pre>commenced  principal  operations and had no sales or operating  revenues through</pre><pre>March  31,  2014,   therefore   Fuelist  is   considered  a   "development-stage</pre><pre>enterprise".  The primary purpose of Fuelist is the development of a data-driven</pre><pre>mobile and web technology  platform that leverages  extensive  segment expertise</pre><pre>and big data analysis tools to value classic  vehicles.  These tools will enable</pre><pre>users to quickly  find  values,  track  valuations  over time,  and to  identify</pre><pre>investment and arbitrage opportunities in this lucrative market.</pre><pre>GOING CONCERN</pre><pre>These  consolidated  financial  statements  have been prepared on the basis of a</pre><pre>going concern,  which contemplates the realization of assets and satisfaction of</pre><pre>liabilities in the normal course of business.  The Company has had continued net</pre><pre>operating  losses  with  net  losses  attributable  to  Chancellor  Group,  Inc.</pre><pre>shareholders  of $216,649 and $225,242 for the three months ended March 31, 2014</pre><pre>and 2013,  respectively,  and  retained  earnings  deficits  of  $2,990,308  and</pre><pre>$2,773,659  as of March  31,  2014 and  December  31,  2013,  respectively.  The</pre><pre>Company's continued operations are dependent on the successful implementation of</pre><pre>its business plan and its ability to obtain additional  financing as needed. The</pre><pre>accompanying  consolidated  financial  statements do not include any adjustments</pre><pre>that might be necessary if the Company is unable to continue as a going concern.</pre><pre>OPERATIONS</pre><pre>The  Company is  licensed  by the Texas  Railroad  Commission  as an oil and gas</pre><pre>producer and operator.  The Company and its wholly-owned  subsidiaries,  Gryphon</pre><pre>Production  Company,  LLC and Gryphon Field  Services,  LLC, own 5 wells in Gray</pre><pre>County,  Texas,  of which 1 is a water  disposal  well.  As of March  31,  2014,</pre><pre>approximately 4 oil wells are actively producing.</pre><pre>We  produced a total of 248 barrels of oil in the three  months  ended March 31,</pre><pre>2014. The oil is light sweet crude.</pre><pre>Both Pimovi and Fuelist were development stage enterprises as of March 31, 2014,</pre><pre>with no  significant  operations  other than the  ongoing  development  of their</pre><pre>respective technologies as described above.</pre><pre>SIGNIFICANT ACCOUNTING POLICIES</pre><pre>BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION</pre><pre>The  consolidated  financial  statements  of  Chancellor  Group,  Inc. have been</pre><pre>prepared  pursuant to the rules and regulations of the SEC for Quarterly Reports</pre><pre>on Form 10-Q and in accordance  with US GAAP.  Accordingly,  these  consolidated</pre><pre>financial  statements  do  not  include  all of the  information  and  footnotes</pre><pre>required  by  US  GAAP  for  annual  consolidated  financial  statements.  These</pre><pre>consolidated  financial  statements  should  be read  in  conjunction  with  the</pre><pre>consolidated financial statements and notes in the Chancellor Group, Inc. Annual</pre><pre>Report on Form 10-K for the year ended December 31, 2013.</pre><pre>These  accompanying  consolidated  financial  statements include the accounts of</pre><pre>Chancellor and its wholly-owned  subsidiaries:  Gryphon Production Company, LLC,</pre><pre>and Gryphon Field  Services,  LLC. These entities are  collectively  hereinafter</pre><pre>referred to as "the Company". The accompanying consolidated financial statements</pre><pre>include the accounts of Chancellor's  majority-owned  subsidiary,  Pimovi, Inc.,</pre><pre>with which Chancellor owns 61% of the equity of Pimovi and maintains significant</pre><pre>financial  control.  Beginning  in the  third  quarter  2013,  the  accompanying</pre><pre>consolidated   financial  statements  also  include  The  Fuelist,   LLC,  which</pre><pre>Chancellor  acquired  51% of the equity of  Fuelist  and  maintains  significant</pre><pre>financial control. All material intercompany accounts and transactions have been</pre><pre>eliminated in the consolidated financial statements.</pre><pre>The  consolidated  financial  statements  are  unaudited,  but, in  management's</pre><pre>opinion,  include all adjustments (which,  unless otherwise noted,  include only</pre><pre>normal  recurring  adjustments)  necessary  for  a  fair  presentation  of  such</pre><pre>financial  statements.  Financial  results  for  this  interim  period  are  not</pre><pre>necessarily  indicative  of results that may be expected  for any other  interim</pre><pre>period or for the year ending December 31, 2014.</pre><pre>ACCOUNTING YEAR</pre><pre>The Company employs a calendar  accounting year. The Company  recognizes  income</pre><pre>and expenses based on the accrual method of accounting under generally  accepted</pre><pre>accounting principles.</pre><pre>USE OF ESTIMATES</pre><pre>The  preparation  of  consolidated   financial  statements  in  conformity  with</pre><pre>generally accepted  accounting  principles requires management to make estimates</pre><pre>and  assumptions  that affect  reported  amounts of assets and  liabilities  and</pre><pre>disclosure of contingent  assets and liabilities at the date of the consolidated</pre><pre>financial  statements and the reported  amounts of revenues and expenses  during</pre><pre>the reporting period. Actual results could differ from those estimates.</pre><pre>PRODUCTS AND SERVICES, GEOGRAPHIC AREAS AND MAJOR CUSTOMERS</pre><pre>For our oil segment,  the Company has no plans at this stage to further  develop</pre><pre>its  producing  domestic  oil  properties,  located in Gray County,  Texas.  The</pre><pre>Company's major customers, to which substantially all oil production is sold are</pre><pre>Plains  Marketing,  ExxonMobil,  and XTO  Energy.  Given the  number of  readily</pre><pre>available purchasers for our products,  it is unlikely that the loss of a single</pre><pre>customer in the areas in which we sell our products would materially  affect our</pre><pre>sales. For our technology segment,  the Company plans to continue developing its</pre><pre>web-based  and  mobile   technology   platforms   for  its  two   majority-owned</pre><pre>subsidiaries, Pimovi, Inc. and Fuelist, LLC.</pre><pre>NET LOSS PER SHARE</pre><pre>The net loss per share is  computed  by  dividing  the net loss by the  weighted</pre><pre>average number of shares of common  outstanding.  Warrants,  stock options,  and</pre><pre>common stock issuable upon the conversion of the Company's  preferred  stock (if</pre><pre>any), are not included in the  computation if the effect would be  anti-dilutive</pre><pre>and would increase the earnings or decrease loss per share.</pre><pre>CASH AND CASH EQUIVALENTS</pre><pre>The Company considers all highly liquid investments with an original maturity of</pre><pre>three months or less as cash equivalents.</pre><pre>CONCENTRATION OF CREDIT RISK</pre><pre>Some of the Company's  operating  cash balances are  maintained in accounts that</pre><pre>currently  exceed  federally  insured  limits.  The  Company  believes  that the</pre><pre>financial strength of depositing  institutions  mitigates the underlying risk of</pre><pre>loss. To date,  these  concentrations  of credit risk have not had a significant</pre><pre>impact on the Company's financial position or results of operations.</pre><pre>RESTRICTED CASH</pre><pre>Included in restricted cash at March 31, 2014 and December 31, 2013 are deposits</pre><pre>totaling  $25,000,  in the form of a bond issued to the Railroad  Commission  of</pre><pre>Texas as required  for the  Company's  oil and gas  activities  which is renewed</pre><pre>annually.</pre><pre>ACCOUNTS RECEIVABLE</pre><pre>The  Company  reviews  accounts  receivable   periodically  for  collectability,</pre><pre>establishes an allowance for doubtful accounts and records bad debt expense when</pre><pre>deemed necessary. Based on review of accounts receivable by management at period</pre><pre>end,  including  credit quality and subsequent  collections  from customers,  an</pre><pre>allowance  for  doubtful  accounts was not  considered  necessary or recorded at</pre><pre>March 31, 2014 or December 31, 2013.</pre><pre>PREPAID EXPENSES</pre><pre>Certain expenses,  primarily consulting fees, have been prepaid and will be used</pre><pre>within one year.</pre><pre>GOODWILL</pre><pre>Goodwill  represents  the cost in excess of the fair  value of net assets of the</pre><pre>acquisition.  Goodwill is not amortized  but is subject to periodic  testing for</pre><pre>impairment.  The Company tests goodwill for impairment using a two-step process.</pre><pre>The first step tests for  potential  impairment,  while the second step measures</pre><pre>the amount of the impairment, if any. The Company performs the annual impairment</pre><pre>test during the last quarter of each year.  As of March 31, 2014,  we determined</pre><pre>there was no impairment of our goodwill.</pre><pre>PROPERTY AND DEPRECIATION</pre><pre>Property  and  equipment  are  recorded  at  cost  and  depreciated   under  the</pre><pre>straight-line method over the estimated useful life of the assets. The estimated</pre><pre>useful life of leasehold  costs,  equipment  and tools ranges from five to seven</pre><pre>years.  Equipment is depreciated  over the estimated useful lives of the assets,</pre><pre>which ranged from 5 to 7 years, using the straight-line method.</pre><pre>OIL AND GAS PROPERTIES</pre><pre>The Company follows the successful  efforts method of accounting for its oil and</pre><pre>gas  activities.  Under  this  accounting  method,  costs  associated  with  the</pre><pre>acquisition,  drilling and equipping of successful  exploratory  and development</pre><pre>wells are  capitalized.  Geological  and  geophysical  costs,  delay rentals and</pre><pre>drilling  costs of  unsuccessful  exploratory  wells are  charged  to expense as</pre><pre>incurred.  The  carrying  value of mineral  leases is depleted  over the minimum</pre><pre>estimated  productive life of the leases, or ten years.  Undeveloped  properties</pre><pre>are periodically  assessed for possible impairment due to  un-recoverability  of</pre><pre>costs invested.  Cash received for partial  conveyances of property interests is</pre><pre>treated as a recovery of cost and no gain or loss is recognized.</pre><pre>LONG-LIVED ASSETS</pre><pre>The Company  assesses  potential  impairment  of its  long-lived  assets,  which</pre><pre>include its property and  equipment  and its  identifiable  intangibles  such as</pre><pre>deferred charges,  under the guidance Topic 360 "PROPERTY,  PLANT AND EQUIPMENT"</pre><pre>in  the  Accounting  Standards   Codification  (the  "ASC").  The  Company  must</pre><pre>continually  determine if a permanent  impairment of its  long-lived  assets has</pre><pre>occurred  and write  down the assets to their  fair  values  and charge  current</pre><pre>operations for the measured  impairment.  As of March 31, 2014 we do not believe</pre><pre>any of our long-lived assets are impaired.</pre><pre>ASSET RETIREMENT OBLIGATIONS</pre><pre>The Company has not recorded an asset retirement  obligation (ARO) in accordance</pre><pre>with ASC 410.  Under ASC 410, a liability  should be recorded for the fair value</pre><pre>of an asset retirement  obligation when there is a legal  obligation  associated</pre><pre>with the  retirement of a tangible  long-lived  asset,  and the liability can be</pre><pre>reasonably  estimated.  The  associated  asset  retirement  costs should also be</pre><pre>capitalized  and recorded as part of the carrying  amount of the related oil and</pre><pre>gas  properties.  Management  believes  that not  recording an ARO liability and</pre><pre>asset under ASC 410 is immaterial to the consolidated financial statements.</pre><pre>INCOME TAXES</pre><pre>Deferred taxes are provided on a liability  method  whereby  deferred tax assets</pre><pre>are  recognized  for  deductible   temporary   differences  and  operating  loss</pre><pre>carry-forwards and deferred tax liabilities are recognized for taxable temporary</pre><pre>differences.  Temporary  differences  are the  differences  between the reported</pre><pre>amounts of assets and liabilities  and their tax bases.  Deferred tax assets are</pre><pre>reduced by a valuation allowance when, in the opinion of management,  it is more</pre><pre>likely than not that some  portion or all of the deferred tax assets will not be</pre><pre>realized.  Deferred tax assets and  liabilities  are adjusted for the effects of</pre><pre>changes  in tax laws and  rates on the date of  enactment.  We have  recorded  a</pre><pre>valuation allowance as of March 31, 2014.</pre><pre>REVENUE RECOGNITION</pre><pre>For our oil segment, revenue is recognized for the oil production when a product</pre><pre>is sold to a customer,  either for cash or as evidenced by an  obligation on the</pre><pre>part  of the  customer  to pay.  For our  technology  segment,  revenue  will be</pre><pre>recognized  when earned,  including both future  subscriptions  and other future</pre><pre>revenue streams, as required under relevant revenue  recognition  policies under</pre><pre>generally accepted accounting policies.</pre><pre>FAIR VALUE MEASUREMENTS AND DISCLOSURES</pre><pre>The Company estimates fair values of assets and liabilities which require either</pre><pre>recognition  or disclosure in the financial  statements in accordance  with FASB</pre><pre>ASC Topic 820 "FAIR  VALUE  MEASUREMENTS".  There is no  material  impact on the</pre><pre>March  31,  2014  consolidated   financial  statements  related  to  fair  value</pre><pre>measurements  and  disclosures.  Fair value  measurements  include the following</pre><pre>levels:</pre><pre>Level 1:  Quoted  market  prices  in  active  markets  for  identical  assets or</pre><pre>          liabilities.  Valuations for assets and  liabilities  traded in active</pre><pre>          exchange  markets,  such as the New York Stock Exchange.  Level 1 also</pre><pre>          includes  U.S.  Treasury  and federal  agency  securities  and federal</pre><pre>          agency  mortgage-backed  securities,  which are  traded by  dealers or</pre><pre>          brokers  in active  markets.  Valuations  are  obtained  from  readily</pre><pre>          available pricing sources for market transactions  involving identical</pre><pre>          assets or liabilities.</pre><pre>Level 2:  Observable  market  based  inputs  or  unobservable  inputs  that  are</pre><pre>          corroborated  by market data.  Valuations  for assets and  liabilities</pre><pre>          traded  in less  active  dealer  or  broker  markets.  Valuations  are</pre><pre>          obtained  from third party  pricing  services for identical or similar</pre><pre>          assets or liabilities.</pre><pre>Level 3:  Unobservable   inputs  that  are  not  corroborated  by  market  data.</pre><pre>          Valuations  for assets and  liabilities  that are  derived  from other</pre><pre>          valuation methodologies,  including option pricing models,  discounted</pre><pre>          cash  flow  models  and  similar  techniques,  and not based on market</pre><pre>          exchange,  dealer, or broker traded  transactions.  Level 3 valuations</pre><pre>          incorporate  certain  assumptions  and  projections in determining the</pre><pre>          fair value assigned to such assets or liabilities.</pre><pre>FAIR VALUE OF FINANCIAL INSTRUMENTS</pre><pre>The carrying value of the Company's  financial  instruments,  including cash and</pre><pre>cash equivalents,  accounts  receivable and accounts payable and long term debt,</pre><pre>as reported in the accompanying  consolidated  balance sheet,  approximates fair</pre><pre>values.</pre><pre>EMPLOYEE STOCK-BASED COMPENSATION</pre><pre>Compensation  expense  is  recognized  for  performance-based  stock  awards  if</pre><pre>management deems it probable that the performance conditions are or will be met.</pre><pre>Determining  the  amount of  stock-based  compensation  expense  requires  us to</pre><pre>develop  estimates  that are used in  calculating  the fair value of stock-based</pre><pre>compensation,  and also requires us to make estimates of  assumptions  including</pre><pre>expected stock price volatility which is derived based upon our historical stock</pre><pre>prices.</pre><pre>BUSINESS COMBINATIONS</pre><pre>The Company accounts for business combinations in accordance with FASB ASC Topic</pre><pre>805 "Business  Combinations".  This standard modifies certain aspects of how the</pre><pre>acquiring  entity   recognizes  and  measures  the  identifiable   assets,   the</pre><pre>liabilities  assumed and the goodwill  acquired in a business  combination.  The</pre><pre>Company entered into a business  combination with The Fuelist, LLC on August 15,</pre><pre>2013 (See Note 7 for further disclosure).</pre><pre>SUBSEQUENT EVENTS</pre><pre>Events  occurring  after  March 31,  2014 were  evaluated  through the date this</pre><pre>quarterly  report  was  issued,  in  compliance  FASB ASC Topic 855  "SUBSEQUENT</pre><pre>EVENTS",  to  ensure  that  any  subsequent  events  that met the  criteria  for</pre><pre>recognition and/or disclosure in this report have been included.</pre><pre>RECENT ACCOUNTING PRONOUNCEMENTS</pre><pre>In  July  2013,  FASB  issued  ASU  No.  2013-11,   INCOME  TAXES  (TOPIC  740):</pre><pre>PRESENTATION  OF  AN  UNRECOGNIZED   TAX  BENEFIT  WHEN  A  NET  OPERATING  LOSS</pre><pre>CARRYFORWARD,  A SIMILAR TAX LOSS, OR A TAX CREDIT CARRYFORWARD EXISTS. This ASU</pre><pre>is effective for interim and annual periods  beginning  after December 15, 2013.</pre><pre>This update  standardizes the presentation of an unrecognized tax benefit when a</pre><pre>net  operating  loss  carryforward,   a  similar  tax  loss,  or  a  tax  credit</pre><pre>carryforward  exists.  This accounting  pronouncement  did not have any material</pre><pre>effect on our consolidated financial statements.</pre><pre>There were various  other updates  recently  issued,  most of which  represented</pre><pre>technical  corrections to the  accounting  literature or application to specific</pre><pre>industries,  and are not  expected  to have a material  impact on the  Company's</pre><pre>financial position, results of operations or cash flows.</pre>

