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