ve10ksb7.htm
United
States Securities and Exchange Commission
Washington,
D.C. 20549
x ANNUAL REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
fiscal year ended December 31,
2007
o TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission
File No.
002-76219NY
VICTORY
ENERGY CORPORATION
(Name of
Small Business Issuer in its Charter)
NEVADA
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87-0564472
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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112
N. Curry Street
Carson City, Nevada 89703-4934
(Address
of Principal Executive Offices)
Issuer’s
Telephone Number:(866)
279-9257
Securities
Registered under Section 12(b) of the Exchange Act: None.
Securities
Registered under Section 12(g) of the Exchange Act: None.
Check
whether the Issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act. o
Check
whether the Issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90
days. Yes x No o
Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.) Yes o No x
State
Issuer’s revenues for its most recent fiscal year: $- 0 -
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked prices of such common equity, as of a
specified date within the past 60 days: On December 31, 2007,
$2,605,704. There are 27,142,750 shares of common voting stock of the Registrant
held by non-affiliates. During the past year, there has been a limited “public
market” for shares of common stock of the Registrant, so the Registrant has
arbitrarily valued these shares on the basis of the closing bid price on this
date.
State the
number of shares outstanding of each of the Issuer’s classes of common equity,
as of the latest practicable date: On December 31, 2007 there were 42,395,366
shares of common stock issued and outstanding
A
description of “Documents Incorporated by Reference” is contained in Part III,
Item 14.
Transitional
Small Business Issuer Format Yes o No x
ITEM
1. DESCRIPTION OF BUSINESS
Forward-Looking
Statements
This
annual report on Form 10-KSB and other statements issued or made from time to
time by Victory Energy Corporation, a Nevada corporation, contain statements
which may constitute “Forward-Looking Statements” within the meaning of the
Securities Act of 1933, as amended (the “Act”) and the Securities Exchange Act
of 1934 (the “Exchange Act”) by the Private Securities Litigation Reform Act of
1995, 15 U.S.C.A. Sections 77Z-2 and 78U-5 (SUPP. 1996). Those statements
include statements regarding the intent, belief or current expectations of
Victory Energy Corporation and its officers/directors as well as the assumptions
on which such statements are based. Prospective investors are cautioned that any
such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those contemplated by such forward-looking statements. Victory Energy
Corporation is sometimes referred to herein as “we”, “us”, “our” and the
“Company.”
General
Background
Victory
Energy Corporation (the “Company”) was organized under the laws of the State of
Nevada on January 7, 1982. The Company is authorized to issue 200,000,000 shares
of common stock, par value $.001.
Historical
Information about our Business
From
inception to 2004, the Company had conducted no material business operations. In
2004, our Company began the search for the acquisition of assets, property or
businesses that could benefit the Company and its shareholders. Our goal has
been to bring value to the Company and to its shareholders through such
acquisitions. Each merger and acquisition we approach is done with the intention
to position the Company into markets and sectors where excellent growth
potential is anticipated.
Current
Business of the Company
Management
determined that the Company should focus on projects in the oil and gas
industry. This is based upon a belief that this industry is an economically
viable sector in which to conduct business operations. The Company has targeted
specific prospects and intends to engage in the drilling for oil and gas. Jon
Fullenkamp who joined Victory as the Company's president and CEO in January of
2005 has a great deal of experience in the oil and gas industry and has already
recruited additional experience with new directors and advisory board
members.
The
Corporation has established a financial facility with institutional investors
providing drilling funds to the Company for the further development of oil and
gas properties. This facility provides for direct participation by the investors
in the production of the completed wells. The Corporation receives a
15% carried interest in the wells and shares in the same value of the production
revenue on a monthly basis. Once the investment amount to drill each
well is earned back to the financial facility, the Corporations participation
will increase to 25%. The Corporation will receive the same level of
participation in the revenues on a monthly basis at that time.
In
December of 2007, the Corporation purchased, through the financial facility with
institutional investors, 50% working interest and 50% of 74% net revenue
interest in six existing and producing gas wells in the Canyon Sandstone gas
zone from
Universal Energy Resources, Inc., a whole owned subsidiary of 1st Texas
Natural Gas Company Inc. Asset value to the Corporation for its
interest in these wells is above $10,000,000. The recording of these
wells, to the wholly owned subsidiary of Victory Energy Corporation, Production
Resources Incorporated through the State of Texas, will take place during the
second quarter of 2008.
The
Corporation has targeted the prolific Canyon Sandstone gas field in the Texas
Permian Basin, with the intent to focus on the drilling and completion of
natural gas wells in this existing field. The opportunity is of
reduced risk due to the extensive historical information available from this
specific natural gas field. The commercial success of this field is
over 97%, indicating that 97% of the wells drilled here are commercially
productive.
The
Canyon Sandstone gas play is located in the Texas Permian Basin as part of the
large prolific Adams-Baggett Canyon Sandstone gas field. The Canyon Sandstone
formation is found at a depth of 4,300 feet to 4,900 feet. Initial production
for these wells is approximately 250,000 cubic feet of gas per day per well. The
average life span of a Canyon Sandstone gas well is approximately 30
years.
Natural
gas from the Canyon Sandstone gas zone receives a 20% premium in price above the
standard price due to its higher BTU content per cubic foot of natural
gas.
Within
this existing gas field are two deeper zones, Strawn Limestone and the
Ellenburger Dolomite. The Strawn Limestone gas zone will produce approximately
1.5 BCF and the Ellenburger Dolomite gas zone will produce approximately 5.0
BCF, over an average life span of approximately 30 years. The Strawn zone is
usually found at 9,000 to 9,800 feet, while the depth of the Ellenburger zone is
between 10,500 and 11,500 feet.
To reduce
risk in the field, each well drilled has the opportunity to have the Canyon
Sandstone gas zone available to produce from. For each of the deeper
gas wells drilled in this field, the Corporation will always have the Canyon
Sandstone zone available as a fall back opportunity to produce from and recover
any additional drilling expenses incurred from drilling a deeper
well.
The
underlying opportunity in drilling a deeper gas well is to first produce the
deepest zone, Ellenburger Dolomite, until it is depleted. The next
step is then to produce the shallower Strawn Limestone until depletion and
finally to produce the Canyon Sandstone zone to depletion. Offsets of
deeper gas wells in this field are producing average of 2.5 million cubic feet
of gas per day.
The
Corporation received its first revenue from production sales from this field in
March of 2008.
We also
hold an interest as a joint venture partner in the Mesa Gas Prospect located in
Roosevelt County New Mexico. Additionally, the Company holds 1,960
acres in a prospective oilfield identified as N.E. Glasgow Prospect located in
Montana which plans to be incorporated into the Company’s developments in Valley
County Montana. We had taken on the evaluation of a prospect in
Oklahoma identified as the Skedee Prospect. As we progressed into the
due diligence of these prospects and the potential production, management
determined that the development of the prospect was not worth the required
investment capital. Even with the potential reduction in investment dollars, the
prospects had an unacceptable pay back time for the initial investment.
Management felt the shareholders would be better served by seeking other
prospects.
Other
than our President, we have no other employees at this time and we will seek to
retain independent contractors to assist in operating and managing the prospects
as well as to carry out the principal and necessary functions incidental to the
oil and gas business. With the intended acquisition of oil and natural gas, we
intend to establish ourselves as an industry partner within the industry. With
our established revenue base with cash flow, we will seek opportunities more
aggressive in nature.
Marketing
Considerations of our Product
The
marketing of our prospects’ oil and gas production, if any, are affected by
numerous factors beyond our control such as the availability and proximity of
adequate pipelines or other transportation facilities, local, state and federal
regulations affecting production, and fluctuations of supply and demand. Our
production may be competing with crude oil imports and other energy sources such
as coal and nuclear energy. Crude oil and natural gas must compete on a free
market basis. Potential proposed legislation could decrease the demand for oil
and gas in the future, however, management believes we are well poised to
compete effectively in today’s market.
Competition
The oil
and gas industry is highly competitive. We will be competing with other oil and
gas companies with financial resources and staffs greater than those available
to us, not only in the acquisition of oil and gas leases having potential for
development, but also in the securing of funds to finance such operations. The
production and sale of oil and gas are subject to the availability of a ready
market, the proximity to pipelines, and to the regulation of production,
transportation and marketing by governmental authorities. There can also be
competition among operators for drilling equipment, tubular goods, and drilling
crews. Such competition may affect our ability to expeditiously develop our
prospects.
Effect
of Existing Governmental Regulations
The
Company’s prospects are located on federal lands in various states. The U.S.
Government and various states have statutory provisions regulating the
exploration, production and sale of oil and/or gas. Such statutes and the
regulations promulgated in connection thereto, protect correlative rights and
opportunities to produce oil and gas as between owners of a common reservoir.
The U.S. Government and various states may or may not regulate the amount of oil
and gas produced by limiting the rate of allowable production from oil and/or
gas wells or the spacing of wells. Local, State and Federal environmental
controls can affect the Operator and its operations through regulations enacted
to protect against waste, conserve natural resources, and prevent pollution.
This could necessitate the Company spending money on environmental protection
measures, in addition to drilling operations. Penalties or prohibitions imposed
on operators for violating such regulations could seriously inhibit operations.
Limits on production allowable by the state law could materially affect the
income of the Company; no projections on allowables will be made until the wells
are tested. State agencies often set allowables in order to maximize oil and gas
recovery over time. The Company is not aware of any production limits in the
various states at this time.
Additionally,
the United States Bureau of Land Management and the various states impose
certain restrictions such as terrain and archaeological restraints, habitat
mating, non-drilling periods and other restrictions which could prohibit or
hamper the Operator’s right to drill. Normally these restrictions can be
satisfied and the proposed wells can be drilled; nevertheless, the granting of a
drilling permit is at the sole discretion of the governmental
authority.
Sarbanes-Oxley
Act
On July
30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”). The Sarbanes-Oxley Act imposes a wide variety of new
regulatory requirements on publicly-held companies and their insiders. Many of
these requirements will affect us. For example:
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Our
chief executive officer and chief financial officer must now certify the
accuracy of all of our periodic reports that contain financial
statements;
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Our
periodic reports must disclose our conclusions about the effectiveness of
our disclosure controls and procedures;
and
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We
may not make any loan to any director or executive officer and we may not
materially modify any existing
loans.
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The
Sarbanes-Oxley Act has required us to review our current procedures and policies
to determine whether they comply with the Sarbanes-Oxley Act and the new
regulations promulgated thereunder. We will continue to monitor our compliance
with all future regulations that are adopted under the Sarbanes-Oxley Act and
will take whatever actions are necessary to ensure that we are in
compliance.