<pre>NOTE 2. INCOME TAXES</pre><pre>Deferred income taxes are recorded for temporary  differences  between financial</pre><pre>statement and income tax basis.  Temporary  differences are differences  between</pre><pre>the amounts of assets and liabilities  reported for financial statement purposes</pre><pre>and  their  tax  basis.   Deferred  tax  assets  are  recognized  for  temporary</pre><pre>differences  that  will be  deductible  in future  years'  tax  returns  and for</pre><pre>operating loss and tax credit carryforwards.  Deferred tax assets are reduced by</pre><pre>a valuation  allowance  if it is deemed more likely than not that some or all of</pre><pre>the  deferred  tax assets will not be realized.  Deferred  tax  liabilities  are</pre><pre>recognized for temporary  differences  that will be taxable in future years' tax</pre><pre>returns.</pre><pre>At March 31, 2014, the Company had a federal net operating loss carry-forward of</pre><pre>approximately $2,830,083 compared to $2,639,577 at December 31, 2013. A deferred</pre><pre>tax asset of  approximately  $566,017 at March 31, 2014 and $527,915 at December</pre><pre>31, 2013 has been  partially  offset by a valuation  allowance of  approximately</pre><pre>$562,581 and $524,414 at March 31, 2014 and December 31, 2013, respectively, due</pre><pre>to federal net operating loss carry-back and carry-forward limitations.</pre><pre>The Company  also had  approximately  $3,436 and $3,501 in  deferred  income tax</pre><pre>liability at March 31, 2014 and December 31, 2013, respectively, attributable to</pre><pre>timing differences  between federal income tax depreciation,  depletion and book</pre><pre>depreciation,  which has been offset  against the deferred tax asset  related to</pre><pre>the net operating loss carry-forward.</pre><pre>Management  evaluated  the  Company's  tax  positions  under  FASB  ASC No.  740</pre><pre>"UNCERTAIN TAX POSITIONS," and concluded that the Company had taken no uncertain</pre><pre>tax positions that require adjustment to the consolidated  financial  statements</pre><pre>to comply with the provisions of this guidance. With few exceptions, the Company</pre><pre>is no longer subject to income tax  examinations by the U.S.  federal,  state or</pre><pre>local tax authorities for years before 2010.</pre>

