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[April 18, 2014]
NORTHERN EMPIRE ENERGY CORP. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Edgar Glimpses Via Acquire Media NewsEdge) Forward-Looking Information This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "common shares" refer to the common shares in our capital stock.
In this Form 10-Q references to "Northern Empire", "the Company", "we", "us" and "our" refer to Northern Empire Energy Corp.
Limited Operating History There is limited historical financial information about our company upon which to base an evaluation of our future performance. We are a development stage corporation and have generated limited revenues from operations. We cannot guarantee that we will be successful in our business operations. We are subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible delays in the exploitation of business opportunities. We may fail to adopt a business model and strategize effectively or fail to revise our business model and strategy should industry conditions and competition change.
We have limited resources and there is no assurance that future financing will be available to us on acceptable terms. Additional equity financing could result in dilution to existing shareholders.
Overview of Operations We were incorporated in the State of Nevada on April 24, 2006, as Political Calls, Inc. Our common stock is quoted for trading on the OTC Bulletin Board under the symbol NOEE. Our principal executive offices are located at Suite 201 - 55 York Street, Toronto, Ontario, Canada, M5J 1R7.
The original business plan of the Company consisted of marketing telephone broadcasting messages for political campaigns. On November 23, 2008, the Board of Directors and the majority vote of the Company's shareholders voted and approved a name change of the Company from Political Calls, Inc. to Northern Empire Energy Corp., to better reflect the Company's new business direction in oil and gas exploration.
9 --------------------------------------------------------------------------------In December 2009 we entered into a "Formal Option to Purchase and Sale Agreement of Petroleum and Natural Gas Rights" with Angels Exploration Fund, Inc., an Alberta Corporation. We agreed to purchase from Angels Exploration Fund Inc.
certain petroleum and natural gas rights within the Province of Alberta for a total purchase price of $471,524 ($500,000.00 Canadian Dollars). In January 2010, the Company announced it had acquired 100% of the Petroleum and Natural Gas lease rights on nine sections in the Redwater Region, north-east of Edmonton, Alberta; the "Waskatenau Prospect".
The Company was unable to secure additional financing to conduct exploration and drill wells on its oil and gas properties and consequently, decided to forfeit the Petroleum and Natural Gas lease rights on the Waskatenau Prospect. During the year ended December 31, 2010, the Company terminated the "Formal Option to Purchase and Sale Agreement of Petroleum and Natural Gas Rights" and became a shell corporation whose sole purpose at this time is to locate and consummate a merger and/or acquisition with an operating entity. We have no employees and own no property. We do not intend to perform any further operations until a merger or acquisition candidate is located and a merger or acquisition consummated.
Plan of Operation Currently, we are a development stage corporation. A development stage corporation is one engaged in the search of business opportunities, successful negotiation and closing of a business acquisition and furthering its business plan.
Our plan of operation for the next twelve months will be to: (i) consider guidelines of industries in which we may have an interest; (ii) adopt a business plan regarding engaging in business in any selected industry; and (iii) to commence such operations through funding and/or the acquisition of an operating entity engaged in any industry selected.
Results of Operations Results of Operations for the three months ended March 31, 2012 and 2011 During the three months ended March 31, 2012, the Company had a net loss of $(11,146) compared to a net gain of $1,871 during the same period ended March 31, 2011. Operating expenses for the period ended March 31, 2012 totaled $13,962 (2011- $9) consisting of $2,012 in general and administrative expenses and professional fees of $11,950 for the preparation and review of our interim financial statements. During the quarter ended March 31, 2012 the Company received $2,051 from foreign currency transaction gain and $765 from the settlement of debt previously owed to the Company's transfer agent.
For the period since inception through March 31, 2012, we generated limited revenues of $19,491. As a result, we have generated significant operating losses since our formation and expect to incur substantial losses and negative operating cash flows for the foreseeable future as we attempt to expand our infrastructure and development activities. Our ability to continue may prove more expensive than we currently anticipate and we may incur significant additional costs and expenses.
We are subject to risks inherent in the establishment of a new business enterprise. We may fail to adopt a business model and strategize effectively or fail to revise our business model and strategy should industry conditions and competition change. We have limited resources and there is no assurance that future financing will be available to our Company on acceptable terms. These conditions could further impact our business and have an adverse effect on our financial position, results of operations and/or cash flows.
10 --------------------------------------------------------------------------------Liquidity and Capital Resources At March 31, 2012, we had total assets of $nil and total liabilities of $42,071 compared to total assets of $174 and total liabilities of $128,280 at December 31, 2011. Net working capital was $(42,071) compared to $(128,106) at December 31, 2011. We incurred a net loss of $(11,146) for the three months ended March 31, 2012 and an aggregate deficit since inception of $(820,184).
We earned $19,491 in revenues since our inception on April 24, 2006 through March 31, 2012. We generated no revenue during the three months ended March 31, 2012. We do not anticipate generating any revenues for the foreseeable future. Since inception, we have used our common stock to raise money to fund our business operations, for corporate expenses and to repay outstanding indebtedness. Net cash provided by the sale of shares from inception to March 31, 2012 was $719,257.
We do not have enough money to meet our cash requirements for the next twelve months, as we have yet to commence operations, have not generated any revenues and there can be no assurance that we can generate significant revenues from operations.
The Company's management is exploring a variety of options to meet the Company's cash requirements and future capital requirements, including the possibility of equity offerings, debt financing and business combinations. There can be no assurance that the Company will be able to raise additional capital, and if the Company is unable to raise additional capital, it will unlikely be able to continue as a going concern.
Going Concern As of the date of this report, there is substantial doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow to fund our business operations. The financial statements included in this report have been prepared on the going concern basis, which assumes that we will be able to realize our assets and discharge our obligations in the normal course of business. If we are not to continue as a going concern, we would likely not be able to realize our assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the financial statements.
Our future success and viability, therefore, are dependent upon our ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon us and our shareholders.
Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies There have been no material changes in our existing accounting policies and estimates from the disclosures included in our 2011 Form 10-K, except for the newly adopted accounting policies as disclosed in the interim financial statements.
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