Penny
Stock
Our
common stock is “penny stock” as defined in Rule 3a51-1 of the Securities and
Exchange Commission. Penny stocks are stocks:
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with
a price of less than five dollars per
share;
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that
are not traded on a “recognized” national
exchange;
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whose
prices are not quoted on the NASDAQ automated quotation system;
or
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in
issuers with net tangible assets less than $2,000,000, if the issuer has
been in continuous operation for at least three years, or $5,000,000, if
in continuous operation for less than three years, or with average
revenues of less than $6,000,000 for the last three
years.
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Section
15(g) of the Exchange Act and Rule 15g-2 of the Securities and Exchange
Commission require broker/dealers dealing in penny stocks to provide potential
investors with a document disclosing the risks of penny stocks and to obtain a
manually signed and dated written receipt of the document before making any
transaction in a penny stock for the investor’s account. You are urged to obtain
and read this disclosure carefully before purchasing any of our
shares.
Rule
15g-9 of the Securities and Exchange Commission requires broker/dealers in penny
stocks to approve the account of any investor for transactions in these stocks
before selling any penny stock to that investor.
This
procedure requires the broker/dealer to:
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get
information about the investor’s financial situation, investment
experience and investment goals;
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reasonably
determine, based on that information, that transactions in penny stocks
are suitable for the investor and that the investor can evaluate the risks
of penny stock transactions;
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provide
the investor with a written statement setting forth the basis on which the
broker/dealer made his or her determination;
and
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receive
a signed and dated copy of the statement from the investor, confirming
that it accurately reflects the investors’ financial situation, investment
experience and investment goals.
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Compliance
with these requirements may make it harder for our stockholders to resell their
shares.
Reporting
Obligations
Section
14(a) of the Exchange Act requires all companies with securities registered
pursuant to Section 12(g) of the Exchange Act to comply with the rules and
regulations of the Securities and Exchange Commission regarding proxy
solicitations, as outlined in Regulation 14A. Matters submitted to stockholders
of our Company at a special or annual meeting thereof or pursuant to a written
consent will require our Company to provide our stockholders with the
information outlined in Schedules 14A or 14C of Regulation 14; preliminary
copies of this information must be submitted to the Securities and Exchange
Commission at least 10 days prior to the date that definitive copies of this
information are forwarded to our stockholders. As of the date of this report, we
have not registered any class of our equity securities pursuant to Section 12 of
the Exchange Act of 1934, as amended.
We are
required to file annual reports on Form 10-KSB and quarterly reports on Form
10-QSB with the Securities Exchange Commission on a regular basis, and will be
required to timely disclose certain material events (e.g., changes in corporate
control; acquisitions or dispositions of a significant amount of assets other
than in the ordinary course of business; and bankruptcy) in a current report on
Form 8-K.
Employees
The
Company presently has one employee who is an officer and director of the
Company. Additional staffing levels will be determined based on the Company’s
growth. The board of directors will determine the compensation of all new
employees based upon job description.
The
Company through the establishment of an investment fund of institutional
investors has purchased 50% working interest in six existing producing wells in
Crockett County Texas, from Universal Energy Resources Inc., a wholy owned subsidiary
of 1st Texas Natural Gas Company Inc. The ownership of the wells will
be recorded through our wholly owned subsidiary, Production Resources
Incorporated, with the State of Texas during the second quarter of 2008 per
contractual conditions of the purchase agreement with 1st Texas Natural Gas
Company Inc.
ITEM
3. LEGAL PROCEEDINGS
The
Company is currently not involved in any material pending or threatened
litigation.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During
2007, there were no matters submitted to a vote of our
shareholders.
ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL
BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.
A. Market
Information
The
Company’s common stock is traded on the OTCBB under the symbol “VYEY.” The
Company’s common stock consists of 200,000,000 shares authorized of which, as of
December 31, 2007, there are 42,395,366 shares issued and outstanding. The
following is the high and low prices of our stock for the last two fiscal
years.
Quarterly Common Stock Price Ranges
2006
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High
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Low
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First
Quarter
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$ |
0.15 |
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$ |
0.03 |
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Second
Quarter
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0.10 |
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0.03 |
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Third
Quarter
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0.04 |
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0.03 |
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Fourth
Quarter
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0.50 |
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0.02 |
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2007
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High
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Low
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First
Quarter
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$ |
.95 |
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$ |
.22 |
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Second
Quarter
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|
.46 |
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.12 |
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Third
Quarter
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|
.14 |
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.05 |
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Fourth
Quarter
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|
.09 |
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|
.03 |
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B. Holders of Common
Stock
As of
December 31, 2007, there were approximately 897 holders of the Company’s common
stock.
C. Dividends
We
currently intend to retain any future earnings for use in the expansion of the
business, and therefore do not intend to pay shareholder dividends in the near
future. The declaration and payment of cash dividends, if any, will be at the
discretion of the Board of Directors of the Company and will depend, among other
things, upon our earnings, capital requirements and financial
condition.
ITEM
6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
Introduction
The
following discussion of our financial condition and results of our operations
should be read in conjunction with the Financial Statements and Notes thereto.
Our fiscal year ends December 31. This document contains certain forward-looking
statements including, among others, anticipated trends in our financial
condition and results of operations and our business strategy. These
forward-looking statements are based largely on our current expectations and are
subject to a number of risks and uncertainties. Actual results could differ
materially from these forward-looking statements. Important factors to consider
in evaluating such forward-looking statements include (i) changes in external
factors or in our internal budgeting process which might impact trends in our
results of operations; (ii) unanticipated working capital or other cash
requirements; (iii) changes in our business strategy or an inability to execute
our strategy due to unanticipated changes in the industries in which we operate;
and (iv) various competitive market factors that may prevent us from competing
successfully in the marketplace.
Plan
of Operation
Our plan
of operation for the next 12 months will be the continued acquisition of
economically viable oil and gas prospects. Once acquired, we intend to develop
and produce the prospects assuming they are commercially economical to produce.
In that case, we can expect to derive revenues from operations. We intend to
diversify our holdings in both oil and gas producing wells to take advantage of
what we believe is a potentially strong window of opportunity that currently
exists in the oil and gas industry.
Management
has determined that the Company should focus on projects in the oil and gas
industry. This is based upon a belief that this industry is becoming an
economically viable sector in which to conduct business operations. The Company
has targeted specific prospects and intends to engage in the drilling for oil
and gas. Jon Fullenkamp who joined Victory as the Company's President and CEO in
January of 2005 has a great deal of experience in the oil and gas industry
and has already recruited additional experience with new directors and
advisory board
members.
The
Corporation has established a financial facility with institutional investors
providing drilling funds to the company for the further development of petroleum
properties. This facility provides for direct participation by the investors in
the production of the completed wells. The Corporation receives a 15%
carried interest in the wells and shares in the same value of the production
revenue on a monthly basis. Once the investment amount to drill each
well is earned back to the financial facility, the Corporations participation
will increase to 25%. The Corporation will receive the same level of
participation in the revenues on a monthly basis at that time.
In
December of 2007, the Corporation purchased, through the financial facility with
institutional investors, 50% working interest and 50% of 74% net revenue
interest in six existing and producing gas wells in the Canyon Sandstone gas
zone from
Universal Energy Resources, Inc., a wholly owned subsidiary of 1st Texas
Natural Gas Company Inc. Asset value to the Corporation for its
interest in these wells is above $10,000,000. The recording of these
wells, to the wholly owned subsidiary of Victory Energy Corporation, Production
Resources Incorporated through the State of Texas, will take place during the
second quarter of 2008.
The
Corporation has targeted the prolific Canyon Sandstone gas field in the Texas
Permian Basin, with the intent to focus on the drilling and completion of
natural gas wells in this existing field. The opportunity is of
reduced risk due to the extensive historical information available from this
specific natural gas field. The commercial success of this field is
over 97%, indicating that 97% of the wells drilled here are commercially
productive.
The
Canyon Sandstone gas zone play is part of the large prolific Adams-Baggett
Canyon Sandstone gas field. The Canyon Sandstone formation is found at a depth
of 4,300 feet to 4,900 feet. Initial production for these wells is approximately
250,000 cubic feet of gas per day per well. The average life span of a Canyon
Sandstone gas well is approximately more than 30 years.
Natural
gas from the Canyon Sandstone gas zone receives a 20% premium in price above the
standard price due to its higher BTU content per cubic foot of natural
gas.
Within
this existing gas field are two deeper zones, Strawn Limestone and the
Ellenburger Dolomite. The Strawn Limestone gas zone will produce approximately
1.5 BCF and the Ellenburger Dolomite gas zone will produce approximately 5.0
BCF, over an average life span of approximately 30 years. The Strawn zone is
usually found at 9,000 to 9,800 feet, while the depth of the Ellenburger zone is
between 10,500 and 11,500 feet.
To reduce
risk in the field, each well drilled has the opportunity to have the Canyon
Sandstone gas zone available to produce from. For each of the deeper
gas wells drilled in this field, the Corporation will always have the Canyon
Sandstone zone available as a fall back opportunity to produce from and recover
any additional drilling expenses incurred from drilling a deeper
well.
The
underlying opportunity in drilling a deeper gas well is to first produce the
deepest zone, Ellenburger Dolomite, until it is depleted. The next
step is then to produce the shallower Strawn Limestone until depletion and
finally to produce the Canyon Sandstone zone to depletion. Offsets of
deeper gas wells in this field are producing average of 2.5 million cubic feet
of gas per day.
The
Corporation received its first revenue from production sales from this field in
March of 2008.
The
Company also holds interest as a joint venture partner in the Mesa Gas Prospect
located in Roosevelt County New Mexico. Additionally, the Company
holds 1,960 acres in a prospective oilfield identified as N.E. Glasgow Prospect
located in Montana which plans to be incorporated into the Company’s
developments in Valley County Montana. The Company had taken on the
evaluation of a prospect in Oklahoma identified as the Skedee Prospect. As the Company progressed
into the due diligence of these prospects and the potential production,
management determined that the development of the prospect was not worth the
required investment capital. Even with the potential reduction in investment
dollars, the prospects had an unacceptable pay back time for the initial
investment. At that point, management felt the shareholders would be better
served by seeking other prospects.
The
Company has no other employees at this time and it will seek to retain
independent contractors to assist in operating and managing the prospects as
well as to carry out the principal and necessary functions incidental to the oil
and gas business. With the intended acquisition of oil and natural gas, the
Company intends to establish itself as an industry partner within the industry.
Once the Company can establish a revenue base with cash flow, it will seek
opportunities more aggressive in nature.