<pre>NOTE 3. STOCKHOLDERS' EQUITY</pre><pre>PREFERRED STOCK</pre><pre>The  Company has  authorized  250,000  shares,  par value  $1,000 per share,  of</pre><pre>convertible  Preferred  Series  B stock  ("Series  B").  Each  Series B share is</pre><pre>convertible  into 166.667 shares of the Company's  common stock upon election by</pre><pre>the  stockholder,  with dates and terms set by the Board.  No shares of Series B</pre><pre>preferred stock have been issued.</pre><pre>COMMON STOCK</pre><pre>The Company has 250,000,000  authorized shares of common stock, par value $.001,</pre><pre>with  74,250,030  and 73,760,030  shares issued and  outstanding as of March 31,</pre><pre>2014 and December 31, 2013, respectively.</pre><pre>STOCK BASED COMPENSATION</pre><pre>For the three months ending March 31, 2014, the Company issued 490,000 shares of</pre><pre>common stock at a price of $0.055 per share and recognized $26,950 in consulting</pre><pre>fees expense, which is recorded in general and administrative expenses.</pre><pre>NON-EMPLOYEE STOCK OPTIONS AND WARRANTS</pre><pre>The Company  accounts for  non-employee  stock  options under FASB ASC Topic 505</pre><pre>"EQUITY-BASED  PAYMENTS TO  NON-EMPLOYEES",  whereby  options costs are recorded</pre><pre>based on the fair value of the  consideration  received or the fair value of the</pre><pre>equity instruments  issued,  whichever is more reliably  measurable.  During the</pre><pre>quarter ended March 31, 2014, no options were issued, exercised or cancelled.</pre><pre>The Company  currently has outstanding  warrants  expiring  December 31, 2014 to</pre><pre>purchase an  aggregate  of  6,000,000  shares of common  stock;  these  warrants</pre><pre>consist of warrants to purchase  2,000,000  shares at an exercise price of $.025</pre><pre>per share,  and warrants to purchase  4,000,000  shares at an exercise  price of</pre><pre>$0.02 per share. In July 2009, the Company issued  additional  warrants expiring</pre><pre>June 30, 2014 to purchase an aggregate  of 500,000  shares of common stock at an</pre><pre>exercise price of $0.125 per share.  From June 2010 thru April 2011, the Company</pre><pre>issued  additional  warrants  expiring June 30, 2015 to purchase an aggregate of</pre><pre>420,000 shares of common stock at an exercise price of $0.125 per share.</pre><pre>On March 31, 2014, the Company had the following outstanding warrants:</pre><pre>                                                     Exercise        Weighted</pre><pre>                                  Remaining         Price times      Average</pre><pre>Exercise        Number of      Contractual Life      Number of       Exercise</pre><pre> Price           Shares           (in years)          Shares          Price</pre><pre> -----           ------           ----------          ------          -----</pre><pre>$0.025         2,000,000             .75             $ 50,000</pre><pre>$0.020         4,000,000             .75             $ 80,000</pre><pre>$0.125           500,000             .25             $ 62,500</pre><pre>$0.125           420,000            1.25             $ 52,500</pre><pre>               ---------                             --------</pre><pre>               6,920,000                             $245,000         $0.035</pre><pre>               =========                             ========</pre><pre>                                                     Weighted</pre><pre>                                                     Average       Remaining</pre><pre>                                     Number of       Exercise   Contractual Life</pre><pre>Warrants                              Shares          Price        (in years)</pre><pre>--------                              ------          -----        ----------</pre><pre>Outstanding at December 31, 2013     6,920,000        $0.035</pre><pre>                                     ---------        ------</pre><pre>Issued                                      --            --</pre><pre>Exercised                                   --            --</pre><pre>Expired/Cancelled                           --            --</pre><pre>                                     ---------        ------</pre><pre>Outstanding at March 31, 2014        6,920,000        $0.035          1.0</pre><pre>                                     ---------        ------         ----</pre><pre>Exercisable at March 31, 2014        6,920,000        $0.035          1.0</pre><pre>                                     =========        ======         ====</pre>

<pre>NOTE 4. PROPERTY AND EQUIPMENT</pre><pre>A summary of fixed assets at:</pre><pre>                                    Balance                            Balance</pre><pre>                                  December 31,                         March 31,</pre><pre>                                     2013       Additions  Deletions     2014</pre><pre>                                   --------     ---------  ---------   --------</pre><pre>Equipment                          $ 4,454       $1,201     $    --    $ 5,655</pre><pre>Leasehold Costs - Developed         57,580        5,360          --     62,940</pre><pre>                                   -------       ------     -------    -------</pre><pre>Total Cost                         $62,034       $6,561     $    --    $68,595</pre><pre>                                   =======       ======     =======    =======</pre><pre>Less: Accumulated Depreciation     $29,752       $1,851     $    --    $31,603</pre><pre>                                   -------       ------     -------    -------</pre><pre>Total Property and Equipment, net  $32,282       $4,710     $    --    $36,992</pre><pre>                                   =======       ======     =======    =======</pre>

<pre>NOTE 5. CONTRACTUAL OBLIGATIONS</pre><pre>On February 25, 2013, the Company  entered into a twelve month  agreement with a</pre><pre>new investor  relations  consultant,  which pays the  consultant a fee of $9,000</pre><pre>monthly for the period from February  2013 through July 2013.  In addition,  the</pre><pre>Company  granted  1,000,000  shares  of  common  stock  to the  consultant  upon</pre><pre>execution of the agreement.  The Company  recognized  $9,500 in consulting  fees</pre><pre>related to this agreement for the quarter ended March 31, 2014.</pre><pre>On May 1, 2013,  Fuelist  entered into a lease  agreement  with a related  party</pre><pre>limited liability company for its main office, located in Berkeley,  California.</pre><pre>The lease term is for one year  beginning on May 1, 2013 and ending May 1, 2014.</pre><pre>The Company is obligated  to pay a minimum  amount of rent of $6,000 per year in</pre><pre>equal monthly installments of $500 payable on the 1st of each month. The Company</pre><pre>subsequently entered into a sublease agreement with another related party entity</pre><pre>in which it was not legally  relieved of its  primary  obligation  for the lease</pre><pre>agreement.  The Company  recognized  $5,460 in  sub-lease  rent revenue in other</pre><pre>income and $8,100 in rent expense in other operating expenses,  related to these</pre><pre>agreements during the quarter ended March 31, 2014.</pre>

<pre>NOTE 6. RELATED PARTY TRANSACTIONS</pre><pre>The Company has used the services of a consulting  company owned by the Chairman</pre><pre>of the Board. The Company has paid $27,000 and $29,400 for those services during</pre><pre>the quarter  ended March 31, 2014 and 2013,  respectively.  The Company has paid</pre><pre>directors  fees to a company owned by the chairman of the board in the amount of</pre><pre>$7,500  and  $7,500  and  during  the  quarter  ended  March 31,  2014 and 2013,</pre><pre>respectively and to one other director in the amount of $7,500 and $7,500 during</pre><pre>the quarter ended March 31, 2014 and 2013 respectively.</pre>

<pre>NOTE 7. BUSINESS COMBINATION</pre><pre>On August  15,  2013,  Chancellor  entered  into a binding  term  sheet with The</pre><pre>Fuelist,  LLC, a  California  limited  liability  company  ("Fuelist"),  and its</pre><pre>founders (the "Founders"), pursuant to which Chancellor acquired a 51% ownership</pre><pre>interest in Fuelist.</pre><pre>As consideration for the 51% ownership interest in Fuelist, Chancellor agreed to</pre><pre>contribute  to  Fuelist  a total  of  $271,200  in cash  payable  in 12  monthly</pre><pre>installments of $22,600. As additional consideration for the ownership interest,</pre><pre>Chancellor  contributed a total of 2,000,000 shares of newly issued common stock</pre><pre>to Fuelist on August 19, 2013, valued at $156,000, or $0.078 per share.</pre><pre>Also in the term sheet,  the  2,000,000  shares of  Chancellor  common stock are</pre><pre>deemed the  property of the  Founders  irrespective  of any future  sales of the</pre><pre>Company  or  outcomes,  and in the event of any sale of the  Company  to a third</pre><pre>party,  the Founder's shares paid as  part-consideration  to the Company for the</pre><pre>purchase of Chancellor's 51% shall remain the property of the Founders and those</pre><pre>Founder's shares shall be transferred to the Founders before, or as part of, the</pre><pre>closing of any such sale in the future to a third party.</pre><pre>Chancellor  determined  that the acquisition of its  majority-owned  interest in</pre><pre>Fuelist  constitutes  a business  combination  as defined by FASB ASC Topic 805,</pre><pre>Business Combinations.  Accordingly,  the net assets acquired were recorded upon</pre><pre>acquisition at their estimated fair values. Fair values were determined based on</pre><pre>the requirements of FASB ASC Topic 820, Fair Value  Measurements.  In many cases</pre><pre>the  determination  of these fair values  required  management to make estimates</pre><pre>about discount rates,  future expected cash flows,  market  conditions and other</pre><pre>future events that are highly subjective in nature and subject to change.  These</pre><pre>fair value estimates were considered preliminary,  and are subject to change for</pre><pre>up to one year  after the  closing  date of the  acquisition  if any  additional</pre><pre>information relative to closing dated fair values becomes available.</pre><pre>The  initial  fair  value of assets  acquired  and  liabilities  assumed  in the</pre><pre>purchase has yielded  little to no value as such all the proceeds are  currently</pre><pre>allocated to goodwill as shown below:</pre><pre>Purchase Price:</pre><pre>Issuance of 2,000,000 shares of common stock                            $156,000</pre><pre>Contributions payable                                                    271,200</pre><pre>                                                                        --------</pre><pre>    Total                                                               $427,200</pre><pre>                                                                        ========</pre><pre>As of December  31,  2013  Chancellor  paid  $180,800  toward its  contributions</pre><pre>payable to  Fuelist.  For the  quarter  ended March 31,  2014,  Chancellor  paid</pre><pre>$90,400  towards its  contributions  payable to Fuelist  resulting in no further</pre><pre>funding commitments as of March 31, 2014.</pre>

<pre>NOTE 8. NON-CONTROLLING INTERESTS</pre><pre>All  non-controlling  interest of  Chancellor  related to Fuelist is a result of</pre><pre>Chancellor's initial investment, the investment of other members in Fuelist, and</pre><pre>results of operations. Cumulative results of these activities result in:</pre><pre>                                                      March 31, 2014         December 31, 2013</pre><pre>                                                      --------------         -----------------</pre><pre>Cash contributions paid by Chancellor to Fuelist        $ 271,200               $ 180,800</pre><pre>Cash contributions paid by others to Fuelist               32,400                  24,300</pre><pre>Net loss prior to acquisition by Chancellor</pre><pre> attributable to non-controlling interest                 (29,006)                (29,006)</pre><pre>Net loss subsequent to acquisition by Chancellor</pre><pre> attributable to non-controlling interest                (148,347)                (91,045)</pre><pre>Proceeds from Fuelist sales of</pre><pre> Chancellor stock                                           4,480                      --</pre><pre>                                                        ---------               ---------</pre><pre>     Total non-controlling interest in Fuelist          $ 130,727               $  85,049</pre><pre>                                                        =========               =========</pre><pre>The  following  is a summary of changes in  non-controlling  interest in Fuelist</pre><pre>during the quarter ended March 31, 2014:</pre><pre>Non-controlling interest in Fuelist at December 31, 2013                        $  85,049</pre><pre>Cash contributions paid by Chancellor to Fuelist                                   90,400</pre><pre>Cash contributions paid by others to Fuelist                                        8,100</pre><pre>Net losses attributable to non-controlling interest in Fuelist                    (57,302)</pre><pre>Proceeds from Fuelist sales of Chancellor stock                                     4,480</pre><pre>                                                                                ---------</pre><pre>Non-controlling interest in Fuelist at March 31, 2014                           $ 130,727</pre><pre>                                                                                =========</pre><pre>All  non-controlling  interest  of  Chancellor  related to Pimovi is a result of</pre><pre>results of operations. Cumulative results of these activities result in:</pre><pre>                                                      March 31, 2014         December 31, 2013</pre><pre>                                                      --------------         -----------------</pre><pre>Cumulative net loss attributable to</pre><pre> non-controlling interest in Pimovi                     $ (290,662)             $ (274,157)</pre><pre>                                                        ----------              ----------</pre><pre>Total non-controlling interest in Pimovi                $ (290,662)             $ (274,157)</pre><pre>                                                        ==========              ==========</pre><pre>The  following  is a summary of changes in  non-controlling  interest  in Pimovi</pre><pre>during the quarter ended March 31, 2014:</pre><pre>Non-controlling interest in Pimovi at December 31, 2013                         $ (274,157)</pre><pre>Net loss attributable to non-controlling interest in Pimovi                        (16,504)</pre><pre>                                                                                -----------</pre><pre>Non-controlling interest in Pimovi at March 31, 2014                            $ (290,662)</pre><pre>                                                                                ===========</pre>

<pre>NOTE 9. SUBSEQUENT EVENTS</pre><pre>Events  occurring after March 31, 2014 were evaluated  through the date the Form</pre><pre>10Q was issued, in compliance FASB ASC Topic 855 "Subsequent  Events", to ensure</pre><pre>that  any  subsequent  events  that  met the  criteria  for  recognition  and/or</pre><pre>disclosure in this report have been included.</pre><pre>On April 28, 2014,  Chancellor  received an interest-free  loan of approximately</pre><pre>$5,000 from a related  party  company owned by the chairman of the board with no</pre><pre>specific repayment terms.</pre><pre>On April  29,  2014,  Chancellor  issued  250,000  shares  of  common  stock for</pre><pre>consulting services valued at $7,500.</pre>

<pre>BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION</pre><pre>The  consolidated  financial  statements  of  Chancellor  Group,  Inc. have been</pre><pre>prepared  pursuant to the rules and regulations of the SEC for Quarterly Reports</pre><pre>on Form 10-Q and in accordance  with US GAAP.  Accordingly,  these  consolidated</pre><pre>financial  statements  do  not  include  all of the  information  and  footnotes</pre><pre>required  by  US  GAAP  for  annual  consolidated  financial  statements.  These</pre><pre>consolidated  financial  statements  should  be read  in  conjunction  with  the</pre><pre>consolidated financial statements and notes in the Chancellor Group, Inc. Annual</pre><pre>Report on Form 10-K for the year ended December 31, 2013.</pre><pre>These  accompanying  consolidated  financial  statements include the accounts of</pre><pre>Chancellor and its wholly-owned  subsidiaries:  Gryphon Production Company, LLC,</pre><pre>and Gryphon Field  Services,  LLC. These entities are  collectively  hereinafter</pre><pre>referred to as "the Company". The accompanying consolidated financial statements</pre><pre>include the accounts of Chancellor's  majority-owned  subsidiary,  Pimovi, Inc.,</pre><pre>with which Chancellor owns 61% of the equity of Pimovi and maintains significant</pre><pre>financial  control.  Beginning  in the  third  quarter  2013,  the  accompanying</pre><pre>consolidated   financial  statements  also  include  The  Fuelist,   LLC,  which</pre><pre>Chancellor  acquired  51% of the equity of  Fuelist  and  maintains  significant</pre><pre>financial control. All material intercompany accounts and transactions have been</pre><pre>eliminated in the consolidated financial statements.</pre><pre>The  consolidated  financial  statements  are  unaudited,  but, in  management's</pre><pre>opinion,  include all adjustments (which,  unless otherwise noted,  include only</pre><pre>normal  recurring  adjustments)  necessary  for  a  fair  presentation  of  such</pre><pre>financial  statements.  Financial  results  for  this  interim  period  are  not</pre><pre>necessarily  indicative  of results that may be expected  for any other  interim</pre><pre>period or for the year ending December 31, 2014.</pre>

<pre>ACCOUNTING YEAR</pre><pre>The Company employs a calendar  accounting year. The Company  recognizes  income</pre><pre>and expenses based on the accrual method of accounting under generally  accepted</pre><pre>accounting principles.</pre>

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

<pre>PRODUCTS AND SERVICES, GEOGRAPHIC AREAS AND MAJOR CUSTOMERS</pre><pre>For our oil segment,  the Company has no plans at this stage to further  develop</pre><pre>its  producing  domestic  oil  properties,  located in Gray County,  Texas.  The</pre><pre>Company's major customers, to which substantially all oil production is sold are</pre><pre>Plains  Marketing,  ExxonMobil,  and XTO  Energy.  Given the  number of  readily</pre><pre>available purchasers for our products,  it is unlikely that the loss of a single</pre><pre>customer in the areas in which we sell our products would materially  affect our</pre><pre>sales. For our technology segment,  the Company plans to continue developing its</pre><pre>web-based  and  mobile   technology   platforms   for  its  two   majority-owned</pre><pre>subsidiaries, Pimovi, Inc. and Fuelist, LLC.</pre>

<pre>NET LOSS PER SHARE</pre><pre>The net loss per share is  computed  by  dividing  the net loss by the  weighted</pre><pre>average number of shares of common  outstanding.  Warrants,  stock options,  and</pre><pre>common stock issuable upon the conversion of the Company's  preferred  stock (if</pre><pre>any), are not included in the  computation if the effect would be  anti-dilutive</pre><pre>and would increase the earnings or decrease loss per share.</pre>

<pre>CASH AND CASH EQUIVALENTS</pre><pre>The Company considers all highly liquid investments with an original maturity of</pre><pre>three months or less as cash equivalents.</pre>

<pre>CONCENTRATION OF CREDIT RISK</pre><pre>Some of the Company's  operating  cash balances are  maintained in accounts that</pre><pre>currently  exceed  federally  insured  limits.  The  Company  believes  that the</pre><pre>financial strength of depositing  institutions  mitigates the underlying risk of</pre><pre>loss. To date,  these  concentrations  of credit risk have not had a significant</pre><pre>impact on the Company's financial position or results of operations.</pre>

<pre>RESTRICTED CASH</pre><pre>Included in restricted cash at March 31, 2014 and December 31, 2013 are deposits</pre><pre>totaling  $25,000,  in the form of a bond issued to the Railroad  Commission  of</pre><pre>Texas as required  for the  Company's  oil and gas  activities  which is renewed</pre><pre>annually.</pre>

<pre>ACCOUNTS RECEIVABLE</pre><pre>The  Company  reviews  accounts  receivable   periodically  for  collectability,</pre><pre>establishes an allowance for doubtful accounts and records bad debt expense when</pre><pre>deemed necessary. Based on review of accounts receivable by management at period</pre><pre>end,  including  credit quality and subsequent  collections  from customers,  an</pre><pre>allowance  for  doubtful  accounts was not  considered  necessary or recorded at</pre><pre>March 31, 2014 or December 31, 2013.</pre>

<pre>PREPAID EXPENSES</pre><pre>Certain expenses,  primarily consulting fees, have been prepaid and will be used</pre><pre>within one year.</pre>

<pre>GOODWILL</pre><pre>Goodwill  represents  the cost in excess of the fair  value of net assets of the</pre><pre>acquisition.  Goodwill is not amortized  but is subject to periodic  testing for</pre><pre>impairment.  The Company tests goodwill for impairment using a two-step process.</pre><pre>The first step tests for  potential  impairment,  while the second step measures</pre><pre>the amount of the impairment, if any. The Company performs the annual impairment</pre><pre>test during the last quarter of each year.  As of March 31, 2014,  we determined</pre><pre>there was no impairment of our goodwill.</pre>

<pre>PROPERTY AND DEPRECIATION</pre><pre>Property  and  equipment  are  recorded  at  cost  and  depreciated   under  the</pre><pre>straight-line method over the estimated useful life of the assets. The estimated</pre><pre>useful life of leasehold  costs,  equipment  and tools ranges from five to seven</pre><pre>years.  Equipment is depreciated  over the estimated useful lives of the assets,</pre><pre>which ranged from 5 to 7 years, using the straight-line method.</pre>

<pre>OIL AND GAS PROPERTIES</pre><pre>The Company follows the successful  efforts method of accounting for its oil and</pre><pre>gas  activities.  Under  this  accounting  method,  costs  associated  with  the</pre><pre>acquisition,  drilling and equipping of successful  exploratory  and development</pre><pre>wells are  capitalized.  Geological  and  geophysical  costs,  delay rentals and</pre><pre>drilling  costs of  unsuccessful  exploratory  wells are  charged  to expense as</pre><pre>incurred.  The  carrying  value of mineral  leases is depleted  over the minimum</pre><pre>estimated  productive life of the leases, or ten years.  Undeveloped  properties</pre><pre>are periodically  assessed for possible impairment due to  un-recoverability  of</pre><pre>costs invested.  Cash received for partial  conveyances of property interests is</pre><pre>treated as a recovery of cost and no gain or loss is recognized.</pre>

<pre>LONG-LIVED ASSETS</pre><pre>The Company  assesses  potential  impairment  of its  long-lived  assets,  which</pre><pre>include its property and  equipment  and its  identifiable  intangibles  such as</pre><pre>deferred charges,  under the guidance Topic 360 "PROPERTY,  PLANT AND EQUIPMENT"</pre><pre>in  the  Accounting  Standards   Codification  (the  "ASC").  The  Company  must</pre><pre>continually  determine if a permanent  impairment of its  long-lived  assets has</pre><pre>occurred  and write  down the assets to their  fair  values  and charge  current</pre><pre>operations for the measured  impairment.  As of March 31, 2014 we do not believe</pre><pre>any of our long-lived assets are impaired.</pre>