Results
of Operations for Period Ended December 31, 2007
As of
December 31, 2007, the Company has not earned any revenues and has incurred a
net loss to date of $3,896,827. Operations have been primarily seeking potential
opportunities in the oil and gas industry through the location of commercially
economical prospects, and raising capital and developing revenue generating
opportunities and strategic relationships.
During
the year ended December 31, 2007, we incurred operating expenses in the amount
of $3,890,308. These operating expenses included due diligence
expenses, consulting fees, professional fees and office and general
expenses.
Results
of Operation Subsequent to December 31, 2007
Based
upon our efforts in seeking business opportunities in the oil and gas industry,
we have agreed to move forward on all prospects.
Liquidity
and Capital Resources
To date,
we have financed our operations from funds put into the Company by our CEO. We
intend to raise future capital from the sale of a percentage of our prospects to
fund development and production or through the sale of our common stock to raise
from $3 million to $8 million to finance the prospects in their
entirety.
Off
Balance Sheet Arrangements
The
Company has no off balance sheet arrangements for the year ended December 31,
2007.
Impact
of Recently Issued Accounting Pronouncements
In
December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment.”
This statement replaces FASB Statement No. 123 and supersedes APB Opinion No.
25. Statement No. 123(R) will require the fair value of all stock option awards
issued to employees to be recorded as an expense over the related vesting
period. The statement also requires the recognition of compensation expense for
the fair value of any unvested stock option awards outstanding at the date of
adoption. We do not expect the adoption of this statement to have a material
impact on our financial condition or results of operations.
In
November 2004, the FASB issued SFAS No. 151 “Inventory Costs, an amendment of
ARB No. 43, Chapter 4. The amendments made by Statement 151 clarify that
abnormal amounts of idle facility expense, freight, handling costs, and wasted
materials (spoilage) should be recognized as current-period charges and require
the allocation of fixed production overheads to inventory based on the normal
capacity of the production facilities. The guidance is effective for inventory
costs incurred during fiscal years beginning after June 15, 2005. Earlier
application is permitted for inventory costs incurred during fiscal years
beginning after November 23, 2004. The Company has evaluated the impact of the
adoption of SFAS 151, and does not believe the impact will be significant to the
Company’s overall results of operations or financial position.
In
December 2004, the FASB issued SFAS No.152, “Accounting for Real Estate
Time-Sharing Transactions--an amendment of FASB Statements No. 66 and 67” (“SFAS
152) The amendments made by Statement 152 This Statement amends FASB Statement
No. 66, Accounting for Sales of Real Estate, to reference the financial
accounting and reporting guidance for real estate time-sharing transactions that
is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real
Estate Time-Sharing Transactions. This Statement also amends FASB Statement No.
67, Accounting for Costs and Initial Rental Operations of Real Estate Projects,
to state that the guidance for (a) incidental operations and (b) costs incurred
to sell real estate projects does not apply to real estate time-sharing
transactions. The accounting for those operations and costs is subject to the
guidance in SOP 04-2. This Statement is effective for financial statements for
fiscal years beginning after June 15, 2005. The Company has evaluated the impact
of the adoption of SFAS 152, and does not believe the impact will be significant
to the Company’s overall results of operations or financial
position.
In
December 2004, the FASB issued SFAS No.153, “Exchanges of Nonmonetary Assets, an
amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions.” The
amendments made by Statement 153 are based on the principle that exchanges of
nonmonetary assets should be measured based on the fair value of the assets
exchanged. Further, the amendments eliminate the narrow exception for
nonmonetary exchanges of similar productive assets and replace it with a broader
exception for exchanges of nonmonetary assets that do not have commercial
substance. Previously, Opinion 29 required that the accounting for an exchange
of a productive asset for a similar productive asset or an equivalent interest
in the same or similar productive asset should be based on the recorded amount
of the asset relinquished. Opinion 29 provided an exception to its basic
measurement principle (fair value) for exchanges of similar productive assets.
The Board believes that exception required that some nonmonetary exchanges,
although commercially substantive, be recorded on a carryover basis. By focusing
the exception on exchanges that lack commercial substance, the Board believes
this Statement produces financial reporting that more faithfully represents the
economics of the transactions. The Statement is effective for nonmonetary asset
exchanges occurring in fiscal periods beginning after June 15, 2005. Earlier
application is permitted for nonmonetary asset exchanges occurring in fiscal
periods beginning after the date of issuance. The provisions of this Statement
shall be applied prospectively. The Company has evaluated the impact of the
adoption of SFAS 153, and does not believe the impact will be significant to the
Company’s overall results of operations or financial position.
In
December 2004, the FASB issued SFAS No.123 (revised 2004), “Share-Based
Payment”. Statement 123(R) will provide investors and other users of financial
statements with more complete and neutral financial information by requiring
that the compensation cost relating to share-based payment transactions be
recognized in financial statements. That cost will be measured based on the fair
value of the equity or liability instruments issued. Statement 123(R) covers a
wide range of share-based compensation arrangements including share options,
restricted share plans, performance-based awards, share appreciation rights, and
employee share purchase plans. Statement 123(R) replaces FASB Statement No. 123,
Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees. Statement 123, as originally issued in
1995, established as preferable a fair-value-based method of accounting for
share-based payment transactions with employees. However, that Statement
permitted entities the option of continuing to apply the guidance in Opinion 25,
as long as the footnotes to financial statements disclosed what net income would
have been had the preferable fair-value-based method been used. Public entities
(other than those filing as small business issuers) will be required to apply
Statement 123(R) as of the first interim or annual reporting period that begins
after June 15, 2005. The Company adopted Statement 123(R) in December of
2005.
In
December 2004, the Financial Accounting Standards Board issued two FASB Staff
Positions - FSP FAS 109-1, Application of FASB Statement 109 “Accounting for
Income Taxes” to the Tax Deduction on Qualified Production Activities Provided
by the American Jobs Creation Act of 2004, and FSP FAS 109-2 Accounting and
Disclosure Guidance for the Foreign Earnings Repatriation Provision within the
American Jobs Creation Act of 2004. Neither of these affected the Company as it
does not participate in the related activities.
In March
2005, the SEC released Staff Accounting Bulletin No. 107, “Share-Based Payment”
(“SAB 107”), which provides interpretive guidance related to the interaction
between SFAS 123(R) and certain SEC rules and regulations. It also provides the
SEC staff’s views regarding valuation of share-based payment arrangements. In
April 2005, the SEC amended the compliance dates for SFAS 123(R), to allow
companies to implement the standard at the beginning of their next fiscal year,
instead of the next reporting period beginning after June 15, 2005. Management
is currently evaluating the impact SAB 107 will have on our consolidated
financial statements.
In March
2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional
Asset Retirement Obligations” (“FIN 47”). FIN 47 provides guidance relating to
the identification of and financial reporting for legal obligations to perform
an asset retirement activity. The Interpretation requires recognition of a
liability for the fair value of a conditional asset retirement obligation when
incurred if the liability’s fair value can be reasonably estimated. FIN 47 also
defines when an entity would have sufficient information to reasonably estimate
the fair value of an asset retirement obligation. The provision is effective no
later than the end of fiscal years ending after December 15, 2005. The Company
will adopt FIN 47 beginning the first quarter of fiscal year 2006 and does not
believe the adoption will have a material impact on its consolidated financial
position or results of operations or cash flows.
In May
2005, the FASB issued FASB Statement No. 154, “Accounting Changes and Error
Corrections.” This new standard replaces APB Opinion No. 20, “Accounting
Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim
Financial Statements,” and represents another step in the FASB’s goal to
converge its standards with those issued by the IASB. Among other changes,
Statement 154 requires that a voluntary change in accounting principle be
applied retrospectively with all prior period financial statements presented on
the new accounting principle, unless it is impracticable to do so. Statement 154
also provides that (1) a change in method of depreciating or amortizing a
long-lived non-financial asset be accounted for as a change in estimate
(prospectively) that was effected by a change in accounting principle, and (2)
correction of errors in previously issued financial statements should be termed
a “restatement.” The new standard is effective for accounting changes and
correction of errors made in fiscal years beginning after December 15, 2005.
Early adoption of this standard is permitted for accounting changes and
correction of errors made in fiscal years beginning after June 1, 2005. The
Company has evaluated the impact of the adoption of Statement 154 and does not
believe the impact will be significant to the Company’s overall results of
operations or financial position.
In
February of 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
Financial Instruments”, which is intended to simplify the accounting and improve
the financial reporting of certain hybrid financial instruments (i.e.,
derivatives embedded in other financial instruments). The statement amends SFAS
No. 133, “Accounting for Derivative Instruments and Hedging Activities”, and
SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities--a replacement of FASB Statement No. 125.” SFAS
No. 155 is effective for all financial instruments issued or acquired after the
beginning of an entity’s first fiscal year that begins after September 15, 2006.
The Company is currently evaluating the impact SFAS No. 155 will have on its
consolidated financial statements, if any.
Our
audited financial statements for the year ended December 31, 2007 with notes are
filed herewith following the signature page to this report beginning with page
F-1.
ITEM
8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There
have been no disagreements with accountants on accounting and financial
disclosure.
ITEM
8A. CONTROLS AND PROCEDURES
The
Company has set up disclosure controls and procedures designed to ensure that
information required to be disclosed in reports filed under the Securities Act
of 1934, as amended, is recorded, processed, summarized, and reported within the
specified time period. At the end of the period covered by this report, the
Company’s CEO and CFO have evaluated the effectiveness of the Company’s
disclosure controls and procedures. Based on the evaluation, which disclosed no
significant deficiencies or material weaknesses, the Company’s CEO and CFO
concluded that the Company’s controls and procedures are effective as of the end
of the period covered by this report.
There
were no changes in the Company’s internal controls and financial reporting that
occurred in the Company’s most recent fiscal quarter, that had materially
affected or was reasonably likely to materially affect, the Company’s internal
control over financial reporting.
ITEM
8B. OTHER INFORMATION
None.
ITEM
9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT.
Executive
Officers and Directors
The
following table sets forth the information regarding our executive officers and
directors as of the date of this filing:
Name
|
Age
|
Title
|
Jon
Fullenkamp
|
53
|
President,
CEO and Chairman of the Board of Directors
|
|
|
|
Rick
May
|
62
|
Director
|
|
|
|
Perry
Mansell
|
60
|
Director
|
Biography
of Officers and Directors
Jon
Fullenkamp - CEO, President and Chairman of the Board - since January
2005
Mr.
Fullenkamp is a petroleum industry executive with over 25 years of experience.
From 1990 to present, he has established a consistent track record of promotion
and leadership with a proven ability to assimilate new technology across
industry segments, and has developed new markets and new revenue streams. Mr.