<pre>ASSET RETIREMENT OBLIGATIONS</pre><pre>The Company has not recorded an asset retirement  obligation (ARO) in accordance</pre><pre>with ASC 410.  Under ASC 410, a liability  should be recorded for the fair value</pre><pre>of an asset retirement  obligation when there is a legal  obligation  associated</pre><pre>with the  retirement of a tangible  long-lived  asset,  and the liability can be</pre><pre>reasonably  estimated.  The  associated  asset  retirement  costs should also be</pre><pre>capitalized  and recorded as part of the carrying  amount of the related oil and</pre><pre>gas  properties.  Management  believes  that not  recording an ARO liability and</pre><pre>asset under ASC 410 is immaterial to the consolidated financial statements.</pre>

<pre>INCOME TAXES</pre><pre>Deferred taxes are provided on a liability  method  whereby  deferred tax assets</pre><pre>are  recognized  for  deductible   temporary   differences  and  operating  loss</pre><pre>carry-forwards and deferred tax liabilities are recognized for taxable temporary</pre><pre>differences.  Temporary  differences  are the  differences  between the reported</pre><pre>amounts of assets and liabilities  and their tax bases.  Deferred tax assets are</pre><pre>reduced by a valuation allowance when, in the opinion of management,  it is more</pre><pre>likely than not that some  portion or all of the deferred tax assets will not be</pre><pre>realized.  Deferred tax assets and  liabilities  are adjusted for the effects of</pre><pre>changes  in tax laws and  rates on the date of  enactment.  We have  recorded  a</pre><pre>valuation allowance as of March 31, 2014.</pre>

<pre>REVENUE RECOGNITION</pre><pre>For our oil segment, revenue is recognized for the oil production when a product</pre><pre>is sold to a customer,  either for cash or as evidenced by an  obligation on the</pre><pre>part  of the  customer  to pay.  For our  technology  segment,  revenue  will be</pre><pre>recognized  when earned,  including both future  subscriptions  and other future</pre><pre>revenue streams, as required under relevant revenue  recognition  policies under</pre>generally accepted accounting policies.

<pre>FAIR VALUE MEASUREMENTS AND DISCLOSURES</pre><pre>The Company estimates fair values of assets and liabilities which require either</pre><pre>recognition  or disclosure in the financial  statements in accordance  with FASB</pre><pre>ASC Topic 820 "FAIR  VALUE  MEASUREMENTS".  There is no  material  impact on the</pre><pre>March  31,  2014  consolidated   financial  statements  related  to  fair  value</pre><pre>measurements  and  disclosures.  Fair value  measurements  include the following</pre><pre>levels:</pre><pre>Level 1:  Quoted  market  prices  in  active  markets  for  identical  assets or</pre><pre>          liabilities.  Valuations for assets and  liabilities  traded in active</pre><pre>          exchange  markets,  such as the New York Stock Exchange.  Level 1 also</pre><pre>          includes  U.S.  Treasury  and federal  agency  securities  and federal</pre><pre>          agency  mortgage-backed  securities,  which are  traded by  dealers or</pre><pre>          brokers  in active  markets.  Valuations  are  obtained  from  readily</pre><pre>          available pricing sources for market transactions  involving identical</pre><pre>          assets or liabilities.</pre><pre>Level 2:  Observable  market  based  inputs  or  unobservable  inputs  that  are</pre><pre>          corroborated  by market data.  Valuations  for assets and  liabilities</pre><pre>          traded  in less  active  dealer  or  broker  markets.  Valuations  are</pre><pre>          obtained  from third party  pricing  services for identical or similar</pre><pre>          assets or liabilities.</pre><pre>Level 3:  Unobservable   inputs  that  are  not  corroborated  by  market  data.</pre><pre>          Valuations  for assets and  liabilities  that are  derived  from other</pre><pre>          valuation methodologies,  including option pricing models,  discounted</pre><pre>          cash  flow  models  and  similar  techniques,  and not based on market</pre><pre>          exchange,  dealer, or broker traded  transactions.  Level 3 valuations</pre><pre>          incorporate  certain  assumptions  and  projections in determining the</pre><pre>          fair value assigned to such assets or liabilities.</pre>

<pre>FAIR VALUE OF FINANCIAL INSTRUMENTS</pre><pre>The carrying value of the Company's  financial  instruments,  including cash and</pre><pre>cash equivalents,  accounts  receivable and accounts payable and long term debt,</pre><pre>as reported in the accompanying  consolidated  balance sheet,  approximates fair</pre><pre>values.</pre>

<pre>EMPLOYEE STOCK-BASED COMPENSATION</pre><pre>Compensation  expense  is  recognized  for  performance-based  stock  awards  if</pre><pre>management deems it probable that the performance conditions are or will be met.</pre><pre>Determining  the  amount of  stock-based  compensation  expense  requires  us to</pre><pre>develop  estimates  that are used in  calculating  the fair value of stock-based</pre><pre>compensation,  and also requires us to make estimates of  assumptions  including</pre><pre>expected stock price volatility which is derived based upon our historical stock</pre><pre>prices.</pre>

<pre>BUSINESS COMBINATIONS</pre><pre>The Company accounts for business combinations in accordance with FASB ASC Topic</pre><pre>805 "Business  Combinations".  This standard modifies certain aspects of how the</pre><pre>acquiring  entity   recognizes  and  measures  the  identifiable   assets,   the</pre><pre>liabilities  assumed and the goodwill  acquired in a business  combination.  The</pre><pre>Company entered into a business  combination with The Fuelist, LLC on August 15,</pre><pre>2013 (See Note 7 for further disclosure).</pre>

<pre>RECENT ACCOUNTING PRONOUNCEMENTS</pre><pre>In  July  2013,  FASB  issued  ASU  No.  2013-11,   INCOME  TAXES  (TOPIC  740):</pre><pre>PRESENTATION  OF  AN  UNRECOGNIZED   TAX  BENEFIT  WHEN  A  NET  OPERATING  LOSS</pre><pre>CARRYFORWARD,  A SIMILAR TAX LOSS, OR A TAX CREDIT CARRYFORWARD EXISTS. This ASU</pre><pre>is effective for interim and annual periods  beginning  after December 15, 2013.</pre><pre>This update  standardizes the presentation of an unrecognized tax benefit when a</pre><pre>net  operating  loss  carryforward,   a  similar  tax  loss,  or  a  tax  credit</pre><pre>carryforward  exists.  This accounting  pronouncement  did not have any material</pre><pre>effect on our consolidated financial statements.</pre><pre>There were various  other updates  recently  issued,  most of which  represented</pre><pre>technical  corrections to the  accounting  literature or application to specific</pre><pre>industries,  and are not  expected  to have a material  impact on the  Company's</pre><pre>financial position, results of operations or cash flows.</pre>

<pre>SUBSEQUENT EVENTS</pre><pre>Events  occurring  after  March 31,  2014 were  evaluated  through the date this</pre><pre>quarterly  report  was  issued,  in  compliance  FASB ASC Topic 855  "SUBSEQUENT</pre><pre>EVENTS",  to  ensure  that  any  subsequent  events  that met the  criteria  for</pre><pre>recognition and/or disclosure in this report have been included.</pre>

<pre>On March 31, 2014, the Company had the following outstanding warrants:</pre><pre>                                                     Exercise        Weighted</pre><pre>                                  Remaining         Price times      Average</pre><pre>Exercise        Number of      Contractual Life      Number of       Exercise</pre><pre> Price           Shares           (in years)          Shares          Price</pre><pre> -----           ------           ----------          ------          -----</pre><pre>$0.025         2,000,000             .75             $ 50,000</pre><pre>$0.020         4,000,000             .75             $ 80,000</pre><pre>$0.125           500,000             .25             $ 62,500</pre><pre>$0.125           420,000            1.25             $ 52,500</pre><pre>               ---------                             --------</pre><pre>               6,920,000                             $245,000         $0.035</pre><pre>               =========                             ========</pre><pre>                                                     Weighted</pre><pre>                                                     Average       Remaining</pre><pre>                                     Number of       Exercise   Contractual Life</pre><pre>Warrants                              Shares          Price        (in years)</pre><pre>--------                              ------          -----        ----------</pre><pre>Outstanding at December 31, 2013     6,920,000        $0.035</pre><pre>                                     ---------        ------</pre><pre>Issued                                      --            --</pre><pre>Exercised                                   --            --</pre><pre>Expired/Cancelled                           --            --</pre><pre>                                     ---------        ------</pre><pre>Outstanding at March 31, 2014        6,920,000        $0.035          1.0</pre><pre>                                     ---------        ------         ----</pre><pre>Exercisable at March 31, 2014        6,920,000        $0.035          1.0</pre><pre>                                     =========        ======         ====</pre>

<pre>A summary of fixed assets at:</pre><pre>                                    Balance                            Balance</pre><pre>                                  December 31,                         March 31,</pre><pre>                                     2013       Additions  Deletions     2014</pre><pre>                                   --------     ---------  ---------   --------</pre><pre>Equipment                          $ 4,454       $1,201     $    --    $ 5,655</pre><pre>Leasehold Costs - Developed         57,580        5,360          --     62,940</pre><pre>                                   -------       ------     -------    -------</pre><pre>Total Cost                         $62,034       $6,561     $    --    $68,595</pre><pre>                                   =======       ======     =======    =======</pre><pre>Less: Accumulated Depreciation     $29,752       $1,851     $    --    $31,603</pre><pre>                                   -------       ------     -------    -------</pre><pre>Total Property and Equipment, net  $32,282       $4,710     $    --    $36,992</pre><pre>                                   =======       ======     =======    =======</pre>