Fullenkamp possesses a track record of effectively and consistently reducing
costs of doing business, reducing employee turnover, producing superior profit
margins, and personally re-negotiated numerous supplier agreements. Mr.
Fullenkamp joined Victory Energy Corporation in 2004 and became the Chairman and
CEO in January 2005. He brings with him the vision to expand the Company into
the energy market segments due to his background, focused on the petroleum
industry. He has a broad knowledge of the oil and gas industry, having completed
wells in the shallow reserves in the Appalachian Mountains to the deepest wells
in the world located in the Anadarko basin.
Rick
May - Board Member
Mr. May’s
extensive professional career began following his undergraduate degree in
Finance from California Polytechnic State University, and where later he
attended the MBA program while working for Data General
Corporation. Mr. May’s initial success started when he founded Profit
Systems Incorporated, a company that created software packages for route
accounting and inventory control companies. Later he became the Chief
Financial Officer and the Chief Operations Officer for a national retail chain
where he instituted on-line transactions, automation, and centralized
inventory.
Mr. May
then joined other key industry individuals to become a founding member of SCS
Corporation, a major technology supplier. SCS Corporation specialized in
automation solutions, with projects in operation at several major
airports.
Following
early retirement from SCS, Mr. May became a principal in Service Industries
Systems, an integrated solutions provider, and partnered with Gemplus of France
to bring new products to the industrialized countries. Mr. May’s partners in SIS
included German, English, and French integrators.
Mr. May
was appointed to the Board of Directors of HoloTag, a technology company in
Cambridge, England. Mr. May returned to his California office to found RJI in
2001.
In 2004,
Mr. May joined SecureSTAR Corporation as a partner. SecureSTAR
produces technology products for commercial and government use. Also
in 2004, Mr. May joined TrustView Partners to provide solutions in
China. In 2006, Mr. May joined Knights Technologies as an
advisor.
Today,
Mr. May operates as a partner in SecureSTAR, RJI, Knights Technologies, and
TrustView Partners.
Perry
Mansell – Board Member
Mr.
Mansell’s experience includes a professional career at North American Rockwell -
Space Division heading up the Testing Team. This involved working with NASA in
the areas of reaction control, environmental control and waste management
systems for the Apollo Command and Service Modules.
In 1970
Mansell Construction was founded focusing on commercial and industrial projects;
the company continues to flourish today. Specific projects to the petroleum
industry include the construction of fuel depots and refurbishment of refineries
and pipelines. Mr. Mansell is well known in his industry and is called upon to
present as an expert his opinion in situations where an outside expert is
required.
Mr.
Mansell’s experience in serving in and knowledge of local government is an asset
to the Company. His stand on environmentally favorable projects that affect the
local economy is positive and visionary. This will serve the Company well as it
moves forward on a national level.
Advisory
Board
Charles
Laser - Advisory Board Member
Charles
Laser is an oil and gas “wildcatter” with ownership of wells in Michigan and
principal operations and discoveries in Wyoming. Mr. Laser has had operations in
Texas, Indiana, Illinois, Colorado, Montana, Wyoming, and Nevada and he has
acquired over 400,000 acres of oil and gas leases in various states. Mr. Laser
was an Executive Vice President at GeoSpectra Corporation from 1976-1984.
Geo-Spectra Corporation has been one of the leading firms in geological remote
sensing serving the major oil and mining firms worldwide. Clients included such
firms Exxon, Chevron, AMOCO, ARCO, DeBeers, Texaco, Mobil, and others. While
with GeoSpectra, although under his own company, Mr. Laser directed ten
financially successful oil and gas lease projects that were co-ventured with
industry partners. Investors typically received all of their invested funds back
within eight or so months and made anywhere from 50 to 150 percent return on
their investment. Additionally, Mr. Laser has been involved in four discoveries
plus numerous consulting positions for other companies. He negotiated a seven
million dollar oil project with a Canadian company involving fifteen oil wells,
which still provides income after twenty-five years to Laser.
The
directors hold office until the next annual meeting of the shareholders and
until their successor(s) have been duly elected or qualified.
None of
the officers or directors have been subject to bankruptcy, receivership or
convicted in any criminal proceedings subject to any criminal proceedings, have
been subject to an order, judgment or decree that would otherwise limit their
involvement in any type of business, securities or banking activities, and has
never been found by a court of competent jurisdiction, or any regulatory agency,
to have violated any securities or commodity laws.
Section
16(a) Beneficial Owner Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires that the Company’s
directors, executive officers, and persons who own more than 10% percent of a
registered class of the Company’s equity securities, or file with the Securities
and Exchange Commission (“SEC”), initial reports of ownership and report of
changes in ownership of common stock and other equity securities of the Company.
Officers, directors, and greater than 10% beneficial owners are required by SEC
regulation to furnish the Company with copies of all Section 16(a) reports they
file. As of the date of this report, the Company has not registered
any class of our equity securities pursuant to Section 12 of the Exchange Act of
1934, as ammended.
Code
of Ethics
The
Company has adopted a code of ethics for all of the employees, directors and
officers which is attached to this Annual Report as Exhibit 14.1.
Summary
of Cash and Certain Other Compensation
Summary Compensation
Table.
The
following table reflects all forms of compensation for the fiscal year ended
December 31, 2007:
SUMMARY
COMPENSATION TABLE
|
|
|
|
|
Long
Term Compensation
|
|
|
|
|
|
|
Annual
Compensation
|
|
|
Awards
|
|
|
Payouts
|
|
|
|
|
Name and Principle
Position
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Other
Annual
Compensation
|
|
|
Restricted
Stock
Award(s)
($)(1)
|
|
|
Securities
Underlying
Options/SARs (#)
|
|
|
LTIP
Payouts
($)
|
|
|
All other
compensation
($)
|
|
Jon
Fullenkamp, CEO, President & Director
|
2007
|
|
$ |
0 |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
8,750,000 |
(1) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Perry
Mansell,
Director
|
2007
|
|
$ |
0 |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
500,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Rick
May,
Director
|
2007
|
|
$ |
0 |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
500,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents an accrued and deferred
compensation through December 31, 2007, which was taken in the form of
restricted stock.
Options
granted in the last fiscal year
At the
end of fiscal year ending December 31, 2007, no executive officer or director
was granted option to purchase shares of common stock.
Fiscal
year-end option values
During
the fiscal year ending December 31, 2007, no executive officer or director
exercised any options to purchase shares of common stock, and as of December 31,
2007, no executive officer or director possessed any options to purchase shares
of common stock.
Directors
Remuneration
As of
December 31, 2007, directors were paid in restricted stock for serving on the
board.
ITEM
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The
following table sets forth as of December 31, 2007, information with respect to
(a) each person, (including “group”) as that term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, whose known to the Company to be a
beneficial owner of more than 5% of outstanding common stock of the Company, and
(b) the number or percentage of the Company’s common stock owned by (a) each of
the directors and the executive officers named in the Summary Compensation Table
above, and (b) all of the directors and executive officers of the Company as a
group. The Company believes that unless otherwise indicated, each of the
shareholders has sole voting and investment power with respect to the shares
beneficially owned. The following table sets forth certain information regarding
the beneficial ownership of the Company’s common stock as of the date of this
Report by (i) each person known to the Company of having beneficial ownership of
more than 5% of the Company’s common stock (ii) existing shareholders, (iii) and
all others as a group.
Title
of
|
Name and Address
|
|
Amount
and Nature
|
|
|
Percent
of
|
|
Class
|
of Beneficial
Owner
|
|
of
Beneficial Owners
|
|
|
Ownership
|
|
Common
|
Jon
Fullenkamp
|
|
|
14,172,616 |
(1) |
|
|
34 |
% |
|
112
N Curry Street, Carson City, NV 89703-4934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
Rick
May
|
|
|
540,000 |
|
|
|
0 |
% |
|
112
N Curry Street, Carson City, NV 89703-4934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
Perry
Mansell
|
|
|
540,000 |
|
|
|
0 |
% |
|
112
N Curry Street, Carson City, NV 89703-4934
|
|
|
|
|
|
|
|
|
(1) Includes
shares held by Virgin Family Trust LLP of which Mr. Fullenkamp is the
trustee.
Other than as set forth in Note 3 to the Financial Statements,
there were no related party transactions for the period ended December 31,
2007.
a) The
exhibits included in this report are indicated below.
Exhibit
No.
|
Description
of Exhibit
|
3.1
|
Articles
of incorporation and amendments (1)
|
3.2
|
Certificate
of Amendment, dated April 28, 2003 (2)
|
3.3
|
Bylaws (2)
|
3.4
|
Certificate
of Amendment, dated May 3, 2006 (3)
|
3.5
|
Certificate
of Amendment, dated August 22, 2006 (3)
|
14
|
|
31
|
|
32
|
|
______________________
1. Incorporated
by reference to Form 10-KSB filed on January 12, 2001.
2. Incorporated
by reference to Form 10-KSB filed on April 17, 2006.
3. Incorporated
by reference to Form 10-KSB filed on April 17, 2007.
1. Audit
Fees - the aggregate fees billed for the year ended December 31, 2007 and 2006
the audit of the Company’s financial statements, review of the interim financial
statements and services provided in connection with regulatory filings totaled
$7,500 and $6,700 respectively.
3. Tax
Fees - there were no tax fees billed during the year ended December 31, 2007 and
2006.
4. All
Other Fees - there were no other fees billed during the year ended December 31,
2007 and for 2006.
There is
no audit committee at present.
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
VICTORY
ENERGY CORPORATION
|
|
|
|
|
|
|
By:
|
/s/ Jon
Fullenkamp |
|
|
|
Jon
Fullenkamp
|
|
|
|
CEO,
President and Director
|
|
|
|
|
|
In
accordance with the Exchange Act, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated:
|
VICTORY
ENERGY CORPORATION
|
|
|
|
|
|
|
By:
|
/s/ Jon
Fullenkamp |
|
|
|
Jon
Fullenkamp
|
|
|
|
CEO,
President and Director
(Principal
Executive Officer and
Principal
Financial and Accounting Officer)
|
|
|
|
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To: the
Board of Directors and Shareholders
Victory
Energy Corporation
112 North
Curry Street
Carson
City, Nevada 89703
I have
audited the accompanying consolidated balance sheet of Victory Energy
Corporation as of December 31, 2007 and 2006 and the related consolidated
statements of operations and of cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company’s
management. My responsibility is to express an opinion on these
financial statements based on my audit.
I
conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that I plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable basis for
my opinion.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses and has not yet
commenced operations. This raises substantive doubt about the
Company’s ability to continue as a going concern. Management’s plans
in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
In my
opinion, based on my audit, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Victory Energy Corporation as of December 31, 2007 and 2006, and the results of
its operations and its cash flows for each of the years ended December 31, 2007
and 2006, in conformity with United States generally accepted accounting
principles.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses and has not yet
commenced operations. This raises substantive doubt about the
Company’s ability to continue as a going concern. Management’s plans
in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
The
Company has determined that it is not required to have, nor was I engaged to
perform, an audit of the effectiveness of its documented internal controls over
financial reporting.
/s/
John Kinross-Kennedy
John
Kinross-Kennedy
Certified
Public Accountant
Irvine,
California
April 5,
2008
Consolidated
Balance Sheets
|
|
(A
Development Stage Company)
|
|
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
and Cash Equivalents
|
|
$ |
3,251 |
|
|
$ |
- |
|
Subscriptions
Receivable
|
|
|
160,000 |
|
|
|
- |
|
Total
Curent Assets
|
|
|
163,251 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
FIXED
ASSETS, NET
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
|
|
Investment
in Joint Venture
|
|
|
50,000 |
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$ |
213,251 |
|
|
$ |
50,000 |
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITES
|
|
|
|
LIABILITIES
& STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITES
|
|
|
|
|
|
|
|
|
Bank
Overdraft
|
|
$ |
- |
|
|
$ |
79 |
|
Accounts
Payable
|
|
|
34,803 |
|
|
|
19,142 |
|
Credit
Line - WFB Business Line
|
|
|
81,860 |
|
|
|
56,961 |
|
Prepaid
Subscriptions
|
|
|
203,500 |
|
|
|
203,500 |
|
Total
Current Liabilities
|
|
|
320,163 |
|
|
|
279,682 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
LIABILITIES
|
|
|
|
|
|
|
|
|
Loan
from Officer
|
|
|
1,377,879 |
|
|
|
690,085 |
|
Total
Other Liabilities
|
|
|
1,377,879 |
|
|
|
690,085 |
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
1,698,042 |
|
|
|
969,767 |
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies (Note 6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIT
|
|
|
|
|
|
|
|
|
Preferred
Stock, $0.001 par value, 10,000,000 shares
|
|
|
|
|
|
|
|
|
authorized,
630,517 issued and outstanding
|
|
|
631 |
|
|
|
716 |
|
Common
Stock, $0.001 par value, 200,000,000 shares
|
|
|
|
|
|
|
|
|
authorized, 42,395,366 issued
and outstanding
|
|
|
42,395 |
|
|
|
4,518 |
|
Additional
paid-in capital
|
|
|
7,860,331 |
|
|
|
4,566,320 |
|
Deficit
accumulated in the development stage
|
|
|
(9,388,148 |
) |
|
|
(5,491,321 |
) |
|
|
|
|
|
|
|
|
|
Total
Stockholders' Deficit
|
|
|
(1,484,791 |
) |
|
|
(919,767 |
) |
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
$ |
213,251 |
|
|
$ |
50,000 |
|
VICTORY
ENERGY CORPORATION AND SUBSIDIARIES
|
|
(A
Development Stage Company)
|
|
Consolidated
Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
Inception,
|
|
|
|
For
the
|
|
|
For
the
|
|
|
from
January 7,
|
|
|
|
Three
Months Ended
|
|
|
Year
Ended
|
|
|
1982
through
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
20,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
Expense
|
|
|
636,966 |
|
|
|
58,284 |
|
|
|
3,644,468 |
|
|
|
1,252,923 |
|
|
|
7,633,821 |
|
Professional
Fees
|
|
|
1,400 |
|
|
|
3,121 |
|
|
|
14,138 |
|
|
|
47,444 |
|
|
|
158,146 |
|
Land
Leases
|
|
|
- |
|
|
|
- |
|
|
|
1,680 |
|
|
|
24,040 |
|
|
|
25,720 |
|
Wages
and Salaries
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
22,500 |
|
|
|
270,500 |
|
Other
General & Administrative
|
|
|
31,234 |
|
|
|
63,169 |
|
|
|
230,022 |
|
|
|
398,457 |
|
|
|
1,217,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Expenses
|
|
|
669,600 |
|
|
|
124,574 |
|
|
|
3,890,308 |
|
|
|
1,745,364 |
|
|
|
9,305,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Loss
|
|
|
(669,600 |
) |
|
|
(124,574 |
) |
|
|
(3,890,308 |
) |
|
|
(1,745,364 |
) |
|
|
(9,285,437 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Income and (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
on abandonment of subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50,900 |
) |
Loss
from reduction in debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(48,363 |
) |
Interest
Expense
|
|
|
(5,664 |
) |
|
|
|
|
|
|
(6,639 |
) |
|
|
|
|
|
|
(5,664 |
) |
Other
Income
|
|
|
120 |
|
|
|
|
|
|
|
120 |
|
|
|
|
|
|
|
2,216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Other Income and (expenses)
|
|
|
(5,544 |
) |
|
|
- |
|
|
|
(6,519 |
) |
|
|
- |
|
|
|
(102,711 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$ |
(675,144 |
) |
|
$ |
(124,574 |
) |
|
$ |
(3,896,827 |
) |
|
$ |
(1,745,364 |
) |
|
$ |
(9,388,148 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and Dilutive net loss per share
|
|
$ |
(0.02 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.56 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding,
basic and diluted
|
|
|
31,347,323 |
|
|
|
4,310,806 |
|
|
|
23,953,149 |
|
|
|
3,096,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive
effect of preferred stock,
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
(Note
2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VICTORY
ENERGY CORPORATION AND SUBSIDIARIES
|
|
(A
Development Stage Company)
|
|
Consolidated
Statement of Stockholders' Equity (Deficit)
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Deficit
During
|
|
|
|
|
|
|
Common
Stock
|
|
|
Preferred
Stock
|
|
|
Paid-in
|
|
|
Development
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances
at January 7, 1982
|
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Common
stock for cash at $7.50/sh
|
|
|
6,000 |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
45,000 |
|
|
|
|
|
|
|
45,006 |
|
Common
stock for cash at $0.39/sh.
|
|
|
168,503 |
|
|
|
169 |
|
|
|
|
|
|
|
|
|
|
|
65,819 |
|
|
|
|
|
|
|
65,988 |
|
Net
loss from inception to Dec. 31,'82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(39,597 |
) |
|
|
(39,597 |
) |
Balances
at Dec. 31, 1982
|
|
|
174,503 |
|
|
|
175 |
|
|
|
|
|
|
|
|
|
|
|
110,819 |
|
|
|
(39,597 |
) |
|
|
71,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss, year ended Dec. 31, 1983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(71,397 |
) |
|
|
(71,397 |
) |
Balances
at Dec. 31, 1983
|
|
|
174,503 |
|
|
|
175 |
|
|
|
|
|
|
|
|
|
|
|
110,819 |
|
|
|
(110,994 |
) |
|
|
(0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock for cash at $25.00/sh.
|
|
|
57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,425 |
|
|
|
|
|
|
|
1,425 |
|
Common
stock for cash at $25.00/sh. per share
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75 |
|
|
|
|
|
|
|
75 |
|
Common
stock for cash at $0.025/sh. per share
|
|
|
1,580,000 |
|
|
|
1,580 |
|
|
|
|
|
|
|
|
|
|
|
38,373 |
|
|
|
|
|
|
|
39,953 |
|
Net
loss - year ended Dec. 31, 1984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Balances
at Dec. 31, 1984
|
|
|
1,754,563 |
|
|
|
1,755 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(110,994 |
) |
|
|
41,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation
of common stock
|
|
|
(1,296,132 |
) |
|
|
(1,297 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,297 |
) |
Net
loss - year ended Dec. 31, 1985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Balances
at Dec. 31, 1985
|
|
|
458,431 |
|
|
|
458 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(110,994 |
) |
|
|
40,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Balances
at Dec. 31, 1986
|
|
|
458,431 |
|
|
|
458 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(110,994 |
) |
|
|
40,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Balances
at Dec. 31, 1987
|
|
|
458,431 |
|
|
|
458 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(110,994 |
) |
|
|
40,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Balances
at Dec. 31, 1988
|
|
|
458,431 |
|
|
|
458 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(110,994 |
) |
|
|
40,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Balances
at Dec. 31, 1989
|
|
|
458,431 |
|
|
|
458 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(110,994 |
) |
|
|
40,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Balances
at Dec. 31, 1990
|
|
|
458,431 |
|
|
|
458 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(110,994 |
) |
|
|
40,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Balances
at Dec. 31, 1991
|
|
|
458,431 |
|
|
|
458 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(110,994 |
) |
|
|
40,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Balances
at Dec. 31, 1992
|
|
|
458,431 |
|
|
|
458 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(110,994 |
) |
|
|
40,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Balances
at Dec. 31, 1993
|
|
|
458,431 |
|
|
|
458 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(110,994 |
) |
|
|
40,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation
of common stock
|
|
|
(316,000 |
) |
|
|
(316 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(316 |
) |
Net
loss - year ended Dec. 31, 1994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,656 |
) |
|
|
(6,656 |
) |
Balances
at Dec. 31, 1994
|
|
|
142,431 |
|
|
|
142 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(117,650 |
) |
|
|
33,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock for cash at $0.001/sh.
|
|
|
2,357,895 |
|
|
|
2,359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,359 |
|
Net
loss - year ended Dec. 31, 1995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(49,097 |
) |
|
|
(49,097 |
) |
Balances
at Dec. 31, 1995
|
|
|
2,500,326 |
|
|
|
2,500 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(166,747 |
) |
|
|
(13,555 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock for cash at $0.001/sh.