<pre>                                                      March 31, 2014         December 31, 2013</pre><pre>                                                      --------------         -----------------</pre><pre>Cash contributions paid by Chancellor to Fuelist        $ 271,200               $ 180,800</pre><pre>Cash contributions paid by others to Fuelist               32,400                  24,300</pre><pre>Net loss prior to acquisition by Chancellor</pre><pre> attributable to non-controlling interest                 (29,006)                (29,006)</pre><pre>Net loss subsequent to acquisition by Chancellor</pre><pre> attributable to non-controlling interest                (148,347)                (91,045)</pre><pre>Proceeds from Fuelist sales of</pre><pre> Chancellor stock                                           4,480                      --</pre><pre>                                                        ---------               ---------</pre><pre>     Total non-controlling interest in Fuelist          $ 130,727               $  85,049</pre><pre>                                                        =========               =========</pre> <pre>Non-controlling interest in Fuelist at December 31, 2013                        $  85,049</pre><pre>Cash contributions paid by Chancellor to Fuelist                                   90,400</pre><pre>Cash contributions paid by others to Fuelist                                        8,100</pre><pre>Net losses attributable to non-controlling interest in Fuelist                    (57,302)</pre><pre>Proceeds from Fuelist sales of Chancellor stock                                     4,480</pre><pre>                                                                                ---------</pre><pre>Non-controlling interest in Fuelist at March 31, 2014                           $ 130,727</pre><pre>                                                                                =========</pre> <pre>                                                      March 31, 2014         December 31, 2013</pre><pre>                                                      --------------         -----------------</pre><pre>Cumulative net loss attributable to</pre><pre> non-controlling interest in Pimovi                     $ (290,662)             $ (274,157)</pre><pre>                                                        ----------              ----------</pre><pre>Total non-controlling interest in Pimovi                $ (290,662)             $ (274,157)</pre><pre>                                                        ==========              ==========</pre> <pre>The  following  is a summary of changes in  non-controlling  interest  in Pimovi</pre><pre>during the quarter ended March 31, 2014:</pre><pre>Non-controlling interest in Pimovi at December 31, 2013                         $ (274,157)</pre><pre>Net loss attributable to non-controlling interest in Pimovi                        (16,504)</pre><pre>                                                                                -----------</pre><pre>Non-controlling interest in Pimovi at March 31, 2014                            $ (290,662)</pre>                                                                                ===========

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Weighted Average Exercise Price Issued additional warrants expiring June 30, 2015 to purchase Issued additional warrants Summary of changes in non-controlling interest in Pimovi Cash and restricted cash at the Beginning of the Period Cash and restricted cash at the Beginning of the Period Cash and restricted cash at the End of the Period Adjustments to Reconcile Net (Loss) to Net Cash Provided by (Used in) Operating Activities: Depreciation and Amortization Lease Operating Expenses Furniture, Fixtures, & Office Equipment Income Tax Receivable Cash Current Fiscal Year End Date Management and consulting services The amount of expenses incurred towards management and consulting services. Issued Outstanding warrants expiring December 31, 2014 to purchase an aggregate shares of common stock Outstanding warrants expiring December 31, 2014 to purchase an aggregate shares of common stock Restricted Cash Policy The entire disclosure on Cash cash equivalents and restricted cash policy Capital Expenditures Cash Flows from Operating Activities: Total Financing Charges Oil, net of royalties paid Common Stock shares issued Entity Voluntary Filers Document Type Subscriptions Receivable [Member] Additional Paid-in Capital [Member] Company recognized consulting fees related to the agreement Company recognized consulting fees related to the agreement Series B convertible preferred shares into shares of common stock Series B convertible preferred shares into shares of common stock EQUITY TRANSACTIONS: The following is a summary of changes in non-controlling interest in Fuelist as follows {1} The following is a summary of changes in non-controlling interest in Fuelist as follows Tabular disclosure for summary of changes in non-controlling interest in Fuelist. Summary of fixed assets Accounts Receivable Policy Interest Paid {1} Interest Paid Net Cash Provided by Financing Activities (Increase) Decrease in Operating Assets Stock Compensation Expense Administrative Expenses Severance Taxes Contributions Payable Other amounts due but not specifically defined in the taxonomy to other stockholders, broker-dealers or clearing organizations. Goodwill Entity Current Reporting Status Amendment Flag Total Cost Equipment Exercisable Exercisable Exercisable warrants Outstanding Outstanding Outstanding Number of shares issued and outstanding as of the balance sheet date. Statement Non-employee Stock Options and Warrants: Consulting fees expense related to stock Consulting fees expense related to stock Valuation allowance against deferred tax assets The following is a summary of changes in non-controlling interest in Fuelist as follows SUBSEQUENT EVENTS {1} SUBSEQUENT EVENTS Proceeds from Sale of Securities Net Cash (Used in) Operating Activities Loss from Non-controlling Interest in The Fuelist, LLC This element represents the income or loss from continuing operations attributable to the economic entity which may also be defined as revenue less expenses and taxes from ongoing operations before extraordinary items, and noncontrolling interest. Provision for Income Taxes (Benefit) Total Liabilities and Stockholders' Equity Total Stockholders' Equity Non-controlling Minority Interest in Pimovi, Inc. Accounts Receivable Chancellor received an interest-free loan On April 28, 2014, Chancellor received an interest-free loan On April 28, 2014, Contributions payable Contributions payable Expired/Cancelled Expired/Cancelled warrants during the period. Exercise Price $0.020 Exercise Price $0.020 Exercise Price Authorized shares of common stock Employee Stock-Based Compensation Policy RELATED PARTY TRANSACTIONS {1} RELATED PARTY TRANSACTIONS Net Loss attributable to non-controlling interest in Pimovi, Inc. 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Shares of common stock at an exercise price Shares of common stock at an exercise price Preferred Stock: Total deferred tax assets Fair Value of Financial Instruments Policy Long-Lived Assets {1} Long-Lived Assets Disclosure of Long Lived Assets Policy of the entity during the period. Oil and Gas Properties Policy Business Combinations: Supplemental Disclosures of Cash Flow Information: Net (Decrease) in Cash Increase in Operating Liabilities Total Operating Expenses Common Stock shares outstanding Non- controlling Interest [Member] Total Total purchase price Common stock shares issued and outstanding Common stock shares issued and outstanding Restricted Cash Consists Of: NON-CONTROLLING INTERESTS INCOME TAXES {1} INCOME TAXES Income Taxes Paid {1} Income Taxes Paid Prepaid Expenses Amount paid by Chancellor towards contributions Amount paid by Chancellor towards contributions CONTRACTUAL OBLIGATIONS AS FOLLOWS Outstanding warrants As Follows: Exercise Price $0.125 {1} Exercise Price $0.125 The number of shares reserved for issuance pertaining to the outstanding exercisable stock options as of the balance sheet date in the customized range of exercise prices for which the market and performance vesting condition has been satisfied. Warrants to purchase shares Warrants to purchase shares Total deferred tax liabilities Deferred tax assets: Non Controlling Interest Of Chancellor Related To Pimovi Schedule of Business Acquisitions, by Acquisition Business Combinations Policy Business Combination ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: {1} ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Loss) Before Provision for Income Taxes Common Stock Shares authorized Series B Preferred stock shares authorized Restricted Cash Document Period End Date Entity Registrant Name Valuation [Member] PROPERTY AND EQUIPMENT AS FOLLOWS: Number of Shares. Warrants to purchase shares. Warrants to purchase shares. Accounting Year CONTRACTUAL OBLIGATIONS STOCKHOLDERS' EQUITY {1} STOCKHOLDERS' EQUITY Cash Flows From Financing Activities: Bank Fees The amount of Bank Fees Amortization during the period. Financing Charges: Stockholders' Equity Deposits {1} Deposits Document Fiscal Period Focus Entity Central Index Key Deficit Accumulated During the Development Stage [Member] Exercised Statement, Equity Components Summary of changes in non-controlling interest in Pimovi {1} Summary of changes in non-controlling interest in Pimovi Tabular disclosure for summary of changes in non-controlling interest in Pimovi during the year ended . Summary of fixed assets {1} Summary of fixed assets Recent Accounting Pronouncements Revenue Recognition Prepaid Expenses Policy Entire policy disclosure for prepaid expenses Cash and Cash Equivalents Policy The entire diclosure on Cash and Cash Equivalents Policy Net Loss per Share POLICY PROPERTY AND EQUIPMENT {1} PROPERTY AND EQUIPMENT Loss from Non-controlling Interest in Pimovi, Inc. 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Weighted Average Number of Common Shares Outstanding Revenues: Series B Preferred Stock Par Value Common Stock; $.001 par value, 250,000,000 shares authorized, 74,250,030 and 73,760,030 shares issued and outstanding, respectively Total Current Liabilities Property: Preferred Stock A Amount [Member] Leasehold Costs - Developed {1} Leasehold Costs - Developed Gross amount, at the balance sheet date, of long-lived, depreciable assets that are an addition or improvement to assets held under lease arrangement Statement {1} Statement Issuance of shares Total number of nonredeemable preferred shares (or preferred stock redeemable solely at the option of the issuer) issued to shareholders (includes related preferred shares that were issued, repurchased, and remain in the treasury). May be all or portion of the number of preferred shares authorized. Excludes preferred shares that are classified as debt. 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Document Fiscal Year Focus Common Stock Amount [Member] Common Stock Shares [Member] Issuance of 2,000,000 shares of common stock Issuance of 2,000,000 shares of common stock Common stockgranted to the consultant Common stockgranted to the consultant Total oustanding warrants number of shares Total oustanding warrants number of shares Total oustanding warrants number of shares STOCK BASED COMPENSATION: Following outstanding warrants Goodwill Policy Products and Services, Geographic Areas and Major Customers Basis of Presentation and Principles of Consolidation ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Capital Contributions Received from Other Member Net (Loss) per Share (Basic and Fully Diluted) Technology Segment Revenues Parentheticals Accrued Expenses Total Property and Equipment, net Quantity Stock [Member] Outstanding contributions Amount paid by Chancellor towards contributions Weighted Average Exercise Price. 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MGFXK6BLK(FA)%/B7!6MDJU:E0^0J(IZWS4W*JP8DUJQDZLV(8E2E\\=-S059 MEY#[U1^3M-4VG3/YBJ6"2YXK!^1<:_0\\\R=N:"T6F0,$NBR(T'S);[SYTF$ MW=7"U.6$VAV#!->@+6G#]K]#'3/\%@]VST@YF`'P)E M-"?;4OWDNV^4;0H%LQU"()UKGKTE5*904)!Q1J%62GD)!N`;54RO#"@(>37M MCF6J6.)@XH21%_B`HS65ZH%I28S2K52\^FLA?R]E149[$6CW(G[D1+XW"Z+A M(L%>!-K6B>^,1V$T_8B5\5X%VE9E[$S#<#R9_M^+:XMC:IT0158+P7<(UB_$ MEPW13X,_!V5=Y`"FZG*1H;IZS)T>9(8"+6%AO*PFT_'"?8'93/=,?(D)N\S] M)6;299)+3'1@7(AQR`*3=)KE>@8-0U:,3C),#[HF9VR9R":