|
|
|
120,000 |
|
|
|
120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120 |
|
Net
loss - year ended Dec. 31, 1996
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,681 |
) |
|
|
(1,681 |
) |
Balances
at Dec. 31, 1996
|
|
|
2,620,326 |
|
|
|
2,620 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(168,428 |
) |
|
|
(15,116 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,517 |
) |
|
|
(3,517 |
) |
Balances
at Dec. 31, 1997
|
|
|
2,620,326 |
|
|
|
2,620 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(171,945 |
) |
|
|
(18,633 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,479 |
) |
|
|
(2,479 |
) |
Balances
at Dec. 31, 1998
|
|
|
2,620,326 |
|
|
|
2,620 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(174,424 |
) |
|
|
(21,112 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 1999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,307 |
) |
|
|
(6,307 |
) |
Balances
at Dec. 31, 1999
|
|
|
2,620,326 |
|
|
|
2,620 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(180,731 |
) |
|
|
(27,419 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 2000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,011 |
) |
|
|
(9,011 |
) |
Balances
at Dec. 31, 2000
|
|
|
2,620,326 |
|
|
|
2,620 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(189,742 |
) |
|
|
(36,430 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - year ended Dec. 31, 2001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19,461 |
) |
|
|
(19,461 |
) |
Balances
at Dec. 31, 2001
|
|
|
2,620,326 |
|
|
|
2,620 |
|
|
|
|
|
|
|
|
|
|
|
150,692 |
|
|
|
(209,203 |
) |
|
|
(55,891 |
) |
Contributed
capital for rent and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other
compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,950 |
|
|
|
|
|
|
|
1,950 |
|
Net
loss - year ended Dec. 31, 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,960 |
) |
|
|
(13,960 |
) |
Balances
at Dec. 31, 2002
|
|
|
2,620,326 |
|
|
|
2,620 |
|
|
|
|
|
|
|
|
|
|
|
152,642 |
|
|
|
(223,163 |
) |
|
|
(67,901 |
) |
Contributed
capital for rent and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
officer
compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
488 |
|
|
|
|
|
|
|
488 |
|
Capital
contributed by shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
via
accounts payable and interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,415 |
|
|
|
|
|
|
|
77,415 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for services $0.025/sh.
|
|
|
13,389,932 |
|
|
|
13,390 |
|
|
|
|
|
|
|
|
|
|
|
321,358 |
|
|
|
|
|
|
|
334,748 |
|
Stock
issued for services at $0.61/sh.
|
|
|
100,000 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
60,900 |
|
|
|
|
|
|
|
61,000 |
|
Stock
for consulting at $0.47/share
|
|
|
10,000 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
4,690 |
|
|
|
|
|
|
|
4,700 |
|
Net
loss - year ended Dec. 31, 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(592,962 |
) |
|
|
(592,962 |
) |
Balances
at Dec. 31, 2003
|
|
|
16,120,258 |
|
|
|
16,120 |
|
|
|
|
|
|
|
|
|
|
|
617,493 |
|
|
|
(816,125 |
) |
|
|
(182,512 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for services at $0.16/sh
|
|
|
1,000,000 |
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
|
159,000 |
|
|
|
0 |
|
|
|
160,000 |
|
Stock
issued for services at $0.17/sh.
|
|
|
1,800,000 |
|
|
|
1,800 |
|
|
|
|
|
|
|
|
|
|
|
304,200 |
|
|
|
0 |
|
|
|
306,000 |
|
Stock
issued for services at $0.165/sh
|
|
|
800,000 |
|
|
|
800 |
|
|
|
|
|
|
|
|
|
|
|
131,200 |
|
|
|
0 |
|
|
|
132,000 |
|
Stock
issued for services at $0.215/sh.
|
|
|
30,000 |
|
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
6,420 |
|
|
|
0 |
|
|
|
6,450 |
|
Stock
issued for debt at $0.45 per sh.
|
|
|
150,000 |
|
|
|
150 |
|
|
|
|
|
|
|
|
|
|
|
67,350 |
|
|
|
0 |
|
|
|
67,500 |
|
Stock
issued for services at $0.40/sh
|
|
|
300,000 |
|
|
|
300 |
|
|
|
|
|
|
|
|
|
|
|
119,700 |
|
|
|
0 |
|
|
|
120,000 |
|
Stock
issued for services at $0.34/sh.
|
|
|
700,000 |
|
|
|
700 |
|
|
|
|
|
|
|
|
|
|
|
237,300 |
|
|
|
0 |
|
|
|
238,000 |
|
Stock
issued for services at $0.41/sh.
|
|
|
300,000 |
|
|
|
300 |
|
|
|
|
|
|
|
|
|
|
|
122,700 |
|
|
|
0 |
|
|
|
123,000 |
|
Stock
issued for services at $0.27/sh.
|
|
|
300,000 |
|
|
|
300 |
|
|
|
|
|
|
|
|
|
|
|
80,700 |
|
|
|
0 |
|
|
|
81,000 |
|
Stock
issued for services at $0.22/sh.
|
|
|
600,000 |
|
|
|
600 |
|
|
|
|
|
|
|
|
|
|
|
131,400 |
|
|
|
0 |
|
|
|
132,000 |
|
Net
loss - year ended Dec. 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,606,057 |
) |
|
|
(1,606,057 |
) |
Balances
at Dec. 31, 2004
|
|
|
22,100,258 |
|
|
|
22,100 |
|
|
|
|
|
|
|
|
|
|
|
1,977,463 |
|
|
|
(2,422,182 |
) |
|
|
(422,619 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed
capital for general and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
138,701 |
|
|
|
|
|
|
|
138,701 |
|
Stock
issued for services at $0.03/sh.
|
|
|
19,860,000 |
|
|
|
19,860 |
|
|
|
|
|
|
|
|
|
|
|
575,940 |
|
|
|
|
|
|
|
595,800 |
|
Net
loss - year ended Dec. 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,323,775 |
) |
|
|
(1,323,775 |
) |
Balances
at December 31, 2005
|
|
|
41,960,258 |
|
|
|
41,960 |
|
|
|
|
|
|
|
|
|
|
|
2,692,104 |
|
|
|
(3,745,957 |
) |
|
|
(1,011,893 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for services at $0.027/sh.
|
|
|
17,583,334 |
|
|
|
17,583 |
|
|
|
|
|
|
|
|
|
|
|
459,917 |
|
|
|
|
|
|
|
477,500 |
|
Common
stock issued in debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
restructuring
at $0.06 and $0.03
|
|
|
10,666,667 |
|
|
|
10,667 |
|
|
|
|
|
|
|
|
|
|
|
429,333 |
|
|
|
|
|
|
|
440,000 |
|
Stock
issued for debt at $0.06/ sh.
|
|
|
5,000,000 |
|
|
|
5,000 |
|
|
|
|
|
|
|
|
|
|
|
295,000 |
|
|
|
|
|
|
|
300,000 |
|
Stock
issued for services at $0.03/sh.
|
|
|
2,500,000 |
|
|
|
2,500 |
|
|
|
|
|
|
|
|
|
|
|
72,500 |
|
|
|
|
|
|
|
75,000 |
|
Stock
issued for services at $0.05/sh.
|
|
|
500,000 |
|
|
|
500 |
|
|
|
|
|
|
|
|
|
|
|
24,500 |
|
|
|
|
|
|
|
25,000 |
|
Stock
issued for services at $0.008/sh.
|
|
|
10,000,000 |
|
|
|
10,000 |
|
|
|
|
|
|
|
|
|
|
|
70,000 |
|
|
|
|
|
|
|
80,000 |
|
Stock
for consulting at $0.008/sh.
|
|
|
4,500,000 |
|
|
|
4,500 |
|
|
|
|
|
|
|
|
|
|
|
31,500 |
|
|
|
|
|
|
|
36,000 |
|
Stock
for consulting at $0.008/sh.
|
|
|
500,000 |
|
|
|
500 |
|
|
|
|
|
|
|
|
|
|
|
3,500 |
|
|
|
|
|
|
|
4,000 |
|
Stock
for consulting at $0.008/sh.
|
|
|
4,000,000 |
|
|
|
4,000 |
|
|
|
|
|
|
|
|
|
|
|
28,000 |
|
|
|
|
|
|
|
32,000 |
|
Stock
for consulting at $0.008/sh.
|
|
|
700,000 |
|
|
|
700 |
|
|
|
|
|
|
|
|
|
|
|
4,900 |
|
|
|
|
|
|
|
5,600 |
|
Stock
for consulting at $0.008/sh.
|
|
|
300,000 |
|
|
|
300 |
|
|
|
|
|
|
|
|
|
|
|
2,100 |
|
|
|
|
|
|
|
2,400 |
|
Stock
for consulting at $0.008/sh.
|
|
|
3,600,000 |
|
|
|
3,600 |
|
|
|
|
|
|
|
|
|
|
|
25,200 |
|
|
|
|
|
|
|
28,800 |
|
Stock
for consulting at $0.008/sh.
|
|
|
3,000,000 |
|
|
|
3,000 |
|
|
|
|
|
|
|
|
|
|
|
21,000 |
|
|
|
|
|
|
|
24,000 |
|
Stock
for consulting at $0.008/sh.
|
|
|
4,000,000 |
|
|
|
4,000 |
|
|
|
|
|
|
|
|
|
|
|
28,000 |
|
|
|
|
|
|
|
32,000 |
|
Balances
before reverse split
|
|
|
108,810,259 |
|
|
|
108,810 |
|
|
|
|
|
|
|
|
|
|
|
4,187,554 |
|
|
|
(3,745,957 |
) |
|
|
550,407 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reverse
split 25 to 1, Oct.26, 2006
|
|
|
(104,457,849 |
) |
|
|
(104,458 |
) |
|
|
|
|
|
|
|
|
|
|
104,458 |
|
|
|
|
|
|
|
- |
|
New
Stock issued for rounding
|
|
|
890 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
|
|
|
|
|
|
- |
|
Balances
after reverse split
|
|
|
4,353,300 |
|
|
|
4,353 |
|
|
|
|
|
|
|
|
|
|
|
4,292,011 |
|
|
|
(3,745,957 |
) |
|
|
550,407 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock for cash at $0.467/sh.
|
|
|
|
|
|
|
|
|
|
|
715,517 |
|
|
|
716 |
|
|
|
246,234 |
|
|
|
|
|
|
|
246,950 |
|
Common
stock for rounding$0.50/sh.
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Common
stock for services $0.20/sh
|
|
|
5,200 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
1,035 |
|
|
|
|
|
|
|
1,040 |
|
Common
stock for rounding$0.20/sh.