The Following outstanding warrants (Details)	Mar. 31, 2014
Number of Shares
Exercise Price $0.025	2,000,000
Exercise Price $0.020	4,000,000
Exercise Price $0.125	500,000
Exercise Price $0.125	420,000
Total oustanding warrants number of shares	6,920,000
Remaining Contractual Life (in years)
Exercise Price $0.025	0.75
Exercise Price $0.020	0.75
Exercise Price $0.125	0.25
Exercise Price $0.125	1.25
Exercise Price times Number of Shares
Exercise Price $0.025	50,000
Exercise Price $0.020	80,000
Exercise Price $0.125	62,500
Exercise Price $0.125	52,500
Total oustanding warrants number of shares	245,000
Weighted Average Exercise Price
Total oustanding warrants number of shares	0.035

XML 13 R9.htm IDEA: XBRL DOCUMENT

PROPERTY AND EQUIPMENT	3 Months Ended
Mar. 31, 2014
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT	NOTE 4. PROPERTY AND EQUIPMENT A summary of fixed assets at: Balance Balance December 31, March 31, 2013 Additions Deletions 2014 -------- --------- --------- -------- Equipment $ 4,454 $1,201 $ -- $ 5,655 Leasehold Costs - Developed 57,580 5,360 -- 62,940 ------- ------ ------- ------- Total Cost $62,034 $6,561 $ -- $68,595 ======= ====== ======= ======= Less: Accumulated Depreciation $29,752 $1,851 $ -- $31,603 ------- ------ ------- ------- Total Property and Equipment, net $32,282 $4,710 $ -- $36,992 ======= ====== ======= =======

PROPERTY AND EQUIPMENT

3 Months Ended

Mar. 31, 2014

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

NOTE 4. PROPERTY AND EQUIPMENT

A summary of fixed assets at:

                                    Balance                            Balance

                                  December 31,                         March 31,

                                     2013       Additions  Deletions     2014

                                   --------     ---------  ---------   --------

Equipment                          $ 4,454       $1,201     $    --    $ 5,655

Leasehold Costs - Developed         57,580        5,360          --     62,940

                                   -------       ------     -------    -------

Total Cost                         $62,034       $6,561     $    --    $68,595

                                   =======       ======     =======    =======

Less: Accumulated Depreciation     $29,752       $1,851     $    --    $31,603

                                   -------       ------     -------    -------

Total Property and Equipment, net  $32,282       $4,710     $    --    $36,992

                                   =======       ======     =======    =======

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

+ References+ Details

RELATED PARTY TRANSACTIONS Consists Of The Folowing (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
RELATED PARTY TRANSACTIONS Consists Of The Folowing:
Management and consulting services	$ 27,000	$ 29,400
Paid directors fees	$ 7,500	$ 7,500

CONTRACTUAL OBLIGATIONS (Details) (USD $)	3 Months Ended
CONTRACTUAL OBLIGATIONS (Details) (USD $)	Mar. 31, 2014	Feb. 25, 2013
CONTRACTUAL OBLIGATIONS AS FOLLOWS
Agreement with a new investor relations consultant, which pays the consultant a fee monthly		$ 9,000
Common stockgranted to the consultant		1,000,000
Company recognized consulting fees related to the agreement	9,500
Obligated to pay rent per year	6,000
Recognized in sub-lease rent revenue	5,460
Rent expense in other operating expenses	$ 8,100

The initial fair value of assets acquired and liabilities assumed and allocated to goodwill (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
The initial fair value of assets acquired and liabilities assumed and allocated to goodwill:
Issuance of 2,000,000 shares of common stock		$ 156,000
Contributions payable	0	271,200
Total		427,200
Amount paid by Chancellor towards contributions	180,800
Outstanding contributions	$ 0	$ 90,400

SUBSEQUENT EVENTS AS FOLLOWS (Details) (USD $)	Apr. 29, 2014	Apr. 28, 2014
SUBSEQUENT EVENTS AS FOLLOWS:
Chancellor received an interest-free loan On April 28, 2014,		$ 5,000
Chancellor issued shares of common stock on April 29, 2014 consulting services valued	$ 7,500
Chancellor issued shares	250,000

Consolidated Balance Sheets (USD $)	Mar. 31, 2014	Dec. 31, 2013
Current Assets:
Cash	$ 362,701	$ 589,901
Restricted Cash	25,000	25,000
Accounts Receivable	23,848	12,326
Income Tax Receivable	9,257	12,558
Prepaid Expenses	2,046	18,069
Total Current Assets	422,852	657,854
Property:
Leasehold Costs - Developed	62,940	57,580
Furniture, Fixtures, & Office Equipment	5,655	4,454
Accumulated Depreciation	(31,603)	(29,752)
Total Property and Equipment, net	36,992	32,282
Other Assets:
Goodwill	427,200	427,200
Deposits	250	250
Total Other Assets	427,450	427,450
Total Assets	887,294	1,117,586
Current Liabilities:
Accounts Payable	118,424	99,866
Contributions Payable	0	90,400
Accrued Expenses	4,549	2,473
Total Current Liabilities	122,973	192,739
Stockholders' Equity
Series B Preferred Stock: $1,000 Par Value 250,000 shares authorized, none outstanding	0	0
Common Stock; $.001 par value, 250,000,000 shares authorized, 74,250,030 and 73,760,030 shares issued and outstanding, respectively	74,250	73,760
Paid-in Capital	3,840,313	3,813,853
Retained Earnings (Deficit)	(2,990,308)	(2,773,659)
Total Chancellor, Inc. Stockholders' Equity	924,255	1,113,955
Non-controlling Minority Interest in Pimovi, Inc.	(290,662)	(274,157)
Non-controlling Minority Interest in The Fuelist, LLC	130,727	85,049
Total Stockholders' Equity	764,321	924,846
Total Liabilities and Stockholders' Equity	$ 887,294	$ 1,117,586

Restricted Cash Consists Of (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Restricted Cash Consists Of:
Restricted cash totaled	$ 25,000	$ 25,000

EQUITY TRANSACTIONS (Details) (USD $)	3 Months Ended
EQUITY TRANSACTIONS (Details) (USD $)	Mar. 31, 2014
EQUITY TRANSACTIONS:
Issuance of shares	250,000
Issuance of shares par value per share	$ 1,000
Series B convertible preferred shares into shares of common stock	$ 166.67
Authorized shares of common stock	250,000,000
Authorized shares of common stock par value	$ 0.001
Common stock shares issued and outstanding	74,250,030
Consulting fees expense related to stock	$ 26,950
Outstanding warrants expiring December 31, 2014 to purchase an aggregate shares of common stock	6,000,000
Warrants to purchase shares	2,000,000
Warrants to purchase shares at an exercise price per share	$ 0.025
Warrants to purchase shares.	4,000,000
Warrants to purchase shares at an exercise price per share.	$ 0.02
Issued additional warrants expiring June 30, 2014	500,000
Issued additional warrants expiring June 30, 2015 to purchase	420,000
Shares of common stock at an exercise price	$ 0.125

Consolidated Balance Sheets Parentheticals (USD $)	Mar. 31, 2014	Dec. 31, 2013
Parentheticals
Series B Preferred Stock Par Value	$ 1,000	$ 1,000
Series B Preferred stock shares authorized	250,000	250,000
Common Stock par value	$ 0.001	$ 0.001
Common Stock Shares authorized	250,000,000	250,000,000
Common Stock shares issued	74,250,030	73,760,030
Common Stock shares outstanding	74,250,030	73,760,030

Document and Entity Information	3 Months Ended
Document and Entity Information	Mar. 31, 2014	May 12, 2014
Document and Entity Information
Entity Registrant Name	CHANCELLOR GROUP INC.
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Amendment Flag	false
Entity Central Index Key	0000894544
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		74,500,030
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	2014
Document Fiscal Period Focus	Q1

Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenues:
Oil, net of royalties paid	$ 22,684	$ 11,526
Technology Segment Revenues	0	0
Other Operating Income	0	53,337
Gross Revenue	22,684	64,863
Operating Expenses:
Lease Operating Expenses	4,856	2,468
Severance Taxes	1,045	529
Other Operating Expenses	14,939	3,600
Technology Segment Professional and Consulting Expenses	152,540	151,187
Administrative Expenses	143,110	189,719
Depreciation and Amortization	1,852	1,441
Total Operating Expenses	318,342	348,944
(Loss) From Operations	(295,658)	(284,081)
Other Income (Expense):
Interest Income	80	515
Other Income	5,560	0
Total Other Income (Expense)	5,640	515
Financing Charges:
Bank Fees	438	639
Total Financing Charges	438	639
(Loss) Before Provision for Income Taxes	(290,456)	(284,205)
Provision for Income Taxes (Benefit)	0	0
Net (Loss) of Chancellor, Inc.	(290,456)	(284,205)
Net Loss attributable to non-controlling interest in Pimovi, Inc.	16,504	58,963
Net Loss attributable to non-controlling interest in The Fuelist, LLC	57,302	0
Net (Loss) attributable to Chancellor Group, Inc. Shareholders	$ (216,649)	$ (225,242)
Net (Loss) per Share (Basic and Fully Diluted)	$ (0.01)	$ (0.01)
Weighted Average Number of Common Shares Outstanding	73,950,586	69,560,030

Significant portions of deferred tax assets and liabilities are presented below (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Significant portions of deferred tax assets and liabilities are presented below
Net operating loss carry-forward	$ 2,830,083	$ 2,639,577
Total deferred tax assets	566,017	527,915
Valuation allowance against deferred tax assets	562,581	524,414
Deferred tax assets net of valuation allowance	3,436	3,501
Total deferred tax liabilities	$ 3,436	$ 3,501