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Common
stock for services $0.17/sh.
|
|
|
160,000 |
|
|
|
160 |
|
|
|
|
|
|
|
|
|
|
|
27,040 |
|
|
|
|
|
|
|
27,200 |
|
Net
loss - year ended Dec. 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,745,364 |
) |
|
|
(1,745,364 |
) |
Balances
at December 31, 2006
|
|
|
4,518,515 |
|
|
|
4,518 |
|
|
|
715,517 |
|
|
|
716 |
|
|
|
4,566,320 |
|
|
|
(5,491,321 |
) |
|
|
(919,767 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock for services $0.15/sh
|
|
|
6,277,251 |
|
|
|
6,277 |
|
|
|
|
|
|
|
|
|
|
|
935,310 |
|
|
|
|
|
|
|
941,587 |
|
Common
stock sold @ $0.21/sh
|
|
|
5,662,000 |
|
|
|
5,662 |
|
|
|
|
|
|
|
|
|
|
|
1,183,358 |
|
|
|
|
|
|
|
1,189,020 |
|
Common
stock for services $0.21/sh
|
|
|
40,000 |
|
|
|
40 |
|
|
|
|
|
|
|
|
|
|
|
8,360 |
|
|
|
|
|
|
|
8,400 |
|
Common
stock for services $0.21/sh
|
|
|
2,787,600 |
|
|
|
2,788 |
|
|
|
|
|
|
|
|
|
|
|
582,608 |
|
|
|
|
|
|
|
585,396 |
|
Common
stock subscribed, issued $0.21
|
|
|
3,500,000 |
|
|
|
3,500 |
|
|
|
|
|
|
|
|
|
|
|
731,500 |
|
|
|
|
|
|
|
735,000 |
|
Preferred
Stock converted to common
|
|
|
8,500,000 |
|
|
|
8,500 |
|
|
|
(85,000 |
) |
|
|
(85 |
) |
|
|
(8,415 |
) |
|
|
|
|
|
|
- |
|
Common
stock for services $0.05/sh
|
|
|
300,000 |
|
|
|
300 |
|
|
|
|
|
|
|
|
|
|
|
14,700 |
|
|
|
|
|
|
|
15,000 |
|
Common
stock for services $0.04/sh
|
|
|
10,310,000 |
|
|
|
10,310 |
|
|
|
|
|
|
|
|
|
|
|
402,090 |
|
|
|
|
|
|
|
412,400 |
|
Common
stock for services $0.04/sh
|
|
|
500,000 |
|
|
|
500 |
|
|
|
|
|
|
|
|
|
|
|
19,500 |
|
|
|
|
|
|
|
20,000 |
|
Revaluation
of subscriptions receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(575,000 |
) |
|
|
|
|
|
|
(575,000 |
) |
Net
loss - year ended Dec. 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,896,827 |
) |
|
|
(3,896,827 |
) |
Balances
at December 31, 2007
|
|
|
42,395,366 |
|
|
$ |
42,395 |
|
|
|
630,517 |
|
|
$ |
631 |
|
|
$ |
7,860,331 |
|
|
$ |
(9,388,148 |
) |
|
$ |
(1,484,791 |
) |
VICTORY
ENERGY CORPORATION AND SUBSIDIARIES
|
|
(A
Development Stage Company)
|
|
Consolidated
Statements of Cash Flows
|
|
|
|
|
|
For
the
|
|
|
For
the
|
|
|
From
Inception
|
|
|
|
Three
Months Ended
|
|
|
Year
Ended
|
|
|
Jan.
7, 1982
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
through
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
Dec.
31, 2007
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
Net
Loss
|
|
$ |
(675,144 |
) |
|
$ |
(124,574 |
) |
|
$ |
(3,896,827 |
) |
|
$ |
(1,745,364 |
) |
|
$ |
(9,388,148 |
) |
Adjustments
to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
used
by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
198 |
|
|
|
|
|
|
|
1,096 |
|
|
|
2,294 |
|
Loss
on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,363 |
|
Loss
on abandonment of subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,900 |
|
Issuance
of common stock for services rendered
|
|
|
447,400 |
|
|
|
560,710 |
|
|
|
447,400 |
|
|
|
1,261,805 |
|
|
|
6,625,415 |
|
Increase
in Short Term Receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
210,984 |
|
|
|
|
|
Decrease
(Increase) in Prepaid Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(Decrease) in Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incrrease
(Decrease) in Prepaid Subscriptions
|
|
|
|
|
|
|
(43,450 |
) |
|
|
|
|
|
|
203,500 |
|
|
|
203,500 |
|
(Incrrease)
Decrease in Subscriptions Receivable
|
|
|
575,000 |
|
|
|
|
|
|
|
(160,000 |
) |
|
|
|
|
|
|
(575,000 |
) |
Increase
(Decrease) in accounts payable
|
|
|
202 |
|
|
|
9,966 |
|
|
|
15,661 |
|
|
|
(311,828 |
) |
|
|
34,803 |
|
Increase
(Decrease) in accrued liabilities
|
|
|
1,020 |
|
|
|
(16,006 |
) |
|
|
|
|
|
|
(11,416 |
) |
|
|
|
|
Increase
(Decrease ) in Accrued Payroll,P'roll Taxes
|
|
|
|
(750,970 |
) |
|
|
|
|
|
|
(240,000 |
) |
|
|
|
|
Increase
(Decrease) in Short Term Receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment
of long term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(146,431 |
) |
|
|
|
|
Increase
(decrease) in Accrued Liabilities-Related
|
|
|
229,644 |
|
|
|
(125,500 |
) |
|
|
|
|
|
|
(172,179 |
) |
|
|
|
|
Non-cash
contributed capital
|
|
|
|
|
|
|
(169,679 |
) |
|
|
|
|
|
|
(121,000 |
) |
|
|
|
|
Net
Cash provided by (used by)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
578,122 |
|
|
|
(659,305 |
) |
|
|
(3,593,766 |
) |
|
|
(1,070,833 |
) |
|
|
(2,997,873 |
) |
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of Fixed Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,294 |
) |
Purchase
/ Sale of Marketable Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
in Joint Venture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50,000 |
) |
|
|
(50,000 |
) |
Net
Cash (used by) Investing Activities
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(50,000 |
) |
|
|
(52,294 |
) |
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
of Note Payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122,684 |
|
|
|
|
|
Proceeds
(Repayment) of Loans
|
|
|
|
|
|
|
(149,458 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in Credit Line
|
|
|
|
|
|
|
(4,167 |
) |
|
|
24,899 |
|
|
|
56,961 |
|
|
|
81,860 |
|
Proceeds
(Repayment) of Loan from Officer
|
|
|
|
|
|
|
565,054 |
|
|
|
687,794 |
|
|
|
690,085 |
|
|
|
1,377,879 |
|
Proceeds
(Repayment) of Note Payable-Related Party
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(Decrease) in Other Loans Payable
|
|
|
|
|
|
|
(19,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Contributed
capital for rent and officers' compensation
|
|
|
|
|
|
|
|
2,270,383 |
|
|
|
|
|
|
|
2,438 |
|
Proceeds
from the sale of Preferred Stock
|
|
|
|
|
|
|
246,950 |
|
|
|
|
|
|
|
246,950 |
|
|
|
|
|
Proceeds
from the sale/conversion of Common Stock
|
|
|
|
|
|
|
|
1,189,020 |
|
|
|
|
|
|
|
1,504,291 |
|
Commons
stock subscribed, revalued
|
|
|
(575,000 |
) |
|
|
|
|
|
|
(575,000 |
) |
|
|
|
|
|
|
|
|
Proceeds
from the sale/conversion of Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
246,950 |
|
Contributed
Capital by shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash provided by Financing Activities
|
|
|
(575,000 |
) |
|
|
639,379 |
|
|
|
3,597,096 |
|
|
|
1,116,680 |
|
|
|
3,213,418 |
|
NET
INCREASE IN CASH
|
|
|
3,122 |
|
|
|
(19,926 |
) |
|
|
3,330 |
|
|
|
(4,153 |
) |
|
|
163,251 |
|
CASH
AT BEGINNING OF PERIOD
|
|
|
129 |
|
|
|
19,847 |
|
|
|
(79 |
) |
|
|
4,074 |
|
|
|
- |
|
CASH
AT END OF PERIOD
|
|
$ |
3,251 |
|
|
$ |
(79 |
) |
|
$ |
3,251 |
|
|
$ |
(79 |
) |
|
$ |
163,251 |
|
CASH
PAID FOR:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Income
Taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
NOTE 1 -
BUSINESS AND CONTINUED OPERATIONS
Victory
Energy Corporation (OTC symbol VTYE), formerly known as Victory Capital Holdings
Corporation (our “Company”) was organized under the laws of the State of Nevada
on January 7, 1982, under the name All Things, Inc. On March 21, 1985 the
Company’s name was changed to New Environmental Technologies Corporation and on
April 28, 2003 to Victory Capital Holdings Corporation. The name was
changed finally to Victory Energy Corporation on May 3, 2006.
The
Company was formed for the purpose of engaging in all lawful businesses. The
Company’s initial authorized capital consisted of 100,000,000 shares of $0.001
par value common voting stock and as of the date of this filing the authorized
capital is 200,000,000 shares of $.001 par value common stock.
The
consolidated financial statements presented are those of Victory Energy
Corporation and subsidiaries. While the information presented
in the accompanying interim nine months financial statements is unaudited, it
includes all adjustments which are, in the opinion of management, necessary to
present fairly the financial position, results of operations and cash flows for
the interim periods presented in accordance with the accounting principles
generally accepted in the United States of America. All adjustments are of a
normal recurring nature.
On
October 3, 2001, the Company formed a wholly owned subsidiary named Papadog,
Inc. Papadog has since changed its name to Global Card Services, Inc. and then
to Global Card Incorporated, (“Global”). As of the date of this
report, there has been no activity for this subsidiary.
On
November 12, 2003, the Company formed a wholly owned subsidiary named On Demand
Communications, Inc., (“On Demand”). As of the date of this report,
there has been no activity for this subsidiary.
On
November 27, 2006 the company incorporated a Nevada subsidiary, Victory Energy
Resources, Inc. The name of the subsidiary was changed to
Victory Carbon Solutions, Inc. There has been no activity in this
company.
Current
Business of the Company
The
Company had no material business operations from 1989 to 2003. In 2004, the
Company began the search for the acquisition of assets, property or
businesses. In 2005 management focused on projects in the oil and gas
industry, intending to drill for oil and gas on leased land. In 2006
the company entered into a farm-out agreement with the owner of certain oil and
gas leases for a 100% working interest in acreage in Montana, subject to
overriding royalties. The Company also secured other mineral rights
in Montana and Texas, as well as a joint venture in New Mexico.
In
December 2006 the Corporation purchased, with institutional investors, through a
financial facility, a working interest in six existing and producing gas wells
in Crockett County, Texas. The recording of the wells will take place
in the following period.
Jon
Fullenkamp, the President/C.E.O., is the sole employee and has a great deal of
experience in the oil and gas industry. The Company retains
independent contractors to assist in operating and managing the prospects and
projects.
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fair Value of Financial
Instruments
The
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards (“SFAS”) No. 107, “Disclosures About Fair Value of Financial
Instruments.” SFAS No. 107 requires disclosure of fair value information
about financial instruments when it is practicable to estimate that value.
The carrying amounts of the Company’s financial instruments as of December 31,
2007 and 2006 approximate their respective fair values because of the short-term
nature of these instruments. Such instruments consist of cash, accounts
payable and accrued expenses. The fair value of related party payables is
not determinable.