ACCOUNTING POLICIES (Policies)	3 Months Ended
ACCOUNTING POLICIES (Policies)	Mar. 31, 2014
ACCOUNTING POLICIES (Policies)
Basis of Presentation and Principles of Consolidation	BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION The consolidated financial statements of Chancellor Group, Inc. have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q and in accordance with US GAAP. Accordingly, these consolidated financial statements do not include all of the information and footnotes required by US GAAP for annual consolidated financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes in the Chancellor Group, Inc. Annual Report on Form 10-K for the year ended December 31, 2013. These accompanying consolidated financial statements include the accounts of Chancellor and its wholly-owned subsidiaries: Gryphon Production Company, LLC, and Gryphon Field Services, LLC. These entities are collectively hereinafter referred to as "the Company". The accompanying consolidated financial statements include the accounts of Chancellor's majority-owned subsidiary, Pimovi, Inc., with which Chancellor owns 61% of the equity of Pimovi and maintains significant financial control. Beginning in the third quarter 2013, the accompanying consolidated financial statements also include The Fuelist, LLC, which Chancellor acquired 51% of the equity of Fuelist and maintains significant financial control. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements. The consolidated financial statements are unaudited, but, in management's opinion, include all adjustments (which, unless otherwise noted, include only normal recurring adjustments) necessary for a fair presentation of such financial statements. Financial results for this interim period are not necessarily indicative of results that may be expected for any other interim period or for the year ending December 31, 2014.
Accounting Year	ACCOUNTING YEAR The Company employs a calendar accounting year. The Company recognizes income and expenses based on the accrual method of accounting under generally accepted accounting principles.
Use of Estimates	USE OF ESTIMATES The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Products and Services, Geographic Areas and Major Customers	PRODUCTS AND SERVICES, GEOGRAPHIC AREAS AND MAJOR CUSTOMERS For our oil segment, the Company has no plans at this stage to further develop its producing domestic oil properties, located in Gray County, Texas. The Company's major customers, to which substantially all oil production is sold are Plains Marketing, ExxonMobil, and XTO Energy. Given the number of readily available purchasers for our products, it is unlikely that the loss of a single customer in the areas in which we sell our products would materially affect our sales. For our technology segment, the Company plans to continue developing its web-based and mobile technology platforms for its two majority-owned subsidiaries, Pimovi, Inc. and Fuelist, LLC.
Net Loss per Share POLICY	NET LOSS PER SHARE The net loss per share is computed by dividing the net loss by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.
Cash and Cash Equivalents Policy	CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.
Concentration of Credit Risk	CONCENTRATION OF CREDIT RISK Some of the Company's operating cash balances are maintained in accounts that currently exceed federally insured limits. The Company believes that the financial strength of depositing institutions mitigates the underlying risk of loss. To date, these concentrations of credit risk have not had a significant impact on the Company's financial position or results of operations.
Restricted Cash Policy	RESTRICTED CASH Included in restricted cash at March 31, 2014 and December 31, 2013 are deposits totaling $25,000, in the form of a bond issued to the Railroad Commission of Texas as required for the Company's oil and gas activities which is renewed annually.
Accounts Receivable Policy	ACCOUNTS RECEIVABLE The Company reviews accounts receivable periodically for collectability, establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. Based on review of accounts receivable by management at period end, including credit quality and subsequent collections from customers, an allowance for doubtful accounts was not considered necessary or recorded at March 31, 2014 or December 31, 2013.
Prepaid Expenses Policy	PREPAID EXPENSES Certain expenses, primarily consulting fees, have been prepaid and will be used within one year.
Goodwill Policy	GOODWILL Goodwill represents the cost in excess of the fair value of net assets of the acquisition. Goodwill is not amortized but is subject to periodic testing for impairment. The Company tests goodwill for impairment using a two-step process. The first step tests for potential impairment, while the second step measures the amount of the impairment, if any. The Company performs the annual impairment test during the last quarter of each year. As of March 31, 2014, we determined there was no impairment of our goodwill.
Property Policy	PROPERTY AND DEPRECIATION Property and equipment are recorded at cost and depreciated under the straight-line method over the estimated useful life of the assets. The estimated useful life of leasehold costs, equipment and tools ranges from five to seven years. Equipment is depreciated over the estimated useful lives of the assets, which ranged from 5 to 7 years, using the straight-line method.
Oil and Gas Properties Policy	OIL AND GAS PROPERTIES The Company follows the successful efforts method of accounting for its oil and gas activities. Under this accounting method, costs associated with the acquisition, drilling and equipping of successful exploratory and development wells are capitalized. Geological and geophysical costs, delay rentals and drilling costs of unsuccessful exploratory wells are charged to expense as incurred. The carrying value of mineral leases is depleted over the minimum estimated productive life of the leases, or ten years. Undeveloped properties are periodically assessed for possible impairment due to un-recoverability of costs invested. Cash received for partial conveyances of property interests is treated as a recovery of cost and no gain or loss is recognized.
Long-Lived Assets	LONG-LIVED ASSETS The Company assesses potential impairment of its long-lived assets, which include its property and equipment and its identifiable intangibles such as deferred charges, under the guidance Topic 360 "PROPERTY, PLANT AND EQUIPMENT" in the Accounting Standards Codification (the "ASC"). The Company must continually determine if a permanent impairment of its long-lived assets has occurred and write down the assets to their fair values and charge current operations for the measured impairment. As of March 31, 2014 we do not believe any of our long-lived assets are impaired.
Asset Retirement Obligations Policy	ASSET RETIREMENT OBLIGATIONS The Company has not recorded an asset retirement obligation (ARO) in accordance with ASC 410. Under ASC 410, a liability should be recorded for the fair value of an asset retirement obligation when there is a legal obligation associated with the retirement of a tangible long-lived asset, and the liability can be reasonably estimated. The associated asset retirement costs should also be capitalized and recorded as part of the carrying amount of the related oil and gas properties. Management believes that not recording an ARO liability and asset under ASC 410 is immaterial to the consolidated financial statements.
Income Tax Policy	INCOME TAXES Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. We have recorded a valuation allowance as of March 31, 2014.
Revenue Recognition	REVENUE RECOGNITION For our oil segment, revenue is recognized for the oil production when a product is sold to a customer, either for cash or as evidenced by an obligation on the part of the customer to pay. For our technology segment, revenue will be recognized when earned, including both future subscriptions and other future revenue streams, as required under relevant revenue recognition policies under generally accepted accounting policies.
Fair Value Measurements and Disclosures Policy	FAIR VALUE MEASUREMENTS AND DISCLOSURES The Company estimates fair values of assets and liabilities which require either recognition or disclosure in the financial statements in accordance with FASB ASC Topic 820 "FAIR VALUE MEASUREMENTS". There is no material impact on the March 31, 2014 consolidated financial statements related to fair value measurements and disclosures. Fair value measurements include the following levels: Level 1: Quoted market prices in active markets for identical assets or liabilities. Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data. Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or similar assets or liabilities. Level 3: Unobservable inputs that are not corroborated by market data. Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.
Fair Value of Financial Instruments Policy	FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying value of the Company's financial instruments, including cash and cash equivalents, accounts receivable and accounts payable and long term debt, as reported in the accompanying consolidated balance sheet, approximates fair values.
Employee Stock-Based Compensation Policy	EMPLOYEE STOCK-BASED COMPENSATION Compensation expense is recognized for performance-based stock awards if management deems it probable that the performance conditions are or will be met. Determining the amount of stock-based compensation expense requires us to develop estimates that are used in calculating the fair value of stock-based compensation, and also requires us to make estimates of assumptions including expected stock price volatility which is derived based upon our historical stock prices.
Business Combinations Policy	BUSINESS COMBINATIONS The Company accounts for business combinations in accordance with FASB ASC Topic 805 "Business Combinations". This standard modifies certain aspects of how the acquiring entity recognizes and measures the identifiable assets, the liabilities assumed and the goodwill acquired in a business combination. The Company entered into a business combination with The Fuelist, LLC on August 15, 2013 (See Note 7 for further disclosure).
SUBSEQUENT EVENTS	SUBSEQUENT EVENTS Events occurring after March 31, 2014 were evaluated through the date this quarterly report was issued, in compliance FASB ASC Topic 855 "SUBSEQUENT EVENTS", to ensure that any subsequent events that met the criteria for recognition and/or disclosure in this report have been included.
Recent Accounting Pronouncements	RECENT ACCOUNTING PRONOUNCEMENTS In July 2013, FASB issued ASU No. 2013-11, INCOME TAXES (TOPIC 740): PRESENTATION OF AN UNRECOGNIZED TAX BENEFIT WHEN A NET OPERATING LOSS CARRYFORWARD, A SIMILAR TAX LOSS, OR A TAX CREDIT CARRYFORWARD EXISTS. This ASU is effective for interim and annual periods beginning after December 15, 2013. This update standardizes the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This accounting pronouncement did not have any material effect on our consolidated financial statements. There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries, and are not expected to have a material impact on the Company's financial position, results of operations or cash flows.

Outstanding warrants As Follows (Details)	Number of Shares.	Weighted Average Exercise Price.	Remaining Contractual Life (in years).
Outstanding at Dec. 31, 2013	6,920,000	0.035	0
Issued	0
Exercised	0
Expired/Cancelled	0
Exercisable at Mar. 31, 2014	6,920,000	0.035	1.0
Outstanding at Mar. 31, 2014	6,920,000	0.035	1.0

Consolidated Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash Flows from Operating Activities:
Net Loss	$ (216,649)	$ (225,242)
Adjustments to Reconcile Net (Loss) to Net Cash Provided by (Used in) Operating Activities:
Loss from Non-controlling Interest in Pimovi, Inc.	(16,504)	(58,963)
Loss from Non-controlling Interest in The Fuelist, LLC	(57,302)	0
Depreciation and Amortization	1,852	1,441
Stock Compensation Expense	26,950	100,000
(Increase) Decrease in Operating Assets	7,802	(54,168)
Increase in Operating Liabilities	20,633	96,560
Net Cash (Used in) Operating Activities	(233,219)	(140,372)
Cash Flows From Investing Activities:
Proceeds from Sale of Securities	4,480	0
Capital Expenditures	(6,561)	0
Net Cash (Used in) Investing Activities	(2,081)	0
Cash Flows From Financing Activities:
Capital Contributions Received from Other Member	8,100	0
Net Cash Provided by Financing Activities	8,100	0
Net (Decrease) in Cash	(227,200)	(140,372)
Cash and restricted cash at the Beginning of the Period	589,901	1,725,508
Cash and restricted cash at the End of the Period	362,701	1,585,136
Supplemental Disclosures of Cash Flow Information:
Interest Paid	0	0
Income Taxes Paid	$ 0	$ 0

PROPERTY AND EQUIPMENT (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
PROPERTY AND EQUIPMENT AS FOLLOWS:
Equipment	$ 5,655	$ 4,454
Leasehold Costs - Developed	62,940	57,580
Total Cost	68,595	62,034
Less: Accumulated Depreciation	31,603	29,752
Total Property and Equipment, net	$ 36,992	$ 32,282