Income
Taxes
The
Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax assets and liabilities
are determined based on the difference between the tax basis of assets and
liabilities and their financial reporting amounts based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. The Company generated deferred tax credits through net
operating loss carryforwards. However, a valuation allowance of 100%
has been established, as the realization of the deferred tax credits is not
reasonably certain, based on going concern considerations outlined
below.
Going
Concern
The
Company’s financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has
suffered recurring losses. The Company incurred a net loss of
$3,896,827 and a negative cash flow from operations of $4,168,766 for the year
ended December 31, 2007, and has a shareholders’ deficiency of $909,791 at
December 31, 2007. The Company has not yet established an ongoing
source of revenues sufficient to cover its operating costs and to allow it to
continue as a going concern. The ability of the Company to continue
as a going concern is dependent on the Company obtaining adequate capital to
fund operating losses until it becomes profitable. If the Company is
unable to obtain adequate capital, it could be forced to cease development of
operations.
In order
to continue as a going concern, develop a reliable source of revenues, and
achieve a profitable level of operations the Company will need, among other
things, additional capital resources. Management’s plans to continue
as a going concern include raising additional capital through sales of common
stock. In the interim, shareholders of the Company are committed to
meeting its minimal operating expenses. However, management cannot
provide any assurances that the Company will be successful in accomplishing any
of its plans.
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.
Development-Stage
Company
The
Company is considered a development-stage company, with no operating revenues
during the periods presented, as defined by Statement of Financial Accounting
Standards (“SFAS”) No. 7. SFAS No. 7 requires companies to report
their operations, shareholders deficit and cash flows since inception through
the date that revenues are generated from management’s intended operations,
among other things. Management has defined inception as January 7,
1982. Since inception, the Company has incurred operating losses
totaling $9,388,148, much of which relates to stock-based compensation to
officers, directors and consultants as a means to preserve working
capital. The Company’s working capital has been generated through the
sales of common stock, loans made by officers of the Company and a bank line of
credit. Management has provided financial data since January 7, 1982 “Inception”
in the financial statements, as a means to provide readers of the Company’s
financial information to make informed investment decisions.
Use of
Estimates
The
preparation of the financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent liabilities at the date of the financial statements and
the reported amounts of expenses during the reporting period. Actual
results could differ from those estimates.
Principles of
Consolidation
The
consolidated financial statements include those of Victory Energy Corporation
and its wholly owned subsidiaries, Global Card Incorporated, On Demand
Communications, Inc. and Victory Energy Resources, Inc. All material
inter-company items and transactions have been eliminated. There was
no activity in the subsidiaries in the fiscal years 2007 and 2006.
Loss Per
Share
Statement
of Financial Accounting Standards No. 128 “Earnings Per Share” requires
presentation of basic earnings per share and diluted earnings per
share. Basic income (loss) per share (“Basic EPS”) is computed by
dividing net loss available to common stockholders by the weighted average
number of common shares outstanding during the period. Diluted
earnings per share (“Diluted EPS”) is similarly calculated using the treasury
stock method except that the denominator is increased to reflect the potential
dilution that would occur if preferred stock at the end of the applicable period
were exercised. These potential dilutive securities were not included in the
calculation of loss per share for the year ended December 31, 2007 because the
Company incurred a loss in the period, and thus their effect would have been
anti-dilutive. At December 31, 2007, potentially dilutive securities
consisted of 630,517 shares of preferred stock, convertible at the rate of 1
preferred share to 100 common shares.
On
October 26, 2006 a reverse stock split of Common Stock occurred on a 25 to 1
basis.
The loss
per share for the year ended December 31, 2006 was calculated accordingly,
giving retroactive effect to the reverse stock split at the beginning of the
year.
The
following is a reconciliation of the numerators and denominators of the basic
and diluted earnings per share computations for the years ended December 31,
2007 and 2006.
|
|
2007
|
|
|
2006
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$ |
( 3,896,827 |
) |
|
$ |
(1,745,364 |
) |
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted
average
|
|
|
|
|
|
|
|
|
number of shares
outstanding
|
|
|
23,953,149 |
|
|
|
3,096,472 |
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Net Loss Per
Share
|
|
$ |
(0.16 |
) |
|
$ |
(0.56 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of Preferred
Stock
|
|
Nil
|
|
|
Nil
|
|
Equipment and
Fixtures
Equipment
and fixtures are recorded at cost. Depreciation is provided using
accelerated and straight-line methods over the estimated useful lives of the
related assets as follows.
Description
|
Years
|
Furniture
and fixtures
|
7
|
Computer
hardware and software
|
3-5
|
Equipment
and fixtures have been fully depreciated.
NOTE 3 –
RELATED PARTY TRANSACTIONS
Five
ledger accounts in the books of the Company relating to loans, salaries and
out-of-pocket expenses payable to the President/C.E.O., Jon Fullenkamp, were
combined into one account “Loan from Officer”, which totaled $1,377,879 at
December 31, 2007. The loan is non-interest bearing and payable on
demand. Under the terms of the employment agreement, the employee may
at his election convert any and all funds due to him into shares of the
Company’s common stock at a conversion price of $0.001 per share. In practice,
in prior years, funds due to him were converted at a discounted market
value.
In the
Year ended December 31, 2007 and 2006 the President/CEO incurred $687,794 and
$313,539 respectively in reimbursable expenses on behalf of the
Company.
In March
2006 the company issued a promissory note to a group of stockholders for
consideration of $141,458 in cash. The terms were to be repayable in one year at
an interest rate of 10%, payable quarterly. Interest was deferred. In
December, 2006 the note was reclassified to prepaid subscriptions, reflecting an
accommodation with the stockholders.
On
December 31, 2007 the Company issued restricted common stock to Company
officials as compensation for consulting as follows:
Jon
Fullenkamp
|
President
|
8,750,000
|
Rick
May
|
Director
|
500,000
|
Perry
Mansell
|
Director
|
500,000
|
NOTE 4 –
INVESTMENT IN JOINT VENTURE
In May,
2006 the Company paid $50,000 to Geosurveys, Inc, a geophysical survey company
of oil and gas prospects. This was part of an agreement with Eldorado
Exploration, Inc. whereby the Company obtained a 2 ½ percent working interest in
a prospective oil well called the Mesa #1 well on leased land in New
Mexico. The agreement provides for cost sharing of drilling
costs.
NOTE 5 -
COMMITMENTS AND CONTINGENCIES
There
were no additional commitments and contingencies in the year ended December 31,
2007.
NOTE 6 –
CAPITAL STOCK TRANSACTIONS
Reverse Common Stock
Split
The
Common Stock issued and outstanding at October 26, 2006 was
108,810,259. On this date the Board of Directors declared a
reverse stock split of the Company’s Common Stock, converting the common stock
on a 25 to 1 basis. Common shares outstanding were
reduced by 104,457,849. New stock outstanding after the split and
after issuing 890 shares for rounding was 4,353,300. The effect
on the balance sheet was to increase Paid-in Capital by $104,458 and to reduce
Common Stock by $104,458, a neutral effect on stockholders’ equity.
On
October 20, 2005 one share was issued at $0.50, valued de minimus, for rounding
following the reverse split.
On
November 11, 2006 5,200 shares were issued for services valued at $1,040 at
market value of $0.20 per share.
On
December 5, 2006, 14 shares valued de minimus were issued for
rounding.
On
December 27, 2006, 160,000 shares were issued for services, valued at $27,200,
at market value of $0.17.
2007
On
January 22, 2007, 6,277,251 shares of common stock were issued for services at
$0.15 per share, reflecting market value. $941,588 was recorded as
consulting fees.
On
February 1, 2007, 5,662,000 shares of common stock were issued at $0.21
reflecting market value for subscriptions receivable
of $1,189,020.
On March
1, 2007, 40,000 shares of common stock were issued to a Director for services
rendered at $0.21 per share reflecting market
value. $8,400 was recorded as consulting
fees.
On May 7,
2007, 1,710,000 shares of common stock were issued for services at $0.21 per
share, reflecting market value. $359,100 was
recorded as consulting fees.
On June
5, 2007, 1,077,600 shares of common stock were issued for services at $0.21 per
share reflecting market value. $226,296 was recorded as consulting
fees.
On June
13, 2007, 850,000 shares of common stock were issued to preferred stockholders
in a conversion of 85,000 shares of preferred stock to common, converted at the
rate of one share of preferred stock to 100 shares of common stock.
On June
15, 3,500,000 shares of common stock were issued at $0.21 per share reflecting
market value, for subscriptions receivable of $735,000.
On
December 12, 2007, 300,000 shares of common stock were issued for services at
$0.05 per share reflecting market value. $15,000 was recorded as consulting
fees.
On
December 31, 2007, 10,310,000 shares of common stock were issued for services at
$0.04 per share reflecting market value. $412,400 was recorded as consulting
fees.
On
December 31, 2007, 500,000 shares of common stock were issued for services at
$0.04 per share reflecting market value. $20,000 was recorded as consulting
fees.
On
December 31, subscriptions receivable was reduced by $575,000 to $160,000
attendant upon a decline in the market price of the common stock and an
agreement with the subscribers concerned. Additional paid-in capital
was reduced accordingly.
The total
of issued and outstanding common shares at December 31, 2007 and 2006 was
42,395,366 and 4,518,515 respectively,
Preferred
Stock
On August
22, 2006 the Board of Directors resolved to amend the Articles of Incorporation,
to authorize 10,000,000 shares of preferred stock, having a par value of
$0.001. The stock is convertible to common stock at will in a ratio
of 1 preferred to 100 common. Preferred stockholders may vote as
common stockholders on any matter on which common stockholders can vote, and in
accordance with the underlying common stock held. Preferred stock
dividends may be declared by the Board of Directors.
On
October 20, 2006, 715,512.23 preferred shares were issued for cash at $0.467
each pursuant to Regulation “S”, realizing $246,950.
On June
13, 2007 85,000 shares of preferred stock were converted, at the rate of one
share of preferred stock to 100 shares of common stock, to 8,500,000 shares
common stock.
The total
of issued and outstanding preferred shares at December 31, 2007 and 2006 was
630,517 and 715,517, respectively.
During
the second quarter of 2007, a former consultant solicited the courts for the
shortfall between the original settlement amount and the amount realized in a
court action. On June 6, 2007, the Corporation delivered final
settlement and the issue is completely resolved.
Neither
the Company nor any of its officers or directors is involved in any other
litigation either as plaintiffs or defendants, and have no knowledge of any
threatened or pending litigation against them or any of the officers or
directors.